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Ppt on merchant banking in india

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Ppt on merchant banking in india

  1. 1. The basic objective of the Project on "Merchant Banking in India" was to deal with the following things:  To examine the role of merchant banking in promoting capital market in India.  To study the rules and regulations of SEBI for merchant bankers as issue managers.  To evaluate the performance of the merchant bankers.  To study the marketing aspects of the merchant bankers relating to the issue.  To study the effectiveness of pricing of the ‘issues’ (as determined by issuing company and the merchant banker).  To make appropriate recommendations to merchant bankers for improving their performance.
  2. 2. Merchant Bankers worldwide have experienced a huge growth during the last 7-8 years. So it was not possible to cover the whole of this as there is still huge scope for research in this area. It was possible to only cover a part of the whole Merchant Banking industry so as to provide a broad outlook over the emergence of Merchant Banking services in India. The time period of study is limited and so the premise of study is also restricted to the periphery of few of the functions of merchant bankers. Capital market is a very big market which comprises of many types of securities but this project focuses only on the primary market which deals in shares.
  3. 3.  Merchant Banking assumes diverse functions in different countries. So, merchant banking may be defined as, "an institution which covers a wide range of activities such as management of customer services, portfolio management, credit syndication, acceptance credit, counseling, insurance, etc".  A merchant banker shall endeavor to ensure that the investors are provided with true and adequate information without making any misleading or exaggerated claims or any misrepresentation and are made aware of the attendant risks before taking any investment decision.  As per SEBI, "Merchant Banker" means any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management.
  4. 4.  To raise money from capital market, promoters bank upon merchant bankers who manage the whole show by rendering multifarious services.  The various steps involved in the preparation & appraisal of project are :  1st STEP: PROJECT IDENTIFICATION  2nd STEP: FEASIBILITY STUDY REPORT  3rd STEP: APPRAISAL OF PROJECT  Merchant Bankers help corporate clients to raise syndicated loans from commercial banks. Merchant Banks help clients approach financial institutions for term loans.  Merchant Bankers provide portfolio management services to their clients.
  5. 5.  The entire investment of an household of India in the capital markets can be shown as below in the following figure, which shows that after Mutual Funds, Share market is the 2nd biggest area of investment in which a household bets on. This is based on the NCAER Report on "How households Save and Invest" of July, 2013.
  6. 6.  The companies can bring public issue of shares in mainly two ways in India:  There are mainly two methods in which public issue can be brought about in India:
  7. 7.  The Company is majorly in the business of retailing of sarees under the brand names of "KALAMANDIR", "MANDIR" & "VARAMAHALAKSHMI". It started as a retailer of sarees in Hyderabad in August 2005.  It brought out its IPO in February, 2013 to raise a capital of about 89 Crore. Ashika Capital Limited & Vivro Financial Services Pvt. Ltd. Acted as the Book Running Lead Managers in the 100 % Book Built issue.
  8. 8.  Entering into an agreement with the body corporate;  Appointment of Compliance Officer;  Appointment of all other Intermediaries & coordinating with them;  Preparation of Offer Document of Letter of Offer or Prospectus and filing them with Registrar, Stock Exchange & SEBI;  Due Diligence Report;  Inter-Se Allocation of Responsibilities;  Pricing, Coordinating with the Stock Exchange for Book Building process including software, bidding terminals and book building;  Collection of application forms from bankers and statement of amount received;  Redresser of Investor Grievances;  Post Issue Monitoring
  9. 9.  Speciality Restaurants Limited (SRL), the first of its kind which brought its IPO in May, 2012 where it offered 1, 17, 39,415 Equity Shares in the issue. The Company had a price band of Rs. 146 - 155 and a issue price of Rs. 150. The issue opened on 16th May, 2012 & closed on 18th May, 2012.
  10. 10. The Company proposed to utilize the Issue proceeds, after deducting the underwriting and issue management fees, selling commissions and other expenses associated with the Issue (the "Net Proceeds") for the following objects:  Development of New Restaurants;  Development of a food plaza;  Repayment of portions of term loan facilities; and  General corporate purposes.
  11. 11.  Showing whether investors read offer documents before investing  Showing whether investors base their investment decision on the Merchant Bankers
  12. 12.  Showing other factors on which investors base their investment decision
  13. 13.  Showing how investors rate the Merchant banking services in the Indian context
  14. 14.  SEBI Guidelines have authorized merchant bankers to undertake issue related activities only with an exception of portfolio management. These guidelines have made them either to restrict their activities or think of separating these activities from the present one and float new subsidiary and enlarge the scope of its activities.  SEBI Guidelines stipulate a minimum net worth of Rs. 5 crore for their authorization. Small but professional & specialized merchant bankers who do not have such net worth may have to close down their business. The entry is denied to young, specialized professionals into merchant banking business.  Non-co-operation of the issuing company in timely allotment of securities and refund of application money is another problem of Merchant Bankers.
  15. 15.  Net Safety Gain option can be exercised if the issue price falls to a large extent, In Sai Silks (Kalamandir) Ltd. Issue; the company had opted for this option.  There has to be accountability of the end use of funds raised from the market. It is not enough that prospectus states the purpose of raising funds.  To cover cases of system failure, insurance cover has to be devised to protect the investors from loss subject to ceiling of, say Rs. 1 lakhs.  Given the risk, our securities should yield more in the long run. Merchant Bankers can make this happen by developing a sense of personal responsibility for the projects they bring to the market for financing.
  16. 16.  It is to be emphasized that mere rules & regulations are not enough to evolve and nurture sound traditions and practices in merchant banking and to build a vibrant capital market.  The quality of the projects that are proposed to be financed by capital issues should be impeccable because it is the primary market that holds the key to rapid capital formation, growth in industrial production and exports.  The securities sold to the public should represent genuine claims on future cash flows and viable assets.  Merchant Bankers in India have a social responsibility to help build an industrial structure, technologically sound to none in the world and financially viable.
  • VaishnaviShaw

    Apr. 14, 2018
  • BenazirAz

    Nov. 10, 2017
  • deepti167

    Aug. 4, 2017

Short and understandable :)

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