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Tarun Kumar 2009H149186P

Shankar Ramaswamy Iyer 2009H149188P

Raunaq Kothari 2009H149195P

Rahul Rai 2009H149189P

Puneet Sobti 2009H149196P

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The following are some of the reasons why specialist merchant bank have a crucial role to play
in India.

* Growing complexity in rules and procedures of the government.

* Growing industrialization and increase of technologically advanced industries.

* Need for encouragement of small and medium industrialists, who require specialist services.

* Need to develop backward areas and states which require different criteria.

* Exploring the possibility of joint ventures abroad and foreign market.

* Promoting the role of new issue market in mobilizing saving from.

Where merchant banks function as an independent wing or as subsidiary of various

private/central governments/ state government financial institution. Most of the financial
institution in India is in public sector and therefore such setup plays a role on the lines of
governmental priorities and policies.

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The Indian Venture Capital Association is nodal centre for all venture activity in India.They fund
potential business ideas and companies.Various Indian Companies received funds through them
±Mastek,Geometric Software etc

PROBLEM WITH VC in Indian Context:

The biggest problem ws of mindset change from collateral funding to high risk high return
funding.The exit route available to them were restricted through IPO route.In general, all issues
are underpriced.Even now SEBI guidelines makes it difficult for pricing issues for an easy exit.
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January 7, 2009 was a black letter day in the history of Indian Corporate industry.B. Ramalinga
Raju, Founder and Chairman, Satyam Computer Services, on this day confessed to its Board of
Directors the accounting scam, which eroded nearly $2 billion of wealth that belonged to 3 lakh
shareholders and the their net worth dropped from a positive Rs 8,529 crore to a negative Rs 278
crore. This fraud was not committed overnight; it was building up continuously from over years.
The role of Satyam¶s auditors is under scanner. They ignored some of the obvious indications of
embezzlement and thus failed to catch on the massive scam, which could have been caught much
before it acquired the µmassive¶ status.

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Audit involves with the task of the verification of accounting data and with determining the
accuracy and reliability of accounting statements and reports. An auditor is required to conduct
an independent review of the financial statements and offer an opinion as to whether the annual
accounts give a true and fair view of the company¶s state of affairs and financial position. To
achieve this goal, the auditor needs to examine not only the company¶s internal accounting
system but also to inspect its assets and review the accounting transactions. It involves testing the
reliability, competency and adequacy of evidence in support of all transactions.

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Investors can¶t be blamed for the fraud. In fact, they are the biggest victims, because they had no
opportunity to independently verify the financials ± they had to take the auditors¶ word, and they
were rational in having confidence in a publicly traded company with audited financial results.
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The government could play a role by facilitating some sort of acquisition of Satyam so that the
company¶s customers and service systems survive. The government¶s main policy response
should be to strengthen disclosure and monitoring requirements, especially making sure that
auditing practice never again fails as blatantly and spectacularly as it did in this case.

Even though weak corporate governance is not the main culprit in the Satyam fiasco, the scandal
is highlighting the poor state of India¶s corporate governance, and provides a political opening to
institute some reforms. Industry associations like the Confederation of Indian Industry should be
proactive in this process, and work with the government in this reform process.