2. Contents:
1. Acknowledgement ……………………..……. 3
2. Introduction…………………………………………… 4
3. History
4. Vision
5. Mission
6. Objectives ……………………………………………….. 5
7. Risk Return
8. Products & services
I. JSIL income fund
II. UTP Islamic fund…………………………….. 6
III. Capital protected fund series
IV. Unit trust of Pakistan
9. Investors of JSIL ……………………………………….. 7
10. Investments of JSIL…………………………………… 8
I. Investment in Pakistan industry
a) Al Abbas Industries
b) Al Abbas Sugar Mills
c) Azgard 9
d) Pakistan International Container Terminals
e) Pak American Fertilizer Limited
f) JSIL Property
g) JSIL Transportation
11. Performance analysis of JSIL …………………… 11
I. Asset Management Industry
II. Equity Market Performance
III. Fixed Income Market Outlook
IV. Performance Review
V. New Products and Initiatives
VI. Asset Manager and Entity Rating
VII. Future Outlook
12. Key indicators of Performance………………….. 13
13. Financial Reporting……………………………… 15
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3. ACKNOWLEDGEMENT
We are grateful to Almighty ALLAH for helping and enabling us to complete the project. We
would like to appreciate and thank our project supervisor for her incessant guidance throughout
project completion process; she has been available whenever we needed her guidance, assistance.
We really appreciate her positive comments for improving and bring out the utmost optimum
consequences out of our endeavors. Without her guidance and support we would have never
been able to organize and complete the project tasks as optimal and with in time constraints .It
would be impossible to acknowledge individually all the professionals who extended their kind
personal assistance in gathering information and relevant data required for data analysis for
project conclusion. We would like to thank all our friends and colleagues for their support
throughout our project duration.
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4. Introduction:
JS Investments Limited (JSIL) is the oldest and one of the largest private sector Asset
Management Companies in Pakistan, with over PKR 11.71 billion (as at September 30, 2011) in
assets under management, spread across various mutual funds, pension funds and separately
managed accounts. The company is listed on the Karachi Stock Exchange and has a market
capitalization of over PKR 368 million (as at September 30, 2011).
History:
Founded in 1995, JS Investments Limited (JSIL) is the oldest and one of the largest private
sector asset management companies in Pakistan with assets under management spread across
various mutual funds, pension funds and separately managed accounts. JSIL's successful track
record, creative and diverse thinking and product offering has helped set the asset management
industry standards in Pakistan by always endeavoring to innovate and to be the first to bring new
financial products to Pakistan. JSIL is part of the Jahangir Siddiqui Group, one of Pakistan's
most diversified and prestigious financial institutions. The Jahangir Siddiqui Group maintains a
strong presence in the nation's investment banking, corporate finance, equity market operations,
and debt factoring and insurance sectors.
Vision:
To be recognized as a responsible asset manager respected for continuingly realizing goals of its
investor.
Mission:
To build JS investment into a top ranking asset management company; founded on sound values;
powered by refined know how; supported by a committed team operating within an accountable
framework of social, ethical and corporate responsibility a strong and reliable institution for its
shareholders to own; an efficient service provider and value creator for clients; an exciting and
fulfilling work place for employees; and a participant worth reckoning competitors.
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5. Broad Policy Objectives:
Value creation for clients on a sustainable basis
Maintain high standards of ethical behaviors and fiduciary responsibility
Professional excellence adapt, evolve and continuously improve
Maintain highly effective controls through strong
compliance and risk management
A talented, diligent and diverse HR
Understand risk-return and find out what kind of
investor you are:
Different investments avenues offer different potentials for
return. It is important to understand the level of risk
involved with your investments. Successful investors base their performance expectations on
historic average returns, and keep short-term market movements in perspective.
Investment opportunities with high return potential usually also have high risk
Risk is generally mitigated as tenor of investment increases
Please keep in mind that past performance is not indicative of future results
How regularly should you invest?
It's better in the long run to invest small amounts regularly than to invest larger sums
occasionally. How much should you invest each month? More is better, but some, even small
amounts, will add up over time. Saving steadily for your goals is a good habit to develop.
Investing your savings on a regular basis is even better. Investing consistently puts more
horsepower into your savings and can put you on track to reach your financial goals.
PRODUCTS & SERVICES:
JSIL INCOME FUND:
JSIL Income Fund is the second open-end mutual fund launched by JS Investments Limited.
JSIL-IF is a diversified investment program in fixed income securities through a single
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6. investment. The fund aims at achieving a high rate of current income consistent with reasonable
concern for safety of capital and provides the investors with the convenience to join or leave the
fund at their discretion.
UTP ISLAMIC FUND:
UTP- Islamic Fund (UTP- ISF) is an open-end Shariah-compliant mutual fund managed by JS
Investments Limited. The fund was launched in December 2002 with the Central Depository
Company as the Trustee and has been given a 5-star rating by PACRA. The fund is intended for
long term investors who seek high returns with the peace of mind that their money is being
managed according to Islamic rules of investing.
CAPITAL PROTECTED FUND SERIES:
UTP- Capital Protected Fund (UTP-CPF) was the first open-end capital protected fund in
Pakistan, established under a Trust Deed dated November 27, 2006 between JS Investments
Limited as the management company and Standard Chartered Bank (Pakistan) Limited as the
exclusive distributor. Following the tremendous success of this unique fund, 3 more Capital
Protected Funds were launched jointly by JS Investments and SCBPL.
A Capital Protected Fund aims at protecting investor capital through the investment structure by
placing a significant percentage of the Fund as bank deposit(s) or in other return-based fixed
income instruments, and uses the remaining funds to gain exposure into equity markets or any
other investment instruments permissible by SECP that the Management Company feels would
be appropriate to maximize return. The fund has a fixed tenor (e.g. 1 year or 3 years) which is the
minimum period of holding for capital protection to be in force.
UNIT TRUST OF PAKISTAN:
Unit Trust of Pakistan (UTP) is the first open-end mutual fund in Pakistan's private sector. UTP
follows a balanced investment strategy which means that it switches its investments from fixed-
income to equity & vice versa depending upon the investment outlook. When the stock market
appears volatile, the funds normally switch portfolios to fixed-income & debt based instruments
and reverts back to equity when the situation becomes stable.
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7. INVESTORS OF JSIL:
These institutions invest in JSIL & they required submitting Board Resolution Memorandum and
Articles of Association Power of Attorney listing Authorized Signatories by Laws (Societies)
N.I.C for investment in JSIL.
Companies
Corporate Bodies
Financial Institutions & Banks
Barclays:
Barclays is one of the largest institution to helping hand to provides investment to
funds offered by JSIL
Standard chartered
Partners of a Firm
Insurance Companies
Individuals
Government
Foreign Nationals and Companies outside Pakistan:
Foreign individuals and foreign companies can also invest in JSIL by fulfilling the
requirement of submitting N.I.C/Passport Subject to the regulations of the State Bank of
Pakistan and Ministry of Finance
Provident, Pension and Gratuity Funds, Non Profit Institutions, funds, trusts,
societies or other organizations, and Societies incorporated in Pakistan
Non-profit organization and different kinds of funds invest in JSIL by submitting Power
of Attorney listing Authorized Signatories Resolution authorizing investment Bye
Laws/Trust Deed N.I.Cs to JSIL.
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8. INVESTEMENTS OF JSIL:
Investment in Pakistan Industry
As Pakistan’s macroeconomic performance continues to improve, Pakistan industry has gone
through steady expansion in its capital investment base and production capacity in the last five
years. Given Pakistan’s comparatively small industrial base, the investments across many
industrial sectors is significant. There are several industrial sectors which we believe offer
particularly attractive investment opportunities. Pakistan’s companies are becoming increasingly
global in outlook. Through exploiting Pakistan’s comparative cost advantages in certain sectors,
these businesses are able to drive significant and sustainable growth.
In some areas of the economy, Pakistan has a high standard of infrastructure for an emerging
market economy. However, there are a number of infrastructure bottlenecks which provide
exciting development opportunities as Pakistan’s economic performance continues to accelerate
JSIL investments in Pakistan’s industrial sector include:
Al Abbas Industries –steel, chemicals and fiber board
This business was established in 2002 to develop three buildings materials projects. The
company’s fiber board plant is Pakistan’s largest producer of Medium Density Fiber (“MDF”)
boards. The company’s Ferro-alloy plant produces about half of the Ferro-alloy requirements of
Pakistan’s steel industry. The company also has a calcium carbide plant.
Al Abbas Sugar Mills – sugar and ethanol
In 1991, JS invested in this leading sugar and ethanol producer. Al Abbas Sugar Mills has a rated
cane crushing capacity of 5,500 tons per day and operates two distillery units for superfine
ethanol production.
Azgard 9 – composite denim
Azgard 9 is a prominent player in the textile industry of Pakistan. It is a fully-integrated,
specialized denim textile mill. It manufactures specialized yarns, denim fabrics and denim
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9. garments. These textile products are marketed through a global sales and distribution network
including offices in five countries. JSIL has been the second largest shareholder in Azgard 9 for
more than two decades.
Pakistan International Container Terminals (PICT) – port operations and container
handling
PICT is the East Wharf container terminal at the Karachi Port. The company is sponsored by
Premier Mercantile Services and JSIL is its second largest shareholder. IFC and the OPEC
Development Fund are lenders to PICT. It is the only container terminal managed by a Pakistani
operator and has a handling capacity of 550,000 TEU per annum.
Pak American Fertilizer Limited (PAFL) –
Fertilizer JSIL led a USD 270 million buyout of PAFL in partnership with Azgard 9 from the
Government of Pakistan as part of the privatization programs. PAFL has a production capacity of
600 metric tons per day of ammonia and 1050 tons per day of urea. The plant has been designed
and engineered by Toyo Engineering Corporation of Japan. The plant is fully-compliant with all
domestic and international environmental standards including ISO14000
JSIL Property
JSIL Property acts as a financial partner internationally and a project developer within Pakistan.
We are one of the largest real estate developers in Pakistan. The property market in Pakistan has,
since 2002, been developing rapidly in both the commercial and residential sectors. JSIL
Property is currently developing seven commercial and residential sites in Karachi and one in
Islamabad.
JSIL Transportation
Airline passenger traffic and, to a lesser extent, cargo traffic has grown significantly in recent
years both within the Pakistani domestic and international travel markets. This has made the
aviation sector an interesting investment opportunity, despite escalating fuel costs
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10. JSIL Income fund Investment Strategy:
JS-IF will generally invest in assets that pay a fixed rupee amount, e.g. investment grade debt
securities, treasury bills, term finance certificates, bank deposits and Government bonds. They
are generally not affected by the volatility at the Stock Exchanges. The element of risk is low and
so is the return.
UTP Investment Strategy:
UTP focuses on preserving the initial capital while providing maximum diversification, along
with liquidity, growth & consistent returns. In order to achieve these, the fund invests in three
types of high quality assets. These include:
Shares of companies which are either consistently dividend paying having growth
prospects actively traded
Debt instruments with good credit rating
Short-term money market instruments
In National Insurance Company Limited (NICL), the management invested Rs 2,000.000
million on March 13, 2009 through Pre-Initial Public Offer (IPO) commitment in JS
Principal Secure Fund-I for the minimum period of 03 years and 06 weeks under the
recommendations of first meeting of Investment Committee of NICL held on March 12, 2009
which was approved by the Chairman on March 13, 2009
UTP-ISF Investment Strategy:
UTP-ISF aims to grow investor’s capital in the long term in adherence with principles of Shariah
compliance as advised by the Shariah Advisory Board (SAB) of this fund while ensuring
liquidity. The fund investments are limited to asset classes approved by the Shariah Advisory
Board and all companies under investment consideration are regularly screened for Shariah
compliance.
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11. Performance analysis of JSIL 2009-2010 annual reports:
Asset Management Industry Performance
The assets under management (AUM) of Pakistan’s mutual fund industry closed at Rs. 199
billion as on June 30, 2010 depicting a decline of 2.3% over the last one year. This decline in the
industry AUM was relatively better than the sizeable decline of 39% experienced in the previous
financial year ended on June 30, 2009. As on June 30, 2010, the AUM of the industry as
represented by open-end and closed-end funds aggregated around Rs. 168 billion and Rs. 31
billion, respectively. The income funds category with funds size at Rs. 60 billion in June 2010
witnessed significant decline of 20.8% amid increased volatility in returns mainly due to the
adverse price movements in corporate debt instruments during the year. This resulted in
diminishing the investor’s interest towards the category during the year. The equity funds
category also could not gain the preference of majority of the investors and lost its industry
AUM share since June 30, 2009, declining by 36% mainly amid disbursements made by the
largest state owned mutual fund redemptions to its LOC holders. On the other hand money
market funds category witnessed sizeable growth during the year and its net assets closed at Rs.
32 billion as on June 2010, depicting an increase of over 8.7 times over the last one year. The
primary reason behind this growth was to cater to from the shift in investor’s preference towards
very low risk investment products that aimed to provide competitive interest based returns from
very high quality and short duration portfolio of assets with the ability to provide them with
better liquidity.
Equity Market Performance
The equity markets recovered considerably during the Fiscal Year 2010, as the KSE-30 Index
surged 26.22% to close the FY10 at 9,556 points. The index rebounded sharply on the back of a
lower base and continued economic improvements. Despite a modest yet fragile economic
growth, a major confidence boosting indicator has been the active injections due to foreigner’s
interest in Pakistan s bourse, as the net Foreign Portfolio Investment (FPI) was recorded at US$
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12. 556 million for FY10. Improved macroeconomic conditions, coupled with extremely attractive
valuations, have been the prime drivers of the equity markets. In contrast, there exists a liquidity
conundrum due to the absence of a leveraged product to cash-strapped investors, with
consequent impact on average daily trading value of US$ 84 million. The local investors,
however, still remain jittery while seeking clarity on the modalities of Capital Gains Tax (CGT)
and viability of Value Added Tax s implementation. The latter s impact on already soaring
inflation rates also remain a cause for concern. Nevertheless, astounding equity valuations a 38%
P/E discount to regional peers and 2010E P/E of 6.9 as packaged with possible reemergence of a
keenly-awaited leveraged product are imminent key triggers to attract both foreign and local
investor’s interest in Fiscal Year 2011.Fixed Income Market Outlook The money market
remained fairly stable during the Fiscal Year 2010.
Fixed Income Market Outlook
The money market remained fairly stable during the Fiscal Year 2010. The pressures observed
on the inflationary indicators cautioned the policy makers of State Bank of Pakistan (SBP) to
keep the Discount Rate (DR) at 12.5% by the end of FY10. Rekindling of sustainable economic
growth remains to be the prime focus for the government, albeit with monetary and fiscal
stability. During the FY10, the 6 Months KIBOR averaged 12.40% and attained a maximum of
12.88%.The stabilization endeavors have yielded affirmative results as the CPI rate for June
2010 was clocked in at 12.69% on YoY as compared to the previous year s figure of 20.8%.
However, steady elimination of subsidies, reformed tax framework and increased international
oil prices are the factors likely to keep the inflation rates in the higher bounds going forward.
Moreover, the liquidity level is also dependent upon the extent of fiscal and public sector
borrowing from the banking system. The SBP, nevertheless, remains focused on balancing the
risks between inflation and financial stability as seen in the recent hike in the policy rate by 50
basis points announced by the State Bank in its Monetary Policy on July 30, 2010.
Performance Review
The Company earned profit after tax of Rs. 45.453 million during the year ended June 30, 2010.
During the year under review, the Company earned management fee income of Rs. 361.248
million from funds under management compared to Rs. 439.880 million during the last year
showing a decline of 17.9%. The decline in management fee income is primarily due to the
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13. decline in assets under management which stood at Rs. 16,508 million compared to Rs. 21,247
million on June 30, 2009 a decline of 22.3%. Dividend income during the year was Rs. 40.077
million compared to Rs. 21.499 million earned last year. Net after tax profit from discontinued
operations of Investment Finance Services was Rs. 17.767 million compared to a loss of Rs.
274.749 million during the last year. Administration expenses for the year declined by 20% and
were recorded at Rs. 281.945 million against last year s Rs. 352.544 million. Financial charges
were also brought down by 34.3% compared to last year by reducing the borrowings. Earnings
per share for the year were Rs. 0.45.
Key Indicators FY 10 FY 09
Performance
Return on assets % 2.42 (54.71)
Total assets turnover Days 97 20
Receivables turnover Days 3 25
Return on equity % 10.62 (601.12)
Liquidity FY10 FY09
Current times 1.71 1.44
Quick times 1.70 1.42
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14. Valuation FY10 FY09
Earnings per shares Rs. 0.45 (17.21)
Historical trends FY10 FY09
Management fee (Rs. in 361 440
Millions)
Operating profit (Rs. in 212 (1,496)
Millions)
Profit before tax (Rs. in 46 (1774)
Millions)
Profit after tax (Rs. in 45 (1,721)
Millions)
Assets under management 16,508 21,247
(Rs. in Millions)
Share capital (Rs. in 1,000 1,000
Millions)
Shareholders’ equity (Rs. 428 286
in Millions)
Total assets (Rs. in 1,735 2,015
Millions)
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15. Summary of operating results for the year ended June 30, 2010 is provided below:
Rs. 000
Profit after tax from continued operations 27,686
Profit after tax from discontinued operations 17,767
Total profit after tax for the year 45,453
Less: Accumulated (loss) brought forward (800,127)
Add: Transfer from surplus on revaluation of fixed assets to accumulated profit 6,599
Un-appropriated loss carried forward (748,075)
New Products and Initiatives
During the year under review the Company launched two new funds namely JS Principal Secure
Fund II and JS Cash Fund. The Company continued expanding its distributor’s base during the
year. This included prestigious names like Barclays Bank and MCB Bank Limited. We believe
that expanded distributors base would enhance our outreach and would enable us in providing
our services to a larger retail segment across the country
Asset Manager and Entity Rating
The Asset Manager rating for JS Investments Limited is in progress and has not yet been
announced by JCR-VIS Credit Rating Co. Limited. The asset manager rating for JS Investments
Limited last announced by PACRA was AM2. The said rating was subsequently withdrawn by
PACRA on March 16, 2010 subsequent to JS Investments decision to discontinue the rating
relationship with PACRA with immediate effect. Pakistan Credit Rating Agency (PACRA) has
assigned the long-term rating to the Company of A+ (Single A plus) and A1 (Aone) respectively.
These ratings denote low expectation of credit risk emanating from a strong capacity for timely
payment of financial commitments.
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16. Future Outlook
Mr. Rashid Mansur was appointed as the new Chief Executive Officer of your Company w.e.f
April 01, 2010. The incoming CEO carried out a detailed SWOT Analysis of your Company and
the Funds based on assessment of the prevailing Macroeconomic and Financial Market trends as
well as their impact on the mutual fund industry, generally, and on your Company, specifically.
Based on this, the CEO reviewed and revised the Vision, Mission, and Statement of Broad Policy
Objectives of your Company to reposition your Company towards sustainable growth This
initiative has been branded as, JSIL 2010 Onwards ~ .
The CEO also reassessed the Organizational Structure and initiated certain desired changes to
enhance the operational efficiency of your Company. These include creation of a separate and
independent Risk Management, Research and Market Intelligence department; defining and
augmenting the role and responsibilities of Investment Committee and Fund Managers. We
believe that a progressive and proactive approach to business will enhance the Brand Visibility
of your Company and its products, yielding higher returns for all stakeholders. At the same time
a strong Prudential Risk Management would play fundamental role in working of your
Company. We understand that Pakistan is passing through a challenging time on the economic
front, yet we are confident that your Company will continue to achieve sustainable growth based
on business model that aims to thrive on efficiency, innovation and transparency
Corporate Governance and Financial Reporting Framework
As required by the Code of Corporate Governance the Directors are pleased to state as follows:
a. The financial statements, prepared by the management of the Company present fairly its
state of affairs, the results of itsoperations, cash flows and changes in equity.
b. b. Proper books of accounts of the Company have been maintained.
c. c. Appropriate accounting policies have been consistently applied in preparation of
financial statements, and financial
d. Estimates are based on reasonable and prudent judgment.
e. International Accounting Standards, as applicable in Pakistan have been followed in
preparation of the financial statements.
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17. f. e. The system of internal control is sound in design and has been effectively implemented
and monitored.
g. f. There are no significant doubts upon the Company s ability to continue as a going
concern.
h. g. There has been no material departure from the best practices of the Code of Corporate
Governance, as detailed in the
i. Listing regulations.
j. h. A summary of key financial data of last six years is given on page 09 of this annual
report.
k. i. The Directors have signed the Statement of Ethics and Business Practices.
l. j. The value of investments of the staff provident fund of JS Investments Limited, as per
the audited accounts for the year
m. Ended June 30, 2010 was Rs. 15.978 million.
BALANCE SHEET AS AT JUNE 30, 2010
2010 2009
Total current assets 1,734,610,584 2, 014, 806, 74
Total liabilities 1,162,980,118 1,578,323,201
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2010
2010 2009
45,453,282 (1,721,175,000)
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18. CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2010
2010 2009
(306,281,131) (313,603,047)
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2010
428,071,953
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