a study on the performance of the sbi merchant banking

8/10/2019 A Study on the Performance of the Sbi Merchant Banking

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S R M U N I V E R S I T Y | 1

A Project Report On

A STUDY ON THE PERFORMANCE OF THE SBI MERCHANTBANKING (Kottayam),

Kerala .

Submitted to the

S.R.M. SCHOOL OF MANAGEMENT

In partial fulfilment of the requirements in the award of the

Degree of Master of Business Administration

By

SONIA JACOB

Reg. No: 3511210455

Under the Guidance of

Mr. AP.Karthik Kumaran

Asst. PROFESSOR

SRM SCHOOL OF MANAGEMENT

DEPARTMENT OF MANAGEMENT STUDIES,SRM UNIVERSITY

KATTANKULATHUR CAMPUSTAMILNADU 603 203


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CERTIFICATE


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CERTIFICATE

This is to certify that the project report entitled A STUDY ON TH E

PERFORM ANCE OF TH E SBI M ERCH ANT

BANKING(Kottayam),Kerala

Submitted by Sonia Jacob (Reg. No: 3511210455) in partial fulfilment for the final project in

awards of Master of Business Administration of SRM University - Kattankulathur, is a

bonafide research work carried out under my supervision and guidance and no part of this

project has been submitted for any other degree / diploma.

The assistance and help received during the course of the investigation has been fully

acknowledged.

Signature Of The Guide Signature Of Student

Place:Date

Dr. (Mrs). Jayshree Suresh External ExaminerDean, Date:SRM University.


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DECLARATION

I Sonia Jacob, Reg. No: 3511210455 , hereby declare that the project report titled A

STUDY ON TH E PERF ORM ANCE OF TH E SBI M ERCH ANT

BANKI NG(Kottayam),Kerala under the supervision and the guidance of Mr. AP.

Karthik Kumaran , Professor, Department of Management Studies, SRM UNIVERSITY

(Kattankulathur Campus- Chennai), is the result of the original work done by me and to the

best of my knowledge, a similar work has not been submitted earlier to any University or any

other Institution.

Place: Sonia Jacob (3511210455)

Date: SRM MBA-H


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ACKNOWLEDGEMENT

A journey is easier when we travel together. Interdependence is certainly moreimportant than independence. It will always be my pleasures to thank those who have

helped me in making this project a lifetime experience.

I would like to express my heartiest gratitude to STATE BAN K OF I NDI A (Kottayam) ,

for giving me an opportunity to work with its Kerala HEADQUATER OF STATE BANK

OF INDIA, our Institute and important persons associated with this project as without

their guidance and support I would have never ever have got a chance to have real lifeexperience of working with a Merchant Banking firm of such a great reputation and learn

practically about working and service provided to customer by Merchant Banking firm,

I would also like to extend my gratitude to M r.Sohan Kumar for giving me an

opportunity to join them to know and learn about the Merchant Banking Operations in

State Bank Of India.

It is my privilege to thank M r.Thomas M atthew (Customer Service Off icer ) &

M r .Cher ian Vargh ese (M ark etin g Associate) whose guidance has made me learns and

understands the finer and complicated aspects of Merchant Banking. The help and

guidance which he has extended to me has made me feel as being an integral part of the

organization.

My heartiest gratitude extends to my faculty Prof. AP.Karthi k Ku maran, (Professor of

SRM UNI VERSI TY CHEN NAI ) who have helped me in every aspect of my work.

Finally, I thank all those who directly and indirectly contributed to this project.

21st May 2014 Sonia Jacob

SRM UNIVERSITY


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Index

Sr.no Particulars Pg no

CHAPTER 1

1 INTRODUCTION 3

1.1 MEANING AND DEFINITION 3

1.2 INDUSTRY PROFILE 4

1.2.1 WHO ARE MERCHANT BANKERS ?1.2.2. CLASSIFICATION OF MERCHANT BANKS

44

1.3 ECONOMIC GROWTH DURING LIBERALIZATION MEASURES 5

1.4 GROWTH OF MERCHANT BANKS DURING RECENT DECADE 8

1.5 FUNCTIONS OF SBI AS MERCHANT BANKERS 9

1.6 ROLE OF SEBI 14

1.6.1REGISTRATION OF MERCHANT BANKERS IN INDIA1.6.2 MERCHANT BANKERS HAVE THE FOLLOWING

OBLIGATIONS AND RESPONSIBILITIES.1.6.3 PROCEDURE FOR GETTING REGISTRATION1.6.4 REGISTRATION FEE PAYABLE TO SEBI:

1415

1717

1.7 SCOPE FOR GROWTH OF MERCHANT BANKING IN INDIA 18

1.8 PROBLEMS AND HURDLES FACED BY MERCHANT BANKS 21

1.9 ORGANISATION PROFILE 22

1.10 REVIEW OF LITERATURE 28

1.11 NEED FOR STUDY 32

1.12 OBJECTIVES OF THE STUDY 33

1.13 LIMITATIONS OF THE STUDY 34


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CHAPTER 2

2 RESEARCH METHODOLOGY 36

2.1 RESEARCH METHODOLOGY 36

2.2 RESEARCH DESIGN 36

2.3 TYPES OF RESEARCH DESIGN 36

2.3.1 DESCRIPTIVE METHOD2.3.2 DESCRIPTIVE RESEARCH DESIGN2.3.3 SAMPLING SIZE2.3.4 SAMPLING TECHNIQUE

37373738

2.4 METHODS OF DATA COLLECTION 38

2.5 DATA ANALYSIS TOOLS 38

2.5.1 PERCENTAGE ANALYSIS2.5.2 TABLES AND CHARTS2.5.3 BAR DIAGRAM

38

3939

2.6 DATA COLLECTION PROCEDURE 39

Chapter 3

3.1 DATA INTERPRETATION 41

3.2 HYPOTHESIS ANALYSIS 52

Chapter 44.1 FINDINGS 56

4.2 SUGGESTIONS 58

Chapter 5

5.1 SUMMARY 60

5.2 BIBLIOGRAPHY 61

5.3 ANNEXURE 62


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ABSTRACT A STUDY ON THE PERFORMANCE OF THE SBI MERCHANT BANKING

The main focus of the study would be on functioning of the Merchant Banking companies.

The study would have information and details of Merchant Banking of public sector and

private sector companies and then an analysis will be done on the collected information andfinally a comparison between these two categories will be done. After comparison it would

be find out which category has more growth potential in present scenario as well as in future.

After the study, based on the data collected, it has been analyzed and better suggestion and

conclusion are given to conclude the project study. A pilot study of 40 samples has been

collected to identify the effectiveness of the questionnaire. The statistical tools which areused for the findings are percentage method, Chi-square test and weighted average method.

The primary sources of data are collected from a structured questionnaire circulated among

the various sectors of individuals. The data obtained give rise to following findings:

1. Out of total respondents, 45% respondents take Financial Service and rest 55%

respondents do not take Financial Service.

2. Out of total respondents, 44% respondents Know about merchant banking and rest

56% respondents do not know about merchant banking.3. 43.75% respondents are Satisfied with the services provided by SBI s Merchant Bank

and the rest 56.25% respondents are unsatisfied.


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CHAPTER 1


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MERCHANT BANKING IN STATE BANK OF INDIA

1. INTRODUCTION

Merchant Bankers act as a link between corporate bodies who intend on raising funds and

investors who are interested in investing in securities. It helps corporates establish new

companies, expand, diversify, merge, commission projects etc. Apart from that, merchant

banking was the necessity of banks themselves which were in need of non-fund based incomeso as to improve their profitability margins by all means in the changed economic scenario.

Merchant Banking is known by different names in different places. In the USA, it is known

as Investment Banking. In the UK it is known as accepting and clearing houses.

1.1.1MEANING AND DEFINITION

Original Definition : A Merchant Bank is a British term for a bank providing various

financial services such as accepting bills arising out of trade, providing advice on

acquisitions, mergers, foreign exchange, underwriting new issues, and portfolio management.

The Focus Definition: A Merchant Bank can be generally described as a financial

services company with a private equity investment arm offering investment banking and

ancillary services as well. Because a merchant bank acts not only as an advisor and broker but also as a principal, a merchant bank has a longer term approach than a typical investment

bank and is highly concerned with the viability of each investment opportunity and providing

the right advice for a strong partnership with each client company.

Amidst the swift changes sweeping the financial world, Merchant Banking has emerged as an

indispensable financial advisory package. Merchant banking is a service-oriented function

that transfers capital from those who own to those who can use it. They try to identify the

needs of the investors & corporate sector & advice entrepreneurs what to do to be successful.


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The merchant banking has been defined as to what a merchant banker does. A merchant

Banker has been defined by Securities Exchange Board Of India (Merchant Banker) rules,

1992, as An y person wh o is engaged in the business of i ssue management ei ther by

making ar rangements regarding sell in g, buying or subscri bing to secur it ies or actin g asmanager , consultant, advisor or rendering corporate advisory ser vices in r elation to such

issue man agemen t.

1.2. INDUSTRY PROFILE

1.2.1 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 help and

financial market speculation.

-Because they do not invest against collateral, they take far greater risks than

traditionalbanks.

-The reason that businesses should develop a working relationship with a merchant bank is that they have more money than venture capitalists. Their advice tends to be

more pragmatic than venture capitalists.


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1.2.2. CLASSIFICATION OF MERCHANT BANKS

(1) Public Sector Merchant Banks:

Commercial Banks (public)

National Financial Institutions

State Financial Institutions

(2) Private Sector Merchant Banks:

Foreign Banks

Indian Private Banks

Leasing Banks

Finance and investment companies

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.

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.,


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1.3 ECONOMIC GROWTH DURINGLIBERALIZATION MEASURES

In late 17th and early 18th century Europe, the largest companies of the world was merchant

adventurers. Supported by wealthy groups of people and a network of overseas trading posts,

the collected large amounts of money to finance trade across parts of the world. For example,

The East India Trading Company secured a Royal Warrant from England, providing the firm

with official rights to lucrative trading activities in India. This company was the forerunner in

developing the crown jewel of the English Empire. The English colony was started by what

we would today call merchant bankers, because of the firm's involvement in financing,

negotiating, and implementing trade transactions. The colonies of other European countries

were started in the same manner. For example, the Dutch merchant adventurers were active in

what are now Indonesia; the French and Portuguese acted similarly in their respective

colonies. The American colonies also represent the product of merchant banking, as

evidenced by the activities of the famous Hudson Bay Company. One does not typically look

at these countries' economic development as having been fueled by merchant bank

adventurers. However, the colonies and their progress stem from the business of merchant

banks, according to today's accepted sense of the word. Merchant banks, now so called, are in

fact the original "banks". These were invented in the middle Ages by Italian grain merchants.

As the Lombardy merchants and bankers grew in stature on the back of the Lombard plains

cereal crops many of the displaced Jews who had fled persecution after 613 entered the trade.

They brought with them to the grain trade ancient practices that had grown to normalcy in the

middle and far east, along the Silk Road, for the finance of long distance goods trades.

The Jews could not hold land in Italy, so they entered the great trading piazzas and halls of

Lombardy, along side the local traders, and set up their benches to trade in crops. They had

one great advantage over the locals.

Christians were strictly forbidden the sin of usury. The Jewish newcomers, on the other hand,

could lend to farmers against crops in the field, a high-risk loan at what would have been
http://www.answers.com/topic/usuryhttp://www.answers.com/topic/usury


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considered usurious rates by the Church, but did not bind the Jews. In this way they could

secure the grain sale rights against the eventual harvest. They then began to advance against

the delivery of grain shipped to distant ports. In both cases they made their profit from the

present discount against the future price. This two-handed trade was time consuming andsoon there arose a class of merchants, who were trading grain debt instead of grain.

TRADATIONAL MERCHANT BANKING

Merchant Banking, as the term has evolved in Europe from the 18th century to today,

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 services span from the earliest negotiations from a transaction to its actual

consummation between buyer and seller.

In particular, the merchant banker acted as a capital sources whose primary activity was

directed towards a commodity trader/cargo owner who was involved in 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 the necessary capital and ensure that the transaction

would ultimately produce "collectable" profits. Often, the merchant banker also became

involved in the actual negotiations between a buyer and seller in a transaction.
http://www.answers.com/topic/debthttp://www.answers.com/topic/debt


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1.4 GROWTH OF MERCHANT BANKS DURINGRECENT DECADE

MODERN MERCHANT BANKING

During the 20th century, however, European merchant banks expanded their services. They

became increasingly involved in the actual running of the business for which the transaction

was conducted. Today, merchant banks actually own and run businesses for their own

account, and that of others.

Since the 18th century, the term merchant banker has, therefore, been considerably broadened

to include a composite of modern day skills. These skills include those inherent in an

entrepreneur, a management advisor, a commercial and/or investment banker plus that of a

transaction broker. Today a merchant banker is who has the ability to merchandise -- that is,create or expands a need -- and fulfill capital requirements. The modern European merchant

bank, in many ways, reflects the early activities and breadth of services of the colonial

trading companies.

M ost compani es that come to a U.S. merchant bank are looking to increase their fi nanci al

stabil ity or satisfy a par ticu lar , immediate capital need.

Professional merchant bankers must have: 1) an understanding of the product, its industry andoperational management; 2) an ability to raise capital which might or might not be one's own

(originally merchant bankers supplied their own capital and thereby took an equity interest in

the transaction); 3) and most importantly, effective skills in concluding a transaction - the

actual sale of the product and the collection of profit. Some people might question whether or

not there are many individuals or organizations that have the abilities to fulfill all three areas

of expertise .


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1.5 Functions of SBI As Merchant Bankers:

Project Appraisal

This service helps corporates analyze the soundness of a project, which may be setting

up a new unit/expansion/modernization etc. It is a process of examining the technical,

commercial, financial and economic viability of a project to ensure that it generates

sufficient returns on the resources invested in it. The study of viability involves

detached verification of project s ability to stand the tests of technical, financial and

commercial feasibilities and management s capabilities to successfully implement and

run the project. A service project report will be prepared for the company, including

finalization of capital structure. Project appraisal includes:

- Financial appraisal (liquidity analysis, capital structure analysis, profitability

analysis etc

- Technical appraisal (factors of production, technology, civil works, site location etc)

- Economic appraisal (also known as cost-benefit analysis, social cost, impact on

employment, impact of the economy)

Syndication of Loan

Merchant Bankers arrange short, medium and long term loans for their clients. They

analyze the pattern of clients cash flows, based on which the terms of borrowing can

be defined. It then prepares a detailed loan memorandum which is circulated to various

banks and financial institutions and they are invited to participate in the syndicate. The

merchant banks then negotiate the terms of lending based on which the final allotment

is done. It also arranges for raising foreign exchange loans and external commercial borrowings for import of capital.


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Issue Management

This is the primary function of merchant bankers. It refers to the management of

securities offering of corporates to the general public and existing shareholders on

rights basis. Merchant bankers act as lead managers and assists companies in arriving

at quantum and nature of issue and obtaining consent/clearance from various statutory

authorities, preparing draft prospectus, obtaining approval from appropriate authorities

etc. it also assists companies in tying up with underwriters for the issue, appoint other

intermediaries like brokers, bankers, advertising agents, registrar to the issue and co-

ordinates the activities of these agencies and institutions from the successful flotation

of the issue. It also helps in listing the securities in stock exchange, finalizing basis of

allotment, arranging for refund, handling investor complaints etc.


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Underwriting of issues

In order to ensure full subscription or the stipulated minimum subscription of 90% of

the issue, companies enter into an agreement with financial institutions, banks, brokers

and bankers to underwrite the issue amount. Merchant bankers can underwrite issues

and assist companies in tying up with other underwriters

Corporate Counseling

Rendering assistance to corporate clients on various aspects of business operations in

the areas of financial planning, performance budgeting, restructuring capital, and other

aspects of financial management and monitoring systems and operations.

Bankers to the issue

Collection of subscription money/application money for an issue from the investors,

acknowledgement, proper accounting of the money received, sending

reports/certificates, informing collection details are the services provided in the banker

to the issue role.

Investment Counseling

This activity involved assisting firms, companies, trusts, funds and associations in the

choice of shares and stocks for investment depending upon the needs and the risk-

return trade-off, as well as taxation and time considerations.

Portfolio Management Services

Portfolio refers to investment in different types of marketable securities or

investment papers like shared, debentures and debenture stocks, bonds etc. from

different companies or institutions held by individuals firm or corporate units.

Portfolio management refers to managing efficiently the investment in the

securities held by professionals to others. Merchant bankers take up management

of a portfolio of securities on behalf of their clients, providing special services with

a view to ensure maximum return by such investments with a minimum risk of loss

of return on the money invested in securities. A merchant banker while performing


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the services of portfolio management has to enquire of the investment needs of the

client, the tax bracket, ability to bare risk, liquidity requirements, etc. they should

study the economic environment affecting the capital market, study the securities

market and identify blue chip companies in which money can be invested. Theyshould keep record of latest amendment in government guidelines, stock exchange

regulations, RBI regulations, etc.

Registrar and Transfer Agent

Transfer agency work involves carrying out transfer work in respect of securities after

complying with stipulated formalities/procedures. Preparation and printing of dividend

warrants and dispatching them to share holders is also covered here. Other servicesinclude attending to complaints of applicants/investors, coding and verification of

applications, allotment, processing and dispatching allotment letters, providing various

documents and certificates etc.

Mergers, amalgamations and Acquisitions

Some companies desire to restructure themselves in order to effectively meet

competition. Merchant bankers provide all requisite guidance and services forrestructuring, to prepare due diligence, necessary clearance from statutory bodies like

SEBI, ROC etc as per the statutory stipulations, for the process of mergers,

acquisitions and amalgamations.

Venture Capital

Merchant Bankers help co obtaining venture capital for financing their new and

innovative strategies. Venture capital financing is a type of financing by venture capital: the type of private equity capital is provided as seed funding to early-stage, high-potential,

growth companies and more often after the seed funding round as growth funding round

(also referred to as series A round) in the interest of generating a return through an

eventual realization event such as an IPO or trade sale of the company .
http://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Seed_fundinghttp://en.wikipedia.org/wiki/Seed_fundinghttp://en.wikipedia.org/wiki/Venture_capital


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Leasing Finance

Is there another lucrative area of financing where merchant bankers are turning?

Leasing is a viable source of financing while acquiring capital assets. The services

include arrangement for lease finance facilities for leasing companies, legal;

documents and tax consultancy.

Non-resident investment

Merchant bankers provide investment advisory services to attract NRI investment in

primary and secondary markets, undertake buying and selling securities on their

behalf, secure clearances from RBI under FEMA for repatriation of interest and

dividends etc.

Joint ventures

Merchant Bankers help corporates with joint ventures in India and abroad.


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1.6 ROLE OF SEBI

1.6.1Registration of merchant bankers in India

Registration with SEBI is mandatory to carry out the business of merchant banking 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 offence

SEBI HAS DIVIDED MERCHANT BANKER S IN

FOUR CATEGORIES , WHICH ARE AS FOLLOW:-

CATEGORIES ACTIVITIES NETWORTH

Category I To carry on the activities of issue mgt &

act as advisor, consultant, manager,

underwriter, portfolio management.

RS 1 Crore

Category II To act as advisor, consultant , co-manager,

Underwriter, portfolio management.

Rs 50 lakh

Category III To act as advisor, underwriter or

consultant

to an issue

Rs 20 lakh

Category IV To act only as advisor& consultant to an

issue

Nil


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1.6.2 Merchant bankers have the following obligations and

responsibilities .

1. Merchant banker should maintain proper books of accounts, records and submit half

yearly/annual financial statements to the SEBI within stipulated period of time.

2. No merchant banker should associate with another merchant banker who is not

registered in SEBI

.

3. Merchant bankers should not enter into any transactions on the basis of unpublished

information available to them in the course of their professional assignment.

4. Every merchant banker must submit himself to the inspection by SEBI when required

for and submit all the records.

5. Every merchant banker must disclose information to the SEBI when it requires anyinformation from them.

6. All merchant bankers must abide by the code of conduct prescribed for them.

7. Every merchant banker who acts as lead manager must enter into an agreement with

the issuer setting out mutual rights, liabilities, obligations, relating to such issues with

particular reference to disclosures allotment, refund etc.


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The SEBI has announced the new guidelines for the disclosures by theCompanies leading to the investor protection. They are presented below:

a) If any Company s other income exceeds 10 per cent of the total income, the detailsshould be disclosed.

b) The Company should disclose any adverse situation which affects the operations ofthe Company and occurs within one year prior to the date filing of the offer documentwith the Registrar of Companies or Stock Exchange.

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 ofthe expanded capital. The minimum application money payable should not be lessthan 25 per cent of the issue price.

e) The company should disclose the time normally taken for the disposal of varioustypes of investor s grievances.

f) The Company can make firm allotments in public issues as follows:

Indian mutual funds (20%),

FIIS (24%),

Regular employees of the company (10%),

Financial institution (20%).

The Company should disclose the safety net scheme or buy back arrangements of the

shares proposed in public issue. 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.

i) According to the guidelines, in case of the public issues, at least 30 mandatory

collection centres should be established.


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j) According to the SEBI guidelines regarding rights issue, the Company should give

advertisements in not less than two newspapers about the dispatch of letters of offer. No

preferential allotment may be made along with any rights issue.

k) The Company should also disclose about the fee agreed between the lead managers and the

Company in the memorandum of understanding.

1.6.3 PROCEDURE FOR GETTING REGISTRATION

An application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers)

Regulations, 1992. SEBI shall consider the application and on being satisfied, issues a

Certificate of registration in Form B of the SEBI (Merchant Bankers) Regulations, 1992.

1.6.4 REGISTRATION FEE PAYABLE TO SEBI:

Rs. 5 lakhs which should be paid within 15 days of date of receipt of intimation regarding

Grant of certificate. Validity period of certificate of registration is three years from the

Date of issue. Three months before the expiry period, an application along with renewal

Fee of 2.5 lakhs should be submitted to SEBI in Form A of the SEBI (Merchant Bankers)

Regulations, 1992. SEBI shall consider the application and on being satisfied renew

Certificate of registration for a further period of 3 years.


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merchant banker services will be needed by corporate enterprise to provide expert guidance.

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

order to compete, they have to go for restructuring, merger, acquisitions or

disinvestments. They may offer good opportunities to merchant bankers

Size and dynamics of the market

Indian market is growing. In fact India is one of the largest emerging markets.

Obviously, public issues, FDI, debt raising are on rise. Lots of new and green fried projects are happening. Merchant bankers have lots space to contribute.

Restrictions-liberalization :

More liberal the market is, more the things left to be decided by the corporate.

Merchant bankers assist in decision making and hence their scope increases. With

significant market freedom, merchant bankers work has increased many folds.

Banking policies

RBI prefers that commercial banks do not indulge in merchant banking business

directly. They should setup a subsidiary for the purpose. This limits scope of

commercial banks and gives space to merchant bankers. This policy also results in fair

business practices. Some countries allow commercial bankers to get involved in


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IPO s, placeme nt of debentures, etc. Indian scenario is favorable to merchant bankers.

Corporate culture

Corporate can do project appraisal, strategicrestructuring in house as well. If the

corporate prefer third-party independent assessment, then only they will engage

merchant bankers. Otherwise merchant banker s role is only statutory as in issue

management. India inc. apparently prefers and is happy with merchant bankers work.

Corporate dynamics

More happening in business gives more opportunities to merchant bankers. Mergers,

takeover acquisition, new Greenfield projects, fund raising for government

institutions, active money market are all providing better business prospectus to

merchant bankers.

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/

Stock

5. 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 investment

avenues.

8. To coordinate the activities of various intermediaries to the share issue such as the


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registrar, Bankers, advertising agency, printers, underwriters, brokers etc.

9. To ensure the compliance with rules and regulations governing the securities market.

1.8 PROBLEMS AND HURDLES FACED BY

MERCHANT BANKS Not many but some problems are faced by Indian merchant bankers.

I. Industry compartmentalization

Company which is in merchant banking business would have expertise in

underwriting, hire purchase, leasing, and portfolio management, money-lending.

But RBI does not permit merchant banking firms to get into these activities. So

the same promoters have to setup different companies for different purposes.

Management cost increases and expertise pooling i.e. multiple use of same talent

is not possible.

II. Malafide practices

India corporate culture is bettering. but still many corporate have excessively

friendly approach. Favored allotment of shares, tampering with project appraisal

report to bankers is common. Corporate like to use merchant bankers for malafide

intentions. This gives growth to more boutique fly-by-day firms. Giant

professional or multinational merchant bankers are cautions in their approach to

Indian market.

III. Regulations

T hough regulations are much better now, there is still scope for further

improvement. Merchant bankers can be made more accountable and responsible.

Professional qualification focused on merchant banking is not available. Industry


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is not well organized and all the players do not play the same tune. This is

specifically evident in comparison with insurance industry and mutual funds

industry.

1.9 ORGANISATION PROFILE

SBI Merchant Banking Group is strongly positioned to offer perfect financial solutions to

your business. We specialize in the arrangement of various forms of Foreign Currency

Credits for Corporate.

State Bank of India is the nation's largest bank. Tracing its roots back some 200 years to the

British East India Company (and initially established as the Bank of Calcutta in 1806), the

bank operates more than 13,500 branches and over 5,000 ATMs within India, where it also

owns majority stakes in seven associate banks. State Bank of India has more than 50 offices

in nearly 35 other countries, including multiple locations in the US (California), Canada, and

Nigeria. The bank has other units devoted to capital markets, fund management, factoring and

commercial services, and brokerage services. The Reserve Bank of India owns about 60% of

State Bank of India.

SBI being an Indian entity has no India exposure ceiling. Our Primary focus is On IndianClients. SBI s seasoned Team of professionals provides you with Insightful credit

Information and helps you 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


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Foreign currency loans under the FCNR (B) scheme Import Finance for Indian corporate

SBI CAPITAL MARKETS LIMITED (SBICAPS) is India's leading investment bank and project advisor, assisting domestic company s fund -mobilization efforts for last many years.

We began operations in August 1986 as a wholly owned subsidiary of the State Bank ofIndia, which is the largest commercial bank in India. In January 1997, fresh equity shareswere issued to Asian 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 thelong standing association of an internationally renowned financial institution like the AsianDevelopment Bank further enhances our image as a truly 'World Class Investment Bank'.

Our Mission - To provide Credible, Professional and Customer Focused world-classinvestment banking 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.


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SBI Capital Markets Limited

No. 1 in Asia Pacific for Project Advisory. Rating by Thomson Project FinanceInternational.

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.

Associates Bank

State Bank ofBikaner &Jaipur

State Bank ofSaurashtra

SBI Factors &Comm. ServicesLtd.

SBI (California) CommercialBank of IndiaLLC

State Bank ofHyderabad

State Bank ofTravancore

SBI FundsManagement(P) Ltd.

SBIInternational(Mauritius)

Ltd.

State Bank ofIndore

SBI CapitalMarkets Ltd.

SBI DFHI Ltd. Indo-NigerianMerchant Bank

State Bank ofMysore

SBICI BankLtd.

SBI LifeInsurance Co.

Ltd

Nepal SBIBank Limited


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Promoters Share: - Performance:-

Awards:-

Asia Pacific Bank of the Year Award 2009 for Leadership in Project Finance byThomson Reuters (pfi)

India Loan House 2009 for Leadership in Loan Syndication by Thomson Reuters (ifrAsia)

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


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SERVICES

Project Advisory & Structured Finance

SBICAP has built a formidable presence in the area of Project Finance Advisory and FundsSyndication with several prestigious mandates in almost every sector of the industry to itscredit.

Our product portfolio includes:

Project Appraisal Structured Finance and Syndication Infrastructure Project Advisory

Securitisation Debt & Equity Syndication

Capital Markets

Capital Markets Group handles transactions in the capital markets space across multiple

instrument 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, privateinvestments 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


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M&A and Advisory

The M & A product portfolio includes:

Mergers & Acquisitions Private Equity Foreign Currency Convertible Bonds (FCCB) Corporate Advisory , and Franklin Templeton

As a strategic partner, the State Bank Of India provide a broad and complimentary range ofservices to address the business needs. The expertise, insight and competitive rates in ForeignCurrency loans give an edge to your business.

The State Bank Of India invites you to use their comprehensive array of strategic andfinancial advisory services including mergers and acquisitions, Bilateral Foreign CurrencyLoans, Syndicated Loans and Reverse FDIs.

SBIs Merchant Banking Group is strongly positioned to offer perfect financial solutions to

your business. They specialize in the arrangement of various forms of Foreign Currency

Credits for Corporate. They provide the resources, convenience and services to meet your

needs by arranging Foreign Currency credits through:


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1.10 REVIEW OF LITERATUREA number of studies have been conducted from time to time to understand the different

aspects relating to primary market and merchant banking activities in India. However, mostof them have focused upon the primary market in India only. Research in the area of

merchant banking in India and its role in the primary market is very limited and that too is

descriptive in nature and deals with procedural aspects, organization and management and

marketing aspects of merchant bankers. A review of important studies is presented below:

Literature Survey

Verma (1990)

I conducted research on merchant banks in India with the purpose to analyse their

organization structure and management pattern and to assess their suitability for medium and

small size corporate and non corporate enterprises. The suitability of merchant banking

services in reducing investors risk and corporate capital structure has also been examined.

The information was collected from a sample of 32 merchant bankers through questionnaire

and the study covered the period 1978 to 1984.

The researcher found a number of weaknesses in the existing divisional form organization

and management pattern of merchant banks in India. This included deep concentration of

decision making power, lack of co-ordination, lack of appropriate skill, inadequate training

programme, strict dependence on the bureaucratic framework, blocked communication

channels and misdirected accountability. The study revealed that 90 percent of the resources

of all merchant banks were devoted only to the management of public issues.

A negligible performance of merchant banks was found in other areas of services including

loan syndication, merger and amalgamation, inter corporate investments and corporate

counselling. Further, merchant banking activities were found to have remained concentrated

with only a few top merchant bankers, while stock brokers managed very small sized issues

covering just 15% of the total amount of public issues.


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A good public response was found to the issues managed by category I merchant bankers

including merchant bankers of public sector banks, whereas the category II merchant bankers

which included private firms had the public response of second order.

The researcher highlighted the merchant banks contribution in causing risk reduction both

to investors (through portfolio management) as well as the industry (through project

counseling and corporate counseling). Empirical results also highlighted that corporate

enterprises which sought mer chant bankers assistance were financially sounder and less

prone to sickness as compared to those not assisted by the merchant banks.

Murthy (1993)

In his paper examined the cost of raising capital from the public issues floated during 1992-

93. During 1992-93, an amount of Rs. 4677.74 crore was raised through 514 public issues.

The estimated expenses on these issues were Rs. 473 crore. Analysis of 506 public issues

showed that issue expenditure as percentage of net public offer was 10.10% and the

proportion of issue expenses declined with the increase in offer size. The study found that

smaller projects tend to spend a higher proportion as issue expenditure compared to the larger

ones. The researcher also compared the cost of raising capital of issues through the OTC

(over the counter) route and regular stock exchange option and found that the cost of raising

capital through OTC route was lower than the issues that opted for regular stock exchange

route.

The study pointed out that no uniform format existed for reporting the issue expenditure in

the prospectus. The researcher has suggested that the total issue expenditure as percentage to

the total issue amount be reported prominently in the prospectus and abridged prospectus

cum application form.


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Shah (1995)

Conducted an empirical study on the data set of 2056 Indian IPOs listed on the BSE from

January 1991 to May 1995 with the objective to examine the under pricing of IPOs and to

establish the empirical regulari ties about India s IPO market. He examined six factors

underlying under pricing, namely asymmetric information between firms and investors,

fixing the offer price too early, the interest rate float, loss of liquidity on the amount paid at

issue date (liquidity premium), building loyal shareholders and merchant bankers rewarding

favoured clients as an incentive to under price. Empirical study found that the average price

on first listing day was 105.6% above the offer size, average delay between issue dates and

listing day was 11 weeks and weekly excess return on market index (BSE Sensex) was 3.8%.

The study further found that correlation between the volume of IPOs under pricing and the

return on BSE Sensex was positive, under pricing among the smaller issues was high, average

long run trading frequency of IPO was lower than A group companies and return on IPOs

during the first 200 trading days was more than market return.

A Few of literature are Form of banking where the bank arranges credit financing, but does

not hold the loans in its investment portfolio to maturity. A merchant bank invests its owncapital in leveraged buyouts, corporate acquisitions, and other structured finance transactions.

Merchant banking is a fee based business, where the bank assumes market risk but no long-

term credit risk. A common form of banking in Europe, merchant banking is gaining

acceptance in the United States, as more banks originate commercial loans and then sell them

to investors rather than hold the loans as portfolio investments. A banque d'affaire is a French

merchant bank, which has more powers than its British counterpart. The Gramm-Leach-

Bliley Act allows financial holding companies, a type of Bank Holding Company created bythe act, to engage in merchant banking activities.

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 deal with.

These fees include things like set-up, cancellation, and monthly minimum, and may be

negotiable based on your unique circumstances.

Once you have determined what your business will be charged for its merchant account, it s


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often a good idea to do a few sample calculations to work out your total credit card

processing costs during a good, bad, and average month.

Finally, you should read and double-check the contract, including small print and detailed

terms. Don t sign anything until you are confident that you understand all the fees,

minimums, termination clauses, a nd other details. It s important to keep in mind that

merchant 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 the Securities

and Exchange Board of India.

This will enable the company to carry out the entire range of merchant banki ng activities

ranging from public issue management to advisory services and underwriting of issues a

company 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 the areas of

mergers & acquisitions, pvt. equity placements, IPO s & high yield debt. We see specificopportunities in cross border M&A that would bring in strategic benefits and growth

opportunities for companies in the SME sector and we are already seeing good traction in this

area

India Infoline expects a significant number of small and medium-sized companies to be

turning to the capital markets and becoming involved in mergers and acquisitions.

The leading investment banks are targeting the large companies and the small and medium-

sized companies bracket is a good untapped growth opportunity.

The company recently acquired Marchmont Capital Advisors Ltd and entered into an alliance

with Marchmont International for exclusive services and non-compete in India.


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1.12 OBJECTIVES OF THE STUDY

To study the significance of Merchant Banking towards the development of the economy.

To familiarize with the various services provided by Merchant Bankers.

To evaluate the performance of Merchant Bankers, both activity performance and operationaland financial performance.

To understand the customers satisfaction level provided by the SBI merchant bankingservices

To analyze the functions of Merchant Banking in relation to rules and regulations of SEBI

To find out the growth potential of the Merchant Banking


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1.13 LIMITATIONS OF THE STUDYDue 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 2-4 public & private sector merchant banking

companies.

Sample size to be taken may not be the true representative of the population.

Sometimes, they may face the problem of sufficient capital to deal in securities which

stops them from getting proper returns.

Lack of proper skilled labour.

Problem in managing right kind of Merger & Acquisition.

Choosing the right kind of Capital Mix.

Giving proper knowledge to its clients about future strategies.


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CHAPTER - 2


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2.1 RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the research problem. It guides the

researcher to do the research scientifically. It contains of different steps that are generally

adopted by a researcher to study his research problem along with the logic behind them. Data

become information only when a proper methodology is adopted. The research methodology

includes the logic behind the methods we use in the content of our research study.

There are various types of research methods.

(i) Applied Research (ii) Exploratory Research (iii) Conclusive Research

(iv) Descriptive Research (v) Casual Research

2.2 RESEARCH DESIGN

A research design is the arrangement of conditions for collection and analysis data in a

manner that aims to combine relevance to the research purpose with economy in procedure.

The research design undertaken by researcher is descriptive research design.

The methodology involved in the design is mostly quantitative in nature. Descriptive

researcher Need with the research studies with a focus on the portrayal of the characteristics

of a group of individual or a situation .

2.3 TYPES OF RESEARCH DESIGN

Descriptive method is used to describe the expectations, opinion and views of the employees

in the Merchant bank


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2.3.1 DESCRIPTIVE METHOD:

Descriptive research is undertaken to describe the situation, community, phenomena,

outcome or programme. The main goal of this type of research is to describe the data and

characteristics about what is being studied. It is contemporary, topical and time bound. They

are relatively more structured and require a formal, specific and systematic approach to

sampling, collecting information, collating and testing the data to verify the research

assumptions. It is largely of a diagnostic nature without establishing the causality of the

relationship.

2.3.2 DESCRIPTIVE RESEARCH DESIGN:

Under descriptive research design we know there are two types of methods are normally used

they are:

1. Survey method

2. Observation method

For my analysis I have used the survey method. This method works by obtaining information

based on questioning of respondents. Respondents are asked a variety of questions regarding

their behavior, intentions, attitudes, awareness. Questions are basically asked either

verbally or in writing or both in same time. In this case I have decided to use the structured

questioner format and asked the questions both verbally and allowed them to write the

answers.

2.3.3 SAMPLING SIZE

The sample size selected for the study was 40 SME s . Ltd.


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2.3.4 SAMPLING TECHNIQUE

The study was conducted based on convenient sampling. It looks sample of 50 employees in

Diamond Engineering Pvt. Ltd.

2.4 METHODS OF DATA COLLECTION

2.4.1 PRIMARY DATA

For the main prospect of my report I have decided to use primary data analysis. For this I

have structured a small survey using the descriptive research design in the perspective of

recruitment and selection of the company using a Questionnaire model.

2.4.2 SECONDARY DATA

In this report I have basically focused on secondary data analysis. This means the information

of this report has been collected from Human Resource Manual, Magazines, Websites and

textbooks from various libraries.

2.5 DATA ANALYSIS TOOLS

2.5.1 PERCENTAGE ANALYSIS

Percentage method refers to a specified kind which is used in making comparison between

two or more series of data. Percentages are based on descriptive relationship. It compares

the relative items. Since the percentage reduces everything to a common base and

thereby allow meaning comparison.

Percentage = Number of respondents x 100 ___________________


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Total no of respondents

2.5.2 TABLES AND CHARTS

Various kinds of tables and charts are used to represent the survey findings and

result. Charts like pie diagram, bar diagram are used.

2.5.3 BAR DIAGRAM

This diagram consists of a series of rectangular bars standing on a common base. The lengthof the bars is proportional to their magnitude. The comparison among the bars is based on

lengths. There are three types of bar diagram.

Simple bar diagram Multiple bar diagram Component bar diagram

2.6 DATA COLLECTION PROCEDURE

The sources of recruitment are broadly divided into Internal Sources and Externals

Sources. Internal Sources are the sources within organizational pursuits. The primary data is

collected with direct interaction with candidates through questionnaire and personal

interview. The questionnaire consists of closed ended and open-ended questions. Externals

Sources are sources outside organizational pursuits.


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CHAPTER 3


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DATA ANALYSIS & INTERPRETATION

Q1. Do you take any financial services from bank?

Sr. No. Take Financial Service Number of clients Percentage

1 Yes 18 45%

2 No 22 55%

Total 40 100%

GRAPH

Interpretation

Out of total respondents, 45% respondents have taken Financial Service and rest 55%

respondents have not taken the Financial Service.

45%

55%

Percentage Of Clients Taking FinancialServices

Yes

No


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Q2. Do you Know about Merchant Banking?

Sr. No. Know about Merchant Nos. Percentage

1 Yes 16 40%

2 No 24 60%

Total 40 100%

GRAPH

INTERPRETATION

Out of total respondents, 44% respondents Know about merchant banking and rest 56%

respondents don t know about merchant banking.

0%

10%

20%

30%

40%

50%

60%

Yes NoPercentage 44% 56%

P e r c e n t a g e

Percentage of clients who are aware ofMerchant Banking


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Q3. Are you satisfied with the services provided by your bank?

Sr. No. Satisfied Nos. Percentage

1 Yes 17 42.5%

2 No 23 57.5%

Total 40 100%

GRAPH

INTERPRETATION

Out of total respondents, 42.50% respondents areSatisfied and the rest 57.50% respondents

are unsatisfied.

Yes

No

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

P e r c e n t a g e

Yes NoPercentage 42.50% 57.50%

Percentage Of Satisfied Clients


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Q4 Which bank would you prefer to take Merchant Banking Services?

Sr. No Bank Percentage

1 ICICI 20

2 SBI 35

3 PNB 20

4 BOI 15

5 Other 10

GRAPH

INTERPRETATION

A large percentage of clients takes financial services from SBI.

20%

35%20%

15%

10%

Favourable Merchant Banking Institution

ICICI

SBI

PNB

BOI

Other


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Q 6 What is the position of Public Sector Merchant Banking in India?

Sr.no Position Percentage

1 Good 40%

2 Normal 55%

3 Bad 5%

Total 100%

GRAPH

INTERPRETATION

Out of total respondents, 40% respondents Say Good, 55% Say Normal and rest 5%

respondents say bad.

40%

55%

5%

Image Of Public Sector Merchant Banks

Good

Normal

Bad


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Q 8 Are you satisfied by Security margin of the bank?

Sr.No. Satisfaction by Security Margin Nos. Percentage

1. Yes 32 80%

2. No 8 20%

Total: 40 100%

GRAPH

INTERPRETATION

Out of total respondents, 80% respondents Satisfied and rest 20% respondents are unsatisfied.

80%

20%

Percentage Of Satisfaction by Security Margin

Yes No


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Q 9 Are you satisfied with timely services provide by banks?

Sr. No. Depends on M.B Nos. Percentage

1 Yes 28 70%

2 No 12 30%

Total 40 100%

GRAPH

INTERPRETATION

Out of total respondents, 75% respondents Say that They are timely heared and rest 25% say

that They are not timely served by merchant banking.

70%

30%

Depends On The Merchant BankYes No


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Q10. Will it differ from investment banks?

Sr. No. Difference Nos. Percentage

1 Yes 30 75%

2 No 10 25%

Total 40 100%

GRAPH

INTERPRETATION

Out of total respondents,75% respondents Think that It is differ and rest 25% respondents

don t Think so .

0

10

20

30

40

50

60

70

80

Yes No

Is Merchant Banking Different fromInvestent Banking

Percentage


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11. Which is the best service provided in a Public sector Merchant Bank?

IN PUBLIC SECTOR MERCHANT BANKING Numbers Percentage

Capital Restructuring 14 35%Venture capital financing 8 20%

Credit syndication 18 45%

Others 0 0%

Total 40 100%

GRAPH

INTERPRETATION

In a Public Sector Merchant Bank the Service mostly used is Credit Syndicatiom at a rate of

45% followed by Capital Restructuring and Venture Capital Finance at a rate of 35% and

20% respectively.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

CapitalRestructuring

Venture capitalfinancing

Creditsyndication

Others

Series1 35% 20% 45% 0%

P e r c e n t a g e

Service Mostly Used in Public MB


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3.2 HYPOTHESIS ANALYSIS

Service provided vs banking sectors in merchant banking

SERVICE PROVIDED PUBLIC PRIVATE TOTAL

CAPITAL RESTRUCTURING 8 5 13

VENTURE CAPITAL FINANCING 4 8 12

CREDIT SYNDICATION 10 5 15

TOTAL 22 18 40

NULL HYPOTHESIS : Willingness to take up Public or Private merchant banks as

an a Merchant Banking option is independent of the services provided by the merchant banks

ALTERNATIVE HYPOTHESIS : Willingness to take up Public or Private

merchant banks as a Merchant Banking option is dependent of the services provided by the

merchant banks


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CALCULATION:

E1=22*13/40=7.15

E2=18*13/40=5.8

E3=22*12/40=6.6E4=18*12/40=5.4

E5=22*15/40=8.25

E6=18*18/40=6.75

CALCULATED VALUE X^2 = 3.0019

TABLE VALUE X^2 = 5.991

DEGREE OF FREEDOM = (r-1)(c-1)

= (3-1)(2-1)= 2*1 =2

DEGREE OF FREEDOM = 2 (@ 5% Significant level)

Observed Frequency (Oi) ExpectedFrequency (Ei)

(Oi-Ei) (Oi-Ei)^2 (Oi-Ei)^2/Ei

8 7.15 0.85 0.7225 0.1010

5 5.8 -0.8 0.64 0.1103

4 6.6 -2.6 6.76 1.0242

8 5.4 2.6 6.76 1.0242

10 8.25 1.75 3.062 0.3711

5 6.75 -1.75 3.062 0.3711

Total 3.0019


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INFERENCE:

Since table value is greater than the calculated value Null Hypothesis is

accepted. Willingness to take up Public or Private merchant banks as a merchant banking

option is independent of the services provided by the merchant banks.


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CHAPTER 4


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4.1FINDING

80% of the respondents treat SBI caps as a Merchant Banking Service option

While dealing with the clients, it is found that medium level entreprenuers are moreInterest in Merchant banking Services

Business sector feels that Merchant banking is an important criterion in their fieldofwork.

The clients would like to invest their money where they would get more Security

The willingness to take up SBICaps Merchant banking as an investment option is

independent of the services provided by them.

Mutual Fund objectives and respondents categories are found to be independent.

Due to liberalization of economy the scenario has changed as many private Merchant

Banking companies have entered in the industry since then.

SBI merchant banking companies services are facing stiff competition from the

private sector companies.

Market Share

Private Sector= 44%

Publice Sector=56%

44%56%

Comparision Between

Private and PublicSector Merchant BankPrivate Public


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Year wise participation of merchant bankers in the management of public issues ofequity showed that the majority of small merchant bankers were involved in one ortwo issues only during the year.

SBI Capital Markets Ltd. was the preferred choice of maximum issuers (43 innumbers). This was followed by Enam Securities Ltd with 35 equity issues.224 KarvyInvestor Services Ltd. managed 34 equity issues. ICICI Securities Ltd, UTI SecuritiesLtd and Kotak Mahindra Capital Co. Ltd managed 32, 33and 30 public issuesrespectively.

SBI Capital Markets Ltd was the preferred choice of public and private banksfor themanagement of their public issues of equity. Out of 40 public issues of equity floated

by public sector banks in India during the period under review,SBI Capital MarketsLtd was the lead manager/BRLM/co-lead manager in as many as 31 equity issues.

In most of the cases, the issuer 225 companies appointed their own subsidiarycompany/sister concern to advise on their equity issue.

With the exception of SBI Capital Markets Ltd and Canara Bank, no other publicsector bank performed a significant role in the public issue managementactivities. Other public sector banks subsidiaries/merchant banking divisions whoshowed their presence in public issue management were BOB Capital Markets Ltd, All

bank Finance Ltd.


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4.2 SUGGESTIONS AND RECOMMENDATIONS

The performance of the a Merchant Bank depends on the services provided by the MerchantBankers. But the future is uncertain. So, the SBI Caps (State Bank Of India Capital Services)should take the following steps: -

Try to reduce fund charges, administration charges and other charges which would tohelp gain more clients.

Different campaigns should be launched to educate people regarding MerchantBanking.

From the findings, it is found that, the security is the main criteria for theinvestors. It is suggested that this aspect would be reinforced whileaccessing the clients.

The people do not want to take risk. The Merchant banks should come up with morerisk free services so that the risk becomes minimum. This will lure more and more

people to take Merchant Banking Services.

The expectation of the people from the Merchant Bank is high. So, a blue print of the business services to pe provided should be prepared taking into consideration theexpectations of the people.

.


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CHAPTER 5


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5.1SUMMARY AND CONCLUSIONS

The company wants to know the perception of investors, who perceive Merchant Banking as

an investment option. The company would like to create the awareness of SBI Merchant

Banking. This study would assist. In the form of an infrastructure, for the forthcoming

branches in developing their services towards the Investors.

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.


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5.2 BIBLIOGRAPHY

BOOKS

S.P.Gupta, Statistical Methods , Sultan Chand & Sons Vol 1 pp.E -3.1,(E-4.1 E-4.15), E-13.5.

S.P. Gupta, Statistical Methods , Sultan Chand & Sons Vol 2 pp.A -4.1.

Beri G.C., Marketing Research . New Delhi, Tata Mc Graw Hill Pub, Edition II, pp.245-260.

Donald S.Tull, Marketing Research Measurements and Methods , Tata Mc Graw Hill, pp.310-312.

Financial Institutions & Market By Shashi K. Gupta, Nisha Aggarwal

WEBSITES

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.canmoney.in
http://www.google.com/newshttp://www.google.com/newshttp://www.answer.com/http://www.answer.com/http://www.emissarycapital.com/http://www.emissarycapital.com/http://www.wikipedia.com/http://www.sebi.gov.in/http://www.sebi.gov.in/http://www.asialaw.com/Article/1988860/Merchant-Banking.htmlhttp://www.asialaw.com/Article/1988860/Merchant-Banking.htmlhttp://www.sebi.gov.in/http://www.wikipedia.com/http://www.emissarycapital.com/http://www.answer.com/http://www.google.com/news


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ANNEXURE Annexure1

Respondents 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. Are you satisfied with the services provided by your bank?

(a) Yes ( ) (b) No ( )

4. Which bank would you prefer to take Merchant Banking Services?

(a) ICICI ( ) (b) SBI ( )

(c) PNB ( ) (d) BOI ( )

(e) OTHER(specify)


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5. What is the position of Merchant Banking in Private Sector?

(a) Good ( ) (b) Normal ( )

(c) Bad ( )

6. What is the position of Merchant Banking in Public Sector?

(a) Good ( ) (b) Normal ( )

(c) Bad ( )

7. What type of security have you deposited/you will deposit with the banks

(a)Bank security ( ) (b) Gold ( )

(c) Land paper ( ) (d) Third party security ( )

8. Are you satisfied by Security margin of bank?

(a) Yes ( ) (b) No ( )

9. Non-financial institution depends on merchant banking. Are you satisfied?

(a) Yes ( ) (b) No ( )

10. Will it differ from investment banks?


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(a) Yes ( ) (b) No ( )

11. Which is the best service provided in a Public sector Merchant Bank?

(a) Capital restructuring ( )

(b) Venture capital financing ( )

(c) Credit syndication ( )

(d) Others ( )

12. Which is the best service provided in a Private sector Merchant Bank?

(a) Capital restructuring ( )

(b) Venture capital financing ( )

(c) Credit syndication ( )

(d) Others ( )


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ANNEXURE-2

MERCHANT BANKING PLAYERS IN INDIA


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a study on the performance of the sbi merchant banking

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