Dipti merchant banking


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Dipti merchant banking

  1. 1. INTRODUCTIONOriginal Definition: A Merchant Bank is a British term for a bank providingvarious financial services such as accepting bills arising out of trade, providingadvice on acquisitions, mergers, foreign exchange, underwriting new issues, andportfolio management.The Focus Definition: A Merchant Bank can be generally described as afinancial services company with a private equity investment arm offeringinvestment banking and ancillary services as well. Because a merchant bankacts not only as an advisor and broker but also as a principal, a merchant bankhas a longer term approach than a typical investment bank and is highlyconcerned with the viability of each investment opportunity and providing theright advice for a strong partnership with each client company.In banking, a merchant bank is a traditional term for an Investment Bank. It canalso be used to describe the private equity activities of banking. This article isabout the history of banking as developed by merchants, from the Middle Agesonwards.Amidst the swift changes sweeping the financial world, Merchant Banking hasemerged as an indispensable financial advisory package. Merchant banking is aservice-oriented function that transfers capital from those who own to those whocan use it. They try to identify the needs of the investors & corporate sector &advice entrepreneurs what to do to be successful.The merchant banking has been defined as to what a merchant banker does. Amerchant Banker has been defined by Securities Exchange Board Of India(Merchant Banker) rules, 1992, as “Any person who is engaged in thebusiness of issue management either by making arrangements regardingselling, buying or subscribing to securities or acting as manager,consultant, advisor or rendering corporate advisory services in relation tosuch issue managemen
  2. 2. MERCHANT BANKING HISTORYIn late 17th and early 18th century Europe, the largest companies of the worldwas merchant adventurers. Supported by wealthy groups of people and anetwork of overseas trading posts, the collected large amounts of money tofinance trade across parts of the world. For example, The East India TradingCompany secured a Royal Warrant from England, providing the firm with officialrights to lucrative trading activities in India. This company was the forerunner indeveloping the crown jewel of the English Empire. The English colony wasstarted by what we would today call merchant bankers, because of the firmsinvolvement in financing, negotiating, and implementing trade transactions. Thecolonies of other European countries were started in the same manner. Forexample, the Dutch merchant adventurers were active in what are nowIndonesia; the French and Portuguese acted similarly in their respective colonies.The American colonies also represent the product of merchant banking, asevidenced by the activities of the famous Hudson Bay Company. One does nottypically look at these countries economic development as having been fueled bymerchant bank adventurers. However, the colonies and their progress stem fromthe business of merchant banks, according to todays accepted sense of theword. Merchant banks, now so called, are in fact the original "banks". Thesewere invented in the middle Ages by Italian grain merchants. As the Lombardymerchants and bankers grew in stature on the back of the Lombard plains cerealcrops many of the displaced Jews who had fled persecution after 613 entered thetrade. They brought with them to the grain trade ancient practices that had grownto normalcy in the middle and far east, along the Silk Road, for the finance oflong distance goods trades.The Jews could not hold land in Italy, so they entered the great trading piazzasand halls of Lombardy, along side the local traders, and set up their benches totrade in crops. They had one great advantage over the locals.
  3. 3. Christians were strictly forbidden the sin of usury. The Jewish newcomers, on theother hand, could lend to farmers against crops in the field, a high-risk loan atwhat would have been considered usurious rates by the Church, but did not bindthe Jews. In this way they could secure the grain sale rights against the eventualharvest. They then began to advance against the delivery of grain shipped todistant ports. In both cases they made their profit from the present discountagainst the future price. This two-handed trade was time consuming and soonthere arose a class of merchants, who were trading grain debt instead of grain. TRADATIONAL MERCHANT BANKINGMerchant Banking, as the term has evolved in Europe from the 18th century totoday, pertained to an individual or a banking house whose primary function wasto facilitate the business process between a product and the financialrequirements for its development. Merchant banking services span from theearliest negotiations from a transaction to its actual consummation betweenbuyer and seller.In particular, the merchant banker acted as a capital sources whose primaryactivity was directed towards a commodity trader/cargo owner who was involvedin the buying, selling, and shipping of goods. The role of the merchant banker,who had the expertise to understand a particular transaction, was to arrange thenecessary capital and ensure that the transaction would ultimately produce"collectable" profits. Often, the merchant banker also became involved in theactual negotiations between a buyer and seller in a transaction.
  4. 4. MODERN MERCHANT BANKINGDuring the 20th century, however, European merchant banks expanded theirservices. They became increasingly involved in the actual running of thebusiness for which the transaction was conducted. Today, merchant banksactually own and run businesses for their own account, and that of others.Since the 18th century, the term merchant banker has, therefore, beenconsiderably broadened to include a composite of modern day skills. These skillsinclude those inherent in an entrepreneur, a management advisor, a commercialand/or investment banker plus that of a transaction broker. Today a merchantbanker is who has the ability to merchandise -- that is, create or expands a need-- and fulfill capital requirements. The modern European merchant bank, in manyways, reflects the early activities and breadth of services of the colonial tradingcompanies.Most companies that come to a U.S. merchant bank are looking to increasetheir financial stability or satisfy a particular, immediate capital need.Professional merchant bankers must have: 1) an understanding of the product,its industry and operational management; 2) an ability to raise capital whichmight or might not be ones own (originally merchant bankers supplied their owncapital and thereby took an equity interest in the transaction); 3) and mostimportantly, effective skills in concluding a transaction - the actual sale of the
  5. 5. product and the collection of profit. Some people might question whether or notthere are many individuals or organizations that have the abilities to fulfill all threeareas of expertise.Who are merchant bankers ?-Merchant banks are private financial institution.-Their primary sources of income are PIPE (Private Investment In Public Entities)financings and international trade.-Their secondary income sources are consulting, Mergers & Acquisitions helpand financial market speculation.-Because they do not invest against collateral, they take far greater risks thantraditional banks.-Because they are private, do not take money from the public and areinternational in scope, they are not regulated.-Anyone considering dealing with any merchant bank should investigate the bankand its managers before seeking their help.-The reason that businesses should develop a working relationship with amerchant bank is that they have more money than venture capitalists. Theiradvice tends to be more pragmatic than venture capitalists.
  6. 6. Functions of Merchant Bankers:  Consulting advice on going public and international business.  Advice and help in taking your company public. If they are unwilling to supply Investment Banking bridge loans, they have a low cost strategy for taking your company public.  They do PIPE (Private Investment in Public Equities) financings.  They can advise or help with a company’s M&A strategy.  They are essential advisors for companies seeking to become multinational corporations
  7. 7. SIGNIFICANCE OF THE STUDY It would help us to develop the ability to study the functioning of Merchant Banking in India & learn & apply multidisciplinary concepts, tools & techniques to solve vital problems. It familiarizes with the various services provided by Merchant Bankers. They would help us to draw comparison between public & private sector companies engaged in Merchant Banking activities.
  8. 8.  Based upon the comparison, it would help us to determine which sector has more growth potential & where should one invest his/her funds to maximize the return at minimum risk.
  10. 10. MERCHANT BANKING IN INDIAIn India Merchant Banking activities started from the year 1967, following thefootsteps of similar activities in UK & USA. Currently Merchant Banking activityhas mushroomed in the Indian capital market with both public & private sectorsettings up their respective merchant Banking divisions. Currently, the total no. ofmerchant bankers in India are approx. 1450 with more than 930 registered withSEBI. The SEBI authorized Merchant Bankers Include merchant Bankingdivisions of All India Financial Institutions, nationalized & foreign banks, subsidiesof the commercial banks, private merchant banks engaged in stock broking,underwriting activities & financial consultancy & investment advisory servicefirms.  Grindlays Banks – 1967  Citi banks – 1970  SBI – 1973  ICICI - 1974Merchant banking in India - an overviewCompanies raise capital by issuing securities in the market. Merchant bankersact as intermediaries between the issuers of capital and the ultimate investorswho purchase these securities. Merchant banking… is the financialintermediation that matches the entities that need capital and those that havecapital. It is a function that facilitates the low of capital in the market.Merchant banker registered with SEBI:Public Sector: - Commercial banks (24), Financial Institutions (6), StateInstitutions (4) Private sector: - International bankers (10), Banks (10), finance &investment (231)
  11. 11. The following comprise the main functions of amerchant banker in India:Management of debt and equity offerings- This forms the main function ofthe merchant banker. He assists the companies in raising funds from the market.The main areas of work in this regard include: instrument designing, pricing theissue, registration of the offer document, underwriting support, and marketing ofthe issue, allotment and refund, listing on stock exchanges.Placement and distribution- The merchant banker helps in distributingvarious securities like equity shares, debt instruments, mutual fund products,fixed deposits, insurance products, commercial paper to name a few. Thedistribution network of the merchant banker can be classified as institutional andretail in nature. The institutional network consists of mutual funds, foreigninstitutional investors, private equity funds, pension funds, financial institutionsetc. The size of such a network represents the wholesale reach of the merchantbanker. The retail network depends on networking with investors.Issue Management:Management of issue involves marketing of corporate securities viz. equityshares, preference shares and debentures or bonds by offering them to public.Merchant banks act as an intermediary whose main job is to transfer capital fromthose who own it to those who need it. After taking action as per SEBI guidelines,the merchant banker arranges a meeting with company representatives andadvertising agents to finalizeArrangements relating to date of opening and closing of issue, registration ofprospectus, launching publicity campaign and fixing date of board meeting toapprove and sign prospectus and pass the necessary resolutions. Pricing ofissues is done by the companies in consultant with the merchant bankers.Underwriting of Public Issue: Underwriting is a guarantee given by the underwriter that in the event of undersubscription, the amount underwritten would be subscribed by him.Banks/Merchant banking subsidiaries cannot underwrite more than 15% of anyissue.Financial structuring includes determining the right debt-equity ratio and gearing ratio for the client;the appropriate capital structure theory is also framed. Merchant bankers also
  12. 12. explore the refinancing alternatives of the client, and evaluate cheaper sources offunds. Another area of advice is rehabilitation and turnaround management. Incase of sick units, merchant bankers may design a revival package incoordination with banks and financial institutions. Risk management is anotherarea where advice from a merchant banker is sought. He advises the client ondifferent hedging strategies and suggests the appropriate strategy.Project Counseling: Project counseling includes preparation of project reports,deciding upon the financing pattern to finance the cost of the project andappraising the project report with the financial institutions or banks. It alsoincludes filling up of application forms with relevant information for obtainingfunds from financialInstitutions and obtaining government approval.Loan syndication- Merchant bankers arrange to tie up loans for their clients.This takes place in a series of steps. Firstly they analyses the pattern of theclient’s cash flows, based on which the terms of borrowings can be defined. Thenthe merchant banker prepares a detailed loan memorandum, which is circulatedto various banks and financial institutions and they are invited to participate in thesyndicate.Providing venture capital and mezzanine financing- Merchant bankershelp companies in obtaining venture capital financing for financing their new andinnovative strategies.Portfolio Management: Portfolio refers to investment in different kinds ofsecurities such as shares, debentures or bonds issued by different companiesand government securities. Portfolio management refers to maintaining propercombinations of securities in a manner that they give maximum return withminimum risk.Off Shore Finance:The merchant bankers help their clients in the following areas involving foreigncurrency.(a) Long term foreign currency loans(b) Joint Ventures abroad(c) Financing exports and imports(d) Foreign collaboration arrangements
  13. 13. Non-resident Investment:The services of merchant banker includesinvestment advisory services to NRI in terms of identification of investmentopportunities, selection of securities, investment management, and operationalservices like purchase and sale of securities.Corporate Counseling and advisory services: Corporate counseling coversthe entire field of merchant banking activities viz. project counseling, capitalrestructuring, public issue management, loan syndication, working capital, fixeddeposit, lease financing acceptance credit, etc. Merchant bankers also offercustomized solutions to their client’s financial problems.
  14. 14. Developments in Merchant banking Establishments In India  Setting up of banks Subsidiaries:In order to meet the growing demand for broad-based financial services from thecorporate sector more effectively, the merchant banking division of thenationalize banks have stated forming independent subsidiaries. Thesesubsidiaries offer more specialized services with proffecinal expertise & skills.SBI capital market ltd. was incorporated as the first such subsidiary of sbi on 2July, 1986. Then CAN BANK financial services ltd was set up as wholly ownedsubsidiary of canra bank in 1987. PNB Capital Market was promoted by PNBduring Mid 1988. Many more subsidiaries are being set up by another nationalizebanks.  Reorganization of private Firms:Expecting tough Competition from growing number of merchant bankingsubsidiary of nationalized banks, private merchant bankers have also startedreorganizing their activities e.g., J.M financial & investment consultancy ltd., 20thcentury finance corporation ltd., LKP merchant financing ltd are some of theprivate sector firms of merchant bankers who have taken steps to reorganizetheir activities.  Establishment of SUA:In order to educate and protect the interest of investor , to provide informationabout new issues of capital market, to evolve a code of conduct for underwriters& to render legal & other services to members & public, the STOCKBROKERUNDERWRITER ASSOCIATION(SUA) was established in 1984  Discount & Finance House of India(DFHI)DFHI was incorporated as a company under the company act 1956 with anauthorized & paid up capital of rs 100 crore. Out of this rs 51 crores has beencontributed by RBI, rs 16 crores but financial intuitions & 33 crores by publicsector banks. It would also have line of credit from public sector banks , refinancefacility from the RBI in order to meet the working capital requirement.DFHI aimsat providing liquidity in money market as it deals mainly in commercial bills.
  15. 15.  Credit Rating Information Services of India Ltd.(CRISIL)CRISIL has been set up in 1987 to provide help to investors, merchant bankers,underwriters, brokers, banks & financial institutions etc. CRISIL rates varioustypes of instruments such as debt, Equity, & Fixed return security offered to thepublic. It helps the investor in taking investment decisions.  Stock-Holding Corporation of India Ltd. (SHC)SHC was set up in 1986 by the all Indian financial institutions to take care of safecustody, delivery of shares & collection of sale proceeds of the securities. Thesetting up of SHC is bound to affect the capital market aim future,
  16. 16. Registration of merchant bankers in IndiaRegistration with SEBI is mandatory to carry out the business of merchantbanking in India. An applicant should comply with the following norms:  The applicant should be a body corporate  The applicant should not carry on any business other than those connected with the securities market  The applicant should have necessary infrastructure like office space, equipment, manpower etc.  The applicant must have at least two employees with prior experience in merchant banking Any associate company, group company, subsidiary or interconnected company of the applicant should not have been a registered merchant banker  The applicant should not have been involved in any securities scam or proved guilt for any offenceSEBI HAS DIVIDED MERCHANT BANKER‟S INFOUR CATEGORIES, WHICH ARE AS FOLLOW:-CATEGORIES ACTIVITIES NETWORTHCategory I To carry on the activities of issue mgt & act as RS 1 Crore advisor, consultant, manager, underwriter, portfolio management.Category II To act as advisor, consultant , co-manager, Rs 50 lakh Underwriter, portfolio management.Category III To act as advisor, underwriter or consultant Rs 20 lakh to an issueCategory IV To act only as advisor& consultant to an issue Nil
  17. 17. Procedure for getting registration:An application should be submitted to SEBI in Form A of the SEBI (MerchantBankersRegulations, 1992. SEBI shall consider the application and on being satisfied,issues aCertificate of registration in Form B of the SEBI (Merchant Bankers) Regulations,1992.Registration fee payable to SEBI:Rs. 5 lakhs which should be paid within 15 days of date of receipt of intimationregardingGrant of certificate. Validity period of certificate of registration is three years fromtheDate of issue. Three months before the expiry period, an application along withrenewalFee of 2.5 lakhs should be submitted to SEBI in Form A of the SEBI (MerchantBankers)Regulations, 1992. SEBI shall consider the application and on being satisfiedrenewCertificate of registration for a further period of 3 years.Leading Merchant Bankers in India  In Public Sector: SBI Capital Markets Ltd., Merchant Banking Divisions of IDBI & IFCI, PNB Capital Services Ltd., Bank of Maharashtra, etc.  In Private Sector: ABN AMRO, ICICI Bank Ltd, Axis Bank Ltd., Kotak Mahindra Capital Co., Bajaj Capital, Reliance Security Ltd., Yes bankLtd, Tata capital market ltd., JM Financial Co. and DCM Financial Services Ltd etc.
  18. 18.  Foreign Players: Goldman SACH (India) Security Pvt. Ltd., Morgan Stanley Indian co. Pvt. Ltd., Barclays Security Indian Pvt. Ltd., Bank of America, Deutsche Bank, Citi Group Global Market Indian Pvt.Ltd., Fedex Security Ltd.,
  19. 19. Role in India
  20. 20. Merchant Banking:The merchant banker are those financial intermediary involved with the activity oftransferring capital funds to those borrowers who are interested in borrowing.The activities of the merchant banking in India are very vast in nature of whichincludes the following 1. The management of the customers securities 2. The management of the portfolio 3. The management of projects and counseling as well as appraisal. 4. The management of underwriting of shares and debentures. 5. The circumvention of the syndication of loans. 6. The management of the interest and dividend etc.Factors responsible for changes:Globalization of Indian Economy has made the whole economy open, which hasmore multinational player in the era of the financial services? This has resulted into the emergence of the global investment in financial sector. Govt. has nowopen up the doors of investment especially in the area of banks and insurance,which leads to competitive environment for the present players. Now they have tobring something new which is efficient and best services to live in the competitiveenvironment. Competition arising out of Private Company participation is due toliberalization of the economy.
  21. 21. Scope for growth of Merchant Banking in IndiaAs planning and industrial policy of the country envisaged the setting of up of newindustries and technology, greater financial sophistication and financial services arerequired. There is a well proven link between economic growth and financial technology.Economic development requires specialist financial skills: savings banks to marshalindividual savings; finance companies for consumer lending and mortgage finance;insurance companies for life and property cover; agricultural banks for ruraldevelopment; and a range of specialized government or government sponsoredinstitutions. As new units have been set up and business is expanding, they requireadditional financial services. A public equity or debt issue is the logical source of fund inthis situation and merchant banks can tap this opportunity of growth. The areas of great scope could be,  Growth of Primary market:If the primary market grows and number of issues increases, the scope of merchantbanking will be enhanced.  Entry of Foreign Investors:Now India capital market directly taps foreign capital through euro issues.FDI isincreased in capital market. So Merchant bankers are required to advice them for theirinvestment in India. The increasing number of joint ventures also requires expert servicesof Merchant Bankers. If more and more NRIs participate in capital market, there will begreat demand for merchant banker services.  Changing policy of Financial Institutions:Now the lending policies of financial institutions are based on project orientation, so themerchant banker services will be needed by corporate enterprise to provide expertguidance.  Development of debt markets:If the debt market is enhanced, there will be tremendous scope for Merchant bankers.Now NSE and OTCEI are planned to raise their fund through debt instruments.  Corporate restructuring:Due to liberalization and globalization Companies are facing lot of competition. In orderto compete, they have to go for restructuring, merger, acquisitions or disinvestments.They may offer good opportunities to merchant bankers
  22. 22. The scope could be extended to:-1. Advising the company on designing of its Capital Structure.2. Advising the company on the instrument to be offered to the public.3. Pricing of the instrument.4. Advising the company on Legal/ regulatory matters and interaction with SEBI/ ROC/Stock5. Exchanges and other regulatory authorities.6. Assisting the company in marketing the issue.7. In channelizing the financial surplus of the general public into productive investmentavenues.8. To coordinate the activities of various intermediaries to the share issue such as theregistrar, Bankers, advertising agency, printers, underwriters, brokers etc.9. To ensure the compliance with rules and regulations governing the securities market. THE FACTORS ON WHICH GROWTH OF MERCHANT BANKING DEPENDS:  Planning and industrial policy of the country i.e. India in this case  Prevailing Economic condition of the country.  Regulatory system of the market and economy prevailing in India.  Confidence of the people, traders, buyers, marketers, business houses, financial institutions etc.  The economic environment of the outside world.  Competition among the existing players and the upcoming entrants.
  23. 23. Problems of Merchant Banking: Restriction of merchant banking activities: SEBI guidelines have authorized merchant bankers to undertake issue related activities and made them restrict their activities or think of separating these activities from present one and float new subsidiary and enlarge the scope of its activities. Minimum net worth of Rs.1 crore: SEBI guidelines stipulate that a minimum net worth of Rs.1 crore for authorization of merchant bankers. Non co-operation of issuing companies: Non co-operation of the issuing companies in timely allotment of securities and refund of application money is another problem faced by merchant bankers. Merchant Banker’s Commission:  Maximum :- 0.5%  Project appraisal fees  Lead Manager :- - 0.5% up to Rs.25 crores - 0.2% more in excess of Rs.25 crores  Underwriting fees  Brokerage commission :- 1.5%  Other expenses :- - Advertising - Printing - Registrar‟s expenses - Stamp dutyIn spite of problems popping up, merchant banking in India has vast scope to developbecause of lot of domestic as well as foreign businesses booming here. Indian economyprovides an amicable environment for these firms to set up, flourish and expand here.
  24. 24. Difference Between Commercial Banking & MerchantBanking:  COMMERCIAL BANKING  Deals with Debt & Debt related finance.  Asset oriented.  Generally avoid risks.  MERCHANT BANKING  Deals with Equity & Equity related finance.  Management oriented.  Willing to accept risks.Difference Between Investment Banking & MerchantBanking:  INVESTMENT BANKING  Both fee-based and fund-based.  Commit their own funds.  MERCHANT BANKING  Purely fee-based.  Impossible to stay aloof from international trends.
  25. 25. BRIEF ANALYSIS OF SOME MERCHANTBANKS OF INDIA  SBI Bank of India  ICICI Bank Ltd.  Punjab National Bank  Bank of Baroda  Union Bank of India  Kotak Mahindra  Canara Bank  IDBI BANK
  26. 26. SBI Merchant Banking Group is strongly positioned to offer perfect financial solutions to yourbusiness. We specialize in the arrangement of various forms of Foreign Currency Credits forCorporate.State Bank of India is the nations largest bank. Tracing its roots back some 200 years to theBritish East India Company (and initially established as the Bank of Calcutta in 1806), the bankoperates more than 13,500 branches and over 5,000 ATMs within India, where it also ownsmajority stakes in seven associate banks. State Bank of India has more than 50 offices in nearly35 other countries, including multiple locations in the US (California), Canada, and Nigeria. Thebank has other units devoted to capital markets, fund management, factoring and commercialservices, and brokerage services. The Reserve Bank of India owns about 60% of State Bank ofIndia.SBI being an Indian entity has no India exposure ceiling. Our Primary focus is On Indian Clients.SBI‟s seasoned Team of professionals provides you with Insightful credit Information and helpsyou Maximize the Value from the transaction.OUR PRODUCTS AND SERVICES  Arranging External Commercial Borrowings (ECB)  Arranging and participating in international loan syndication  Loans backed by Export Credit Agencies  Foreign currency loans under the FCNR (B) scheme  Import Finance for Indian corporate
  27. 27. SBI CAPITAL MARKETS LIMITED (SBICAPS) is Indias leading investmentbank and project advisor, assisting domestic company‟s fund-mobilization efforts for last manyyears.We began operations in August 1986 as a wholly owned subsidiary of the State Bank of India,which is the largest commercial bank in India. In January 1997, fresh equity shares were issued toAsian Development Bank (ADB) and ADB now holds 13.84% stake in the equity of SBICAPS.The distinguished parentage (with a 86.16% stake) together with the long standing association ofan internationally renowned financial institution like the Asian Development Bank furtherenhances our image as a truly World Class Investment Bank.Our Mission - To provide Credible, Professional and Customer Focused world-class investmentbanking services.Our Vision - To be the best India based Investment Bank.SBI Group:  The largest commercial bank group in India  Position in the domestic banking sector as on 31 March 2008:  15.44% of the aggregate deposits.  15.28 % of total advances.  The only Indian Bank to find a place in the Fortune Global 500 List.  First Indian Bank to take up merchant banking in 1986.SBI Capital Markets Limited:  No. 1 in Asia – Pacific for Project Advisory. Rating by Thomson Project Finance International.  No. 1 in IPO‟s, managed 700+ issues (since 1989 – source Prime Database).  The only Indian Merchant Banker in the Global 10, Thomson Project Finance International 2007.  Pioneer in Privatization.Subsidiary:-  SBICAPS Ventures Ltd.  SBICAP Securities Ltd.  SBICAPS (UK) Ltd.  SBICAP Trustee Company Ltd.
  28. 28. Associates Bank:-State Bank of State Bank of SBI Factors & SBI (California) CommercialBikaner & Saurashtra Comm. Services Bank of IndiaJaipur Ltd. LLCState Bank of State Bank of SBI Funds SBIHyderabad Travancore Management (P) International Ltd. (Mauritius) Ltd.State Bank of SBI Capital SBI DFHI Ltd. Indo-NigerianIndore Markets Ltd. Merchant BankState Bank of SBICI Bank SBI Life Nepal SBI BankMysore Ltd. Insurance Co. Limited LtdKey Personnel:- Board of Directors Committee of Audit Management Team Directors Committee Shri O. P. Bhatt Shri R. Sridharan Shri D. Sundaram Shri S. Vishvanathan (Chairman) (Chairman) (Chairman) (MD & CEO ) Dr. R. H. Patil Dr. R. H. Patil Shri R. Sridharan Shri M. K. Nag (Executive Vice President) Shri R. Sridharan Shri S. Vishvanathan Dr R. H. Patil (MD & CEO) Shri Bansi S. Mehta Smt. Bharati Rao Shri D. Sundaram Shri Ajay Sagar Dr. Swati A. Piramal Shri S. Vishvanathan (MD & CEO)
  29. 29. Promoters’ Share: - Performance:-Awards:-  Asia Pacific Bank of the Year Award 2009 for Leadership in Project Finance by Thomson Reuters (pfi)  India Loan House 2009 for Leadership in Loan Syndication by Thomson Reuters (ifr Asia)  Asia Pacific Oil and Gas Deal of the Year 2009 for Cairn India by Thomson Reuters (pfi)  African Power Deal of the Year 2009 for Morupule B by Thomson Reuters (pfi)  Indian Power Deal of the Year 2009 for Sasan by Euromoney  Indian Upstream Oil & Gas Deal of the Year 2009 for Cairn India by Euromoney  Indian Road Deal of the year 2009 for Yamuna expressway by Euromoney  Indian Telecom Deal of the Year 2009 for Aircel by Euromoney  SAFA Best Presented Accounts Award 2008  Award for Excellence in Financial Reporting
  30. 30. SERVICE’S:-  Project Advisory & Structured FinanceSBICAP has built a formidable presence in the area of Project Finance Advisory andFunds Syndication with several prestigious mandates in almost every sector of theindustry to its credit.Our product portfolio includes:  Project Appraisal  Structured Finance and Syndication  Infrastructure Project Advisory  Securitisation  Debt & Equity Syndication  Capital MarketsCapital Markets Group handles transactions in the capital markets space across multipleinstrument structures.Our product and solutions bouquet includes:  Managing Initial Public Offerings and Follow-on Public offerings and Offers-for- Sale  Managing Rights Offering, be it the traditional or the structured formats  Qualified Institutional Placements  Open offers, Buyback and Delisting of securities  Offerings of convertible securities  Public offering of Corporate structured bonds  Arranging Private Equity to include growth capital, pre-IPO convertibles, private investments in public equity (PIPES), mezzanine debt and equity, and equity offerings completed as a private placement.  Private placement of bonds  Capital restructuring advisory services  Advisory and arrangement services for products such as AIM Listing, Indian Depository Receipts, ADR/GDR and other off-shore equity or bond listing options  M&A and AdvisoryThe M & A product portfolio includes:  Mergers & Acquisitions  Private Equity  Foreign Currency Convertible Bonds (FCCB)  Corporate Advisory
  31. 31. Employees:41,871Employee growth: 37.2%You see, ICICI Bank is Indias #2 bank (after State Bank of India), with more than 600branches and 2,200 ATMs nationwide. ICICIs retail banking group offers lending anddeposit services to small businesses and individuals. Larger businesses are served by thecorporate banking group, which offers finance services and treasury products. ICICIsrural and government banking unit offers micro-loans and agricultural banking. Foreignoperations, as well as services related to international trade finance and expatriateIndians, fall under the international banking group. Other ICICI offerings include onlinebanking, asset management, and insurance.Key numbers for fiscal year ending March, 2008:Sale: $5,796.3MOne year growth: 99.1%Net income: $524.1MIncome growth: 167.4%ICICI Advice on Wide Varity of Product:  Private Equity Financing  Secondary sale transactions  pre IPO deals
  32. 32. ICICI Securities Ltd is the largest equity house in the country providing end-to-endsolutions (including web-based services) through the largest non-banking distributionchannel so as to fulfil all the diverse needs of retail and corporate customers. ICICISecurities (I-Sec) has a dominant position in its core segments of its operations -Corporate Finance including Equity Capital Markets Advisory Services, InstitutionalEquities, Retail and Financial Product Distribution.ICICI Securities Inc., the step-down wholly owned US subsidiary of the company is amember of the National Association of Securities Dealers, Inc. (NASD). As a result ofthis membership, ICICI Securities Inc. can engage in permitted activities in the U.S.securities markets. These activities include Dealing in Securities and Corporate AdvisoryServices in the United States and providing research and investment advice to USinvestors.is a SEBI Registered CAT-1 Merchant banker. ICICI Securities Inc. is also registeredwith the Financial Services Authority, UK (FSA) and the Monetary Authority ofSingapore (MAS).Board of Directors:- ICICI Securities Limited. ICICI Securities Holding Inc. ICICI Securities, Inc. Ms. Chanda Kochhar, (Chairperson) Ms. Anup Bagchi, Mr. Anup Bagchi, (Chairman) (Chairman) Mr. Ketan Patel Mr. A Murugappan Mr. A Murugappan Mr. Narendra Murkumbi Mr. Charanjit Attra Mr. Charanjit Attra Mr. Uday Chitale Mr. Subir Saha Mr. Subir Saha Mr. Pravir Vohra Mr. Gopakumar P., (President) Mr. Sonjoy Chatterjee Ms. Madhabi Puri-Buch, (Managing Director & CEO)Mr. A. Murugappan, (Executive Director)Mr. Anup Bagchi, (Executive Director)
  33. 33. Awards & RecognitionInstitutional  ICICI Securities is awarded as the Best Investment Bank 2008 by Global Finance Magazine  The Corporate Finance group also was awarded a runner-up Best Merchant Banker by Outlook Money in 2007.  ICICI Securities (I-Sec) topped the Prime Database League Tables 2007 for money raised through IPOs/FPOs.  The equities team was adjudged the Best Indian Brokerage House-2003 by Asiamoney.Retail  ICICIdirect wins the prestigious Outlook Money - Indias Best e-Brokerage House for 2009.  ICICIdirect, the neighborhood financial superstore won the prestigious Franchise India `Service Retailer of the Year 2008 award.  ICICIdirect wins the prestigious Outlook Money - Indias Best e-Brokerage House for 2008.  ICICIdirect been winning the prestigious Outlook Money - Indias Best e- Brokerage House for 2003-2004, 2004-2005, 2006-2007 and 2007-2008.  ICICIdirect has also won the CNBC AWAAZ Consumer Award for the Most Preferred Brand of Financial Advisory Services.  Best Broker - Web 18 Genius of the Web Awards 2007  Franchisor of the year award 2009  Retail concept of the year awards 2009Technology  IDG Indias CIO magazine has recognized ICICI Securities as a recipient of 2009 CIO 100 award  Indian Banks Association Business Technology Awards for Best Online Trading Platform in 2006 and 2007
  34. 34. Punjab National Bank (PNB) is one of Indias largest nationalized banks with some 4,500branches or service counters. The financial institution offers services in personal andcorporate banking, including industrial, agricultural, and export finance, as well asinternational banking. Its personal lending services include loans for housing, autos, andeducation. PNBs diverse client list includes Indian conglomerates, small and mid-sizedbusinesses, non-resident Indians, and multinational companies. The bank was establishedin Lahore in 1895 -- before the country was partitioned into India and Pakistan in 1947.Key numbers for fiscal year ending 2008:Sale: $2,315.0MNet income: $322.1MPNBs Financial Numbers  Sales $2.32 bil  Profits $.28 bil  Assets $24.12 bil  Market Value $2.79 bil  Employees 58,300
  35. 35. Bank of Baroda (BOB) was established on 20th July, 1908 in the princely state of Barodaby the great visionary, Sir Sayajirao Gaekwad III. The founder strongly believed that, "abank of this nature would prove to be a beneficial agency for lending, transmission anddeposit of money and a powerful factor in the development of art, industries andcommerce of the state as also of adjoining territories". Unlike other state-owned bank,BOB could maintain its unique identity and established a strong national presence evenbefore independence, to all corners of the country.The Bank was led by eminent personalities and great bankers like Shri V.D. Thakersey,Walchand Hirachand, R.D. Birla, N.M. Chokshi, M.G. Parikh and others.BOB was amongst the first few banks to venture overseas by opening a branch atMombassa in 1953. Today it has significant international presence with a network of 72offices in 25 countries.Bank of Baroda has 100 years of glorious performance and an uninterrupted profit record,serving generation after generation around the globe.
  36. 36. BOB Capital Markets Ltd. (BOBCAPS) is a wholly owned subsidiary of Bank of Baroda.BOBCAPS is one of the Investment Banking Companies in India and is a SEBI registeredCategory I Investment Banker. We are shortly commencing Broking/E-broking Business.BOBCAPS offers the entire spectrum of financial services that includes Initial Public Offerings,Private Placement of Debt, Corporate Restructuring, Business Valuation, Mergers &Acquisitions, Project Appraisal and Loan Syndication. BOBCAPS also undertakes advisoryservices on Securitisation and Structuring of Debts.Singular Strengths  Patronage of Bank of Baroda  Excellent association with Banks and Financial Institutions  Good relationship with fellow market intermediaries  Large client base consisting of blue chip and midcap companies  Good rapport with regulatory authoritiesStrengths  Patronage of over 101 years old "Bank of Baroda" having more than 3000 branches across India and 70 branches overseas.  Excellent rapport with the concerned regulatory authorities.  Good liaison with Banks and Financial Institutions.  Strong relationship with fellow Market Intermediaries.  Strong pool of clients consisting of Blue chip and mid cap companies.  Experienced & qualified professionals wholly devoted towards their key areas.Board of Directors  Mr. J.S. Arora - Managing Director  Mr. P.H.Ravi Kumar - Independent Director  Mr. N.Ramani - Nominee Director  Mr. Raj Kumar Aggarwal - Independent Director  Mr. Akshay M. Joshi - Whole Time Director  Mr. S. Swaminathan - Whole Time Director
  37. 37. SERVICES:-  Investment Banking  IPO / Rights Issue / FPO  Mergers & Acquisition  Private Placement of Debt / Equity  Private Equity Advisory  Corporate Advisory Services  Project Appraisal / TEV Studies  Debt Syndication  Business Valuation  Retail Broking  Online Trading  Call n Trade  Applying IPOs Online  Applying MFs Online  Institutional Broking  Institutional Equity Broking Services  Equity Research  F & O Dealing and Sales  Mutual Fund Distribution  BOB Capital Markets Ltd. (BOBCAPS), a wholly owned subsidiary of Bank of Baroda is into Mutual Fund Distribution and Advisory Services. As a distributor we are empanelled with 28 SEBI Registered Mutual Funds in India including SBI, UTI, Reliance, HDFC, Fidelity, and Franklin Templeton.
  39. 39. Recent Offerings Business Valuation Business Valuation for a crossover M&A Deal Project Appraisal and Valuation Valuation of shares Capital Issues - EquityLead Manager to the Initial Public Offering of Lead Manager to the Lead Manager to the Rights Issue Size INR 750 Million Issue Size INR 180 Million Capital Issues - Debt Arranged Issue of NCDs on Arranged the Issue ofPrivate Placement Basis worth Arranged Issue of NCDs on Private various Bond series for Tier INR 3250 Million Placement basis worth INR 500 Million I and Tier II capital requirements aggregating INR 20 Billion from 2007- 2009 Mergers & Acquisitions Advisor to the Takeover Deal.
  40. 40. Union Bank of India has been around for more than 88 years. The bank has earned areputation for being techno-savvy--more than 600 branches of Bank are networked andpowered with a centralized technology platform, the bank also manages close to 395networked ATMs.Union Bank is a Public Sector Unit with 55.43% Share Capital held by the Government ofIndia. The Bank came out with its Initial Public Offer (IPO) in August 20, 2002 and Followon Public Offer in February 2006. Presently 44.57 % of Share Capital is presently held byInstitutions, Individuals and Others.Financial performance(as on 31st march 10) st The Bank’s Net Worth increased by 25.76% and stood at Rs. 8758 crore as on 31 March 10 as compared to Rs.6964 crore in the previous year. st Net Profit Increased by 27.47% and stood at 594 crore as on 31 March 10 as compared to 466 crore crore in the previous year. st Gross NPA level increased to Rs.2671 crore as on 31 March’10 from Rs.1923 st crore as on 31 March’09.Board of Directors  SHRI M.V.NAIR (Chairman & Managing Director)  Shri S.C.Kalia(Executive Director)  SHRI S.Raman(Executive Director)  Dr. Gulfam Mujibi(Part-time non-official Director)  Shri B.M.Sharma(Chartered Accountant Director)  SHRI N. SHANKAR (WORKMEN DIRECTOR)
  41. 41. Products and Services  Personal Banking (Accounts & Deposits,Retail Loans,Cards,Insurance & Investment,Demat)  NRI Banking(Remittance, Savings & Deposits, Loan & Services, Payments)  Corporate Banking(CMS, E-Tax, Insurance, Trade Finance, loans Syndication, MSME Banking)  Internet Banking(Account Information,Transfer of Funds/Bills/Limits/Currency. Financial & Non Financial enquiries)Award’s:  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. The award was given away by the Hon’ble Governor of Maharastra, Shri K.Sankaranarayan.  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. The award was given away by Dr. C Rangarajan, Economic advisor to the Prime Minister th  As part of its global expansion initiatives, the Bank opened its 5 overseas representative office in London, U.K. in April 2010. The Bank already has 4 representative Offices in Shanghai, Beijing in PRC, Abu Dhabi in UAE and Sydney, Australia. Besides the Bank has a full fledged overseas branch in Hong Kong. The Bank is the process of setting up a Rep Office in Toronto, Canada.
  42. 42. The Kotak Mahindra GroupKotak Mahindra is one of Indias leading financial conglomerates, offering completefinancial solutions that encompass every sphere of life. From commercial banking, tostock broking, to mutual funds, to life insurance, to investment banking, the group catersto the financial needs of individuals and corporates.The group has a net worth of over Rs. 7,100 crore and has a distribution network ofbranches, franchisees, representative offices and satellite offices across cities and townsin India and offices in New York, London, San Francisco, Dubai, Mauritius andSingapore. The Group services around 6.5 million customer accounts.Since the inception of the erstwhile Kotak Mahindra Finance Limited in 1985, it has beena steady and confident journey leading to growth and success.Kotak Group Products & Services:Senior Management:  Mr. Uday S. Kotak (Executive Vice Chairman & Managing Director)  Mr. Anand Mahindra (Vice-Chairman and Managing Director)  Mr. C Jayaram (Executive Director)  Mr. Dipak Gupta (Executive Director)  Dr. Shankar Acharya (Non-Executive Part-time Chairman)  Mr. Shivaji Dam (managing director of Kotak Mahindra Old Mutual Life Insurance Limited)  Mr. C. Jayaram ( Executive Director)  Mr. Dipak Gupta ( Executive Director)  Mr. Cyril Shroff (managing partner of the law firm)
  43. 43. Kotak SecuritiesKotak Securities Ltd. 100 % subsidiary of Kotak Mahindra Bank is one of the oldest andlargest broking firms in the Industry. A subsidiary of Kotak Mahindra bank.Reconstruction from a private company to a public limited company effective from June13, 2003. Act as a lead manager to several (IPO‟s) & help in Client in accessing thepublic & private equity market.It is also a depository participant with National Securities Depository Limited (NSDL)and Central Depository Services Limited (CDSL).Kotak Securities Limited has Rs. 2300 crore of Assets Under Management (AUM) as of31st March, 2010.Large Presence: At present Kotak in 331 cities with 843 offices all over the country.Services :-  stock broking through the branch and Internet,  Investments in IPO,  Mutual funds  Portfolio management service,  Currency Derivatives,  Insurance.Accolades :UTI MF – CNBC TV18 Financial Advisor Awards - Best Performing Equity Broker(National) for the year 09Finance Asia Award (2009)-Best Brokerage Firm In IndiaBest Brokerage Firm in India by Asiamoney in 2008, 2007 & 2006Best Performing Equity Broker in India – CNBC Financial Advisor Awards 2008Avaya Customer Responsiveness Awards (2007 & 2006) in Financial Services SectorThe Leading Equity House in India in Thomson Extel Surveys Awards for the year 2007Euromoney Award (2007 & 2006) - Best Provider of Portfolio Management: EquitiesEuromoney Award (2005)-Best Equities House In IndiaFinance Asia Award (2005)-Best Broker In IndiaFinance Asia Award (2004)- Indias best Equity HousePrime Ranking Award (2003-04)- Largest Distributor of IPOs
  44. 44. CANRA BANK is also one of the leading merchant bankers in India, offering specializeservices to banks, PSUs, and State owned corporation, Local statutory bodies, &corporate sector.It is SEBI register with CAT I Merchant banker to carry on issue management (public,right, private placement), Underwriting Consoltancy, Corporate advisory services.It have associated with issue ranging from 1 crore to 1500 crore, involving various typesof industries, banks , statutory Bodies etc. & have an edge in handling Private Placementissue- Both Retail & HNIs.SPECTROM of Services:-  Equity Issue (Public/ Right) management.  Debt Issue management.  Private Placement  Project appraisal  Monitoring agency assignments.  Agriculture Consultancy Services  Corporate Advisory Services  Merger & Acquisition  Share valuation & Buy back Assignment.  IPO funding Security Trustee Services.
  45. 45. AboutPROMOTERS/ACTIVITYThe Company, a Subsidiary of Canara Bank was incorporated and accredited as aPrimary Dealer (PD) in 1996 in the name of „Gilt Securities Trading CorporationLimited. (GSTCL)‟ with a paid-up capital of Rs.100 Crores.The Primary Dealer activity of the Company was taken over by the parent Bank inFebruary, 2007 and the Company is focusing on capital market related activities mainlyinto equity broking and distribution of Financial Products.The name of the Company has been changed as „Canara Bank Securities Ltd. (CBSL)‟in 2009.The On Line Trading (OLT) in Equity and FNO is a product added by CBSL to FinancialSuper Market of Canara Bank. This facilitates seamless trading in stock market byinvestor clients of the Bank at their comfort and convenience.PRINCIPAL OBJECTIVES  To provide a viable and efficient institutional platform for competitive trading in equities.  To develop a Retail Equity market with broader investor base by offering enhanced trading facility to the equity instruments and hassle-free & speedy service using state of the art technology in the market.  To create an active secondary market for Equities, assure prompt settlement, Liquidity to the instrument and transparency in dealing.  To provide Trading Convenience by way of:- Efficient and Speedy On-Line Service Prompt Settlement Transparency in operation
  46. 46. ORGANIATIONAL SETUPAs per SEBI guidelines the Company has functional separation for.  Trading (Front Office)  Settlement accounting and Reconciliation(Back Office and Accounting)and  Monitoring and Control (Middle Office)Similarly, there is a separation of transactions relating to Proprietary trads, Institutionalaccounts and Constituents‟ accounts.The Company is Board managed. Day to day affairs are overseen by the ManagingDirector, assisted by the executives heading the departments and supported by competentand experienced staff, who are on deputation from Canara Bank.BOARD OF DIRECTORS  Shri A C Mahajan - Chairman (Chairman and Managing Director of Canara Bank)  Shri H S Upendra Kamath - Vice Chairman (Executive Director of Canara Bank)  Shri P N Murthy - Director (General Manager of Canara Bank)  Shri D S Anandamurthy - Director (General Manager of Canara Bank)  Shri D S R Murthy - Director (Chartered Accountant-with vast experience in Capital Market)  Shri K Krishna Rai - Director (Retd Executive Director of Allahabad Bank)  Shri K R Rao - Managing Director (Deputy General Manager of Canara Bank)BANKERS TO THE COMPANY  Canara BankAUDITORS TO THE COMPANY  M/S Ghalla & Bhansali  M/s A J Shah & Co. Mumbai (Internal Auditors)PRINCIPAL EXECUTIVES  Shri K R Rao (Managing Director )  Shri N S Rao (General Manager )  Shri K Ganesh Kamath (General Manager )COMPANY SECRETARY  Shri S Mutthu
  47. 47. IDBI Capital Market Services Ltd., (IDBI Capital) is a wholly owned subsidiary ofIDBI Bank Ltd and is a leading Investment Banking & Securities Company.IDBI Capital offers a full suite of products and services to Corporates, Institutionaland Individual clients. The range of services include :- Investment Banking Capital Market Products Private Equity Corporate Advisory Services Mergers & Acquisitions Project Appraisals & Debt Syndication Stock Broking - Institutional & Retail Distribution of Financial Products Debt Placement and Underwriting Fund Management (Managing Clients Assets-Pension/PF Fund Managers) Research GroupIDBI Capital is highly regarded for safety and trust and enjoys a credit rating of“AAA” by CARE for its medium-term borrowings and P1+ by ICRA for its short-term borrowings.
  48. 48. Milestones1995 March Commenced Equity Broking on NSE CM segment1995 July Built agent Distribution Network across the country1996 October Commenced Debt Broking on NSE WDM segment1996 Started operations as a Depository ParticipantDecember1996 Started to act as Arranger to Privately Placed Bond issues1998 April Commenced operations as a Portfolio Manager1999 February Acquired membership of BSE, Mumbai1999 Started operations as a Primary DealerNovember2002 March Achieved an outright secondary market turnover exceeding Rs.100000 crore in G-Secs2000 June Acquired Derivatives memberships of BSE and NSE2002 October Commenced trading in Interest Rate Swaps2004 June Commenced Merchant Banking & Corporate Advisory Services2006 January Launched the online investing portal – www.idbipaisabuilder.in2006 IDBI Capital bags CNBC TV18 Best National FinancialSeptember Advisor-Institutional award.2006 IDBI Capital ties up with Punjab National Bank and Bank ofSeptember Rajasthan Bank.2007 March IDBI Capital ties up with Oriental Bank of Commerce2007 May IDBI Capital ties up with Karur Vysya Bank (KVB)2008 January IDBI Capital bags CNBC TV18s prestigious National Financial Advisor Award2008 March IDBI Capital ties up with Union Bank of India
  49. 49.  Fund ManagementIDBI Capital Market Services Ltd. (ICMS) is a leading Fund Manager in the country forProvident, Pension and Retirement Benefit Funds. The Company is a SEBI registeredPortfolio Manager and manage its Client’s assets under both discretionary and non-discretionary mandates. These services are provided to various public and private sectorundertakings and their provident, pension, retirement benefit and surplus funds. TheCompany’s client base includes leading pension and provident funds in the country.IDBI capital has been advising institutions, banks and corporates for their investment inDebt, Mutual Funds and Equities over several years. Its services include managing ClientAssets--Pension & Provident Funds, Surplus fund Management, Equity PortfolioManagement and Mutual Fund Advisory.The funds have continuously yielded superior returns, which are significantly higherthan the benchmark.ISO Certification 9001:2000Keeping in view the importance of standardized processes and service levels, theCompany has gone in for ISO Certification for Fund Management, and is the onlycompany to have done so in this sector. Being a public sector, the Company is alsoaudited by Comptroller and Auditor General (CAG) office and follows transparentpractices.Regulatory ApprovalIDBI Capital is a registered Portfolio Manager with Securities and Exchange Board ofIndia (SEBI) since 1998 and is authorised to undertake Funds Management activities(Debt & Equity) for clients. These activities would be governed by Securities andExchange Board of India (Portfolio Managers) Rules and Regulations, 1993. SEBIRegisration No. of IDBI Capital is INP000000209, valid till the year 2010.
  50. 50. Service’s:- Retail Broking & Distribution Online Investing IPO Distribution Capital Markets IPO / FPO / Right Issues TakeOver Buyback of Securities Qualified Institutional Placement Private Equity Investment Banking Financial Advisory Project Advisory Corporate Advisory Mergers & Acquistions Strategic Advisory Institutional Broking & Distribution Equity Sales & Dealing Equity Research Mutual Fund Sales & Dealing Mutual Fund Research
  51. 51. Present scenario of Indian Merchant BankingU.S Stock Market Listings of Fast- Growing Indian Companies: An innovative financingOptionNew York, Feb 17 08 /PR Newswire/ Emissary Capital, LLC A merchant bank based inNew York City and specializing in Indian Companies, is a pioneer firm leading thecharge for Indian Companies to obtain stock market listings in the U.S and Europeaninvestors in conjunction with a U.S public company with market listing. This turns a fastgrowing Indian company into U.S public company with the prestige and capability toraise money from U.S and European institutional investors. Focus on small and mediumenterprises (SMEs). SMEs are dynamic force in India fall under this category.India‟s strength in Information Technology sector is well known, but it is India‟s fastgrowing manufacturing sector, driven by approximately three million SME`s in sectorsranging from auto components to industrial goods, that is rapidly India a leading globalmanufacturing hub. Debt Financing is not the answer for SME`s. There seems to anacross the board consensus that Indian SME`s have not been able to fully tap theirpotential and keep pace with India‟s growth because of their inability to access greatersources of financing. For vast majority of Indian SME`s, the high domestic interest rateregime (prime rate of 12.75% to 13.25%) continues to be a substantial hindrance.Furthermore, the ability to raise debt financing outside India (typically referred to asExternal Commercial Borrowings (ECBs) is strictly regulated by RBI. No IPO boom forIndian SMEs in Indian stock markets. The Indian stock markets including the BSE &NSE have essentially ignored robust Indian SMEs. The avg. size of Indian IPO rose toapproximately $100 million in 2008-09. Meanwhile smaller Indian companies seeking toraise funds of less than that amount have found it increasingly difficult to raise fundsthrough Indian Stock Markets listings.According to SEBI only 104 companies raised capital in the range of $2.5 million to $125million in March 2007 fiscal year. No companies have raised money in the $1.25 millionto $2.5 million range since April 2007. Finally, only 52 companies have been able to
  52. 52. raise funds in the range of $2.5 million to $125 million in March 2008 fiscal year. Thereare few smaller Indian IPOs because Indian merchant bankers prefer to work on biggerIPOs that earn them bigger, as the work required for a small IPO compared to a large IPOis relatively the same. Also the regional stock exchanges, where the majority of SMEswould list themselves if possible, face stiff competition from India‟s two major stockexchanges BSE & NSE.Emissary Capital Ltd. Is a full service merchant banking firm which specializes inassisting fast growing Indian companies in obtaining financing and U.S stock marketlistings as well as identifying and advising on mergers & acquisitions transactions forsuch companies.
  53. 53. FOCUS OF THE STUDYThe main focus of the study would be on functioning of the Merchant Bankingcompanies. The study would have information and details of Merchant Banking of publicsector and private sector companies and then an analysis will be done on the collectedinformation and finally a comparison between these two categories will be done. Aftercomparison it would be find out which category has more growth potential in presentscenario as well as in future.
  54. 54. CONCEPTUALIZATION OF THE STUDYAmidst the swift changes sweeping the financial world, Merchant Banking has emergedas an indispensable financial advisory package. Merchant banking is a service-orientedfunction that transfers capital from those who own to those who can use it. They try toidentify the needs of the investors & corporate sector & advice entrepreneurs what to doto be successful. New players are entering in this field day by day. Merchant Banking inIndia has a great demand over the globe. So many companies in India are trying theirhands in this field. Some companies have built their strong image and some are still inprocess to leave their mark in the international market.
  56. 56. REVIEW OF EXISTING LITERATUREThere are no. of study Have Been done on mercent Banking.A Few of literature are Form of banking where the bank arranges credit financing, butdoes not hold the loans in its investment portfolio to maturity. A merchant bank investsits own capital in leveraged buyouts, corporate acquisitions, and other structured financetransactions. Merchant banking is a fee based business, where the bank assumes marketrisk but no long-term credit risk. A common form of banking in Europe, merchantbanking is gaining acceptance in the United States, as more banks originate commercialloans and then sell them to investors rather than hold the loans as portfolio investments.A banque daffaire is a French merchant bank, which has more powers than its Britishcounterpart. The Gramm-Leach-Bliley Act allows financial holding companies, a type ofBank Holding Company created by the act, to engage in merchant banking activities.Okay so you want to accept credit cards from your customers, and are interested inestablishing a merchant account. Whether you own a brick-and-mortar retail store, mailorder outlet, or internet shopping operation, there are a few things to consider whenchoosing a credit card processing provider.First of all, you should make a list of several providers that offer the features you want,and then compare the variable fees that may differ depending on the company you dealwith. These fees include things like set-up, cancellation, and monthly minimum, and maybe negotiable based on your unique circumstances.Once you have determined what your business will be charged for its merchant account,it‟s often a good idea to do a few sample calculations to work out your total credit cardprocessing costs during a good, bad, and average month.
  57. 57. Finally, you should read and double-check the contract, including small print and detailedterms. Don‟t sign anything until you are confident that you understand all the fees,minimums, termination clauses, and other details. It‟s important to keep in mind thatmerchant account providers won‟t go over every single point with every single customer,and that it is ultimately your responsibility to read and understand the terms.Financial services firm India Infoline on Wednesday said its wholly owned subsidiary,India securities Pvt. Ltd, has received a category 1 merchant banking licence from theSecurities and Exchange Board of India.“This will enable the company to carry out the entire range of merchant banking activitiesranging from public issue management to advisory services and underwriting of issues” acompany release said here.Mr. Ajit Menon, Senior Vice –President and Head-Investment Banking, India Infoline,said the company would provide focused corporate finance advisory for SME`s in theareas of mergers & acquisitions, pvt. equity placements, IPO‟s & high yield debt. “Wesee specific opportunities in cross border M&A that would bring in strategic benefits andgrowth opportunities for companies in the SME sector and we are already seeing goodtraction in this area”India Infoline expects a significant number of small and medium-sized companies to beturning to the capital markets and becoming involved in mergers and acquisitions.The leading investment banks are targeting the large companies and the small andmedium-sized companies bracket is a good untapped growth opportunity.The company recently acquired Marchmont Capital Advisors Ltd and entered into analliance with Marchmont International for exclusive services and non-compete in India.
  58. 58. Objective
  59. 59. OBJECTIVES OF THE STUDY To develop the ability to study the functioning of Merchant Banking in India & learn & apply multidisciplinary concepts, tools & techniques to solve vital problems. To familiarize with the various services provided by Merchant Bankers. To compare the public & private sector company engaged in providing merchant banking services on various grounds. To find out the growth potential of the Merchant Banking public & private sector companies.
  60. 60. Findings & Conclusions
  61. 61. Conclusion Longstanding client relationships Strong positions in high-growth client and product niches. Multiple revenue growth initiatives are in place with detailed and concrete action plans, and with rigorous follow-up mechanisms. Growth is controlled by a sound Risk Management System and disciplined cost management. Small & Medium scale enterprises SMEs need immediate attention from merchant bankers to get access to finance. SMEs are facing stiff competition from large scale companies.
  62. 62. LIMITATIONS OF THE STUDY Due to paucity of time only limited information can be collected. There can be a possibility of “individual biasness” on the part of respondents. Study would be confined to only 7-8 public & private sector merchant banking companies. Sample size to be taken may not be the true representative of the population.
  63. 63. Chapter 5
  64. 64. BIBLIOGRAPHY i. Financial Institutions & Market By Shashi K. Gupta, Nisha Aggarwalii. INTERNET www.google.com/news www.answer.com www.emissarycapital.com www.wikipedia.com www.sebi.gov.in http://unionbankofindia.co.in http://www.asialaw.com/Article/1988860/Merchant-Banking.html http://www.icicisecurities.com http://www.sbicaps.com http://www.bobcapitalmarkets.com http://www.pnbindia.in/subsidiaries http://www.kotaksecurities.com http://www.canmoney.in