Unit- 1

Project Finance An Overview:

What is Project Finance? How is it different from Conventional Finance? Project
Finance in Developing Countries, The Importance of using project Finance?
What is a Project? Concept of Capital Budgeting, Time Value of Money, Cost of
Capital Cost of debt, Cost of preference capital, Cost of Retained earnings and
Cost of equity, Concept of Risk & Return and calculation of required rate of ret
urn
for a Project.
Project Identification and Feasibility Studies, Preliminary Screening, Analysis
Market,
Technical, Financial, Economic and Environmental Analysis.
Global Experience: Equator Principle-A framework for FIs to manage environmental
and social issues in Project Finance.
UNIT- II
Financial Analysis:
Estimation of Cost of Project: Estimation of Cash Flows of the Project, Elements
of
the cash flow stream, Basic principles of cash flow estimation, Cash flows for a
replacement project, Biases in Cash Flow estimation.
Financial Estimates and Projections: Projection of Profit, Projection of Cash Fl
ow
Statement, Projection of Balance Sheet.
UNIT-III
Financing Of Projects:
SEBI Guidelines On Project Financing in India; Sources Equity, Debentures and
Term Loans from Financial Institutions; Policies and practices of Indian Financi
al
Institutions.
Lease and Hire Purchase Financing - Financial and Leveraged lease, Benefits to L
essor
and Lessee , Evaluating a financial Lease Proposal, Depreciation Tax Shield, Sal
vage
value with ref. to Tax laws.
44
MBA (Part Time) Programme MBA Syllabus
Venture Capital Financing - Notion of Venture capital, The Business Plan ,The
Process of Venture capital Financing, Methods of Venture Financing, Disinvestmen
t
Mechanism, Development of Venture capital in India ,Fiscal Incentives, Future
prospects of Venture Financing.
Unit-IV
Financing Infrastructure Projects:
Need and Features of Infrastructure Finance, Complexities in Valuing Large Proje
cts,
Infrastructure Finance Structure, Regulatory dilemmas in Infrastructure financin
g.
Infrastructure in India-present scenario.
Project Finance Contracts Public-Private-Partnership, SPV, BOOT, BOT etc, and
Government Support. Financial Modeling, Return to equity - Sponsors and Lenders
Concerns, Concession Agreement, Risk Mitigation.
UNIT-V
Relevant cases on:
Financing of infrastructure projects especially financing of power projects,
telecommunication projects, road transport etc.
Suggested Readings:
1. Finnerty, John D; Project Financing (Asset-Based Financial Engineering), Jhon
Wily
and Sons, Inc., New York, (1996).
2. Padmalatha Suresh (ed); Project Finance-Concepts and Applications; ICFAI Univ
ersity
Press, Hyderabad, (2006).
3. Chandra, Prasanna, Projects (Planning, Analysis, Selection, Financing, Implem
entation
and Review), Fifth Edition, reprint (2004), Tata Mcgraw-Hill Publishing Company
Limited, New Delhi (CFM-TMH Professional Series in Finance)
4. Pandey, I. M.; Financial Management, 9th Ed. (2005) Second reprint, Vikas Pub
lishing
House Pvt. Ltd., New Delhi.
5. The Economist, (Finance and Economics Section).
The list of cases, specific references, websites, and recent articles will be an
nounced
in the class from time to time during the course.