Vous êtes sur la page 1sur 81

Merchant Banking

Merchant Banking

MERCHANT BANKING
SUBMITTED BY, JHAMNANI NEHA ROLL NO.14

UNDER THE GUIDANCE OF, PROF. GUNJAN CHOTRANI

In Partial Fulfillment of The Requirements For The Award Of The Degree Of Bachelor Of Commerce

ACADEMIC YEAR: 2011-2012

J.W.SADHUBELLA GIRLS COLLEGE ULHASNAGAR-1 {UNIVERSITY OF MUMBAI}

Merchant Banking

Declaration
I,Neha.S.jhamnani,the student of J.W.Sadhubella Girls College, T.Y.Bcom{banking & insurance}(semester five) hereby declare that I have completed this project on ―Merchant banking‖ in the academic year 2011-2012.the information submitted is true and original to the best of my knowledge.

Student Signature

Merchant Banking

Certificate
I, ‗Prof. GUNJAN CHOTRANI‘ hereby certify that ‗JHAMNANI NEHA‘ of Third Year Bachelor of Commerce{Banking & Insurance} (Semester V) of J.W.SADHUBELLA GIRLS COLLEGE,Ulhasnagar-421001 has completed the project entitled ―MERCHANT BANKING‖ in the Academic Year 2011-2012 under my guidance. The information submitted is true and original to the best of my knowledge.

PROF.GUNJAN CHOTRANI

Ms. SMITHA CHAWAK

(PROJECT GUIDE)

(CO-ORDINATOR)

DR.M.M.Hosalkar (PRINCIPAL)

EXAMINER SIGN

Hosalkar (Principal) External Examiner .Smitha Chawak (Co-ordinator) DR. Gunjan Chotrani (Project Guide) Ms.M.WATUMULL SADHUBELLA GIRLS COLLEGE UNIVERSITY OF MUMBAI CERTIFICATE This is to certify that Neha. Gunjan Prof. Jhamnani Bachelor of Commerce{Banking & Insurance}(Semester V) for the academic year 2011-2012 has completed the project on ―MERCHANT BANKING‖ under the guidance of Prof.Merchant Banking J. S.M.

I would also like to thank college authorities. Gunjan Chotrani for her excellent guidance and letting me know about Merchant Banking and its importance in today‘s world. .Merchant Banking ACKNOWLEDGEMENT I take this opportunity to present a sense of gratitude towards my project guide Prof. Smitha Chawak for authorizing my project. our principal and co-ordinator Mrs.

. both activity performance and operational and financial performance.  To analyze the functions of Merchant Banking in relation to rules and regulations of SEBI.Merchant Banking Objectives of the project  To study the significance of Merchant Banking towards the development of securities industry.  To analyze issue management regulations.  To draw a conclusion and suggestions based on the analysis and experiences.  To evaluate the performance of Merchant Bankers.

And customer survey on awareness on Merchant Banking was also conducted. Secondary data: The secondary data required for the project was collected from various kinds of books and websites. Also it contains ideas and information imparted by the project guide. .Merchant Banking METHODOLOGY This project is a mixture of theoretical as well as practical knowledge. Primary data: Primary data was collected by the conducting a survey on banking whereas some of the information was collected by visiting Union Bank of India branch. the name of which are mentioned in the bibliography.

According to the Ministry of Finance in India.Merchant Banking EXECUTIVE SUMMARY Merchant Banking. as the term has evolved in Europe from the 18th century to today. Merchant banking services span from the earliest negotiations from a transaction to its actual consummation between buyer and seller. buying and subscribing to securities or in advising the corporations on issue management. the role of merchant banking services in India is indispensable. there is need for skilled professionals who can take care of various finance-related needs of the advanced industrial sectors. . The need of merchant banking services in India arises from the fact that high level industrialization is taking place in the country. Considering the way the Indian economy is growing. So. These specialist services are also of great importance for the small and medium sized enterprises to help them operate smoothly. Merchant banking services strengthen the economic development of a country as they acts as sources of funds and information for corporations. These financial institutes also act as corporate advisory bodies to help corporations rightly get involved in various financial activities. a merchant banker is a person or body engaged in selling. pertained to an individual or a banking house whose primary function was to facilitate the business process between a product and the financial requirements for its development.

Merchant Banking INDEX MODULE 1:-MERCHANT BANKING  History  Meaning  Definition MODULE2:-MERCHANT BANKING DETAILS  Objectives  Functions  Scope MODULE3:-MERCHANT BANKING SERVICES  Corporate counseling  Project counseling  Loan syndication  Management of capital issues  Dealing in secondary market  Mutual funds  Portfolio management  Underwriters  Mergers / amalgamations .

Merchant Banking MODULE 4:-MERCHANT BANKING REGULATIONS  Registration  Regulation  Obligation and Responsibilities MODULE 5:-MERCHANT BANKING ORGANIZATION  Organizational setup  Development Stages MODULE6:-MERCHANT BANKING RECENT TRENDS  Level of Competition  Current affairs  Conclusion MODULE7:-DATA ANALYSIS & INTERPRETATION .

Merchant Banking MODULE 1:-MERCHANT BANKING .

portfolio managers. moneychangers. JAGAT SHETH (1720-1773AD. & saucers performed the function of banks & merchant banks. They also issued & discounted bills of exchange (handiest) & bank draft. BENGAL) HABIB & SONS which is now HABIB BANK (founded in 1941. Later. negotiating agents for mergers. Over a period they extended their activities to domestic business of syndication of long term and short term finance. debenture trustees. the merchants assisted the Government of under developed countries in rising long – terms through floatation of bonds in London money market. Merchant Banking in India – Historical Perspective: Till 18th century moneylenders. .Merchant Banking History and Origin of Merchant Banking in India ORIGIN Merchant banking originated through the entering of London merchants in foreign trade through acceptance of bill. acting as registrars and share transfer agents. These were the organized merchant bankers in recent history of INDIA. now is in PAKISTAN). They gave loans on mutual trust. takeovers etc. village merchants (maharanis). ornaments & other property. underwriting of new issues. on mortgage of lands.

In general the merchant banks are the financial institution which provides financial services. consultant. . In United States these are called as ―Investment Banks‖ and in UK they are called as ―accepting and issuing houses‖. State Bank Of India. Punjab National Bank etc. or subscribing to the securities as manager. & advice to corporate houses. Credit Suisse & Morgan Stanley etc. solutions. buying. Company raises capital by issuing securities in market.Merchant Banking Meaning The word merchant bank does not have a fixed definition as this term is used differently in different countries. In India there are many banks which are into the field of merchant banking some of the banks are ICICI. Some of the world famous merchant banks are Goldman Sachs. Merchant banking……. The notification of Ministry Of Finance in India defines Merchant Banker as ―any person who is engaged in the business of issue management either by making arrangements regarding selling. Merchant bankers act as intermediaries between the issuer of capital and the ultimate investor who purchase these securities. is the financial intermediation that matches the entities that need capital and those that have capital? It is function that facilitates the flow of capital in the market. adviser in relation to such an issue management‖.

a merchant bank is a financial institution primarily engaged in offering financial services and advice to corporations and wealthy individuals on how to use their money. consultant. assuming role of an advisor. According to Cox. which consists of preparation of prospectus and other information relating to the issue. manager to securities market related operations . merchant banking is defined as. “Merchant banks are the financial institutions providing specialist services which generally include the acceptance of bills of exchange. “Merchant banker is a body corporate who carries on any activity of the issue management.Merchant Banking DEFINITION: In banking. determining financial structure. In India. D. tie-up of financiers and final allotment and refund of subscription.” . portfolio management and other banking services”. corporate finance. The term can also be used to describe the private equity activities of banking.

Merchant Bankers in India As of now there are 135 Merchant bankers who are registered with SEBI in India. nationalized banks have formed subsidiary companies. Citibank Setup its merchant banking division in Indian in 1970. share brokers and consultancies constituted themselves into public limited companies or registered themselves as private limited Companies. Commercial banks and foreign development finance institutions have organized them through formation divisions. It includes Public Sector.  Indian banks Started banking Services from 1972.  ICICI  Bank of India  Bank of Baroda  Canara Bank  Punjab National Bank  UCO Bank The Merchant Bank got more importance in the year 1983 when there was a huge boom in the primary market where the companies were going for new issue. Some merchant banking companies have entered into collaboration with merchant bankers of foreign countries abroad with several branches.  State bank of India started the merchant banking division in 1972 After that there were many banks which set up the merchant bank division such as.Merchant Banking Merchant Banking in India Merchant banking activity was officially commenced into the Indian capital Markets when Grindlays bank received the license from reserve bank in 1967. Apart from this it also provides management consulting services to meet the Requirements of small and medium sector rather than large sector. Grindlays started its operations with management of capital issues. Private Sector and foreign players some of them are Public Sector Merchant Bankers o SBI capital markets ltd o Punjab national bank o Bank of Maharashtra o IFCI financial services ltd  . recognized the requirements of upcoming class of Entrepreneurs for diverse financial services ranging from production planning and system design to market research. Merchant banking activities are organized and undertaken in several forms.

Ltd o Barclays Securities (India) Pvt.Merchant Banking o Karur Vysya bank ltd. o Morgan Stanley India Company Pvt.A o Deutsche Bank o Deutsche Equities India Private Limited o Barclays Bank Plc o Citigroup Global Markets India Pvt. o DSP Merrill Lynch Ltd o FEDEX Securities Ltd . o State Bank of Bikaner and Jaipur Private Sector Merchant Bankers o ICICI Securities Ltd o Axis Bank Ltd (Formerly UTI Bank Ltd. Ltd. Ltd o Bank Of America. Ltd.) o Bajaj Capital Ltd o Tata Capital Markets Ltd o ICICI Bank Ltd o Reliance Securities Limited o Kotak Mahindra Capital Company Ltd o Yes Bank Ltd. Foreign Players in Merchant Banking o Goldman Sachs (India) Securities Pvt. N.

Merchant Banking MODULE2:-MERCHANT BANKING DETAILS .

They will invest in buying and selling of transfers. underwrite. 3. securities and properties of any other company. . municipality. assist in the capital formation. To carry on the business of merchant banking. government. society. They also provide services to the finance housing schemes for the construction of houses and buying of land. trust person. civil body. public authority established in India. hypothecate and deal with dispose of shares.Merchant Banking Main Objectives of Merchant Bankers Merchant bankers render their specialized assistance in achieving the main objectives which are presented below: 1. debentures. They render the services like foreign exchange dealer. 5. 2. manage advice. Merchant bankers another objective is to set up and provide services for the venture capital technology funds. stocks. money exchange. corporation. 6. The main object of merchant banker is to create secondary market for bills and discount or re-discount bills and acts as an acceptance house. firm. provide standby assistance. and authorized dealer and to buy and sell foreign exchange in all lawful ways in compliance with the relevant laws of India. 4. securities and all kinds of investments issued. to be issued or guaranteed by any company.

Merchant Banking Qualities of a Good Merchant Banker Leadership Innovation Aggressive action Liasioning ability Co-operation and Qualities of a Good Merchant Banker Friendliness Capital market familiarity Contacts Knowledge Problem solving attitude .

. He assists the companies in raising funds from the market. The following are the main areas in which their advice is sought. The main areas of work in this regard includes : instrument designing. listing on stock exchanges. the size of such a network represents the wholesale reach of the merchant banker.debt instrument. private equity funds. Corporate advisory services:Merchant bankers offer customized solutions to their client‘s financial problems. insurance products. commercial paper to name a few. pension fund. allotment and refund. fixed deposit. 3. Management of debt and equity offerings:This forms the main function of the merchant banker. foreign institutional investor. Placement and distribution:the merchant banker helps in distributing various securities like equity shares . pricing the issue.. mutual fund product. financial institution etc. 1.Merchant Banking Functions of a merchant banker…. and marketing of the issue. The retail network depends on networking with investors. registration of the offer document. The distribution network of the merchant banker can be classified as institutional and retail in nature. underwriting support. 2. the institutional network consist of mutual fund.

Once the idea is formed. the appropriate capital structure theory is also framed. They also assist the client in preparing different document like the detail project report. Project advisory service:- Merchant bankers help their clients in various stage of project undertaken by the clients. They assist them in conceptualizing project idea in the initial stage. Another area of advice is habilitation and turnaround management. . merchant banker may design a revival package in coordination with banks and financial institution.Merchant Banking 4. He advice the client on different hedging strategies and suggest the appropriate strategy. In case of sick units. 5. Merchant banker also explores the refinancing alternatives of the client and evaluate cheaper source of fund. they conduct feasibility studies to examine the viability of the proposed project. Risk management is another area where advice from a merchant banker is sought. Financial structuring:- Includes determining the debt-equity ratio and gearing ratio for the client.

4. Some countries allow commercial bankers to get involved in IPO‘s. Lots of new and green fried projects are happening. With significant market freedom. Restrictions-liberalization: more liberal the market is. merchant bankers work has increased many folds. strategic restructuring in house as well. 1. Merchant bankers have lots space to contribute. then only they will engage merchant bankers. Otherwise . placement of debentures.Merchant Banking Scope for merchant banking in India:Scope for merchant banking depends upon size of the market. Merchant bankers assist in decision making and hence their scope increases. This limits scope of commercial banks and gives space to merchant bankers. public issues. debt raising are on rise. FDI. etc. 3. In fact India is one of the largest emerging markets. If the corporate prefer third-party independent assessment. Banking policies: RBI prefers that commercial banks do not indulge in merchant banking business directly. 2. more the things left to be decided by the corporate. Size and dynamics of the market: Indian market is growing. restrictioncorporate liberation. Corporate culture: corporate can do project appraisal. banking culture. policies. This policy also results in fair business practices. Indian scenario is favorable to merchant bankers. They should setup a subsidiary for the purpose. and corporate dynamics. Obviously.

Entry of Foreign Investors: Now India capital market directly taps foreign capital through euro issues. takeover acquisition. there will be great demand for merchant banker services. . 6. Growth of Primary market: If the primary market grows and number of issues increases. fund raising for government institutions. 7. If more and more NRIs participate in capital market. active money market are all providing better business prospectus to merchant bankers. Mergers. So Merchant bankers are required to advice them for their investment in India. new Greenfield projects.Merchant Banking merchant banker‘s role is only statutory as in issue management. 5. the scope of merchant banking will be enhanced. apparently prefers and is happy with merchant bankers work. The increasing number of joint ventures also requires expert services of Merchant Bankers. India inc. Corporate dynamics: more happening in business gives more opportunities to merchant bankers.FDI is increased in capital market.

Merchant Banking SERVICES PROVIDED BY MERCHANT BANKS: (in detail) .

Mutual Funds 7. Mergers / Amalgamations . Dealing In Secondary Market 6.Merchant Banking Services of Merchant Bankers in India:- 1. Portfolio Management 8. Project Counseling 3. Underwriters 9. Loan Syndication 4. Corporate Counseling 2. Management Of Capital Issues 5.

lease financing. An academic analysis of corporate counseling present a different picture than that transpires from the literature of the merchant bankers Firstly corporate counseling is the beginning of the merchant banking service which every clients whether new or existing has got to avail a different matter whether . Requirement of any action to be taken or compliance of statutory formalities to be made for implementation of those suggestions would demand for a specific type of service other than corporate counseling being offered by the merchant bankers. and loan syndication. steady growth through good working and appreciation in market value of its equity shares. working capital. However counseling is limited to only opinions and suggestions and any detailed analysis would form part of a specific service. fixed deposit.Merchant Banking Corporate Counseling Corporate counseling denotes the advice provided by the Merchant Banking to the corporate unit to ensure better corporate performance in terms of image building among investors. The scope of corporate counseling. etc. public issue management. capital restructuring and. procedures and laws to be observed by the client company. The scope of corporate counseling is restricted to the explanations of concepts. acceptance credit. portfolio management and the full range of financial engineering includes venture capital.

are the areas to be covered. etc. rate of returns and cost of capital besides basic corporate changes of financial rearrangement. Its coverage ranges from the managerial economies. Reorganization. a merchant banker has to guide the corporate clients in areas covering financial reporting. locations factors. etc. allocation of resources. investment decisions. new issues of equity or debentures respectively .Merchant Banking a merchant bank charges its client separately for rendering the corporate counseling service or includes the element of fee in the other heads of services but for the angle of priority. banks and the general public in the form of loan. Corporate laws should basically cover the legal aspects including the various legal formalities involved in areas of corporate finance being raised from the financial institutions. cost reduction and cost analysis. financial requirements and the sources of finance. mergers and acquisitions. investments and financial management to Corporate Laws and the related legal aspects of the organizational goals. evaluating financial alternatives. project measurements. organizational size and operational scale. choice of product and market survey. Corporate counseling is first in line of the services which a merchant banker offers and than other services. As financial and investment experts. pricing methods and marketing strategy. Secondly the scope of the corporate counseling is very vast. forecasting of product. working capital management. capital management and expenditure control.

or review of the project reports or market survey report prepared by the TCO. preparing project report form financial angle. review of technical feasibility of the project on the basis of the report prepared by own experts r by the outside consultants. . and advice and act on various procedural steps including obtaining government consents for implementation of projects. selecting Technical consultancy Organization (TCO) for preparing project reports and market survey.Merchant Banking Project Counseling Project counseling services may be rendered independently or maybe. agencies viz. it relates to project finance and broadly covers the study of the project and offering advisory assistance on the project viability and procedural steps for its implementation broadly including following aspects:- general review of the project ideas/ project profile. advice on procedural aspects of project implementation. the facility providing guidance to Indian entrepreneurs for making investment projects in India and in Indian joint ventures overseas is also covered under this activity. This assistance can include obtaining of the following approvals/licenses/permission/grants etc form the govt. In addition to above. letter of intent. industrial license and DGTD registration and government approval for foreign collaboration.

Some of the critical issues that a study of this genre deals will include an in-depth investigation of environment and regulatory factors. Such a study would assess the financial and economic viability of a given project and help the clients to identify and short list those projects that are built upon his inherent strength son as to accentuate corporate profitability and growth in long run. project counseling may include identification of potential investments avenues. arranging and negotiating foreign collaborations. precise capital structuring shaping the pattern of financing. industrial license and DGTD registrations etc. Pre-investment studies are directed mainly for the prospective investor. location of raw material. financial and economic aspects of the project from the point of view of their acceptance by the financial institutions and banks. guidance on investment opportunities for entrepreneurs coming to India. . mergers and takeover. These reports would cover the technical. These are the objective and detailed feasibility explanation of which the principal aim is to arm the clients with the sound foundation of facts and figures to evaluate the alternative avenues open for capital investments from the point of view of growth and profit prospects. financial study of the project and preparation of viability reports. amalgamations. supplies. to advice on the framework of institutional guidelines and laws governing corporate finance. demand projections and financial requirements. assistance in the preparation of project profiles and feasibility studies based on preliminary project ideas in order to indicate the potential. seeking approvals from the government of India for foreign technical and financial collaboration agreements.Merchant Banking Besides the above services. advising and assisting clients in preparing the applications for obtaining letters of intent.

Merchant Banking Loan Syndication Credit syndication also known as credit procurement and project finance services. Broadly. (c) Preparing loan application for financial assistance from term lenders/financial institutions/banks and monitoring their progress including the pre-sanction negotiations. government agencies and underwriters. prescribed by the participating financial institutions and banks. (f) Arranging bridge finance. The main task involved in credit syndication is to raise to rupee and foreign currency loans with the banks and financial institutions both in India and abroad. (d) Selecting the institutions and banks for participation in financing. the credit syndications include the following acts. (h) Assessing the working capital requirements. It also arranges the bridge finance and the resources for cost escalations or cost Overruns. (e) Follow-up of the term loan application with the financial institutions and banks and obtaining the satisfaction for their respective share of participation. (g) Assisting in completion of formalities for drawl of term finance sanctioned by institution expediting legal documentation formalities drawing up inter-se agreements etc. Financial institutions and banks. (a) Estimating the total costs (b) Drawing a financing plan for the total project cost-conforming to the requirements of the promoters and their collaborators. Preparing the necessary application for a successful issue management the close liaison and coordination with the various constituents of the public issue is an .

accountants certification. underwriters‘ commission. printers‘ charges and advertising and publicity expenses and coordinates with syndicated merchant bankers and principal brokers. acting as ‗Manager‘ to the issue has to settle the fee for Advocate/solicitors‘ advice. stock exchanges. If proper coordination is not done. The responsibility for all this rests upon the merchant banker. . etc. the success of the issue may be rendered unassured.Merchant Banking essential condition that warrants full cooperation of all the parties affecting the cost and prospects f the issue. broker‘s and banks charges. Merchant banks.

additional issues of existing companies including rights issue and dilution of shares by letter of offer. registrar to the issue and merchant bankers providing specialized services to make the issue of the success. advertising agency. brokers. However merchant banker is the agency at the apex level than that plan. underwriters. The public issues are managed by the involvement of various agencies i.e. coordinate and control the entire issue activity and direct different agencies to contribute to the successful marketing of securities. bankers. printers.Merchant Banking Management of Capital Issues The capital issue are managed are category-1 merchant banker and constitutes the most important aspects of their services. viz. legal advisers. auditors. The procedure of the managing a public issue by a merchant banker is divided into two phases. (A) (B) Pre-issue management Post-issue management . The public issue of corporate securities involves marketing of capital issues of new and existing companies.

Filing of the prospectus with Registrar of Companies. (8) (9) Approval of prospectus from Securities and Exchange Board of India. (11) Publicity of the issue with advertisement and conferences.Merchant Banking (A) Pre-Issue Management:Steps required to be taken to manage pre-issue activity is as follows:(1) Obtaining stock exchange approvals to memorandum and articles of associations. legal advisers and broad base Board of Directors (5) (6) Drafting of prospectus Obtaining approvals of draft prospectus from the company‘s legal advisers. . with copy of the prospectus. (12) Open subscription list. (2) (3) Taking action as per SEBI guide lines Finalizing the appointments of the following agencies:  Co-manager/Advisers to the issue  Underwriters to the issue  Brokers to the issue  Bankers to the issue and refund Banker  Advertising agency  Printers and Registrar to the issue (4) Advise the company to appoint auditors. (10) Making an application for enlistment with Stock Exchange along. underwriting financial institutions/Banks (7) Obtaining consent from parties and agencies acting for the issue to be enclosed with the prospectus.

.2% of the amount exceeding Rs. This fee is to be shared by all lead managers.5% of the amount of public issues up to Rs.25crores. advisers etc. To attend the investors grievances regarding the public issue The Merchant Bankers for managing public issue can negotiate a fee subject to a ceiling. if more than one Merchant bankers are managing the issue.Merchant Banking (B) Post-issue Management:Steps involved in post-issue management are:(1) To verify and confirm that the issue is subscribed to the extent of 90% including devolvement from underwriters in case of under subscription (2) To supervise and co-ordinate the allotment procedure of registrar to the issue as per prescribed Stock Exchange guidelines (3) To ensure issue of refund order. 0. allotment letters / certificates within the prescribed time limit of10 weeks after the closure of subscription list (4) To report periodically to SEBI about the progress in the matters related to allotment and refunds (5) (6) To ensure he listing of securities at Stock Exchanges.25 crores 0.

g. etc. neither understand the complexities of financial markets nor have the time to watch. The Trust issues units to the investors in the proportion of their investments. Unit Trust of India (UTI).Merchant Banking Mutual Funds A Mutual Fund is a special type of investment institution which collects or pools the savings of the community and invests large funds in variety of Blue-chip Companies which are selected from a wide range of industries with the objects of maximizing returns/incomes on investments. and analyze different equities. . This is distributed to the various investors in the proportion of their contribution to the pool funds. E. Money collected by the investors is invested in various issues of primary and secondary markets in order to gain profits on such investments It is a Trust. and capital appreciation. A fund manager then invests these funds in different types of assets. securities or any other investments opportunities that are available in the market. Mutual Funds are basically a trust which mobilize savings from the people and invest them in a mix of corporate and government securities. which provide returns in the form of dividends. who want to invest their savings. research. Sri Ram Mutual Fund. Ordinary investors. which combines the investments of various investors having similar financial goals. Morgan Stanley Growth Fund (foreign mutual fund). interests.

and the market dealing with the other assets have now reached a stage where a minimal information affect the markets. all the markets viz. the money market. transactions. the debt market. the economy has opened up and global events influence their performance. derivatives. . brokerages etc.Merchant Banking At present. In the present scenario mutual funds are some of the most efficient financial instruments as it offers above services like managing investments at a very low cost. real estates. the equity market. Besides this. It is very difficult for a lay person to keep track of various investments.

to carry on the portfolio management activity within the framework of SEBI regulations applicable to portfolio managers. In order to carry on portfolio management services. The SEBI regulations are . in pursuance of a contract with client. But for category 1 and 2 merchant banker a separate registration is not required to act as a portfolio manager. The term portfolio means the total holding of securities belonging to any person.Merchant Banking Portfolio Manager Portfolio managers are defined as persons who. advise/ direct undertake on their behalf the management/ administration of portfolio of securities/ funds of clients. a certificate of registration from SEBI is mandatory. The portfolio management can be…  Discretionary: the first type of portfolio management permits the exercise of discretion in regard to investment/ management of the portfolio of the securities /funds. They have.  Non-discretionary: the non-discretionary portfolio manager should manage the funds in accordance with the direction of client. however.

The portfolio manager is also to give an undertaking to take adequate steps for the redresses of grievance of clients within one month of the receipt of complaint. An application for renewal must be made three months before the expiry of the validity of the certificate.The SEBI is authorized to grant and renew certificate of registration as a prior permission to portfolio managers on the payment of the requisite registration/renewal fee. nature. The annual registration fee payable to SEBI was Rs 2. 5 lakh respectively. . and other particular of complaints and abide by its rules and regulations. A certificate/ renewal of registration is valid for three years. the registration fee and renewal fee after every three years in Rs. The renewal fee was rs 75. keep SEBI informed about the number.000 per annum.Merchant Banking applicable to portfolio manage. After November 1999.5 lakh for the first two year and Rs. 1 lakh for the third year.

the SEBI considers all matters relevant relating to the underwriting and in particular. a certificate of registration must be obtained from the SEBI in granting the registration. Through underwriting is not mandatory after April 1995. Underwriters are appointed by the issuing companies in consultation with the lead manager/ merchant banker to the issues.Merchant Banking Underwriters Another important intermediary in the new issue/primary market is the underwriters to the issues of capital who agree to take u securities which are not fully. the underwriters asset are adequate to meet their obligation should be incorporated in the prospectus certificate. The necessary infrastructural like adequate office space. . Past experience in underwriting/ employment of at least two persons with experience in underwriting: c. a. equipment and manpower to effectively discharged the activity: b. A statement to the effect that in the opinion of the lead manager.  Registration To act as underwriter. They make a commitment to get the issue subscribed either by other or by them. Any person directly/ indirectly connect with the applicant is not registered with the SEBI as underwriter or previous application of any such person has been rejected or any disciplinary action has been taken against such person under the SEBI act/rules/regulation. subscribed. its organization is an important element of the primary market.

Every three years from the fourth year the date of initial registration is payable. To keep the registration in force. renewal fee of Rs 1 lakh.000 was payable every year to keep the certificate in force or for its renewal. pay a fee to the SEBI from the date of initial grant of certificate. had to. . Capital adequacy requirement of not less than the net worth ( CAPITAL + free reserve) of Rs. Since 1999 the registration fee has been raised to Rs 5 lakh. 20 lakh: and e. Failure to pay the fee would result in the suspension of the certificate of registration. A fee of Rs 20. The applicant/ director/ principle officer/ partner has been convicted of offence involving moral turpitude or found guilty of any economic offence. Fee underwriters. Rs 2 lakh for the first and second year and Rs 1 lakh for the third year.Merchant Banking d. for grant or renewal of registration.

The outcome of this arrangement is that the amalgamating firm is dissolved/wound-up and losses it identity and its shareholders become shareholders of the amalgamated firm. 1956. All the property and liabilities of the amalgamated company / companies immediately before amalgamation should vest with/ become the liabilities of the amalgamated company and 2. The income tax act . stipulates to pre-requisite for amalgamation through which the amalgamated company seeks to avail the benefit of set of / carry forward of losses and unabsorbed depreciation of the amalgamating company against its future profits u/s 72A . 1. The shareholders other than amalgamated company/its subsidiary holding at list 90% value of shares/ voting power in the amalgamating company should . A merger is a combination of two or more firms in which only one firm would survive and the other would cease to exist.namely. 1961. And amalgamation is an arrangement in which the asset/liability of two or more firm to form a new entity or absorption of one/more firm with another.Merchant Banking Mergers /Amalgamation: The terms merger and amalgamation are used interchangeably as a form of business organization to seek external growth of business. it does not defined this term. its asset/ liabilities being taken over by surviving firm. Although the merger/amalgamation of firm in India is governed by the provision of the companies act.

The merger and amalgamation of corporate constitute a subject matter of the companies act. there is a discernible trend among promoters and established corporate group towards consolidation of market share and diversification into new areas through acquisition/takeover of companies but in a more pronounced manner through mergers/amalgamation. The terms merger and amalgamation on the one hand and acquisition and takeover on the other are treated here synonymously.Merchant Banking become shareholders of the amalgamated company by virtue of amalgamation. Following the economic reforms in India in the post-1991 period. The scheme of merger. the courts and law and there are well-laid down procedure for valuation of share and right of investor. income tax implications of amalgamation and financial evaluation are discussed in the section. The acquisition/takeover bids fall under the purview of SEBI. the legal procedure involved is difficult. Although the economic consideration in terms of motive and effect of these are similar. Section one of the chapter covers the framework of merger/amalgamation including financial evaluation. The regulatory framework governing acquisition/takeover is described in section two. .

Merchant Banking MODULE 4:-MERCHANT BANKING REGULATIONS .

 They should not be connected with any company directly or indirectly. SEBI will grant certificate to Merchant banker if it follows the following condition:-  Merchant banker should be a body corporate and should not be non banking finance company  They must have a necessary infrastructure for maintaining an office  They must have employed a minimum of 2 persons with experience in merchant banking business. .Merchant Banking REGISTRATION PROCESS OF MERCHANT BANKING MERCHANT BANKER without holding a certificate of registration granted by the Securities and Exchange Board of India cannot act as a merchant banker.

Cancellation of certificate . Failing to pay registration fees Rs. SEBI shall consider the application and on being satisfied renew certificate of registration for a further period of 3 years. 5 lakhs should be paid within 15 days of date of receipt of intimation regarding grant of certificate t he certificate is valid only for a period of 3 years Three months before the expiry period. 1992. 2.5 lakhs which should be paid within 15 days of date of receipt of intimation regarding renewal of certificate. an application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers) Regulations. 1992. 1992 Rs. SEBI shall consider the application and on being satisfied issue a certificate of registration in Form B of the SEBI (Merchant Bankers) Regulations.Merchant Banking Procedure for getting registration An application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers) Regulations.

consultant. portfolio manager.to act as adviser. 50lakhs  Category III – Rs. co-manager. The minimum net worth requirement for acting as merchant banker is given below:  Category I – Rs.  Category III . 20lakhs  Category IV – Nil The categories for which registration may be granted are given below  Category I – to carry on the activity of issue management and to act as adviser. adviser or consultant to an issue  Category IV – to act only as adviser or consultant to an issue .Merchant Banking  CAPITAL STRUCTURE DECISION:- The capital requirement depends upon the category. underwriter. manager. underwriter.  Category II .to act as underwriter. consultant. portfolio manager. 5crores  Category II – Rs.

He ought to render at all times high standards of service. while competing for. to the client either about his qualification or his capability to other clients. practice unfair competition. which has come to his knowledge. He has to. He should not make any exaggerated statement. any assignment. He cannot made any statement or become privy to any act.Merchant Banking Obligations and responsibilities  Code of conduct:Every merchant banker has to abide by the code of conduct as specified below. ensure proper care and exercise independent professional judgment. wherever necessary. exercise due diligence. and . the possible sources of conflict of duties and interest. disclose to his clients. or executing. while providing services. press or any other party any other party confidential information about his client. A merchant banker in the conduct of his business has to observe standards of integrity and fairness of all his dealings with the clients and other merchant bankers. and 2) Ensure that all professional dealing are affected in prompt. and his own professional skill. whether oral or written. efficient and cost effective manner  He should not:1) Divulge to other clients. which is likely to be harmful to interest of other merchant bankers or is likely to place such other merchant banker in a disadvantageous position in relation to him. A merchant banker always to endeavors to: 1) Render the best possible advice to the clients regarding clients the needs and requirements.

 He should endeavor to ensure that:1) The investors are provided with true and adequate information without making any misguided or exaggerated claims. and are made aware of attendant risks before any investment decision is taken by them. and c) Passing of price sensitive information to brokers.Merchant Banking 2) Deal in the securities of any client company without making disclosure to the SEBI as per the regulations and also the Board of Directors of the client company. he has to avoid by the provisions of the SEBI Act. memorandum and related literature are made available to the investors 3) Adequate steps are taken for the fair allotment of securities and refund of application money without delay. Finally. b) Price rigging or manipulations. its rules and regulations which may be applicable and relevant to the activities carried on by the merchant banker. members of stock exchanges and other players in the capital market or take any other action which is unethical or unfair to the investors. . and A merchant banker should not generally and particularly in respect of the issue of any securities be part to a) Creation of false market. 2) The copies of prospectus.

other than a bank/public financial institution (PFI) is permitted to carryon business other than that just in the securities market with effect from December 9.100 cores and Rs. He can also not associate with a merchant .200 corer and above Rs. A lead merchant banker cannot manage an issue if the issuing company is its associate. two managers are appointed. 1997. liabilities. a merchant banker who is registered with RBI as a Primary Dealer/Satellite Dealer may carry on such business as may be permitted by RBI with effect from November 1999. For an issue of size less than Rs. the statement of has to provide details about their respective responsibilities.  Responsibilities of Merchant Banker:Every lead manager has to enter into an agreement with the issuing companies setting out their mutual rights. In case of more than one-lead manager/Merchant banker. However. allotment and refund. For size groups of Rs.400 crores respectively. and obligation relating to issue and in particular to disclosures. A statement specifying these is to be furnished to SEBI at least one month before the opening of the issue for subscription.50 cores to Rs.Merchant Banking  Restriction on Business:No merchant banker.  Maximum Number of Lead Managers :The maximum number of lead manager is related to the size of the issue. the maximum permissible lead managers are three and four respectively.100 crores to Rs.50 crores. A company can appoint five and five or more (as approved by the SEBI) lead managers in case of issues between Rs.200 crores.

 Submission of Documents:The lead managers(s) to an issue has (have) to. It is necessary for a lead manager to accept a minimum underwriting obligation of 5% of the total underwriting commitment or Rs.25 laky whichever is less. draft prospectus/letter of offer. and c) The disclosure is true. fair and adequate to enable the investors to make a well-informed decision as to the investment in the proposed issue. he has to make arrangements for an underwriting of an.  Due Diligence certificate:The lead manager is responsible for the verification of the content of a prospectus/letter of offer in respect of an issue and the reasonableness of the views expressed in them. Submit at least two weeks before the date of filing with the registrar of companies/regional stock exchange or both particulars of the issue. and so to the SEBI. other literature to be circulated to the investors/shareholders. He has to submit to the SEBI at least two weeks before the opening of the issue for subscription a due diligence certificate to the effect that a) The prospectus/letter of after is in conformity with the documents/materials and papers relevant to the issue. equal amount by a merchant banker associated with that issue under intimation to SEBI.Merchant Banking banker who does not hold a certificate of registration with the SEBI. They have to ensure that the modifications/suggestion made by it with . If he is unable to do so. b) All legal requirements connected with the issue have been fully complied with.

Merchant Banking respect to the information to be given to the investors is duly incorporated.000 They have to continue to be associated with the issue till the subscribers have received the share debentures certificate or the refund of excess application money.000 Rs 50 cores.5 crores Fee per document Rs 10.000 More than Rs 500 corer Rs 5. Acquisition of shares a merchant banker is prohibited from acquiring securities of any company on the basis of unpublished price sensitive information obtained during the course of any professional assignment either .000 Rs 5 cores.Rs 50 cores Rs 25.50.Rs 100 cores Rs 50.000 Rs 100 cores.00. The draft prospectus/draft letter of offer should be submitted to the SEBI along with the prescribed fee specified below:- Issue size including premium and intended retention oversubscription Up to Rs.Rs 10 crores Rs 15.000 Rs 10 cores.Rs 500 cores Rs 2.

. He has to submit to the SEBI the complete particulars of any acquisition of securities of a company whose issue is being managed by him within 15 days from the date of the transaction.  Disclosures to SEBI:As and when required. consultant or adviser to an issue.Merchant Banking from the client or otherwise. under writer. IV) The particulars relating to breach of capital adequacy requirements and V) Information relating to his activities as manager. III) The names of the companies whose issues he has managed or has been associated with. II) Any changes in the information/particulars previously furnished which have a bearing and the certificate of registrations granted to it. a merchant banker has to disclose to the SEBI: I) His responsibilities with regard to the management of the issue.

the first issue by the existing private companies and public issues by the existing listing companies. The SEBI has announced the new guidelines for the disclosures by the Companies leading to the investor protection. The SEBI has issued guidelines for the issue of capital by the companies. The guidelines broadly covers the requirement of the first issue by a new or the first issue of a new company set up by the existing company. The issue of capital and pricing of issues by companies has become free of prior approval. the place was occupied by a legal organ called as ―Securities and Exchange Board of India‖. e) The minimum application money payable should not be less than 25 per cent of the issue price. They are presented below: a) If any Company‘s other income exceeds 10 per cent of the total income. the details should be disclosed. c) The Company should also disclose the information regarding the capacity utilization of the plant for the last 3 years. d) The Promoters of the Company must maintain their holding at least at 20 per cent of the expanded capital.Merchant Banking REGULATORY AUTHORITY Guidelines of SEBI After the obligations of the CCI. b) The Company should disclose any adverse situation which affects the operations of the Company and occurs within one year prior to the date filing of the offer document with the Registrar of Companies or Stock Exchange. The SEBI is the most powerful organization to control and lead both the primary market and secondary market. .

j) According to the SEBI guidelines regarding rights issue.  FIIS (24%). the Company should give advertisements in not less than two news-papers about the dispatch of letters of offer. k) The Company should also disclose about the fee agreed between the lead managers and the Company in the memorandum of understanding.  Financial institution (20%).Merchant Banking f) The company should disclose the time normally taken for the disposal of various types of investor‘s grievances. i) According to the guidelines. No preferential allotment may be made along with any rights issue. at least 30 mandatory collection centers should be established. in case of the public issues. g) The Company can make firm allotments in public issues as follows:  Indian mutual funds (20%). This scheme is applicable to a limited number of 500 shares per allottee and the offer should be valid for a period of at least 6 months from the date of dispatch of securities. .  Regular employees of the company (10%). h) The Company should disclose the safety net scheme or buy back arrangements of the shares proposed in public issue.

It also works as a trade body promoting the interests of the industry and of its members. . This led to the birth of the Association of Merchant Bankers of India (AMBI). The spectrum of AMBI's activities is wide.Merchant Banking About AMBI In the early 1990s. It was promoted to exercise overall supervision over its members in the matters of compliance with statutory rules and regulations pertaining to merchant banking and other activities. SEBI. the merchant banking industry in India witnessed a phenomenal growth with over 1. AMBI's primary objective is to ensure that its members render services to all its constituents within an agreed framework of ethical principles and practices. In order to ensure the well being of the industry and for promoting healthy business practices. AMBI. It is the nodal point for the assimilation and dissemination of information relating to the merchant banking industry. it became necessary to set up a Self Regulatory Organization within the industry. AMBI is the merchant banking industry's sole representative to all statutory authorities. for providing efficient services and to establish standard practices in merchant banking and financial services. AMBI was granted recognition by SEBI to set up professional standards. as also other matters of interest. in consultation with SEBI. Thus AMBI ensures that its members are aware of the latest rules/guidelines issued by various statutory authorities. is working towards improving the compliance of statutory requirement in a systematic manner. The Chairman of AMBI is on the Primary Market Advisory Committee of SEBI.500 merchant bankers registered with SEBI. in particular.

AMBI regularly conducts/sponsors talks and seminars on financial matters. For the benefit of investors. AMBI is also the intra-industry arbitrator on all matters arising between its members.Merchant Banking To ensure healthy competition within the industry. . AMBI has published its Code of Conduct for Merchant Bankers. This handbook is currently under revision. AMBI has brought out an Investor's Education Handbook Concurrent with the activity of educating investors. which has proved to be a useful tool for merchant bankers. This memorandum expresses the concerns of the industry and requests specific changes in various financial legislations that would help better the range of services and opportunities provided by the industry. AMBI regularly submits a Pre-Budget Memorandum to the Finance Ministry. This document sets out the broad parameters and the spirit in which the members of AMBI should conduct business. AMBI has also produced a Due Diligence Handbook.

Merchant Banking MODULE 5:-MERCHANT BANKING ORGANIZATION MERCHANT BANKING ORGANIZATION .

Canara Bank. These organizations have brought Professionalism in merchant banking sector and they help their parent organization to make a presence in capital market. Each category is authorized to perform certain functions. Bank of India. Punjab National Bank.Merchant Banking Organizational setup of merchant bankers in India In India a common organizational setup of merchant bankers to operate is in the form of divisions of Indian and foreign banks and financial institutions. etc. The parent banks are either nationalized commercial bank or the foreign banks operating in India. Some firms are also organized by financial and technical consultants and professionals. Securities and Exchange Board of India has divided the merchant bankers into four categories based on their capital adequacy. They are: (A) Institutional Base Where merchant banks function as an independent wing or as subsidiary of various private/Central Government/State Government financial institutions. . Most of the financial institutions in India are in public sector and therefore such setup plays a role on the lines of government priorities and policies. From the point of organizational setup India‘s merchant banking organizations can be categorized into four groups on the basis of their linkage with parent activity. subsidiary companies established by bankers like SBI. (B) Banker Base These merchant bankers function as division/subsidiary of banking organization.

These brokers undertake merchant banking related operations also like providing investment and portfolio management services. . Many of these firms were in existence for quite some times before they added a new activity in the form of merchant banking services by opening new divisions on the lines of commercial banks and All India Financial Institutions. Private sector merchant banking firms have come up either as the sole proprietorship or public limited companies. (D) Private Base These merchant banking firms are originated in private sector. These organizations are the outcome of opportunities and scope in merchant banking business and they are providing skill-oriented specialized services to their clients.Merchant Banking (C) Broker Base In the recent past there has been an inflow of qualified and professionally skilled brokers in various stock exchanges of India. Some foreign merchant bankers are also entering either independently or through some collaboration with their Indian counterparts.

1 Start-up founders and associates involved in the management Own investment Emerging formal 2 Early growth organization. But most of these firms are not well developed to show stage of maturity. or professional manager in management Formal organization with 3 Accelerating growth professional.Merchant Banking Development stages of Merchant Banking firms In the merchant banking organization in the following chart. manager or founder Complex organization with professional manager Firms investment with banks backing in terms of loan Corporate finance from bank plus equity funds from public Matching finance available from all possible sources Individual investment 4 Sustaining growth 5 Maturity Multilayer complex management organization . This is easily dissemble from the following projection of the development stages Unit Stages in development of merchant banking Organizational setup Principal financing source Very loose organization. the firm of merchant banker and individual stock broker have been included as they have been contributing jointly to the growth of the profession of merchant banking. founders. Most of them are still in the start-up and early growth stages.

Merchant Banking MODULE6:-MERCHANT BANKING RECENT TRENDS .

The number of Merchant Bankers has increased from only 33 in the year 1989-90 to 405 in 1993-94. As a result of liberalization and globalization. their survival dependent on innovative capital issue structuring and other income generating activities like leasing. This area of corporate advisory services which is largely in the hands of private consultancy firms. acquisitions. Merchant Banking business is handled by a few established players and for the others there is a heavy competition. The high level of competition in Merchant Banking business especially issue management is evident from the fact that out of 140 Category-I merchant Bankers in 1992-93 only 66 were able to manage an issue. Presently. . This had led to corporate restructuring including mergers. structures and functioning. a Merchant Banker on average viedlor 3.5 issues. splits. Therefore. companies are reviewing their strategies. Considering a total number of public issues in the year 1994-95. high-purchase. competition in corporate sector is becoming intense. also offers good opportunity to Merchant Bankers to extend the area of operations. the number of Merchant Bankers in different categories registered with SEBI is 501 (August 1994). Therefore a tough competition exists in the line off issue management.Merchant Banking Level of Competition The rapid growth in the primary capital market has led to an even greater proliferation of Merchant Bankers. For their survival and growth. investments and dealings in secondary market operations. divestments and financial restructuring.

which were engaged in fixed income." RBI said in a statement issued here. This facility may be made available at any merchant establishment designated by the bank and would be available whether the card holder makes a purchase or not. up to Rs1000 per day.857.  Morgan Stanley makes I-banking comeback The joint venture between JM Financial and Morgan Stanley was inked in 1997 and formalized in 1999. research. the Reserve Bank.237 POS terminals in the country. it has been decided to permit cash withdrawals at POS (point of sale) terminals. equity broking. wealth management and advisory and securities distribution operations.Merchant Banking CURRENT AFFAIRS  RBI allows cash withdrawal from merchant banker terminals Besides ATMs. it said. To start with. customers can now also withdraw cash up to Rs1000 from terminals at different merchant establishments. This facility is available only against debit cards issued in India. There are 4. JM Financial acquired the investment banking company together with its subsidiaries. As a further step towards enhancing the customer convenience in using the plastic money. The Indian partner sold its 49% holding in JM .70. advisory and distribution businesses of $ 20 million. this facility will be available for all debit cards issued in India. Post the split. The use of debit cards at POS terminals at different merchant establishments has been steadily increasing. wealth management. The JV had investment banking operations other than equity broking. At present cash withdrawal facility using plastic cards is available only at Automatic Teller Machines (ATMs) with the number of ATMs in the country at 44.

500 crores in the next four years. "The bank has set a target to expand total business to Rs10crore and earn net profit of Rs7.Merchant Banking Morgan Stanley Securities (JMSPL). This arrangement replaces the earlier practice of both I-Sec and ICICI Bank working together on M&A deals. the bank plans to open new line of businesses in the current fiscal including merchant banking subsidiary. ―Since a predominant number of people. The growth driver would be better asset liability management. focus on customers and financial inclusion. also look for acquisition finance. after parting ways with JM Financial — its former Indian partner. who is charge of Deputy Governor of RBI. Bulge bracket investment banking major.  ICICI Bank to oversee mergers and acquisitions ICICI bank and its merchant banking arm. he had said. who wish to be advised on M&A. 500 crores by 2013.  PNB aims profit of 7. it was decided . ICICI Securities (I-Sec). the institutional equity broking company to Morgan Stanley for $ 445 million." said PNB Chairman and Managing Director K C Chakrabarty. Morgan Stanley has re-entered investment banking business on its own. Currently. thrust on recovery. whereby all M&A deals will be done out of ICICI Bank.500crore by 2013 The country's second largest public sector lender Punjab National Bank aims to double its profit to Rs7. have entered into an agreement. Besides. PNB Investment Services aims to provide investment consultancy and merchant banking services and would be operational in the next three months. these operations are run by a division of the bank. The agreement goes on to define an M&A deal as one which involves change in management control.

 Birla Capital and Financial Services gets SEBI merchant banking license Birla Capital & Financial Services Ltd has been granted a merchant-banking license by the Securities and Exchange Board of India. . both the bank and its subsidiary have been vying for deals. if a corporate is seeking a sell mandate or a buy mandate. Over the past couple of years. takeover.‖ ICICI Bank had initially entered the investment banking space in 2006.000-crore Yash Birla Group that has diversified interest in sectors like auto & engineering.Merchant Banking that the business should be housed in the bank. The license will enable the company to offer a wide range of on-shore investment banking advisory and underwriting services in the Indian market. The company. the deal will be done by ICICI Bank. It also offers non-regulated services like PE Syndication. will initially concentrate on regulated services like initial public offerings. The new deal has taken into effect between both the entities from April 1. which is a part of the Yash Birla conglomerate. where the transfer of controlling interest takes place. M&A Advisory and other corporate advisory. is part of the 3. buybacks.‖ I-Sec MD Madhabi Puri Buch told ET. education & IT. Birla Capital & Financial Services Ltd. ―Now. textiles & chemicals and power & electrical. delisting and valuations.

The average percentage of fees has been declined to 1. Nomura.44 per cent of the issue size had a great bearing on this trend. fixed income liquid markets sales and trading. acquired the majority of Lehman Brothers' employees in India." Nexgen Capitals. In October 2008. a global investment bank. the merchant-banking arm of brokerage firm SMC Global Securities. 771crore for the calendar year 2007. amounting to 0.9 per cent on annualized basis. has launched its equity sales and trading and investment banking operations in India. as there has been a significant decline of nearly 60 per cent in their percentage fees so far this year. ('Nomura'). including the equities sales and trading. and investment banking teams.21 per cent so far this year from 2. "There is a clear drop in the merchant banking fees to Rs 216crore in comparison to Rs. By integrating the former Lehman Brothers India franchise and obtaining its . Inc. affects merchant bankers’ wallet The recent slowdown in the primary market has impacted not only investors but merchant bankers as well.Merchant Banking  Primary market slowdown.  Nomura launches its investing banking operations in India Nomura Financial Advisory and Securities (India) Private limited ('Nomura India'). Merchant bankers are those who advise the issuer about the public offer and manage the issue. the report ad Reliance Power IPO of Rs 11.24 per cent in 2007.563 crores during this year with the merchant banking fee of Rs 50.6 crores. a wholly-owned subsidiary of Nomura Holdings. indicating a drop of 57. equity research.

Nomura India said in a statement it has significantly expanded its capabilities in India through a wide range of onshore financial solutions spanning securities brokerage. securities underwriting and advisory services. .Merchant Banking merchant banking license and stock exchange memberships.

NAIR (Chairman & Managing Director) Shri S.Kalia(Executive Director) SHRI S.2671 crore as on 31 March‘10 from Rs. 8758 crore st as on 31 March 10 as compared to Rs.43% Share Capital held by the Government of India.C.Raman(Executive Director) Dr.Sharma(Chartered Accountant Director) SHRI N.M. the bank also manages close to 395 networked ATMs. st st Board of Directors       SHRI M.6964 crore in the previous year. The Bank came out with its Initial Public Offer (IPO) in August 20. Union Bank is a Public Sector Unit with 55.57 % of Share Capital is presently held by Institutions. 2002 and Follow on Public Offer in February 2006. SHANKAR (WORKMEN DIRECTOR) . Presently 44. st  Gross NPA level increased to Rs. Financial performance (as on 31st march 10)  The Bank‘s Net Worth increased by 25. The bank has earned a reputation for being techno-savvy--more than 600 branches of Bank are networked and powered with a centralized technology platform.1923 crore as on 31 March‘09.76% and stood at Rs.  Net Profit Increased by 27.V. Individuals and Others. Gulfam Mujibi(Part-time non-official Director) Shri B.Merchant Banking Union Bank of India has been around for more than 88 years.47% and stood at 594 crore as on 31 March 10 as compared to  466 crore crore in the previous year.

. Abu Dhabi in UAE and Sydney.K. C Rangarajan. The Bank already has 4 representative Offices in Shanghai. Besides the Bank has a full fledged overseas branch in Hong Kong. Trade Finance. Australia. Demat )  NRI Banking(Remittance. Insurance. Loans. Savings & Deposits. Loan & Services. MSME Banking)  Internet Banking (Account Information.  The Bank was awarded the prestigious ―Skoch Challenger Award‖ 2009 for excellence in capacity building through innovative concept of ―Village Knowledge Centre‖ as part of financial inclusion initiatives. loans Syndication. The Bank is the process of setting up a Rep Office in Toronto. the Bank opened its 5 overseas representative office in London. Financial & Non Financial enquiries) Awards:  The Bank was awarded the Gold Trophy and a certificate in the Elite Class for Excellence in Marketing & Brand Communication by Association of Business Communicators of India (ABCI) in March 2010. Transfer of Funds/Bills/Limits/Currency. Payments)  Corporate Banking(CMS. Cards. U. The award was given away by Dr. The award was given away by the Hon‘ble Governor of Maharastra. Beijing in PRC. Economic advisor to the Prime Minister th  As part of its global expansion initiatives. Insurance & Investment. E-Tax. Canada.Merchant Banking Products and Services  Personal Banking (Accounts & Deposits. in April 2010.Sankaranarayan. Shri K. Retail .

Unlike in the past. and it is now being adopted or undertaken by a few large commercial banks in India. However. Merchant banking is usually international in character. The merchant banks offer a package of financial services. they do not require much capital. Merchant banking is an activity initially undertaken by a few large commercial banks in India. The range of activities covered under merchant banking very wide indeed. and it is now being adopted or undertaken by practically every commercial bank through its Merchant Banking Department. Hence.Merchant Banking Conclusion The merchant banking business has increased over a short period of time and with continued economic reforms. Therefore. . One of the basic requirements of merchant banking is a highly professional staff and worldwide contacts. Merchant Banking Service is taking shape for turbulent times. a stiff competition exists in this line and survival will depend upon the financial skills and spectrum of financial services and instruments offered by the Merchant Banker. their activities are now primarily non-fund based.

Merchant Banking

MODULE7:-DATA ANALYSIS & INTERPRETATION

Merchant Banking

Analysis & Interpretation Q 1 Do you take any financial services from bank?
Sr. No. 1 2 Take Financial Service Yes No Total Nos. 36 44 80 Percentage 45 55

GRAPH
Take Financial Service

45% 1 Yes 2 No 55%

Interpretation
Out of total respondents, 45% respondents have taken Financial Service and rest 55% respondents have not taken the Financial Service.

Merchant Banking

Q 2 Do you Know about Merchant Banking?
Sr. No. 1 2 Know about Merchant Yes No Total Nos. 32 48 80 Percentage 40 60

Know about Merchant
2 No, 60 60 50 40 30 20 10 0 Nos. 1 Yes, 40 1 Yes 2 No

Interpretation
Out of total respondents, 40% respondents Know about merchant banking and rest 60% respondents don‘t know about merchant banking.

Merchant Banking

Q 3 Are you satisfied with the services provided by your bank?
Sr. No. 1 2 Satisfied Yes No Total Nos. 35 45 80 Percentage 43.75 56.25 100

60 50 40 30 20 10 0 Percentage Percentage, 43.75

Percentage, 56.25

1 Yes 2 No

Interpretation
Out of total respondents, 43.75% respondents Satisfied and rest 60% respondents don‘t Satisfied.

no 1 2 3 4 5 Bank ICICI SBI PNB BOI Other Percentage 20 35 20 15 10 40 35 30 25 20 15 10 5 0 icici sbi pnb boi any other icici sbi pnb boi any other Interpretation  Large no.Merchant Banking Q4 Are you satisfied with services offered by banks? Sr. . of companies takes financial services from SBI.

35% Say Normal and rest 15% respondents say bad.no 1 2 3 Position Good Normal Bad Total Percentage 50 35 15 100 Position Bad 3 15% Normal 2 35% Good 1 50% 1 Good 2 Normal 3 Bad Interpretation Out of total respondents. .Merchant Banking Q 5 What is the position of Merchant Banking in Private Sector? sr. 50% respondents Say Good.

40% respondents Say Good.no 1 2 3 Position Good Normal Bad Total Percentage 40 55 5 100 Position 5% 40% 1 Good 2 Normal 3 Bad 55% Interpretation Out of total respondents.Merchant Banking Q 6 What is the position of Merchant Banking in Public Sector? sr. 55% Say Normal and rest 5% respondents say bad. .

Merchant Banking BIBLIGRAPHY i.asialaw. ii.R.emissarycapital. iv.answer.canmoney. KOTHARI Financial Institutions & Market By Shashi K.scribd.Y.BCBI) RESEARCH METHODOLOGY BY C.pnbindia.com/news www.com/Article/1988860/Merchant-Banking.in http:/www.com .html http://www.wikipedia.co.com www.in/subsidiaries http://www. iii.google.com http://www. Nisha Aggarwal INTERNET www. Financial Services Management(T.com http://unionbankofindia. Gupta.in http://www.com http://www.bobcapitalmarkets.kotaksecurities.com www.

What is the position of Merchant Banking in Public Sector? (a) Good (c) Bad ( ( ) ) (b) Normal ( ) . Are you satisfied with the services provided by your bank? (a) Yes ( ) (b) No ( ) 4. Which bank provides you maximum services? (a) ICICI (c) PNB ( ) ( ) (b) SBI (d) BOI ( ) ( ) (e) OTHER(specify) 5. What is the position of Merchant Banking in Private Sector? (a) Good (c) Bad ( ( ) ) (b) Normal ( ) 6.Merchant Banking Questionnaire Respondent’s Profile Name Age Gender :_______________ :_______________ :_______________ Occupation :_______________ 1. Do you take any financial services from bank? (a) Yes ( ) (b) NO ( ) 2. Do you know about Merchant Banking? (a) Yes ( ) (b) No ( ) 3.

Merchant Banking MERCHANT BANKING PLAYERS IN INDIA .