Course OutlineDr. Gaur Hari Singhania Institute of Management and Research, Kanpur

Merchant Banking and Financial Service (405F)Trimester 4th – PGDM – Batch 2012-14 (FT)

(HALF CREDIT)Faculty: Amit Trivedi;

Email: amit.trivedi.iit@gmail.com;Text Book: Merchant Banking and Financial Services (2011)Author: Dr. S GurusamyPublisher: Tata McGraw Hill Education Pvt Limited, New Delhi=============================================================================================A. Course ObjectiveThe students attending the course should be able to

1. Know about merchant banking services and financial services2. Understand the underlying principles and mechanism that drive the industry3. Able to connect MB&FS activities with business entity4. Become aware about the state of financial services in India

B. Teaching Pedagogy

There will be 28 class room lectures to cover the required concepts. There are assignments, graded quizzes, and end-trimester examination. Class attendance and participation in class discussion is very important for understanding of this course. The class participants are expected to prepare notes, such material will be helpful in scoring good marks in quizzes/exams.

C. Detailed Session Plan

UnitSession

No.Topic & Contents Chapter No. of prescribed

text book / Page Nos.ActivityDetails

1 Introduction to Merchant Banking

1 Merchant Banking and Its needChapter 1, Page 1 to 11

2Understanding business need for merchant banking

2Raising Capital for New and Existing Businesses- Private Funding

3 Seed funding, Angle Investment Class Notes Assignment 1* due

4 Raising Venture capital Chapter 27, Page 397-410

5 Private Equity and Role Class Notes

6 Credit Syndication Service Chapter 16, Page 233-246

3Raising Capital for Business- Public Funding

7 Regulatory Framework- SEBI Chapter 2, Page 13-26Allotment of Presentation Topics

8 Various Instruments for raising capital Chapter 9/10, Page 91-125

9 Public Issues- Process and Documents Chapter 2, Page 27-30Chapter 3, Page 33-38Chapter 4, Page 39-50

Submit Assignment 1

10 Public Issues- Process and Documents

11 Pricing of Equity and Debt instruments Chapter 5, Page 53-57 Announced Quiz 1

12 Management of public issue Chapter 6/7, Page 59-83

Assignment 2# due

13 Management of public issue

14 Stock Exchange- Roles and comparison Chapter 12/13, Page 157-

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4Adding Credibility to Business- Credit Rating

` 15 Concept of Credit Rating- 3rd party

Chapter 25, Page 361-37816 Process of Credit rating Assignment 3^ due

17 Major Credit rating agencies Announced Quiz 2

5Financial Services in operating a business

18 LeasingChapter 18, Page 261-276

Submit Assignment 2

19 Leasing

20 Bill Financing

Chapter 20, Page 287-29421 Bill Financing

22 Bill Financing

23 Factoring- Mechanism and principlesChapter 21, Page 297-311

24Factoring and off balance-sheet financing, In India

25Hire Purchase- Mechanism, Profit preposition and risk

Chapter 22, Page 322-326 Submit Assignment 3

6Taking Business to Next Stage- Acquisitions and Mergers

26 M&A- advisory servicesChapter 14, Page 191-210

Announced Quiz 3

27 M&A- In India

28 Revisiting the concepts Class Notes

*Assignment 1 (10 marks):There would be 3 parts to this assignment:

a. You are required to present a summary of a new venture that you have planned. You are required to write a short write up covering the following areas (planning for 3 years).

1. Product or service to be offered2. Target market/segments and key marketing approach and expenses, separately mention the customer acquisition

cost3. Sourcing of resources and expected costs4. Capital expenses plan and operational expenses plans with numbers5. Cash flow from business activity

The write-up should be crisp and not exceed 3 sides of A4 in font size 11 or 12 of Times New Roman script.b. Present a 3 year forecast for your business in a balance sheet, income statement and cash flow statementc. You have to prepare 2 minute video presenting your idea to a venture capitalist. This is called elevator pitch.

# Assignment 2 (10 marks)You must have read about the controversy between Sahara group companies and SEBI in the media. You are required to research the controversy referring to publically available material.

a. You have to submit a write-up on the following:1. Facts (details) of fund raising by Sahara group2. SEBI’s view on alleged violations- mention the guidelines/rules/laws those might have been compromised3. Your opinion on having regulations on fund raising- why are regulations important?

The write-up should be crisp and not exceed 2 sides of A4 in font size 11 or 12 of Times New Roman script.^ Assignment 3 (10 marks)You must have read that IPO activity is much higher in the developed countries such as US compared to developing countries like India. Taking US and India as representative countries, you have to submit a report containing the following parts:

1. Compare the IPO activity on the following parameters and comment:a. Number of IPOs per billion dollar of GDP

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Course Outlineb. IPO volume per billion dollar GDPc. Daily trading volume at top 2 exchanges as percentage of GDP for both countriesd. Your opinion on the differences

2. Based on your observation in part 1 and otherwise, suggest the changes needed in Indian laws and rules to better the situation. The write-up should be crisp and not exceed 2 sides of A4 in font size 11 or 12 of Times New Roman script.

D. Evaluation Details Final evaluation will include end term exam of 45 marks. Internal Evaluation shall be done out of 60 marks. It is based on the student’s performance in Assignment, Quiz-cum-Class

Test, Presentation, Classroom Participation and Attendance. The marks assigned for each activity are as follows:

Attendance = 10 marks Assignment (3 assignment * 10 marks each) = 30 marks 2 Quizzes (both announced; 2*10 marks) = 20 marks

Total 60 marks

E. Recommended Websites:

1. This Wikipedia link is not authoritative in claims but presents a good readable story about the history of merchant banking: http://en.wikipedia.org/wiki/Merchant_bank

2. Given here is the link to SEBI guidelines on merchant banking in India. The regulations were issued in 1992 and subsequently modified. http://www.sebi.gov.in/acts/Merchantbankers.pdf

3. Ethics is a burning issue, here is a link on disclosure: http://www.sebi.gov.in/commreport/IntegratedDisclosures.pdf 4. A government of India website on financial services: http://financialservices.gov.in/

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