It gives me immense pleasure to state my observation on the performance of Janata Capital and Investment Limited for the year 2012. I would like to express my sincere gratitude to our respectable Chairman and directors of JCIL and of Janata Bank Limited, valued shareholders and well-wishers whose co-operation and continuous support has helped us to achieve our objectives.
The Bangladesh economy passed the year 2012 with some challenges emerged from the slowdown of global economy. GDP growth rate slightly slowed to 6.3% in the fiscal year 2012 from 6.7% in the previous year. Inflation showed an increasing trend and exports weakened but the current account surplus increased remarkably on strong remittances. The government adopted several policy reforms and programs to correct emerging imbalances and foster sustained rapid growth. Agricultural growth was slow in 2012 while industry growth was strong compared to those of 2011 as manufacturing expanded by 9.8%. The overall balance of payment showed significant rise from the deficit in the previous year. Earlier pressure on the exchange rate abated in the second half of fiscal year 2012, as import damand slowed, and remittance were strengthened by overseas employment. As a result, taka started appreciating from the 2nd half of 2012 and this appreciation is still cuntinuing. The central Bank's tightening of monetary policy has resulted in a stable exchange rate. The foreign exchange reserve has been showing an increasing trend in the past few years. The reserve in December 2012 peaked at US$ 12,405 million.
Janata Capital and Investment Limited (JCIL) started its function as a full-fledged merchant bank from 26 September, 2010. The core functions of JCIL are issue management, underwriting, portfolio management and corporate advisory services. The company started functions at a time when the market was overvalued. The bull run that started from the beginning of 2010 ended in December of the same year with disappointment for all the stakeholders of the capital market. The market crashed on 19 December, 2010 when the General Index of DSE lost 551.77 points in a single day. The downward price correction started from the market crash continued throughout 2011 and 2012 as well. Adoption of various remedial measures including announcement of incentive package for affected small investors, creation of Bangladesh Fund could not restore confidence of the investors and stop continuous fall of stock prices. Good macroeconomic situation of the country also could not bring any result fruitfull for the capital market. The bank and financial institutions, merchant banks, brokers and dealers community including individual investors did not find any scope for re-cycling their earlier investment which weakened the demand side and acted as a barrier for turn around of the secondary market. The market reached its highest level on 05 December, 2010 with DSE General Index of 8918.51 points which gradually came down to 4219.31 points on 30 December, 2012 bringing massive fall of 4699.20 points which is unusual and not consistent with economic fundamentals. JCIL had to carry out its operation in 2012 within such an adverse situation.
In 2012, JCIl entered into an agreement as a manager to the issue of one company named Ratanpur Steel Re-rolling Mills Ltd (RSRM). The size of IPO at offer price is fixed at Tk. 100.00 crore. Documented proposal has been submitted to Bangladesh Securities and Exchange Commission (BSEC) which is under active consideration. The company provided underwriting commitment of Tk. 69.00 crore to eleven companies in 2012. While providing underwriting commmitment, merit of the project, capability of the sponsors, risk involved and justification of issue price are taken into consideration. Under Investors' scheme, 99 accounts were opened with a total deposit of Tk. 19.41 crore. Because of bearish market condition, the response of investors was not encouraging in 2012. The cumulative number of active accounts was 2921 at the end of 2012 with deposit of Tk. 143.00 crore. Margin loan amounting to Tk. 243.78 crore was outstanding under this scheme. In 2012, JCIL provided interest waiver of Tk. 4.81 crore to 1918 affected small investors under the incentive package declared by the government. In JCIL own portfolio, a sum of Tk. 99.16 crore was invested for purchasing securities from the secondary market and securities worth Tk. 82.34 crore was sold in the market. The company earned capital gain of Tk. 17.54 crore in 2012 which is about 6 times higher than capital gain of Tk. 3.03 crore earned in 2011. Inspite of unfavourable and sluggish market condition, financial performance of JCIL in 2012 was much better than that of 2011. The total income and operating profit increased by 55% and 28% respectively. The company was able to make a net profit of Tk. 7.69 crore in 2012 which was negative in the previous year. In pursuance of the decision of the Board of Directors of Janata Bank Limited, short-term, mid-term and long-term management plan has been prepared covering 9 years which began from 2012 and will end in 2020. Quarterly achievement against target fixed in the management plan is presented before the Board of JCIL for review and then to the Board of Janata Bank Limited for information.
In conclusion, I express my sincere gratitude to BSEC for their valuable guidance and continuous support. I am grateful to the Board of Directors of JCIL for their visionary role and continuous patronization. I am also thakful to the honourable Chairman of Janata Bank Limited and members of the Board for their help and guidance. Finally, I thank to the working team of JCIL for their dedication, commitment and re-newed vigor to translate the objectives of this organization into reality.