Icb Capital Management Ltd 236s1u

ICB CAPITAL MANAGEMENT LTD. INVESTMENT BANKING OPERATIONS

INTRODUCTION ORIGIN

OF THE

REPORT

The report on “Investment Banking Operations of ICB Capital Management Limited” is prepared as a partial requirement of the course Financial Market and Institution, code: F-304, instructed by M Kismatul Ahsan ,Assistant Professor ,Department of Finance ,University of Dhaka.

OBJECTIVES This report focuses the details of the operations of the ICB Capita Management Company Limited (ICML). The specific objectives are to-



Explain its function as an Investment Banker.



Illustrate the details of its Underwriting, Portfolio Management and Issue Management functions.



Explain its role in the development of the financial market (both primary and secondary market) of Bangladesh.



Analyze the details of the products and services it offers to the general and institutional investors.



Show the performance of the company as an investment banker.



Identify the assets maintained and recorded by the company.



Analyze the financial condition of the company.



Compare the financial reports of last five years of the company.



Identify the factors that may affect the industry in the future.

Investment Banking Operations of ICML

1

SCOPE OF THE REPORT In the whole report we basically wanted to show the details of ICML’S functions. We described how it actually performs investment banking function in the real world. To show that we basically emphasized on its three major functions-underwriting, issue management, portfolio management etc. we then outlined how successfully it is performing its function throughout the years after its debut in the investment banking industry in 2002. We also went through detailed analysis of its financial performance up to last year.

METHODOLOGY To prepare the report, we collected secondary data. We collected the annual reports of ICML for the years 2003-2004 to 2006-2007. We also visited the website of ICML for collecting necessary information. We have also consulted with a Liaison Officer of ICM for knowing the details of their each function. We have also gone through the text book to understand those investment banking functions easily.

LIMITATIONS Although ICML has a perfect and healthy web site, it did not help us much in preparing the report. The reason is that we needed many internal information of how they conduct their operations practically that was not available in their website. The annual report also has not given any practical guideline of their basic operations where we mainly focused on. Moreover there was time constraint also. So as far as the limitation is concerned we had tough condition in gathering all the necessary information. In spite of the limitations we tried our best to represent the company’s overall functions and performance as an investment banker.


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INVESTMENT BANKING

OF

BANGLADESH

Throughout the world the security market can be classified in two categories- primary and secondary market. The primary market involves with the distribution of newly issued securities among the investors and the participant in the market place that work with the issuers to distribute the newly issued securities are called investment bankers. The process of investment banking is also synonymous to merchant banking. The process of investment banking is basically leaded by security houses and commercial banks. Merchant banks are private financial institutions. Their primary sources of income are PIPE (Private Investment in Public Entities) financing and international trade. Their secondary sources of income are consulting, Merger and Acquisition help and financial market speculation. Because they do not invest against collateral, they take for greater risks than traditional banks. As they are private they do not take money from the public and are international in scope, they are not regulated. Anyone considering dealing with any merchant bank should investigate the bank and its managers before seeking their help. Investment bankers typically perform three activities 1. Advising the investor on the time and timing of public offering. 2. Buying the securities from the issuer which is also known as underwriting. 3. Distributing the issue to the public.

ROLE

OF INVESTMENT BANKING IN CAPITAL MARKET

Investment banks play a vital role to develop a countries capital market. In Bangladesh this function is basically played by ICB. But now this part is performed by the newly established subsidiary company of ICB, ICML. This investment banks continuously update themselves about the current economic information and economic cycle. So eventually they learn which may be the best moment to issue a new security. Without investment bankers help the issuers needed the go through the costly and time consuming procedure of market analysis. Moreover this decision can be misleading because of there lack of skill.


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On the other hand it is helpful to determine the stock issue price by an outside specialist to avoid any sort of biasness and misjudgment. Investment bankers also help to share the risk involved in issuance of securities. Because they guarantee the sale of securities and if they cannot sale the securities to individuals they finance the company though buying the residual amount. The whole process of issuance is involved with legal and time consuming procedures. The investment bankers step out and serve the issuing company with their specialized knowledge.

LAW REGARDING MERCHANT BANK Merchant banking under a formal legal framework is a relatively new concept in Bangladesh. SEC formulated a regulation in 1996 on merchant banking. Activities namely, SEC (Merchant Banker & Portfolio manager) , Regulations 1996. As per regulation, a merchant bank is allowed to perform four types of operations. 1. Issue management 2. Underwriting 3. Portfolio Management 4. Corporate Advising


4

INVESTMENT BANKS

IN

BANGLADESH

Name of the Banks

Authorized Functions

Certificate Issue Date

Industrial Development Leasing Company of Bangladesh Ltd. Uttara Finance and Investment Limited. Banco Trans World (Bangladesh) Limited. Fidelity Assets and Securities Company Ltd Raspit Securities and Management Limited. Capital Market Services Limited. Bay Leasing and Investment Limited. Swadesh Investment Management Limited. LankaBangla Finance Limited. Grameen Capital Management Limited. South Asia Capital Ltd. Prime Finance & Investment Ltd. EC Securities Ltd. Mercantile Securities Limited. GSP Finance Company (Bangladesh) Ltd. Bangladesh Mutual Securities Ltd. Equity Partners Limited. Prime Bank Limited. Arab Bangladesh Bank Ltd. ICB Capital Management Ltd.

Full-fledged MB

22.01.98

Do

25.03.98

Do

22.01.98

Do

22.01.98

Do

22.01.98

Do Do

25.03.98 25.06.98

Do

26.07.98

Do Do

22.01.98 25.06.98

Do DO DO DO DO

07.12.98 25.01.99 04.02.99 31.08.99 24.08.99

DO

12.09.99

DO DO DO

Do

25.09.2000 29.03.2001 15.05.2001 16.10.2001

Do

08.10.2001

Do

10.04.2002

Export Import Bank of Bangladesh Ltd. Union Capital Limited


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Investment Corporation of Bangladesh (ICB)

Background Investment Corporation of Bangladesh (ICB) is the principle investment Bank in the public sector of our country. It was established on 1st October 1976 under the Investment Corporation of Bangladesh Ordinance 1976 (XL-1976) with the goal to encourage and broaden the base of investment. Before liberation it was Investment Corporation of Pakistan which provided underwriting to industrial enterprises and throughout the East Pakistan. The establishment of ICB was a major step undertaken by the government to accelerate the pace of industrialization and develop a well-organized capital market. After liberation in revised investment policy, which was announced in the December 1975, government announced its decision to reactive the stock exchange and examine the question of recreation of Investment Corporation of Bangladesh.

Objectives •

To encourage and broaden the base of investment.

•

To develop the capital market.

•

To provide for matters ancillary thereto.

•

To mobilize savings.

•

To promote and establish subsidiaries for business development

At a Glance Date of Establishment Status Nature of Business Capital Structure (as on June 2007)


1st October 1976 Statuary Corporation Investment Banking BDT in Crore

6

Authorized Capital Paid up Capital Reserves Retained Profit Government Loan Debenture Loan

100.00 50.00 122.61 13.82 4.55 41.80

Functions of ICB Private Placements ICB is authorized to act as an agent of the issuers and investors for private placements of securities. Under this arrangement, ICB places securities to individuals/institutions on behalf of the issuer for which it charges fees. ICB also acquires shares/securities for its own portfolio both in pre-IPO placement and equity investment.

Custodian and Banker to the Issues Act as the custodian of the public issue of Open-end & Closed-end Mutual Funds. ICB provides professional services. It also acts as the Banker to the issues and provides similar services through the network of its branches. Fees in this regard are negotiable.

Mergers and Acquisitions Companies willing to expand their business through mergers or acquisitions or to Dis-investment projects that no longer viable into present capacity of operation can the Corporation. ICB provides professional services & advices in respect of shaping up the cost and financial structures to ensure best possible operational results. Besides, in case of divestment, the corporation, through network and established business relationship, bring buyers and sellers together, help them to negotiate final agreement and advice on the emerging corporate structure.

Corporate Financial Advice Government enterprises and Companies intending to go public issue often seek professional & financial advice on corporate restructuring & reengineering. ICB through its expertise provide such services through its expertise.


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Lease Financing ICB Provides lease finance mainly for procurement of industrial machinery, equipment and transport. ICB provides professional advice and financial assistance to the intending clients. The period of lease, rental, charges, and other and conditions are determined on the basis of type of assets and the extent of assistance required by the applicants. Since introduction of this scheme was in 1999 good responses have been received from the intending lessees.

Investment Portfolio of ICB Being the largest institutional investor ICB contributes significantly to the development of the country's cap ital market through active portfolio management which is one of the important functions of ICB. During 2003-04 a total investment of Tk. 138.93 crore has been made in the investment portfolio of ICB including Tk.O.2 crore in shares of a company through Pre-IPO placement, Tk. 7.0 crore in debentures of two companies, Tk. 0.3 crore in preference shares of a company and Tk. 5.0 crore in bonds of a company. As a result of favorable market situation in 2003-04 ICB earned Tk. 42.25 crore as capital gain through sale of securities of Tk. 258.59 crore which was 53.58 per cent higher than the capital gains of Tk. 27.51 crore made in 2002-03. During 2003-04, an amount of Tk. 22.95 crore was earned as dividend on shares and interest on debentures as against Tk. 21.5 crore in 2002-03 ing an increase of 6.74 per cent. Dividend income has increased because of satisfactory dividend performance of some companies. Up to 30 June 2004 ICB made a total investment of Tk 41.08 crore in 27 companies through purchase of preference shares, debentures, shares against pre-IPO placement and bonds of Tk.7.3 crore of 3 companies, Tk. 9.5 crore of 3 companies, Tk. 11.33 crore of 12 companies and Tk. 5.0 crore of a company respectively as well as through investment of Tk. 7.95 crore in 8 companies as direct equity participation As on 30 June 2004, the market value of the securities of ICB's investment portfolio stood at Tk.521.62 crore against the net investment value of Tk. 378.82 crore resulting in capital appreciation of Tk. 1 42.8 crore.

Advance against Unit Certificates Scheme Investment Banking Operations of ICML

8

Advance against ICB Unit Certificates Scheme was introduced in 1998, especially designed for the ICB unit- holders to meet their emergency fund requirements. One can borrow maximum Tk. 85 per unit by depositing his/her unit certificates under lien arrangement from any of the ICB offices where from such unit certificates were issued. The rate of interest on the loan is reasonable and competitive.

Advance against Mutual Fund certificates Scheme Advance against ICB Mutual Fund certificates Scheme was introduced in 2003, designed for the ICB Mutual Fund Certificate-holders to meet their emergency fund requirement. One can borrow maximum of 50% value of last one year's weighted average market price of certificates at the time of borrowing by depositing his/her certificates under lien arrangement from any of the ICB offices. The rate of interest on the loan is reasonable and also competitive.

Consumer Credit Scheme As part of business diversification program, ICB has introduced "Consumers Credit Scheme" in 2003-04 considering at the need of various household commodities of different employees of govt., semi-govt., autonomous bodies and some established private sector organizations. Under this scheme one can enjoy minimum Tk 1.0 lac but maximum 5 lac credit facilities. The rate of interest on the loan is reasonable and competitive which is fixed by the board of directors of ICB considering the bank rate and with the guidelines of Bangladesh Bank.

Bank Guarantee scheme ICB introduced Bank Guarantee scheme in 2002-03. ICB provides (i) Bid Bond for enabling the business people to participate in any tender or bidding; (ii) Performance Bond for helping the business community to continue their business smoothly by fulfilling their obligations promised by them to their clients; and (iii) Customs Guarantee for solving different disagreements between the customs authority and the business classes at the initial stage. The maximum limit of guarantee is Tk. 2.00 crore and would be issued against at east 20% cash and 80% easily encashable securities or against 100% cash margin. Re-guarantee from other financial institution is required for guarantee against the amount exceeding Tk. 2.00 crore.


9

Training Local Training During 2003-04, as part of human resource development programme, ICB endeavored to develop the skill, knowledge and professional competence of its manpower by arranging various in-house and local training courses. During the year, 26 officers and 09 employees of ICB received local training on different subjects including Policy towards investment and industrialization, VAT and Taxation, Performance Measurement of Financial Institutions-a Credit Rating Perspective, Web page Design and Development, Venture Financing and Factoring, Investment and Merchant Banking, Managing core risks in banking for Senior Bankers, Corporate Governance, Institutional Computer Training, Trade Union Training Course for Organizer, Young Leadership, Development of small and medium enterprises etc..

Foreign Training During 2003-04, no officer/staff participated in any foreign training course.

Development Activities Equity through consortium arrangement ICB invests in different companies through equity participation singly/under consortium arrangements by different Banks and financial institutions.

Counseling to the Government Incase of Govt. divestment program ICB provides professional & financial advice through analyzing the companies to be privatized and the attitude the prospective buyers. Government enterprises intending to go public often seek professional financial advice on corporate restructuring and reengineering, ICB through its expertise provides such advice.

Term deposit


10

ICB receives deposit as term deposit from individuals/institutions offering attractive and negotiable interest rate which helps to mobilize savings for profitable investment in securities.

Disinvestment Program ICB is actively associated with disinvestment process. With a view to off loading of Govt. share holding through the Stock Market ICB has been entrusted with the responsibility of selling Govt. owned shares of different listed Companies.

EEF ICB Capital Management Ltd. acts as project appraising institute for equity participation of EEF unit of Bangladesh Bank.

Subsidiary’s Information At suggestions of World Bank and International Monitory Fund (IMF) ICB Corporation management has decentralized its control over the capital and share market by introducing three subsidies.

 ICB Capital Management Limited ( ICML)  ICB Asset Management Company Ltd. (IAMCL)  ICB Securities Trading Company Ltd. (ISTCL)

ICB Capital Management Limited (ICML) Underwriting In order to raise long term debt and equity from the primary market, the Government bodies, enterprises corporation or companies may seek intermediary assistance from ICML in the form of underwriting.

Issue Management To act as the manager to the issue of shares and debentures, ICML provides professional services in respect of syndicate underwriters and bankers to the issue.


11

Besides, it also helps in preparing prospectus, getting their approval from SEC and arranges publication of the same.

Placement of Shares ICML acts as a placement agent. Selected percentage of shares of a company is privately presented to relatives and different financial companies.

Investment Counseling ICML provides investment counsel to the issuers and investors' including financial engineering and corporate advisory services.

Managing Investment s ICML, at its discretion, may grant loan at a ratio of 1:1 against the assets of an subject to a maximum limit of Tk.25.0 lac. An holder may use the combined balance of his/her equities and loan to buy shares/securities. It helps the investors to develop a diversified and balanced portfolio by minimizing the risk and earning a reasonable return. ICML provides professional advice and other services.

ICB Asset Management Company Ltd. (IAMCL) ICB Asset Management Company Ltd. was created as part of the restructuring program of ICB under Capital Market Development Program (CMDP) initiated by the Government of Bangladesh and the Asian Development Bank. The Company was incorporated as a public limited company with an authorized capital of Tk. 100 crore and a nominal paid up capital of Tk. 2.00 lac, which was subsequently increased to Tk. 5.00 crore, under the Companies Act, 1994 with the Registrar of t Stock Companies and Firms on December 05, 2000. The Company obtained license on October 14, 2001 from the Securities and Exchange Commission under Securities & Exchange Commission (Mutual Fund) Act, 2001 to carry out the mutual fund activities. The company started its operation from July 01, 2002 upon issuance of Govt. gazette notification.


12

Activities: The company is engaged in investment management; more specifically floating and managing both open-end and closed end mutual funds, provident funds etc. The company is dedicated towards development of mutual fund industry as well as the capital market of Bangladesh.

MUTUAL FUNDS ICB Asset Management Company Ltd. has so far floated three closed-end mutual funds and two open-end Mutual Funds through which the small and medium savers get opportunities to invest their savings in a balanced and relatively low risk portfolio. The aggregate size of these funds is around Tk. 90.00 crore. Types of Mutual Fund There are two types of Mutual Fund. They are•

Open-end Mutual Fund

•

Close-end Mutual Funds

Open-end Mutual Fund Open-end Mutual Funds are allowed for a continuous subscription and redemption. These schemes do not have a fixed maturity period. Investors can buy or repurchase these units at any time at NAV basis. Prices are declared by the fund manager on daily or weekly basis. There are two open-end mutual funds operated by ICB AMCL. They areI.

ICB AMCL Unit Fund

II.

ICB AMCL Pension Holders’ Unit Fund


13

Close-end Mutual Funds Close-end Mutual Fund is where the shares are initially offered to the public and are traded in the secondary market. There are three close-end mutual funds operated by ICB AMCL. They areI.

ICB AMCL First Mutual Fund

II.

ICB AMCL Islamic Mutual Fund

III.

ICB AMCL First NRB Mutual Fund

One can invest in the closed-end mutual funds through the stock exchanges. Islamic mutual fund is a specialized mutual fund. The business of the fund should be in consistence with the Sharia` Law.

ICB Securities Trading Company Ltd. (ISTCL) ICB Securities Trading Company Ltd. performs stock brokerage activities. The Company maintains its activities to become the most active broker of both DSE and CSE. The Company has started trading of securities for general investors alongside the institutional investors from the beginning of 2003-2004. ISTCL has obtained license from SEC to act as the full service Depository participant (DP) in Central Depository Bangladesh Ltd. (CDBL)

Now we will discuss in details about ICB’s one of the subsidiary ICB Capital Asset Management (ICML), Leader in Merchant Banking in details in our next segment.


14

ICB Capital Management Ltd. (ICML) ICML Overview ICB Capital Management Ltd.(ICML) has been incorporated as a subsidiary of Investment Corporation of Bangladesh (ICB) to carry out investment banking which includes underwriting, issue management and portfolio management. A brief chronicle on ICML is asserted as follows: Date of Incorporation

December 5, 2000

SEC’s Registration Obtained Business Commenced SEC’s Permission for Branch Operation Authorized Capital Paid Up Capital

October 16, 2001 July 1, 2002 July 15, 2002 BDT 100 crore BDT 8 crore

Number of Shareholders

7

Vision  To initiate new products in the capital market  To provide innovative and quality service to the customers  To set high standards of professionalism  To bring total satisfaction to the clients, sponsors and employees  To perform operations with high standard and business ethics.

Mission  To expand merchant banking services with the help latest technology  To ensure reasonable return on shareholders’ equity  To help develop and strengthen the capital market and thus accelerate the

pace of industrialization  To contribute to the national GDP as well as to the growth of national

economy


15

 To mobilize savings of small and medium level of investors and channelize

the same to quicken the pace of economic development  To create demand for and supply of securities in the capital market  To establish itself as a leading and sound merchant banking institution

Objectives  To carry out merchant banking activities including issue management,

underwriting and portfolio management with a view to developing a vibrant capital market  To widen the scope and area of investment by mobilizing savings of small

and medium level of investors  To introduce high quality companies to the Bangladesh capital market and to

induce good companies to raise their funds from the capital market leading to adequate supply of securities in the capital market  To create demand for quality securities by efficient portfolio management  To establish perfect combination of high quality buy-sell execution capabilities

and create a large local network among investors and broker community.

Board Committee The company has a separate Board of Directors consisting of 6(six) . Excepting Chief Executive Officer (CEO), all the Directors are non-executive and independent, two of whom are nominated by ICB, the holding company of ICML and the other three (50%) are drawn from the private sectors. The managing Director of ICB is the Chairman of the Board.

Work -Environment The Company has a excellent working environment, adequate experts and professionals. It is equipped with necessary logistics to provide fully automated merchant banking services.


16

Functions of ICML As a subsidiary of most experienced , pioneer and biggest merchant bank (ICB) in the country, ICB Capital management Ltd. (ICML) has been performing merchant banking

activities

including

issue

management,

underwriting

and

portfolio

management. Details of the functions are given as follows:

Underwriting Underwriting is considered as the heart of merchant banking. In order to raise long term debt and equity from the primary market, the Government bodies, Enterprises, Corporation or companies may seek intermediary assistance from ICML in the form of underwriting. ICB Capital Management Ltd. (ICML) has emerged as the leading underwriting institution in the country. ICML provides underwriting singly or through consortium to viable and prospective companies those seek to mobilize finance by issuing equity and/ or debt instruments. ICML has the capability to render efficient, prompt and cost effective service in this regard.

Process There are two practices for underwriting – Outright Buy basis and Best-effort method. In Bangladesh Outright Buy Method is in Practice. When a company seeks underwriting help to ICML and it agrees with appropriate and conditions, they bound each other in a contract. ICML communicate with its issuing banks. Generally ICML serve the both role of Underwriter and Issue manager. After appointing the bank to the issuer, activities of ICML as an issue manager end. As an underwriter, ICML collects the share application through the banks then performs the lottery of share application; at last perform necessary legal activities to enlist the company in DSE. There are certain conditions regarding underwriting. In the form of outright buying method if there is any share left after the public offering the rest amount of share have to finance by the underwriting company.

Conditions Applied Government bodies, enterprises, corporation or company have to collect at least 50% of their issued capital through public offerings.


17

Commissions & Fees ICML charges 50% of initial public offering or 1% of amount underwritten, whichever is less. If all the shares of the government bodies, enterprises, corporation or company sold out still they will receive their fees from that particular issuer. From the year 2003 to 2007 ICML has generated 3.44 million taka revenues as underwriting fees. Year-wise underwriting fees and comparative percentage contribution in the total fee income of ICML is as follows:

Underwriting Fees Contribution to Total Fee Income

2003-04 345,000 7.50%

2004-05 429,125 1.70%

2005-06 1,363,358 10%

2006-07 1,298,505 5.23%

Year-wise Underwriting Activities During FY 2003-04, ICML received 10 applications seeking underwriting assistance of Tk 10.61 crore of which all the 10 applications were approved. Out of 10 companies, 3 companies got approval from SEC and accordingly floated their shares through initial public offering (IPO). The remaining 7 companies are yet to get approval from SEC. List of the companies are given in the next page: Name of the Companies

Amount of Underwriting Commitment (in crore)

Daffodil Computers Ltd.

0.50

Lafarge Surma Cement Ltd.

0.50

EXIM Bank Ltd.

0.68

Mercantile Insurance Co. Ltd

0.45

First Security Bank Ltd.

1.00

Jamuna Bank Ltd.

2.40

Prime Finance and Investment Ltd.

0.38

Global Insurance Co. Ltd.

3.00

Nitol Insurance Ltd.

1.50

Prime Islamic Life Insurance Ltd.

0.20 10.61


18

During FY 2004-05, ICML received 11 applications seeking underwriting assistance of Tk. 11.00 crore of which all applications were approved including a right issue. Among them three companies floated their shares. The remaining companies care awaiting floating of their shares. List of the companies to which underwriting commitment was made are as follows: Name of the Company

Amount of Underwriting Commitment (BDT in crore)

Northern General Insurance Co. Ltd.

1.00

Agrani Insurance Co. Ltd.

0.50

Sonar Bangla Insurance Co. Ltd.

1.00

Green Delta insurance Co. Ltd (Right Share)

1.50

Progati Life Insurance Co. Ltd

0.10

Islami Commercial Insurance Co. Ltd

0.45

Prime Islami Life Insurance Co. Ltd

0.50

Peoples Leasing and Financial Services Ltd.

0.25

Islami Finance and Investment Ltd

0.50

Popular Life Insurance Co. Ltd

0.20

Shahjalal Islami Bank Ltd

5.00 Total

11.00

During FY 2005-06, ICML received 12 applications seeking underwriting assistance of Tk. 43.19 crore. All the 12 application were approved by ICML including three right issues. List of the companies to which underwriting commitment was made are as follows:

Name of the Company

Size of Issue

Amount of underwriting commitment (in crore taka)

Janata Bank Ltd.

51.48

1.98

(including of tk.8.58 crore) Provati Insurance Company Ltd.

9.00

0.50

Barger Paints Bangladesh Ltd.

13.91

0.97

(including of tk.12.75 crore) S.Alam Cold Rolled Steels Ltd.

12.00

2.00


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Aftab Automobiles Ltd.

33.74

14.24

(including of tk.22.49 crore) Uttara Finance and Investments Ltd.

39.60

17.10

(including of tk.26.40 crore) Golden Sun Ltd

6.00

1.50

Fareast Finance And Investment Ltd.

7.11

0.30

Industrial Promotion and Development

27.80

2.00

(including of tk.13.90 crore) Bangladesh Industrial Finance Company Ltd.

11.10

1.70

Union Capital Ltd.

7.50

0.40

InTech Online Ltd.

4.60

0.50

223.84

43.19

Company of Bangladesh Ltd.

Total

During FY 2006-07, ICML received 11 applications seeking underwriting assistance of Tk. 76.68 crore. All the 11 application were approved by ICML including one right issue. List of the companies to which underwriting commitment was made are as follows: Name of the

Size of Issue

Company

Amount of underwriting

Shahjalal Islami Bank Ltd The Premier Bank Ltd. Bangladesh Finance & Investment

93.58 84.50 7.00

commitment 0.50 5.00 0.40

Company Ltd. Oman Bangladesh Leasing & Finance Co.

12.75

0.50

Ltd. Baira Life Insurance Co. Ltd Phoenix Finance & Investment Co. Ltd Trust Bank Ltd.

7.59 12.50 70.00

0.50 1.50 2.69

( Tk. 23.33 crore) Standard Bank Ltd First Security Bank Ltd. Mudaraba Perpetual Bond of Islami Bank

65.58 100.00 150.00

22.65 5.00 37.00

Bangladesh Ltd. Industrial and Infrastructure Development

7.50

0.94

611.00

76.68

Finance Company Ltd. Total


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Issue management To perform the job of an issue manager for the issue of shares and debentures, ICML renders professional services to the issuers. While performing the function of manager to the issue, ICML involves itself in preparing prospectus, helping the issuers in getting the approval of prospectus from SEC and also arranges publication of prospectus in the daily newspaper.

Process When an issuer company approaches to ICML to perform the manager to issue activities, they sequentially carry out the following activities.  Initially they examine and analyze the financial statements (income

statement, balance-sheet and cash-flow statement) of existing companies and for the new companies the go through the capital structure (debt equity ratio), asset position. After that they prepare the Prospectus as per Public Issue Rules of SEC. Prospectus contains information about the company’s asset & liabilities, financial positions, profit & losses and it’s future prospects.   After preparing the Prospectus they go to Security Exchange Commission

(SEC) for the approval of the prospectus. SEC scrutinizes the prospectus. (before giving approval)



Receiving the approval from SEC then ICML arranges the publication of prospectus in the daily newspaper.

 Then they appoint the bank to the issue (commercial banks) to collect the

application money from the public and they also settle the five working days in which the applicants will submit the money.

Commission & Fees


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Issue Management fee is maximum 1% on the public offering amount or 20 lac whichever is less. The fees generated from the act of issue manager for companies from the FY 2003-04 to 2006-07 are given below: Particulars Manager to the Issue fees

2003-04 1500000

2004-05 1450000

2005-06 3830000

2006-07 1222082

Year-wise Issue-Management Activities During FY 2003-04, ICML received 8 applications to act as Manager to the Issuer amounting to Tk. 159.50 crore, of which 7 applications amounting Tk. 153. 50 crore were approved, and 1 application was under consideration. Out of the approved applications, 2 applications were made for bond issue through private placement and 1 application was cancelled subsequently.

List of the companies to which

underwriting commitment was made are as follows: Name of the Company

Nature of

Size of

Date

Jamuna Bank Ltd. Prime Finance and Investment Ltd.*

Issue IPO IPO

Issue 19.50 Bond: 30.00

25-02-2004 17-04-2004

Nitol Insurance Co. Ltd. Phoenix Leasing Company Ltd.** Global Insurance Company Ltd.

IPO IPO IPO

Share: 3.00 9.00 30.00 9.00

12-04-2004 27-04-2004 06-05-2004

CNS Ltd. Power Grid Company of BD Ltd. Total

IPO IPO

3.00 50-00 153.50

26-05-2004 28-06-2004

During the FY 2004-05 ICML received 8 assignments to act as an issue manager amounting 238.68 crore. Among those 4 applications were cancelled subsequently. For the following companies ICML acted as an issue manager in the mentioned financial year: Name of the Company S. Alam Cold Rolled Ltd.

Nature of Issue IPO

Size of Issue BDT 26.68

Date 14-7-2004

IPO IPO IPO

crore 20.00 9.00 100.00 155.68 crore

11-8-2004 20-9-2004 25-5-2005

Golden Son Ltd. Union Insurance Co. Ltd. ACI Formulations Ltd.


22

During the FY 2005-06, ICML received 6 applications to act as Manager to the issue amounting to Tk. 237.31 crore among which 5 applications amounting to Tk.207.31 crore were approved and the remaining 1 application for issuance of bond was cancelled subsequently. The companies against which ICML acted as Issue Manager are asserted below: Name of the Company Aftab Automobiles Ltd.

Nature of Issue Right Issue

(including of Tk. 22.49 crore) Uttara Finance and Investments Ltd.

Size of Issue Tk. 33.74

Date 1-8-2005

crore Right Issue

39.60 crore

10-6-2005

IPO

11.10 crore

13-4-2006

Dhaka Electric Supply Company Ltd.

Direct Listing

31.78 crore

16-4-2006

Powergrid Company of Bangladesh

Direct Listing

91.09 crore

16-4-2006

Total

207.31 crore

(including of 26.40 crore) Bangladesh Industrial Finance Company Ltd.

Ltd.

During the FY 2006-07 ICML committed to act as to the issue of 6 companies amounting 469 crore taka. The following company appointed ICML to conduct the issue management in that year: Name of the company

Nature of

Size of Issue

Date of

Mudaraba Perpetual of Islami Bank of

Issue Private

150+150=

g 5-9-2006

Placement &

300.00 crore

Repeat Public

taka

Bangladesh

Offering(RPO Industrial

and

Development Limited Phoenix

7.50

27-9-2006

IPO

12.50 crore

7-2-2007

Private

30+10= 40

12-2-2007

Placement &

crore

Infrastructure

Finance

Finance

) IPO

and

Company Investments

Limited Plane Vanilla Bond of IDLC Finance Limited

RPO


23

Takaful Islami Insurance Limited First Security Bank Limited

IPO IPO

9.00 crore 100 crore

3-4-2007 26-4-2007

Private Placement In addition to underwriting securities for distribution to the public, securities may be placed with a limited number of institutional investors such as commercial banks, insurance companies, investment companies and pension funds. This process differs from the public offering of securities that we have described so far. Here certain percentage of total securities are mostly offered to  Relatives  Existing Shareholders  Commercial Bank  Insurance Company  Pension Fund  Mutual Fund

In this method instead of providing prospectus to the potential investors, they serve “THE MEMORANDUM OF DUEL PROSPECT”. It contains information about the company’s assets & liabilities, financial positions, profit & losses and its future prospects. It is also mentionable that the private placement memorandum is not subject to SEC review rather the investors have their own SHARE DEPARTMENT where well-knowledged persons are involved in analyzing those statements.

Commission & Fees Issue Management fee is maximum 1% on the public placements amount or 20 lac whichever is less.

Year-wise Private Placement Activities Following companies are issued through Private Placements: Name of the Company

Year

Mudaraba Perpetual Bond of Islami Bank

2006

Bangladesh Limited Plane Vanilla Bond of IDLC Finance Limited

2007


24

DIRECT LISTING (BOOK BUILDING METHOD) In this method company securities are offered to the general public through secondary markets. Generally, well reputed companies in Bangladesh only Govt. companies go for direct listing.

Process Issue manager, ICML performs the following activities:  Initially they examine and analyze the financial statements (Profit- Loss

statements, Balance- Sheet and Cash flow Statements) of the Govt. companies. After that they prepare the “INFORMATION DOCUMENT” which contains information about the company’s asset & liabilities, financial positions, profit & losses and its future prospects.  Then ICML submit the INFORMATION DOCUMENT to SEC for approval.

 Receiving the approval , they directly place the share in secondary market

through ICB Security Trading Ltd. (ISTL)  At the first day of trading within a fixed time bracket ICML observe the

trading prices of shares. And then they fixed the lower limit or minimum price of the share.

Commission & Fees: Issue Management fee is maximum 1% on the public offering amount or 20 lac whichever is less.

Company Lists Following companies are issued through Direct Listing: Name of the Company Dhaka Electric Supply Company Ltd.


Year 2006

25

Power Grid Company of Bangladesh Ltd.

2006

Meghna Petroleum Ltd.

2007

Jamuna Oil Company Ltd.

2007

Portfolio Management Portfolio management is the corner stone of ICML’s activities. Being a Leading merchant banking institution, ICML contributes significantly to the development of the capital market through active portfolio management.

Two types of portfolio are

managed by ICML.  Investment Portfolio of ICML  Investment Portfolio of individual investors (Investors’ Scheme)

Investment Portfolio of ICML It is ICML’s own portfolio. Investment portfolio of ICML generally builds up by their paid-up capital, Net Profit and Retained earnings. Decisions are solely taken by ICML. and they are the only beneficiary if profit is generated from portfolio. The following table shows comparative summarized position of investment portfolio of ICML from FY 2002-03 to FY 2006-07 (Tk. in crore) Particulars

2003-04

2004-05

2005-06

2006-07

Total Investments

8.68

15.58

10.61

15.16

Net Investments

4.23

8.80

5.07

3.47

Capital Gain

1.76

5.61

2.37

6.55


26

Dividend Income

.16

.62

.88

1.65

Here In FY 2003-04 the net investment was pretty low compared to next FY 2004-05. Again on FY 2005-06 the investment decreases and finally on last FY 2006-07 it was the lowest 3.47 crore Here In FY 2003-04 the capital gain was pretty low compared to next FY 2004-05. Again on FY 2005-06 gains decreases and finally on last FY 2006-07 it was the highest Tk.6.55 crore. We can also observe similar trend on dividend income in first FY 2003-04 it is the lowest and FY 2006-07 it is the highest. In FY 2004-05 and FY 2005-06 it was gradually increasing. Now the change in Net Investments, Capital Gain and Dividend Income are shown in graph in figure 1, 2, 3, respectively Figure: 1 It

shows

the

change

in

Net

Investment from FY 2003 -04 to

Net Investments

FY 2006-07. In 2003-04 it was Tk.4.23 crore. It has more then doubled in FY 2004-05 amounting Tk. 8.80 crore.In FY 2005-06 it has declined 43% from previous year amounting TK.5.07 crore. Last FY 2006-07 it was lowest TK.3.47

9 8 7 Amount 6 5 (Tk. in 4 crore) 3 2 1 0 2003-04

2004-05

2005-06

2006-07

Years

crore

Figure: 2 Capital Gain 7

It shows the change in Capital Gain from FY 2003 -04 to FY

6 5

2006-07. In 2003-04 it was

Amount 4 (Tk. in 3 crore)

Tk.1.76 crore. It has more then

2 1

doubled

0 2003-04 2004-05 2005-06 2006-07

in

FY

2004-05

amounting Tk. 5.61 crore.In FY

Years


27

2005-06 it has declined 58% from previous year amounting TK.2.37 crore. Last FY 2006-07 It was highest Tk. 6.55 crore. Figure: 3 It shows the change in Dividend

Dividend Income

Income from FY 2003-04 to FY 2006-

2

07.In 2003-04 it was Tk.16 lac In 200405 it was Tk. 66 lac which almost four times greater then previous year. It

Amount ( Tk. in crore)

gradually increases in 2006 & 2007.

1.5 1 0.5 0 2003-04 2004-05 2005-06 2006-07

Highest was in 2007 amounting Tk1.65

Years

Investors’ Scheme ICML is mandated to manage investment portfolios of individuals under its Investors’ Scheme. This scheme enables an individual to open an investment with minimum deposit of Tk.10,000 (ten thousand) in both ICML Head Office and Branch Offices. It grants loan at a ratio of 1:1 against the assets of an subject to a maximum limit of Tk.25.0 lac. An holder may use the combined balance of his/her equities and loan to buy shares/securities in both primary and secondary securities markets.. To help the investors to develop a diversified and balanced portfolio in order to minimize risk and earn a reasonable return, ICML provides professional advice and other services. Types of s: There are two types of investment s. They are:  Discretionary : In this type of investment decisions

are made by only ICML at their own discretion. This type of now doesn’t exist in ICML.  Non- Discretionary :

In this type of investment

decisions are made by holders. But here ICML is also involved. Nowadays ICML opens only this kind of .


28

ICML now have approximately 10,000 . 7000 s at their head office and around 3000 at different branches. No. of net operating s that of ICML from FY 2003-04 to FY 2006-07 are given in a table and also the trend have been shown in Figure 5: Particulars No. of net operative s

2003-04

2004-05

2005-06

2006-07

4090

5483

8890

513

Figure: 4 No. of Net Operating s

Figure 4 show the trend in No. of Net Operating s. Here in FY 200304 it was only 513. In FY 2004-05 No. of is 4090 which 8 times greater then last year. Next FY the number increases to 5483 which is

9000 8000 7000 6000 5000 Number 4000 3000 2000 1000 0

34% higher then previous and finally in

2003-04 2004-05 2005-06 2006-07

Year

FY 2006-07 it is 8890.

Opening An individual needs minimum deposit of Tk.10,000 (ten thousand) to open an investment in both ICML Head Office and Branch Offices. Other requirements are given below:  The holder has to be physically present while opening investment

.  Prescribed opening form has to be filled-up properly.  Two port size photographs duly attested by an introducer or by a

gazette officer or any bank official.  The introducer needs to have an investment in ICML.In

case of Nominee, signature and the photograph of the nominee is a must


29

 Bank certificates mentioning name, father’s name, mother’s name,

address and number along with signature has to be attested by the bank.  Persons of unsound mind or minors are not eligible to open investment

 Maximum two s can be opened one in the name of the individual

and another tly. No. of s that have been opened by ICML from FY 2003-04 to FY 2006-07 are given in a table and also the trend have been shown in Figure 5: Particulars

No. of s opened

2003-04

2004-05

2005-06

2006-07

536

3405

1670

3625


30

Figure: 5 It shows the trend in No. of s Opened. Here in FY 2003-04 it was only 536. In FY 2004-05 No. of is 3405

No. of s Opened

which 6 times greater then last year. Next FY the number falls to 1670 which is 50% less then previous and finally in FY 2006-07 it is 3625. Loan disbursed:

4000 3500 3000 2500 Number 2000 1500 1000 500 0 2003-04

2004-05

2005-06

2006-07

Year

 Margin Loan Ratio:

1:1  Loan Limit: Maximum 25.00 lac per .

Total deposits received and Loan disbursed amount from FY 2003-04 to FY 2006-07 are given in a table and also the trend have been shown in Figure 6: (Tk. in crore)

Particulars Deposits Received Loans Disbursed

2003-04

2004-05

2005-06

2006-07

17.39

41.58

27.63

50.57

4.09

24.63

39.66

199.82

Figure: 6 It shows the trend in Loan Disbursed & Deposits Received. During FY 2003-04 to FY 2005-06 deposit received

was

higher

then

loan

disbursed. But in FY 2006-07 loan

Amount (Tk. in crore)

Loans Disbursed & Deposits Received

300 250 200 150 100

disbursed get higher then deposits received.


50

Loan Disbursed

0 2003-04 2004-05 2005-06 2006-07 Years

Depostis Received

31

Closure of s In case of closure of an investment , the holder has to give a notice regarding closing of the . After getting not less than 7 days prior notice, ICML will take necessary measures to close the . ICML, after adjusting all dues will pay withdrawal fund/ securities ( it any) to the client. ICML maintains a suspense against the closed for receiving any future inflows to be distributed to the closed . No. of s that have been closed during FY 2003-04 to FY 2006-07 are given in a table and also the trend have been shown in Figure 7: No. of s Closed 300

Figure 7 show the trend in

250

No. of s Closed during

200

FY 2004 to 2007. Here in FY

Number 150 100

2003-04 it was only 23. In FY

50

2004-05 No. of closed

0 2003-04

2004-05

2005-06

2006-07

Years

is 70 which 3 times greater then last year. Next FY the number increases to 277, the closing rate was high then previous.

Finally in FY 2006-07 it is 177, less then previous year. Commission & Fees Cost of Opening Form

: Tk. 20.00

Initial Documentation Charge

: Tk. 500.00

Brokerage Commission

: 0.50% on the value of traded securities.

Interest on Marginal Loan Interest Rate

: 13.00%

Mode of Charging Interest on

: Quarterly

Margin Loan


32

Service Charge Portfolio Management

: 1% per annum with a minimum

Fee/Service Charge

charge of Tk.500.00

Mode of Charging Service Charge

: Quarterly.

Charge of Security withdrawal

: 0.50% on the market value of

from

securities to be withdrawn from the

. Financial/Portfolio Charge

: Tk.10.00 per statement

Sectoral Investments Sectoral Investments at cost under Investors’ Scheme during FY 2003-04 to FY 2006-07 are given below Sector Banks Cements Ceramics Engineering Food and allied Fuel and Power Insurance Investments IT Pharmaceuticals and chemicals Services and real estate Tannery & Leather Textile Miscellaneous Total

(Tk. in crore) 200320042005200604 05 06 07 56.73 98.49 48.67 172.67 1.3 10.23 3.7 9.81 0.05 0.2 0.01 0.09 0.62 4.43 3 13.16 0.82 2.27 0.39 1.48 0.47 1.23 6.55 45.83 0.76 12.58 11.53 7.3 1.21 4.86 4.09 26.29 0.6 5.27 2.38 5.02 2 26.33 13.77 17.74 0.13 0.43 1.29 0.18

0.64 2.59 9.12 2.6

0.1 0.81 2.68 1.78

0.72 5.8 4.72 3.96

66.6

180.84

99.47

128.85

On the table we can observe that on FY 2003-04 main investor sectors was Bank around Tk.56 crore was invested in this sector. Other prominent sectors were


33

Pharmaceutical, Cement, and Textile etc. On FY 2004-05 Bank maintained their leading position and prominent companies remained the same, only Insurance made its position among them. During FY 2005-06 the picture is quite same. Here also Bank is the most prominent investment sector but the amount has declined to Tk.48.67 crore. In this year Insurance sector investment has increased from 6.5% to 11% and a new sector has able to make a mark that is Fuel and Power sector around Tk.6.55 crore was invested in this sector. Finally during FY 2006-07 Bank holds its leading position. Fuel and Power sector flourished and Investment sector looked promising. But the pharmaceuticals and chemicals previous years one of main investment sectors investment falls, On Figure: 8 we have shown a comparison of four years investment sector. Sectoral Investment for 2003-04

Govt./non govt. employees Retired Personnel

B anks

Sectora l Inve stm ent for FY 2004-05C ament C eramics

Engineers/Doctors/Lawy ers

Engineering

Businessmen/ Agriculturists

F uel & P o wer

F o o d & A llied Insurance

Housewives/Working women

Investments IT

Students

P harmaceuticals & C hemicals

Workers

Services & R eal Estate T annery

Others

T extile M iscellaneo us

B anks

Se ctora l Inve stm e nt for FY 2005-06

Sectoral Investment for FY 2006-07

C ament C eramics

B anks C ament C eramics

Engineering

Engineering

F ood & A llied

F o od & A llied

F uel & P ower

F uel & P o wer

Insurance

Insurance

Investments

Investments

IT

IT



Services & R eal Estate

Services & R eal Estate

T annery

Tannery

T extile

Textile

M iscellaneous

M iscellaneous

Bank Sector maintained their top position during these four financial years. At the beginning most of the investments were done in this sector but later years other sectors also flourished. During FY 2003-04 to FY 2005-06 Pharmaceutical and chemicals and textile sector investment was pretty high. But during FY 2006-07 it falls and Fuel and Power sector become quite prominent. Classification of Investors


34

Investors of different occupations invested their savings under Investors’ Scheme of ICML .However, salaried Government and Non- Government employees, retired personnel, housewives and working women formed the backbone of Investors’ Scheme of ICML. The following table shows the occupation wise classification of the investment holders of ICML who opened s during FY 2003-04 to FY

Number of holders

On the table we can observe that on FY 2003-04 Govt./Non Govt. employees were dominating. Businessman and Agriculturist and Housewives/Working women were other two prominent occupations. Student and workers were not defined. During FY 2004-05 the trend remained the same. Govt. /Non Govt. employees were leading. Student and Workers new two segment were opened. During FY 2005-06 number of total holders decreased compare to past year trend remained the same. In Occupation 2003-04 2004-05 2005-06 2006-07 Govt./non govt. employees Retired Personnel Engineers/Doctors/Lawyers Businessmen/ Agriculturists Housewives/Working women Students Workers Others Total FY 2006-07 numbers of investors increased

276 1485 876 1693 16 70 16 69 18 100 28 127 147 891 371 868 28 315 232 442 00 155 134 342 00 2 4 9 51 387 9 75 536 3405 1670 3625 and number of student investors was

quite compared to previous two years. On figure 9 we have shown a comparison of the classification of investors of four years:


35

Figure: 9 Cla ssifica tion of Inve stors FY 2003-04

C la ssifica tio n o f In ve sto rs F Y 2004-05

Go vt./no n go vt. emplo yees

G o vt./no n go vt. emplo yees

R etired P erso nnel

R etired P ers o nnel

E ngineers/Do cto rs/Lawyers

E ngineers /D o c to rs /L awyers

B usiness men/ A griculturists

B us ines s m en/ A gric ulturis ts

H o usewives/Wo rking wo men

H o us ewives /Wo rking wo m en

S tudents

S tudents

Wo rkers

Wo rkers

Others

O thers

Cla ssifica tion of Inve stors FY 2005-06 Go vt./no n go vt. emplo yees

C l a ssific a tio n o f I n v e sto rs F Y 2 0 0 6 -0 7 G o v t./no n go v t. em plo ye e s

R etired P erso nnel

R etired P ers o nne l

E ngineers /Do cto rs /Lawyers

E nginee rs /D o c to rs /L a wyers

B us ines smen/ A griculturists

B us ines s m e n/ A gric ulturis ts

H o usewives/Wo rking wo men

H o us ewiv e s /W o rk ing wo m en

Students

S tude nts

Wo rkers

W o rk e rs

Others

O the rs

Govt. /Non Govt. employees were the major holders of the Investors’ Scheme of ICML. Businessman/ Agriculturists are holding the second position and Housewives/ Working women third. During FY 2006-07 good number of students opening under Investors’ Scheme at ICML.

Corporate Advisory Services Besides the major services provided by the ICML other corporate advisory services are:

Investment Counseling To help the investors build diversified and balanced portfolio to minimize risk and earn a reasonable return, ICML provides professional advice and other services. It provides investment counsel to the issuers and investors including financial engineering and corporate advisory services.


36

Equity and Entrepreneurship Fund (EEF) ICML has also been rendering consultancy services to the projects under the Equity and Entrepreneurship Fund (EEF) of Bangladesh Bank. The EEF is the equity fund provided by the Government of Bangladesh under the management and supervision of Bangladesh Bank and ICML is acting as the lien bank on behalf of the Bangladesh Bank. Its services also include financial engineering and other financial advisory services. The equity is provided to the entrepreneurs who are interested to set-up Agro-based or Information Technology (IT) industry. So far they have worked as Lien Banker for fisheries Industry. They have prepared 19 appraisal reports. Bangladesh Bank has stopped this fund activity for a while. In near future they are planning to issue fund for IT industry and also hand over the full responsibility of EEF to ICML.

Activities The activities that are performed by ICML in this regards are discussed below:  At first the particular agro-based industries (generally fisheries) choose

ICML as their lien banker then Bangladesh Bank asked ICML to prepare the appraisal report / feasibility report of the company.  It also prepared the costing report for the particular company. Bangladesh

Bank study that report and then issue funds not necessarily the exact amount that is quoted by ICML, it can be less.  Bangladesh Bank also asks Lien Bank to check whether the particular

company has spent 51% of total investment. If they had carry out that expenditure then only that company will be eligible to receive the 49% amount on installment basis from Bangladesh Bank.  51% share of that particular company is kept in ICML under their

protection and power of attorney is given by that company. If due to any


37

reasons they become unable to pay back the loan amount ICML will sell those shares in the secondary market.  If Bangladesh Bank faces any problem regarding collecting the loan

amount or any other crises arises they appoint ICML to investigate the issue.

Commission & Fees ICML has received TK.20.35 lac as consultancy fee under Bangladesh Bank EEF Scheme during FY 2003 to FY 2005. These are the all functions performed by ICML.


38

Performance At a Glance (Tk. in crore) Particulars

2003-04

2004-05

2005-06

2006-07

Resources Authorized Capital Paid-up Capital Long Term Loan Retained Earning Total Asset Investment In ICML's Portfolio Working Capital Total Shareholders Equity

100.00 8.00 10.00 2.19 28.04 8.68 18.56 12.89

100.00 8.00 9.38 6.74 52.04 15.58 -6.85 14.76

100.00 8.00 7.17 8.63 64.56 10.61 -7.95 16.63

100.00 8.00 4.97 16.23 101.27 15.16 -15.01 36.23

Issue Management No of companies Total Amount

7 113.52

4 155.68

5 207.31

6 469.00

Underwriting No of companies Total Amount

10 10.61

11 11.00

12 43.19

11 76.68

Investors Scheme No of s Opened Deposits Received Loan Sanctioned Investment Made

536 17.38 4.07 8.76

3405 41.58 24.63 50.17

1670 27.63 39.66 10.79

3625.00 50.57 199.82 33.34

4.07 1.90

12.78 5.45

10.51 3.07

17.76 8.80

4.83 289.77 21.66% 6.77% 15.55% 27.36 0.9 10.00 152.36

0.75 301.75 10.86% 10.47% 36.92% 84.47 0.64 15.00 184.47

0.8 297.59 28.45% 4.57% 18.49% 107.90 0.43 15.00 207.92

0.75 514.99 26.39% 11.36% 36.31% 202.90 0.14 16.00 302.90

Results from Operation Total Income Profit after Tax/Retained Earnings Key Financial Ratios and Market Data Current Ratio Net Asset Value per Share Return on Investment Return on Asset Return on Equity Earnings per Share (based on retained earnings) Debt/Equity Ratio Dividend Per Share Book Value per Share


39

Total Asset Position The graph shows the portion of current and non current assets used by ICML. In 2003-04 the non current assets were much less then the current asset but it gradually builds up and in 2006-07 it was highest, amounting 562,076,285 BDT.

Asset-Liability-Equity:

The second line graph shows the basic ing equation (A=L+E) position in the company.

Working Capital In 2003-04 the working capital was 18.56 crore but it decreased over the next few years as the current liability of the company grew more then the current assets.


40

Current Ratio Current ratio measures the liquidity position of a company. This graph shows a poor trend in liquidity situation of ICML. In 2003-04 the ratio was 4.83:1 which proves excess liquidity but it laterally dropped to 0.75:1 the next year and in 2006-07 it was 0.75:1 which is 0.75 taka asset is for 1 taka of liability. Generally the standard for current ratio is 2:1 that is 2 taka asset for 1 taka liability.

Net Asset Value per Share Net asset value per share is an expression for net asset value that represents a company's value per share. It is calculated by dividing the total net asset value of the company

by the

number

of shares

outstanding. Here in 2006-07 the value rouse to 514.99 BDT per share.

Income-Profit Composition The

Income-Profit

Composition

chart

is

a

comparison of total revenue and profit earned. It indicates the efficiency of the company to convert revenue to profit. In FY 2006-07 total income was 17.76 crore and Profit after tax was 8.80 crore.


41

Return on Investment Return on investment is an ing ratio expressing the profit of an organization for a financial

year as a percentage of the

investment. On 2006-07 it was 26.39%. This means the company has earned return of 26.39 for its 100 taka investment.

Return on Asset In 2006-07 the return on asset was the highest at 11.36%. This indicates ICML has earned 11.36 taka on per 100 taka of assets.

Return on Equity Return on Equity the net income of an organization expressed as a percentage of its equity capital. Return on equity has been fluctuating over the few years. In 2003-04 it was 15.55% then 36.92%, 18.49% and at 2006-07 it was 36.31%.


42

Earnings per Share Earnings per share are the portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability. Earnings per share (based on retained earnings) in ICML is increasing at an increasing rate, as shown in the graph.

Debt/Equity Ratio Debt/equity ratio is a measure of a company's financial leverage. It indicates what proportion of equity and debt the company is using to finance its assets. Capital-intensive industries tend to have a debt/equity ratio above 2. But ICML’s ratio is very poor. It ranges 0.9 to 0.14.

Dividend per Share In 2003-04, ICML declared dividend of 10 BDT. For the next two years the dividend was 15BDT and at 2006-07 it was 16BDT.


43

Conclusion ICML as a subsidiary of ICB, plays a significant role in the development of capital market activities of our economy. The company’s overall performance and achievements are influenced considerably by the trends of economy. In spite of the challenges on a few fronts, the company has achieved strong growth with its’ remarkable

performance

in

issue

management,

underwriting

and

portfolio

management --- major functions of the company. The company is committed to dedicate all it’s effort to enhance it’s activities to perform operations with high standards of business ethics. Foe a sound capital market and for better capital formation, ICML is providing services from the very beginning of its’ establishment and to mobilize savings and contributing to our nation throughout.


44

BIBLIOGRAPHY 

Annual Report of ICB Capital Asset Management Ltd. FY 2003-04












ICB Capital Asset Management Ltd. Brochure for FY 2006-07



ICB official website www.icb.gov.bd



ICML official website www.icbcml.com.bd



ICB AMCL officials website



ICB STCL officials website


45

Icb Capital Management Ltd 236s1u

Overview 3e4r5l

More details w3441

Related Documents 3m3m1z

Icb Capital Management Ltd 236s1u

Royal Capital Ltd 296iw

Edelweiss Capital Ltd 2 1a432m

Capital Budgeting Of Opgc Ltd. 2b4z44

Project Report On Working Capital Management At Tata Steel Ltd. 1p2870

International Working Capital Management 313k1s