An Overview of ICB
2.1 Introduction
The Investment Corporation of Bangladesh (ICB) was established on
October 1, 1976 under the Investment Corporation of Bangladesh Ordinance (No.
XL of 1976) to encourage and broaden the base of investments, develop the
capital market and mobilize savings and to provide for matters ancillary
thereto. It is involved in stock underwriting, stock trading, portfolio
management, operating mutual funds both open-ended and close ended. The
establishment of ICB is a major step in a series of measures undertaken by the
government in the past years to accelerate the pace of industrialization. The
re-creation of ICB has met the long felt need to provide institutional support
to meet the equity gap of the industrial enterprises in absence of which the
process of industrialization in the private sector was slowed down. Through the
enactment of the Investment Corporation of Bangladesh
 |
| ICB |
2.2 Historical Background of ICB
After liberation in view of socio-economic changes the scope for
private sector investment in the economy was kept limited by allowing
investment in projects up to Tk. 25 lacs. The new Investment Policy which was
announced in July, 1974 provided for an expanded role of private sector by allowing
investment in a project up to Tk. 3 crores. This ceiling has further been
raised to Tk. 10 crores. In spite of the adequate facilities an incentives
provided to the private sector, encouraging response was not forthcoming. One
of the reasons, among others, was the lack of institutional facilities which
provided underwriting support (like from ICP) to industrial enterprises which
was required to raise the much needed equity fund. Thus the need for re-activation
of capital market/stock market was keenly felt.
In the revised investment policy which was announced in December, 1975.Government
announced its decision to reactivate the stock exchange and examine the
question of re-creation of Investment Corporation of Bangladesh
2.3 Main Objectives of ICB
ø
To encourage
and broaden the base of investments.
ø
To develop the
capital market.
ø
To mobilize
savings.
ø
To promote and
establish subsidiary for business development.
ø
To provide for
matters ancillary thereto.
 |
| ICB |
2.4
Sources of Capital
Every
organization collects funds from several sources. It may be internal sources or
externals. In case of Investment Corporation of Bangladesh
.6 Shareholding Position
Table No – 2:
The shareholding position as on 30 June, 2005
Sl no.
|
Shareholders
|
No. of
shareholders
|
No. of Shares
|
Percentage of
shareholding
|
1.
|
Government of
|
1
|
13,50,000
|
27.00
|
2.
|
Nationalized Commercial Banks
|
4
|
11,37,220
|
22.74
|
3.
|
Development Financial
Institutions
|
2
|
6,81,550
|
13.63
|
4.
|
Insurance Corporations
|
3
|
6,18,286
|
12.37
|
5.
|
Bangladesh Bank
|
1
|
6,00,000
|
12.00
|
6.
|
Denationalized Private
Commercial Banks
|
2
|
4,54,263
|
9.08
|
7.
|
Private Commercial Banks
|
3
|
28,286
|
0.57
|
8.
|
Foreign Commercial Banks
|
2
|
26,531
|
0.53
|
9.
|
First BSRS Mutual Fund
|
1
|
6,900
|
0.14
|
10.
|
Other Institutions
|
9
|
26,949
|
0.54
|
11.
|
General Public
|
927
|
70,015
|
1.40
|
Total
|
955
|
50,00,000
|
100.00
|
Source: ICB Annual Report
(2004-05)
2.10
Management of ICB
The Head Office of the corporation as per the
requirement of the ordinance of ICB is located at Dhaka .
The general direction and superintendence of the corporation created in a board
of directors, which consists of persons including the chairman and managing
director of ICB
The board
of directors consists of the following directors:
a)
The Chairman to
be appointed by the government.
b)
The Directors to
be appointed by the government from among persons serving under the government.
c)
One Director to
be nominated by the Bangladesh Bank
d)
The Managing
Directors, Bangladesh Shilpa Bank, Ex-office.
e)
The Managing
Directors, Bangladesh Shilpa Rin Sangstha,Ex-office.
f)
Four other
Directors to be elected by the shareholders other than the government, BB, BSB
and BSRS.
g)
The Managing
Director of ICB to be appointed by the government.
 |
| ICB |
The main divisions along with
the Departments of ICB can be illustrated in the following table:
Table
No – 3:
Divisions |
Departments
|
a. Merchandising
|
1. Investors
|
2. Shares
|
|
b. Funds
|
3. Unit fund
|
4. Unit registration and procurement
|
|
5. Mutual funds
|
|
c. Loan appraisal
|
6. Loan appraisal
|
7. Economic and business research
|
|
d. Computer
|
8. System analysis
|
9. Programming
|
|
10. Data management
|
|
e. Legal affairs
|
11. Public issue
|
12. Law
|
|
f. Implementation and loan
recovery
|
13. Project implementation
|
14. Recovery and follow up
|
|
g. Audit and methods
|
15. Audit and method (Head office)
|
16. Audit and method (Branches)
|
|
h. Accounts and finance
|
17. Central accounts
|
18. Project loan accounts
|
|
i. Administration finance
|
19. Personnel
|
20. Establishment
|
|
j. Secretary's
|
21. Secretary’s
|
22. Public
relations
|
Source: ICB Annual Report
(2004-05)
2.12 Branches of ICB
1. Chittagong
2. Rajshahi Branch
3. Khulna
4. Barisal
5. Sylhet Branch
6. Bogra Branch
7. Local office Dhaka
2.13 Product of ICB
2.13.1 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 portfolios.
2.13.2 Custodian
and Banker to the Issues
To act as the custodian to 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 similar
services through the network of its branches. Fees in this regard are
negotiable.
2.13.3 Mergers and Acquisitions
Companies willing to expand their business through
mergers or acquisitions or to divest projects that no longer fit into present
scale of operation contact the Corporation. ICB provides professional services
& advice 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 negotiate final agreement and advice on the emerging
corporate structure.
2.13.4 Corporate
Financial Advice
Companies and Government enterprise intending to go
public often seek professional & financial advice on corporate
restructuring & reengineering. ICB through its expertise provides such
services.
2.13.5 Bank Guarantee Scheme
ICB introduced Bank Guarantee
scheme in 2002-03. ICB provided (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. 2.0 crore
and would be issued against at least 20 percent cash and 80 percent easily
cashable securities or against 100 percent cash margin. Re-guarantee from other
financial institution is required for guarantee against the amount exceeding
Tk. 2.0 crore.
2.13.6 Consumer Credit Scheme
As part of business diversification
program ICB has introduced “Consumer Credit Scheme” in 2003-04 looking at the
need of various household commodities of different professionals of government,
semi-government, autonomous bodies and some established private sector
organizations. Under this scheme one can enjoy minimum of Tk. 1.0 lac but
maximum of Tk. 5.0 lacs credit facilities. The rate of interest on the loans
reasonable and competitive
2.13.7 Lease Financing
ICB provides lease finance mainly
for machinery, equipment and transport. ICB is in a position to provide
professional advice and financial assistance to the intending clients. The
period of lease, rental, and charge and other terms and conditions are
determined on the basis of type of assets and the extent of assistance required
by the applicants. Good responses have been received from the intending lessees
since inception of this scheme in 1999.
 |
| ICB |
2.13.8 ICB Unit Fund
It is on open-ended Mutual Fund
through with the small and medium savers get opportunity to invest their
savings in a balanced and relatively low risk portfolio. ICB has so far
declared attractive dividends on units every year ranging from Tk. 11.5 to Tk.
25.0 per unit. Investment in units enjoys tax benefits, amount being applicable
as per law. However, under the ICB’s restructuring program new unit
certificates are being sold by ICB’s subsidiary company, the ICB Asset
Management Company Ltd.
2.13.9
ICB Mutual Funds
ICB has
so far floated eight closed-end mutual funds. The First ICB Mutual Fund was
floated on 25 April 1980, while the Eighth ICB Mutual Fund was floated on 23
July 1996. The aggregate size of these funds is Tk. 17.5 crore. As on the 30
June 2004, 33646 certificate holders own these funds. Dividends declared on the
funds were very attractive ranging from 14.0 to 200.0 per certificate fro
2003-04. Investors show overwhelming interest in all the ICB Mutual Funds. One
can invest in such funds through the stock exchanges with which these funds are
listed. Through corporate restructuring, new mutual funds are being floated
through “ICB Asset Management Company Ltd.” – a subsidiary of ICB.
2.13.10
Investors’ Scheme
The Investors’ Scheme was
introduced in June 1977. Over the years, this scheme has grown tremendously,
ICB, at its discretion; may grant up to two times loan against the assets of an
account subject to a maximum limit of Tk. 3.0 lacs. An accountholder may use
the combined balance of his/her equities and loan to buy shares/ securities. To
help the investors to develop diversified and balanced portfolio to minimize
risk and earn a reasonable return, ICB provides professional advice and other
support services. Under the restructuring program, ICB operates and manages
only the old accounts and new accounts are being opened and managed by the ICB
Capital Management Ltd. – a subsidiary of ICB.
2.13.11
Advance against ICB Unit certificate scheme
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
of 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
purchased. The rate of interest on the loan is reasonable and competitive.
2.13.12
Advance against ICB Mutual Fund certificates
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 percent value of last one year’s weighted average market price of
certificates at 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.
Activities of Different Department
of ICB
3.1 Introduction
There are twenty-two Departments under ten Divisions
of ICB. The entire organization functions properly as a result of the apt
interaction among the different Departments. During my internship with ICB I
discovered a sound working environment and the presence of an efficient
administration.
3.2
Administration of ICB
Investment Corporation of Bangladesh (ICB) is providing different
category of financial and banking services. Nature of different divisions/departments
varies, such as Economic and Business Research (EBR) Department, requires
teamwork, Loan Appraisal Division requires professional work, Funds division
needs chain work. Managing Director is entrusted with authority to transact the
regular business of the organization; he may delegate some authority to the
officials of the corporations. However, most of the policy decision are taken
by the different committees with the approval of managing director and where
required of the Board. It is the discretionary authority of the Board to
constitute the executive committee and to nominate its Chairman to assist the
Board in the discharging of the function stated under the ordinance.
The Board may appoint such other committees it deems appropriate to
assist it in the efficient discharge of its functions. So far, Board has
appointed two such committees, Economic and Business Research committee and
Loan Appraisal Committee, headed by General Manager.
3.3 Manpower
The corporation’s manpower strength is
enhanced by 35 persons through recruitment of 14 officers and 21 employees at
different levels during 2000-05. This appointment was made mainly to add
dynamism in the overall activities of ICB through the uses of computer
technology. On the other hand, two officers resigned and one officer retired
from the services of ICB. One officer got promotion as general manager and
joined in another bank. The total manpower as on 30 June 2005 stood at 396
which were 365 on the same date of last year. Out of 396 people, 254 were
officer and 142 non officer employees. The total number of female employees was
59, including 44 officer representing 14.9% of the total manpower.
With this manpower and administrative body of
ICB, it is performing in the following departments:
1.
Merchandising Division
The activities of Merchandising Division are
conducted under two different Departments, namely:
i)
Investors Department
ii)
Shares Department
i) Investors Department
Investors Department deals with "Investor's
Scheme", which started operation on 13 June 1977. The main functions of
this Department are follows:
ø
Investors
Department opens and maintains accounts (investor's account) for individual
investors for diversified investment in listed securities.
ø
Investors are
allowed to open such accounts with a minimum deposit of Tk. 5000. Against each
of this account the investor can have an investment loan currently at 1:2 ratio
with his/her deposited amount. The highest among one can have, as investment
loan is Tk. 30,000.00.
ø
An individual
can open an account by filling up the account opening form, which is to be
purchased from the corporation paying Tk. 10.00 and completing other required
formalities.
ø
An individual
investor can open a maximum of two accounts; one in his own name and the other
in joint name.
ø
An investor can
operate any account if he/she is permitted to do so by the concerned account
holder. Presently one individual can operate maximum five accounts at a time.
ø
The investor
can withdraw money from his account keeping a minimum balance of Tk. 5000.00 or
securities valuing Tk. 5000.00 in the account.
ø
The investor
can close down the account. In that case, the ID delivers the cash balance and
securities after adjusting the loan (if any) to the investor.
Operational
activities of the investors’ scheme in 2004-05
Table
No – 4:
particulars
|
2004-05
|
||||
Head
office
|
Branches
|
Total
|
|||
No.
accounts opened
|
-
|
-
|
-
|
||
No. of
accounts closed
|
288
|
519
|
807
|
||
No. of
net operative accounts
|
26152
|
22728
|
48880
|
||
Deposits
received
|
9.68
|
13.09
|
22.77
|
||
Loan disbursed
|
62.66
|
96.84
|
159.50
|
||
Investments
made
|
57.46
|
60.80
|
118.26
|
||
Interest
accrued
|
16.73
|
8.36
|
25.09
|
||
Interest
Waves
|
12.28
|
6.78
|
19.06
|
||
Recovery
of margin loans
|
73.46
|
106.14
|
179.60
|
||
|
16.94
|
23.24
|
40.18
|
||
Figure 3: Operational activitie
Profession-wise classification of the
investment accountholders as on 30 June 2005
Table
No – 5:
Occupation
|
No. of accountholders
|
Percentage
|
Public & private sector employees
|
21264
|
44
|
Business/Agriculturist
|
3389
|
7
|
Retired persons
|
2568
|
5
|
Housewives
|
15095
|
31
|
Engineers, Doctors and Lawyers
|
2600
|
5
|
Other
|
3964
|
8
|
Total
|
49399
|
100
|
Source: ICB Annual Report
(2004-05)activitie t is divided into five sections, which are: s of sending
shares and debentures to the company and receives shares and debentures after
registration. This section also collects declared dividend, bonus and right
share from the companies involved.
2. Sales
and Withdraw Section:
Sales and withdraw section receives sales and withdraw order from the
investors Department and verifies physical existence of the securities.
3. Funds
Portfolio Section:
Funds portfolio section deals with the sales and withdrawals of mutual
funds portfolio, unit fund portfolio and ICB portfolio.
4. Securities
Reconciliation Section
This section is connected with the reconciliation of securities to
check any reconciliation of securities to check any discrepancy, which arise to
the actual number and the amount in the accounts.
5. Procurement
Section
This section is engaged in collection of dividends, interest etc.
declared by the companies whose shares are held by the ICB and its other
accounts.
2.
Funds Division
The main activities of funds division are conducted under three
departments which are-
i.
Unit Fund
ii.
Unit
registration and procurement department
iii.
Mutual funds
i) Unit
Fund:
 |
| ICB |
Legal
status and objectives of the fund
Investment Corporation of
Bangladesh (ICB) was established in 1976 with the objectives of acceleration
industrialization and economic development of the country through development
of capital market by mobilizing savings and encouraging and improving the
investment climate in the country with particular emphasis placed on broadening
the base and scope of investments as well as tapping marginal investors.
Keeping in line with these objectives, unit fund is to accelerate industrialization
and economic development of the country by way of mobilizing savings of small
and medium savers and channeling those in the productive industrial sector.
Thus, the scheme induces the small and medium savers to participate in the
activities of industrial development of the country.
This department deals with ICB unit, which is an open-end mutual fund.
The responsibility of managing the fund rests on Investment Corporation of Bangladesh
ø Sales of units to the investors.
ø Reconcile the amount received and unit certificates
send to the agent.
ø Transfer the units, if applied for with the
prescribed form.
ø Splits the units, if applied for.
ø Transmission of units in case of death of the unit
holder.
ø Issue and distribution of CIP (Cumulative Investment
Plan) Certificates.
ø Marketing of lien on units if necessary.
|
Table No – 6:
Particulars
|
2000-01
|
2001-02
|
2002-03
|
2003-04
|
2004-05
|
Gross Issue
Unit
Amount
|
2793232
28.75
|
2842578
29.26
|
1710155*
17.44
|
1728270*
17.97
|
1627339*
17.09
|
Repurchase
Unit
Amount
|
4063013
41.99
|
3337975
34.54
|
1816132
18.60
|
1976294
20.79
|
2139325
|
Net Issue
Unit
Amount
|
(1269781)
(13.24)
|
(495397)
(5.28)
|
(105977)
(1.16)
|
(248024)
(2.82)
|
(511986)
(6.37)
|
Cumulative Net Loss
Unit
Amount
|
41715909
478.72
|
41220512
473.44
|
41114535
472.28
|
40866511
469.46
|
40354525
463.09
|
Investment (As on 30 June)
at cost
at market price
|
423.55
376.76
|
397.32
270.28
|
431.33
314.75
|
604.59
626.63
|
637.09
700.89
|
No. of Securities (held in the Portfolio as on 30 June
|
247
|
254
|
262
|
266
|
271
|
Net Income
|
51.43
|
50.96
|
45.54
|
49.71
|
61.11
|
Distributable
|
66.16
|
67.06
|
61.90
|
61.04
|
75.15
|
Dividend Per Unit (Tk.)
|
12.00
|
12.30
|
12.30
|
11.50
|
12.00
|
Dividend Amount
|
50.06
|
50.70
|
50.57
|
47.00
|
48.42
|
Undistributed Income
|
16.10
|
16.36
|
11.33
|
14.04
|
26.73
|
Selling Price of Unit
Opening (Tk.)
Closing (Tk.)
|
108
115
|
108
116
|
106*
111
|
108*
115
|
109*
118
|
Yield on Opening Price (percentage)
|
11.11
|
11.39
|
11.60
|
10.65
|
11.01
|
Source: ICB Unit Fund
Annual Report (2004-05)
Dividend Performance of ICB Unit Fund
Figure 5: Dividend Performance of ICB Unit Fund
ii) Unit Registration
and Procurement Department:
This department performance the following functions:
ø
Posting all the
information related to sale, transfer and repurchase from the statements
received from unit sales department of ICB.
ø
Preparation of
dividend list from the ledger posting and CEP marketing/cancellation.
ø
Splits the
units, if applied for.
ø
Consolidates
the units, if applied for.
ø
Delivering the
certificates, forms, brochures, annual reports etc. to all the issuing offices
as per their requisition.
ø
Reconciliation
of blank unit certificates.
iii) Mutual Funds
Department:
Mutual fund is a closed
fund, which is issued once. The size of the fund and the number of certificates
are determined earlier, which cannot be increased or decreased. Up to June 2000
the Investment Corporation of Bangladesh
ø
Maintenance of
ledger with the name, address and number of certificates along with distinct
number for each mutual funds separately.
ø
Issue of
certificates among the holders.
ø
Verify the
signature of the holders in the 117 form.
ø
Renunciation of
certificates, if applied for by the holders.
ø
Registration in
the name of transferee after getting approval form the competent authority.
ø
Preparation of
dividend list from the ledger position.
ø
Obtaining
approval from the management with regard to selection of bank branches and
opening of suitable accounts for payment of dividend to the certificates
holders as well as list of signatories authorized o sigh the dividend warrants.
ø
Providing the
list of signatories to the central department and to open the bank account for
payment of dividend through the central accounts.
ø
After
declaration of dividend, on management's approval to advice computer department
for printing of final dividend warrants in the name of the certificates holders
as per the dividend list and after obtaining the dividend warrants from the
computer department sinning those for signing to the authorized signatories.
ø
Distribution/dispatch
of final dividend warrants to the certificate holders after completing
necessary formalities.
ø
Arrangements
for re-dispatched.
ø
Receiving
application for change of address correction of names and forwarding the same
to the computer department for correction.
ICB Mutual Fund
ICB has played a pioneering role in the development
of close-ended Mutual Funds in Bangladesh
ICB has been able to declare
attractive dividends on its Mutual Funds during 2004-05 as previous year. Among
the 8 Mutual Funds the highest dividend of 210.00 percent on the Second ICB
Mutual Funds, with lowest being 15.00 percent declared on the Eighth ICB Mutual
Funds during the year under review. The rate of dividends for the previous year
ranged from 14.00 to 200.00 percent. In 2004-05 the market prices of all the
Mutual Funds on Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd.
were above their par values, reflecting strong performance of the Funds.
Average dividend yield on these 8 listed Mutual Funds worked out to Tk. 7.71
per certificate based on closing price. The rate of dividend declared by First
ICB Mutual Fund ranked first amongst all the listed companies that declared
dividend during 2004-05. ICB has been succeeded to a greater extent in broad
basing equity ownership through Mutual Funds as is evident from the number of
certificate holders, which was over 31000 as on 30 June 2005.
Operational Highlights
Launching
Table No – 7:
Name of the Fund
|
Date of Launching
|
Paid up Capital
(Taka in lac)
|
First ICB Mutual Fund
|
25 April 1980
|
50.00
|
Second ICB Mutual Fund
|
17 June 1984
|
50.00
|
Third ICB Mutual Fund
|
19 May 1985
|
100.00
|
Fourth ICB Mutual Fund
|
06 June 1986
|
100.00
|
Fifth ICB Mutual Fund
|
08 June 1987
|
150.00
|
Sixth ICB Mutual Fund
|
16 May 1988
|
500.00
|
Seventh ICB Mutual Fund
|
30 June 1995
|
300.00
|
Eighth ICB Mutual Fund
|
23 July 996
|
500.00
|
Total
|
1750.00
|
Source: ICB Mutual Fund Annual Report (2004-05)
Portfolio Position
Table No – 8: (As on 30 June 2005)
Name of the Fund
|
Cost of Portfolio
(Tk in Lac)
|
Market Value of
the Portfolio (Tk)
|
Market price per
certificate (Tk)
|
No. of
Certificate holders
|
||
First ICB Mutual Fund
|
311.83
|
1309.34
|
2655.00
|
973
|
||
Second ICB Mutual Fund
|
284.23
|
312.28
|
820.00
|
994
|
||
Third ICB Mutual Fund
|
417.28
|
472.75
|
697.00
|
2748
|
||
Fourth ICB Mutual Fund
|
381.57
|
456.77
|
564.00
|
2152
|
||
Fifth ICB Mutual Fund
|
599.39
|
712.71
|
341.00
|
3923
|
||
Sixth ICB Mutual Fund
|
942.31
|
1002.38
|
217.75
|
9712
|
||
Seventh ICB Mutual Fund
|
1109.48
|
1220.93
|
217.75
|
3163
|
||
Eighth ICB Mutual Fund
|
1154.32
|
1278.82
|
205.25
|
7671
|
||
|
5200.41
|
6765.98
|
31336
|
Operational Result
Table No – 9: (As on 30 June 2005)
Name of the Fund
|
Net income (Tk in
Lac)
|
Distributable
income per Certificate (Taka)
|
Ex-dividend
intrinsic value per certificate (Taka)
|
First ICB Mutual Fund
|
101.72
|
640.71
|
2551.20
|
Second ICB Mutual Fund
|
40.38
|
222.03
|
336.56
|
Third ICB Mutual Fund
|
52.31
|
153.04
|
260.39
|
Fourth ICB Mutual Fund
|
71.30
|
161.67
|
297.99
|
Fifth ICB Mutual Fund
|
61.01
|
49.12
|
207.12
|
Sixth ICB Mutual Fund
|
115.79
|
27.91
|
123.17
|
Seventh ICB Mutual Fund
|
62.72
|
29.35
|
150.56
|
Eighth ICB Mutual Fund
|
106.55
|
28.86
|
138.76
|
Source: ICB Mutual Fund Annual Report (2004-05)
Consolidated position of
portfolios of ICB Mutual Funds
Table No – 10: (As on 30 June 2005)
Sl. no.
|
Particulars
|
First ICB Mutual Fund
|
Second ICB Mutual Fund
|
Third ICB Mutual Fund
|
Fourth ICB Mutual Fund
|
Fifth ICB Mutual Fund
|
Sixth ICB Mutual Fund
|
Seventh ICB Mutual Fund
|
Eighth ICB Mutual Fund
|
1.
|
No. of companies
|
48
|
56
|
71
|
77
|
92
|
121
|
118
|
116
|
2.
|
No. of Securities
|
48
|
58
|
72
|
78
|
92
|
122
|
122
|
118
|
3.
|
Total investment at cost (Tk. in lac)
|
311.83
|
284.23
|
417.28
|
381.57
|
599.39
|
942.31
|
1109.48
|
1154.32
|
4.
|
Market Value
(30 June 2005)
|
1309.34
|
312.28
|
472.75
|
456.77
|
712.71
|
1002.38
|
1220.93
|
1278.82
|
|
Dividend Performance
Table
No – 11: (Tk per certificate)
Mutual Funds
|
Financial Year
|
||||
2000-01
|
2001-02
|
2002-03
|
2003-04
|
2004-05
|
|
First ICB Mutual Fund
|
170.00
|
175.00
|
180.00
|
200.00
|
210.00
|
Second ICB Mutual Fund
|
40.00
|
42.00
|
45.00
|
50.00
|
55.00
|
Third ICB Mutual Fund
|
45.00
|
50.00
|
50.00
|
50.00
|
52.00
|
Fourth ICB Mutual Fund
|
38.00
|
40.00
|
40.00
|
45.00
|
48.00
|
Fifth ICB Mutual Fund
|
23.00
|
24.00
|
24.00
|
24.00
|
27.00
|
Sixth ICB Mutual Fund
|
17.00
|
17.50
|
17.50
|
17.50
|
18.50
|
Seventh ICB Mutual Fund
|
14.00
|
14.50
|
14.50
|
15.00
|
16.00
|
Eighth ICB Mutual Fund
|
13.00
|
13.50
|
13.50
|
14.00
|
15.00
|
Source: ICB Mutual Fund Annual Report (2004-05)
3.
Loan Appraisal Division
Loan appraisal division has two departments under it:
i) Loan appraisal department
ii) Economic and business research department.
i) Loan
appraisal department
ICB provides financial
support to the public limited companies through underwriting and bridge
financing. Bridge financing is now very selective and done on priority basis.
Before financing this department verifies the viability of the project.
ii) Economic and
business research department
This department provided service to various interested groups. EBR also
participates in the decision making process. The main functions of this
department area:
ø
To take part in
the portfolio management decision.
ø
Prepare annual
report of ICB, mutual funds and unit fund.
ø
Manage business
development cell.
ø Collect information about DSE,
CSE, public issue, half-yearly accounts of the listed
companies etc.
4. Computer Division
Computer division is one of the most important divisions of ICB. Though
the division is established recently, it brings dynamism in all the works of
the corporation. It has reduced paper works and changed the corporation into a
modern, smart and efficient institution.
A strong networking environment exists among the different departments
of ICB, which is controlled by the computer division. The main purpose of
computer division is to maintain the existing networking environment of ICB and
develop some customize software for different departments in order to fulfill the
total automation planning by the Investment Corporation of Bangladesh
Computer Division has three departments under it :
i) System analysis
department
ii) Programming department
iii) Data management
department
The computer division of ICB is a relatively small division. Presently,
the departments under this division do not work independently. In near future
the three departments will be separated according to their working methodology.
The head of computer division is a DGM. Two system-analysts worked
under him. The duty of the system-analysts is to maintain the network. They
also participate in the analysis of different software systems develop for the
various departments of ICB. In brief, they are responsible for the total
computer system of ICB. Besides them two programmers and three assistant
programmers develop software for the ICB. These software's are generally
developed in Oracle, Developer-2000, Fox-Pro etc. But some leading software
companies of Bangladesh
Table 12:
SL. No.
|
Name of the Software
|
Developer
|
1
|
Merchandising operation management
|
Leads
corporation
|
2
|
Mutual fund script and ownership
|
Leads
corporation
|
3
|
Stock exchange index publication
|
Leads
corporation
|
4
|
Software for IPO
|
Leads
corporation
|
5
|
Project implementation management
|
Beximco
computer
|
6
|
Software for PMIS
|
Beximco
computer
|
7
|
Software for financial feasibility analysis for project
|
Beximco
computer
|
8
|
Software for meeting minute storage and retrieval and
software for Lawsuit tracking
|
Beximco
computer
|
9
|
Unit sales & repurchase information
|
Beximco
computer
|
10
|
Central account
|
Colonel
corporation
|
Source: ICB Annual Report (2004-05)
Computer division of ICB is not a profit earning division but it
performs a pivotal role. This division makes the interaction among various
departments possible, easier and efficient. This division provides information,
which is vital to other departments as well as to other companies. The dynamism
of ICB depends on this division.
5.
Legal Affairs Division:
The legal affairs division has to departments under it :
i) Public Issue Department
ii) Law Department
i) Public Issue
Department
The ultimate objectives of providing bridging loan or direct
underwriting is to help the projects to go for public issue. This the public
issue department is a vital department in the context of the ICB organogram.
This department is empowered to.
ø
Visit and
collect audited financial statement from the sponsors;
ø
Analyze the
financial statement of on-going projects;
ø
Advise, purse
sponsors for going for public issue;
ø
Assist sponsors
to prepare prospects for issuing shares and debentures;
ø
Examine the
prospectus submitted by the sponsors & make arrangement for its approval;
ø
Advise
companies in issuing allotment letters and refund warrants;
ø
Make necessary
adjustments of bridging loan of concerned company;
ø
Make liaison
with the recovery and follow up department regarding realizing of dues/over
dues.
ii) Law Department:
This is a specialized department and empowered to
ø
Process all
legal matters.
ø
Prepare legal
documents, advance agreements, shares agreements, demand promissory notes
memorandum and deposit of title deed etc.
ø
Arrange
exception of underwriting-cum-advance agreement, underwriting agreement and
supplementary documents etc.
ø
Process
litigation cases, prepare legal not ices, refer cases to legal advisor and
co-ordinate with legal advisor in the court.
ø
Prepare
necessary board memos for placement in the board meeting relating to relating
to litigation and legal affairs.
6.
Implementation and loan recovery division
This division has to departments under it:
i) Implementation department
ii) Recovery and follow up department
i) Implementation
department
Project implementation department helps to give the physical shape of a
project through close supervision. It also helps in implementation of the
sanctioned projects, follow-up the project until the start of commercial
operation and makes recommendations for additional loans, if necessary.
ii) Recovery and
follow up department
This department is engaged in recovering the following types of loans:
ø Bridge loan
ø Debenture loan
ø
Share
repurchase
ø
Loan against
unit fund
Recovery Policy:
The loan recovery and follow-up department classifies loans as
"Good loan", "Substandard loan", "Doubtful loan",
and "Bad loan". recovery policy is different for these different
types of loans. In order to recover doubtful and bad loans the steps followed
by this department are:
ø
Issuing of
reminder letter.
ø
Ceasing the
validity of NOC (No. objection certificate). NOC is generally issued for
granting working capital loan.
ø
Giving reminder
via telephone and visits to the company.
ø
Informs the CIB
(Credit information bureau) of Bangladesh Bank of the defaulting borrower.
7.
Audits and Methods Division:
The main functions of this division is conducted through two
departments:
i) Audit and Methods (Head office)
ii) Audit and Methods (Branches)
This division performs four types of audit namely, internal audit,
external audit, statutory audit and Bangladesh Bank Audit (Special audit). It
also advises ICB to adopt and practice different new methods.
8.
Accounts and Finance Division:
There are two departments under this division:
i) Central
accounts department
ii) Project loan accounts department
i) Central accounts
department
All kinds of payments of ICB are made by central accounts department.
This department provides various information, such as consolidated trial
balance to EBR, to help in preparing financial statements for publishing annual
report. This department also prepares the following vouchers:
ø
Journal voucher
ø
Bank voucher
ø Credit voucher
ø Investor credit voucher
ii) Project loan accounts
department
This department mainly deals
with the calculation of interest, the dates of submission of interest etc. of
the projects, which are financed by ICB.
9.
Administration Division:
The proper functioning and interaction among the different departments
of ICB is ensured by this division. This division has two departments :
i) Personnel department
ii) Establishment department
i) Personnel
department
This department deals with the human resource issues of the
organization. Functions of this department are :
ø
Recruitment
a) Direct recruitment
b) Promotion
ø
Training
programs
ø
Disciplinary
action
ø
Salary
ii) Establishment
department
The activities of this department are :
ø Total purchase of office furniture and fixing or
maintenance regarding the purchased material.
ø
Replacement
initiation according to government rule.
ø Loan facilities to the employees (house building
motor etc.).
10.
Secretary's Division
The secretary's division has two wings
i) Secretary's
department
ii) Public relations department
i) Secretary's
department
This department is responsible for:
ø
Contact with
the board of directors.
ø
Arrangement of
board meetings.
ø
Determine the
remuneration of directors.
ø
Submission of
proposal to the board meeting.
ii) Public relations
department
This department conducts all necessary interactions with shareholders,
visitors and anyone seeking information about the activities of ICB.
3.4 Role of ICB in developing the Capital Market of Bangladesh
The development of capital market is pre-condition of the economic
development of a country. It is a long drawn out process and is dependent on
the socio-economic program of a nation. For rapid industrialization a developed
capital market is essential especially the share market. Through share market
the savings of small savers can be mobilized and channeled into the productive
sector.
Capital market may be defined as the demand for and supply of capital
as a reproductive capacity, which involves both loan and equity. The capital
market actually caters the need of fund for industrialization. The capital
market may be divided into two segments; the non-securities segment primarily
dealing in terms of loans and mortgages, and the securities segment dealing in
stocks/bonds/certificates. ICB as a development bank plays a vital role for
developing the capital market of Bangladesh
ICB has played pivotal role to develop the country's capital market.
ICB as the national investment house, was the lone organization to perform the
activities by creating demand of securities, and on the other hand to ensure
the supply of securities in the stock market. The investor's scheme of the
corporation provides the required impetus to the capital market by creating a
class of investors who are oriented towards investing in corporate stocks. The
operation of investor's scheme thus creates demand for securities to match the
supply of securities which serves two important objectives: first, the small
and medium savings are mobilized for investment in industrial sectors and
second, the companies find it easier to mop-up capital by issue of shares
because of the existence of large investor class. Moreover, the floatation of
mutual funds and issuance of unit certificates by ICB has strengthened the
stock market. Through investor's scheme, mutual funds, and unit fund mechanism,
ICB has been able to mobilize huge social savings which otherwise would remain
static.
3.5 Progress of ICB
in the past years
Table No – 13:
Milestones
|
|
Date of
Establishment/ Commencement
|
|
ICB
|
October
1, 1976
|
Investors'
Scheme
|
June
13, 1977
|
First
ICB Mutual Fund
|
April
25, 1980
|
ICB
Unit Fund
|
April
10, 1981
|
Second
ICB Mutual Fund
|
June
17, 1984
|
Third
ICB Mutual Fund
|
May
19, 1985
|
Fourth
ICB Mutual Fund
|
June
6, 1986
|
Fifth
ICB Mutual Fund
|
June
8, 1987
|
Sixth
ICB Mutual Fund
|
May
16, 1988
|
Entry
as country's Nodal DFI in SADF
|
May
7, 1992
|
Seventh
ICB Mutual Fund
|
June
30. 1995
|
Decision
for 100% Automation
|
July
14, 1996
|
Eight
ICB Mutual Fund
|
July
23, 1996
|
Purchase
of
|
December
11, 1997
|
Participation
in equity of SARF (Unit Fund)
|
January
16, 1998
|
Advance
Against Unit
|
October
12, 1998
|
Term
Deposit
|
January
13, 1999
|
Lease
Financing
|
April
22, 1999
|
The
Investment Corporation of
|
July
5 and 6, 2000
|
Formation
and Registration of 3 Subsidiary Companies
|
December
5, 2000
|
Computer
Training Program.
|
March
25, 2001
|
Source: ICB Annual Report (2004-05)
3.6 ICB
Subsidiary Companies
The major activities of ICB have been divided into three subsidiaries
from the year 2001. Descriptions about these three companies have been given
below:
3.6.1
ICB Capital Management Ltd.
ICB Capital Management Ltd. is a fully owned subsidiary of investment
Corporation of Bangladesh. The company obtained license from the Securities and
Exchange Commission to act as Issue Manager. Underwriter, Portfolio Manager and
to carry out other merchant banking operations under the Securities and
Exchange Commission (Merchant Banker and Portfolio Manager) Regulations, 1996.
The Company started operations form from July 1, 2002 through a gazette
notification of the government. The Company has a separate Board of Directors
comprising 3 members from the private sectors having good academic
qualification, expertise and experience in the field of business, finance and
investment. The MD of ICB is the Chairman of he Board. The Company has
excellent working environment being equipped with logistics and computer
facilities.
Objectives of ICML
- Provides the best possible investment avenue
for your savings.
- Provides investment opportunity to maximize
returns.
- Provides investment counseling to minimize
risk.
- Broaden the base of investment.
- Contributes to the growth of industrialization
with employment generation.
Opening and operating ICML Investor’s Account
ø
Any Bangladeshi
adult citizen, Corporation bodies and statutory organizations are eligible for
opening an Investment account. persons
of unsound mind or minors are not allowed to open such account. Minimum
deposit for opening account is Tk. 10,000.00 (Ten Thousand) only. There is no
fixed ceiling of additional deposit. Account holder may deposit any amount in
phases according to his convenience.
ø
Maximum two
account can be opened by an individual. One account in his own name and another
jointly with other person. Corporate bodies/ statutory organizations shall not
be allowed to open joint account.
ø
Account can be
opened by property filing in prescribed application form and complying with
other all-requisite formalities.
ø
At the time of
opening account, the account holder(s) shall have to appear in person before
the authorized officer of the company for completing legal formalities.
ø
An account
holder(s) can nominate another person to operate portfolio account in the
prescribed form at the time of opening account. the operator shall carry
authority to operate the accounts freely. The actions of the operator in
respect of operating portfolio accounts will be treated as actions of the
assigned to an individual who has an existing account in the company. In case
of joint account, either or both of the holders can operate the account.
Closing
the Investor’s Account
An account
holder can close his account by adjusting the entire debit balance including
margin loan, interest, service charges, brokerage commission and other charges
(if any). After payment of full debit balance, the account holder can withdraw
the securities and credit balance from the account at the time of closing.
Accounts once closed shall not be allowed to revive. However, the same
individual/ institution can open fresh account with the company fulfilling the
company fulfilling all requirements.
INVESTMENT CORPORATION OF BANGLADESH
HEAD
OFFICE
Deposit
Position
Date from 16/06/05 to 20/12/05
Table No – 14:
Serial no
|
Transaction Name |
Total amount
|
Debit/Credit
|
1.
|
Additional
deposit
|
4850825.00
|
Credit
|
2.
|
Application
for share
|
9476000.00
|
Debit
|
3.
|
Cost
of share
|
9864035.87
|
Debit
|
4.
|
Final
dividend
|
1309.00
|
Credit
|
5.
|
Initial
deposit
|
4373400
|
Credit
|
6.
|
Interest
for the quarter
|
69050.67
|
Debit
|
7.
|
Internal
transfer of fund
|
57500.00
|
Credit
|
8.
|
Internal
transfer of fund
|
57500.00
|
Debit
|
9.
|
Loan
repayment
|
79500.00
|
Credit
|
10.
|
Portfolio
management fee
|
8915.86
|
Debit
|
11.
|
Refund
of application money
|
5868.00.00
|
Credit
|
12.
|
2252177.64
|
Credit
|
|
13.
|
Withdrawal
fund
|
666500.00
|
Debit
|
Source: ICB Annual Report (2004-05)
3.6.2 ICB Asset Management Company Ltd.
The
responsibility of this subsidiary company is to manage new mutual funds and
unit funds. Under this new arrangement there will be four different groups or
aspects to manage the mutual funds. They are trustee, sponsor, asset management
and custodian. For these provisions the operational cost of the newly issued
mutual funds are higher than the previous ones. Up to June 2005, the company
floated two closed-end mutual funds and two open-end mutual funds. Out of these
four funds, two mutual funds, namely “ICB AMCL Islamic Mutual Fund” – a
closed-end mutual fund and “ICB Mutual Fund”- a closed-end mutual fund and “ICB
AMCL Pension Holders’ Unit Fund” – an open-end mutual fund, were floated during
2004-05. During the year, the company has successfully managed these funds.
3.6.3 ICB Securities Trading Company Ltd.
ICB Securities Trading
Company Limited started its brokerage activities on 13 August 2002. during the
year under review, the company has significantly expanded its activities to be
become one of the most active brokers of both DSE and CSE like in the preceding
year. The Company performs trading activities of securities for general
investors alongside the institutional investors. With a view to involving more
investors’ in the securities market, ISTCL carryout its brokerage activities
through its branch offices in four divisional towns namely, Chittagong ,
Sylhet, Barisal
Stock Brokerage
Functions of ISTC up to 2004-05
Table No-15:
Particulars
|
2004-05
|
2003-04
|
||||
DSE
|
CSE
|
Total
|
DSE
|
CSE
|
Total
|
|
Total
turnover
|
7522.52
|
1667.85
|
9190.37
|
2477.10
|
837.76
|
3314.86
|
Transaction
|
914.41
|
287.85
|
1202.26
|
632.07
|
426.76
|
1058.83
|
Portion
of ISTCL in total turnover (percentage)
|
12.16
|
17.26
|
13.08
|
25.52
|
50.94
|
31.94
|
Source: ICB Annual Report (2004-05)
Functions
1.
Facilitating individuals/ institutions to make
applications in the initial public offerings of securities
2.
Providing brokerage services for buying and selling
securities listed with the Stock Exchange.
3.
Acting as member of the Stock Exchanges and of over-
the – counter markets.
4.
Performing other related activities.
Capital Structure
Table
No – 16: (As on 30 June 2005)
Authorized Capital
|
Tk. 50.00 Crore
|
Paid Up Capital
|
1.25 Crore
|
Retained Earnings
|
56.36 Lac
|
No. of Share holder
|
7
|
Source: ICB Annual
Report (2004-05)
3.7 Financial results of subsidiary companies
A brief summary
of financial result of the subsidiary companies of ICB for 2004-05 and 2003-04
is given below.
Table No – 17:
Particulars
|
ICB Capital Management Ltd.
|
ICB Asset Management Co. Ltd.
|
ICB Securities Trading Co. Ltd.
|
|||
2004-05
|
2003-04
|
2004-05
|
2003-04
|
2004-05
|
2003-04
|
|
Income
|
12.78
|
4.07
|
5.81
|
2.44
|
4.60
|
2.75
|
Expenditure
|
6.72
|
1.99
|
2.28
|
1.36
|
3.20
|
1.86
|
Gross profit
|
6.06
|
2.08
|
3.53
|
1.08
|
1.40
|
0.89
|
Net profit
|
5.45
|
1.90
|
3.42
|
1.08
|
0.88
|
0.56
|
EPS (Tk.)
|
68.11
|
23.69
|
68.38
|
21.66
|
69.97
|
44.83
|
NAV (Tk)
|
169.47
|
142.35
|
159.74
|
110.77
|
179.09
|
139.13
|
Dividend
(Tk.)
|
15.00
|
10.00
|
18.00
|
12.00
|
30.00
|
25.00
|
Source: ICB Annual Report (2004-05)
3.8 Overall Financial Analysis of ICB
The International Accounting Standards (IAS)-17 and IAS-27 have been
adopted by the Institute of chartered Accounts of Bangladesh (ICAB) in the
recent past, which are related to lease Financing and Consolidation of Accounts
of Subsidiaries. The IAS-17 and IAS -27 have been followed while preparing
accounts for 2004-05 along with other applicable rules as adopted in Bangladesh
The overall financial position of
ICB has improved during the year, compared to the previous year. Financial
results of ICB’s own and those of after consolidation of accounts with its
subsidiaries and some key financial ratios relating to profitability, liquidity
and solvency are given below-
Statement of financial results and some key financial ratios
Table No – 18:
Particulars
|
ICB
|
Consolidated
(ICB &Subsidiaries)
|
||
2004-05
|
2003-04
|
2004-05
|
200-04
|
|
Financial Result:
|
||||
Total
Income (Tk. In Crore)
|
170.38
|
137.35
|
187.82
|
143.49
|
Total
Expenses (Tk. In Crore)
|
82.72
|
92.10
|
86.29
|
93.83
|
Profit
Before Provision (Tk. In Crore)
|
87.66
|
45.25
|
101.53
|
49.66
|
Provision
Made (Tk. In Crore)
|
65.73
|
27.11
|
69.85
|
27.98
|
Net
Profit (Tk. In Crore)
|
21.93
|
18.14
|
31.68
|
21.68
|
Financial Ratios:
|
||||
|
12.87
|
13.21
|
16.87
|
15.27
|
|
9.27
|
6.64
|
12.75
|
7.82
|
|
15.73
|
14.65
|
20.91
|
16.94
|
|
43.87
|
38.84
|
63.36
|
46.41
|
|
281.63
|
270.33
|
305.65
|
279.17
|
|
6.00
|
8.15
|
-
|
-
|
|
27.35
|
25.75
|
26.75
|
30.96
|
|
4.56
|
3.16
|
2.16
|
2.64
|
|
1.11:1
|
1.10:1
|
1.15:1
|
1.14:1
|
|
32:68
|
39:61
|
30:70
|
38:62
|
Source: ICB Annual Report (2004-05)
Interpretation
of Ratios
Return on Investment
|
: Net Profit /Total
Assets * 100
|
Return on Equity
|
: Net Profit / Total
Equity
|
Earning Per Share
|
: Net Profit / No of
Shares Outstanding
|
Price Earning Ratio
|
: Market Price Of The
Share/ Earning Per Share
|
Book Value Per Share
|
: Total Equity / No of
Shares Outstanding
|
Dividend Yield
|
: Dividend Per Share/
Market Price Per Share
|
Current Ratio
|
: Current Assets /
Current Liabilities
|
Debt Equity Ratio
|
: Debt / Shareholder
Equity
|
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