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Financial Analysis of Jahangir Siddiqui Investment Limited _Final Draft_

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   Financial Analysis of Jahangir Siddiqui
             Investment Limited

                Prepared By

                Ambreen Tai

        Course Code :      MKT-606

              EMBA (Finance)

           FACULTY OF

                                                                  Financial Analysis of JS Investments Ltd


ACKNOWLEDGEMENT……………………………………………. 03


     1.1        Introduction................................................................... 06
     1.2        Research Objectives…………………………………….. 06
     1.3        Research Methodology………………………………….. 06
     1.4        Literature Review………………………………………….07

     2.1        Introduction……………………………………………….. 09
     2.2        Mutual Funds Basics…………………………………….. 10
     2.3        Types of Mutual Funds…………………………………...13
     2.4        Mutual Funds Advantages/Disadvantages……………..14
     2.5        Risks in Mutual Funds…………………………………….18

     3.1        Overview of JSIL…………………………………………..22
     3.2        Fund Manager Profiles………………………………...... 24
     3.3        Products & Services……………………………………... 24
     3.4        Investment Committee……………………………………26

     4.1        Financial Highlights……………………………………… 29
     4.2        Ratio Analysis……………………………………………. 31
     4.3        Horizontal Analysis……………………………………… 32
     4.4        Cash Flow Statement……………………………………. 33

     5.1        The Mahvash & Jahangir Siddiqui Foundation……….. 35
     5.2        Health Care……………………………………………….. 35
     5.3        Education…………………………………………………..35
     5.4        Social Enterprises and Sustainable Development……. 35

     6.1        Conclusion………………………………………………… 37
     6.2        Recommendations……………………………………….. 37

BIBLIORAPHY……………………………………………... 44

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I am grateful to Almighty ALLAH for helping and enabling me to complete the
project. I would like to appreciate and thank my project supervisor Dr. Noor Ahmed
Memon for his incessant guidance through out project completion process; he has
been available whenever I needed his guidance, assistance. I really appreciate his
positive comments for improving and bring out the utmost optimum consequences
out of my endeavors. Without his guidance and support I would have never been
able to organize and complete the project tasks as optimal and with in time
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. I would like to thank all my friends
and colleagues for their support throughout my project duration.

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                                                                   Financial Analysis of JS Investments Ltd

                   INSTITUTE OF BUSINESS
                      AND TECHNOLOGY

ABSTRACT SUBMITTED BY:                       Ambreen Tai

DISCIPLINE:                                  EMBA (Finance)

TITLE OF PROJECT REPORT:                     Financial Analysis of JS investments Ltd.

MONTH OF SUBMISSION:                         APRIL 2010

NAME OF PROJECT SUPERVISOR:                  Dr. Noor Ahmed Memon


Mutual funds are one of most important vehicle of investing in the stock market.
Mutual funds have played very important role in Pakistani stock market. The reasons
why I have selected JS Investments Limited (JSIL) is because it’s one of the oldest
and largest Asset Management Company (AMC) in Private sector, with over PKR
38.3 billion in assets under management, spread across various mutual funds,
pension funds and separately managed accounts. The purpose of this report is to
present the mutual fund introduction, structures, types as well as the basics of
mutual funds. This report describes the introduction of JS investments Ltd the fund
manager’s details who maintain the books of funds and invests into the stock market
on behalf of clients & financial analysis of JS Investment Ltd. The JSIL also provides
social services and has built Jahangir Siddiqui foundation that supports needy
people in education, and health care.

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                                                   Financial Analysis of JS Investments Ltd


 1.1   Introduction
 1.2   Research Objectives
 1.3   Research Methodology
 1.4   Literature Review

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                                                                      Financial Analysis of JS Investments Ltd

                                1. INTRODUCTION

1.1 Introduction

This topic covers mutual funds, Mutual fund structures, mutual fund categories and
the reason of investment in mutual fund. Financial Analysis of JS Investments as it is
one of the oldest and largest asset management company in private sector. We will
also have horizontal and vertical analysis of the JSIL. We will discuss the growth of
JS investment Ltd along with comparisons with other Investment Companies

1.2 Research Objectives

The    Objective   of   this   research        is    to    review         the      performance             of    JS
Investments. The hick ups, the rise and fall of investments returns and to
highlight the strategies of JS Investments Ltd in utilizing their strengths to
gain maximum and reduce the impact of up coming threats & to analyze
earnings of organization. In actual we want to figure it out that where JS
Investments stands if we compare with others. The entire working will be
done through Financial Analysis. The objective is to review the yearly
performance of the JS Investments Ltd about the Net Assets at the end of

1.3 Research Methodology

Here we will use secondary methodology because secondary methodology is much
less expensive than if the researchers had to carry out the research themselves and
in this methodology we can get the data from different sources for example Financial
Institutions Government Sources , Company-Provided Information, News and Media
Sources, Market ,Research Companies, from Securities & Exchange Commission of
Pakistan, And MUFAP (Mutual Fund Association of Pakistan), FMA (Financial
Market Association Pakistan. The following sources can help me out in the
completion of my research

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                                                                   Financial Analysis of JS Investments Ltd

Secondary Resource

By using secondary methodology model, I met with the management of JS
Investments Limited, Staff members, visited web sites, analysis of Annual Reports to
collect the data.

1.4 Literature Review

Self Experiences, Departmental peers experience.

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  2.1   Introduction
  2.2   Mutual Funds Basics
  2.3   Types of Mutual Funds
  2.4   Mutual Funds Benefits/Advantages
  2.5   Risks in Mutual Funds

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                                    2. MUTUAL FUNDS

2.1 Introduction

Mutual Fund is a pool of money provided by various participants and then invested
into equity & fixed income markets with the objective to provide safety of capital and
returns to investors. The pool is managed on behalf of the investors by a team of
specialized individuals, commonly known as Fund Mangers or Investment Advisors
It can also be defined as: A mutual fund is a professionally managed type of
collective investment scheme that pools money from many investors and invests it in
stocks, bonds, short-term money market instruments, and other securities. The
mutual fund will have a fund manager that trades the pooled money on a regular
basis and distributes the profits in the form of dividends as well
Currently, the worldwide value of all mutual funds totals more than $26 trillion. Since
1940, there have been three basic types of investment companies in the United
States: open-end funds, also known in the US as mutual funds; unit investment
trusts (UITs); and closed-end funds. Similar funds also operate in Canada. However,
in the rest of the world, mutual fund is used as a generic term for various types of
collective investment vehicles, such as unit trusts, open-ended investment
companies (OEICs), unitized insurance funds, and undertakings for collective
investments in transferable securities (UCITS).
Mutual funds provide an easy way for small investors to make long-term,
diversified,       professionally managed             investments           at     a    reasonable           cost.    If
an investor only has a small amount of money with which to invest, then
he/she      will    most   likely    not     be      able      to    afford        a     professional           money
manager, a diversified basket of stocks, or have access to low trading
fees. With a mutual fund, however, a large group of investors can pool
their resources together and make these benefits available to the entire
group. There are no “perks” for the largest investor and no penalties to the
smallest--all mutual fund holders pay the same fees and receive the same
Mutual funds are also popular because they provide an excellent way for

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anyone to direct a portion of their income towards a particular investment
objective. Whether you're looking for a broad-based fund or a narrow
industry-focused. You’re almost certain to find a fund that meets your
needs. Although the various style and category types are virtually endless,
here's a quick summary of some of the various choices available to equity

2.2 Mutual Funds Basics

Establishing an investment plan is an essential first step toward successful
investing. Understanding the investments best suited to helping you achieve your
goals is equally important. Mutual funds can fit well into either your long- or short-
term investment strategy, but the success of your plan depends on the type of fund
you choose. Because all investments in funds come with some level of risk, it is
important to have realistic expectations about the risk vs. return potential and
choose funds which are best suited to your individual needs.
You can make money from a mutual fund in three ways:
1) Income is earned from dividends on stocks and interest on bonds. A fund pays
out nearly all of the income it receives over the year to fund owners in the form of a
2) If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for
distributions or to reinvest the earnings and get more shares. For example
if a person going to invest with JS Investments Limited then the following
steps will be taken by the investor. And he should why he is going to
invest and what are the reasons behind his investment what kind of return
he will earn either he wants to have short term investments or long term
investments then customer relations team will guide investor accordingly
below mentioned chart tells us few steps how to go through the process of

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her important thing that with the time an investor can switch his investment from one
fund to another

Type of investments
There are different types of investments where people invest and get return
accordingly. There are following types of investments
      Bank deposits (current, saving, term deposits)
      Commodities (gold, silver, platinum)
      Property (land, house, apartment)
      Capital market instruments
If we invest in bank deposits and capital market instruments we don’t need to have
much money we can start investment with the lowest amount. On the other hand if
we talk about investing in commodities and property we need a huge amount of
capital and that will not affordable for everyone.

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Reason of investment
A person invests due to following reasons:
       Value of money diminishes over time
       We invest to appreciate its worth in real terms (after adjusting for inflation/
        devaluation) or to aim to maintain value of money.

Type of investors
There are two types
    1) Employed Individuals (all income segments)
    2) Institutions (large, SME, family businesses, partnerships)

Investment in Mutual Funds
The simple fact is that most people do not have time outside their work
and family life to scrutinize dozens of stocks and bonds before putting
their   money       in   for   investment.         This     job     can        be      left    to     professional
managers. Anyone can pick and buy certain hot stocks and make money
in the process. However, this fact should not make us believe that we will
always hit a sixer. It is an established fact that majority of part-time
speculators lose in the game of                       speculation. One should not confuse
speculation for investment. Investment through mutual funds is an ideal
option for those investors who do not have time to explore investment
opportunities       in   today’s      dynamic         and       ever        changing            capital        market

Risk & Return Equation
Logically if you invest heavy amount you will get high return but with higher risk in
the same way slight investment will give you low return and you will face less risk
against your investment.

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      Investments 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

2.3 Types of Mutual Funds

There are two generic types of funds available in the market
      Closed end Fund
      Open end Fund

Close end Fund
Closed-end mutual funds are more like the stock of a listed company, a fixed
number of whose shares are traded on an exchange. The shares of closed-end
mutual funds are priced at market value determined by supply and demand and are
not priced at the fund’s net assets per share value and thus may trade below or
above the net asset value; if the shares of a closed-end fund trade above the net
asset value the fund is said to be trading at a "premium" and if it is trading below the
fund is said to be trading at a "discount". A feature of closed-end funds is that they
can be converted into open-end funds.
      Units trade on a stock exchange which is the only exit route

      Trade at last price determined by the market which may be greater than,
       equal to or less than the NAV

      Do not continually offer units for sale

      No sales load (front end or back end), only management fee

      Some funds follow the practice of sharing excess profits above benchmark to
       align fund manager goals with that of the investor
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Open end Fund
Open-end mutual funds are also called unit trusts, because they are registered as
trusts. An open-end fund unit holder can redeem or purchase units at any time. Units
are priced at their Net Asset Value (NAV) on per unit basis and its unit price is
determined by the net increase and/or decrease in the share prices of the stocks
that the fund owns along with any dividends and capital gains received. The units of
an open-end mutual fund can be bought directly or through the Asset Management
       Registered as trusts
       Bought through the management company at offer price, which is
        NAV plus front end load, if any
       Redeemed through the management company at redemption price
        which is NAV less the back end load, if any
       In addition to sales load, if any, flat management fee is charged
       Some funds follow the practice of sharing excess profits above
        benchmark to align fund manager goals with that of the investor.

2.4 Mutual Funds Benefits/Advantages & Disadvantages

Advantages of Mutual Funds Investments

Mutual funds allow investors to benefit from the collective strength of the group
(pool). The benefits include:
   Services of Investment Professionals:

An average investor may not be well-versed with the capital markets, or have
access to adequate information to invest successfully or simply may not have the
time to acquire information and analyze it. By investing through a mutual fund, the
investor is able to acquire the services of a team of professionals dedicated to the
investment business, whose cost is spread over the entire pool and thus is at a very
low cost for the investor
   Ability to Diversify
An average investor will normally invest small amounts of money and will not be
able to achieve an adequate level of diversification if invested directly in the Capital
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Market. Where as even a small amount in a mutual fund will achieve immediate
diversification by becoming a part owner of the entire portfolio of the mutual fund
   Less volatile
By investing in diversified assets, mutual funds are generally less volatile than the
average equities portfolio of an individual investor
   Ability to invest very small amounts
An investor, who wishes to invest very small amounts, even Rs.1,000, can
do so by investing in some mutual funds (normally open-end funds). The
same amount of Rs.1,000 will not be entertained by any broker in the
capital markets, which are normally the exclusive domain of the rich and
   Ability to multiply savings
If an investor wishes to build up savings of small amounts every month, he does not
have to wait to first build up large enough amounts to invest meaningfully. By
investing every month in a mutual fund, the investor can make the monthly savings
earn and grow as these are accumulated
   Ability to diversify price volatility risk
At the point in time when an investor has some funds to invest, the market
may be rising (bullish) or declining (bearish). He is never too sure if he is
entering the market at              the    right     time.      By investing small amounts                           in
mutual funds regularly, the investor is able to average out the fluctuations
in the purchase price - some investment will be made when the market is
high and some when it is low; the average investment is likely to be at the
   Size does matter
With the growth in the size of funds under mutual fund management, the reach and
dimension of that fund in itself enhances its ability to exploit investment and trading
opportunities in the market

   Liquidity
Money invested in mutual funds can be redeemed either by selling the shares of a
closed-end fund in the market or by simply asking the Fund Manager for redemption
(refund at current market price) in the case of an open-end fund. There are no
penalties for early termination of the investment, which one may have to suffer in the
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case of term deposits with banks or other savings schemes. Below mentioned table
can also make your concepts clear regarding mutual funds benefits
You can also have a quick eye on the below mentioned table that will make your
concepts regarding mutual funds investments. The benefits has been summarized
for your convenience

Disadvantages of Mutual Funds Investments
                                           Mutual Funds provide the opportunity for
                                           long term growth without any long term
Liquidity                                  commitment required. In fact, Mutual Funds
                                           provide the option to redeem your
                                           investment on a daily basis.
                                           Mutual funds in Pakistan are exempted
                                           from tax as Mutual Funds have to distribute
Tax Benefits                               90% of their income to Unit Holders.
                                           Additionally, bonus units may be redeemed
                                           without any tax liability

Professional Management                    Dedicated research team, specialized portfolio
                                           management, and risk management oversight
                                           and controls.
                                           Mutual Funds provide the opportunity to
Diversification regardless of small        establish a well diversified portfolio without
Investment Amount                          the large investment typically required to
                                           achieve this diversification.
                                           Given that Asset Management Companies
                                           specialize in managing your investments,
Active Management                          investments with mutual
                                           funds attempt to weather all storms - taking
                                           advantage of ups & downs in the market.
                                           A Mutual Fund allows you to invest without
                                           requiring a large investment - in fact at JSIL
Accessibility                              you can invest for as little as PKR 100. This
                                           means that small amounts may be invested
                                           over a period of time.
                                           Net Assets of a Mutual Fund are
                                           completely under the custody the Trustee
Security                                   which ensures that the fund is
                                           operating within the investment policy as
                                           detailed in the Trust Deed.

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Changing market conditions can create fluctuations in the value of a
mutual fund investment.
There are fees and expenses associated with investing in mutual funds that do not
usually      occur         when           purchasing           individual              securities            directly.
As with any type of investment, there are drawbacks associated with mutual funds.
     No Guarantees.         The value of your mutual fund investment, unlike a
      bank deposit, could fall and be worth less than the principle initially
      invested. And, while a money market fund seeks a stable share
      price, its yield fluctuates, unlike a certificate of deposit. In addition,
      mutual funds are not insured or guaranteed by an agency of the
      U.S.       government.       Bond      funds,       unlike      purchasing            a     bond       directly,
      will not re-pay the principle at a set point in time.
     The        Diversification    "Penalty."       Diversification            can        help        to      reduce
      your risk of loss from holding a single security, but it limits your
      potential for a "home run" if a single security increases dramatically
      in value. Remember, too, that diversification does not protect you
      from an overall decline in the market.
     Costs. In some cases, the efficiencies of fund ownership are offset
      by     a     combination       of    sales      commissions,             12b-1        fees,       redemption
      fees, and operating expenses. If the fund is purchased in a taxable
      account, taxes may have to be paid on capital gains. Keep track of
      the cost basis of your initial purchase and new shares that are
      acquired by reinvesting distributions. It's important to compare the
      costs of funds you are considering. Always look at "net" returns
      when comparing fund performances. Net return is the bottom line;
      an investment's true returns after all costs are deducted.
Prospectuses will not contain all the costs that affect the net return on your
investment. This is why it is important to compare net returns whether or not the
fund in a no-load or load fund.

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2.5 Risks in Mutual Funds

Every type of investment, including mutual funds, involves risk. Risk refers to the
possibility that you will lose money (both principal and any earnings) or fail to make
money on an investment. A fund's investment objective and its holdings are
influential factors in determining how risky a fund is. Reading the prospectus will
help you to understand the risk associated with that particular fund.
Generally speaking, risk and potential return are related. This is the risk/return trade-
off. Higher risks are usually taken with the expectation of higher returns at the cost
of increased volatility. While a fund with higher risk has the potential for higher
return, it also has the greater potential for losses or negative returns. The school of
thought when investing in mutual funds suggests that the longer your investment
time horizon is the less affected you should be by short-term volatility. Therefore, the
shorter your investment time horizon, the more concerned you should be with short-
term volatility and higher risk.

Defining Mutual fund risk

Different mutual fund categories as previously defined have inherently different risk
characteristics and should not be compared side by side. A bond fund with below-
average risk, for example, should not be compared to a stock fund with below
average risk. Even though both funds have low risk for their respective categories,
stock funds overall have a higher risk/return potential than bond funds. Of all the
asset classes, cash investments (i.e. money markets) offer the greatest price
stability but have yielded the lowest long-term returns. Bonds typically experience
more short-term price swings, and in turn have generated higher long-term returns.
However, stocks historically have been subject to the greatest short-term price
fluctuations—and have provided the highest long-term returns. Investors looking for
a fund which incorporates all asset classes may consider a balanced or hybrid
mutual fund. These funds can be very conservative or very aggressive. Asset
allocation portfolios are mutual funds that invest in other mutual funds with different
asset classes. At the discretion of the manager(s), securities are bought, sold, and

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shifted between funds with different asset classes according to market conditions.
Mutual funds face risks based on the investments they hold. For example, a bond
fund faces interest rate risk and income risk. Bond values are inversely related to
interest rates. If interest rates go up, bond values will go down and vice versa. Bond
income is also affected by the change in interest rates. Bond yields are directly
related to interest rates falling as interest rates fall and rising as interest rise. Income
risk is greater for a short-term bond fund than for a long-term bond fund.
Similarly, a sector stock fund (which invests in a single industry, such as
telecommunications) is at risk that its price will decline due to developments in its
industry. A stock fund that invests across many industries is more sheltered from
this risk defined as industry risk.
Following is a glossary of some risks to consider when investing in mutual
        Call Risk.   The possibility that falling interest rates will cause a bond issuer to
         redeem—or call—its high-yielding bond before the bond's maturity date.
        Country Risk. The possibility that political events (a war, national elections),
         financial problems (rising inflation, government default), or natural disasters
         (an earthquake, a poor harvest) will weaken a country's economy and cause
         investments in that country to decline.
        Credit Risk. The possibility that a bond issuer will fail to repay interest and

         principal in a timely manner. Also called default risk.
        Currency Risk.     The possibility that returns could be reduced for Americans
         investing in foreign securities because of a rise in the value of the U.S. dollar
         against foreign currencies. Also called exchange-rate risk.
        Income Risk.    The possibility that a fixed-income fund's dividends will decline as
         a result of falling overall interest rates.
        Industry Risk.    The possibility that a group of stocks in a single industry will
         decline in price due to developments in that industry.
        Inflation Risk. The   possibility that increases in the cost of living will reduce                          or
         eliminate a fund's real inflation-adjusted returns.
        Interest Rate Risk.   The possibility that a bond fund will decline in value because
         of an increase in interest rates.

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   Manager Risk.       The possibility that an actively managed mutual fund's
    investment adviser will fail to execute the fund's investment strategy
    effectively resulting in the failure of stated objectives.
   Market Risk.   The possibility that stock fund or bond fund prices overall will
    decline over short or even extended periods. Stock and bond markets tend to
    move in cycles, with periods when prices rise and other periods when prices
   Principal Risk.   The possibility that an investment will go down in value, or "lose
    money," from the original or invested amount.

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  3.1 Overview of JSIL

  3.2 Fund Manager Profiles

  3.3 Products and Services

  3.4 Investment Committee

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                          3. JS INVESTMENTS LTD

3.1 Overview of JSIL

Founded in 1995, JS Investments Limited (JSIL, formerly JS ABAMCO Limited) is
the oldest and largest private sector Asset Management Company (AMC) in
Pakistan, with over PKR 38.97 billion (as at June 30, 2009) 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 around 10 billion (as at June 30, 2009).
Our Founding partners include INVESCO PLC (formerly known                                as AMVESCAP
PLC) - one of the world's largest fund managers with global reach, managing assets
in excess of US$370 billion and International Finance Corporation (IFC) - the private
sector arm of the World Bank Group. JS Investments Limited 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.
The group has offices throughout the major cities in Pakistan and manages its
international operations from its London and Dubai offices. The group comprises
businesses with over 18,000 employees and revenues of over US$750 million in
2006.JSIL is to date the best rated asset manager in Pakistan with a rating of AM2+,
the first asset management company in Pakistan to be rated as such, and credit
rating of AA-/ A1+ (long/ short term) awarded by The Pakistan Credit Rating Agency
Limited (PACRA).
JSIL's mutual fund product suite provides the most diverse range of products under
a single Asset Management Company including funds for every investment strategy
and risk profile
Scope of Services:

JSIL possesses a diverse set of licenses catering to investment requirements at
both the individual and institutional level.

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Investment Advisory and Asset Management Services
SECP has granted renewed license, dated June, 2007 to JS Investments under
Rule 5(2) of the Non-Banking Finance Companies (Establishment and Regulation)
Rules 2003, to undertake investment advisory and asset management services.

Investment Finance Services
SECP has granted license No. NBFC-22/IFS-10/2006, dated June 30, 2006 to JS
Investments     under    Rule     5(2)      of    the      Non-Banking              Finance          Companies
(Establishment and Regulation) Rules 2003, to undertake or carry out Investment
Finance Services.

Pension Fund Manager
SECP      has     granted       Registration          No.       SECP/PW/Reg-03/2007,                          dated
January 8, 2007 to JS Investments under Rule 5(2) of the Voluntary
Pension System Rules 2005, to commence business as a Pension Fund

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3.2 Fund Manager Profiles

Kashif Rafi
Mr. Rafi earned his MBA (Finance) from IBA Karachi, CA Foundation from ICAP and
CFA Level 1 from CFA Institute. He started his career with BMA Capital
Management, in May 2001 and worked their for 1-1/2 years as money market
dealer, joined Security Leasing Corporation Ltd, in November 2002 and worked their
for 6 months as treasury manager. He remained associated with Arif Habib
Investment Management as a Vice President, Fixed Income Funds, promoted to
SVP & Head of Fixed Income Funds, his total work experience at AHIML is 4 years
i.e. from May 2003 to May 2007.He joined JS Investments Limited as a Vice
President (Fund Manager) in May 2007 and has recently been promoted to SVP.

Syed Rehan Mobin
Mr. Mobin brings with him 10 years of highly specialized experience in the field of
Debt and Equity Markets. He is an MBA with majors in Finance. He has extensive
exposure of Fixed Income and Equity Portfolio Management, Research and Risk
Management. In his last assignment, he worked as Head of Fixed Income Funds at
National Asset Management Company Limited. Prior to that, he was engaged in
wealth management consultancy for high net-worth individual clients. He
successfully structured and managed Fixed Income Hedge Portfolio worth PKR
2,500 million and an Equity Portfolio worth PKR 200 million. He started his
professional career with Khadim Ali Shah Bukhari & Company Limited, where he
managed Fixed Income and Money Market department.

3.3 Products & Services
JSIL has launched a number of mutual funds and provides a number of services to
institutional investor as well as indivisual investors

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                                                                    Financial Analysis of JS Investments Ltd

Products of JSIL
From the establishment of JS Investments a number of funds have been
launched by the company which include the following open and close end

Open End Funds

   Unit Trust of Pakistan

   JS Income Fund

   UTP Islamic Fund

   JS Aggressive Asset Allocation Fund

   JS Fund of Funds

   UTP A30

   JS Capital Protected Fund I

   JS Capital Protected Fund II

   JS Capital Protected Fund III

   JS Capital Protected Fund IV

   JS Aggressive Income Fund

   JS Pension Saving Fund I

Close End Fund

       JS Value Fund Limited

       UTP Large Capital Fund

       JS Growth Fund

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                                                                    Financial Analysis of JS Investments Ltd

Services provided by JSIL

JSIL provides the number of services to the institutions as well as the individual
investors. People invest and get return accordingly

Institutional Investors

Investment Advisory Services Provides professional analysis of securities to
institutional investors as to the advisability of investing in, purchasing or selling of
securities for remuneration.

Mutual Funds JSIL's mutual fund product suite provides the most diverse range of
products under a single Asset Management Company. Review fund details to
expand your organization's investment portfolios.

Pension funds JSIL's Pension fund product suite allows and alleviates
your organization of administrative burden of maintaining Provident &
Gratuity fund while providing your employees with diverse investment

Separately Managed Accounts Manage portfolios of securities, including stocks and,
shares, pension and provident fund, participation term certificates and other
negotiable and debt

Individual Investors

Mutual Funds JSIL's mutual fund product suite provides the most diverse range of
products under a single Asset Management Company. This includes funds for every
investment strategy and risk profile.
Pension Fund Government employees have historically been the only people in
Pakistan with access to pension schemes while a sizeable majority of the
population, salaried professionals and self-employed individuals has never had
access to a structured and well regulated pension plans.

3.4 Investment Committee

The Investment Committee (IC) is responsible for recommending to the Board of
Directors the investment policies and strategies for the management of the Funds
and monitoring the performance of the Trustees, Auditors, Investment Managers
and other Fiduciaries. The Board of Directors through its Audit Committee monitors
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                                                                     Financial Analysis of JS Investments Ltd

the performance of the IC. The prime obligation of the IC is (a) to protect the
principal assets of the Fund, (b) to maximize the return to the unit/certificate holders,
(c) to maintain reasonable costs relating to managing the investments of the Fund,
and (d) to ensure the Funds assets are prudently invested in accordance with the
Investment Management Policy.

       Objective of reviewing the overall investments of the funds under

       Scope      includes    devising          strategies           and          taking          appropriate
        investment actions for all economic scenarios

       Meetings    are   scheduled        weekly        to    approve           quarterly         investment
        plan, review fund & manager performance in light of set targets

       Meetings can be event-triggered depending upon the prevailing economic
and market environment

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                                                         Financial Analysis of JS Investments Ltd

CHAPTER - 4 Financial Analysis
    4.1 Financial Highlights
    4.2 Ratio Analysis
    4.3 Horizontal Analysis
    4.4 Cash Flow Statement

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                                                                       Financial Analysis of JS Investments Ltd

                           4. FINANCIAL ANALYSIS
4.1 Financial Highlights

Below mentioned graph shows the performance of total assets of JS Investments it
clearly shows the picture from the year 2004 to 2009 initially it starts from 1000
Million and gradually increase till 2008 with the time it increases and sudden change
after 2007 because of foreign investments as we all know 2007 to 2009 foreign
investor showed deep interest in Pakistan for investment purpose and with in the
year total assets of JS Investments shoot-up from 3.2 Million to 5 Million

                               Total Assets (PKR in Millions)






                               2009     2008       2007      2006       2005       2004

Further if we move on we will get to know about profit of the company after
taxation in 2003 and after that in 2004 we can see the slight movement in
profit and increase 100 Million and after that a slight decline have been
checked in 2005 initially company couldn’t performed well in first 3 years
because of market crises and then with the time from year 2006 to 2009
profit increased 198 Million to 500 Million and in 2009 it goes to 600

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                                                                   Financial Analysis of JS Investments Ltd

Earnings per share actually present the performance of the company. Initially Stages
Company could not earn much but as the profit and net assets of the company
increases earning per share of the company shoot up from Rs. 2 to 5.5 and finally
has been decreased to Rs. 16 in 2009

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                                                                  Financial Analysis of JS Investments Ltd

As we move on we will get to know about the shareholders equity of the JS
Investments that also gradually increases. Another thing is the people were unaware
with the mutual fund industry and people used to get returns from the banks. As
people knew about the high returns with high investments public in actually wanted
to divert their investments where they can get more profit as compare to banks
because it all works with the Karachi stock exchange and with the country
circumstances Karachi stock exchange rises or decreases you can see in the below
mentioned graph that shareholders equity gradually increases and in 2009 it goes
up to 400 Million.

4.2 Ratio Analysis

Current Ratio                         Current Asset/current Liability                          2.29%
Debt Ratio                             Total Liability/Total Asset                             0.54%
Rate of Return on Total Asset        Net Income/Total Asset                                    0.13%
Earning Per Share                        Net Income/No. of Shares                              5.49%
Time Interest Earned Ratio              EBIT/Financial Cost                                    3.84%
Return on Equity                Net Income/Total Current Equity                               32.58%

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                                                                                       Financial Analysis of JS Investments Ltd

4.3 Horizontal Analysis of JSIL
Profit and Loss Account for the year 2009


                                                                                                                          2009                 2008

Remuneration from funds under management                                                                                439,879,978          626,928,164
Commission from open end funds under management                                                                           4,753,743           24,492,527
Dividend                                                                                                                 33,772,067          153,704,538
Underwriting commission                                                                                                                          687,500
(Loss) / gain on sale of investments - net                                                                             (355,151,304)         353,627,560
Income on Continuous Funding System (CFS) transactions                                                                                            51,155
Return on bank deposits                                                                                                   1,856,904            4,959,647
Mark up on term finance certificates                                                                                     44,518,534           32,157,918
Mark up on letter of placement                                                                                              742,482            3,291,015
Mark up on financing against shares                                                                                                            5,363,397
Mark up on commercial papers                                                                                               4,633,801           1,123,711
Commission income and share of profit from
  management of discretionary client portfolios                                                                             129,794           11,503,536
Amortisation of discount                                                                                                     52,714
                                                                                                     175,188,713                            1,217,890,668
Impairment loss on available for sale equity securities                                                               (1,314,093,976)
                                                                                                   (1,138,905,263)                          1,217,890,668

Administrative and marketing expenses                                                                         27        357,290,849          445,130,348

OPERATING (LOSS) / PROFIT                                                                                             (1,496,196,112)        772,760,320
Other operating expenses                                                                                      28           1,231,254          11,206,920
Financial charges                                                                                             29         291,423,117         211,194,387

                                                                                                   (1,788,850,483)                           550,359,013
Other operating income                                                                                                    14,828,371          23,234,754

(Loss) / profit before taxation                                                                                       (1,774,022,112)        573,593,767

Taxation - net                                                                                                           (52,847,112)         24,225,129

(Loss) / profit after taxation                                                                                        (1,721,175,000)        549,368,638

(Loss) / earnings per share for the year                                                                                      (17.21)                 5.49

The annexed notes 1 to 42 form an integral part of these financial statements.

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                                                                                      Financial Analysis of JS Investments Ltd

4.4 Cash Flow Statement for the year 2009
                                                                                                                  2009                  2008
(Loss) / profit for the year before taxation
                                                                                                                (1,774,022,112)        573,593,767
Adjustment for non-cash and other items:
Remuneration from funds under management
                                                                                                                (439,879,978)          (626,928,164)
Commission from open end funds under management
                                                                                                                (4,753,743)            (24,492,527)
                                                                                                                (33,772,067)           (153,704,538)
                                                                                                                34,999,098             45,211,247
Amortisation of intangible assets
                                                                                                                7,107,914              6,873,863
Financial charges
                                                                                                                291,423,117            211,194,387
Interest / mark-up income
                                                                                                                (1,856,904)            (4,959,647)
Liabilities no longer required written back
                                                                                                                (2,172,740)            (5,619,424)
Gain/ (loss) on disposal of fixed assets
                                                                                                                5,943,229              (1,504,614)
                                                                                                                (1,916,984,186)        19,664,350
Increase / decrease in assets and liabilities
Loans and advances
                                                                                                                3,536,738              4,000,144
Long-term receivable from related parties
                                                                                                                4,572,432              3,982,000
Deposits, prepayments and other receivables
                                                                                                                (1,727,552)            (17,485,865)
Accrued and other liabilities
                                                                                                                (44,042,398)           35,834,958
                                                                                                                (37,660,780)           26,331,237
                                                                                                                (1,954,644,966)        45,995,587
Taxes paid
                                                                                                                (30,406,979)           (69,293,224)
Remuneration and commission received from funds under management
                                                                                                                475,659,254            840,721,841
Net cash (outflow) / inflow from operating activities
                                                                                                                (1,509,392,691)        817,424,204
Investments - net
                                                                                                                2,551,427,941          (2,146,452,972)
Investment in subsidiary
Fixed capital expenditure incurred
                                                                                                                (4,446,577)            (15,243,740)
Dividend received
                                                                                                                33,807,317             230,146,976
Return on bank deposits
                                                                                                                2,014,587              5,222,943
Proceeds from disposal of fixed assets
                                                                                                                1,001,364              27,320,930
Net cash inflow / (outflow) on investing activities
                                                                                                                2,583,804,632          (1,936,505,863)
Repayment of principal amount relating to the securitised
                                                                                                                (91,690,000)           (280,000)
management fee Dividend paid
                                                                                                                (108,079,914)          (140,587,304)
Money market borrowings
                                                                                                                41,000,000             523,000,000
Repayments of long-term financing
Financial charges paid
                                                                                                                (297,967,670)          (187,424,377)
Net cash (outflow) / inflow on financing activities                                                             (456,737,584)          107,208,323
Net increase / (decrease) in cash and cash equivalents                                                          617,674,357            (1,011,873,336)
Cash and cash equivalents at beginning of the year
                                                                                                                (931,277,404)          80,595,932
Cash and cash equivalents at end of the year
                                                                                                   36            (313,603,047)         (931,277,404)
The annexed notes 1 to 42 form an integral part of these financial

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                                                          Financial Analysis of JS Investments Ltd

CHAPTER - 5 Corporate Social
 5.1 The Mahvash & Jahangir Siddiqui Foundation
 5.2 Health Care
 5.3 Education
 5.4 Social Enterprises and Sustainable Development

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                                                                     Financial Analysis of JS Investments Ltd

JS Investments Limited, like others JS Group entities, strongly believes in fulfilling its
Corporate Social Responsibility (CSR). The Company is a regular contributor of
donations to the Mahvash & Jahangir Siddiqui Foundation and other charities

5.1 The Mahvash & Jahangir Siddiqui Foundation

Established in 2003, The Mahvash & Jahangir Siddiqui foundation is a charitable,
non profit organization. The primary focus areas of the foundation are health care,
education and sustainable development through social enterprises. The foundation
supports the following organizations

5.2 Health Care

Jahangir Siddiqui and co limited make contributions to the following health care

      The Cardiovascular Foundation

      Sindh Institute Urology and Transportation

      Karachi National Hospital

      Patients’ Behbud Society for the Agha Khan University Hospital

      The Medical Aid Foundation

      Burhani Blood Bank & Thalessaemia Center

5.3 Education

      Fakhr-e-Imdad Foundation
      JS Academy for the deaf
      Lahore University of Management Sciences

5.4 Social Enterprises and Sustainable Development

      Acumen Fund
      Karachi Vocational Training Centre.

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                                                        Financial Analysis of JS Investments Ltd


6.1 Conclusion
6.2 Recommendations

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                                                                           Financial Analysis of JS Investments Ltd


6.1 Conclusion

The JSIL’S profit after tax for the year ended June 30, 2008 amounted to
Rs 549.368 Million compared to Rs.520.543 Million for the previous year
showing an increase of 5.5%. The management fee income from funds
under management increased sharply by 35.8% and reached Rs 626.928
Million compared to Rs 461,647 Million earned last year. Net after tax
contribution    from    investment          finance       services         segment          was       Rs      145.480
Million. Administration expenses for the year were recorded at Rs.441.246
showing an increase of 26% over last year. Earning per share for the year
was Rs.5.49.
Share price of the company also performed well in the stock market as the price
appreciated by 28% during the year and recorded at Rs 95.07 on June 30, 2008
against Rs. 73.90 per year share earlier. The company continues to maintain its
leadership position in the industry both in terms of the product suite and assets
under management was 12%, a growth of 20% compared to FY07 year end.

6.2 Recommendations

JS   Investments       is    one      of    the     oldest       and       largest        asset       management
companies in private sector and currently company has a very strong
market. Position in current situation where country is going through with
the tough time but still JS investments maintains its position and still
reaches   at    the     top    the         reason      behind       this        is    the      diversification         in
investment. If any company increases it borrowing from the market and
doesn’t   return      with    in     the     time      that     can        be        very     harmful         for     the
organization.    In    2008        has     short     term      borrowing             of   Rs     716       Million.     I
personally believe that company should not borrow much from the market
apart from this the company has also increased its accrued and other
liabilities from 68 Million to 108 Million. I recommend that company should
have 60% to 40% ratio that will be good enough for the company and

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should reduce the expenses. I as a part of JSIL feel proud to be a part of
this   prestigious   institution.   Well     I   strongly       recommend               that     investing       in
mutual funds is much better than investing in somewhere else because in
mutual funds experienced fund managers look after your investment and
try to give maximum benefits to the clients

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                                                                        Financial Analysis of JS Investments Ltd

                                 LEARNING CENTER

Asset Allocation Funds
These funds have highly fluid investment portfolios that target the best of any asset
class. They are a step ahead of balanced funds, meaning that they can invest up to
100% of their net assets in any particular asset class or in any combination of asset
classes. In a rising market, these funds generally take advantage of short term
spread transactions, realizing their profits in small and rapid steps. In declining
markets, they move swiftly towards safer asset classes. The element of risk in an
asset allocation fund is generally higher than that of a balanced fund, but the returns
are relatively higher as well.

Accessibility & Affordability
Most banks, financial institutions and other companies sell mutual funds and
facilitate clients on behalf of the management company. Additionally, the initial
amount is very small and this makes investing extremely easy and affordable.

Account Statement
Means statement of transactions in Units in the folio of the Holder

Balanced Fund
The objective of these funds is to provide a balanced mixture of safety, income and
capital appreciation. The strategy of balanced funds is to invest in a combination of
fixed income and equities. These funds maintain the debt and equity at certain ratios
which are adjusted periodically based on market conditions

Back-end Load
Means Sales Load deducted from the Net Asset Value in determining the
Redemption Price

Business Day
Means a day on which Banks are open for business in Pakistan

Constitutive Document
Means the Trust Deed that is the principal document governing the formation,
management or operation of the Trust.
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                                                                    Financial Analysis of JS Investments Ltd

Contingent Load
Means Sales Load deducted from the Net Asset Value in determining the
Redemption Price.

Means the definitive certificate acknowledging the number of Units registered in the
name of the Holder issued at the request of the Holder.

Means a bank, the Central Depository Company or any other Depository that for the
time being may be appointed by the Trustee with the approval of the Management
Company to hold and protect the Deposited Property or any part thereof as
custodian on behalf of the Trustee.

Core Investors
Means the initial investors, who shall be required to subscribe to and to hold number
of Units of an amount to be in compliance with Rule 67-2 (f) for the minimum two
years from the date of payment in full of such Units.

Core Units
Means such Units of the Trust that are issued to Core Investors with the condition
that these are not redeemable for a period of two years from the date of issue.
However, such Units are transferred with this condition and shall rank pari passu
with all other Units save for this restriction. Any transfer of these Core Units, during
the first two years of their issue, shall be affected only on the receipt by the Transfer
Agent of a written acceptance of this condition by the transferee.

A risk management technique that mixes a wide variety of investments within a
portfolio. It is designed to minimize the impact of any one security on overall portfolio
Deposited Property
Means the aggregate proceeds of the sale of all Units at Offer Price after deducting
there from or providing there out any applicable Sales Load and Duties and Charges

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                                                                    Financial Analysis of JS Investments Ltd

and Transaction costs and any other expenses chargeable to the Fund; and includes
the Investment and all income, profit and other benefits arising there from and all
cash, bank balances and other assets movable or immovable and property of every
description for the time being held or deemed to be held upon trust by the Trustee
for the benefit of the Holders pursuant to this Deed but does not include any back-
end or contingent charges payable to the Management Company or any amount
standing to the credit of the Distribution Account.

Distributor/ Distribution Company
Means a company, firm or a Bank appointed by the Management Company and
after intimation to the Trustee for performing the Distribution Function and shall also
include the Management Company and the Trustee, subject to approval by the
Management Company, if they perform the Distribution Function

Distribution Function
Mean with regard to:
      Receiving applications for issue of Units together with the aggregate Offer
       Price for Units applied for by the applicants
      Issuing of receipts in respect of (a) above
      Interfacing with and providing services to the Holders including receiving
       redemption applications, transfer applications, conversion notices and
       applications for change of address or issue of duplicate Certificates for
       immediate transmission, in accordance with the instructions given by the
       Management Company or the Trustee, to the Management Company or
      The Transfer Agent as appropriate; and
      Accounting to the Trustee for all (1) moneys received from the applicants for
       issuance of Units; (2) payments made to the Holders on redemption of Units;
       and (3) expenses incurred in relation to the Distribution Function.

These funds invest mainly in equity of companies and undertake the risk of price
movement at the stock exchange. Such funds are clearly expected to out-perform

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                                                                    Financial Analysis of JS Investments Ltd

other types of funds in a rising market. When the market declines, equity funds tend
to under-perform, when compared with other types of funds. Their strength is the
expected capital appreciation and windfall income through capital gains. However,
such funds are prone to losses when the market is declining.

These funds primarily invest in assets that pay a fixed-Rupee amount e.g., bank
deposits, treasury bills, term finance certificates and government bonds. They are
generally not affected by volatility at the stock exchanges. The element of risk is low
and so is the return.

Front-end Load or Preliminary Charges
Means the Sales Load that is included in the Offer Price of Units

Income Tax on Mutual Funds/ Investors
The impact of taxation on investor, investing directly or through mutual funds is
neutral. Mutual funds distributing ninety percent of income as dividend are exempt
from payment of income tax. The unit/ shareholders are subject to tax on dividend
distribution by mutual funds at the applicable tax rates.

Initial Period or Initial Offering Period
Means a period determined by the Management Company not exceeding ninety
days during which Units will be offered at the Initial Price in terms of the Offering

Initial Price
Means the price per Unit during the initial offering period determined by the
Management Company.

A mutual fund allows you to request that your units be converted into cash at any

Mutual Funds
A mutual fund is a pool of money provided by various participants and then invested
into equity and fixed income markets with the objective to provide safety of capital
and returns to investors. The pool is managed on behalf of the investors by a team
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                                                                     Financial Analysis of JS Investments Ltd

of specialized individuals, commonly known as fund managers or investment

Net Asset Value (NAV)
Means per Unit value of the Trust arrived at by dividing the Net Assets by the
number of Units issued.

Offering Document
Means the prospectus, advertisement or other document (approved by SECP),
which contains the investment and distribution policy and all other information in
respect of the Unit Trust, as, required by the Rules and is circulated to invite offers
by the public to invest in the Unit Trust.

Professional Management
Mutual funds being large entities are managed by professional portfolio managers
who have the right levels of qualifications and experience to handle and search for
best securities for the fund. These funds may have crucial, real time information from
the markets and are able to execute large trade volumes on timely and cost effective

Par Value
Means the face value of a Unit that shall be determined by the Management
Company in consultation with the Trustee from time to time.

Regulatory Body/ Authority
Mutual funds are regulated by the Securities and Exchange Commission of Pakistan

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                                                                Financial Analysis of JS Investments Ltd


1. www.answer.com/topic/mutual-fund#history
2. http://www.atozinvestments.com/mutual-funds-history.html www.jsil.com
3. http://jsil.com/learningCenter.do
4. http://www.arifhabib.com.pk/mutual_funds/ppfl.aspx
5. http://www.arifhabib.com.pk/education/why_mutual_funds.aspx
6. www.investorwords.com
7. http://www.answers.com/topic/mutual-fund#History
8. Source: Ross Westerfield Jaffe (Corporate Finance 7th Edition)
9. Source: JSIL annual report 2009

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