| It may include the following services:
(i) Examination of the capital structure of corporate unit to decide the extent of capitalisation.
(ii) In case of bonus issue, it helps the clients in preparing the Memorandum for Controller of Capital Issue (CCI) and in obtaining his consent.
(iii) For companies governed by Foreign Exchange Regulation Act (FERA), merchant bankers suggest an alternative capital structure which is in conformity with the legal requirements. It also advises company on disinvestment issues to their maximum advantage.
(iv) For sick units, it suggests appropriate capital structure which will help the unit in revival. It also advise as to the extent and means of bringing fresh capital into business.
(v) Merchant bankers also render advise on mergers, takeovers and amalgamations and help in their implementation.
(vi) Merchant bankers also identify the areas of diversification of the existing production systems and suggest various strategies to widen and restructure the capital base accordingly.
Function # 4. Portfolio Management:
Merchant banks offer services not only to the companies issuing the securities but also to the investors. They advise their clients, mostly institutional investors, regarding investment decisions as to the quantum of amount of security and the type of security in which to invest.
Merchant banks render necessary services to the investors by advising on the optimum investment mix, taking into account factors like:
(i) Objectives of the investment.
(ii) Tax bracket applicable to the investor.
(iii) Need for maximising return.
(iv) Capital appreciation etc.
Merchant bankers even undertake the function of purchase and sale of securities for their clients so as to provide them portfolio management services. Some merchant bankers are managing mutual funds and off share funds also.
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