Project Finance

PROJECT REPORT
Student Name:Vasant Patil Batch & Section: 2012-2013 Company/Institution Name: Punjab National Bank Title of the report: Financial Appraisal of project finance by Punjab National Bank Area of research: Banking Internship Duration: 2nd May 2013 to 30th June Name & Logo of Institute: Alkesh Dinesh Mody Institute ofFinancial and Management Studies
Alkesh Dinesh Mody Institute for Financial & management Summer Internship Project Report (2013)
University of Mumbais Alkesh Dinesh Mody Institute of Financial and Management Studies Summer Internship Certificate This is to certify that Mr. Vasant Patil M.M.S. (Finance) Batch 2012-14 of Alkesh Dinesh Mody Institute of Financial And Management Studies has successfully completed his summer internship during 2nd may 2013 to 30th June 2013. The project was undertaken by him at Punjab National Bank titled Financial Appraisal of Project Financed by Punjab National Bank under the guidance of Mr. N.K. Ramakrishnan, Senior Manager (Credit). The project fulfills all the stated criteria and the student findings are his original work. I hereby certify his work is good to the best of my knowledge.
Director Dr. S. Ratnaparkhi
Alkesh Dinesh Mody Institute of finance and management Summer Internship Project Report (2013)
Vasant Patil
Acknowledgement
I would like express my sincere thanks to Punjab National Bank for giving me the opportunity to do my summer training with the organization & for providing opportunity to work on a challenging project. I would like to extend my gratitude to various people who provided their continuous support during these two months of our Project. I express my sincere thanks to Mr. N.K. Ramakrishnan Sr. Manager (Credit), Circle Office Bandra Kurla Complex, for helping me and guiding me to understand the organizational process of Project Finance through my internship process & geared me to extract the best. I would like to thanks staff of Credit Department as well as Rating Department of the Bank. I would like to thank Mr. Sanjay Chauhan Sr. Manager (HRD) to giving me this opportunity to work in the precise bank of the country.
My sincere thanks to Prof. SmitaShukla, a highly esteemed professor, whose precious suggestion, constructive guidance has been indispensible in the completion of my project. She has been a source of inspiration to me and I am indebted to her for initiating me in the project.
I would also like to thank teaching, non-teaching staff and all who had directly or indirectly helped me to complete my project.
Vasant Patil
Vasant Patil
Table of Contents
Executive Summary...................................................................................................................4 Introduction...............................................................................................................................5 Objective & Methodology.........................................................................................................6 Sector Overview........................................................................................................................7 Company Overview..................................................................................................................10 Organizational structure............................................................................................................11 Theoretical Background for the project....................................................................................13 Advantages and Disadvantages................................................................................................14 Project Phases...........................................................................................................................17 Financing sources used in project financing.............................................................................18 Participants in project Financing..............................................................................................20 Process of Project Finance........................................................................................................21 The Project Company...............................................................................................................22 Project Company Agreements..................................................................................................23 Project Risks.............................................................................................................................28 Risk Minimization Process.......................................................................................................30 Process of Sanctioning..............................................................................................................31 Pre-sanction Process.................................................................................................................32 Case Study................................................................................................................................37 Recommendations & Limitation..............................................................................................56 An Assessment of Internship....................................................................................................57 Conclusion................................................................................................................................58 Bibliography.............................................................................................................................59
Vasant Patil
Executive Summary
Financial Appraisal of the Project Financed By PNB, MUMBAI
This project report mainly consists of the financial appraisal of the project financed by Punjab national Bank. Project finance is a financing which is repaid solely out of cash flows from a specific asset and secured by just that asset and its contracts. Lenders do not have recourse to the owners of the project for repayment of the debt. It entails allocation of risks to entities best equipped to handle that risk. Such project is appraised considering various factors which are important from the lenders point of view. The project undertaken was to sanction of term loan of Rs. 50 Crores being part finance of total debt requirement of Rs. 126 Crores for setting up a 150,000 TPA Coal Tar distillation plant at Halkarni, Maharashtra at total cost of Rs. 189 Crores, proposed to be funded by DER of 2:1 at the rate of 12.75% repayable in 27 equal quarterly installments commencing from 31.12.2014 with total term of 8 years & 10 Months. The financials of the project are studied and various interpretations were derived to arrive at certain conclusion for the acceptance of the project. The balance sheet, profit or loss statements and cash flow statements were analyzed. Ratio analysis helped to evaluate the project as viable and the liquidity position of the firm isgood and it is maintaining the standard ratio. Debt Equity ratio is in decreasing trend, it shows that the firm is reducing itsliability portion by paying the loan year on year so the financial risk less. The project may face various risks. These risks and their mitigation are also taken under consideration.
Vasant Patil
Introduction
As a part of curriculum, every student studying MMS has to undertake a project on a particular subject assigned to him/her. Accordingly I have been assigned the project work on the study of analysis of project finance in Banking Sector. As it is rightly said that finance is the life blood of every business so every business need funds for smooth running of its activities and bank is the one of the source through which the business gets fund, before financing the bank appraise the project and if the projects meet the requirement of the rules than only they will finance. Project financing is commonly used as a financing method in capital-intensive industries for project requiring large investment of funds, such as the construction of power plants, pipeline, transportation system, mining facilities, industrial facilities and heavy manufacturing plants. The core area of this project focuses on the financial appraisal of ABC chemicals pvt. LTD, who are going to start Tar coal Distillation plant at Halkarni, Maharashtra. The financial projections and finding are discussed and the project is evaluated on various parameters. The feasibility study consists mainly of ration analysis. On the basis of all this analysis and various observations, recommendations are suggested and conclusions are derived.
Vasant Patil
Objective and Methodology

Main objective Financial appraisal of project financed by Punjab National Bank
Sub Objectives:
1. To know the projects financed by Punjab National Bank 2. To know the policies of Punjab National Bank towards project financing 3. To know the Risks involved in project finance 4. To appraise the projects using financial tools 5. To know the measures taken by bank when the clients fail to repay the amount
Methodology:
Data collection method: The report will be prepared mainly using secondary data viz, Primary Data: Meetings with the project guide and staff members. Meetings and discussions with raters at PNB. Meetings with various other department head.
Secondary Data: www.pnbindia.com PNB Book of instructions PNB Compendium
Vasant Patil
Sector overview
Banking Industry History of banking in India Without a sound and effective banking system, India cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades Indias banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons for Indias growth. The governments regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India.
Reserve Bank of India
Scheduled Banks
Commercial Banks
Coperatives
Foreign banks
Regional Rural Banks
Public Sector Banks State Bank of India and Associate banks Other Natinalised bank
Private Sector Banks
Urban Cooperative
Old
State Cooperative
New
Figure 1: Overview of Banks
Vasant Patil
8 The first bank in India, though conservative, was established in 1786. From 1786 tilltoday, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks. Nationalization of Indian Banks and up to 1991 prior to Indian Banking sector Reforms. New phase of Indian Banking System with the advent of IndianFinancial & Banking Sector Reforms after 1991. Phase I The General Bank of India was set up in the year 1786. Next came the Bank of Hindustanand Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
ofBombay(1840)andBank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeanshareholders.In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, IndianBank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.During the first phase the growth was very slow and banks also experienced periodicfailures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline thefunctioning and activities of commercial banks, the Government of India came up withThe Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of Indiawas vested with extensive powers for the supervision of banking in India as the CentralBanking System.In those days, public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postaldepartment was comparatively safer. Moreover, funds were largely given to traders. Phase II Government took major steps in the form of Indian Banking Sector Reform after independence.In 1955, it nationalized Imperial Bank of India with extensive banking facilities on alarge scale especially in rural and semi-urban areas. It formed State Bank of India to actas the principal agent of RBI and to handle banking transactions of the Union and stategovernment all over the country.Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19thJuly 1969, major process of nationalisation was carried out. It was the effort of the thenPrime Minister of India, Mrs. Indira Gandhi that 14 major commercial banks in the countrywere nationalized.Second phase of
Vasant Patil
9 nationalisation Indian Banking Sector Reform wascarried out in 1980 with seven more banks. This step brought 80% of the bankingsegment in India under Government ownership. The following are the steps taken by the Government of India to Regulate BankingInstitutions in the Country: 1949: Enactment of Banking Regulation Act. 1955: Nationalisation of State Bank of India. 1959: Nationalisation of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalisation of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalisation of seven banks with deposits over 200 crores.
After the nationalization of banks, the branches of the public sector bank India rose toapproximately 800% in deposits and advances took a huge jump by 11000%. Bankingin the sunshine of Government ownership gave the public implicit faith and immenseconfidence about the sustainability of these institutions. Phase III This phase has introduced many more products and facilities in the banking sector as part of the reforms process. In 1991, under the chairmanship of M Narasimham, a committee was set up, which worked for the liberalization of banking practices. Now, the country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking are introduced. The entire system became more convenient and swift. Time is given importance in all money transactions. The financial system of India has shown a great deal of resilience. It is sheltered from crises triggered by external macroeconomic shocks, which other East Asian countries often suffered. This is all due to a flexible exchange rate regime, the high foreign exchange reserve, the not-yet fully convertible capital account, and the limited foreign exchange exposure of banks and their customers.
Vasant Patil
10
Company overview
Punjab National Bank at a Glance Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act, with its office in Anarkali Bazaar, Lahore. The founding board was drawn from different parts of India professing different faiths and a varied back-ground with, however, the common objective of providing country with a truly national bank which would further the economic interest of the country. The board first met on 23 May 1894.The bank opened for business on 12 April 1895 in Lahore. PNB has the distinction of being the first Indian bank to have been started solely with Indian capital that has survived to the present. With over 72 million satisfied customers and 5937 domestic branches, PNB has continued to retain its leadership position amongst the nationalized banks. The Bank enjoys strong fundamentals, large franchise value and good brand image. Mission Statement: "Banking for the unbanked" Vision Statement: To be a Leading Global Bank with Pan India footprints and become a household brand in the Indo Gangetic Plains providing entire range of financial products and services under one roof"
Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to have been started with Indian capital, Punjab National Bank has continuously strived for growth in business which at the end of June 2012 amounted to Rs.6,79,823 crore. PNB is the largest nationalised Bank in the country in terms of Branch Network, Total Business, Advances, Operating Profit and Low Cost CASA Deposits. The CASA deposits share to the Total Deposits of the Bank was at 35.6% as on June 2012. Bank achieved a Net Profit of ` 1246 crore during the Q1 FY13. Bank also has a strong capital base with Capital Adequacy Ratio of 12.57% as on June12 as per Basel II with Tier I and Tier II capital ratio at 9.33% and 3.24% respectively. Punjab National Bank continues to maintain its frontline position in the Indian Banking industry. The performance highlights of the Bank in terms of business and profit are shown below: Rs. In Crore Parameters Operating Profit Net Profit Deposit Advance Total Business Mar'10 7326 3905 249330 186601 435931 Mar'11 9056 4433 312899 242107 555005 Mar'12 10614 4884 379588 293775 673366 CAGR (3 yearly%) 23.10 16.47 21.86 23.83 22.71 June11 2474 1105 324097 242908 567005 June12 2841 1246 385355 294468 679823 YOY Growth% 14.8 12.8 18.9 21.2 19.9
Vasant Patil
11
ORGANISATIONAL STRUCTURE Bank has its Corporate Office at New Delhi and supervises 68 Circle Offices under which the branches Function. The delegation of powers is decentralized up to the branch level to facilitate quick decision making.
Head Office
FGM Offices
Circle Offices
Branches
Vasant Patil
12 A typical Hierarchy of a bank has been shown below:

Chairman Executive Director Chief Genaral Manager Genaral Manager Deputy Genaral Manager Assistant General Manager Chief Manager Senior Manager Manager Officer Clerical/ Subordinate
Vasant Patil
13
Theoretical Background for the project work

Project Finance Introduction While riding on a high-speed train through India, Europe, or Taiwan, a passenger may see massive wind turbines scattered throughout the countryside. Marveled by the landscape, the passenger may take a snapshot on her phone camera and send it to her family. Without realizing it, the passenger is likely to have benefitted from infrastructure projects that have been financed by a mechanism called project finance. The high-speed rail, the wind turbine, and the telecommunication towers are all large and complex infrastructure undertakings. Sometimes such projects are made possible by traditional financial methods; increasingly, however, infrastructure projects are financed by a mechanism that engages a multitude of participants including multilateral organizations, governments, regional banks, and private entities. In project finance, participants negotiate amongst themselves to spread risks associated with an undertaking, thereby increasing the chances for success in developing vital infrastructure projects for that country and its population. Meaning Project financing involves non-recourse financing of the development and constructionof a particular project in which the lender looks principally to the revenues expected to be generated by the project for the repayment of its loan and to the assets of the projectas collateral for its loan rather than to the general credit of the project sponsor. Rationale Project financing is commonly used as a financing method in capital-intensiveindustries for projects requiring large investments of funds, such as the construction of power plants, pipelines, transportation systems, mining facilities, industrial facilitiesand heavy manufacturing plants. The sponsors of such projects frequently are notsufficiently creditworthy to obtain traditional financing or are unwilling to take therisks and assume the debt obligations associated with traditional financings. Projectfinancing permits the risks associated with such projects to be allocated among anumber of parties at levels acceptable to each party.
Vasant Patil
14
Advantages and Disadvantages of project finance

Non-recourse/limited recourse financing Non-recourse project financing does not impose any obligation to guarantee the repayment of the project debton the project sponsor. This is important because capitaladequacy requirements and credit ratings mean that assuming financialcommitments to a large project may adversely impact the companys financial structure and credit rating (and ability to access fundsin the capital markets). Off balance sheet debt treatment: The main reason for choosingproject finance is to isolate the risk of the project, taking it off balancesheet so that project failure does not damage the owners financialcondition. This may be motivated by genuine economic arguments suchas maintaining existing financial ratios and credit ratings. Theoretically,therefore, the project sponsor may retain some real financial risk inthe project as a motivating factor, however, the off balance sheettreatment per se will effectively not affect the companys investmentrating by credit rating analysts. Leveraged debt: Debt is advantageous for project finance sponsorsin that share issues (and equity dilution) can be avoided. Furthermore,equity requirements for projects in developing countries areinfluenced by many factors, including the country, the projecteconomics, whether any other project participants invest equity inthe project, and the eagerness for banks to win the project financebusiness. Avoidance of restrictive covenants in other transactions: Because theproject financed is separate and distinct from other operations andprojects of the sponsor, existing restrictive covenants do not typicallyapply to the project financing. A project finance structure permits aproject sponsor to avoid restrictive covenants, such as debt coverageratios and provisions that cross-default for a failure to pay debt, inthe existing loan agreements and indentures at the project sponsorlevel. Favorable tax treatment: Project finance is often driven by taxefficientconsiderations. Tax allowances and tax breaks for capitalinvestments etc. can stimulate the adoption of project finance. Projectsthat contract to provide a service to a state entity can use these taxbreaks (or subsidies) to inflate the profitability of such ventures. Favorable financing terms: Project financing structures can enhancethe credit risk profile and therefore obtain more favorable pricingthan that obtained purely from the project sponsors credit risk profile. Political risk diversification: Establishing SPVs (special purposevehicles) for projects in specific countries quarantines the projectrisks and shields the sponsor (or the sponsors other projects) fromadverse developments.
Vasant Patil
15 Risk sharing: Allocating risks in a project finance structure enablesthe sponsor to spread risks over all the project participants, includingthe lender. The diffusion of risk can improve the possibility of project success since each project participant accepts certain risks; however, themultiplicity of participating entities can result in increased costs whichmust be borne by the sponsor and passed on to the end consumer often consumers that would be better served by public services. Collateral limited to project assets: Non-recourse project finance loansare based on the premise that collateral comes only from the projectassets. While this is generally the case, limited recourse to the assetsof the project sponsor is sometimes required as a way of incentivizingthe sponsor. Lenders are more likely to participate in a workout than foreclose: The non-recourse or limited recourse nature of project finance meansthat collateral (a half-completed factory) has limited value in a liquidationscenario. Therefore, if the project is experiencing difficulties,the best chance of success lies in finding a workout solution ratherthan foreclosing. Lenders will therefore more likely cooperate in a workoutscenario to minimize losses. Disadvantages of project finance Complexity of risk allocation Project financings are complex transactionsinvolving many participants with diverse interests. This resultsin conflicts of interest on risk allocation amongst the participants andprotracted negotiations and increased costs to compensate third partiesfor accepting risks. Increased lender risk Since banks are not equity risk takers, the meansavailable to enhance the credit risk to acceptable levels are limited,which results in higher prices. This also necessitates expensive processesof due diligence conducted by lawyers, engineers and other
specializedconsultants. Higher interest rates and fees Interest rates on project financingsmay be higher than on direct loans made to the project sponsor sincethe transaction structure is complex and the loan documentationlengthy. Project finance is generally more expensive than classic lendingbecause of: the time spent by lenders, technical experts and lawyers to evaluatethe project and draft complex loan documentation; the increased insurance cover, particularly political risk cover; the costs of hiring technical experts to monitor the progress of theproject and compliance with loan covenant; thecharges made by the lenders and other parties for assumingadditional risks.
Vasant Patil
16 Lender supervision: In order to protect themselves, lenders will wantto closely supervise the management and operations of the project(whilst at the same time avoiding any liability associated with excessiveinterference in the project). This supervision includes site visits bylenders engineers and consultants, construction reviews, and monitoringconstruction progress and technical performance, as well as financialcovenants to ensure funds are not diverted from the project. Thislender supervision is to ensure that the project proceeds as planned,since the main value of the project is cash flow via successful operation. Lender reporting requirements: Lenders will require that the project company provides a steady stream of financial and technical information to enable them to monitor the projects progress. Such reporting includes financial statements, interim statements, reports on technical progress, delays and the corrective measures adopted, and various notices such as events of default. Increased insurance coverage: The non-recourse nature of project finance means that risks need to be mitigated. Some of this risk can be mitigated via insurance available at commercially acceptable rates. This however can greatly increase costs, which in itself, raises other risk issues such as pricing and successful syndication. Transaction costs may outweigh the benefits: The complexity of the project financing arrangement can result in a transaction whose costs are so great as to offset the advantages of the project financing structure. The time-consuming nature of negotiations amongst various parties and government bodies, restrictive covenants, and limited control of project assets, and burgeoning legal costs may all work together to render the transaction unfeasible.
Vasant Patil
17
Project phases
Project financings can be divided into two distinct stages: Construction and development phase here, the loan will be extended and debt service may be postponed, either by rolling-up interest or by allowing further drawdowns to finance interest payments prior to the operation phase. The construction phase is the period of highest risk for lenders since resources are being committed and construction must be completed before cash flow can be generated. Margins might be higher than during other phases of the project to compensate for the higher risks. The risks will be mitigated by taking security over the construction contract and related performance bonds. Operation phase here, the lenders will have further security since the project will begin to generate cash flows. Debt service will normally be tailored to the actual cash flows generated by the project typically a dedicated percentage of net cash flows will, via security structures such as blocked accounts, go to the lenders automatically with the remainder transferred to the project company. The terms of the loan will frequently provide for alternative arrangements should cash flows generate an excess or shortfall due to unanticipated economic or political risks arising.
Vasant Patil
18
Financing sources used inproject financing

Just as financial instruments range from debt to equity and hybrids suchas mezzanine finance, project finance can raise capital from a range ofsources. Raising financing depends on the nature and structure of the projectfinancing being proposed. Lender and investor interest will varydepending on these goals and risks related to the financing. Commerciallenders seek projects with predictable political and economic risks.Multilateral institutions, on the other hand, will be less concerned withcommercial lending criteria and will look towards projects that ostensiblysatisfy not only purely commercial criteria.In assembling a project financing, all available financing sources shouldbe evaluated. This would include equipment suppliers with access toexport financing; multilateral agencies; bilateral agencies, which may providefinancing or guarantees; the International Finance Corporation orregional development banks that have the ability to mobilize commercialfunds; specialized funds; institutional lenders and equity investors; andcommercial banks, both domestic and international. Equity Equity, as it is well known, is more expensive than debt financing. Domesticcapital markets provide access to significant amounts of funds for infrastructureprojects, although capital markets in developing countriesmay lack the depth to fund large transactions. However, this is generally limited totransactions whose sponsors are large, multinational companies. Developmental loan A development loan is debt financing provided during a projects developmentalperiod to a sponsor with insufficient resources to pursuedevelopment of a project. The developmental lender is typically a lenderwith significant project experience. Developmental lenders, who fundthe project sponsor at a very risky stage of the project, desire someequity rewards for the risk taken. Hence, it is not unusual for the developmentallender to secure rights to provide permanent financing for theproject as part of the development financing arrangement. Subordinated loans Subordinated loans, also called mezzanine financing or quasi-equity, aresenior to equity capital but junior to senior debt and secured debt.Subordinated debt usually has the advantage of being fixed rate, longterm, unsecured and may be considered as equity by senior lenders forpurposes of computing debt to equity ratios.
Vasant Patil
19 Unsecured loans Unsecured loans basically depend on the borrowers general creditworthiness,as opposed to a perfected security arrangement. Unsecuredloans will usually contain a negative pledge of assets to prohibit theliquid and valuable assets of the company from being pledged to a thirdparty ahead of the unsecured lender.The loan agreement may include ratio covenants and provisions calculatedto trigger a security agreement, should the borrowers financialcondition begin to deteriorate. An unsecured loan agreement may alsocontain negative covenants which limit investments and other kinds ofloans, leases debt obligations of the borrower. Secured loans Secured loans are loans where the assets securing the loan have value ascollateral, which means that such assets are marketable and can readilybe converted into cash.In a fully secured loan, the value of the asset securing the debt equals orexceeds the amount borrowed. The reputation and standing of the projectmanagers and sponsors, and the probable success of the project, allenter into the lending decision. The lending, however, also relies on thevalue of the collateral as a secondary source of repayment. The securityinterest is regarded by lenders as protection of loan repayment in the unlikely event the loan is not repaid in the ordinary course of business.Because of the security interest, a secured loan is superior since it ranks ahead of unsecured debt. Syndicated loans A syndicated loan is a loan that is provided to the borrower by two or more banks, known as participants, which is governed by a single loan agreement. The loan is arranged and structured by an arranger and managed by an agent. The arranger and the agent may also be participants. Each participant provides a defined percentage of the loan, and receives the same percentage of repayments. Bonds In recent years, the use of the bond market as a vehicle for obtaining debt funds has increased. Bond financings are similar to commercial loan structure, except that the lenders are investors purchasing the borrowers bonds in a private placement or through the public debt market. The bond holders are represented by a trustee that acts as the agent and representative of the bondholders. Bond purchasers are generally the most conservative source of financing for a project.
Vasant Patil
20
Participants in Project Financing:

Stakeholder Sponsors The equity investor(s) and owner(s) of the Project Company can be a single party, or more frequently, a consortium of Sponsors Subsidiaries of the Sponsors may also act as sub-contractors, feedstock providers, or offtaker to the Project Company Summary of role in a project financing
Procurer Only relevant for PPP - the Procurer will be the municipality, council or department of state responsible for tendering the project to the private sector, running the tender competition, evaluating the proposals and selecting the preferred Sponsor consortium to implement the project
Contractors The substantive performance obligations of the Project Company to construct and operate the project will usually be done through engineering procurement and construction (EPC) and operations and maintenance (O&M) contracts respectively
Feedstock provider(s) and/or More typically found in utility, industrial, oil & gas and petrochemical projects Off taker One or more parties will be contractually obligated to provide feedstock (raw materials or fuel) to the project in return for payment One or more parties will be contractually obligated to offtake (purchase) some or all of the product or service produced by the project Feedstock/Offtake contracts are typically a key area of lender due diligence given their criticality to the overall economics of the project (i.e. the input and output prices of the goods or services being provided)
Lenders Typically including one or more commercial banks and/or multilateral agencies and/or export credit agencies and/or bond holders
Vasant Patil
21
Process of Project Financing

Feasibility Study As one of the first steps in a project financing is hiring of a technical consultant and hewill preparea feasibility study showing the financial viability of the project. Frequently, a prospective lender will hire its own independent consultants to prepare an independent feasibility study before the lender will commit to lend funds for the project. Contents The feasibility study should analyze every technical, financial and other aspect of the project, including the time-frame for completion of the various phases of the projectdevelopment, and should clearly set forth all of the financial and other assumptionsupon which the conclusions of the study are based, Among the more important itemscontained in a feasibility study are: 1.Description of project 2.Description of sponsor(s). 3.Sponsors' Agreements. 4.Project site. 5.Governmental arrangements. 6.Source of funds. 7.Feedstock Agreements. 8.Off take Agreements. 9.Construction Contract. 10.Management of project. 11.Capital costs. 12.Working capital. 13.Equity sourcing. 14.Debt sourcing. 15.Financial projections. 16.Market study. 17.Assumptions.
Vasant Patil
22 The Project Company Legal Form Sponsors of projects adopt many different legal forms for the ownership of the project. The specific form adopted for any particular project will depend upon many factors, including: The amount of equity required for the project The concern with management of the project The availability of tax benefits associated with the project The need to allocate tax benefits in a specific manner among the project company investors.
The three basic forms for ownership of a project are: CorporationsThis is the simplest form for ownership of a project. A special purpose corporation may be formed under the laws of the jurisdiction in which the project is located, or it may be formed in some other jurisdiction and be qualified to do business in the jurisdiction of the project. General PartnershipsThe sponsors may form a general partnership. In most jurisdictions, a partnership is recognized as a separate legal entity and can own, operate and enter into financing arrangements for a project in its own name. A partnership is not a separate taxable entity, and although a partnership isrequired to file tax returns for reporting purposes, items which include of their income, allocated
gainlosses,deductionsandcreditsareallocatedamong the partners
share in computing their own individual taxes.Consequently, a partnership frequently will be used when the tax benefits associated with the project are significant. Because the general partners of a partnership are severally liable for all of the debts and liabilities of the partnership, a sponsor frequently will form a wholly owned, single-purpose subsidiary to act as its general partner in a partnership. Limited PartnershipsA limited partnership has similar characteristics to a general partnership except that the limited partners have limited control over the business of the partnership and are liable only for the debts and liabilities of the partnership to the extent of their capital contributions in the partnership. A limited partnership may be useful for a project financing when the sponsors do not have substantial capital and the project requires large amounts of outside equity.
Vasant Patil
23
Project Company Agreements

Depending on the form of Project Company chosen for a particular project financing, the sponsors and other equity investors will enter into a stockholder agreement, general or limited partnership agreement or other agreement that sets forth the terms under which they will develop, own and operate the project. Principal Agreements in a Project Financing1) Construction ContractSome of the more important terms of the construction contracts are2) Project DescriptionThe construction contract should set fortha detailed description of all the Work necessary to complete the project 3) Price:Most project financing construction contracts are fixed- price contracts although some projects may be built on a cost- plus basis. If the contract is not fixed-price, additional debt or equity contributions may be necessary to complete the project, and the project agreements should clearly indicate the party or parties responsible for such contributions. 4) PaymentPayments typically are made on a "milestone" or "completed work" basis, with a retain age. This pay ment procedure provides an incentive for the contractor to keep onschedule and useful monitoring points for the owner and thelender. 5) Completion DateThe construction completion date, together with any time extensions resulting from an event of force majeure, must be consistent with the parties' obligations under the other project documents. If construction is not finished by the completion date, the contractor typically is required to pay liquidated damages to cover debt service for each day until the project is completed. If construction is completed early, the contractor frequently is entitled to an early completion bonus.
Vasant Patil
24 6) Performance GuaranteesThe contractor typically will guarantee that the project will be able to meet certain performance standards when completed. Such standards must be set at levels to assure that the project will generate sufficientrevenues for debt service, operating costs and a return on equity.Such guarantees are measured by performance tests conducted by the contractor at the end of construction. If the project doesnot meet the guaranteed levels of performance, the contractor typically is required to make liquidated damages payments to
thesponsor.Ifprojectperformance exceeds the guaranteedminimumlevels, the contractor may be entitle d to bonus payments. 7) Feedstock Supply Agreements The project company will enter into one or more feedstock supplyagreements for the supply of raw materials, energy or other resources over the life of the project. Frequently, feedstock supply agreements arestructured on a "put-or-pay" basis, which means that the supplier must either supply the feedstock or pay the project company the difference in costsincurred in obtaining the feedstock from another source. The price provisions of feedstock supply agreements must assure that the cost of thefeedstock is fixed within an acceptable range and consistent with thefinancial projections of the project. 8) Product off take Agreements In a project financing, the product off take agreements represent the sourceof revenue for the project .Such agreements must be structured in amanner to provide the project company with sufficient revenue to pay its project debt obligations and all other costs of operating, maintaining andowning the project .Frequently,offtake agreements are structured on a"take-or-pay" basis, which means that the offtaker is obligated to pay for product on a regular basis whether or not the offtaker actually takes the product unless the product is unavailable due to a default by the project company. Like feedstock supply arrangements, offtake agreements frequently are on a fixed or scheduled price basis duringthe term of the project debt financing. 9) Operations and Maintenance Agreement The project company typically will enter into a long-term agreement for the day-to-day operation and maintenance of the project facilities with a company having the technical and financial expertise to operate the projectin accordance with the cost and production specifications for the project.The
operator may be an independent company, or it may be one of the sponsors. The operator typically will be paid a fixed compensation and may be entitled to bonus payments for extraordinary project
Vasant Patil
25 performance and be required to pay liquidated damages for project performance below specified levels. 10) Loan and Security Agreement The borrower in a project financing typically is the project company formed by the sponsor(s) to own the project. The loan agreement will set forth the basic terms of the loan and will contain general provisions relating tomaturity, interest rate and fees. The typical project financing loan agreement also will contain provisions such as11) Disbursement Controls These frequently take the form of conditions precedent to each drawdown, requiring the borrower to present invoices, builders certificates or other evidence as to the need for and use of the funds. 12) Progress Reports The lender may require periodic reports certified byan independent consultant on the status of construction progress. 13) Covenants Not to Amend The borrower will covenant not to amendor waive any of its rights under the construction, feedstock, off take,operations and maintenance, or other principal agreements without theconsent of the lender. 14) Completion Covenants These require the borrower to complete the project in accordance with project plans and specifications and prohibit the borrower from materially altering the project plans without theconsent of the lender. 15) Dividend Restrictions These covenants place restrictions on the payment of dividends or other distributions by the borrower until debtservice obligations are satisfied. 16) Debt and Guarantee Restrictions The borrower may be prohibitedfrom incurring additional debt or from guaranteeing other obligations 17) Financial Covenants Such covenants require the maintenance of working capital and liquidity ratios, debt service coverage ratios, debtservice reserves and other financial ratios to protect the credit of the borrower.
Vasant Patil
26 18) Subordination Lenders typically require other participants in the project to enter into a subordination agreement under which certain payments to such participants from the borrower under projectagreements are restricted (either absolutely or partially) and madesubordinate to the payment of debt service. 19) Security: The project loan typically will be secured by multiple forms of collateral, including: Mortgage on the project facilities and real property. Assignment of operating revenues. Pledge of bank deposits Assignment of any letters of credit or performance or completion bonds relating to the project. Project under which borrower is the beneficiary. Liens on the borrower's personal property Assignment of insurance proceeds. Assignment of all project agreements Pledge of stock in Project Company or assignment of partnership interests. Assignment of any patents, trademarks or other intellectual property owned by the borrower.
20) Site Lease Agreement The project company typically enters into long-term lease for the life of the project relating to the real property on whichthe project is to be located. Rental payments may be set in advance at afixed rate or may be tied to project performance.
Vasant Patil
27
Insurance
The general categories of insurance available in connectionwith project financings are: 1) Standard InsuranceThe following types of insurance typically areobtained for all project financings and cover the most commontypes of losses that a project may suffer. Property Damage, including transportation, fire and extendedcasualty. Boiler and Machinery. Comprehensive General Liability. Worker's Compensation. Automobile Liability and Physical Damage. Excess Liability.
2) Optional Insurance The following types of insurance often are obtained in connection with a project financing. Coverages such as these are more expensive than standard insurance and require more tailoring to meet the specific needs of the project Business Interruption. Performance Bonds. Cost Overrun/Delayed Opening. Design Errors and Omissions System Performance (Efficiency). Pollution Liability.
Vasant Patil
28
Project Risks
Project finance is finance for a particular project, such as a mine, toll road, railway, pipeline, power station, ship, hospital or prison, which is repaid from the cash-flow of that project. Project finance is different from traditional forms of finance because the financier principally looks to the assets and revenue of the project in order to secure and service the loan. In contrast to an ordinary borrowing situation, in a project financing the financier usually has little or no recourse to the non-project assets of the borrower or the sponsors of the project. In this situation, the credit risk associated with the borrower is not as important as in an ordinary loan transaction; what is most important is the identification, analysis, allocation and management of every risk associated with the project. The following detail shows the manner in which risks are approached by financiers in a project finance transaction. Such risk minimization lies at the heart of project finance. In a no recourse or limited recourse project financing, the risks for a financier are great. Since the loan can only be repaid when the project is operational, if a major part of the project fails, the financiers are likely to lose a substantial amount of money. The assets that remain are usually highly specialized and possibly in a remote location. If saleable, they may have little value outside the project. Therefore, it is not surprising that financiers, and their advisers, go to substantial efforts to ensure that the risks associated with the project are reduced or eliminated as far as possible. It is also not surprising that because of the risks involved, the cost of such finance is generally higher and it is more time consuming for such finance to be provided. Types of Risks: Basically different types of projects are posed to different risks. Similarly the risks mentioned below are related to this particular project. 1) Completion RiskCompletion risk allocation is a vital part of the risk allocation of any project. This phase carries the greatest risk for the financier. Construction carries the danger that the project will not be completed on time, on budget or at all because of technical, labor, and other construction difficulties. Such delays or cost increases may delay loan repayments and cause interest and debt to accumulate. They may also jeopardize contracts for the sale of the project's output and supply contacts for raw materials.
Vasant Patil
29 2) Operating RiskThese are general risks that may affect the cash-flow of the project by increasing the operating costs or affecting the project's capacity to continue to generate the quantity and quality of the planned output over the life of the project. Operating risks include, for example, the level of experience and resources of the operator, inefficiencies in operations or shortages in the supply of skilled labour. Operating risks are managed during the loan period by requiring the provision of detailed reports on the operations of the project and by controlling cash-flows by requiring the proceeds of the sale of product to be paid into a tightly regulated proceeds account to ensure that funds are used for approved operating costs only. 3) Market RiskObviously, the loan can only be repaid if the product that is generated can be turned into cash. Market risk is the risk that a buyer cannot be found for the product at a price sufficient to provide adequate cash-flow to service the debt. The best mechanism for minimizing market risk before lending takes place is an acceptable forward sales contact entered into with a financially sound purchaser. 4) Credit RiskThese are the risks associated with the sponsors or the borrowers themselves. The question is whether they have sufficient resources to manage the construction and operation of the project and to efficiently resolve any problems which may arise. To minimize these risks, the financiers need to satisfy themselves that the participants in the project have the necessary human resources, experience in past projects of this nature and are financially strong. 5) Technical RiskThis is the risk of technical difficulties in the construction and operation of the project's plant and equipment, including latent defects. Financiers usually minimize this risk by preferring tried and tested technologies to new unproven technologies. Technical risks are managed during the loan period by requiring a maintenance retention account to be maintained to receive a proportion of cash-flows to cover future maintenance expenditure. 6) Regulatory or Approval RiskThese are risks that government licenses and approvals required to construct or operate the project will not be issued, or that the project will be subject to excessive taxation, royalty payments, or rigid requirements as to local supply or distribution. Such risks may be reduced by obtaining legal opinions confirming compliance with applicable laws and ensuring that any necessary approvals are a condition precedent to the drawdown of funds. Alkesh Dinesh Mody Institute of finance and management Summer Internship Project Report (2013)
Vasant Patil
30
Risk minimization process

Financiers are concerned with minimizing the dangers of any events which could have a negative impact on the financial performance of the project. If a risk to the financiers cannot be minimized, the financiers will need to build it into the interest rate margin for the loan. Step 1- Risk identification and analysisThe project sponsors will usually prepare a feasibility study, e.g. as to the construction and operation of a mine or pipeline. The financiers will carefully review the study and may engage independent expert consultants to supplement it. The matters of particular focus will be whether the costs of the project have been properly assessed and whether the cash-flow streams from the project are properly calculated. Some risks are analyzed during financial models to determine the project's cash-flow and hence the ability of the project to meet repayment schedules. Different scenarios will be examined by adjusting economic variables such as inflation, interest rates, exchange rates and prices for the inputs and output of the project. Various classes of risk that may be identified in a project financing will be discussed below. Step2- Risk allocationOnce the risks are identified and analyzed, they are allocated by the parties through negotiation of the contractual framework. Ideally a risk should be allocated to the party who is the most appropriate to bear it (i.e. who is in the best position to manage, control and insure against it) and who has the financial capacity to bear it. It has been observed that financiers attempt to allocate uncontrollable risks widely and to ensure that each party has an interest in fixing such risks. Generally, commercial risks are sought to be allocated to the private sector and political risks to the state sector. Step3- Risk managementRisks must be also managed in order to minimize the possibility of the risk event occurring and to minimize its consequences if it does occur. Financiers need to ensure that the greater the risks that they bear, the more informed they are and the greater their control over the project. Since they take security over the entire project and must be prepared to step in and take it over if the borrower defaults. This requires the financiers to be involved in and monitor the project closely. Such risk management is facilitated by imposing reporting obligations on the borrower and controls over project accounts. Such measures may lead to tension between the flexibility desired by borrower and risk management mechanisms required by the financier.
Vasant Patil
31
Processof sanctioning
The bank usually asks the firm to give the following details 1) Nature of the proposal The purpose for which the term loan is required. (whether for expansion, modernization, diversification etc.) 2) Brief History In case of an existing company, essential particulars about its promoters, its incorporation, subsequent corporate growth to date, major developments or changes in management. 3) Past Performance A summary of past performance in terms of licensed/installed or operating capacities, sales, operating capacities, and sales and net profit for the three years should be analyzed. The figures relating to sales and profitability should be analyzed to ascertain the trend during the 3years. In sum, the companys past performance has to be assessed to study if there has been a steady improvement and growth record has been satisfactory. 4) Present financial positionThe Companys audited balance sheets and profit and loss account have to be analyzed. If the latest audited balance sheet has more than 6 months old, a pro-forma balance sheet as on a recent date should be obtained and analyzed. 5)ProjectHere the technical feasibility and the financial feasibility of the project are studied. 6) Project implementation scheduleExamine the project implementation schedule with reference to Bar Chart or PERT/CPM chart (if proposed to be used by the company for monitoring the implementation of the project) and in the light of actual implementation schedules of similar project.
Vasant Patil
32
Pre sanction processAppraisal 1. Preliminary appraisalThe following aspects have to be examined if the proposal is to financing a project Whether the project cost is prima facie acceptable. Debt and equity gearing proposed and whether acceptable Promoters ability to access capital market for debt/ equity support Whether critical aspects of project- demand, cost of production, profitability etc. are prima facie in order. After undertaking the preliminary examination of the proposal, the branch will arrive at a decision whether to support the request or not. If the branch finds the proposalacceptable, it will call for from the applicants, a comprehensive application in the prescribed pro-forma, along with a copy of project report, covering specific
creditrequirements of the company and other essential data/ information. The informationamong other things should include: Organization setup with a list of board of directors and indicating theQualifications, experience and competence of the key personnel inCharge of the main functional areas e.g. Production, purchase,Marketing and finance in other word brief on the managerial resourceand whether these are compatible with the size and the scope of the proposed activity. Demand and supply projections based on the overall market prospects together with a copy of market research report. The report may comment on the geographic spread of the market where the unit proposes to operate, demand and supply gap, the competitors share, competitive advantage of the applicant, proposed marketing arrangement. Current practices for the particular product or service especially relating to terms of credit sales, probability of bad debts. Estimates of sales cost of production and profitability. Projected profit and loss account and Balance Sheet for the operating years during currency r of the bank assistance. Branch should also obtain additionally Appraisal report from any other bank/financial institution in case appraisal has been done by them. NO Objection Certificatefrom term lenders if already financed by them and Report from Merchant bankers in case the company plans to access capital market,wherever necessary.In respect of existing concerns, in addition to the above particulars regarding the historyof the concern, its past performance, present financial position, etc. should also becalled for.
Vasant Patil
33 This data should be supplemented by supporting statements such as: Audited profit and loss account and balance sheet for the past three years Details of existing borrowing arrangements, if any, Credit information reports from the existing bankers on the applicant company Financial statements and borrowing relationship of associate firms/group companies.
2. Detailed AppraisalThe viability of a project is examined to ascertain that the company would have the ability to service its loan and interest obligations out of cash accruals from the business. While appraising a project all the data/ information furnished by the borrower is counter checked and wherever possible, inter-firm and inter-industry comparisons should be made to establish their veracity. The appraisal of the new project could be broadly divided into the following subheads Promoters track record Types of fixed assets to be acquired Technical feasibility Marketability Production process Management Time schedule Cost of project Sources of finance Commercial Profitability; Security and Margin Repayment period and debt service coverage; Funds Flows statement and Rates of return.
Vasant Patil
34 If the proposal involves financing of a new project, the commercial, economic and financial viability and other aspects are to be examined as indicated below Statutory clearance from various government depts/agencies License/ clearance /permits as applicable Details of sources of energy requirements, power, fuel etc.. Pollution control clearance Cost of project and source of finance Buildup of fixed assets. Arrangements proposed for raising debt and equity Capital structure Feasibility of arrangements to access capital market Feasibility of the projections/estimates of sales cost of production and profit covering the period of repayment. Break-even point in terms of sales value and percentage of installed capacityunder a normal production year. Cash flows and fund flows Whether profitability is adequate to meet stipulated repayments with referenceto Debt Service Coverage Ratio, Return on Investment. Industry profile and prospectus Critical factors of industry and whether the assessment of these and management plans in this regard are acceptable Technical feasibility with reference to report of technical consultants, if available Management quality, competence, track record Companys structure and systems. Also examine and comment on the status of approvals from other term lenders, project implementation schedule. A pre-sanction inspection of the project site or the factory should be carried out in the case of existing units.
Vasant Patil
35 3. Present relationship with the Bank The banks also take into consideration the relationship of the firm or the customer with the banks. It takes into account the following aspects Credit Facilities now granted. Conduct of the existing accounts. Utilization of limits- FB & NFB. Occurrence of irregularities, if any. Frequency of irregularity i.e.; the number of times and the total number of days the account was irregular during the last twelve months. Repayment of term commitments. Compliance with requirements regarding submission of stock statements, Financial Follow-up Reports, renewal data, etc Stock turnover, realization of book debts. Value of accounts with breakup of income earned. Pro-rata share of Non-fund and foreign exchange business. Concessions extended and value thereof. Compliance with other terms and conditions. Action taken on comments /observations contained in RBI inspection Reports. CO inspection and audit reports. Verification Audit Reports. Concurrent audit reports. Stock Audit Reports Spot Audit Reports. Long Form Audit Report (statutory Report)
Vasant Patil
36 4. Creditrisk Rating Draw up rating for Working Capital and Term Finance. 5.Opinion Reports Compile opinion Reports on the company, partners/ promoters and the proposed guarantors. 6. Existing charges on assets of the unit If the company, report on search of charges with proposed guarantors. 7.Structure of facilities and Terms of Sanction Fix terms and conditions for exposures proposed facility wise and overall: Limit for each facility- sub limits. Security- Primary & collateral, Guarantee Margins- for each facility as applicable. Rate of interest. Rate of commission/exchange/other fees. Concessional facilities and value thereof. Repayment terms, where applicable. Other standard covenants.
8. Review of the proposal Review of the proposal should be done covering Strengths and weaknesses of the exposure proposed Risk factors and steps proposed to mitigate them Deviations if any, proposed from usual norms of the bank and the reasons thereof. 9.Proposal for sanction Prepare a draft in prescribed format with required back-up details and with recommendations for sanction.
Vasant Patil
37
Case Study:
The further part has been dealt with respect to the project of M/s ABC Chemicals Pvt. Ltd Project in Brief: Name of the company: M/s ABC Chemicals Pvt. Ltd Purpose:Setting up a 150,000 TPA Coal Tar distillation plant at Halkarni, Maharashtra Brief Background: The plant is being designed for production of different grades of Coal Tar Pitch (82,500 TPA), Light Oils (22,500 TPA), Heavy Oils (22,500 TPA) and Naphthalene (15,000 TPA), which find wide applications in the aluminium and graphite industry. The product category proposed to be manufactured by the Company is already in short supply and with increase in aluminium production capacity in the country the demand supply gap is expected to widen further. Technology and Equipment Supplier: Handan Xinbao Coal Chemical Company Limited, China Borrowers profile: a. Group Name b. Address of Regd./Corporate Office No recognized group Raj Mahal, Veer Nariman Road, Churchgate, Mumbai 400 020 c Works/Factory Halkarni Industrial Area, Kolhapur, Maharashtra
d Constitution and constitution code as per Private Limited Company ladder e Date of incorporation/Establishment f Dealing with PNB since g Industry/Sector h Business Capacity. Activity August 27, 2010 New Account Manufacturing (Chemicals) (Product)/Installed Setting up a 150,000 TPA Coal Tar distillation plant at Halkarni, Maharashtra
Vasant Patil
38 Security:
A.
st
Primary
1 Paripassu charge on fixed assets of the Company, both present and future
B.
Collateral 2nd charge on current assets of the Company, both present and future Pledge of promoters shareholding to the extent of 26% of the paid up capital of the Company and will be released after 2 years of COD DSRA equivalent to 1 quarter principal and 1 month interest payment (interest amount to be created upfront, Principal amount to be created one month prior to commencement of repayment)
Appraising agency The Techno Economic Viability Study of the term loan requirement is conducted by Mott MacDonald, Chennai and the financial appraisal is done by Axis Bank
Vasant Patil
39
Financial Analysis:
1) Cost of project: Cost of project Total Debt Promoters Contribution Proposed loan (PNB share) DER 189 cr 126 cr 63 cr 50 cr 2:1
Summary of cost of project and means of finance The total project cost is estimated at Rs. 189 Crores by M/s Mott MacDonald Pvt. Ltd, the consultant for the project. (Rs. In Crores) Particulars Land & Site Development Cost Infrastructure Development Buildings & Civil Work Plant & Machinery Misc. Fixed Assets Design, Engineering & Technical support Total Hard Cost Provision for Contingency Pre-operative Expenses IDC & Finance cost Working Capital Margin Total Soft Cost Total Project Cost Amount 7.14 11.43 8.40 103.44 1.00 10.37 141.78 9.92 13.02 11.84 12.43 47.22 189.00
Vasant Patil
40 2) Financial Position of the Company: The company has not commenced commercial operations as on date. The COD is 30th April 2014. Hence, the projected financial indicators for the tenor of the term loan facility are provided as under:(Rs. in Crores) 2015 Proj. Net Sales - Domestic - Export % growth * Gross Sales Other Income Operating Profit/Loss Profit before tax Profit after tax Depreciation/ Cash profit/ (Loss) PBIDTA Paid up capital Reserves 30.71 20.75 8.52 34.27 57.34 63.00 and 20.74 37.45 24.12 8.52 36.51 64.61 63.00 44.87 38.83 26.23 8.52 37.66 63.88 63.00 71.10 39.96 26.99 8.52 37.61 62.64 63.00 98.10 41.47 28.02 8.52 37.94 61.77 63.00 126.11 42.43 28.66 8.52 37.98 60.36 63.00 154.77 43.75 29.56 8.52 38.37 59.30 63.00 184.32 44.51 30.07 8.52 38.44 58.13 63.00 214.39 447.48 0.00 N/A 447.48 0.00 30.71 503.42 0.00 12.5% 503.42 0.00 37.45 503.42 0.00 0.00% 503.42 0.00 38.83 503.42 0.00 0.00% 503.42 0.00 39.96 503.42 0.00 0.00% 503.42 0.00 41.47 503.42 0.00 0.00% 503.42 0.00 42.43 503.42 0.00 0.00% 503.42 0.00 43.75 503.42 0.00 0.00% 503.42 0.00 44.51 2016 Proj. 2017 Proj. 2018 Proj. 2019 Proj. 2020 Proj. 2021 Proj. 2022 Proj.
Surplus excluding Deferred Tax Liab / 4.99 (Assets) a) Tangible Net 88.74 116.73 145.87 174.97 204.37 233.83 263.66 293.58 8.87 11.78 13.87 15.26 16.06 16.34 16.19
Vasant Patil
41 Worth b) Investment in 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
allied concerns and amount holdings c) Net owned 88.74 116.73 145.87 174.97 204.37 233.83 263.66 293.58 of cross
funds/Adjusted TNW (a b) * Share money Total Borrowings Secured Unsecured Investments Total Assets 153.96 153.96 (0.00) 0.00 271.86 139.94 0.00 289.49 159.52 121.30 0.00 299.99 151.00 102.67 0.00 310.46 142.48 84.04 0.00 321.22 133.95 65.42 0.00 332.07 125.43 46.80 0.00 343.27 116.91 42.16 0.00 368.55 108.38 139.94 121.30 102.67 84.04 65.42 46.80 42.16 application 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Out of which net 168.05 fixed assets Net Working Capital Current Ratio Debt Equity Ratio Operating Profit/Sales Long Term Sources Short Term Sources Short Term Uses 29.27 66.46 91.38 56.03 2.17 1.31 6.86%
73.87 2.32 0.84 7.44%
92.88 2.66 0.54 7.71%
111.83 2.99 0.35 7.94%
131.09 3.33 0.21 8.24%
150.40 3.67 0.10 8.43%
156.09 3.22 0.02 8.69%
185.20 3.47 (0.00) 8.84%
32.65 8.31 26.15
34.75 0.02 19.02
35.52 0.04 18.99
36.54 0.03 19.29
37.19 0.05 19.36
38.08 0.04 19.73
38.59 0.03 33.81
Vasant Patil
42 Surplus/ Deficit (24.93) (17.84) (19.00) (18.95) (19.26) (19.31) (19.69) (33.78)
3) Projected Profitability Statement (Rs. in Crores) Particulars Net Sales Cost of Sales Raw Material Direct Labour Other Manufacturing expenses Depreciation Total Cost of Sales 8.52 371.18 8.52 416.35 30.98 8.52 417.08 30.98 8.52 417.88 31.42 8.52 418.75 31.42 8.52 419.72 31.86 8.52 420.78 31.86 309.60 6.60 46.46 348.30 7.26 52.27 348.30 7.99 52.27 348.30 8.78 52.27 348.30 9.66 52.27 348.30 10.63 52.27 348.30 11.69 52.27 FY15 447.48 FY16 503.42 FY17 503.42 FY18 503.42 FY19 503.42 FY20 503.42 FY21 503.42
Selling, Admin and General 27.48 expenses Total Operating Cost Operating interest Interest PBT Provision for Taxation Net Profit/Loss 18.11 30.71 9.96 20.74 Profit 398.67 before 48.81
447.33 56.09
448.05 55.36
449.29 54.12
450.17 53.24
451.58 51.84
452.64 50.77
18.64 37.45 13.33 24.12
16.53 38.83 12.60 26.23
14.16 39.97 12.97 27.00
11.78 41.46 13.45 28.01
9.41 42.43 13.77 28.66
7.03 43.74 14.19 29.55
Vasant Patil
43 4) Projected Balance Sheet (Rs. in Crores) Particular Sources of Funds Net Worth Share Capital Reserves & Surplus Term Liabilities Rupee Term Loans Working Capital Deferred Tax Liability Total Liabilities Application of Funds Gross Block Less: Acc. Depn. Net Block Capital Work In Progress MAT Credit Entitlement 176.57 8.52 168.05 1.18 176.57 17.05 159.52 129.97 176.57 25.57 151.00 148.99 176.57 34.09 142.48 167.98 176.57 42.61 133.95 187.27 176.57 51.14 125.43 206.63 176.57 59.66 116.91 226.36 83.74 63.00 20.74 158.95 116.67 37.29 4.99 242.69 107.87 63.00 44.87 148.81 98.00 41.95 8.87 256.68 134.10 63.00 71.10 133.08 79.33 41.97 11.78 267.18 161.10 63.00 98.10 116.55 60.67 42.01 13.87 277.64 189.11 63.00 126.11 99.30 42.00 42.04 15.26 288.41 217.77 63.00 154.77 81.48 23.33 42.09 16.06 299.25 247.32 63.00 184.32 63.14 4.67 42.13 16.34 310.46 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Current Assets, Loans & 102.64 Advances Less: Current Liabilities & 29.17 Provisions Net Current Assets Total Assets 73.47 242.69
32.81
32.81
32.81
32.81
32.81
32.81
97.15 256.68
116.18 267.18
135.17 277.64
154.46 288.41
173.82 299.25
193.55 310.46
Vasant Patil
44
5) Projected Cash Flow Statement (Rs. in Crores) Particulars PAT Depreciation DTL Interest CFO before WC Changes in WC Net CFO Invest.in Fixed Assets Change in non-CA Net CFI Increase in Share Capital Increase in term loans Increase in WC Borrowing Interest CFF Change in cash Opening Cash Balance Closing Cash Balance FY15 20.74 8.52 4.99 18.11 52.37 (49.72) 2.65 0.00 (1.18) (1.18) 0.00 (9.33) 37.29 (18.11) 9.85 11.32 12.43 23.75 FY16 24.12 8.52 3.87 18.64 55.16 (6.21) 48.95 0.00 1.18 1.18 0.00 (18.67) 4.66 (18.64) (32.65) 17.47 23.75 41.23 FY17 26.23 8.52 2.91 16.53 54.20 (0.03) 54.17 0.00 0.00 (0.00) 0.00 (18.67) 0.02 (16.53) (35.17) 18.99 41.23 60.22 FY18 27.00 8.52 2.09 14.16 51.77 (0.06) 51.71 0.00 0.00 0.00 0.00 (18.67) 0.04 (14.16) (32.78) 18.93 60.22 79.15 FY19 28.01 8.52 1.39 11.78 49.71 (0.04) 49.67 0.00 0.00 (0.00) 0.00 (18.67) 0.03 (11.78) (30.42) 19.25 79.15 98.40 FY20 28.66 8.52 0.80 9.41 47.39 (0.06) 47.32 0.00 0.00 0.00 0.00 (18.67) 0.05 (9.41) (28.02) 19.30 98.40 117.70 FY21 29.55 8.52 0.28 7.03 45.39 (0.05) 45.34 0.00 0.00 0.00 0.00 (18.67) 0.04 (7.03) (25.66) 19.68 117.70 137.38
Vasant Patil
45 6) Detailed Sensitivity Analysis: Assumptions/Projections Base Case Sales decrease by 5% Sales decrease by 10 % Raw Material cost increases by 5 %. FY15 1.91 1.79 1.66 1.44 FY16 1.48 1.39 1.30 1.13 1.04 FY17 1.54 1.44 1.35 1.17 1.07 FY18 1.58 1.48 1.38 1.19 1.09 FY19 1.63 1.53 1.43 1.23 1.12 FY20 1.69 1.58 1.47 1.26 1.15
Sales decrease by 5 % & RM cost 1.31 increases by 5 % Average Interest Rate Increases by 2% 1.75
1.39
1.45
1.49
1.56
1.62
The DSCR is found to be acceptable under all scenarios, except in case of sales decrease by 5% & raw material cost increases by 5%. In this scenario, DSCR falls to 1.04 in FY16. However, with available cash at the end of FY15, the Company is expected to be able to service debt obligation without additional equity infusion.
Vasant Patil
46 7) Ratio Analysis: While analyzing the financial aspects of project, it would be advisable to analyze the important financial ratios over a period of time as it may tell us a lot about a unit's liquidity position, managements' stake in the business, capacity to service the debts etc. The financial ratios which are considered important are discussed as under: The two major aspects of financial analysis are liquidity analysis and capital structure. For this purpose ratios are employed which reveal existing strengths and weakness of the project. a) Liquidity ratios Liquidity ratio or solvency ratio measure a projects ability to meet its current or short -term obligations when they become due. Liquidity is the pre-requisite for the very survival of a firm. A proper balance between the liquidity and profitability is required for the efficient
financial management. It reflects the short-term financial strength or solvency of the firm. Two ratios are calculated to measure liquidity, the current ratio and quick ratio. Current ratioThe current ratio is defined as the ratio of total current assets to total currentliabilities. It is computed by,
FY15 Current Ratio 2.17
FY16 2.32
FY17 2.66
FY18 2.99
FY19 3.33
FY20 3.67
FY21 3.22
InterpretationIt is an indicator of the extent to which short term creditors are covered byassets that are expected to be converted to cash in a period corresponding to the maturityof claims. The ideal current ratio is 2:1. The firm current ratio indicate that the firm is ina position to meet its short term obligation because the ratio is in increasing trend , byobserving the above table we can say that though the firm does not maintain ideal currentratio, it is still in a position to meet its current obligations. After clearing all the dues thefirm is still in a position to maintain liquidity.
Vasant Patil
47 b) Capital structure ratio: The long-term lenders/creditors would judge the soundness of a firm on the basis of the long term financial strength measured in terms of its ability to pay the interest regularly as well as repay the installment of the principal on due dates or in one lump sum at the time of maturity. The long term solvency of firm can be examined by using leverage or capital structure ratios. The leverage or capital structure ratios may be defined as financial ratios which throw light on the long term solvency of a firm as reflected in its ability to assure the long term lenders with regard to (i) periodic payment of interest during the period of the loan and (ii) repayment of the principal on maturity or in predetermined installments at due dates. Debt equity ratioThis ratio measures the long term or total debt to shareholders equit y. This ratio reflects claims of creditors and shareholders against the assets of the firm. Debt Equity Ratio is given by:
FY15 Debt Equity Ratio 1.31
FY16 0.84
FY17 0.54
FY18 0.35
FY19 0.21
FY20 0.10
FY21 0.02
FY22 (0.00)
InterpretationThe debt equity ratio is an important tool of financial analysis to appraise the financialstructure of the firm. The ratio reflects the relative contribution of creditors and ownersof the business in its financing. A high ratio shows a large share of financing by thecreditors of the firm; a low ratio implies a smaller claim of the creditors. Debt Equity ratio indicates the margin of safety to the creditors. The debtequity ratio is in decreasing and in 2022 it become nil, which implies that the owners are putting uprelatively more money of their own.
Vasant Patil
48 c) Profitability ratios related to sales-
These ratios are based on the premise that a firm should earn sufficient profit on each rupee of sales. If adequate profits are not earned on sales, there will be difficulty in meeting the operating expenses and no returns will be available to the owners. Net profit marginIt is also known as net margin. This measures the relationship between the net profits and sales of a firm. Depending on the concept of net profit employed. , this ratio can be computed as follows-
Net Profit/Loss Net Sales Net profit margin
20.74 447.48
24.12 503.42
26.23 503.42
27 503.42
28.01 503.42
28.66 503.42
29.55 503.42
4.634844
4.791228
5.210361
5.363315
5.563943
5.693059
5.86985
Interpretation The net profit margin is indicative of managements ability to operate the business with sufficient success not only to recover from revenues of the period, the cost of services, the operating expenses and the cost of borrowed funds, but also to leave a margin of reasonable compensation to the owners for providing their capital at risk. A high profit margin would ensure the adequate return to the owners as well as enable the firm to withstand adverse economic conditions. A low net profit margin has theopposite implications. With respect to the above firm the net profit margin is increasing trend so it will show that the company is in good condition and the demand for the product is increasing.
Vasant Patil
49 Debt Service Coverage Ratio: (DSCR) It is considered a more comprehensive and apt measure to compute debt service capacity of firm. It provides the value in terms of the number of times the total debt service obligations consisting of interest and repayment of principal in installments are covered by the operating funds available after the payment of tax : earnings after taxes,EAT+interest+Depreciation+Other non cash expenditure like amortization
(In Rs. crores) Financial Year Cash Accruals Add: Interest Total (a) Debt repayment Interest Total (b) DSCR (a/b) Min. DSCR Average DSCR 2015 34.26 18.11 52.37 9.34 18.11 27.45 1.91 1.48 1.68 2016 36.52 18.64 55.16 18.69 18.64 37.30 1.48 2017 37.67 16.53 54.20 18.69 16.53 35.20 1.54 2018 37.61 14.16 51.77 18.69 14.16 32.82 1.58 2019 37.93 11.78 49.71 18.69 11.78 30.45 1.63 2020 37.98 9.41 47.39 18.69 9.41 28.07 1.69 2021 38.36 7.03 45.39 18.69 7.03 25.70 1.77
Since the debt repayment starts in the 3rd quarter of FY15, the DSCR is higher at 1.91 The lowest DSCR occurs in FY16 due to the highest interest payment in FY16. Overall, considering the business model of the Company of manufacturing activity, average DSCR of 1.68 may be considered acceptable.
Vasant Patil
50 8) Capital Investment Evaluation: Net Present Value It is calculated by discounting the future cash flows of the project to the present valuewith the required rate of return to finance the cost of capital. A project is acceptable if thecapital value of the project is less than or equal to the net present value of cash flows over the operating life cycle of the project. This method is highly useful when selection has to be made among many projects, which are mutually exclusive, and there are no budgetaryconstraints. Selection of projects with the largest positive NPV will yield highest returns.But this method is useful only to determine whether a project is acceptable or not butdoesnt indicate which project is best under budgetary constraints. It is difficult to rank different compatible projects with NPV as there is no account for scale of investmentwhile calculating NPV Cash flow PV factor @ 10% Total present value 34.27 0.909 31.15 1 0.826 30.17 2 36.51 0.751 28.29 3 37.66 0.683 25.69 4 37.61 0.621 23.56 5 37.94 0.564 21.44 6 37.98 0.513 19.69 7 38.37 0.467 17.93 8 38.44
Year
Total PV 197.93 less:Initial Outlay 189 NPV 8.93 The acceptance rule using NPV method is to accept the investment proposal if its net present value is positive (NPV > 0) and to reject it if the NPV is negative (NPV<0).Positive NPVs contribute to the net wealth of the shareholders which should result in theincreased price of a firms share. The positive net present value will result only if the project generates cash inflows at a rate higher than the opportunity cost of capital. Sincethe Net Present Value of the above project is positive, the proposal can be accepted.
Vasant Patil
51 Internal Rate of ReturnIt is the rate of return at which the Net Present Value (NPV) of a project becomes zero.A project is acceptable if the IRR exceeds the cost of capital. It is possible to rank variouscompatible projects with IRR method and a project with highest IRR can be selected.However, this method is not useful when selection has to be made among mutuallyexclusive projects. This method assumes that the net cash flows from a project are firstnegative and then positive for the rest of the project life and vice versa. But thiscondition is not always fulfilled resulting in multiple IRRs for the same project. Due toambiguous results, project selection becomes difficult. Further, selection of a
projectbasedonhighest IRR alone, without taking project specific risk factors intoconsideration, may be often misleading. Cash flow
34.27
Year 1 2 3 4 5 6 7 8 total PV
weights
8 7 6 5 4 3 2 1 36
weighted average
274.16 255.57 225.96 188.05 151.76 113.94 76.74 38.44
36.51 37.66 37.61 37.94 37.98 38.37 38.44
1324.62
= 36.795
= 5.14
Vasant Patil
52 A) Cash flow pv factor @ 10% Total present value 34.27 0.909 31.15 1 0.826 30.17 2 36.51 0.751 28.29 3 37.66 0.683 25.69 4 37.61 0.621 23.56 5 37.94 0.564 21.44 6 37.98 0.513 19.69 7 38.37 0.467 17.93 8 38.44 197.93 189 8.93
Year
total PV less:Initial Outlay NPV
B) Cash flow pvfacttor @ 12 %

0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404
Year
Total present value

30.60 29.11 26.81 23.90 21.53 19.24 17.36 15.53
34.27 1 2 36.51 3 37.66 4 37.61 5 37.94 6 37.98 7 38.37 8 38.44 total PV less:Initial Outlay NPV
184.06 189 -4.94
( =14.47 Thus the project with higher IRR is good and could be accepted.
Vasant Patil
53
Demand Supply Scenario

Domestic Market: As per the analysis conducted by Mott MacDonald (consultant for the project), the present demand supply equation for CTP in domestic market is as under: (In 000 Tons) Financial Year Demand Supply Gap 2007 153.53 130.80 22.73 2008 169.99 154.87 15.12 2009 185.83 169.29 16.54 2010 210.17 197.94 12.23 2011 224.61 211.26 13.35 2012 244.03 231.73 12.30
The demand supply gap is primarily met by imports. Domestic CTP demand is expected to reach 0.67 MTPA owing to huge CTP requirements from aluminium industry and other application industries like graphite electrodes.
The demand for CTP is expected to witness a CAGR growth of 10.8%. Around 3.34 MTPA of aluminium smelter capacity is expected to be set up by FY20 in India which will create an additional demand of about 0.34MTPA of high QI CTP.
Demand-supply gap for CTP is expected to shoot up in FY13 owing to the commercial operational of VAL aluminium smelter plant of 1.1 MTPA during FY13. This indicates the need for more CTP plants in the country.
Due to commissioning of new CTP plants by AVH during FY14 and Himadri Chemicals during FY15 the demand supply gap is expected to be met to a large extent.
Vasant Patil
54
Strengths & Weakness with mitigations, if any

Strengths The project is being implemented by an experienced project execution team having past experience in implementing large projects in other companies. The product category proposed to be manufactured by the Company is already in short supply and with increase in aluminium production capacity, the demand is expected to increase considerably in future. The Company has proposed to enter into a long term agreement with JSW Steel Limited for the supply of key raw material i.e. coal tar. The Company has already received environmental clearance from the Ministry of Environment and Forests for the project. The Company has received Consent to Establish from Maharashtra Pollution Control Board. The Company has appointed Handan Xinbao Coal Chemical Company Limited as technology and equipment supplier for the proposed coal tar distillation unit and for initial support. By virtue of technical arrangement and agreement for support at operational level for initial period, the Company is not expected to face significant difficulty in installing and operating the plant.
Vasant Patil
55
Risk Factors Project Implementation Risk
Risk Mitigants The Company has already appointed competent project execution team for the project.For technical installation and sourcing, the Company has already appointed Handan Xinbao of China. By virtue of technical arrangement and agreement for support at operational level in the initial period, the Company is not expected to face significant difficulty in installing and operating the plant.
Project Off take The existing CTP market is mainly catered to by Himadri Chemical. The and Competition capacity of AVHs plant will be one third of Himadri Chemicals capacity. Even Risk after increase in overall capacity, increasing demand from aluminium industry and high demand supply gap globally will ensure that the Company will not face any difficulty in selling its product. By virtue of new plant & machinery and support from the supplier in operations during initial years, the Company is expected to meet quality standards of the end consumer segments. Raw Risk Material The Company has planned to enter a long term purchase agreement with JSW Steel Ltd for supply of coal tar of 150,000 TPA. The plant of the Company is located near its key raw material supplier. Some coal tar is also proposed to be purchased from different sources like RINL, Vizag for blending with JSW tar and achieving the various grades required in the market. Geographical Concentration Risk The Companys products are proposed to be marketed across a number of states in India to downstream sector users like aluminium, steel etc. Majority of end customers of the Company are located in east and central India Considering the industrial applications of the product and demand supply scenario, the Company is not expected to face geographical concentration risk. Environment Risk The Company has already obtained the most critical environmental approvals from Environment Department (State Environmental Impact Assessment Authority (SEIAA), Environment Department, Govt. of Maharashtra), which is the key approval required for the proposed project. Consent to Establish approval (required from Maharashtra Pollution Control Board) was obtained on 16.08.2012. The Company has also proposed to invest in adequate effluent treatment facilities.
Vasant Patil
56
Measures taken by Punjab National Bank when the repayment is not possible
1) Firstly they send a notice to the clients stating therein to pay their dues. 2) When there no improvements in the repayments even after the notice being sent then the bank will forward the legal notice stating the clients to make payments 3) Third is the compromise dealing wherein both the parties sit together and decide what
measures has to be taken which means whether the clients make the payments, or whether to file a suit or decide to sell the Properties etc.
Recommendations:
The time taken for appraisal and sanctioning of loan is experienced to be more in Punjab National Bank. They should look after the time frame and decision making should be quick.
Limitation of the study:Some of the information are confidential in nature that could not divulged for study
Vasant Patil
57
An Assessment of the Internship:

Skills and Qualifications Acquired: I have learnt both Financial and technical skill that are required in appraisal of Project financial. Financial skills which I have learnt consist of analyzing actual balance sheet, sensitivity analysis, profit and loss account and cash flow of a company. Responsibilities Undertaken: I was working as an assistant of my mentor in analysing the appraisal of Project Finance. Influence of Internship on career plan: Now I am more confident that, whatever career path I will choose in future because both technical and financial skills are required in Corporate. Correlation with classroom Knowledge: Whatever I have learn like ration analysis, Balance sheet analysis, cash flow, sensitivity analysis in my classroom was quite helpful for me during my internship and I came to know that how this concept are implemented in business.
Vasant Patil
58
Conclusion:The project undertaken has helped a lot in understanding the concept of project financing in nationalized bank with reference to state bank of India. The project financing is an important aspect which helps in increasing the profit of the banks .Project financing is a vast subject and it is very difficult to apply all the aspect in all type of project when bank want to finance, and it is very difficult to cover all aspect in this project. To sum up it would not be out of way to mention here that the state bank of India has given a special impetus on Project Financing .the concerted efforts of the management and staff of state bank of India has helped the bank in achieving remarkable progress in almost all important aspects .Finally the success of project financing would mostly depend on the proper analysis of the projects before financing project in accordance with the cost and production specifications for the project. The operator may be an independent company, or it may be one of the sponsors. The operator typically will be paid a fixed compensation and may be entitled to bonus payments for extraordinary project performance and be required to pay liquidated damages for project performance below specified levels.
Vasant Patil
59
Bibliography
The data is collected from the list of books and web site given below www.pnbindia.com. www.Google.com www.wikipedia.com www.investopedia.com PNB Book of instruction. Commercial Banks Book. Project financing by Machiraju Introduction to project finance by Andrew Fight Financial management by Khan and Jain
Vasant Patil

Project Finance

Încărcat de

Informații document

Descriere originală:

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Project Finance

Încărcat de

Drepturi de autor:

Formate disponibile

PROJECT REPORT

Director Dr. S. Ratnaparkhi

Objective and Methodology

Secondary Data: www.pnbindia.com PNB Book of instructions PNB Compendium

Reserve Bank of India

Regional Rural Banks

Private Sector Banks

Figure 1: Overview of Banks

12 A typical Hierarchy of a bank has been shown below:

Theoretical Background for the project work

Advantages and Disadvantages of project finance

Financing sources used inproject financing

Participants in Project Financing:

Process of Project Financing

gainlosses,deductionsandcreditsareallocatedamong the partners

Project Company Agreements

Risk minimization process

73.87 2.32 0.84 7.44%

92.88 2.66 0.54 7.71%

111.83 2.99 0.35 7.94%

131.09 3.33 0.21 8.24%

150.40 3.67 0.10 8.43%

156.09 3.22 0.02 8.69%

185.20 3.47 (0.00) 8.84%

32.65 8.31 26.15

34.75 0.02 19.02

35.52 0.04 18.99

36.54 0.03 19.29

37.19 0.05 19.36

38.08 0.04 19.73

38.59 0.03 33.81

18.64 37.45 13.33 24.12

16.53 38.83 12.60 26.23

14.16 39.97 12.97 27.00

11.78 41.46 13.45 28.01

9.41 42.43 13.77 28.66

7.03 43.74 14.19 29.55

FY15 Current Ratio 2.17

FY15 Debt Equity Ratio 1.31

48 c) Profitability ratios related to sales-

Net Profit/Loss Net Sales Net profit margin

36.51 37.66 37.61 37.94 37.98 38.37 38.44

total PV less:Initial Outlay NPV

B) Cash flow pvfacttor @ 12 %

Total present value

184.06 189 -4.94

Demand Supply Scenario

Strengths & Weakness with mitigations, if any

Risk Factors Project Implementation Risk

An Assessment of the Internship:

S-ar putea să vă placă și