problems and prospect of brokerage houses in bangladesh
TRANSCRIPT
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Problems and prospect of Brokerage houses in Bangladesh
A study on Stock and Bond Ltd.
By
Md. Shahnawaz Khan
ID# 0510042
An internship report presented impartial fulfillment of the requirement
of the degree bachelor of business administration
Independent university, Bangladesh
September, 2010
Problems and prospect of Brokerage houses in Bangladesh
A study on Stock and Bond Ltd.
2
By
Md. Shahnawaz Khan
ID# 0510042
Has been approved
September 2010
Shawgat S. kutubi
Lecturer, Finance
School of Business
Independent University, Bangladesh
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16th September, 2010
Letter of Transmittal
To
Shawgat S. kutubi
Lecturer, Finance
School of Business
Independent University, Bangladesh
Subject: Submission of Internship Report.
Dear Madam,
It is a great pleasure for me to submit the Working report on “Problems and
prospect of Brokerage houses in Bangladesh A study on Stock and Bond Ltd.”.
I Md. Shahnawaz Khan Id:0510042 submitting this report as the part of my
internship (BBA-499A) in TDCL. I believe that the knowledge and experience I
have gathered during my internship period will vastly help for my career buildup. I
can assure you that I have tired to the best of my ability to prepare this report. I
tried my level best for understanding the relationship between man and machine
and the relation ship of various classes of people at same organization. I hope you
will find it satisfactory and I am looking forward to the defense of my report at
any date convenient to you.
Thanking You,
Sincerely Yours,
Md. Shahnawaz Khan
ID# 0510042
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Acknowledgement
All praises are due to Almighty Allah who enabled me to complete this report. This
report entitled Problems and prospect of brokerage houses in Bangladesh A study on
Stock and Bond Ltd.
I would like to express my sincere gratitude and appreciation to my supervisor, Mrs.
Shawgat S. kutubi. It would not have been possible for me to complete this report
without her help, advice and overall supervision. This constant encouragement and
supervision throughout the period of this study have been greatest inducement for me
and directly contributed to the accomplishment of the task. I am also indebted to Mr.
Abdul Gani (CA) chief of accountant SBL for his help and patients to make me
understand about companies account operation. Then I would like to thank Mr.
Ibrahim executive of accounting, without his help and co-operation I wont know all
the objects of brokerage houses.
Finally I would like to thank Mr. Sifatuddin Beg Director of Stock & Bond, For
giving me opportunity to do my internship in Stock & bonds.
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Contents Acknowledgement ......................................................................................................... 4
Chapter 01: Background of the Report .......................................................................... 7
1.01 Introduction ............................................................................................................ 7
1.02 Scope of the study .............................................................................................. 8
1.03 Methodology ...................................................................................................... 8
1.04 Limitation ........................................................................................................... 8
Chapter 02 Background of the company ....................................................................... 9
2.01 History of Dhaka Stock Exchange ..................................................................... 9
2.02 Company profile .............................................................................................. 10
2.03 History of Stock & Bond Limited:....................................................................... 10
2.04 Objectives of Stock & Bond Limited: ............................................................. 10
2.05 Mission of SBL ................................................................................................ 11
2.06 Vision of SBL .................................................................................................. 11
2.07 Capital structure Of SBL ................................................................................. 12
Chapter 03 Prospect of Brokerage houses in Bangladesh ........................................... 14
3.01 Interest among the industries to raise capital ................................................... 14
3.02 More investors in capital market ...................................................................... 14
3.03 More stability in market ................................................................................... 14
3.04 Constant growth on GDP ................................................................................. 14
3.05 Change in Bank deposit rate ............................................................................ 15
3.06 More foreign investment in DSE ..................................................................... 15
3.07 Investor from different region of Bangladesh .................................................. 15
3.08 Demand of new brokerage houses ................................................................... 16
3.09 Demand of financial advisors .......................................................................... 16
Chapter 04 Problems of Brokerage houses in Bangladesh .......................................... 17
4.01 Cost of opening a new brokerage house .......................................................... 17
4.02 Rules and regulations of DSE .......................................................................... 17
4.03 Rules and Regulation of CDBL ....................................................................... 17
4.04 Opening a new BO account ............................................................................. 17
4.05 BO account maintenance ................................................................................. 18
4.06 Categorical difference of securities ................................................................. 18
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4.07 Lack of knowledge among the new investors .................................................. 18
4.08 Overpriced securities ....................................................................................... 19
4.09 Market manipulation ........................................................................................ 19
4.10 Lack of experienced manpower ....................................................................... 19
Chapter 05 Prospects of Stock and Bonds Ltd............................................................. 20
5.01 Growth in turnover ........................................................................................... 20
5.02 increasing number of clients ............................................................................ 20
5.03 Brunches in different region of Bangladesh .................................................... 20
5.04 Facility for the loyal clients ............................................................................. 20
5.05 Introducing new technology ............................................................................ 20
5.06 Most experienced working force ..................................................................... 21
5.07 Giving easy loan to its client ............................................................................ 21
Chapter 6 Problems for SBL ........................................................................................ 22
6.01 Rules and regulation of DSE and CDBL ......................................................... 22
6.02 Categorical difference of securities ................................................................. 22
6.03 Check requisitions process ............................................................................... 22
6.04 No new brunches.............................................................................................. 22
6.05 No individual finance department .................................................................... 23
6.06 Dealing with minus figures .............................................................................. 23
6.07 No awareness program for clients.................................................................... 23
Chapter 08 Lesson learned from SBL .......................................................................... 24
Chapter 09 Conclusion ................................................................................................. 25
References .................................................................................................................... 26
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Chapter 01: Background of the Report
1.01 Introduction Stock market is the reflector of and countries economy system, and a broker house is
a reflector of stock market. Broker house is a licensed buyer and seller of stock and
securities for there clients. As a member of DSE the broker house does this service for
commission on each transaction. That means more transaction more commission for
houses and more wealth for it.
Before 1998 broker houses were not so active because people used to sell and buy
there paper share direct to buyer or seller hand to hand. This hand to hand transaction
was really a slow process and full of hustle. But after establishment of CDBL (Central
Depository of Bangladesh Limited) it was just a matter of click. Since then investor in
share market is increasing day by day, and activity of brokerage house is also
increasing. Its not that this increasing activity only bring wealth for brokerage houses
there is also enormous number of problem. Because houses have to deal with
thousands of people every day and every one have there own needs and wants. In my
whole internship period I have tried to identify problem which faces the brokerage
houses and the future prospect of a brokerage firm on the perspective Stock and bond
Ltd.
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1.02 Scope of the study
This report is on the overall progress and problem of brokerage houses in Bangladesh.
It is obvious that this report can not discuss all the aspects of brokerage house because
the basis of this report is only one company. But because it is one of the leading
brokerage firms in Bangladesh Member of DSE, anyway it can give us an
understanding of how the brokerage houses are performing in Bangladesh.
1.03 Methodology
There are both primary and secondary information were used in this report. The
primary information were provided by SBL and allowed to show in public and the
secondary information was collected from several book journal and WebPages.
1.04 Limitation
It is observable that almost all studies have some boundaries. During performing my
work, I had to face a number of limitations.
There were some confidential issues like financial issues, for which they were
very strict and careful in revealing those information. Although they have provided
the financial statement but only the methods the numbers in the statement were
changed
Lack of enough materials like books, journals and other papers capture me for
severe brainstorming during working this report.
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Chapter 02 Background of the company
2.01 History of Dhaka Stock Exchange
The Dhaka Stock Exchange (DSE) was established as East Pakistan Stock Exchange
Association Limited on April 28, 1954. Formal trading of the bourse began in 1956.
On June 23, 1962, it was renamed as East Pakistan Stock Exchange Ltd. The name of
the stock exchange was once again changed to Dacca Stock Exchange Ltd on May 13,
1964. The service on the stock exchange continued uninterrupted until 1971. The
trading was suspended during the liberation war and resumed in 1976 with the change
in economic policy of the government.
Since then the bourse did not look back and continued its journey contributing to the
development activities of the nation. On August 10, 1998 the DSE introduced screen-
based state-of-the-art automated online real-time trading through Local Area Network
(LAN) and Wide Area Network (WAN). On January 24, 2004, Later the
DSE upgraded its automated trading system on August 21, 2005. Central Depository
System (CDS) for electronic settlement of share trading made a debut in the DSE on
1st January, 2004. In its 50-years journey the stock exchange has made significant
contribution to the economy of Bangladesh providing the unique platform to raise
funds for investment from the market. The stock exchange is in a relentless process of
modernization and up gradation of its systems and facilities to accommodate latest
technologies available. The SEC approved the Direct Listing Regulations-2006 as
proposed by the DSE which paved the way for direct listing of large and profitable
companies at offloading shares by government companies through the bourse.
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2.02 Company profile
Name: Stock & bond Ltd.
H/O: Swantex Bhaban
9/I, Motijheel C/A (3rd
Floor), Dhaka-1000
Business type: Stock & bond limited is a corporate member of Dhaka stock exchange
limited and the company provides on the business of brokers, jobbers or dealers in
stocks, shares, securities, commodities, commercial papers, bonds, obligations,
debenture stocks, treasury bills either as a joint debenture in collaboration with
foreign company of exclusively with local participants.
Brunches: Stock & Bond have 9 branches. Seven are located in Dhaka city and other
two is in Barishal and Khulna. The Barishal and Khulna branches are directly under
control of stock & bond and other seven branches are authorized to different
organization or soul proprietor. Among the seven branches three are most important
they are Dilkusha brunches Motijheel, Standard bank Motijheel brunch and Fidelity
Banani brunches.
2.03 History of Stock & Bond Limited: Stock & Bond limited is a private company limited by shares integrated on 2
nd
December, 2004 in Bangladesh under the companies Act, 1994. SBL is licensed by
SEC as a stock broker in the Dhaka Stock Exchange as well as being licensed by the
Central Depository Bangladesh Limited (CDBL) as a fully pledged Depository. SBL
always try to maintain highest level of quality in service. With the intense growth of
investor over last couple of years, the company‟s commitments are focused to
sustainable development of service with reliability and flexibility as a result within
few years they have been able to increase their branches in few division of
Bangladesh. SBL have almost 30000 VO including al the branches and head office.
Providing service to this large number of client requires well trained human resources
and higher technological support. And it assure both to there client and customers for
this reason SBL is very much successful in its field and growing rapidly.
2.04 Objectives of Stock & Bond Limited:
The major objectives are to create an efficient and transparent market facilitating
entrepreneurs to raise capital, so that it accelerates industrial growth for overall
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benefit of the country‟s economy. The objectives of Stock and Bond Ltd. are given
below:
Provide a complete, high-quality trading experience in various markets through
robust technology and a well experienced Relationship Management team.
Provide an investment opportunity for small and large investors through earning
commission.
Provide a fully automated trading system with most modern facilities. To
ensure: quick, easy, accurate transactions and easily accessible to all.
Undertake any business relating to the Stock Exchange, such as a clearing
house, securities depository center or similar activities.
2.05 Mission of SBL
SBL„s mission is to be a customer oriented and value creating company. They will
achieve their vision with commitment and passion, through innovation and
technology, and in an environment of fairness, honesty and courtesy towards
all stakeholders.
2.06 Vision of SBL
Their vision is to be one of the respected leading brokerage houses in the country and
to follow ethical business practices.
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2.07 Capital structure Of SBL
Authorized capital 2,000,000 ordinary shares of Tk :100 each 200,000,000
Issued, subscribed and paid-up capital
625,000 ordinary shares of Tk: 100
62,500,000
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The compositions of the shareholders are given as under:
Name of Shareholders Nationality Number of share Amount
2010 2010
Mr. Md. Mustafa Bangladeshi 110,313 11,031,300
Mr. Khwaja Arim Ahmed Bangladeshi 110,313 11,031,300
Mr. Kafiluddin Bhuiyan Bangladeshi 75,531 7,353,100
Mr. Mohammad A Hafiz Bangladeshi 73,531 7,353,100
Mr. Sifatuddin Beg Bangladeshi 147,031 14,703,100
Mr. Khawaja Ashed Ahmed Bangladeshi 36,781 3,678,100
Mr. Khwaja Aziz Ahmed Bangladeshi 36,750 3,675,000
Mrs. Farhana Chowdhury Bangladeshi 36,750 3,675,000
31 may 2010 31may 2009
Short term Loan with uttara 8,410,831 8410831
Finance & investment Ltd.
Short term loan from IDLC 1,884,242
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Chapter 03 Prospect of Brokerage houses in Bangladesh
3.01 Interest among the industries to raise capital
There‟s an intense interest among the industries to raise capital form the capital
market. They are not going for traditional capital raising method like banks or the
borrowers. From every sector industries are enlisting there names in the DSE and CSE
to get money from general investors. It we see in the list of dse there were 236
companies were listed till December 2009 but now there is 254 companies listed. So
in last eight month 18 new company came to the market for raising there capital.
Among them Grameen phone was the largest one it raised approximate Tk. 13503mn
3.02 More investors in capital market
New investors are emerging day by day. In June 2008 CDBL had 1,076,252 Bo
account registered. In June 2009 the account increases almost 30.8% the amount
stands in 1,401,165. In the last published news in august 12 2010 the number of Bo
account increased in 2,695,916 which is almost increase of 92% approximate. This
increasing no of investor are coming from every section of economy. Small business
to big corporate giant every one is investing money in this sector.
3.03 More stability in market
The capital market has become more stable for couple of years. People has became
more aware on there investment. They are now more concern what the companies
performing in the business instead of running behind rumors. On the other hand rules
and regulation of DSE and CSE is helping to stability in the market. SEC is closely
monitoring on the activities on the companies also the investor to ensure a smooth and
clear capital market.
3.04 Constant growth on GDP
From 2004-2009 the GDP growth rate shows that it is growing in a constant of 5% to
6% every year. That means there is stability in the economy of Bangladesh. So there
are no huge ups and downs in economy. For that reason investors are felling safe to
use there money in the capital market.
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3.05 Change in Bank deposit rate
From last decades deposit rate of the banks were quite high, which was actually more
then the actual growth rate of GDP. So it was really a safe investment for general
people just deposit a healthy amount in the banks and have a good amount from
interest. But recently BB has taken initiative to lower the deposit rate to lower the
interest rate of borrowing. So now people are not interested to put there money in the
banks. They are now going for investment by there either starting new business or
going for the capital market investment.
3.06 More foreign investment in DSE
Stability of economy and capital market has attracted the foreign investor in
Bangladesh capital market. And Establishment of CDBL has given a new opportunity
for foreign investors. Now people from outside of country can also invest directly to
DSE or CSE if they want by opening corporate account on any of the member of
them. According to the DSE, in 2007, net foreign or portfolio investment on the
Dhaka Stock Exchange surged 8.3x to $129 million. The banking sector, followed by
the power, pharmaceutical and cement sectors, received the most foreign investment.
In 2010 the number Bo account registered in CDBL is 116,348.
3.07 Investor from different region of Bangladesh
People for out side Dhaka division also showing there interest to invest in capital
market. That is why brokerage houses are opening branches in the major cities in
different division of Bangladesh. After Dhaka and Chittagong brokerage houses are
focusing in barishal sylhet Khulna etc.
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3.08 Demand of new brokerage houses
Demand of new brokerage houses are increasing now. There are already 238 member
under Dhaka stock Exchange and 136 member under Chittagong stock exchange but
from the increasing number of investor the capacity of brokerage houses are full now.
Almost all of the firms have several offices in Dhaka city as well as other cities but
still 12000 Bo account average still is a big number.
3.09 Demand of financial advisors
Financial advisor is the single most important thing for capital market. Investors are
now willing looking for an advisor where they can go to understand on which share
will be good for there portfolio, how to maintain a healthy portfolio where to invest.
This is actually a time when the brokerage houses think to provide financial advising
as a part of there business.
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Chapter 04 Problems of Brokerage houses in Bangladesh
4.01 Cost of opening a new brokerage house
The cost of opening a new brokerage is huge. To become a member of DSE now cost
almost Tk. 500 mn excluding the other cost, Deposit to CDBL is 5mn. So despite of
the increasing demand of new brokerage houses it is not possible to investor just start
one. There is another problem that DSE is not willing to give membership license in
near future. Despite of the membership cost it contains a huge portion of money on its
setup. So to start a new brokerage one should have Tk. 600mn-650mn which is not
easy for a person or company.
4.02 Rules and regulations of DSE
Brokerage houses are always under close monitoring of DSE and SEC. If DSE sees
any unusual activity they directly punished the brokerage houses, they don‟t see who
made the mistake is it the trader or client it just fine the house.
4.03 Rules and Regulation of CDBL
Central Depository Of Bangladesh has its own rules and regulation. Every day
brokerage have to report to there daily transaction of there clients. Every day after
reviewing the transaction a check has to be written and send CDBL as the howla and
laga charge. If there is any problem in the number it will straight fine or close the
transaction for several days which will conquer a huge loss for the firm and can create
tension among the clients.
4.04 Opening a new BO account
To open new BO account a person has to go over few requirements but for a
brokerage house it‟s a hustle. Cause if there is any information missed by that
particular person the brokerage house has to go for the same procedure again, and the
pressure is from both sides. CDBL will charge them that why there is information in
the form and client will complain why the firm didn‟t told them about the mistake in
the first place
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4.05 BO account maintenance
Bo account maintenance is a great responsibility for the brokerage houses. Every
financial years end CDBL will charge the houses for the clients account. And after
that they have to raise the amount from every individual client. It‟s a very slow and
long process. After collecting the money the firms find that not every one has paid for
there account because some clients‟ have no transaction at all and they will not going
to have the renewal amount against that account, Which is ultimately a loss for the
brokerage firms.
4.06 Categorical difference of securities
Every day clients buy sale different category. There are four category in DSE most
common A,B,N, and Z category. A and B category share matures in four days and N
and Z category matures in 10 working days. Some time clients sell a Z category share
and buys an A category share which has a 6 days gap between maturity. So ultimately
it happens that brokerage houses end up paying for the client and they cant event
charge anything as loan or some other criteria. Some time trader prevents the client
not to do this but if traders don‟t pay much attention they end up to this kind of
situation.
4.07 Lack of knowledge among the new investors
Lack of knowledge among the investor is a common problem for the brokerage
houses. New investors has no place to learn about market they learn from other
investors or they run on it like a wild goose chase and end up with losing money.
There is no proper place where they can have the actual idea what is going on the
capital market so they are always running behind the rumors. so if a investor loss
money for some period he or she withdraw there money from market and firms lost
another clients. To overcome this situation the trader who places order in computer
helps the new investors. But its not sufficient cause a trader is a busy person who has
to stick there in the keyboard placing order.
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4.08 Overpriced securities
Over the last couple of year the market size is growing intensively. Everyday new
people are investing in the capital market. But no of securities are not increasing to
mach the growing demand, result over pricing of the current securities. If this growth
of supply increases in this rate can lead to another disaster like 1996, and brokerage
houses will found them bankrupted.
4.09 Market manipulation
Market manipulation is a common term in the capital market. There is a group of
people who are the big fishes of capital market some time flooded up the market with
liquidity raising the prices of securities and then leave with profits and the small
investors end up with losing money. Although DSE and SEC is monitoring this kind
of situation but still if the capital market dose not increases no of securities there is
always a fear of market manipulations.
4.10 Lack of experienced manpower
Brokerage houses have a common problem on recruiting employ for there firms. Very
few people have chances to learn to work related to brokerage houses. Most the
employee doesn‟t had any knowledge before entering a house. The firms has to recruit
a new person then train them by there old employee and make them eligible to work
for there client which is a really long and slow process.
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Chapter 05 Prospects of Stock and Bonds Ltd.
5.01 Growth in turnover
Stock and bonds Profit and loss account shows an instances growth in turnover from
June 2009 to may 2010. The change in turnover has a percentage change of 77% in
positive. That mean in one year the operating growth was positive 77%. It shows that
the growth of capital and the growth of stock and bond is positively related.
5.02 increasing number of clients
In May 2009 stock and bond have approximately 17000 BO account enlisted, and
after one year the BO account stands at approximately 31000. The percent change in
BO account is 82% which is almost equal to the increasing no of BO account of
CDBL.
5.03 Brunches in different region of Bangladesh
SBL has total 10 brunches among them two brunches are in different divisions of
Bangladesh. One is in Khulna and another is in Barishal which gives the access to
fulfill the demand of investors in those divisions. These branches have given SBL a
competitive advantage getting varies type of clients and make more profit from it.
5.04 Facility for the loyal clients
Like other big companies SBL gives extra facility to there loyal clients. They give
them private treading facility with there own trader. If the clients face any account
related problem even financial problem SBL take cares of them.
5.05 Introducing new technology
SBL is trying to introduce technological facility to there clients. SBL is developing
software which will notify the clients about the current position of there portfolio.
How many securities are matured who much money is idol etc.
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5.06 Most experienced working force
SBL has a reputation to recruit the most experienced personal to do its job done.
Dealing with enormous no of client and also dealing with DSE and CDBL need
dedication and skills. The brokerage houses are closely monitored by the DSE so it is
the employee who has to be strict to maintain rules and regulation if there is one
mistake SBL have to pay the price of that mistake. But SBL is maintaining its
excellence on its work that‟s why it is one o the top 10 brokerage house in
Bangladesh.
5.07 Giving easy loan to its client
SBL gives investment loan to its client in really less condition with fewer
requirements. Although this loans are not counted in the name of SBL instead
Standard Bank Ltd. But the clients has to go for any procedure it tell the CDBL
section about the loan amount and it gives the limit and they can buy securities.
Although to get this loan the clients has to regularly tread for at least six months.
22
Chapter 6 Problems for SBL
6.01 Rules and regulation of DSE and CDBL
Like all other brokerage firms SBL also face the problem regarding Rules and
regulation. Maintaining a larger no of client every day is a hard job and if there‟s any
problem occurs during the trading session it can make problem for SBL and its
clients. So to deal with DSE and CDBL the employee has to check and double check
every single detail in clearing section.
6.02 Categorical difference of securities
Most of the time clients do this kind of mistake that they sell a z category share and
buys an A category share ultimately after end of the month SBL finds that there cash
in hand is less then there account book. Then they have to adjust and re-adjust all the
account again and again which slows down the work in account sections.
6.03 Check requisitions process
When the clients withdraw there money they have to put a requisition first and on the
basis of the maturity period they get there money back. But some time the clients do
and unusual thing which can not be monitored by account section. After giving the
requisition the clients buy securities and don‟t notify in accounts so what happens that
the matured money was there and the check was written and provided but there was
no despite left in the account. This is a really common problem for SBL although the
accounts section closely monitors but still this problem lay on there.
6.04 No new brunches
Stock and bond ltd. is currently operating 10 branches nationwide. But, according to
the demand in some areas, they are clearly left behind to provide the service in parts
of the country.
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6.05 No individual finance department
SBL does not have an individual finance department. So it is a disadvantage for the
company that they can not monitor there financial activities closely. All the financial
decisions are taken by directors like traditional method.
6.06 Dealing with minus figures
Some time the clients buy there shares on credit to SBL and does not perform any
transaction after. This situation hampers the financial statement because SBL does not
gives any loan to the client directly on there name. These loans are provided by
Standard Bank Ltd. So if the accounts are not treading any more the interest goes
higher every single day. So SBL has to deal with it in a different way they force sell
those account and block it for moments. To do that SBL first ask the client and then
go for the procedure. Although it is a standard procedure but still they end up with
losing the clients.
6.07 No awareness program for clients
Stock & Bond does not arrange any awareness program. A brokerage house should
educate there new clients how to create a healthy portfolio, help them to understand
the ups and downs of capital market, but there is no program like that so clients end
up with losing there money or take advise from the trader or other clients.
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Chapter 08 Lesson learned from SBL
As an intern student of Independent University I worked in Stock & Bond Limited for
three months limited period. In this limited amount of time I have learned many
things and most importantly it was the first introduction to the corporate world and its
belonging. Secondly I came to know about the capital market performance. Till now I
have been reading in textbook and articles about the performance of DSE and CSE
but by working in SBL for three month I have experienced the real capital market and
goatherd a knowledge which can‟t be forgotten in lifetime.
Another thing I learned that account section is the hart of the company. It has to run
24 hr a day. I have seen them working in the account section till evening to fulfill
there responsibility. To take this kind of responsibility one must give the full
dedication toward the company they are company and that is my third lesson.
So I hope that this lesson learned from Stock and bond Ltd in last three month will
help me in my future life.
25
Chapter 09 Conclusion
Bangladesh is a third world country which is still under development. Stock market is
the reflector of and countries economy system, which is also under development. So it
is an obvious that it will have an enormous number of problems. But it is also true
there is a lot more opportunities for stock market in Bangladesh. If we can overcome
these problems it will be a great strength for this nation.
This strength will make another sector bigger which is the brokers of stock and
securities. So if the broker houses can solve there problem and maintain there
operation according to rules and regulation then it can become one of the largest
business sector in Bangladesh.
26
References www.Dsebd.org
www.thefinancialexpress-bd.com
Financial report of Stock & Bond Ltd.
Monthly review DSE
27
Stock and Bond Limited
Blaance Sheet
As at 31 May 2010
31-May
31-May
2010
2009
Taka
Taka
Property and assets
Tangible Fixed assets at cost less
accumulated depreciation
10,061,735
4,763,615
Membership consideration value
8,000,000
8,000,000
Software installation
500,000
---
Preliminary expenses
26,429
52858
18,588,164
12,816,473
Investments in FDR
15,764,826
16,647,021
Current assets
Accounts Receivable
89,769,995
43,002,436
Receivable from DSE
121,495,818
10,803,151
Receivable from Clients
60,417,524
48,816,657
Advances and deposits
2,392,496
2,633,410
Cash in hand and bank balances
1,499,048,956
7,588,954
1,773,124,789
112,844,608
Less: Current liabilities
Payable to DSE
46,880,867
15,730,648
Payable to clients
618,168,413
43,063,431
Payable to others
1,015,113,980
825,729
Short term loan with UFIL
8,410,831
14,421,374
Initial deposit for BO a/c opening
800,410
800,410
Short term loan with IDLC
1,884,242
Provision for Taxation
1,899,141
899,141
Liabilities for Expenses
4,564,863
3,812,853
1,697,722,747
79,553,586
Net current assets
75,402,042
33,291,002
Net assets
109,755,032
62,754,516
Financed By
Share Capital
62,500,000
37,500,000
Reserve and surplus
Proposed stock dividend
37,500,000
25,000,000
28
Profit transferred from Profit and loss
account
9,755,032
254,516
1.9,755,032
62,754,516
Stock and Bond Limited
Profit and loss Account
As at 31 May 2010
31-May
31-May
2010
2009
Taka
Taka
Revenue 86,257,145
48,579,653
Administrative and general Expenses (36,454,840)
(23,643,936)
Operating profit 49,802,305
24,935,717
Other income 2,589,463
1,921,607
Net profit for the year before tax 52,391,252
26,857,324
Less: Tax paid 4,391,252
1,500,931
Less: Provision for taxation 1,000,000
750,000
Net profit after tax liability 47,000,516
24,606,393
Net profit brought from previous year 254,516
648,123
Accumulated profit 47,255,032
25,254,516
Less: proposed stock dividend 37,500,000
25,000,000
Accumulated profit Transfeered to Balance sheet 9,755,032
254,516
29
Stock and Bond Limited
Cash Flow Statement
As at 31 May 2010
Operating activities
Profit for the period/year
48,000,516
25,356,393
Adjustment for items not involving movement of cash:
Deprecioation
1,569,975
957,430
Amortisation of preliminary Expences
26,429
52,860
Operating activities before changes in working capital
49,596,920
26,366,683
Changes in working capital
(46,767,559)
(10,505,382)
Increase in accounts Receivable
882,195
(1,647,021)
Decreases/increases in investment in FDR
(110,692,667)
(10,803,151)
Decreases/increases in investment From DSE
(11,600,867)
(48,816,657)
Decreases/increases in investment From clients
240,914
1,156,897
Decreases in advances and deposits
(25,000,000)
(52,500,000)
Transferred stock dividend
31,150,219
15,730,648
Increases in payable to clients
575,104,982
43,063,431
Increases in payable to others
1,014,288,251
825,729
Income tas adjusted/paid during the year
(1,442,859)
Decrease in Term loan with UFIL
(6,010,543)
5,578,626
Decreases/increases in Term Loan with IDLC
1,884,242
increase in liabilities for Expenses
752,010
2,043,743
1,424,231,177
(68,473,248)
Net Cash flow from operating activities
1,473,828,097
(42,106,565)
Investing Activities:
Acpuisiton of fixed assets
(7,368,095)
(4,330,051)
Net cash outflow from investing activities
(7,368,095)
(4,330,051)
Financing Activities:
Share capital
25,000,000
52,500,000
share money deposit
Net cash inflow from financing activities
25,000,000
52,500,000
Net cash inflow
1,491,460,002
6,063,384
Cash and Bank balance
On 01 july
7,588,954
1,525,570
On 31 may
1,499,048,956
7,588,954
Net changes in cas and cash equivalents
1,491,460,002
6,063,384