Darson Securities Pvt Ltd Internship Report

They aim to be an organization that is founded on… • • •

Growth through creation of sustainable relationships with DSL customers. Prudence to guide DSL business conduct. A national presence with a history of contribution to DSL communities.

They shall work to… • • •

Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders.

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They aim to be peopling who… • • • •

Care about relationships. Lead through the strength of DSL commitment and willingness to excel. Practice integrity, honesty and hard work. They believe that these are measures of true success.

They have confidence that tomorrow we will be… • • •

Leaders in DSL industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment

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It gives me great pleasure to announce that Darson Securities Pvt Limited Pakistan is gearing up to the challenges faced by the domestic brokerage industry due to innovations and advances in the international brokerage world, which is the consequence of globalization. Now DSL core objective is to create an interest for equities market and with other investment avenues. So let start from Reasons to invest in equities markets. When we talk about a market there should be a buyer and a seller, the same concept applied here in equities market. This market can also divided into two parts. One is primary market of equities in which you just fill the company's subscription form at an offering price of defined quantity of shares usually 500 share lots. The second is secondary market where you can directly active for buying and selling of a particular shares known as stocks/equities market known as Stock exchange where buyers and sellers execute their orders according to their views and opinion on the particular shares or on overall stock market synchronized by index methodologies. You have heard about the phrase 'Higher the risk and higher the returns' but this does not mean you work in irrational manners. Investment in equities market is a risky task as compare to other markets. Grabbing maximum returns varies according to individual-toindividual skills and personality for bearing risk for a particular time period depends on the objective wanted to accomplish. Few individuals take this business as a part time job some consider as full time job in both cases end point is to maximize the wealth or savings for future better perspectives in life. But when we talk about to manage these funds in efficient manners and overcome on hiccups of inherent total risk is not a game. We need to establish an appropriate investment plan for getting higher returns with minimum owing risk or cost of transaction. In other words there is a rational way and irrational way to manage required returns but making sense for defining rational and irrational way of individuals for any tradable instrument is very difficult. Because in stock market at the time of trading execution order there are reasonable sellers available at a particular price in time to sell and on other side reasonable buyers are willing to buy at the same price the seller want to sell both at the time of inference assuming right on the way but only one get capital gains and other get capital losses. In DSL view it depends on your trading or investing style in stock market. Few of trading or investing style are as follows. follows. Chairman& President

Zeeshan Dar

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“The company is committed to provide excellent and personalized professional service to all its clients. We believe that quality research is vital for the success of any brokerage house and we aim to provide objective and unbiased market research to DSL valued client.”

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“Darson Securities mission is to become Pakistan's leading Brokerage house, focusing on equity and debt organization and distribution, through value-added products targeted at various institutions, and high net worth individuals. By combining the activities of equity brokerage and investment advisory, the company will be able to conduct diverse activities including equity organization, debt distribution, fund management, etc. It is also in the process of obtaining an Investment Advisory License from the SECP. This license will entitle the Company to undertake all from of advisory service including ones related to fund management.”

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“Darson As a firm we obsessed with service quality as we recognize that technical superiority alone is never enough to excel in a service industry. We are committed to innovation and market leadership but we recognize that only a serious commitment to customer service will allow Darson Securities to truly distinguish itself. Success in DSL industry is a function of customer satisfaction. Therefore, each one of us believes that we must build the kind of relationships that last over time; relationships that are based on mutual trust, confidence and professional respect. We realize that the integrity of DSL people is crucial to building such relationships. That is why extra care has been taken to recruit professionals who are not only technically competent but have also exhibited the highest possible moral and ethical standards.”

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“Now Our core objective is to create an interest for equities market and with other investment avenues.” “In other words there is a rational way and irrational way to manage required returns but making sense for defining rational and irrational way of individuals for any tradable instrument is very difficult.”

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Darson Securities (Pvt.) Ltd. is a corporate member of the Karachi Stock Exchange and the Lahore Stock Exchange. Darson Securities (Pvt.) Ltd. was incorporated in January 1998, 1998, at Lahore, Pakistan. It is a limited liability company formed under the Company’s Ordinance 1984. Its services include equity brokerage, corporate finance, portfolio management, online foreign exchange trading, and commodity trading. The company offers brokerage services to fund managers, unit trusts mutual funds, brokerage companies, high net worth individuals, and retail investors. Darson Securities (Pvt.) Ltd. was formerly known as Darson (Pvt.) Ltd. and changed its name in April 2000. The company was earlier incorporated as Darson (Pvt.) Ltd. Ltd. in March 2000 and the name was subsequently changed in April 2000. 2000. Darson Securities (Pvt) Ltd. was incorporated in the year 2000 having Company Registration number L-10156 of 1999-2000

The Darson Securities (Pvt) Ltd is the member company of Dollar East Group Of

Companies; the Group has a lot of projects in its list. Some major and prestigious projects are as follows: 1- Gift University (The First Ever High Education Institute Based in Gujranwala) 2- Chain Designer (The Biggest Supplier of Gold Chains in Pakistan) 3- Dollar East Exchange Company (The top rated Foreign Exchange House) 4- Bio Vet (Pvt) Ltd (specialized in distribution of vet nary food and vaccination) 5- AWAS International (deals in Computer imports and distribution)

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The paid up capital of the company was Rs. 20 million with corporate membership at the Lahore stock Exchange. Darson also acquired a corporate membership at the Karachi stock Exchange and has been operational since September 23, 2002. The paid up capital of the company now stand at Rs. 120 million, with the authorized capital at Rs. 200 million. The sponsors realize the need to enhance the capital base further and have decided in principle to increase it to Rs. 700 million through IPO by next year.

Number of Share held by Shareholder: Name

Amount of Share Capital

Sabahat Dar Imrana Farooq Malik Nadeem Asghar Malik Waheed Asghar Shameem Akhtar

6,000,000 5,990,000 5,500,000 5,500,000 5,000,000

Hence this is the total division of paid up capital of the Company. -

Now of the Company is Rs-200 Million;

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The Capital of the Company was Rs-48 Million at the Time of Incorporation.

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Later it was increased to Rs-70 Million.

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Now a day the Company has paid up capital of Rs-120 Million.

The division of Paid up Capital and shareholding patron among Chief Executive, directors and shareholders (Shares of Rs 100 each) Name

Designation

Zeeshan Dar M. Anwar Dar M. Farooq Dar Madam Robina Mehmood

Chief Executive Director Director Director

Amount of Share Capital (Figures in Rs) 27,500,000 9,000,000 15,500,000 5,010,000

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The company has eight branches in Pakistan, with head office at Lahore, Corporate office at Karachi and regional office at Gujranwala and Multan, others sales office include one in Lahore and three in Karachi. Darson Securities is own subsidiary of Credence Group, a well diversified business family with active interest in money exchange, equity broking, software development, educational institution, imports/ distribution and gold chain manufacturing. Mission Darson Securities mission is to become Pakistan's leading Brokerage house, focusing on equity and debt organization and distribution, through valueadded products targeted at various institutions, and high net worth individuals. By combining the activities of equity brokerage and investment advisory, the company will be able to conduct diverse activities including equity organization, debt distribution, fund management, etc. It is also in the process of obtaining an Investment Advisory License from the SECP. This license will entitle the Company to undertake all from of advisory service including ones related to fund management. The company is committed to provide excellent and personalized professional service to all its clients. We believe that quality research is vital for the success of any brokerage house and we aim to provide objective and unbiased market research to DSL valued client.

Head Office

Corporate Office

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Contact Person: Zulfiqar Ali

Contact Person:

Room No. 102, 1st Floor,

M. Saqib Islam

Lahore Stock Exchange Building,

Room No. 808, 8th Floor,

Lahore, Pakistan.

Business & Finance Centre,

UAN: 111-900-400

I.I. Chundrigar Road,

Ph: +92-42-6317111, 6366655 +92-42-6316777

Karachi-Pakistan.

Karachi Office

Ph: +92-21-2470755-57

Lahore DHA Office

Gujranwala Office

Room # 808, Business & Finance Centre,

Contact Person

Contact Person:

Mohammad Asif

Mr. Waheed Asghar Malik

I. I. Chundrigar Road,

T-23, Phase II,

Office No. 3, 1st Floor, GDA, Trust Plaza,

Karachi, Pakistan Phone: 92 11 190 0400 Fax: 92 41 247 1088

Commercial Area DHA, Lahore Pakistan. Ph: +92-42-5743181-84 Fax: +92-42-5743185

Near General Bus Stand, Gujranwala Pakistan. Ph: +92-553-732961-64 Fax: +92-553-732965

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CHAIN DESIGNER Manufacturing of quality gold chains Chain Designer is Pakistan’s largest manufacturer of quality gold chains. The company has captured a big share of the Domestic Jewelry market and its products are exported as well. The company was established in 1999, with a paid-up capital of Rs. 20 million.

BIO VET LTD. Importers of Poultry Biologics and Pharmaceuticals. Bio- Vet is the single largest distributor of poultry vaccines and other medicines in Pakistan as well as several countries in the Middle East; Established in 1984, the company has successfully expanded its operation having 12 offices throughout Pakistan. LINK MAZE (PVT.) LIMITED www.linkmaze.com.pk Link Maze (Pvt.) Limited was incorporated in year 2004. The company deals in imports of heavy construction machinery, scrap and many other industrial new and used items. Link Maze has rich, varied and diversified experience in the field of Imports, Real Estate, Construction and Power sector.

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Darson is sponsored by a well established group of Pakistan; commonly know as Dollar East Group, with very successful business ventures in various fields including software development, educational institution, import/distribution and gold chain manufacturing etc. Mr. Anwar Dar is the chairman & Mr. Zeshan Dar is the CEO of the group . Presently sponsor directors own majority of the Company’s equity equally, while the remaining portion is held by Mr. Ghayas Uddin.

DOLLAR EAST EXCHANGE COMPANY (PVT.) LTD. Dollar East Exchange Company (Pvt.) Limited is a leading exchange company providing money exchange and remittance services in Pakistan. The company is one of the pioneers to start currency exchange business in the country. It was amongst the first companies to receive the license of money changer from State Brokerage house when this business was regularized in 1992. The company currently operates a network of 15 branches which are strategically located in all high potential areas of Pakistan and representative offices in all over the world. The network of these foreign correspondents is being rapidly expanded to provide remittance service in other countries of the world.

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ROSHNI HOMES A Home for Orphans At Roshni homes, we hope to support the international and national efforts to promote and protect the Rights of Children. The main aim of the Trust is to ensure better socialization and ensuring physical growth of the children who are without parental care. This is to be carried out irrespective of their color, caste, creed, race, religious belief, ethnic background or any other social status. We aim to provide services of the family, higher education, health, shelter, recreation and food all under a friendly environment. We also hope to improve the quality of current efforts to detect, treat and improve the quality of services rendered to these destitute children. In addition to all this , the trust also aims to design and arrange comprehensive training programs for professionals and concerned parties engaged in efforts to deal with these children. www.roshnihomes.org GIFT UNIVERSITY: www.gift.edu.pk Gujranwala Institute of Future Technologies. GIFT is the group largest undertaking in provisioning quality education in Pakistan. The state of the art campus at Gujranwala has started its operations offering courses in modern disciplines such as computer Engineering, E- Commerce and Business Administration etc. Punjab Education Department has also granted GIFT a university status.

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MANAGEMENT STRUCTURE & HIERARCHY:

CHIEF EXECUTIVE CHIEF OPERATING OFFICER LHR

CHIEF MANAGERS Finance: Accounts: Sales: Human Resource: Admin: Online Trading: Business Development: IT: Online Trading

MANAGERS Finance: Accounts: Sales: Human Resource: Admin: Online Trading: Business Development: IT: Online Trading

CHIEF OPERATING OFFICER KHI

CHIEF MANAGERS Finance: Accounts: Sales: Human Resource: Admin: Online Trading: Business Development: IT: Online Trading

MANAGERS Finance: Accounts: Sales: Human Resource: Admin: Online Trading: Business Development: IT: Online Trading

Non- Managerial Staff

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The Chief Executive Zeeshan Dar

Trading & Marketing Department

Finance Department

1- Zulifqar Ali (Senior Agent) Corporate

Zubair Ahmed (Finance & tax manager)

2- Mehram Ali (Senior Agent) Individuals

Muhammad Saeed (Deputy Finance manager)

3- Ghayas-Ud-Din (Senior Agent) Corporate-Karachi

Haseeb Iqbal (Accounts Officer)

Nasir Hussain (Assistant to finance manager)

CDC & Settlements Department Farhan Mir (Manager CDC) Faraz Haider (Settlements Manager) Izhar-ul-Haq (Deputy manager CDC) Toqeer Butt (Assistant to CDC manger)

The Darson since its incorporation has been showing excellent performance in share brokerage business, the management of the company which include 1- ZEESHAN DAR (Chief Executive) 2- GHAYAS-UD-Din (Chief operating officer) at Karachi Office 3- ZULIFQAR ALI (Chief operating officer) at Lahore office

Zeeshan Dar (Chief Executive Officer)

The Chief Executive Officer of DSL, Mr. Zeeshan Dar is currently heads the Board. He has more than 8 years of finance and marketing experience with his own family business “Dollar East”. Mr. Dar completed his MBA with major in finance from an Australian University. Mr. Dar has been actively involved in Karachi stock Exchange since 1996. He is also responsible for the management of the group portfolio.

M. Ghayas Uddin (hief Operating Officer)

Mr. Muhammad Ghayas Uddin, has had 12 years of experience in stock broking business with Citibrokerage house and various brokerage houses. He was involved in product sales and managing the unit’s client base and settlements desk for foreign equity investments in INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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both primary and secondary market transactions and was instrumental in re-engineering control and management systems. His experience includes exposure to all the local, foreign and operational aspects and is fully conversant with all financial matters related to equity trading operation. He holds a M.Com degree from the University of Karachi.

Saqib Islam (CFO)

Mr. Saqib Islam is one of the pioneer team members and integral part of DSL. Right from the start of Darson’s borkerage activities at Karachi Stock Exchange, he provided strategic management of accounting, finance functions and risk management controls. His financial management abilities in the fields of due-diligence, compliance and MIS, helped DSL to develop a competitive product offering.

Tariq Hussain Khan, Head - Portfolio Management Services

Mr. Tariq Hussain Khan has over 15 years of experience in capital markets. His last assignment was at Elixir Securities (Pvt) Ltd as Head of Portfolio Management Services. During his career Mr. Hussain has worked at some of the leading brokerage houses and asset management companies in the country. His core expertise is research analysis and portfolio management and during his career he has completed in-depth analysis on economy and various sectors such as brokerage houses, cement, textile, fertilizer, automobiles, etc. Tariq brings with him strong fundamental & technical qualifications, allowing him to implement long-term and short-term investment strategies. By qualification, he is an MBA in Brokerage & Finance (PIMSAT).

Aftab Merchant, Head - Corporate Sales

Mr. Aftab has been associated with Pakistani capital markets since 1998, working for both local and multinational firms. His expertise includes forex, private equity, corporate finance and equity sales. Prior to joining Darson Securities (DSL) he served as Head of Brokerage, Escorts Investment Brokerage house. Over the years Aftab has been an essential part of every institution he has been associated with. He holds an MBA in Marketing from King's College, UK.

Saad Mehmood, Head - Business Development & Strategy

An ex-commercial brokerage houseer by profession, Saad joined DSL in 2008 and has been a vital part of the firm. Holding a Bachelors degree in General Business from Oklahoma (USA), Saad has experience in sales, services and management. During his brokerage tenure he served as a Branch Manager for prominent institutions such as Union Brokerage house, Standard Chartered Brokerage house and NIB Brokerage house.

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Muhammad Akhtar, Head - Online Trading

Mr. Akhtar has more than 5 years of experience in online brokerage automation, operations, sales & marketing. Prior to joining DSL he was working with ApplicationXS (Pvt) Ltd., a pioneer of online trading systems in Pakistan, as manager sales & marketing. There he gained invaluable knowledge of retail brokerage through online trading services and helped implement them at leading brokerage houses.

Dil Awayz Ahmed, Manager - Finance & Admin

Mr. Dil Awayz is a pivotal team member of DSL as well as one of the pioneers. He is well versed in corporate issues related to the brokerage industry. His core responsibilities include managing all accounting functions of DSL and to liaison with brokerage houses & regulatory authorities. Throughout his career Dil Awayz has dealt with all responsibilities with utmost competence and professionalism. He holds an M.Com degree from Hailey College of Commerce, University of Punjab and has recently undertaken CA certification.

Shiraz Ali, Head - Information Technology

Shiraz has vast experience in IT networking which has been crucial to DSL’s success. His technical skills have played a vital role in the development of the firms IT infrastructure. He holds a MSC in Information Technology from University of Karachi. These all are the dedicated members of this team and all these persons have excellent experience of stock market trading and making their best for better results of company’s portfolio.

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The company has a flat structure and modern horizontal style of management exits in the company, the Chief Executive of the Company is sitting at Lahore in head office and the Saqib Islam (Chief Finance Officer) of Karachi branch mainly handles the Karachi office. There are two main shares trading agents in Lahore office acting on company’s behave having many corporate clients for shares portfolio. The names of these two agents are:

1- Zulifqar Ali Anjum 2- Mehram Ali Mr. Zulifqar Ali Anjum is a very senior agent and having many prestigious investment Companies in clients list including 123456-

Al-Khair Five Star Foam, Crescent Investment Brokerage house, Switch Securities, First Pakistan Securities Ltd, Wasiullah Khan Securities Arif Habib Securities. And many other Corporate Clients

Mr. Mehram Ali is mainly dealing with individual clients of the company. Mr. Ghayas-UD-Din is the main trading agent at Karachi Office Mr. Farhan Mir is CDC manager and deals with the shares incoming and out going deliveries, which has to give or take from the National clearing Company. The company has to take and give the deliveries of the shares which take place due to the trading of shares and whose settlement take place due to T+3, Spot And T+1 trading of the clients, all these settlement is responsibility of CDC department. The company has a strong internal control relating to the reconciliation of the Stock of shares available in- individual CDC A/C and the holding of the clients; the reconciliation takes place on weekly basis.

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Mr. Faraz Haider is the Settlement manager, manager, his duties include the receiving and payment of the share price from the clients for the delivery of shares, and also the commission slab rates with the new clients. The statement services of the company provide the facilities of giving the confirmation of the transactions and ledger balances to the clients. The corporate clients have certain limit of the balance retaining say Rs-100, 000/-. They pay the remaining amount through cross cheque. The company has huge amount available for maintenance of its portfolio, at this time company has a portfolio of Rs-50 Million, Million, the company earned a capital gain of Rs 4 Million this year and 2.5 Million last years.

Primary market is very rewarding and need intensive capital investment in Pakistan and all over the world; usually the prices of securities are less in primary market and best time for investment in some special securities in this time, the always tries to avail such investment opportunities.

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“An organization without product is like an individual without his/her aim of life”

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The company is committed to provide excellent and personalized professional service to all its clients. It believes that quality research is vital for the success of any brokerage house and it aims to provide objective and unbiased market research to its valued clients. Its product range has been structured such that a sustained growth in revenues can be maintained. Product offering will include the following: • • • • • • • • •

Equity Brokerage Equity Research Portfolio Management Investment Advisory Debt Advisory Asset Management Corporate Finance Online Forex Trading Personalized Services

The growth and structural change in Pakistan’s financial and capital markets have created significant opportunity for properly focused “financial house”. Darson Securities objective is to become a highly specialized equity corporate finance house, and public sector of Pakistan. Darson has primarily focused on equities sales and trading and has been successfully offering brokerage facilities to hundreds of satisfied retail clients and some of the institutions namely.

Equity Brokerage DSL has maintained an untarnished reputation for excellence as a full-service broker. DSL commitment to providing DSL clients with superior investment advice, attentive customer service, and excellent trade executions continues to provide the foundation for DSL success in the brokerage services industry. DSL customers are fund managers, unit trusts mutual funds, brokerage firms, high net worth individuals and retail investors.

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Equity Research Fundamental Research: We realize that credible research is vital for the success of a securities house. We view research as an essential pillar supporting DSL full-service platform and believe that the quality of DSL research will distinguish us from DSL competition. Consequently, we place a lot of emphasis on providing reliable, accurate and up-to-date research. To achieve this we have staffed DSL research department with high quality professionals and provided them with some of the best technology available around. So understanding that every investor’s needs and goals are different, we provide a comprehensive set of research reports, so that you can make the right investment decisions regardless of your investing preferences! Morning Glimpse Morning Talks is a daily publication which covers daily news, current issues, political and economic events, payouts and expected announcements of particular stocks. Evening Glimpse This document discusses precisely overall intra-day trading activity with DSL comments on important events on that day and reasons behind the price fluctuation of various stocks. CFS & Market Information This document discusses released and unreleased amount acquired by the investors for financing themselves.

Technical Analysis Milestone (Tech Paper) Overall general trend, weekly and daily stocks trading inferences.

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Parameters for trading Yesterday's price parameters, support and resistance levels. These all numbers work interchangeably, as support and resistance mechanism helpful in trading. Performance sheet Different important numbers that gives you an idea on a period basis of specific stock is basically performing and its momentum. Also provides you a clue for accumulation or distribution hints.

Financial Portal Financial Portal with features that include do-it-yourself technical analysis and historical data of listed companies for in-depth analysis.

Portfolio Management DSL portfolio management and investment advisory services are structured to provide high returns while maintaining a strict control over capital preservation and liquidity. These products will be targeted towards individual and institutional investors on a discretionary and non-discretionary basis and will include both money and capital markets instruments. Given the experience of Darson Securities’ personnel in this area we expect to introduce innovative, low risk financial products that will allow us to meet the individual investment needs of DSL customers

Corporate Finance DSL top management has unmatched network of relationships with leading corporations of Pakistan. These relationships have been honed to a point where we virtually act as permanent advisors to such corporations. Such unlimited access gives us a tremendous competitive advantage when originating corporate finance transactions. DSL corporate finance activity is aimed at assisting private and public sector companies to formulate and execute plans for raising equity and debt capital. We also provide advisory services with regard to their existing financial and capital structures. Specific capital markets products include advisory and private placements of new and existing shares, underwriting of public issues and arranging short and long term commercial debt and trade finance.

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Commodity Trading

www.ncel.com.pk Darson is also member of National Commodity exchange of Pakistan, and offers its clients commodity trading facility in NCEL, a world-class commodity futures trading platform to trade in a wide spectrum of commodity derivatives.

Online Forex Trading DSL sponsor, Dollar East, one of the largest exchange companies of Pakistan, on line foreign exchange web site to help the importers, exporters, and general public to buy sell remit or send money overseas online. We are in touch with State Brokerage house of Pakistan on this issue and once granted permission will launch a secure web site.

Personalized Services Experience ease and convenience - from opening your account to accessing top research. To all investors, we offer investment guidance and portfolio planning. DSL goal is simple: to give you everything you need to do better. Whether you want to manage your portfolio yourself or have us professionally manage it, you’ll receive one-on-one investment guidance and portfolio planning from an experienced investment professional. At Darson, we believe that no matter how you choose to work with us, you deserve a personal relationship based on respect and listening. It’s the foundation from which we’ll support your financial needs and goals. Enjoy the benefits of a full-service broker—without high prices or fees. At Darson, it’s DSL belief that you should always enjoy low, easy-to-understand prices and superior service with no compromises. Simply put, you get more for your money here.

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“Control can be kept through the feedback of activities performed”

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Equity Brokerage DSL has maintained an untarnished reputation for excellence as a full-service broker. DSL commitment to providing DSL clients with superior investment advice, attentive customer service, and excellent trade executions continues to provide the foundation for DSL success in the brokerage services industry. DSL customers are fund managers, unit trusts mutual funds, brokerage firms, high net worth individuals and retail investors.

Functions of Finance Department of Brokerage House and Information flow at the end of trading day Broker’s own database software

Take the Back up of the entire trading transactions of that particular brokerage house, from the central system of stock exchange which have been take place during the trading day. The system of the brokerage house is updated accordingly. The reconciliation between the Lahore stock exchange and brokerage house information system for the settlement figure of the trading day and confirmation of the deliveries of the final settlement .

LSE central data base software has record of the entire transaction take place between all brokers

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Investment Advisory Investment Advisory Investing is a part of finance in which you manage savings or excess savings amount to provide a safeguard against strategic economic down falls impact on the particular country currency in future. Therefore some portion of the investment management consider as an art and some portion as science. We believe you don't need much convincing about the wisdom of investing. However knowledge about the subject is your power more learning more perfect in managing investment amount in different investment avenues. In this the key of success is to achieve your objective in consistent manners through assimilating strategies successfully that made earlier before entering into investing obligations, which is not a game. But your right decisions on a right time will make you a winner to get higher returns from different investment avenues in comparison to your annual required rate of return. In Pakistan required rate of return for developing portfolio is range from 25% to 30%. If you are novice at investing terms such as Stocks, Bonds, Mutual funds, Money market instrument, Commodities, Financing mode for carry over open transaction over a period of time, Graph patterns, P.E ratios, Capital gain/loss, Risk, Yields may sound Greek and Latin. Relax you will become familiar with these terms in this course ahead. Being enthusiastic about getting started is the first step, though some hitch or anxiety at the first instance will hold your head. But as soon as you aware how to invest in efficient manners will make you aweless. That's why DSL investing course begins with a dose to encouragement with reasonable time and focus on discipline. There is no guarantee or warranty to find out the right moves in tradable instrument markets. But you can mange your trades wisely to find the right move or direction of the tradable instruments in the market. Patience and motivation to icon your savings across a portfolio of securities depends on your own bespoke nature that suits your age and risk profile. This will boost your revenues at the same time cushion you against any major losses. Investing is not a gambling; neither a speculation; nor you need to put the money into the 'Next Info system,' without measuring monetary benefits or having intention to make killing and creating problems for others. It's all about taking reasonable risk to mature steady rewards / investment returns. Trading or investing in capital, financial and commodities markets is one way to achieve these goals. Irrespective of whether, you work as a full-time trader/investor or a part time trader. If you do not have discipline in properly timed work you always do mistakes, same like you need discipline in this risky business where money flows directly from few seconds to years. You must have mission of rules in your mind for making inferences in these markets and should avoid following mistakes. “Poor understanding and knowledge about tradable instruments in these markets will dry your capital amount. Means you should have knowledge about Fundamentals and Technical of the instruments.

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Because every economic activity starts from country economy. In both analyses we need Growth rates of particular sector, Government policies towards particular sector and Federal Brokerage house activity for determining values and expected trading volume. Therefore the definition of Fundamentals analysis would be "Predicating future price movements from analysis of the fundamentals about the company or commodity in question" is necessary for determining intrinsic values and assessing history of the instruments for issued returns. And the definition of Technical analysis is "The study of stocks and the overall market bases on supply and demand. Technical analysis use charts of historical price and volume activity to predict future price movements" is essential for evaluating real values and assessing history of the instruments for capital gain returns. Both studies have much significance if use in efficient manners. The Mechanics of these studies is the way, to implement sequential approach for analysis of any instrument. In Fundamentals we make sure consistency in earnings track record of the instruments and its expected fair value of the instruments. While in Technical's we make sure the phase of instrument price present on time scale? How much the risk involve in it? What will be the real value expected and the position size? When to execute trading order? Where to exit? Under capitalization avoid to trade when you have not sufficient amount of capital to locate margins or differences. Unrealistic expectations i.e. do not involve in gambling or avoid to live in your own ego's, always adopt realistic approach through taking advises from experts. Lack of patience: This is necessary because its significance varies with your trading styles. Lack of discipline: discipline: You can manage this obstacle through developing your strategies for different timeframe i.e. for either day. Near, short medium and long term purposes. High-risk aversion: Although this is based on your capital amount and mental temperament means varies individual to individuals. To handle the risk you should have to deep focus on these instruments where you can get higher returns with minimum cost and low bearing risk. The best time to invest is depending upon your personality and your risk bearing profile i.e. how much you can take risk at the time of investing in any tradable instrument. But however few researchers, market participants and history indicate some golden rules that applicable for all types of investors or traders.

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“Once you studied the specific investment case as viable don't wait invest early. " Invest regularly for short-term basis if offering better returns in future. " Invest long-term basis always based on opportunity cost. Continue reinventing your capital amount with return or income is known as compounding concept of investments. This needs to develop discipline strategy to robust your income or returns consistently in tradable instruments. By doing this you allow your investments more time to grow especially in stock market where your country's economy momentum is on the upward move. Under these conditions long-term investment consider reasoning your country's economy mitigates the stock market volatility and the risk of losses.

Portfolio Management DSL’s portfolio management and investment advisory services are structured to provide high returns while maintaining a strict control over capital preservation and liquidity. These products will be targeted towards individual and institutional investors on a discretionary and non-discretionary basis and will include both money and capital markets instruments. Given the experience of Darson Securities’ personnel in this area we expect to introduce innovative, low risk financial products that will allow us to meet the individual investment needs of DSL customers

Online Forex Trading DSL’s sponsor, Dollar East, one of the largest exchange companies of Pakistan, on line foreign exchange web site to help the importers, exporters, and general public to buy sell remit or send money overseas online. We are in touch with State Brokerage house of Pakistan on this issue and once granted permission will launch a secure web site.

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“Dealing with the field matters is just like as producing the resources for new business.”

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I did my internship in Darson Securities Private Limited DHA branch Lahore. Field of activities in main branch is following: • • • •

Equity Brokerage Investment Advisory Commodity Trading Portfolio Management

DSL with its sponsor, Dollar East, one of the largest exchange companies of Pakistan, online foreign exchange web site to help the importers, exporters, and general public to buy sell remit or send money overseas online.

The company is providing all types of brokerage functions relating to the ordinary Shares, debentures and all type of fixed income and equity securities of the companies listed on Karachi and Lahore Stock Exchange.

The company also providing the advisory services to the investors relating to management of their portfolio of investments and has a large number of corporate and individual clients, who prefer to liquidate their investment portfolio through the company. Darson is also member of National Commodity exchange of Pakistan, and offers its clients commodity trading facility in NCEL, a world-class commodity futures trading platform to trade in a wide spectrum of commodity derivatives. DSL’s portfolio management is structured to provide high returns while maintaining a strict control over capital preservation and liquidity. Given the experience of Darson Securities’ personnel in this area we expect to introduce innovative, low risk financial products that will allow us to meet the individual investment needs of DSL customers

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DSL is a brokerage house and it provides brokerage in different way it can be as an intermediary while trading the commodities or while managing portfolio or advising investments. DSL is providing investment advisory to its clients and charging very low charges for these services. Experienced and well educated advisory staff advises the client while making any investment. The following are the things which I learnt during the internship.

Practical Experience and tips for investing wisely Tips for Investing Wisely When trading in the Stock Market, one should avoid, 1. Greed; being greedy can be a problem as it corrupts wisdom, 2. Making the same mistake twice, 3. Following the crowd, as the loss at the end is of the individual and not the crowd itself, “Putting all your ‘eggs in one basket” You should diversify and spread your investment, 4. Using rumors as tips, as this can result in losses. A tip can end up as a ‘pit’, 5. Emotions; being emotional can effect reasoning. Traders should use research backed by fundamental reasoning. 6. Impatience; patience pays, perseverance gains, Over borrowing; loan repayment is not an investment. Intra-day trading style Trading position open and square in 1 hours to end of trading session in stocks market. Day trading style Trading or Investment position open and square within the period of 1 day to 3 days or if memento continue then 1 day to 5 days of the trading sessions in stock market.

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Swing based trading styles Trading or Investment position open and square within the period of 1. Near-term basis 1 day to 15 days; 2. Short-term basis 1 day to 3 month; 3. Intermediate term basis 1 day to 6 month in stock market. Pure investing style: pPsition open with a view of longer term goals that consist of period from 12 month to more than 5 years

Standard assumptions for pronouncing irrational way of investing or trading in stock market. However we can also define standard assumptions for pronouncing irrational way of investing or trading in stock market as well given as follows. Following tips of news or rumors in a hot stocks; overall stock market or relevant news to the economy or government policies without considering the current state of price i.e. how length of price appreciated or depreciated on the scale where the particular stock is present at the moment are key questions need to solve. Without studying particular stock or without considering investment consultant advises just blindly or impulsively executing trading orders are the valid points will make your investment capital shrink or the cause of abnormal losses. Another most important point is the self-ego problem and betting with each other really hurt in all types of businesses especially in stock market where the risk is higher in respect; will some times brokerage houserupt you. So avoid all above recklessness before executing trading orders in stock market. Before discussing approaches to invest in equities we would like to clear your mind about the size of the saving you allocate your money wisely that really lead to your financial goals. As earlier we mentioned about savings basket in Pakistan is between 12% to 18%, which is under valued this should be at least from 30% to 35% of your total monthly or yearly income. Most of people do not know how to save there money for better future they consume only on food maybe the reason can be just defined as inflation in prices in an economy or due to under employment. But what about the rest of people found wasting their money on unnecessary activities like Speculation activity without member ship card of any tradable market, Involve in gambling, betting etc. These all activities have no productive out-put in an economy ultimately idle money flows into limited hands and rest of the whole INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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population faces the consequences. In DSL opinion the person who wants to save for his better life in future should divide into four saving baskets out of first three baskets you should divide equally your primary income savings and the fourth basket you will reinvest from second and third basket usually known as passive income. Security Basket This basket should be the first priority of any individual who wanted to grow his saving just enough to keep pace with inflation in an economy. The type usually covers fixed income instruments, which provide you a safe guard against any emergency matter. You are mentally satisfied that you have access funds any time to handle hurdle. In all over the world the benchmark of this basket is range between 1.5% to 4.5% annually but in Pakistan this should be 5% to 18% or depends on the fixed income instrument % of return. Growth Basket for short to intermediate term basis: This basket is little risky then security basket but manageable for building your net worth and positive cash flow assets that will lead your financial freedom. In this you put some portion of your savings money into different tradable exchanges of the country, mutual funds etc. The standard return from kind of basket in all over the world is range between 8.5% to 20% annually. In Pakistan this offers you high volatile returns range between 7.5% to 40% that really highest as compare to other countries. Growth Basket for Long term basis: The concept of investment compounding apply to this basket accelerate the building of your net worth & positive cash flow assets that will lead to financial autonomy. This covers the developing wining portfolio of more than 10-stocks that offers you consistent annual earnings records and payouts with managing stock prices appreciation and depreciation for capital gains with perspective of more than 12 month to 10 years objective. Luxury Basket This basket should not come from your primary source of income but from the passive income generated from aforementioned growth baskets. In this you save to indulge your cumulative passive income into your dream assets. Like: Status maintenance, dream house up gradation, luxury cars, jewelry, boats, paintings, antiques and precious metals etc. Investing is a method of buying or selling assets in order to get capital gains or profits in the form of reasonable income no matter in the shape of dividend, interest, rentals and gains due to appreciation in prices over a certain period of time.

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Actually the company acts as an intermediary party between the purchaser and the seller of the securities (shares or debentures) or any fixed or equity securities of a listed company.

Nature of Investment Accounts of Investors There are generally two forms of an account of an investor are maintained by the brokerage house, one is called “Cash Position” of the customer and second is called the “Holding Position” of the customer. The “Cash position” shows the exposure limit of the client and shows how much the cash and exposure deposit is needed by the client to trade his portfolio. On the other side the “Holding position” of the client shows the worth of the shares and investment of the clients in different companies. One point that always should be kept in mind is that the Receivable limit of any client should not be more than the holding position of the client. While trading in shares during the trading hours company provide the facility of “LEVERAGE” to the clients up to the 10 to 15 time of the cash balances deposited by the client but at the end of the trading session the holding position should not be more than the cash balance of the client. The leverage not only increase the capacity of the client to trade in the shares but also increase the brokerage revenue of the house, finally the client has to settle the delivery position of the share according to the deliveries of the shares available to him in his portfolio. The company usually gives the margin equal to the four time of the deposit of the investors for trading in shares. The higher the value of the share the more exposure a person will use, so there is greater risks involved in high priced less stable shares. The shares having good background of paying handsome dividend and strong financial structure are considered “most favorite” in the eyes of the investors and portfolio managers of the investment companies. The serious Mutual Fund mangers always take the bold step of “delivery of the shares” on their realistic values and sell these deliveries on very high unrealistic values of shares. The difference earned due to the change in value of shares in “capital gain” which is total exempt from the tax. The Darson Securities (Pvt) Ltd provide the facility of investment advisory service to the active traders of the shares. For increasing profitability of the portfolio of the investors the company maintains a balanced leverage and high liquid financing, so that investors can easily take the deliveries of the shares. INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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Costs Costs that are associated with stock dealing usually fall under the following heads: Daily trade charges cost incurred by the investor for intra day transactions. Badla charges are the charges incurred by the clients for carry over transactions commonly known as COT. Delivery charges cost incurred by the investor for delivery transactions. It is highly recommended that the investors should have a proper understanding of the commission structure of the brokerage service. The structure varies from broker to broker in most cases. It is advisable that the investor should ask his broker about all the cost associated with stock dealings to arrive at his net profit position Badla is a mechanism to carry forward a speculative trade. It is also known as the Carry over Transaction (COT).

Investment Avenues Investors can invest in their money in stock in following ways: Shares: It is the direct mode of investment in which investor directly sell and purchase stocks of various companies through the brokers or dealers. BONDS AND LONG-TERM NEGOTIABLE INSTRUMENTS In Pakistan Bonds structure has been divided into two parts. One is non-interest bearing bond and the second is interest-bearing bonds. Bond market in Pakistan is not being well established by the government of Pakistan but regulates through Federal Reserve Brokerage house (State brokerage house of Pakistan). Interest bearing Bonds The Government issue savings bond named as PIB's that offers a fixed rate of interest over a fixed period of time for the purpose of raising capital. Many people find these bonds attractive because of fixed interest rates nature. On maturity date of bonds individual get his principal amount that invested in along with fixed rate of interest amount. Cannot be negotiable.

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Non-interest bearing bonds-Islamic bond (trust certificates): Recently Government of Pakistan (GoP) has issued Islamic bond ever issued internationally named as Sukuk bonds. Sukuk are Islamic shariat law compliant instruments. Islamic shariat disallows payment of interest on any financial transactions. Because of this, Sukuk investors will receive profit yielded by approved investments of the GoP. The Sukuk bonds offered to state and government-backed entities and businesses turned out to be the biggest investors like Asset managers, Islamic brokerage houses, trustees and other brokerage houses with foreign currency price per purchase. In order to comply with Islamic shariat, Sukuk bonds will be backed by state owned assets, including the 400-kilometer Islamabad-Lahore motorway called M-2. The government's National Highway Authority (NHA) administers the motorway, the best in Pakistan's motorway-highway networks. GoP has formed Pakistan International Sukuk company Ltd. (PISCL) that will issue trust certificates, through lease agreement. The periodicity of payments on certificates will be described as 'rental on assets', or 'Ijara rather than interest, so that Sukuk remain Islamic shariat compliant. Pakistan undertakes irrevocably to purchase the land at the agreed exercise prices, on dissolution. When this trust is dissolved in 2010, and upon receipt of the exercise price payable by Pakistan, along with rentals payable under the 'Ijara' agreement, up to the date of Dissolution Distribution Amount, will be applied to redeem the Sukuk certificates. Other long-term negotiable instruments include Brokerage house fixed deposits, Preference shares and Term fiancé certificates. Brokerage house fixed deposits: every brokerage houses has its own fixed deposits structure for this purpose. Preference share is another kind of fixed instruments. This is a class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights The precise details as to the structure of preferred stock is specific to each corporation. However, the best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as "preferred shares". Can easily convertible if option driven by the corporation. In Pakistan few corporations has issued preference shares to their shareholders like DGKC, PPL, PICT and etc. Average rate of return on bonds and securities in Pakistan between range 10% to 18%.

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Term Finance Certificates TFC's An issue of term finance certificate that all have the same maturity date. Their time to maturity can be from long term. Upon maturity, the issuer pays all outstanding holders the amount owing. Term finance certificate can also be repaid prior to maturity if they are called or converted. Certificate of deposits These certificates are usually develop for short to medium terms fixed deposits interest rate instruments offered at brokerage sector to promote savings in the country. These types of instruments are low-risk and low return instruments but having charged penalty if withdrawn before the maturing date of the instruments. However few categories of these are saving deposits, fixed deposits, recurring deposits etc. In Pakistan average rate of return on these certificates are below 10% and above 4%. MUTUAL FUND Mutual funds manage by the investment company or asset management companies raises money from public and invests in a group of assets in accordance with a stated set of objectives. Basically this is an option for those investors who are risk-averters and having not sufficient knowledge that how to invest there savings in an efficient manners. Or due to some other reasons like unable to invest directly in equities or debt markets because of resources, time or some other constraints amount. For the sake of this purpose now you can invest through a professional team working in a mutual fund industry. Mutual fund industries do business by issuing its units against a reasonable set of amount, which can be redeemable on demand based on the funds Net Assets Value that is determined at the end of each trading session. Average rate of return of each individual funds vary accordingly from funds to funds performance is based on its professional team. That is why their average rate of returns to put together is not fixed but in generally more than what earn in fixed deposits. There are two types of mutual funds one is open-end mutual fund can constantly changes capitalization as new shares are sold and out-standing shares redeem like money market mutual fund are the good example. While the second type is close-end mutual fund cannot change its capitalization, remain fixed as shares trade on Exchanges and Over the counter market (OTC). In Pakistan most of the mutual funds are providing return between 20% to 40% depends on overall performance of the mutual funds.

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MONEY MARKET INSTRUMENT: These types of instruments come into cash equivalents; are highly liquid and safe instruments, which can easily converted into cash having some times risk free or less risky nature as compare to stock markets. Like: treasury bills below than a year and money market funds. COMMODITIES AND VICE VERSA: Recently in Pakistan year 2007, National Commodity Exchange has started its trading as investment vehicles in Gold and having plan to develop further is Rice other stuff etc. While for vice versa there are art and crafts, antiques and foreign currencies etc are available for investment purposes. Where about foreign currencies usually considered as hedging tool of risk management rather than an investment purposes. See currencies at, http://www.dollareast.com/. This is the main group that handling currencies business as well. DARSON Securities (Pvt) limited is active in stock market for investment basically a subsidiary of this group. The investing avenues are many but few are as follows: Stocks or Equities Bonds Mutual funds Fixed deposits Money market instruments Commodities vice versa It depends on the individual to select different options of the investment for his saving and that based on the risk profile to get the returns. The reason is risk and returns are directly proportional to each other. Higher the risk, higher the returns. Following are the brief review of different investment avenues. STOCKS OR EQUITIES Investing in share companies listed on stock exchange is known as stocks or equities investment. Stocks can be buy and sell through stock exchange known as secondary market. Where reasonable buyers and sellers are available to execute transactions at particular price. Existing economic news relevant to the particular sector discount in the stocks. News discounting is an art, which can be measurable through different discounting scales on various investment/trading technical indicator models and fundamentals financial models. The basic two streams of revenue generation from this form of investment are as below:

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Dividend / Payouts: Distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The dividend is most often quoted in terms of the country's currency amount each share receives (i.e. dividends per share or DPS). It can also be quoted in terms of a percent of the current market price, referred to as dividend yield. I.e. Dividend yield= dividend / current price. Dividends may be in the form of cash, stock or property. Most secure and stable companies offer dividends to their stockholders. Their share prices might not move much, but the dividend attempts to make up for this. Capital Gain/Loss: The prices of the stocks well appreciated or depreciated in the market due to appropriate growth posted by the company or on the hope of the company's change in fundamental aspects in future or government policies relevant to the particular sectors impact the stocks fluctuations resulting in capital gains or losses. Total sum of these two components i.e. Dividend and Capital gains shows the total return on investment in units. To convert into % Dividend + Capital gains / Actual investment amount is known as investment on returns. In Pakistan the % of total return on an average basis is 15% to 30% and above from these percentages in a precise time reflects good output of portfolio management. The key point is to identify the right stocks on the right time for enter and exit with finding risk levels from the trading transactions made for it. DSL suggestions and comments on various stocks issued on daily basis to DSL clients through DSL e-mail services. And we also provide specific stock analysis for DSL client for short to long-term perspectives.

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Key considerations for investment in equities Understanding why you are investing is the first step in structuring a portfolio. There are few questions investors need to ask them and review with their broker before starting to invest. Specifically, What are my investment objectives? What is this money for? What kind of risk am I willing to take? What is my time horizon? It is important that you work closely with your advisor so you both have a clear understanding of your specific needs and goals.

Risks Understanding risk is an integral factor that is required to be evaluated before making any investment. You can view risk as portfolio volatility, as the risk of not achieving your goals, or as the risk of permanent capital loss. When you are assessing risk, questions to ask yourself include: Risk and returns are generally related. Over the long term, increasing your risk typically leads to higher expected returns, while lowering your risk leads to lower expected returns. However, this is not always so. These guidelines will enable you to structure your portfolio and provide you with a framework that allows you to review and understand your investment performance.

Investment Climate Whenever you hire a broker to invest in the stocks it’s not necessary that your results would be same as the market movements. In some cases brokers advise to invest in stocks that are not highly correlated with stock index due to the small capitalization of that particular scrip in the market.

Maximization of Return The goal of the investor, in most cases, is to maximize return. Higher returns are often related with higher degree of risk. Investor should not take unnecessary risk to earn higher profits because it posts a great deal of threat to its basic equity and investments. Investors could avoid risk by diversifying its portfolio in different sectors, which usually pays off in terms of better returns.

Company Profile Information regarding companies invested in and their economic profile should be exposed to the investor.

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How much Money can you afford to Invest Investors should be aware of the fact that investments in the stock usually do not result in immediate profits. A sound investment strategy avoids speculative moves. An investor should have excess reserves with its broker to protect himself against frequent fluctuations in stock.

Own investment Strategy vs. professional Advise: Sound strategy for investment in stock market requires either professional’s advice or own stock dealing decisions, which are often, time consuming. Despite the time consideration it is advisable to pursue own investment strategy because it is more rewarding than seeking broker’s opinion.

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Trading means buying and selling the products. In brokerage houses like Darson Securities Pvt Limited, it refers to the online buying and selling of different commodities. When the securities are traded in secondary market price show very volatile results and the factors of “speculation”, “arbitration” and other market situation like general economic conditions and inflationary gaps in country can affect the prices of the securities. Having a best research department under the supervision of the chief executive of the company Darson has maintained a portfolio of best-rated companies of stock market. The investment in shares is a risky job and need personal attention and quick observation of portfolio manager who can better judge the future change in price of the shares. The chief operating officers in Karachi and Lahore stock exchange paying personal Attention to the portfolio of the company and so preventing it from the hazards of quick and wrong decision-making. The audited accounts of the company shows that it has very strong financial grounds for the development of brokerage business Organizational Structure

Risk, reward & value of the information available Buying shares can offer advantages over saving in deposit accounts: your investment may increase in value besides paying you dividends. You share the rewards when the company does well and the price of the shares goes up. But if the company performs badly, the share price may go down and the value of your investment will be reduced. Other factors, such as the performance of the stock market as a whole and the general economic climate, may also affect the price of your shares. Investment in shares is therefore investment in ‘risk capital’. The shareholders can be rewarded for taking this risk and the potential return on your money can be higher than that on other investments. You can reduce your risks with careful planning.

(Trading Cycle & Accounting System) (Selling of shares) INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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Customer or Investor

Brokerage house

Stock Exchange (Trading Facilities)

(Buyer of shares) (Customer or investors)

Brokerage House

Settlement Cycle & Financial System of Organization (after 3 days) Seller of securities (Customer or investor)

Brokerage House

Settlement Brokerage Pays Cash National Clearing house of Buyer’s & Company Seller Deposit the cash with the brokerage house

Buyer of Securities (Customer or Investor)

Brokerage House

The brokerage house also stands as intermediary between the buyer and seller of shares, which are passed out of the stock exchange and the information system of the broker it self handle all these transactions.

Brokerage Brokerage Brokerage House # 1 House # 2 House # 3 Central Depository INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem Company

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All the brokerage houses have their a/c in CDC

(Takes the delivery of shares from sellers) NCCPL (The Settlement Company)

And credit these shares to the buyer of the shares.

Mobilization of Funds of Brokerage House & Settlement Brokerage house share in have shares in Brokerage CDC A/c House Brokerage sellingbuying the house INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem shares the shares

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Give delivery of shares to NCCPL Takes cash Brokerag e house Give cash to selling broker

NCCPL

Give delivery to buying broker Takes shares CDC A/c Have cash in

Brokerage house A/c

Give cash to NCCPL

Generation of Funds and Role of Finance Department The Finance department plays the key role in the management and supervision of the trading environment of the stock exchange, it not only confirms the trading information flow but also protect it from unauthorized use and its proper Settlement between participants.

Sources of Funds & its Allocation Role of Finance Department 1- Confirmations of the trading contacts and their settlement. 2- Improvement and maintenance of the Information relating to the trading exposures of the 3- Safety and the data of the trading for further reference and legal proof of the trading done in the open market. 4- Settlement facilities to all the participants and confidence of the investor. 5- Proper control on the efficiency of trading and minimizing the chances of “insider trading” with in stock exchange and its linkage 6- Protection and integrity of the Finance data and making it possible to of database & transmitting of daily trade transaction to the NCCPL Company for the settlement. .

What is “Badla”? Badla Finance in simple terms means putting money on interest. The mechanism is very easy for the stock broking society but complex for the ordinary investor. History says Badla INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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was born in the nineteenth century. Then, till today, the purpose has remained the same, the mechanism has hardly changed but the process has. These changes have made Badla Finance safer, more secure and transparent to clients besides a fair business practice for the stockbrokers

Mechanism of “Badla” A person buys shares with the intention to make profits but without blocking money. The purchase at the end of the settlement is carried forward to the next settlement. Here is where the client / Badla financiers steps in. The financier's block the money for taking delivery of shares purchased by the speculators. He gives the money to the exchange for shares bought. For this facility the speculator pays interest to the financiers. This interest is known as Badla.

Badla Financing is done through Stock Broker: The financier gives money to his broker who in turn, hands over the same to the Exchange. The Exchange under custody, on behalf of the broker’s client, retains the shares. Since the shares and the money lie with the Exchange, broker's risk is also eliminated. Example: If "A" has purchased 1000 shares of MCB @ Rs. 50 per share in Settlement 1, he has to take delivery from "B" who has sold the same. "A" would like to carry forward his position to the next settlement by letting "C" (Badla Financier) take delivery at the prevailing interest rate. In settlement 2 "A" will have to purchase the shares at a higher Badla rate as determined by the Exchange. If the Badla was Rs. 0.20 in settlement no.1, "A" will have to buy MCB @ Rs. 50.20 per share from "C". The difference in purchase price in settlement no.1, and sale price in settlement no.2, is the earning for the Badla Financier.

Futures Contract A Future contract involves purchase and sale of a financial or tangible asset at some future date, at a price fixed today

Complete Structure of the Finance Department of Darson Security Pvt Limited, and its linkage Finance Department of Stock Market (The trading supervisor), CDC and NCCPL Companies (The settlement Supervisors). Brokerage House Brokerage House (on behalf of (on behalf of seller) Buyer) INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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Lahore Stock Exchange (Main Terminal) (Matches the rate and quantity of the buy and sell orders coming from the entire trading terminals placed in the houses of all active members) The Lahore Stock Exchange keeps all the records the entire transactions take place between the members. Where on one side there will be a brokerage house standing on behalf of seller and other on the behalf of buyer. Settlement information flow in stock market (for settlement of sale or purchase of shares) Brokerage House

Pays the required amount in settlement a/c

Shift the shares to main a/c Brokerage House’s settlement Brokerage house CDC Takes the service charges Amount is credited to brokers A/c LSE

NCCPL

Takes the delivery from CDC

Key Information required before You Buy a Stock 1- What Does the Company Do? 2- Is the Company Profitable?

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3- What Is the Company's Earnings History and Outlook? 4- How Richly Is the Company's Stock Valued? 5- Who Are the Company's Competitors? 6- Who Runs the Company?

Portfolio management relates to investing money in different sectors so that it can be used to the maximum and most profitably. The purpose of Portfolio management is to

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minimize the risk and to maximize the return by allocating the money in different sectors of the economy. Remember there is always first time for everything so also there is first for you build investment profile. It is obvious you need free amount of capital to locate your amount in investment obligations. In DSL opinion your saving strategy should be like if you are salaried person or if you come into small to medium business category then you have to save at least 30% to 35% of your monthly income. Stick to this practice and try to increase you saving levels. In Pakistan on an average basis this % is range between 12% to 18% of GDP which is lower then the world bench mark the cause for diminished % saving rate is currency value that is continue in down ward pressure since more than decade or on sideways as compare to other currencies. The reason in DSL opinion are few economical factors that really influencing DSL currency for example real investment in shape of industrial projects needed for local and foreign investors for decreasing unemployment rate in the country, Properties values are unnecessarily rising in worth need to control by government and In budget the benefits announced by the government for various industrial sectors not pass onto to nation ultimately inflationary pressure observe during the assessment year. Now there are few measures that are necessary to protect your saving for abnormal losses. Do not invest savings made for emergency purpose hold them in a liquid state. Do not utilize 100% amount of saving into risky business like stock markets. Avoid unnecessary or lavish expenses better is to save amount to groom your self and your family. It is foolish to pay off debt by trying to first make money for the cause out of gambling or investing in stocks with whatever little money you hold. Opportunity cost needs to define for making decisions for investment options in tradable instruments. Opportunity cost means the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. Example: The difference in return between a chosen investment and one that is necessarily passed up. Lets say you invest in a stock and it investment returns a worthless 5% over the year.

In placing your money in the stock, you gave up the opportunity of another investment - say, a risk-free government bond like-t-bills yielding 8%. In this situation, your opportunity costs are 3% (8%-5%). However there are certain trading or investment styles and holding risk that really need to choose before entering into tradable instrument markets varies according to period wise. Like:

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        

1hours to 1day 1day to 3days. 1day to 5days. 5days to 15days. 15days to 3month. 3month to 6month. 6month to 1year 1year to 3years. 3years to 5years.

Means how long you wanted to open your investment position under different time frame period; its return and inherent risk is important need to diversify accordingly. Once you evaluated you have to develop a portfolio strategy for maximizing returns and reducing risk in the market and accordingly reduce or add number of tradable instrument in the portfolio.

Why do Investors Buy Shares? Studies have shown that over a twenty-year span, investment in shares has provided greater returns than most other forms of savings. Shares can provide you with a regular stream of income through dividends as well as the potential for your investments to grow in value. If the prices of shares go up, you can sell them for more than you paid. This is called capital gain.

What are Dividends? Dividends are returns paid to shareholders out of the profits of the company. Returns can be in the form of cash or additional shares of the company called bonus shares. Dividends are usually paid once or twice a year depending upon the company’s profit distribution policy.

What is Capital Growth & Role of Finance Department in it? This is one of the ways in which shares differ from deposit accounts. The principal amount of money you put in a brokerage house or any fixed income savings scheme always stays the same e.g. if you start with Rs.100, 000 you will always have Rs.100, 000 (other than any interest earned).Changes in value according to the performance of the company. With good INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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management information system, the value of your investment in shares of a company can grow over time so that your shares are worth more than you paid for them. This is capital growth.

Equity Stocks are Vital for Superior Growth Equities are mainly growth investments, and can include things like real estate, art, and gold. However the most popular equity investments that people rely on for growth are stocks. But stocks can also serve purposes other than growth. In addition to potential capital gains, stocks also have the potential to pay dividends. If you have equity in a business you are an owner, and if your company makes money, you are rewarded with dividend

How do you decide when a Stock is Attractive to Purchase? There are two general ways of determining a stock's potential as an investment. You can look at the “fundamentals” or you can look at “technical analysis” and of course you can look at both. Fundamental analysis looks at factors such as earnings, cash flow, debt, strength in its industry, outlook for the industry, general economic factors, interest rates, and so on. If these factors are good, then even if there are short-term setbacks, over the long run, the stock should do well. Technical analysis looks at factors like volume of trading, cyclical behavior, trends, moving averages and many others. Some investors use both approaches. They use fundamentals to determine the long-term potential of a company and technical analysis to decide when to buy. For example, you may believe that a certain company has great potential over the long-term and will be worth much more in years to come. However, it could be that the current market for this company’s product is temporarily weak and that as a result, the stock price could fall. Technical analysis could be helpful in determining how far the price might fall and could provide help in indicating a good time to buy.

How to become Shareholder Shares of a particular company are offered by the following methods.

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An initial public offering (IPO) is the sale of equity in a company, generally in the form of shares of common stock. These shares trade on a recognized stock market. A company goes public; to raise capital for project funding, business planning and implementation; for marketing purposes.

Right Issues A rights issue gives the existing shareholders the right to subscribe for new ordinary shares at an issue price lower than the prevailing market price and at a ratio equivalent to their existing shareholding. Companies carry out a rights issue when they want to raise additional funds to finance their capital requirements.

Things you should know about Equities trading Stocks and shares are the most volatile asset class in terms of price movements and thus, the most risky. Hence, do not invest directly in the stock market unless you can bear a fall in price without it having any impact on your day-to-day living standard. Remember the saying: “the greater the reward, the higher the risk”. The aim of investing in stocks and shares is to buy at a low and sell at a high, but knowing when, is the problem. Many investors attempt to time the market: they try to figure out when the market is going up and buy into it before it does, and then figure out when it is going to crash and sell everything just before it does. Unfortunately such spot on accuracy is usually impossible to achieve, so what you can do is try to catch a portion of each big swing. You buy when the upswing has begun, and sell as the downswing starts. But for this to work, you must be able to control your greed, as you do not know exactly when the top or bottom is reached. The stock market can be said to be driven by two emotions: greed and fear. People get caught up in the boom fever and pay silly prices for unworthy shares - this is greed driving bull markets. markets. In bear markets, markets, people get carried away with the ruling negativity and are overeager to believe the worst rumors - this is fear dominating bear markets. You must step away from the crowd and not let them take over your rational reasoning and action.

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Central Depository Company of Pakistan Limited (CDC) started in 1993 to manage and operate the Central Depository System. CDS is an Electronic book entry system to record and transfer securities. securities. Electronic book entry means that the securities do not physically change hands and the transfer from one client account to another takes place electronically. CDC is to operate as a central securities depository on behalf of the financial services industry to support an effective capital market system that will attract institutional and retail level investors from Pakistan and abroad. Its basic purpose is to operate and maintain an electronic book entry settlement system for equity, debt and other financial instrument.

Capital Market prior to CDS Information System The capital markets of Pakistan have witnessed a rapid growth resulting in increased trading volume. This in turn has led to difficulty in handling the share certificates. The custody and safe keeping of physical certificates required maintenance of huge vaults by the individuals and institutions and the physical settlement of certificates were no longer feasible. Moreover, the manual system was also plagued by long delays, risks of damage and considerable time delays. Following are some highlighted problems faced before CDS was in place, 1- Increased volume of bookkeeping and paper work. 2- Problems in settlement due to increased volume. 3- Maintenance of huge vaults for safe keeping of certificates. Long share transfer procedure taking up to 45 days. 4- Payment of stamp duty on share transfers which ranged from 0.1% to 1.5% of the face value. 5- In case of new issues the issuers would take more than 2 months for the certificates.

dispatch of

6- Risks of damaged, lost, forged and duplicate certificates. 7- Capital and time investment required for issue and dispatch of share certificates, cash dividend, and bonus and right issues.

Benefits after CDS information system was Incorporated Following are some of the benefits of electronic settlement of securities through CDS: 1- Reduced workload due to paperless settlement environment. INTERNSHIP REPORT ON DARSON SECURITIES PVT LIMITED. Prepared By Muhammad Faisal Saleem

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2- Reduced manpower requirements. 3- Instantaneous transfers of ownership. 4- No stamp duty on transfers in CDS. 5- No risk of damaged, lost, forged or duplicate certificates. 6- No impact in case of sudden increase of settlement volumes. 7- Instant credit of bonus, rights and new issues. 8- Substantial reduction of paperwork during book closure. 9- Convenient pledging of securities. 10- Substantial reduction in time & capital investments.

Tracking stocks To track how your stocks are doing, you have to look at stock listings. Stock listings are published in most of the newspaper (e.g. Dawn). The listings look confusing at first, since they look like a mixture of numbers, but can be a very useful tool when tracking your stock’s progress. The listings are organized into many columns, including the following information:

Company name This field is usually abbreviated in the listings, and listed alphabetically.

Symbol This field is a one to five character symbol used as a sort of nickname for the company.

Volume The volume is the amount of stocks that were traded the day before.

High, Low and Close These are the highest and lowest price of the stock the day before, and the closing price for the day before. This is an indicator of how much the price of the stock fluctuated throughout the previous day.

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This is the change of the price of the stock from the previous day. This gives you an idea whether the price is dropping or rising. In addition to the stock listings, other useful information about companies is available in the Annual Reports that reflects the balance sheet, income statement and cash flows and states the reasons for changes in these financial statements during the year.

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The strength of any organization can be better judged by analyzing its balance sheet and its other statements of accounts. The financial statement of any organization shows the results of its operation and its position in business.

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The data of balance sheet and income statement give idea about firm position but it is better judged by analysis. By comparing of degree of changes in different items .the comparison shows the fluctuation in assets and liabilities of business. The financial statements of organization usually includes following: 1. 2. 3. 4.

Balance Sheet Profit & Loss Account Cash Flow Statement Statement of Changes in Equity

These statements can be suitable to make an idea about business performance. These statements have been analyze in two ways

1. Horizontal Analysis 2. Vertical Analysis

Horizontal Analysis: Through this analysis we can check that what are changes with in years in the items of balance sheet and profit and loss account. Last year become base for next year. And change can be easily analyzed.

Vertical Analysis: In this analysis the percentage of each item of statement is calculated to total and then the change in the percentages is checked with in years.

Note:

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Due to incomplete data of financial year 2009 I decided to do financial analysis of year 2008.

Balance Sheet As on 30th June, 2008 (Rs)

Assets Non Current Assets Security deposits Accounts Receivable Advances Investments Other receivables Cash & Brokerage house Balances Advance Income taxes Total Assets Liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Net Assets Represented By Share capital Unappropriated profit Reserves Surplus on revaluation of assets

2008

2007

52.09% 26.93% 15.25% 92.72% 209.43% 17.96% 6.41% 420.79% 420.79%

61.93% 26.98% 14.16% 136.55% 233.84% 20.82% 8.22% 502.50% 502.50%

Worse Worse Good Worse Worse Worse Worse Worse

7.03% 7.76% 332.50%

1.51% 7.62% 403.09%

Worse Worse Worse

0.0088%

0.014%

Good

17.62% 1.58% 54.30% 54.30%

20.44% 3.88% 65.95% 65.95%

Good Good Worse

4.70% 21.25% 9.20%

5.14% 16.85% 10.75%

Worse Good Worse

19.15%

33.21%

Worse

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Profit And Loss Account For the year ended 30th June, 2008 (Rs) 2008

2007

100% 31.14% 68.86% 7.02% 7.02%

100% 30.63% 69.36% 7.27% 7.27%

Evaluation 2006-2007 same Good Better Worse

(1.62%)

(0.73%)

Worse

0.012% 0.012% 63.45%

0.068% 0.068% 62..70%

Good Good

14.03% 14.03% 6.61% 3.05%

14.65% 14.65% 5.1% 3.58%

Better Good Worse

1.43% 27.78%

.53% 28.02%

Good Better

30.70% 0.039% 0.48% 31.14%

33.28% 0.59% 0.19% 34.06%

Good Good worse Good

Extra ordinary items Profit before tax Taxation –current -prior year(s) -Deferred

60.09% 19.86% 1.21% (0.14%)

56.66% 21.27% 3.27% (0.87%)

Good Good Good Good

Profit after tax Unappropriated profit brought forward

38.87% 38.87% 44.24%

37.72% 37.72% 32.31%

Good Good

Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing advances Provision for diminution in the value of investment Bad debts written off directly Net mark-up/interest income after provision Non Mark-Up/Interest Income Fee, commission and brokerage income Dividend income Income from dealing in foreign currency Other income Total non mark-up/interest income Non Mark-Up/Interest Expenses Administrative expenses Other provision/write offs Other charges Total non mark-up/interest expenses

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Profit available for appropriation Earning per share

83.11% 83.11% 24.01

70.03% 70.03% 17.92

Good Good

Formula for Calculation Of Values Every value =

Value Capital Employed

*100

Here Capital Employed = Long term Liabilities + owners equity 2007: 89687210+25281450 = 114968660 2008: 111771790+ 39165389 = 150937179 Where, Long Liability= Borrowing from financial institutions + Term deposit + Liability against asset subject to finance lease. 2008:

11704079+100054476+13235 = 111771790

2007:

8756847+80913734+16629 = 89687210

And Owner’s Equity=share capital + Un-appropriated profits 2008:

7090712+32074677= 7090712+32074677= 39165389

2007:

5908927+19372523 = 25281450

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Balance Sheet As on 30th June, 2008 (Rs) 2007 Assets Cash and balance with treasury brokerage houses Balances with other brokerage houses Lending to financial institutions Investments Advances Other assets Operating fixed assets Total Assets Liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Liabilities against assets subject to finance lease23068314 Other liabilities Deferred tax liabilities Total Liabilities Net Assets Represented By Share capital Unappropriated profit Reserves Surplus on revaluation of assets Total

2008

Evaluation 2006-2007

100%

110.43%

Increase by 10.43%

100% 100% 100% 100% 100% 100% 100%

131.02% 141.33% 89.15% 117.58% 113.25% 102.41% 109.94%

Increase by 31.02% Increase by 41.33% Increase by 10.85% Increase by 17.58% Increase by 13.25% Increase by 2.41% Increase by 9.94%

100% 100% 100% 100%

609.12% 133.66% 108.30% 79.59%

Increase by 509.12% Increase by 33.66% Decrease by 8.30% Decrease by 20.41%

100% 100% 100% 100%

113.19% 53.49% 110.22% 108.09%

Increase by 13.19% Decrease by 46.51% Increase by 10.22% Increase by 8.09%

100% 100% 100% 100% 100%

120% 165.57% 112.34% 75.71% 108.09%

Increase by 20% Increase by 65.57% Increase by 12.34% Increase by 24.29% Increase by 8.09%

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Profit And Loss Account For the year ended June 30th, 2008 2007

2008

Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing advances Provision for diminution in the value of investment Provision against off balance sheet obligations Bad debts written off directly Net mark-up/interest income after provision Non Mark-Up/Interest Income Fee, commission and brokerage income Dividend income Income from dealing in foreign currency Other income Total non mark-up/interest income Non Mark-Up/Interest Expenses Administrative expenses Other provision/write offs

100% 100% 100% 100%

129.96% 132.1% 129.02% 129.02% 125.71%

Evaluation 2006-2007 Increase by 29.96% Increase by 32.1% Increase by 29.02% Increase by 25.71%

100%

(288.54%)

Negative

-

-

-

100% 100%

22.91% 131.38% 131.38%

Decrease by 77.09% Increase by 31.38%

100% 100% 100% 100% 100%

124.72% 168.27% 110.63% 352.91% 129.50%

Increase by 24.72% Increase by 68.27% Increase by 10.63% Increase by 252.91% Increase by 29.50%

100% 100%

119.80% (8.72%)

Other charges Total non mark-up/interest expenses Extra ordinary items Profit before tax Taxation –current -prior year(s) -Deferred Profit after tax Unappropriated profit brought forward

100% 100% 100% 100% 100% 100% 100% 100% 100%

329.60% 118.73% 138.07% 121.55% 148.30% 21.23% 133.93% 177.97%

Increase by 19.80% Increase in writing off Increase by 229.60% Increase by 18.73% Increase by 38.07% Increase by 21.55% Increase by 48.30% Decrease by 78.77% Increase by 33.93% Increase by 77.97%

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Profit available for appropriation Earning per share

100% 17.92

154.25% 24.01

Increase by 54.25% Increase by 133.98%

Ratio analysis includes method of interpreting financial ratios to access the performance of any organization. The basic input to ratio analysis is profit and loss account and balance sheet. Ration analysis of any organization is in interest of its creditors, employees, shareholders and of its management as well. Both existing and prospective customer are interested in the ratio analysis of organization Ratio analysis is a valuable aid to management in the discharge of its basic functions such as planning, forecasting, control etc. these ratios describe the relationship with the functioning of the business and helpful for controlling cost of goods manufactured. The great advantage of ratio analysis is that it reduces raw data of widely varying magnitude to a common comparative basis. Thus, ratio analysis is the most meaningful to compare financial information regarding a giving company.

1. Net Interest Income to Gross Income: It is the comparison of Net Interest income earned & the gross income by the brokerage house. Net mark-up/ interest income /Gross Income * 100 Year 2007

Year 2008

Net mark-up/ interest income

23370897

30153716

Gross income

87,256,8 74

98720954

Net interest income to gross income

71.33%

71.25%

Gross Income = Net interest income + Non- mark-up income 2005= 2005= 23370897+ 9392351= 32763248

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2006= 2006= 30153716+ 12162892= 42316608 Comments: The Net interest income to gross income is good due to increase in Net Income.

2. Risk Asset Turnover Ratio: It is a comparison of Net Mark-up/ Interest after provisions & Risk assets (Advances) of the brokerage house. Net mark-up/ interest after provisions / Risk assets (Advances)

Year 2007

Year 2008

Net mark-up / interest after provisions

21146970

27782170

Risk assets

305000

580474

Risk asset turnover ratio

0.079times

0.088 times

Comments: The Risk Asset Turnover Ratio of 2008 is good as compared to that of 2007. This may be due to increase in net markup. Percentage of increase in net markup is more than risk assets.

3. Interest Coverage Ratio: It is a comparison of Earning before Tax & Financial Charges of the Brokerage house. Earning before Tax / Financial Charges Year 2007

Year 2008

Earning Before Tax

57015048

72661728

Financial Charges

10321768

13634912

Interest Coverage Ratio

5.52 times

5.33 times

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+ Total Non- Markup Income + Provision against non performing advances + Total non markup interest expenses 2008=43788628 2008=43788628 + 12162892+ 3075723 + 13634485= 13634485= Rs. 72661728 2007= 33692665 + 9392351+ 2446739 + 11483293=Rs. 11483293=Rs. 57015048 Comments The Interest Coverage Ratio of 2008 is bad as compared to that of 2007. This may be due to increase in financial charges.

4. Operating Profit Ratio This ratio is a comparison of Operating Profit to markup/ Interest of the Brokerage house. Operating Profit / Markup Earned * 100

Year 2007

Year 2008

Operating Profit

19056028

26310577

Markup/ interest Earned

33692665

43788628

Operating Profit Ratio

56.56%

60.09%

Comments: The operating Profit Ratio of 2008 is good as compared to that of 2007. This may be due to increase in operating profit.

5. Net Profit Ratio before Tax: Net profit before tax/Interest Earned*1

Net profit before tax Interest Earned Net Profit Ratio before Tax

Year 2007

Year 2008

19056028 33692665

26310577 43788628

56.56%

60.08%

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Comments: In years 2008 it has increased up to 60.08% from 56.56% in Year 2007. This increase in profit shows the unsatisfied performance of the brokerage house.

6. Net Profit Ratio after Tax Net profit after tax/Interest Earned X 100

Net profit after tax

Year 2007 12709444

Year 2008 17022346

Interest Earned

33692665

43788628

Return on assts

37.72%

38.87%

Comments: This ratio shows that an organization is earning on its assets after meeting all the expenses and obligations. This ratio also increased up to a great extent.

7. Return on Total Assets Net Profit after Tax/total assets X 100 Year 2007

Year 2008

Net Profit after Tax

12709444

17022346

Total assets

577718806

635132711

2.20%

2.68%

Return on Total Assets Comments: Comments:

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This ratio also increased up to a great extent so it shows that an organization is earning on its assets after meeting all the expenses and obligations.

8. Return on Share Capital: Net profit after tax/Share Capital X 100 Year 2007

Year 2008

Net profit after tax

12709444

17022346

Share Capital

5908927

7090712

2.15%

2.40%

Return on Share Capital

Comments: The ratio has increased in Year 2008 which shows that that DSL has positive trend of earning on share capital

9. Return on Deposit: =Net profit after tax/Deposits X 100 Year 2007

Year 2008

Net profit after tax

12709444

17022346

Deposits

463426602

501872243

2.74%

3.39%

Return on Deposits Comments:

By analyzing, I analyze that the ratio has increased in Year 2008 which shows that brokerage house is in good position.

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10. Solvency ratio: =Total Assets/Total Liabilities-Issued Capital

Total assets Total Liabilities-Issued Capital Solvency ratio

Year 2007

Year 2008

577718806

635132711

501900862-5908927

553178593-7090712

1.16 times

1.16 times

Comments: This ratio shows that the asset of brokerage house has increased as well as liabilities has also increased with the same ratio. This shows the sound position of business.

11. Advances to Deposits ratio: Total advances/total Deposits X 100 Year 2007

Year 2008

Total advances

268838779

316110406

Total Deposits

463426602

501872243

58.01%

62.99%

Total advances/total Deposits X 100 Comments:

The DSL has ratio of 62.99% in Year 2008as compare to 58.01% in Year 2007. The increase in ratio is due to increase in promotion of services, like online forex trading.

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12. Deposits to Capital: Total Deposits/Share Capital Year 2007

Year 2008

Total Deposits

463426602

501872243

Share Capital

5908927

7090712

78.43 times

70.78 times

Total Deposits/Share Capital

Comments: I analyze that DSL has negative trend of Deposits to Capital ratio from Year 2007 to Year 2008.

13. Total debts to Total Assets ratio: Total debts/Total assets X 100 Year 2007

Year 2008

Total debts

501900862

553178593

Total assets

577718806

635132711

86.88%

87.10%

Total debts/Total assets X 100

Comments: The higher the ratio, the greater the amount of other people’s money to generate profits.

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1. Net Interest Income to Gross Income: Remarks: The Net interest income to gross income is good due to increase in Net Income.

2. Risk Asset Turnover Ratio: Remarks: The Risk Asset Turnover Ratio of 2008 is good as compared to that of 2007. This may be due to increase in net markup. Percentage of increase in net markup is more than risk assets.

3. Interest Coverage Ratio: Remarks: The Interest Coverage Ratio of 2008 is bad as compared to that of 2007. This may be due to increase in financial charges.

4. Operating Profit Ratio Remarks: The operating Profit Ratio of 2008 is good as compared to that of 2007. This may be due to increase in operating profit.

5. Net Profit Ratio before Tax: Remarks: In years 2008 it has increased up to 60.08% from 56.56% in Year 2007. This increase in profit shows the unsatisfied performance of the brokerage house.

6. Net Profit Ratio after Tax Remarks: This ratio shows that an organization is earning on its assets after meeting all the expenses and obligations. This ratio also increased up to a great extent.

7. Return on Total Assets Remarks: This ratio also increased up to a great extent so it shows that an organization is earning on its assets after meeting all the expenses and obligations

8. Return on Share Capital:

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Remarks: The ratio has increased in Year 2008 which shows that that DSL has positive trend of earning on share capital

9. Return on Deposit: Remarks: By analyzing, I analyze that the ratio has increased in Year 2008 which shows that brokerage house is in good position.

10. Solvency ratio: Remarks: This ratio shows that the asset of brokerage house has increased as well as liabilities has also increased with the same ratio. This shows the sound position of business.

11. Advances to Deposits ratio: Remarks: The DSL has ratio of 62.99% in Year 2008as compare to 58.01% in Year 2007. The increase in ratio is due to increase in promotion of services, like online forex trading.

12. Deposits to Capital: Remarks: I analyze that DSL has negative trend of Deposits to Capital ratio from Year 2007 to Year 2008.

13. Total debts to Total Assets ratio: Remarks: The higher the ratio, the greater the amount of other people’s money to generate profits.

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Every organization especially Brokerage organizations has some dilemmas while operating its business. The dilemmas of DSL are following: 1. DSL works like one of the inefficient Brokerage organizations. Its working machinery has since been become unworkable. The staff as well as its managing force does not care to acquire the commercial gains but it cares only for its own financial benefits, payments, allowances and bonuses etc. This is why the DSL could not achieve the due standards in brokerage market. 2. The DSL no doubt extends brokerage services to the public but the top management including its micro managerial infrastructure does not take due care while appointing staff for The marketing & trading agents are less active in performance; the department has very poor performance during last one year, as they cannot add even one corporate client in the clients’ list of the company, although a corporate member, the Darson Securities (Pvt) Ltd. is mostly dependant on the individual clients of the market.

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1- Although the company has a flat architecture and the chief Executive has a strong interaction and check in each operation and department of the company, but it has made the decision-making too centralized for the company. 2- The managers feel them selves as less authoritative in taking bold decision relating to the financial and marketing related decision-making, the lower capital has decreased the exposure limit of the trading of the shares on the behalf of customer. 3- The marketing & trading agents are less active in performance; the department has very poor performance during last one year, as they cannot add even one corporate client in the clients’ list of the company, although a corporate member, the Darson Securities (Pvt) Ltd. is mostly dependant on the individual clients of the market. 4- The capital budgeting suggestions approved and recommended by the finance department are usually treated as less important, and due to this ignorance and less control on capital expenditures the company. 5- The common problem which I observed with transactions making with any brokerage house is that they use two different soft wares for maintaining records of transactions, which may cause fraud or misconduct of business. 6- Some time the company has to face serious problems in managing these projects

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Overall performance of the company is fine although not “excellent” and it has a very good reputation in the brokerage marking relating to its portfolio management. 1. The decentralization of the decision-making about the financial and legal matters can improve the condition of the company. 2. Secondly and also more importantly the marketing department at Lahore Stock Exchange should accelerate its functions to increase its customer base, because the bigger working capital is beneficial for the brokerage house. 3. The leverage of the company should be increased to take the advantage of market fluctuation. 4. Last but not the least, the company has a very sound and good start in brokerage business and it can improve its efficiency as well as profitability in future if it could its weaknesses in management style and financing techniques. 5. The debt sources of finance and increase in corporate client base can give the company a very high boost in the market. 6. Currently company is using the facility of credit limit from the ABL, which is charging 9% mark up on its credit line, but some other brokerage houses like KASB Brokerage house is offering the same facility on 6%, the finance department has completed all the documentations and formalities for taking this credit facility. 7. This will not only decrease the financial costs of the company but also increase the profitability of the company.

8.

It is hoped that by the end of this year the National Commodity Exchange may start its functioning and having the corporate membership of the exchange the company will be the pioneers of that market in Pakistan.

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9. It is hoped that National Commodity Exchange would be the biggest brokerage point for exchange of deliveries of all commodities in Pakistan with in next few years. 10. We can see a very bright and fruit full future of the company with next few years, as it has all the qualities of a best rated brokerage house to excel and & progress in the finance world. 11. The most Important point that should be kept very clear in mind is that debtor turn over ratio of the company is decreasing day by day, basically the main reason for this is that the volume of the revenue has not increased in the same pattern as the debtors and the second one is that that most of the brokerage house provide the facility of “Leverage” to its corporate client which are the biggest part of company Clients. 12. For increase in the revenue and decrease in the capital Blockage in the Company should inject new capital in the finance side and should try to negotiate with the corporate Clients of the Company for increase in the speed of recovery of the delivery payments. 13. Fresh debt finance has been injected to increase the efficiency, which will be beneficial in coming years. 14. Overall position of the Company is Satisfactory and it has a very bright future in the future. 15. Two different soft wares should not be used; only soft ware provided by CDC should be used to make transactions fair and to avoid misconduct of business.

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I had wonderful experience of doing internship in Darson Securities Pvt Limited Pakistan. Pakistan. I got much information regarding practical work of brokerage house. DSL is one of the leading brokerage houses of Pakistan. It has a big network of branches in the country. It is earning very well just because of its good services and low charges. It is Pakistan’s brokerage house or we can say nations brokerage house as it itself state. state. It is not just profit seeking institution but also working for the welfare of the nation of Pakistan. Darson Securities Pvt Limited Pakistan maintains its position as Pakistan's premier brokerage house determined to set higher standards of achievements. It is the major business partner for Dollar East with special emphasis on fostering brokerage business growth through aggressive and balanced policies, technologically oriented services offered through its large network of branches locally. Its most of branches are online so they have to do work online which some time cause of interruption and in case of any discontinuity they lose much because they have to make quick decisions and have to keep an eye on the market every time. Its services are very authentic and people trust on them. Customer can obtain different services either investment advisory or foreign exchange trading. Brokerage services are one of the major functions of every brokerage house. So Darson Securities Pvt Limited Pakistan is providing brokerage for different natures to different kinds to people at a reasonable brokerage fee, they provide Equity Brokerage facility for individuals and businesses. They are also providing the portfolio management services to the clients. They provide facilities to rapid transfer of equity from one place to another through online trade, commodity trade, Equity Brokerage and through Corporate Finance.

They also provide Personalized Services for their customers; they provide customized services to their clients according to the needs of their customers. It is representative of Dollar East. It is involved in Equity Research. Research. Which is also a very good service for its customers? This makes their investment safer and tells the client different new ideas and ways to deal with equities.

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Darson Securities Pvt Limited Pakistan is at the forefront of international brokerage in Pakistan which is proven by the fact that DSL has its branches in all of the major financial capitals of Pakistan; they have recently set up the Online Forex Trade wing under the Dollar East Group. They also provide Assets management services to their customers’ which is helpful in managing the assests more efficiently and making the most of them. It is providing services of investment advisory to its customer which is very helpful for the individuals willing to invest their money in different sectors. The professional skills of the brokerage house representatives prove to be very helpful. One more very attractive service of Darson securities Pvt Limited is “Debt Advisory”. The customer is advised whether to take a debt or not; or how to plan to pay a debt back in an efficient way. If we talk about the financial position of the brokerage house it is outstanding its earning is very well and its earning is increasing year by year. Ratio analysis is a yard stick to see the financial position of the brokerage house and by using this technique I get it that its financial position is much better. It should provide more services to people because it is era of competition and private brokerage houses are struggling more to provide good services to people. I have provided the problems faced by the organization through my observation in brokerage house. I have also provided some recommendations to improve the deficiencies. I have a very well experience to work here learn a lot of things regarding brokerage operations. Staff is very diligent, honest and devoted towards their work. They all guide me for better work.

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www.darson.com.pk www.darsononline.com.pk DARSSON SECURITIES PVT LIMITED DHA BRANCH, LAHORE Contact Person Mohammad Asif

T-23, Phase II, Commercial Area DHA, Lahore, Pakistan. Ph: +92-42-5743181-84 Fax: +92-42-5743185

Zubair Bajwa (Manager Accounts) (Visiting Card)

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