Infrastructure Project Financing 2013

TABLE OF CONTENTS
Acknowledgement!
E"ecuti#e Summar$%
A&out Bank of &aroda'
Introduction(
Features of Infrastructure Finance)
Sources of Infrastructure Financing in India)
*rowt+ Potential,,
*o#ernment Initiati#es,!
-ig+lig+ts of .nion Budget !/,01,%,%
2oad A+ead,%
Issues 3 c+allenges constraining infrastructure funding,'
Infrastructure Financing in Ot+er Countries,)
Infrastructure Financing &$ commercial Banks,)
Ste4s in Infrastructure Finance ,)
2enewa&le Energ$ Project Finance!/
Basic Com4an$ Information0/
Project 5etails0!
Project Cost00
6eans Of Finance00
Credit A44raisal 5etails0%
TE7 Stud$ Anal$sis0(
Securit$ and Banking arrangements08
6ilestones of t+e Project08
Project Im4lementation09
2easons for dela$ in Im4lementation%,
Current Status%!
Swot Anal$sis%0
2ecommendations%%
2eferences%'
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Infrastructure Project Financing 2013
E:EC.TI7E S.66A2;
T+e fast growt+ of t+e econom$ in recent $ears +as 4laced increasing stress on
a#aila&le infrastructure suc+ as electricit$< railwa$s< roads< 4orts< air4orts< irrigation
and ur&an and rural water su44l$ and sanitation< all of w+ic+ alread$ suffer from a
su&stantial deficit from t+e 4ast in terms of ca4acities as well as efficiencies in t+e
deli#er$ of critical infrastructure ser#ices T+e econom$ can get a &oost t+roug+
im4ro#ed infrastructure T+e im4lementation of infrastructure 4rojects itself 4ro#ides
jo&s and su44orts economic de#elo4ment and it contri&utes to an im4ro#ed =ualit$ of
life for mankind
As t+ese 4rojects re=uire +uge ca4ital in#estments and t+e returns are s4read o#er
longer time +ori>ons< financing t+e e#er growing needs of infrastructure 4rojects
remains an area of t+rust ? concern
T+is re4ort t+rows lig+t on different sources of infrastructure financing a#aila&le in
India and t+eir e"4osure to infrastructure 4rojects T+e growt+ 4otential< go#ernment
initiati#es and issues and c+allenges of infrastructure financing sector are discussed
in &rief Ste4s followed in issuing finance to infrastructure finance 4rojects are
discussed along wit+ different forms of funding a#aila&le from commercial &anks
Bank of Baroda@s financing to renewa&le energ$ 4roject is taken as sam4le 4roject
and +as &een studied in details and major 4arameters w+ic+ are considered for loan
a44ro#al 3 furt+er de&t ser#icing are outlined along wit+ 4roject e"ecution details
Finall$ &ased on findings of t+e stud$ some recommendations are made
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Infrastructure Project Financing 2013
ABO.T BANA OF BA2O5A
Bank of Baroda BBoBC is an Indian state1owned &anking and financial ser#ices
com4an$ +ead=uartered in 7adodara It offers a range of &anking 4roducts and
financial ser#ices to cor4orate and retail customers t+roug+ its &ranc+es and t+roug+
its s4eciali>ed su&sidiaries and affiliates in t+e areas of retail &anking< in#estment
&anking< credit cards and asset management Its total glo&al &usiness was 8</!,
&illion as of 0, 6arc+ !/,0< making it t+e second largest Bank in India after State
Bank of India In addition to its +ead=uarters in its +ome state of *ujarat it +as a
cor4orate +ead=uarter in t+e Bandra Aurla Com4le" in 6um&ai BoB +as total a
network of %!80 &ranc+es Bout of w+ic+ %,)! &ranc+es are in IndiaC and offices< and
o#er !/// AT6s
Banks Mission Statement
To &e a to4 ranking National Bank of International Standards committed to
augmenting stake +oldersD #alue t+roug+ concern< care and com4etence
Brief History:
Bank of Baroda was incor4orated in ,9/8 &$ 6a+araj Sat$ajirao *aekwad III It
launc+ed its first &ranc+ in ,9,/ in A+emada&ad In ,9'0< its first &ranc+es in
Aam4ala and 6om&asa &ecame o4erational Its o#erseas &ranc+ in Nairo&i was
o4ened in ,9'%
Products & Services:
Bank of Baroda 4ro#ides it &anking 4roducts and ser#ices in se#eral categories like
4ersonal< International &usiness< treasur$< cor4orate and rural In 4ersonal &anking
section Bank of Baroda offers 4roducts like de4osits< de&it cards< *en1Ne"t<
4ersonal &anking ser#ices< loans< lockers and credit cards
In &usiness &anking sector< Bank of Baroda offers 4roducts and ser#ices suc+ as
de4osits &usiness &anking ser#ices< loans and ad#ances and lockers In cor4orate
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Infrastructure Project Financing 2013
&anking section Bank of Baroda offers 4roducts and ser#ices like w+olesale &anking<
loans and ad#ances< de4osits and cor4orate &anking ser#ices
INT2O5.CTION
Infrastructure Financing is t+e long term financing of infrastructure and industrial
4rojects &ased u4on t+e 4rojected cas+ flows of t+e 4roject rat+er t+an t+e &alance
s+eets of t+e 4roject s4onsors .suall$< an Infrastructure 4roject financing structure
in#ol#es a num&er of e=uit$ in#estors< known as s4onsors< as well as
a s$ndicate of &anks or ot+er lending institutions t+at 4ro#ide loans to t+e o4eration
Infrastructure 4rojects differ in some #er$ significant wa$s from manufacturing
4rojects and e"4ansion and moderni>ation 4rojects undertaken &$ com4anies Some
of im4ortant features of Infrastructure Financing are discussed in ne"t section

FEAT.2ES OF INF2AST2.CT.2E FINANCE

1. onger MaturityE Infrastructure finance tends to +a#e maturities &etween ' $ears
to %/ $ears T+is reflects &ot+ t+e lengt+ of t+e construction 4eriod and t+e life of t+e
underl$ing asset t+at is created A +$dro1electric 4ower 4roject for e"am4le ma$ take
as long as ' $ears to construct &ut once constructed could +a#e a life of as long as
,// $ears< or longer
2. arger !mountsE F+ile t+ere could &e se#eral e"ce4tions to t+is rule< a
meaningful si>ed infrastructure 4roject could cost a great deal of mone$ For
e"am4le a kilometre of road or a mega1watt of 4ower could cost as muc+ as .SG ,/
million and conse=uentl$ amounts of .SG !/// to .SG !'/ 6illion B2s9// &illion
to 2s,!// &illionC could &e re=uired 4er 4roject
3. Hig"er #isk: Since large amounts are t$4icall$ in#ested for long 4eriods of time it
is not sur4rising t+at t+e underl$ing risks are also =uite +ig+ T+e risks arise from a
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Infrastructure Project Financing 2013
#ariet$ of factors including demand uncertaint$< en#ironmental sur4rises<
tec+nological o&solescence Bin some industries suc+ as telecommunicationsC and
#er$ im4ortantl$< 4olitical and 4olic$ related uncertainties
$. %i&ed and o' ()ut *ositive+ #ea, #eturnsE *i#en t+e im4ortance of t+ese
in#estments and t+e cascading effect +ig+er 4ricing +ere could +a#e on t+e rest of
t+e econom$< annual returns +ere are often near >ero in real terms -owe#er< once
again as in t+e case of demand< w+ile real returns could &e near >ero t+e$ are
unlikel$
to &e negati#e for e"tended 4eriods of time w+ic+ need not &e t+e case for
manufactured goods 2eturns +ere need to &e measured in real terms &ecause often
t+e re#enue streams of t+e 4roject are a function of t+e underl$ing rate of inflation
SO.2CES OF INF2AST2.CT.2E FINANCIN* IN IN5IA
In first 0 $ears of ele#ent+ 4lan< &udgetar$ su44ort constituted H%' 4er cent of t+e total
infrastructure s4ending T+e de&t from Commercial &anks< NBFCs< Insurance Com4anies
and t+e e"ternal sources constituted H%, 4er cent of t+e funding w+ile t+e &alance ,% 4er
cent was funded t+roug+ E=uit$ and F5I
Sources of %unds for infrastructure -nvestment
Banks:
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Infrastructure Project Financing 2013
T+ere +as &een a ra4id growt+ in &ank credit to infrastructure 4rojects wit+ &anks
contri&uting to t+e tune of !,I of t+e total in#estment during first 0 $ears of ,,t+ fi#e
$ear 4lan, 6ost of t+is funding +as &een 4ro#ided &$ Pu&lic Sector &anks and in
some cases t+e sectoral 4rudential ca4s +a#e almost &een reac+ed Bes4eciall$ for
4ower sectorC t+us constraining an$ furt+er lending to t+ese sectors Banks +a#e
4rudential e"4osure ca4s for infrastructure sector lending as a w+ole as well as for
indi#idual sectors
Banks ,ending to'ards infrastructure investment
.on )anking financia, com*anies (.B%/s+
O#er t+e ele#ent+ 4lan 4eriod< NBFCs lending increased s+ar4l$ 4rimaril$ due to
+ig+er demand from 4ower< telecom and roads sectors
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Infrastructure Project Financing 2013
0ro't" registered )y .B%/s to'ards infrastructure investment and .B%/s
,ending
ife insurance /om*anies
Life insurance com4anies are re=uired to in#est at least ,'I of t+eir Life Fund in
infrastructure and +ousing In#estment &$ insurance com4anies in !/,! +as onl$
&een ,/I of insurance life fund A.6 w+ic+ indicates furt+er 4otential to utili>e
insurance com4anies to fund infrastructure de#elo4ment 6oreo#er insurance
4enetration is estimated to continue to rise< wit+ t+e insurance 4remium e"4ected to
grow from t+e current a44ro"imate %I of *5P to (%I of *5P &$ t+e end of t+e
twelft+ 4lan T+is will generate furt+er 4otential for infrastructure funding +owe#er it
will &e su&ject to management of 4rudential and regulator$ constraints in t+e sector
1&terna, commercia, )orro'ings (1/B2s+
T+e s+are of ECB in total infrastructure in#estments +as &een recording a decline
T+is could &e a reflection of t+e wa$ regulator$ en#ironment is #iewed &$ t+e
international in#estors T+e$ are not keen on making long term in#estments in
en#ironments w+ic+ +a#e regulator$ idios$ncrasies .nder1de#elo4ed financial
markets?4roducts ma$ +a#e also contri&uted to t+is dro4 in ECB funding
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Infrastructure Project Financing 2013
S"are of 1/Bs in tota, infrastructure investment
13uity
A large 4art of e=uit$ in#estments relies on foreign in#estments wit+ domestic
in#estment institutions not s+owing significant interest in taking e=uit$ in
Infrastructure 4rojects T+e e=uit$ in#estment for t+e twelft+ 4lan 4eriod is estimated
to &e 2s %'( lak+ crores
T+ere are t+ree 4rinci4al forms of finance for infrastructure ser#ice deli#er$E
1. Pu),ic %inanceE In industriali>ed countries 4u&lic finance consists of go#ernment
4ro#iding e=uit$ financing Bseed ca4ital< in C+ina@s termsC t+roug+ general &udget
reser#es< earmarked reser#es< self1raised funds Beg licensing fee< and sale< rental
or leasing of go#ernment assetsC< and intergo#ernmental grants and fiscal transfers
5e&t financing in t+e 4u&lic finance s$stem is t+roug+ 4olic$ loans at concessional
rates< su44lier credits< and fi"ed income securities in t+e form of ta"1secured &onds
and re#enue &onds secured &$ 4roject1related re#enue streams In some cases<
4u&lic de&t financing is guaranteed &$ go#ernments eit+er e"4licitl$ or im4licitl$
2. /or*orate financeE Cor4orate finance consists of cor4orations 4ro#iding e=uit$
financing t+roug+ retained earnings and s+are+olders@ e=uit$ 5e&t financing takes
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Infrastructure Project Financing 2013
t+e form of commercial &ank &orrowing< su&ordinated de&t Bincluding con#erti&le
de&entures and 4referred stocksC< 4ri#atel$14laced &orrowing< and issuance of fi"ed
income securities T+ese securities can &e s+ort1term in t+e form of commercial
4a4er< or of longer durations in t+e form of cor4orate &onds 5e&t is secured t+roug+
collaterali>ation of cor4orate assets and assignments of recei#a&les
3. Pro4ect %inanceE Project finance consists of go#ernment< cor4orations and PPP
financing in#estments solel$ t+roug+ t+e re#enue stream of t+e infrastructure
4rojects wit+out taking recourse to go#ernment guarantees 6ost 4roject finance is
made a#aila&le &$ 4roject1s4ecific com4anies wit+ e=uit$ +eld &$ s4onsors E=uit$
takes t+e form of s4onsor in#estment in s+are ca4ital of t+e 4roject com4an$ 5e&t is
full$ secured t+roug+ t+e re#enue stream of t+e infrastructure 4rojectJ t+is stream is
assigned to lenders t+roug+ securit$ agreements wit+ trustees and does not a44ear
on s4onsor com4anies@ &alance s+eets 5e&t financing usuall$ takes t+e form of a
com&ination of &ank loans Busuall$ s$ndicated for large 4rojectsC< s4onsor loans<
su&ordinated loans< su44liers@ credits< and &onds of t+e 4roject com4an$ Cor4orate
and 4roject finance is clearl$ a44lica&le onl$ to 4ri#ate and clu& goods t$4e of
infrastructure for w+ic+ t+ere is sufficient re#enue stream t+at can &e legall$
collaterali>ed to lenders
*2OFT- POTENTIAL
Planning commission is targeting an in#estment of ', lak+ crores o#er t+e duration
of t+e twelft+ fi#e $ear 4lan w+ic+ is almost dou&le t+e amount 4ro4osed under t+e
ele#ent+ 4lan F+ile t+e s+are of 4u&lic in#estment is 4rojected to decrease from
(!I to a le#el of '0I in t+e twelft+ 4lan< t+e s+are of 4ri#ate in#estment is 4rojected
to increase from 08I Bele#ent+ 4lanC to %)I Btwelft+ 4lanC of t+e total in#estment
In com4arison to ele#ent+ 4lan< a #er$ significant growt+ BK,//IC in in#estments
BBudgetar$ 3 Pri#ateC +as &een 4rojected for Non1Con#entional Energ$< 62TS<
Ports and Storage All t+e ot+er sectors are also 4rojected to +a#e an in#estment
growt+ of K'/I Planning commission is e"4ecting 4ri#ate sector to 4la$ a ke$ role
in twelft+ 4lan wit+ an o#erall in#estment growt+ of ,0,I Pri#ate in#estment is
4rojected to grow in all t+e infrastructure sectors wit+ 2ailwa$s< Fater Su44l$<
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Infrastructure Project Financing 2013
Storage and Ports 4rojected to grow at K!//I w+ereas in#estment in ot+er sectors
is 4rojected to grow at K,//I O#erall 4ri#ate sector in#estment will &e a ke$ to
success of infrastructure de#elo4ment under twelft+ fi#e $ear 4lan
Pro4ections for investment in infrastructure for t"e t'e,ft" *,an
B2s D/// crore at !/,,1,! 4ricesC
*O7E2N6ENT INITIATI7ES
In order to &roaden t+e &ase< t+e go#ernment 4romoted Industrial Finance
Cor4oration of India BIFCIC to 4ro#ide long term ca4ital to industr$ 2eser#e Bank of
India B2BIC 4romoted Industrial 5e#elo4ment Bank of India BI5BIC for t+e same
4ur4ose Besides< Industrial Credit and In#estment Cor4oration of India BICICIC was
incor4orated in t+e 4ri#ate sector T+ese t+ree institutions were to lend mone$ for
4roject finance< w+ile &anks would su44ort t+e working ca4ital needs of industr$
In t+e ne"t 4+ase of growt+< s4ecialised institutions were created< suc+ as< E"4ort
Credit 3 *uarantee Cor4oration BEC*CC for guaranteeing e"4ort recei#a&les of
Indian industr$< S+i44ing Credit and In#estment Cor4oration of India BSCICIC for
addressing t+e financial needs of s+i44ing industr$ and E"4ort1Im4ort Bank of India
BE:I6C for financing t+e international &usiness of Indian com4anies In order to
address t+e re#i#al needs of industr$< Industrial 2e1construction Bank of India BI2BIC
was created
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.nit Trust of India B.TIC was 4romoted< among ot+er reasons< to mo&ilise mone$
from t+e 4u&lic &$ issuing mutual fund units Life Insurance Cor4oration BLICC was
created to co#er t+e li#es of Indians T+ese two institutions +ad access to long term
mone$ collected from Indians< w+ic+ were made a#aila&le for lending to Indian
industr$ T+e$ largel$ in#ested in &onds and de&entures issued &$ com4anies t+at
needed t+e mone$
Com4anies were also 4ermitted mo&ilise mone$ from t+e 4u&lic &$ acce4ting fi"ed
de4osits of u4to 0 $ears A few large com4anies and financial institutions also
managed to issue &onds and de&entures to t+e 4u&lic In t+e mid1,9)/s< w+en
go#ernment 4olic$ forced foreign com4anies to issue s+ares to Indian in#estors at
low 4rices< retail in#estors got interested in t+e e=uit$ market T+us< mone$ was
a#aila&le from &anks< financial institutions and retail in#estors< t+roug+ a mi" of de&t
and e=uit$
.ntil t+e earl$ ,99/s< all interest rates in t+e India econom$ were determined &$ t+e
*o#ernment or 2BI Similarl$< e=uit$ s+ares +ad to &e issued at a 4rice determined
&$ t+e Controller of Ca4ital Issues BCCIC Se#eral &rokers and su&1&rokers were
acti#e in mo&ilising mone$ from retail in#estors Issues of securities to t+e 4u&lic
were +andled &$ 6erc+ant Bankers *raduall$< as 4art of li&eralisation< interest rates
were freed
Currentl$< 2BI onl$ controls a few s+ort term interest rates Besides< wit+ t+e creation
of Securities and E"c+ange Board of India BSEBIC< a regulator$ framework was
created for com4anies to decide t+e 4remium at w+ic+ t+e$ would issue s+ares A
4+ase of consolidation followed< and t+e 4+enomenon of uni#ersal &anking was
introduced Some of t+e institutions mentioned a&o#e c+anged form or were merged
into ot+er institutions .ni#ersal &anks started offering a range of retail and
w+olesale &anking ser#ices< including 4ro#ision of working ca4ital and long term
finance 6erc+ant &anks +a#e mor4+ed into in#estment &anks< t+at are 4re4ared to
in#est in t+e com4anies wit+ w+om t+e$ do &usiness T+ere is a fairl$ acti#e 4rimar$
and secondar$ market in e=uit$ T+e sources of funds for industr$ +a#e grown from
domestic to international O#er t+e last few $ears< Indian com4anies +a#e also
&ecome acti#e in setting u4 4rojects outside t+e countr$ Anot+er de#elo4ment since
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Infrastructure Project Financing 2013
t+e turn of t+e centur$ is t+e willingness of *o#ernment to work wit+ t+e 4ri#ate
sector in t+e infrastructure s4ace 6ore and more sectors are &eing t+rown u4 for
Indian 4ri#ate sector to set u4 and o4erate E#en foreign direct in#estment BF5IC u4to
,//I is 4ermitted in some sectors suc+ as 4ower< roads and +ig+wa$s
T+e *o#ernment of India reali>es t+e im4ortance of accelerating t+e in#estments in
infrastructure to &oost t+e countr$@s slowing econom$ T+erefore< it +as set a
massi#e target for dou&ling in#estment in infrastructure from 2s !) lak+ crores
Bele#ent+ 4lan L !/,,?,! 4ricesC to 2s ', lak+ crores during t+e twelft+ 4lan 4eriod<
ie< !/,!L!/,)T+e s+are of infrastructure in#estment in *5P is 4lanned to &e
increased to more t+an ,/I &$ t+e end of t+e twelft+ 4lan T+is in#estment< if it
materiali>es< can 4ro4el India@s economic growt+ to a +ig+er trajector$
-I*-LI*-TS OF .NION B.5*ET !/,01,%
Pro4osed allocation of 2s ', lak+ crores towards infrastructure in#estment
during t+e ,!t+ Plan 4eriod wit+ H%)I e"4ected to come from t+e 4ri#ate
sector
New I5F launc+ed to ta4 t+e o#erseas markets for long term 4ension and
insurance funds< for financing infrastructure 4rojects Four I5Fs +a#e &een
registered wit+ SEBI out of w+ic+ two of t+em were launc+ed in t+e mont+ of
Fe&ruar$< !/,0
2s '/</// crores target for t+e ta" free &onds for financing infrastructure
4rojects in !/,01,%< w+ic+ is less t+an t+e amount B2s (/</// croresC
assigned in t+e 4re#ious $ear
India Infrastructure Finance Cor4oration Ltd BIIFCLC< in 4artners+i4 wit+ t+e
Asian 5e#elo4ment Bank< will offer credit en+ancement to infrastructure
com4anies t+at wis+ to access t+e &ond market to ta4 long term funds
To encourage in#estment< com4anies would &e gi#en in#estment allowance
for 4rojects of 2s ,// crores or a&o#e &etween A4ril ,< !/,% and 6arc+ 0,<
!/,' T+e com4anies would &e allowed to deduct ,'I of t+e in#estment in
addition to t+e normal de4reciation rates
Pro4osal to raise cor4us of 2ural Infrastructure 5e#elo4ment Fund B2I5FC to
2s !/</// crores
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Infrastructure Project Financing 2013
Ca&inet Committee on In#estment BCCIC +as &een set u4 to monitor and
re#iew infrastructure 4rojects
2OA5 A-EA5
A coordinated effort is re=uired from t+e go#ernment< 2eser#e Bank of India<
Securities and E"c+ange Board of India and Insurance 2egulator$ and 5e#elo4ment
Aut+orit$ BI25AC to create a #i&rant &ond market Introducing a suita&le mec+anism
for credit en+ancement ena&les cor4orate wit+ lower credit rating to access t+e &ond
market
Infrastructure de#elo4ment continues to &e t+e focus area for t+e go#ernment and in
t+e recent 4ast it +as introduced #arious 4ro4osals to catal$>e in#estments in t+e
infrastructure sector some of w+ic+ will re=uire significant infusion of funding t+roug+
4ri#ate sector In order to mo&ili>e t+e 4ri#ate funding for infrastructure de#elo4ment
a multi14ronged reform 4rocess would need to &e 4ursued In addition to significantl$
im4ro#ed ena&ling en#ironment focused s$stematic c+anges and inter#entions will
&e re=uired to &e im4lemented
ISS.ES 3 C-ALLEN*ES CONST2AININ* INF2AST2.CT.2E F.N5IN*
On t+e de&t side t+e major lenders are commercial &anks *oing forward rel$ing on
commercial &anks as major lenders is 4recarious as &anks are likel$ to &e
constrained in t+eir future lending due to t+e issue of asset lia&ilit$ mismatc+ Also
&anks +a#e not &een a&le to offer #er$ long tenure loans and t+e reset 4eriod on
t+ese loans is #er$ s+ort Finall$ t+e e"4osure norms ma$ 4re#ent &anks from
lending to large de#elo4ers in India t+ere&$ st$mieing t+e growt+ of PPP
infrastructure in India
On t+e e=uit$ side we find t+at 4romoter@s of PPP infrastructure 4rojects +a#e to 4ut
in most of t+e e=uit$ re=uirement of an infrastructure 4roject T+ere is an acute
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Infrastructure Project Financing 2013
s+ortage of e=uit$ wit+ 4ri#ate de#elo4ers and if t+e 4resent trend continues t+en
t+e$ will not &e a&le to attract t+e re=uisite amount of de&t for t+e 4rojects .se of
su& de&t +as eased t+e e=uit$ re=uirement somew+at -owe#er< restrictions on
taking out of t+e e=uit$ &$ de#elo4ers remain a cause for concern In#ol#ement of
financial in#estors in &idding for infrastructure 4rojects is also limited at 4resent as is
t+e in#ol#ement of strategic in#estors and international com4anies
T+ere are a lot of ot+er +indrances in ac+ie#ing eas$ financing for infrastructure
4rojects in India w+ic+ are as followsE
1. Savings not c"anne,i5ed 6 Alt+oug+ India@s sa#ing rate ma$ &e as +ig+ as 0)I<
&ut almost one1t+ird of sa#ings are in 4+$sical assets Also financial sa#ings are not
4ro4erl$ c+anneli>ed towards infrastructure due to lack of long term sa#ings in form
of 4ension and insurance
2. #egu,ated 1arnings 6 Earnings from 4rojects like 4ower and toll Bannuit$C ma$
&e regulated leading to limited lucrati#e o4tions for 4ri#ate sector and difficult$ for
lenders Also an$ increase in in4ut cost o#er t+e o4erational life is #er$ difficult to
4ass on to customers due to 4olitical 4ressures
3. !sset7ia)i,ity Mismatc" 6 6ost of t+e &anks face t+is issue due to long term
nature of infrastructure loans and s+ort term nature of de4osits
$. imited Budgetary #esources 6 Fit+ widening fiscal deficit and 4assing of
F2B6 act< go#ernment +as limited resources left to meet t+e ga4 in infra financing
2est of funds +as to &e met &$ e=uit$ ? de&t financing from 4ri#ate 4arties and PS.s
8. 9nderdeve,o*ed :e)t Markets 7 Indian de&t market is largel$ com4rised of
*o#ernment securities< s+ort term and long term &ank 4a4ers and cor4orate &onds
T+e go#ernment securities are t+e largest market and it +as e"4anded to a great
amount since ,99, -owe#er< t+e 4olic$makers face man$ c+allenges in terms of
de#elo4ment of de&t markets likeE
M Effecti#e market mec+anism
M 2o&ust trading 4latform
M Sim4le listing norms of cor4orate &onds
M 5e#elo4ment of market for de&t securiti>ation
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Infrastructure Project Financing 2013
;. #isk /oncentration 6 In India< man$ lenders +a#e reac+ed t+eir e"4osure limits
for sector lending and lending to single &orrower B,'I of ca4ital fundsC T+is
mandates need for &etter risk di#ersification and distri&ution
<. #egu,atory /onstraints 6 T+ere are lot of e"4osure norms on 4ension funds<
insurance funds and PF funds w+ile in#esting in infrastructure sector in form of de&t
or e=uit$ T+eir traditional 4reference is to in#est in 4u&lic sector of go#ernment
securities
INF2AST2.CT.2E FINANCIN* IN OT-E2 CO.NT2IES
Fit+ an understanding of w+at is +a44ening in India it is im4ortant to com4are it wit+
+ow infrastructure 4rojects are financed in ot+er countries T+is will +el4 to +ig+lig+t
t+e ga4s faced &$ t+e infrastructure financing market in India and will also 4oint to
w+at can &e done a&out t+em< &ased on t+e e"4eriences in ot+er countries
India is not uni=ue in +a#ing a su&stantial infrastructure creation re=uirement In fact
as earl$ as t+e nint+ fi#e $ear 4lan Bo#er t+e 4eriod ,99(1!///C C+ina +ad 4rojected
an infrastructure re=uirement of nearl$ .S5 0/' &illion< close to t+e infrastructure
financing re=uirement &eing 4rojected in India for t+e ,,t+ fi#e $ear 4lan And like
India commercial &anks +a#e &een t+e major source for financing t+is infrastructure
re=uirement T+e role of ot+er financial institutions and ca4ital markets +as not &een
significant It +as also &een seen t+at C+inese &anks are also resorting to using t+e
cor4orate finance model as o44osed to 4roject finance model for some infrastructure
4rojects to &ring in increased comfort
As far as ot+er Asian countries are concerned t+e infrastructure financing situation is
also not muc+ different from India Before t+e Asian economic crisis t+ere was a
significant flow of foreign currenc$ infrastructure financing< w+ic+ was arranged &$
international &anks International &ank 4artici4ation was +ig+ in a lot of countries as
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Infrastructure Project Financing 2013
&anks followed international de#elo4ers w+o 4artici4ated significantl$ in de#elo4ing
infrastructure in t+ese countries T+e long term relations+i4 &etween international
&anks and de#elo4ers +el4ed to gi#e an additional sense of comfort in financing
4rojects Comfort was also got from #arious guarantees gi#en &$ *o#ernments to
reduce t+e risk of t+e lenders -owe#er< t+e e"4erience of t+is first round of
infrastructure de#elo4ment was &itter after t+e East Asian economic crisis +it Some
countries like Indonesia defaulted on t+e guarantees offered to 4roject s4onsors as
t+e$ were +it &$ de#aluation of t+e local currenc$ It was also reali>ed during t+e
crisis t+at man$ 4rojects +ad &een financed on t+e &asis of =uestiona&le #ia&ilit$ and
under 4ressure from t+e economic downturn a lot of t+e 4rojects suffered As
infrastructure 4rojects floundered in t+e wake of t+e crisis t+e increased risk
4erce4tion led to a significant reduction in t+e flow of ca4ital for infrastructure
4rojects in t+ese countries Fit+ international ca4ital flows dr$ing u4 t+ere +as &een
an increased reliance on domestic markets and commercial &anks in man$ countries
to 4ro#ide t+e financing needed for infrastructure 4rojects Infrastructure sector in
countries wit+ +ig+ li=uidit$ in t+e &anking s$stem +a#e &een a&le to tide t+e crisis as
local commercial &anks in t+ese countries +a#e started to take a lead in
infrastructure financing T+e major reason for reliance on t+e &anking s$stem +as
&een t+at ot+er a#enues for financing are not significantl$ de#elo4ed in t+ese
markets
C+ina +as seen t+e conse=uences of e"cessi#e reliance on commercial &anks to
lend to t+e infrastructure sector C+inese &anks are saddled wit+ #er$ +ig+ le#els of
NPAs and as a conse=uence #er$ low returns on a#erage assets T+e returns on
a#erage assets for C+inese &anks are in t+e &elow /!/ as com4ared to Indian
&anks w+ere t+ese returns range from just &elow , to significantl$ more t+an ,
Banks are sur#i#ing onl$ &ecause of t+e +ig+ le#els of li=uidit$ in t+e market and
&ecause t+e C+inese *o#ernment is strongl$ &acking t+em
Confidence of international lenders +as also slowl$ &een returning -owe#er< in t+eir
second coming international &anks +a#e often &een &eaten &$ +ig+l$ li=uid local
&anks w+ic+ +a#e &een a&le to out 4rice international &anks as well as s+own
willingness to take +ig+er le#els of risk w+ile gi#ing out 4lain #anilla 4roducts
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Infrastructure Project Financing 2013
International &anks wit+ +ig+er financing cost as well as currenc$ risks +a#e not
&een a&le to offer t+e kind of 4roducts needed &$ t+e markets in t+ese countries
If we contrast t+e a&o#e wit+ t+e situation 4re#ailing in India it +as &een found t+at
t+ere are man$ similarities Commercial &anks lead infrastructure financing in India
like elsew+ere Also like India most ot+er de#elo4ing countries lack alternati#e
means of financing infrastructure T+ere are some countries like C+ile and 6ala$sia
w+ic+ also +a#e a strong cor4orate &ond market w+ic+ +el4s in raising infrastructure
&onds But e#en in t+ese countries t+e tenure of t+e &onds is not significantl$ more
t+an t+e tenure &eing offered &$ t+e &anks to infrastructure 4rojects in India
As t+e C+inese e"am4le s+ows large in#ol#ement of t+e &anks in financing
infrastructure can lead to deterioration in &ank finances T+us if t+e +ealt+ of t+e
&anking sector +as to &e maintained Bor im4ro#ed u4on in lig+t of Basel II guidelinesC
t+en alternati#es to &ank lending in infrastructure 4rojects will need to &e found
Also< going forward< a large 4ro4ortion of t+e infrastructure financing will &e local
currenc$ &ased e#en t+oug+ ot+er countries +a#e successfull$ im4lemented 4rojects
wit+ e"ternal commercial &orrowing T+is is &ecause in India t+e 2BI fears t+at a
significant rise in li=uidit$ in t+e market will increase t+e inflation rate w+ic+ it wants
to kee4 in c+eck Also 2BI is =uite stringent on e"c+ange risk management
F+ile it is im4erati#e t+at ot+er sources of infrastructure financing will need to &e
ta44ed in India t+ere are #er$ few successful tem4lates t+at e"ist in t+e de#elo4ing
world for de#elo4ing markets for suc+ means of financing As a conse=uence India
will +a#e to largel$ c+art its own course on t+e matter taking cogni>ance of
de#elo4ments elsew+ere T+e aim of t+e reforms will +a#e to &e to ease t+e
constraints t+at are faced in infrastructure financing
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Infrastructure Project Financing 2013
INF2AST2.CT.2E FINANCIN* B; CO66E2CIAL BANAS
Banks +a#e traditionall$ funded t+e working ca4ital re=uirements of medium and
large industrial 4rojects -owe#er< wit+ t+e onset of financial sector reforms< &anks
+a#e e"4anded t+eir role from mere 4ro#iders of working ca4ital finance to co#er
ru4ee term loans< guarantees and to a limited e"tent foreign e"c+ange loans for
large 4rojects
As 4art of &anking sector reform< in India 2BI +as rela"ed man$ of t+e restrictions
go#erning &ank 4artici4ation in 4roject financing Since Octo&er ,99%< indi#idual
&anks are 4ermitted to gi#e long1term loans u4 to 2s ! &illion to a single 4roject
wit+out 4rior 2BI a44ro#al w+ile t+e aggregate limit for &ank lending in t+e form of
long1term loans to a single 4roject +as &een raised to 2s ' &illion T+is rela"ation
s+ould result in &anks emerging as an im4ortant source of long1term funds for
medium si>ed infrastructure 4rojects
=y*es of %unding >*tions
=?P1S >% %9.:-.0 >P=->.S !@!-!B1 %># -.%#!S=#9/=9#1 P#>A1/=
%-.!./1
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Infrastructure Project Financing 2013
%9.: B!S1: -M-=S:
=erm oan:
As t+e name suggests< t+ese loans are gi#en for fi"ed 4eriod of time wit+ t+e
4ro#ision t+at its re4a$ment s+all also come in regular 4re1fi"ed 4eriodical
instalments w+ic+ ma$ &e e=uated or graduated T+ese loans are generall$
sanctioned for ac=uiring fi"ed assets &$ t+e 4ersons engaged in &usiness and trade
or in manufacturing or ser#icing etc T+is is a source of de&t finance for long term
4ur4ose as 4roject im4lementation takes from , $ear to 0 $ears de4ending on t+e
t$4e of 4roject and t+e loan is re4a$a&le in ' to ,/$ears T+erefore< it is also known
as NTerm Finance@ T+ese loans are generall$ re4a$a&le on t+e &asis of re4a$ment
agreement made according to t+e generation of future cas+ flow
Bank gi#es 2u4ee loans as well as Foreign Currenc$ term loan
a #u*ee currency ,oan L T+ese loans are 4ro#ided for incurring e"4enditure for
land< &uilding< 4lant 3 mac+iner$< tec+nical know1+ow< miscellaneous fi" assets<
4reliminar$ e"4enses 4re1o4erati#e e"4enses and margin mone$ for working
ca4ital
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,9
Non-fund Based
Letter of Credit
Bank Guarantees
Deferred Payment Guarantees
Fund Based
Term loan: Rupee Term loan
and Foreign Currency Term
loan
Demand loan
Buyers credit
Working Capital
Infrastructure Project Financing 2013
) %oreign currency ,oan L T+ese loans are 4ro#ided for meeting t+e foreign
currenc$ e"4enditure towards im4ort of 4lant< mac+iner$ and e=ui4ment< and
4a$ment of foreign tec+nical know1+ow fees
T+e 4eriodical lia&ilit$ for interest and 4rinci4al remains in t+e currenc$ of t+e loan
and is translated into ru4ees at t+e 4re#ailing rate of e"c+ange for making 4a$ments
to t+e res4ecti#e Bank?financial institutions T+ese term loans t$4icall$ re4resent
secured &orrowing Assets w+ic+ are financed wit+ t+e 4roceeds of t+e term loan
4ro#ide t+e 4rime securit$ Ot+er assets of t+e firm ma$ ser#e as additional?collateral
securit$ All loans 4ro#ided &$ &anks< along wit+ interest< li=uidated damages<
commitment c+arges< e"4enses< etc< are secured &$ wa$ ofE
a First e=uita&le mortgage of all immo#a&le 4ro4erties of t+e &orrower< &ot+
4resent and future If t+e term loan is e"tended &$ more t+an one &ank< t+en
t+e c+arge on t+e assets to t+e lenders is normall$ on N4ari 4assu@ &asis
& Second c+arge on +$4ot+ecation of all mo#a&le 4ro4erties of t+e &orrower<
&ot+ 4resent and future< su&ject to 4rior c+arges in fa#our of commercial
&anks for o&taining working ca4ital ad#ance in t+e normal course of
&usiness
To t+e general categor$ of &orrowers< &ank c+arges an interest rate t+at is
determined relating to t+e credit risk of t+e 4ro4osal< su&ject usuall$ to a certain floor
rate L generall$ Bank@s Prime Lending 2ate BBPL2C Interest is c+arged on a
mont+l$ &asis and de4ending on t+e terms of t+e 4roject< eit+er ca4itali>ed or
ser#iced during t+e dis&ursement 4eriod
T+e interest &urden decline o#er time on account of re4a$ment of t+e 4rinci4al<
w+ere as 4rinci4al re4a$ment ma$ remain constant if &ased on e=ual installments
Princi4al re4a$ment ma$ #ar$ if t+e re4a$ment is fi"ed on &allooning terms w+ic+
conse=uentl$ de4ends on t+e cas+ flow from t+e 4roject T+us t+e total de&t
ser#icing &urden declines o#er time
:emand oan:
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Infrastructure Project Financing 2013
T+is is t+e fund demanded instantaneousl$ &$ &orrower due to uncertain c+anges in
t+e situation Beg economic downturn< inflation< 4rice rise in manufacturing 4roduct
etcC T+is is t+e loan Bsuc+ as an o#erdraftC wit+ or wit+out a fi"ed maturit$ date< &ut
w+ic+ can &e recalled an$time &$ t+e lender and must &e 4aid in full on t+e date of
demand T+is is generall$ not used for 4roject finance &ut its rele#ance wit+ 4roject
finance &ecomes more im4ortant in ad#erse situations if term loan is alread$
financed for t+e 4roject T+ese loans are generall$ re4a$a&le on t+e &asis of
re4a$ment agreement go#erned under negotia&le instruments Beg Promissor$
Notes< Bills of E"c+ange< etcC 5uration of t+ese loans is generall$ ,10 $ears
Buyers /redit:
According to FE6A guidelines on Trade Credits< Bu$er@s Credit refers to loans for
4a$ment of im4orts into India arranged &$ t+e im4orter from a &ank or financial
institution outside India for maturit$ of less t+an t+ree $ears
Bu$er@s credit for im4orts of raw material?non ca4ital goods into India can &e
a#ailed for ma"imum 4eriod of one $ear and Bu$er@s credit for ca4ital goods
can &e a#ailed for ma"imum 4eriod of less t+an t+ree $ears
T+e credit can &e raised irres4ecti#e of w+et+er im4ort takes 4lace under an
arrangement of letter of credit issued &$ a &ank in India or w+et+er t+e su44lier
sends t+e &ills on collection &asis
.nder t+e &u$er@s credit arrangement< t+e e"4orter ie su44lier of t+e goods
recei#es 4a$ment instantl$ in case of sig+t documents and on due date of t+e
drafts?&ills
Bu$er@s Credit is arranged for a maturit$ of less t+an t+ree $ears No roll
o#er?e"tension is 4ermitted &e$ond t+e 4ermissi&le 4eriod Bu$er@s credit for
t+ree $ears and a&o#e comes under t+e 4ur#iew of ECB< w+ic+ are strictl$
go#erned &$ ECB guidelines of 2BI
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Infrastructure Project Financing 2013
Borking /a*ita, %inance:
A firmDs working ca4ital is t+e mone$ it +as a#aila&le to meet current o&ligations
Bt+ose due in less t+an a $earC and to ac=uire earning assets Banks offers
cor4orations Forking Ca4ital Finance to meet t+eir o4erating e"4enses< 4urc+asing
in#entor$< and recei#a&les financing
.>. %9.: B!S1: -M-=S:
etter >f /redit:
A letter of credit is a commercial instrument of assured 4a$ment and widel$ used &$
t+e &usiness communit$ for its #arious ad#antages It is an instrument &$ w+ic+ a
&ank undertakes to make 4a$ment to a seller on 4roduction of documents sti4ulated
in t+e credit T+e credit s4ecifies as to w+en t+e documents are 4resented to t+e
4a$ing &ank or at some future date< de4ending u4on t+e terms sti4ulated in t+e
credit
Bank 0uarantee:
*uarantee is a contract to e"ecute t+e 4romise< or disc+arge t+e lia&ilit$ of a t+ird
4erson in case of +is default In t+e ordinar$ course of &usiness< t+e &ank often
issues guarantees on &e+alf of its customers in fa#our of t+ird 4arties F+en t+e
&ank issues suc+ a guarantee< it assumes a res4onsi&ilit$ to 4a$ t+e &eneficiar$< in
t+e e#ent of a default made &$ t+e customer A &ank guarantee ena&les t+e
customer Bde&torC to ac=uire goods< &u$ e=ui4ment< or draw down loans< and
t+ere&$ e"4and &usiness acti#it$
:eferred Payment 0uarantee:
A deferred 4a$ment guarantee is a contract under w+ic+ a &ank 4romises to 4a$ t+e
su44lier t+e 4rice of mac+iner$ su44lied &$ +im on deferred terms< in agreed
installments wit+ sti4ulated interest in t+e res4ecti#e due dates< in case of default in
4a$ment t+ereof &$ t+e &u$er
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Infrastructure Project Financing 2013
STEPS IN INF2AST.2.CT.2E FINANCE
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u!mission of "pplication !y t#e !orro$er
Preliminary %nformation Collection&
%nformation 'emorandum
Pro(ect "ppraisal
Risk 'easurement and Rating
Preparation of Final proposal
Infrastructure Project Financing 2013
1. Su)mission of !**,ication )y )orro'er:
T+e &orrower a44roac+es t+e &ank wit+ t+e 4ro4osal to finance a 4roject Borrower
+as to gi#e a written a44lication in fa#our of &ranc+ +ead containing t+e &rief
information of a44licant< com4an$< industr$< a&out Project< Project duration and fund
re=uirement from t+at &ank
2. Pre,iminary -nformationC -nformation Memorandum:
T+e &orrower +as to 4ro#ide t+e Bank wit+ t+e 4reliminar$ information T+e &orrower
+as to 4re4are a detailed 4roject re4ort< w+ic+ is su&mitted to t+e &ank and on t+e
&asis of w+ic+ t+e final re4ort is 4re4ared In case of a s$ndication arrangement< t+e
lead arranger 4re4ares an Information 6emorandum in consultation wit+ t+e
&orrowing entit$
3. Pro4ect !**raisa,:
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Proposal for$arded to t#e sanctioning
aut#ority
Proposal re(ected anctioned
anction Letter issued
Documentation ) Dis!ursement
Credit monitoring* uper+ision and
Follo$,up
Infrastructure Project Financing 2013
A detailed and critical a44raisal of t+e 4roject is necessar$< &efore taking a final
decision a&out financing an$ 4roject< w+et+er indi#iduall$ or jointl$ T+e a44raisal
met+odolog$ of t+e &anks s+ould kee4 4ace wit+ e#er c+anging economic
en#ironment and also addresses t+e #arious t$4es of risks #i> industr$< &usiness<
financial< management etc
Bank +as to ensure t+at t+e 4eo4le &e+ind t+e 4roject +a#e t+e re=uired knowledge
and e"4ertise in t+e 4ro4osed line of acti#it$< enoug+ owned funds to meet t+e
4romoters contri&ution T+e 4rojections su&mitted &$ t+e 4romoters s+ould &e
realistic and ac+ie#a&le and t+e 4roject must +a#e enoug+ sur4lus generation to
ser#ice de&t in a reasona&le 4eriod of time after meeting t+e normal &usiness
e"4enditures
F+ile doing a44raisal of an$ 4roject< t+e following four fundamentals are carefull$
studied and e"aminedE
BiC Tec+nical A44raisalE
Tec+nical A44raisal of a 4roject is essential to ensure t+at necessar$ 4+$sical
facilities re=uired for 4roduction will &e a#aila&le and t+e &est 4ossi&le
alternati#e is selected to 4rocure t+em
BiiC Commercial A44raisalE
In order to +a#e a 4ro4er a44raisal of t+e demand forecast made &$
&orrowers< t+e term lending institutions would re=uire information regarding
demand< su44l$< distri&ution< 4ricing and e"ternal forces
BiiiC 6anagement A44raisal
Banks gets information a&out t+e com4an$< its &rief +istor$< &usiness
acti#ities< Business model< details of t+e 4romoters< Board of directors<
s+are+olding 4attern< ca4ital structure etc
Bi#C Financial A44raisalE
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Infrastructure Project Financing 2013
Financial a44raisal is used to e#aluate t+e #ia&ilit$ of a 4ro4osed 4roject &$
assessing t+e #alue of net cas+ flows t+at result from its im4lementation
Financial a44raisal measures t+e direct effects on t+e cas+ flows of t+e
organi>ation of an in#estment decision
$. #isk Management and /redit #ating:
Credit risk is defined as t+e 4ossi&ilit$ of losses associated wit+ t+e reduction of
credit =ualit$ of &orrowers or counter14arties In a &ank@s 4ortfolio< losses arise from
outrig+t default due to ina&ilit$ or unwillingness of a customer or counter14art$ to
meet commitments in relation to lending< trading settlements< or an$ ot+er financial
transaction Alternati#el$< losses occur due to deterioration in credit =ualit$
Banks are 4ermitted a c+oice &etween ! &road met+odologies for calculating t+eir
ca4ital re=uirements for credit risk One met+od is to measure credit risk in a
standardi>ed manner &ased on e"ternal credit rating T+e ot+er met+od< #i> Internal
2ating Based BI2BC a44roac+< would allow t+e &anks to use t+eir internal rating
s$stem for credit risk T+is will &e su&ject to t+e e"4licit a44ro#al of t+e &ank@s
su4er#isor
A credit rating estimates t+e credit wort+iness of an indi#idual< cor4oration< or e#en a
countr$ Credit ratings are calculated from financial +istor$ and current assets and
lia&ilities T$4icall$< a credit rating tells a lender or in#estor t+e 4ro&a&ilit$ of t+e
su&ject &eing a&le to 4a$ &ack a loan A 4oor credit rating indicates a +ig+ risk of
defaulting on a loan< and t+us leads to +ig+ interest rates or t+e refusal of a loan &$
t+e creditor
8. Pre*aration of %ina, Pro*osa,
Once t+e 4roject is a44raised< t+e final 4ro4osal is 4re4ared &$ t+e credit officer T+e
final 4ro4osal 4re4ared at t+e &ank contains t+e following details regarding t+e
4roject likeJ details a&out t+e &orrower< 5escri4tion a&out t+e management and
names of t+e 4eo4le w+o constitute t+e &oard< t+e 4ur4ose for w+ic+ t+e loan is
taken< securit$ 4ro#ided &$ t+e &orrower< financial indicators< t$4es of risk faced &$
t+e 4roject etc
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Infrastructure Project Financing 2013
;. Pro*osa, %or'arded to t"e Sanctioning !ut"ority
Once t+e credit officer 4re4ares t+e final 4ro4osal< it is sent to t+e sanctioning
aut+orit$ It is t+en eit+er a44ro#ed or rejected &$ t+e sanctioning aut+orit$ If
sanctioned it gets a44ro#al wit+ recommended 2ate of Interest B2OIC< concessionar$
fees< securities to mortgage?4ledge< etc After recommendation it is sent &ack to
&ranc+
<. Sanction etter -ssued
As soon as financial assistance is sanctioned< a letter of intent is issued to t+e
a44licant In addition to usual terms and conditions< s4ecial conditions are
incor4orated in t+e letter of intent to co#er weak links< if an$< noticed at t+e a44raisal
stage
D. :ocumentation and :is)ursement:
E"ecution of loan agreement and ot+er necessar$ legal documents is #er$
necessar$ for dis&ursing t+e amount T+e term lending institutions s+ould ensure
t+at t+e amount dis&ursed will &e utili>ed for t+e 4ur4ose for w+ic+ it +as &een
sanctioned
E. Su*ervision and %o,,o'7u*:
Project su4er#ision and Follow1u4 of assisted 4rojects during and after
im4lementation is indeed a crucial e"ercise to &e 4erformed 4eriodicall$ wit+
meticulous care< not onl$ to safeguard t+e interests of t+e term1 lending
institutions &ut also to ensure o4timi>ation of returns on t+e total in#estment in
t+e 4roject
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Infrastructure Project Financing 2013
2ENEFABLE ENE2*; P2OOECT FINANCE
BBank of Baroda@s ClientC
T+e com4an$ +ad a44roac+ed Bank of Baroda for 4roject financing re=uirement for
t+eir renewa&le energ$ 4roject &ased in 2ST T+is section outlines all t+e rele#ant
information a&out t+e com4an$ 3 4roject under different +eads
BASIC CO6PAN; INFO26ATION
T+is section contains t+e &asic com4an$ information suc+ as t+e Com4an$ name<
+ead=uarters< etc
Page
!8
1 Name of
the entity
and
Address
M/s. XYZ Pvt. Ltd.
Reg. Off. /Corp. Off. LI*1A<0(E1(< Arera Colon$< B+o4al<
6ad+$a Prades+1%(!/,(
Corporate Off. '/,< Centrium< Plot No!)< Sector1,'< CBO
Bela4ur< Na#i 6um&ai1%//(,%
5ate of Incor4orationE ,'1/'1!//'
! Constit"tion Private Limited Company
# $nd"stry/
Line of
A%tivity/
Nat"re of
&"siness
'eneration of rene(a)*e e*e%tri%ity+ 'as )ased
, 'ro"p/
Promoter
-ire%tors
Promoter M/s A&C Pvt. Ltd.
-ire%tors Mr. P.R
Shareholding Pattern:
Name of
Shareholder
No. of Shares of
face value of
Rs.10
Value in Rs.
-ire%tor 1 1/.//
M/s. A&C #011111 #011111/.//
Total 37,00,000 3,70,00,000
Infrastructure Project Financing 2013
om!an" #ac$ground:
M/s Ci%on 2nvironment 3e%hno*ogies Ltd 4%ons"*ting %ompany5 (as in%orporated in
&hopa* in the fie*d of 6o*id 7aste Management. 3he said %ompany entered into
agreement (ith R63 M"ni%ipa* Corporation 4R63MC5 on /8 /, !//, for $nsta**ation
of M"ni%ipa* 7aste 9and*ing P*ant in R63 thro"gh an 6P: to )e formed to ena)*e
the Corporation to ta;e %are of hea*th and hygiene of the inha)itants of the %ity. $t
(as on &OO3 4&"i*d< O(n< Operate = 3ransfer5 )asis.
A%%ording*y< an 6P: named M/s XYZ Private *imited (as formed and *ease
agreement (ith R63 M"ni%ipa* Corporation (as entered into on /1 />.!//, for
6o*id 7aste of #?/ 3ons per -ay4@/+ !/A5. M/s. XYZ Pvt Ltd (as in%orporated on
1!./?.!//? in &hopa* 4MP5 to eBe%"te this proCe%t. Present ;ey promoter dire%tor of
6&26 is Mr. P.R.
M/s -2D Pvt *td (as in%orporated on 11 /0 !//8 as a Coint vent"re )et(een a team
of te%hno%rats5 and a gro"p of investors. 3his %ompany is %"rrent*y non+operationa*.
9o(ever< at the time of san%tion of the ear*ier term *oans< %orporate g"arantee (as
stip"*ated.
M/s -2D Pvt Ltd de%ided to spread their a%tivities gro"p (ise and a%%ording*y they
formed a ne( %ompany tit*ed M/s A&C Pvt Ltd on !1./8.!//8. 3he %ompany has
its main o)Ce%t to %arry on the )"siness of promotion and deve*opment of non
%onventiona* energy so"r%es and "*timate*y they too; over M/s XYZ Pvt Ltd and
are the deve*opers of the said proCe%t.
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P2OOECT 5ETAILS
T+e details a&out t+e 4roject< its &ackground< and im4lementation details are
s4ecified to gi#e an o#er#iew of t+e 4roject
%NTR&'(T%&N:
3his proCe%t has )een set "p "nder PPP mode* to %onvert m"ni%ipa* so*id (aste
4M675 generated in R63 %ity into energy p*"s %ompost. C"rrent %apa%ity of the p*ant
is p*anned to )e , M7. 3he M67 is provided free of %ost )y R63 M"ni%ipa*
Corporation. Ender Fyoto proto%o*< the proCe%t (i** generate %aro) %redits as the
proCe%t traps methane (hi%h other(ise (o"*d go into atmosphere.
%N'(STR) P*R*PT%&N:
6o*id (aste hand*ing has )een %a"se of %on%ern g*o)a**y. :ario"s methods are
)eing "sed for treatment of so*id (aste.
3here are %onstant efforts made to "se these (aste prod"%ts p"rposef"**y. :ario"s
methods are adopted (hi%h in%*"de %omposting< 'asifi%ation< in%ineration< )io
methanation et%. &io Methanation is the *atest method "nder (hi%h the re%y%*a)*e
so*id (aste is "ti*iGed for generation of e*e%tri%ity and the )y prod"%t is high H"a*ity
ferti*iGer. 6in%e this method has many advantages over the ear*ier methods< it is
)e%oming pop"*ar a** over the (or*d.
$n $ndia a*so the separate ministry has )een set "p as Ministry of Rene(a)*e 2nergy
6o"r%es (hi%h is monitoring the gro(th of this se%tor. 'overnment is giving f"**
s"pport to any s"%h proCe%ts and there are s")sidies and other )enefits avai*a)*e. As
it is an a%tivity invo*ving h"ge %apita* eBpendit"re and te%hni%a* %ompeten%e the
%ompetition is %omparative*y *o(er.
Technolog":
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Com4an$ uses Bio1met+anatlon BAnaero&ic digestionC tec+nolog$ in t+e
4roject w+ic+ is ranked as no , tec+nolog$ for treatment of 6SF as 4er
National 6aster Plan issued &$ go#ernment of India
T+e 4roject In#ol#es an e"tensi#e 4re1treatment BsegregationC of 6SF Into
organic and Inorganic waste T+e organic fraction of t+e waste is fed to a
digester w+ic+ 4roduces met+ane in time 4eriod of ,% da$s and is used to
o4erate tur&ines and generate electricit$ 2esidual =ualit$ of t+e waste Bslurr$C
4ost digestion is aero&icall$ treated to 4roduce +ig+ =ualit$ fertili>er T+us t+e
4roject would +a#e dou&le a44lication ie +andling of solid Faste and also to
generate electricit$ and 4roducing fertili>er
P2OOECT COST
T+e 4roject cost is detailed wit+ t+e &reak1u4 for #arious 4ur4oses
Particulars +ctual ,Rs. crore-
&"i*ding = %ivi* (or; 1#.81
P*ant = Ma%hinery #!.1,
Dees for 3e%hni%a* servi%es = other proCe%t
deve*opment eBpenses
1/.#!
ProCe%t finan%e eBpenses = interest d"ring %onstr"%tion 1.?,
T&T+. /0.12
6EANS OF FINANCE
6eans of finance 4ro#ides clarit$ on +ow t+e 4roject is 4ro4osed to &e financed It
also gi#es an indication of t+e s4onsor@s contri&ution to t+e 4roject and grants
recei#ed Bif an$C
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Infrastructure Project Financing 2013
Sources of 3und +mount ,Rs. in crores-
6hare Capita* !!.1,
Ense%"red Loans ?.##
3erm Loan+$ form &an; of &aroda 4Origina*5 !!.?
3erm Loan+$$ from &an; of &aroda4for
%apa%ity eBpansion5
8.#/
Dresh term *oan+$$$ for a%hieving -/2 to
>/#/
0.8!
Total /0.12
C2E5IT APP2AISAL 5ETAILS
Periodic credit a44raisal of t+e com4an$ is carried out &ased on following
4arameters Bank of Baroda uses read$ module 4ro#ided &$ C2ISIL
-ndustry #isk
5emand ? Su44l$
*o#ernment Polic$
Com4etiti#e En#ironment
Business #isk
6arket Position
En#ironmental ? Social Im4act
Counter4art$ 2isk
Cost &ase of 4roject
Off take risk
O4erating efficienc$
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/om*,etion #isk7 Bui,d P"ase
Funding 2isk
Financial Fle"i&ilit$
Financial Closure
Clearances
*estation Period
1&ecution #isk7 Bui,d P"ase
Tec+nolog$
2e4utation of design consultant
Contractor e"4erience
Contractor@s creditwort+iness
Safeguards in contract
Sta)i,i5ation #isk7 Bui,d P"ase
S4onsor 2isk
Project criticalit$ risk
6anagement =ualit$ risk
%inancia, #isk7 Bui,d P"ase
5egree of e"4osure to interest 2isk
Currenc$ 2isk
2easona&ilit$ of 4roject assum4tions
Internal rate of return1Build 4+ase
Project 5e&t to e=uit$1Build 4+ase
Sensiti#it$ to re#enue1Build 4+ase
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Infrastructure Project Financing 2013
Sensiti#it$ to cost1Build 4+ase
Based on t+e a&o#e factors t+e 4roject@s current rating is as followsE
S6E 1Non 2egulator$ L O&ligor 2ating L BOB /(
Cas+ Credit
Facilit$ 2atings F2 /!
Com&ined 2atings C2 /'
B>B 0; E In#estment grade moderate safet$
%# 02 : -ig+er Safet$
/# 08 : Ade=uate co#era&le e"4ected loss
Based on t+e com&ined rating t+e interest rate to &e offered is linked to &ase rate
w+ic+ is currentl$ Base #ate F ;.28G. Ie ,/!' P (!' Q ,('I
TE7 ST.5; ANAL;SIS
TE7 stud$ for t+e said 4roject was carried out &$ Project Finance 5e4artment of
Bank of Baroda during 6arc+ !//9 for ca4acit$ of 0// TP5 waste and t+e 4roject
was found to &e tec+no1economicall$ #ia&le It was 4ro4osed t+at com4an$ s+all
com4lete construction of t+e 4roject and commence commercial o4eration -owe#er<
as 4er original TE7 stud$ dated !//0!//9< t+ere was e"4ected to &e a dela$ of
around ( mont+s -owe#er during t+e course of im4lementing t+e 4roject< t+e
com4an$ +as 4ro4osed to en+ance t+e ca4acit$ of 4lant to % 6F estimating
a#aila&ilit$ of around %// TP5 of 6unici4al Solid Faste from 2ST 6unici4al
Cor4oration Fit+ 4ro4osed en+ancement< t+e total cost of 4roject is estimated at
2s'0)% crores as against t+e original estimation of 0// TP5?0 6F 4lant at
2s%/89 crores Fit+ t+e re#ised estimated cost once again TE7 stud$ was carried
out T+e summar$ of anal$sis made during TE7 stud$ is as underE1
Project was assessed in terms of risks< uncertaint$ and sensiti#it$
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SFOT anal$sis for t+e 4roject was done
2e4ort +ad &een discussed in detail a&out t+e tec+nical as4ects of t+e 4roject
including t+e 4rocess of manufacturing
7arious re=uirements of resources are taken into account along wit+ t+e
4ro4osed e"4enditure
Ca4acit$ utili>ation is considered at realistic le#els and t+e sales #olume is
calculated in accordance wit+ t+e same
Economic #ia&ilit$ of t+e 4roject +as &een worked out on t+e &asis of different
met+ods
Sensiti#it$ anal$sis for t+e 4roject was carried out
2e#ised estimated 4roject cost of 2s'0)% crores is 4ro4osed to &e funded
wit+ total term loan of 2s0,// crores and 4romoters contri&ution of 2s!!)%
crores BPreference S+are Ca4ital of 2s,9/% crores and e=uit$ s+are ca4ital
of 2s0)/ croresC
In #iew of increased =uantit$ of generation and collection of waste< com4an$
modified its design 4arameters from t+e original 4lan of ! lines of ,'/ TP5
eac+ for 0// TP5 of waste to an installed ca4acit$ of two lines of !// TP5
eac+ for %// TP5 waste T+e c+ange in design 4arameters +as meant t+at
si>ing of all e=ui4ments +as c+anged and some additional
e=ui4ment?au"iliaries are re=uired including one gas engine
T+e re#ised ci#il cost to &e certified &$ &ank@s em4anelled arc+itect Suita&le
condition sti4ulated
T+e com4an$ +as o&tained major a44ro#als for setting u4 t+e 0// TP5?0 6F
4lant -owe#er< t+e same would &e re=uired to &e suita&l$ amended? modified
for t+e en+anced ca4acit$ of %// TP5? % 6F of t+e 4lant
SEC.2IT; AN5 BANAIN* A22AN*E6ENTS
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Primar" Securit":
-$4ot+ecation of Plant and mac+iner$ created out of &ank financeC
E=uita&le mortgage of land and &uilding leased
B* 6argin
ollateral:
2H"ita)*e mortgage of Offi%e in Andheri
D-Rs
P*edge of 1,<8/</// Redeema)*e Preferen%e shares 4Rs.1//+ per share5
amo"nting to Rs.1.,8 %rores o(ned )y M/s.A&C Pvt *td and #><//</// eH"ity
shares of the %ompany f"**y paid "p amo"nting to Rs.#>/.// *a%s.
M$L263ON26 OD 392 PROI2C3
Concession Agreement was entered in !//% wit+ 2ST 6unici4al
Cor4oration to 4ro#ide 0'/ BP?1 !/IC TP5 of 6unici4al Solid Faste B6SFC
free of cost Concession Agreement 4eriod is !9 $ears and ,, mont+s
Land lease Agreement was entered in !//% and t+e site of t+e 4roject +as
&een allotted &$ 2ST 6unici4al Cor4oration at Tulja4ur 2oad< 2ST of 9 acres
of land Lease 4eriod is !9 $ears and ,, mont+s
2ent 4a$a&le to 2ST6C was 2s ,?1 4er s= mtr as 4er guidelines of
6inistr$ of Non Con#entional Energ$ Sources< *o#ernment of India and as
4er t+e Lease Agreement
First Term Loan of 2s !!'/ crores Bwit+ 4roject costing 2s %, ,) crores 3
5E ratio of B''E%'C for setting u4 t+e 0// TP5 4lant was sanctioned &$ Bank
of Baroda in Oune !//9
T+e com4an$ +as signed Power Purc+ase Agreement dated !%/0!/,, wit+
6a+aras+tra State Electricit$ 5istri&ution Com4an$ B6SE5CC wit+ installed
ca4acit$ of !80 6F and t+e 4urc+aser B6SE5CC will 4a$ to t+e com4an$ for
t+e acti#e energ$ at t+e interconnection 4oint at le#elised tariff of 2s%88 4er
unit as determined &$ 6E2C In case of an$ en+ancement in t+e 4roject
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Infrastructure Project Financing 2013
ca4acit$< t+e same terms of t+e Power Purc+ase will &e a44lica&le to
en+anced ca4acit$ as 4er t+e Power Purc+ase Agreement
T+e com4an$ +as taken u4 t+e issue wit+ 6a+aras+tra Electricit$ 2egulator$
Commission B6E2CC for increase in tariff t+roug+ an A44eal to t+e A44ellate
Tri&unal for Electricit$ and an order to &e awarded tariff of u4to 2s(%0 4er
unit +as &een awarded in fa#or of t+e com4an$
5uring t+e im4lementation 4eriod in !/,,< t+e 2ST6C a44roac+ed t+e
5e#elo4ers to en+ance t+e ca4acit$ of t+e 4roject to %// TP5 B% 6FC due to
t+e increased generation in 2ST as 4er t+e terms of t+e Concession
Agreement
T+erefore< an additional term loan of 2s 80/ crores for total 4roject costing
2s '0)% cr Badditional 2s ,!') cr wit+ 5E ratio of ')E %0C was sanctioned
&$ Bank of Baroda in 6arc+ !/,! for t+e 4ro4osed e"4ansion
T+e 4roject +as &een commissioned and 4ower &eing generated is &eing
used for Ca4ti#e consum4tion T+e 4roject is awaiting final grid connecti#it$
a44ro#al to start commercial w+eeling of 4ower and com4an$ is e"4ecting
first 4ower &ill on 0,/0!/,0-owe#er< t+e com4an$ +as started selling
com4ost since 5ecem&er !/,! and it e"4ected to earn re#enue of 2s !'1
0/ lacs In !/,!1,0 from com4ost
P2OOECT I6PLE6ENTATION
Project was initiall$ conce4tuali>ed for t+e de#elo4ment of a Faste1to1energ$
facilit$ for t+e scientific 4rocessing and dis4osal of 0// Tonnes 4er da$ BTP5C
of 6unici4al Solid Faste B6SFC to &e deli#ered &$ t+e 2ST 6unici4al
Cor4oration B2ST6CC
As 4er t+e 4rocess of 6E2C< in order to o&tain t+e order for tariff on w+ic+
&asis t+e PPA waste was to &e entered for esta&lis+ing t+e 4roject #ia&ilit$<
t+e Com4an$ filed a 4etition to t+e 6a+aras+tra Electricit$ 2egulator$
Commission B6E2CC on !,st Octo&er !//9 for determination of Tariff for
su44l$ of electricit$ from 6unici4al Solid Faste Power 4roject for 5istri&ution
licensee in 6a+aras+tra< a44l$ing for a 4ower tariff of 2s ),/ 4er unit as 4er
4re#ailing 4ractices
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Su&se=uent to t+e a&o#e< t+e 6E2C released t+e 6A-A2AS-T2A
ELECT2ICIT; 2E*.LATO2; CO66ISSION BTE26S AN5 CON5ITIONS
FO2 5ETE26INATION OF 2E TA2IFFC 2E*.LATIONS< !/,/ on )t+ Oune
!/,/ As 4er t+is guideline guidelines laid down t+e following rules for
determination of tariff wit+ res4ect to 5e&t E=uit$ ratioE
For suo1motu determination of generic tariff< t+e de&t e=uit$ ratio s+all &e
)/E0/
For 4roject s4ecific tariff< t+e following 4ro#isions s+all a44l$E
If t+e e=uit$ actuall$ de4lo$ed is more t+an 0/I of t+e ca4ital cost< e=uit$ in
e"cess of 0/I s+all &e treated as normati#e loan
Pro#ided t+at w+ere e=uit$ actuall$ de4lo$ed is less t+an 0/I of t+e ca4ital
cost< t+e
actual e=uit$ s+all &e considered for determination of tariff
Based on t+e a&o#e< t+e 6E2C in its order dated 0rd Se4tem&er< !/,/
considered a de&tE e=uit$ ratio of )/E0/< e"cluding costs relating to t+e 4re1
treatment section and granted a tariff of 2s %88 4er unit
A44eal to A44ellate Tri&unal for Electricit$E An a44eal was filed against t+e
said 6E2C order in No#em&er !/,/ &$ t+e com4an$ in t+e -onD&le A44ellate
Tri&unal for Electricit$< New 5el+i BAPTELC c+allenging t+e e"clusion of t+e
costs relating to t+e 4re1treatment section and t+e de&t1e=uit$ ratio
Su&se=uentl$< due to t+e increase in waste generation in t+e cit$ of 2ST< t+e
ca4acit$ of t+e 4roject +ad to &e e"4anded during construction 4+ase BOune
!/,,C to %// Tonnes 4er da$ BTP5C in accordance wit+ t+e terms of t+e
Concession Agreement
As 4er T+e -onD&le APTEL@S judgment dated ,(t+ Se4tem&er !/,,< T+e
com4an$ succeed in esta&lis+ing its case t+at t+e Pre1treatment Plant is an
integral 4art of t+e 6SF &ased Power Project and its ca4ital cost s+ould &e
included in t+e ca4ital cost of t+e 4roject considered for determination of
electricit$ tariff
In t+e #iew of t+e a&o#e tariff was increased form 2s %88 4er unit to 2s (%/
4er unit
2EASONS FO2 5ELA; IN I6PLE6ETATION
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Infrastructure Project Financing 2013
As 4er t+e original sanction< t+e 4roject was sc+eduled to &e commissioned in
Fe&ruar$ !/,/ T+e account was restructured on !),!!/,/ fi"ing re#ised CO5 as
6arc+ !/,, and installments were to commence from Oune !/,, T+e
commissioning of t+e 4roject was dela$ed due to following e"ternal factors? court
cases< &e$ond t+e control of t+e 4romotersE
5ela$ in o&taining 6E2C B6a+aras+tra Electricit$ 2egulator$ CommissionC
Order for tariff fi"ation and su&se=uent signing of Power Purc+ase
Agreement< w+ic+ took almost one and +alf $ear BInstead of sti4ulated 0
mont+s and finall$ signed onl$ in 6arc+ !/,, T+e com4an$ +as filed an
a44eal to -onora&le A44ellate tri&unal for Electricit$ ,n No#em&er !/,/
c+allenging e"clusion of certain cost and 5e&t E=uit$ ratio In t+e 4rocess of
tariff determination T+e -onora&le APTEL 4assed Its judgment on ,(t+
Se4tem&er !/,, and com4an$ +as filed a 4etition against t+e judgment of
APTEL In relation to 5e&t E=uit$ ratio wit+ Su4reme Court of India in
No#em&er !/,, and +as &een admitted in t+e Su4reme Court in Se4tem&er
!/,! and $et to come u4 for furt+er 4roceedings Since de&t dis&ursal was
linked to t+e signing of t+e PPA< com4an$ could not undertake t+e
construction acti#it$ in o4timum s4eed
T+e 4roject is eligi&le for o&taining custom dut$ e"em4tion for t+e Im4ort of
mac+iner$ and its com4onents re=uired for t+e initial setting u4 of a 4roject for
generation of 4ower using non con#entional materials T+ere was dela$ in
o&taining custom dut$ e"em4tion for t+e im4orted mac+ineries and its
com4onents T+e 4romoter mo#ed Frit Petition in -ig+ Court for Oudicature at
Bom&a$ in No#em&er !/,, wit+ t+e .nion of India< t+roug+ t+e Secretar$<
6inistr$ of Finance< 6inistr$ of New and 2enewa&le Energ$< 6a+aras+tra
Energ$ 5e#elo4ment Agenc$ and 5e4ut$ Commissioner of Customs and t+e
com4an$ o&tained orders In t+eir fa#or for e"em4tion of Custom 5ut$ in
Fe&ruar$ !/,! ot+erwise custom dut$ wit+ 4enalties and demurrage c+arges
would amount to a44ro" 2s '// crores
T+ere was dela$ in grid connecti#it$ w+ic+ was t+e res4onsi&ilit$ of 6SE5CL
Furt+er t+ere were o&jections from local #illagers for erecting of transmission
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Infrastructure Project Financing 2013
lines t+roug+ t+eir land Finall$ solutions for eac+ of t+e agitators +a#e &een
arri#ed and t+e$ +a#e gi#en t+eir consent for grid connecti#it$ w+ic+ +as &een
com4leted in t+e mont+ of Oanuar$ !/,0
C.22ENT STAT.S
T+e 4roject is now full$ constructed as on date and t+e 4roject +as &een
commissioned Furt+er &iogas generation +as commenced and t+e gas
engines +a#e &een test fired T+e electricit$ 4roduced is &eing used for
ca4ti#e 4ur4oses and e"cess gas is &eing flared since t+e 4roject is awaiting
final connecti#it$ clearance T+e 2ST6C +as &een deli#ering waste at t+e site
currentl$ T+e testing of t+e grid lines is in 4rogress and commercial w+eeling
is e"4ected from 6arc+ !/,0 Com4an$ +as alread$ commenced sale of
com4ost and e"4ected re#enue from sale of com4ost was around 0/ lacs
SFOT ANAL;SIS
SFOT Anal$sis is $et anot+er im4ortant factor w+ic+ gi#es an o#erall #iew of t+e
strengt+s< weakness< o44ortunities and t+reats to t+e 4roject +olisticall$
STR*N4T5S:
T+e 4romoters of t+e com4an$ are =ualified and e"4erienced in t+is work
Tec+nolog$ to &e utili>ed is 4ro#en and su44liers of t+e mac+iner$ are of
international re4ute
Eas$ a#aila&ilit$ of raw material
6ac+iner$?e=ui4ments to &e 4urc+ased are +a#ing customs dut$ e"em4tions
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Infrastructure Project Financing 2013
A44arentl$ no com4etition in similar industr$ as su44l$ of 6SF is limited and
is assured to com4an$ &$ 2ST6C
6*+7N*SS:
Ca4acit$ utili>ation is taken at +ig+er le#els since first $ear of o4eration
T+e &orrower is de4endent on foreign counter 4arts for t+e use of tec+nolog$
&PP&RT(N%T%*S:
Suc+ 4rojects are +a#ing +ig+ 4otential as 2enewa&le Energ$ Sector is on
4riorit$ in India and across t+e glo&e
5emand?Su44l$ situation in 4ower sector is in fa#or of t+e &orrower
T+e tie u4 wit+ foreign constituents would ensure t+e success of t+e 4roject
and o44ortunit$ for new 4rojects
Arrangement for 4urc+asing of raw material and selling of energ$ 4roduced is
alread$ in 4lace
T5R*+TS:
Natural 5isasters like eart+=uakes< floods etc
5ela$ in im4lementation of t+e 4roject
-ea#il$ de4endence on t+e su44l$ of 6unici4al Solid Faste &$ 2ST6C
2ECO66EN5ATIONS
To successfull$ ta4 t+e a#aila&le re#enue 4ools< &ank s+ould de#elo4 a
strong understanding of eac+ sector to assess 4roducts needs< timing and
in#estment merit
Bank will also need to &uild dee4 e"4ertise to undertake accurate risk
assessment< for t+is &ank s+ould make different teams to work on 4rojects of
different sectors< t+is will +el4 t+em to s4eciali>e in one sector and also will lead to
&etter understanding of risks and o44ortunities in t+ose sectors
Banks s+ould also +a#e a team focusing entirel$ on t+e stud$ of t+e risks as4ects
of t+e 4rojects
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Infrastructure Project Financing 2013
To mo#e u4 t+e #alue c+ain or ac=uire relations+i4s and scale in India< &anks
s+ould consider 4artners+i4s 5omestic incum&ent &anks wit+ a strong funding
&ase and e"isting cor4orate relations+i4s can use glo&al or domestic alliances to
&uild s4ecific sector e"4ertise< go &e$ond 4artici4ating in s$ndications to acti#e
origination and 4artici4ation from t+e e=uit$ side of t+e 4roject ca4ital structure
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2EFE2ENCES
Infrastructure Funding 2e=uirements and its Sources o#er t+e
im4lementation 4eriod of t+e Twelft+ Fi#e ;ear Plan B!/,!1 !/,)C
Interim re4ort of t+e -ig+ le#el committee on infrastructure finance1Aug !/,!
Forking su& grou4 on infrastructure< 4lanning commission
Planning Commission B!//)C REle#ent+ Fi#e ;ear PlanR Planning
Commission< *o#ernment of India< New 5el+i
+tt4E??wwwinfrastructurego#in?
Budget !/,0
Bank of Baroda1 5ocumentation of 6?s :;S P#t Ltd
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