On behalf of the Board of Directors, it is my pleasure to welcome you all to the 3rd Annual General Meeting of Janata Capital and Investment Ltd. As a Chairman of the company I am pleased to present before you my statement as well as the Annual Report on the overall operational performance of JCIL along with the audited accounts and financial statements for the year ended 31st December 2012.
In 2012, the world economy grew at a moderate rate of 3.03 % lower than the growth rate of 2011. The global economy is expected to grow at 2.4% in 2013 and 3.2% in 2014. This pace of growth will be far from sufficient to overcome the continued job crisis that many countries are still facing. Weaknesses in the major developed economies are at the root of the global economic slowdown. The U.S economy weakened notably during 2012, and a growth prospect for 2013 and 2014 remains sluggish. Economic growth in Japan in 2012 was up from a year ago, mainly driven by the reconstruction work and recovery from the earthquake - related disasters of 2011. Average growth in East Asia is projected to pick up mildly to 6.2% in 2013, from the estimated 5.8% in 2012. The development of entire region of Western Asia is expected to be affected in 2013 because of social unrest and political instabilities.
Amidst bleak world scenario, most of the economic indicators of Bangladesh Economy such as GDP growth rate, remittance, foreign exchange reserve, export earnings showed positive trend throughout the year 2012. From the year 2011 to 2012, the Gross Domestic Product (GDP) in Bangladesh experienced a growth of 6.30%. In most of the year of last decade, the country recorded GDP growth rate of above 6% due to development of micro credit, remittance inflows robust agricultural growth and garment export. Inflation came down to a single digit level, supported by the falling prices of rice amid increased production and central bank's tight monetary policy. The 12-month average annual inflation rate declined by 1.96 percent to 8.74 percent in December 2012 from 10.70 percent in December 2011 due to integrated steps taken by the government in the monetary and fiscal sector. A satisfactory growth in remittance inflow contributed to increase the national saving as a percentage of GDP from 29.40 percent in 2011-12 from 28.78 percent of the previous year. Adequate productions in two consecutive years and higher government procurement have led to record level of stock and supply of foodgrains. Due to financial pressures resulting from increased revenue expenditures, overall budget deficit stood at Tk. 36,025 crore in FY2012, which was 3.6 per cent of GDP. Balance of payment position was under pressure in 2012 mainly because of lower than expected export earnings. The foreign exchange reserve has been increasing in past few years. In December, 2012 reserve peaked at U.S $ 12,405million. Adoption of several policy reforms and programs by the Government to ensure sustainable development is expected to help maintaining macroeconomic stability in the years to come.
However, the situation in the capital market was disappointing in 2012. High bull market prevailing in the last quarter of 2010 ultimately ended in big trouble. The massive price correction that started from December 2010 continued till the end of 2012 eroding capital of thousands of investors both individual and institutions. The general index of DSE at its highest level of 8918.51 points on 5th December, 2010 came down to 4219.31 points at the end of 2012. A massive fall of 52.69% which is considered unusual for a developing and growing capital market. Other market indicators such as market capitalization, ratio of market capitalization to GDP, turnover and market P/E also have fallen drastically as a resultant effect of massive price correction. The various corrective measures taken by the Bangladesh Securities and Exchange Commission (BSEC) and Government could not bring back investors' confidence and the market did not see a ray of hope from its bearish condition. The institutional investors including merchant bankers could not play their active role in 2012 because of shortage of liquidity and fear of prolong recovery of the market. Though the condition of primary market was encouraging but that could not influence the secondary market to come out of its long stagnation.
Concerted efforts from all concerned institutions are needed now to broaden the depth and breadth of our Capital Market. The important issues need to be addressed are : (i) Educating the investors about risk and return on investment.(ii) Rumour based trading be reduced as far as possible. (iii) Merchant bankers should develop and strengthen research and development arms. (iv) More instruments such as fixed income securities and derivatives are introduced to give alternative investment choice for investors. (v) Introduction of third market for IPO of companies falling under SME categories. (vi) Introduction of market making system in order to avoid excess volatility in the market. (vii) Strengthening the Bangladesh Institute of Capital Market by giving more logistics support. (viii) Bringing more mutual funds in the market by efficient fund managers and (ix) Providing financial support to merchant bankers by creating a refinancing scheme at a concessional rate of interest.
Inspite of bearish and sluggish market condition, financial performance of Janata Capital and Investment Limited in 2012 was better than the previous year. The operating profit of the company was Tk. 17.54 crore which is 28.42% higher than that of 2011. The company was able to make a net profit of Tk 7.69 crore which was negative in the last year.
We wish to thank all our Board Members who have contributed to the continuing success of Janata Capital and Investment Ltd. Their invaluable insights have provided guidance and direction to the Janata Capital and Investment Ltd for its growth and development. I convey my best wishes to the honourable Directors who have left Janata Capital and Investment Ltd but contributed to the performance in 2012.
We are also grateful to the Government, the Bangladesh Securities and Exchange Commission, Bangladesh Bank, Dhaka Stock Exchange Ltd, Chittagong Stock Exchange Limited and our valued clients. I specially thank the honourable Chairman of Janata Bank Limited and through him, all the distinguished Directors for their valuable guidance and direction. I would like to thank the Chief Executive and all Officers and staff for their dedication and contribution to the success of Janata Capital and Investment Ltd.