Analysis of The Financing Structure of Infrastructure Projects With Special References To Highways in The Sphere of Public Private Partnerships.

ANALYZING THE FINANCING STRUCTURE OF
INFRASTRUCTURE PROJECTS WITH SPECIAL

REFERENCE TO HIGHWAYS IN THE SPHERE
OF PUBLIC PRIVATE PARTNERSHIPS
Submitted in partial fulfillment of the requirements for
Post Graduate Diploma in Management (PGDM)
By
Saurabh Sharma
Class of 2009
Bharatiya Vidya Bhavan’s
Usha & Lakshmi Mittal Institute of Management
Copernicus Lane, Kasturba Gandhi Marg
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New Delhi
July 2010
ACKNOWLEDGEMENT
I express my sincere gratitude to Mrs. Manju Kapoor (Vice President), IFIN, Delhi/NCR for
giving me the opportunity to undergo summer training in this esteemed organization.
I feel great pleasure to acknowledge deep regards to my esteemed Company Guide Mr. Ravi
Kyal (Senior Manager, Project Syndication Group, IFIN) for cooperating a lot in the projects and
for giving their advice to make my project more useful and impressive.
I am grateful to my faculty guide Prof. Ms. Priya Sharma for extending her help during my
Summer Internship and giving me the guidance. This report would not have been possible
without their help.
Last but not the least I also want to thank the entire Management Staff of the Company whom I
found friendly, courteous and candid while expressing their views.
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CERTIFICATE OF ORIGINALITY
I --------------------------------------------------- Roll No -------------- Class of 2008, a full time bonefide

student of first year of Post Graduate Diploma in Management (PGDM) Programme of Bharatiya Vidya
Bhavan’s Usha and Lakshmi Mittal Institute of Management, New Delhi hereby certify that this project
work carried out by me at
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---------------------- and the report submitted in partial fulfillment of the requirements of the programme is
an original work of mine under the guidance of the industry mentor
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----------------------------and faculty
mentor------------------------------------------------------------------------------, and is not based or reproduced
from any existing work of any other person or on any earlier work undertaken at any other time or for any
other purpose, and has not been submitted anywhere else at any time
Date: July 01, 2010
Date: July 01, 2010

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CERTIFICATE BY THE COMPANY
4
CERTIFICATE BY THE INDUSTRY MENTOR
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EXECUTIVE SUMMARY
The National Highway network of the country spans about 66,590 Km. The NHDP (National Highway
Development Project), covering a length of 55,000 Km. is India’s largest road development program in its
history. This project began in the last decade and acknowledged the importance of private sector in
India’s infrastructure development.
As a result of these types of initiatives by the government a new concept called as Public Private
Partnership (PPP) emerged. Various new types of methods were adopted to finance, build and operate the
infrastructure projects emerged.
In the due course of study of a Highway Project of IL&FS Financing Services Limited named as
Dehradun Haridwar Project Limited the entire process of the project implementation in terms of :
 Model Concession Agreement
 Key Dates
 Project Cost
 Modes of Financing
 Financial Model
was obtained.
In the entire two months of the training this project report was prepared and I believe that this would
serve as a useful guide to students like me to understand the details of Project Financing especially in the
Highway Sector.
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LIST OF CONTENTS
Acknowledgement...................................................................................................... 2
Certificate of Originality..............................................................................................3
Certificate By The Company.......................................................................................4
cERTIFICATE BY THE INDUSTRY MENTOR....................................................................5
Executive Summary....................................................................................................6
List of contents........................................................................................................... 7
ABBREVIATIONS........................................................................................................10
Objective..................................................................................................................12
INTRODUCTION.........................................................................................................13
1.1Project Finance................................................................................................13
1.1.1Introduction...............................................................................................13
1.2 Forms of Project Financing (Especially in Highway sector)..............................15
1.2.1 Traditional Approach.................................................................................15
1.2.2 Current Scenario.......................................................................................15
1.3 Public Private Partnerships..............................................................................16
1.3.1 The key drivers for PPP are:......................................................................16
1.3.2 Misconceptions about PPPs.......................................................................17
1.3.3 Principles of PPP........................................................................................18
The following key principles will underpin all PPP actions in the highway sector:
........................................................................................................................... 18
1.4 Government Initiative......................................................................................20
1.4.1 Current Scenario.......................................................................................21
1.5 Modes of Financing a PPP Project in Highway Sector.......................................24
1.6 Company Profile .............................................................................................27
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1.6.1 Infrastructure Leasing & Financial Services Limited (IL&FS).....................27
1.6.2 Services ...................................................................................................27
1.6.3 IL&FS Financial Services Limited ..............................................................28
1.6.4 Key Strengths of IFIN are:..........................................................................29
1.6.5 Sources of funds of IL&FS..........................................................................30
Methodology............................................................................................................. 32
2. DEHRADUN HARIDWAR PROJECT LIMITED............................................................33
2.1 Project Details.................................................................................................33
2.2 Background..................................................................................................... 34
2.3 Sponsors Profile...............................................................................................35
2.4 Concession Agreement....................................................................................37
Project Cost and Means of Financing.....................................................................41
2.6 Project Implementation Framework.................................................................46
3. FINANCIAL MODEL................................................................................................47
3.1 Output and Sensitivity.....................................................................................47
3.2 Assumptions....................................................................................................50
3.3 Phasing............................................................................................................ 62
3.4 Working Capital.................................................................................................. 74
3.5 Revenue and Expenditure...............................................................................75
3.6 Depreciation and Tax......................................................................................81
3.7 Financial.......................................................................................................... 90
3.8 Ratios............................................................................................................104
REFERENCES...........................................................................................................107
3. FINANCIAL MODEL………………………………………………………………………………..46
3.1Output and Sensitivity…………………………………………………………………….............46
3.2 Assumptions……………………………………………………………………………………….49
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3.3
Phasing....................................................................................................
.........................................59
3.4 Working Capital………………………………………………………………………………….72
3.5 Revenue and Expenditure………………………………………………………………………..73
3.6 Depreciation and Tax…………………………………………………………………………….78
3.7 Financial…………………………………………………………………………………………..88
3.8 Ratios……………………………………………………………………………………………...102
REFERENCES …………………………………………………………………………………………103
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ABBREVIATIONS
BOT Build Operate & Transfer
COD Commercial Operation Date
CA Concession Agreement
DBFOT Design, Build, Finance, Operate & Transfer
DER Debt Equity Ratio
DSCR Debt Service Coverage Ratio
DSRA Debt Service Reserve Account
EBIDTA Earnings Before Interest Depreciation Taxation and Amortization
EA Escrow Account
FY Financial Year
DHPL Dehradun Highways Project Limited
EIEL ERA Infra Engineering Limited
OJSC-SIBMOST OJSC-SIBMOST (Technical Partner)
IE Independent Engineer
IFIN IL&FS Financial Services Limited
IL&FS Infrastructure Leasing & Financial Services Limited
IRR Internal Rate of Return
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KM Kilo Meter
LOA Letter of Award
LoC Letter of Credit
MAT Minimum Alternate Tax
Cr Crores
Bn Billion
MoEF Ministry of Environment and Forests
MOU Memorandum of Understanding
NH National Highway
NHAI National Highways Authority of India
NHDP National Highways Development Programme
O&M Operation and Maintenance
PAT Profit After Tax
PBT Profit Before Tax
PMC Project Management Consultant
RFP Request for Proposal
RFQ Request for Qualification
Rs Indian Rupees
SPV Special Purpose Vehicle
TL Term Loan
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OBJECTIVE
The objective of the project report is:
1. To understand the basics of Project Financing.
2. To understand the importance and emergence of Public Private Partnerships in the sector of
Infrastructure Development with special reference to Highways.
3. To prepare the Project Information Memorandum.
4. To understand the debt financing process.
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INTRODUCTION
1.1Project Finance
1.1.1Introduction
Project finance is a method of raising long term debt financing for major projects through “ Financial
Engineering” based on lending against the cash flow generated by the project alone; it depends on a
detailed evaluation of a project’s construction, operating and revenue risks, and their allocation between
investors, lenders and other parties through contractual and other arrangements.
Project finance is generally used to refer to a non-recourse or limited recourse financing structure in
which debt, equity and credit enhancement are combined for the construction and operation, or the
refinancing, of a particular facility in a capital-intensive industry.
Credit appraisals and debt terms are typically based on project cash flow forecasts as opposed to the
creditworthiness of the sponsors and the actual value of the project assets. Forecasting is therefore at the
heart of project financing techniques. Project financing, together with the equity from the project
sponsors, must be enough to cover all the costs related to the development of the project as well as
working capital needs.
Project finance risks are therefore highly specific and it is essential that participants such as commercial
bankers, investment bankers, general contractors, subcontractors, insurance companies, suppliers and
customers understand these risks since they will all be participating in an interlocking structure.
These various participants have differing contractual obligations, and the resultant risk and reward varies
with the function and performance of these various parties. Ideally, the debt servicing will be supported
by the project cash flow dynamics as opposed to the participants, who at best provide limited coverage.
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Some of the major sectors include:
 Energy - Project finance is used to build energy infrastructure in industrialized countries as well
as in emerging markets.
 Oil- Development of new pipelines and refineries are also successful uses of project finance.
Large natural gas pipelines and oil refineries have been financed with this model. Before the use
of project finance, such facilities were financed either by the internal cash generation of oil
companies, or by governments.
 Mining- Project finance is used to develop the exploitation of natural resources such as copper,
iron ore, or gold mining operations in countries as diverse as Chile, Ghana and Australia.
 Highways- New roads are often financed with project finance techniques since they lend
themselves to the cash flow based model of repayment.
 Telecommunications- The burgeoning demand for telecommunications and data transfer via the
Internet in developed and developing countries necessitates the use of project finance techniques
to fund this infrastructure development.
 Other- Other sectors targeted for a private takeover of public utilities and services via project
finance mechanisms include pulp and paper projects, chemical facilities, manufacturing,
hospitals, retirement care facilities, prisons, schools, airports and ocean-going vessels.
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1.2 Forms of Project Financing (Especially in Highway sector)
1.2.1 Traditional Approach
Traditionally, financing for development of National Highways in India was from the budgetary resources
of the Government of India. In order to augment the available resources, loans have also been raised from
multilateral agencies like World Bank, Asian Development Bank (ADB) and Japan Bank of International
Cooperation (JBIC). NHAI has earlier received loans directly from multilateral agencies (highway
project). These loans are expected to be repaid through the toll income from the project. The interest rate
for the project is determined according to ADB's pool based variable lending rate system for US dollar
loans. Around 80 per cent of the external assistance is provided to NHAI as a grant by the central
government. The balance is made available as long-term loans to NHAI, with the Centre bearing the
foreign exchange risk. Such loans are usually provided for 15-25 years with a moratorium of 5 years.
1.2.2 Current Scenario
Presently, the development and maintenance of National Highways is financed by following modes:
1. Government's general budgetary sources
2. Dedicated accruals under the Central Road Fund (by levy of cess on fuel)
3. Lending by international institutions:
• World Bank
• ADB (Asian Development Bank)
• JBIC (Japan Bank for International Cooperation)
4. Private financing under PPP frameworks

 Build Operate and Transfer/Design Build
 Finance Operate and Transfer (DBFOT) -
 Investment by private firm and return through levy and retention of user fee
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 Build Operate and Transfer (Annuity)
 BOT (Annuity ) - Investment by private firm and return through semi-annual
Payments from NHAI as per bid.
 Special Purpose Vehicle – SPV (with equity participation by NHAI)
 Market Borrowings
1.3 Public Private Partnerships
A Public Private Partnership is an arrangement between a public (government) entity & a private (non-
government) entity by which services that are the responsibility of/ have traditionally been delivered by
the public entity are now to be provided by the private entity under a set of terms and conditions that are
defined at the outset.
PPP is more about creating a structure in which greater value for money is achieved for services
through private sector innovation, management skills and delivering significant improvement in service
efficiency levels.
1.3.1 The key drivers for PPP are:

1. Increased public expectations and demand for public services
2. Need for capital investment
3. Innovation in service delivery and
4. Encouragement of on time and within budget competition
Apart from these, the other aspects to drive PPP are:
5. Fiscal reasons - Inadequacy of resources – leveraging on lower government funding

6. Optimal transfer of risks – to the entity best suited to manage the risks to deliver value for
money through synergies such as:
 Design
 Financing
 Construction
 Operations and Maintenance

 Impact - time overrun, cost overruns, change of scope, defective designs, leakage
of revenues, high maintenance costs
7. Efficiency gain by transferring responsibilities
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 Appropriate technology
 Innovative design solutions and spread of best practices
 Project management
 Establishing standards through the life cycle of a project
8. Rigorous enhancement in the bankability of the project and
9. Enhancement of implementation capacity
1.3.2 Misconceptions about PPPs
 PPPs are often not understood properly by the implementation bodies and the prejudices works
against the interests of the project. It is necessary to understand that a PPP is not:
 Privatization or disinvestment- where the underlying asset is not an infrastructure asset that would
work for the benefit of the society, but rather a corporation or a venture of Government
established years ago where private sector was not developed and now with the maturing of
private sector capabilities are not needed to be owned by Government any longer.
 About borrowing money from private sector or donations extended by private entity for public
good. - Because the partnering in the service delivery is not there, and in this case the utilization
of the resources is still by Government body.
 Simple outsourcing where in substantial financial, technical and operational risk is retained by
public entity (Government). PPP without risk transfer would not help Government in expanding
coverage or enhancing quality. It is to be clearly understood here that the risk has to be allocated
to the party best able to manage it.
 Commercialization of a public function by the creation of a state owned enterprise, ultimately the
management and the regulation are both with the Government and there can hardly any
improvement in the service quality and coverage.
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1.3.3 Principles of PPP
The following key principles will underpin all PPP actions in the highway sector:
Size of the Initiatives

With an extensive road network of 3.3 million kilometers, India is the second largest in the world. Indian
roads carry about 61% of the freight and 85% of the passenger traffic. All the highways and expressways
together constitute about 66,000 kilometers (only 2% of all roads), whereas they carry 40% of the road
traffic. To further the existing infrastructure, Indian Government annually spends about Rs.18000 crores
(USD 3.704 billion).
Target
 Developing 1000 km of expressways
 Developing 8,737 km of roads, including 3,846 km of national highways, in the North East
 Four-laning 20, 000 km of national highways
 Four-laning 6,736 km on North-South and East-West corridors
 Six-laning 6,500 km of the Golden Quadrilateral and selected national highways
 Widening 20,000 km of national highways to two lanes
Approach
 National Highways Authority of India (NHAI) is the apex Government body for implementing
the NHDP. All contracts whether for construction or BOT are awarded through competitive
bidding
 Private sector participation is increasing, and is through construction contracts and Build-
Operate-Transfer (BOT) for some stretches based on either the lowest annuity or the lowest lump
sum payment from the Government
 BOT contracts permit tolling on those stretches of the NHDP
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 A large component of highways is to be developed through public-private partnerships and
several high traffic stretches already awarded to private companies on a BOT basis.
Policy
 100% FDI under the automatic route is permitted for all road development projects
 100% income tax exemption for a period of 10 years
 Grants / Viability gap Funding for marginal projects by NHAI.
 Formulation of Model Concession Agreement
Opportunity
Road development is recognized as essential to sustain India’s economic growth. Road development is a
priority sector and the ongoing focus on the highway infrastructure development is targeted to projected
annual growth of 12-15% for passenger traffic and 15-18% for cargo traffic. The project has been
attracting huge Direct Foreign Investment (FDI).
Outlook
 Annual growth projected at 12-15% for passenger traffic, and 15-18% for cargo traffic
 Over $50- 60 billion investment is required over the next 5 years to improve road infrastructure
Potential
 Road development is recognized as essential to sustain India’s economic growth
 The Government is planning to increase spends on road development substantially with funding
already in place based on a cess on fuel
 A large component of highways is to be developed through public-private partnerships
 Several high traffic stretches already awarded to private companies on a BOT basis
 Two successful BOT models are already in place - the annuity model and the upfront/lump sum
payment model
 Investment opportunities exist in a range of projects being tendered by NHAI for implementing
the NHDP - contracts are for construction or BOT basis depending on the section being tendered.
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 At Rs.41, 200 crores (US $ 5 billion) project plans to lay 6 lane roads over 6,500 kms. of
National Highways on the Design Build Finance and Operate (DBFO) basis - in Golden
Quadrilateral and other high traffic stretches.
1.4 Government Initiative
For a country of India's size, an efficient road network is necessary both for national integration as well as
for overall socio-economic development. The National Highways (NH), with a total length of 65,569 km,
serves as the arterial network across the country. The four-laning the 5,900 km long Golden Quadrilateral
(GQ) connecting Delhi, Mumbai, Chennai and Kolkata is on the verge of completion. The ongoing four-
laning of the 7,300 km North-South East-West (NSEW) corridor is scheduled to be completed by
December 2009. The Committee on Infrastructure adopted an Action Plan for development of the
National Highways network. An ambitious National Highway Development Programme (NHDP),
involving a total investment of Rs.2, 20,000 crores (USD 45.276 billion) up to 2012, has been established.
For the smooth implementation of the government initiatives Government of India formed an
autonomous body - The National Highways Authority of India (constituted by an Act of Parliament, the
National Highways Authority of India Act, 1988. The Authority was operationalised in Feb, 1995.
NHAI is the nodal agency responsible for the development, maintenance and management of National
Highways entrusted to it and for matters connected or incidental thereto. The USD 60 billion National
Highways Development Project (NHDP) has been entirely managed by the NHAI under the mandate of
the Ministry of Road Transport & Highways (MoRTH), Government of India.
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The charter of NHAI is set out in the National Highways Act, 1956 and National Highways Authority of
India Act, 1988:
• Delegation of powers and functions of the highway administration to NHAI
• Enhanced powers for land acquisition
• Right to collect tolls for road projects on its own or through third parties in accordance with
specified government guidelines
• Authorization to borrow from capital market through bonds, debentures and other instruments
• Situation where Central Government will have powers to override NHAI and its officials NHAI
Besides implementation of the NHDP, NHAI is also concerned with implementation of road safety
measures and environmental management and IT initiatives in construction, maintenance and operation of
National Highways.
1.4.1 Current Scenario
India has an extensive road network of 3.3 million km – the second largest in the world. The National
Highways have a total length of 70,548 km and serve as the arterial road network of the country. It is
estimated that more than 70 per cent of freight and 85 per cent of passenger traffic in the country is being
handled by roads. While Highways/ Expressways constitute only about 2 per cent of the length of all
roads, they carry about 40 per cent of the road traffic leading to a strain on their capacity. The number of
vehicles on roads has been growing at compounded annual growth rate (CAGR) of over 8% in the last 5
years (2003-04 to 2008-09). The development of National Highways is the responsibility of the
government of India. The Government of India has launched major initiatives to upgrade and strengthen
National Highways through various phases of the NHDP. NHDP is one of the largest road development
programmes to be undertaken by a single authority in the world and involves widening, upgrading and
rehabilitation of about 55,000 km, entailing an estimated investment of INR 3,00,000 Crores (USD 60
billion).The National Highways Authority of India (NHAI) is mandated to implement the National
Highways Development Project (NHDP). Most of the projects have been developed or are under
development on Public Private Partnership (PPP) basis through Build Operate and Transfer (BOT)-
Annuity and BOT-Toll mode (these have been explained in detail in later section of the brochure).
Typically, in an annuity project, the project IRR is expected to be 12-14% and equity IRR would be 14
-16%. For toll projects, where the concessionaire assumes the traffic risk, the project IRR is expected to
be around 14-16% and 3 equity IRR around 18-20% .The NHDP is being implemented under several
phases: 4-laning of the Golden Quadrilateral (GQ) and North- South and East- West (NS-EW) Corridors-
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(NHDP I & II) Phase I mainly involves widening (to 4 lanes) and upgrading of 7,498 km of the national
highway network and has four component packages:
 Highway network linking the four metropolitan cities in India i.e. Delhi-Mumbai-Chennai-
Kolkata, covering a length of 5,846 km, popularly known as the Golden Quadrilateral (GQ)
project.
 Highways along the North-South (NS) and East- West (EW) corridors, covering a length of 981
Km.
 Port connectivity projects covering a length of 356 km; and
 Other highway projects, covering a length of 315 km.
Phase-II involves widening and improvement of the NS-EW corridors (not covered under Phase-I)
covering a distance of 6,647 km, besides providing connectivity to major ports on the east and west coasts
of India and some other projects. This includes 6,161 km of NS-EW corridors and 486 km of other
highways. The total length of the NS-EW network under Phases I & II is about 7,200 km. 4-laning of the
GQ has almost been completed. Phase II is expected to be largely completed by December 2010.
 Upgradation of 12,109 km (NHDP-III)

NHDP-III involves upgradation of 12,109 km (mainly 4- laning) of high density national
highways, through the Build, Operate & Transfer (BOT) mode at a cost of INR 80,626 Crores (USD
billion). The project consists of stretches of National Highways carrying high volume of traffic,
connecting state capitals with the NHDP network under Phases I and II and providing connectivity to
places of economic, commercial and tourist importance.
 2-laning of 20,000 km with paved shoulders (NHDP-IV)

With a view to providing balanced and equitable distribution of the improved/widened
highways network throughout the country, NHDP-IV envisages upgrading of 20,000 km of such
highways into 2-lane highways, at an indicative cost of INR 27,800 Crores (USD 5.6 billion). This
will ensure that their capacity, speed and safety match minimum benchmarks for national highways.
The government has already approved strengthening of 5,000 km to 2-lane paved shoulders on BOT
(Toll/ Annuity) under NHDP-IV A at a cost of INR 6,950 Crores (USD 1.4 billion).
 6-laning of 6,500 km (NHDP-V)

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Under NHDP-V, 6-laning of the 4-lane highways comprising the GQ and certain other high
density stretches, will be implemented on BOT basis at an estimated cost of INR 41,210 Crore (USD
8.2 billion).These corridors have been 4-laned as part of the GQ in Phase-I of NHDP. Implementation
of initial set of projects has already commenced and the entire package is expected to be completed
by 2012. Of the 6,500 km proposed under NHDP-V, about 5,700 km would be taken up in the GQ
and the balance 800 km would be selected on the basis of predefined eligibility criteria.
 Development of 1,000 km of expressways (NHDP-VI)

With the growing importance of urban centers of India, particularly those located within a
few hundred kilometers of each other, expressways would be both viable and beneficial. The
Government has approved 1,000 km of expressways to be developed on a BOT basis, at an indicative
cost of INR 16,680 Crores (USD 3.3 billion). These expressways would be constructed on new
alignments.
 Other Highway Projects of 700 km (NHDP-VII)

The development of ring roads, bypasses, grade separators and service roads are considered
necessary for full utilization of highway capacity as well as for enhanced safety and efficiency. For
this, a programme for development of such features at an indicative cost of INR 16,680 Crores has
been approved by the Government. Apart from the high density corridors, a substantial part of the
National Highways network would also require development during the 11th Plan period. The
sections are characterized by low density of traffic. Some of these stretches fall in backward and
inaccessible areas and others are of strategic importance. The development of these categories of
National Highways would be carried out primarily through budgetary resources.
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1.5 Modes of Financing a PPP Project in Highway Sector
The first two phases i.e. NHDP-I and NHDP-II were mostly funded through Government where the share
of the BOT (Build – Operate –Transfer) Highways was only 10%. Now, from the NHDP-III onwards, the
funding mechanism is mostly Public– Private Participation except some stretches where it may not be
viable on BOT. Also high traffic corridors are being offered to the concessionaire there by making Public
Private Participation an attractive and profitable proposition.
Public Private Partnership is proving to be a successful mechanism for developing and maintaining the
National Highways. In 2005, 30 BOT contracts covering a length of 1600 Kms. Were awarded. Almost
all future projects are envisaged in the BOT mode.
Types of Public Private Partnerships:
i. Build Operate and Transfer/Design Build 5 Finance Operate and Transfer

(DBFOT) - Investment by private firm and return through levy and retention of
user fee.
ii. Build Operate and Transfer (Annuity) – BOT (Annuity ) - Investment by private
firm and
iii. Return through semi-annual payments from NHAI as per bid.
iv. Special Purpose Vehicle – SPV (with equity participation by NHAI)
v. Market Borrowings
 BOT (Toll)
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Private developers/ operators, who invest in toll able highway projects, are entitled to collect
and retain toll revenues for the tenure of the project concession period. The tolls are prescribed by
NHAI on a per vehicle per km basis for different types of vehicles. The Government in the year 1995
passed the necessary legislation on collection of toll. (Refer the National Highways Fee
[Determination of Rates and Collection] Rules 2008). A Model Concession Agreement (MCA) has
been developed to facilitate speedy award of contracts. This framework has been successfully used
for award of BOT concessions.
 BOT (Annuity)
The concessionaire bids for annuity payments from NHAI that would cover his cost
(construction, operations and maintenance) and an expected return on the investment. The bidder
quoting the lowest annuity is awarded the project. The annuities are paid semi-annually by NHAI to
the concessionaire and linked to performance covenants. The concessionaire does not bear the traffic/
tolling risk in these contracts.
 Operate, Maintain and Transfer (OMT) Concession
NHAI has recently taken up award of select highway projects to private sector players under
an OMT Concession. Till recently, the tasks of toll collection and highway maintenance were
entrusted with tolling agents/ operators and subcontractors, respectively. These tasks have been
integrated under the OMT concession. Under the concession private operators would be eligible to
collect tolls on these stretches for maintaining highways and providing essential services (such as
emergency/ safety services).
 Special Purpose Vehicle for Port Connectivity Projects
NHAI has also taken up development of port connectivity projects by setting up Special Purpose
Vehicles (SPVs) wherein NHAI contributes up to 30% of the project cost as equity. The SPVs also have
equity participation by port trusts, State Governments or their representative entities. The SPVs also raise
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loans for financing the projects. SPVs are authorized to collect user fee on the developed stretches to
cover repayment of debts and for meeting the costs of operations and maintenance.
 International Competitive Bidding Process
General procedure for selection of concessionaires adopted by NHAI is a two-stage bidding

process. Projects are awarded as per the model documents- Request for Qualification (RFQ), Request
for Proposal (RFP) and Concession Agreement - provided by the Ministry of Finance. NHAI amends
the model documents based on project specific requirements. The processes involved in both stages
are set out as follows:
Stage 1: Pre-qualification on the basis of Technical and Financial expertise of the firm and its track
record in similar projects which meets the threshold technical and financial criteria set out in the RFQ
Document. Notice inviting tenders is posted on the web site and published in leading newspapers.
Stage 2: Commercial bids from pre-qualified bidders are invited through issue of RFP. Generally, the
duration between Stage 1 and 2 is about 30-45 days. Wide publicity is given to NHAI tenders so as to
attract attention of leading contractors/ developers/ consultants.
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1.6 Company Profile
1.6.1 Infrastructure Leasing & Financial Services Limited (IL&FS)

IL&FS was promoted by the Central Bank of India (CBI), Housing Development Finance
Corporation Limited (HDFC) and Unit Trust of India (UTI). Over the years, IL&FS has broad-
based its shareholding and inducted Institutional shareholders including State Bank of India, Life
Insurance Corporation of India, ORIX Corporation - Japan and Abu Dhabi Investment
Authority
IL&FS has a distinct mandate - catalyzing the development of infrastructure in the country. The
organization has focused on the commercialization and development of infrastructure projects
and creation of value added financial services.
1.6.2 Services
The IL&FS Group has developed the requisite capabilities to take infrastructure projects from
concept to commissioning. The organization has developed a pool of institutionalized resources
and functional expertise in various areas. These areas include project management, project
engineering, finance, risk management and environmental-social management, all of which are
strategic to the infrastructure development activity:
IL & FS Group
Infrastructure Services Financial Services
 Project Development & Implementation  Project Finance
 Cluster Management  Private Equity
 Environmental & Social  Investment Banking
27
 Education/ Technology  Trust & Fiduciary
 Logistic & Fleet Management  Depository, Custodian and

professional clearing service
 Facility Management  Auto Infrastructure
Table 1: List of various infrastructure and financial services of IL&FS
Group Companies
Infrastructure Services Financial Services
 IL&FS Infrastructure Development  IL&FS Investment Managers Limited

Corporation Limited -
 IL&FS Transportation Networks  IL&FS Trust Company Limited

Limited
 IL&FS Ecosmart Limited  ORIX Auto Infrastructure Services

Limited
 IL&FS Education and Technology  IL&FS Securities Services Limited

Services Limited
 New Tirupur Area Development  IL&FS Financial Services Limited

Corporation Limited
 Noida Toll Bridge Company Limited  IL&FS Financial Services Limited
Table 2: List of various Group Companies of IL&FS
1.6.3 IL&FS Financial Services Limited

IL&FS Financial Services Ltd (IFIN) is a 100% subsidiary of IL&FS, with a combination of
Investment Banking skill sets comprising of Debt Syndication, Corporate advisory and lending
capabilities. The mandate to IFIN is to provide value added Investment banking services to a
select group of customers.
The core businesses of IFIN are:
 Asset and Structured Finance
28
 Project Debt Syndication
 Corporate Advisory
 International Business
 Project Finance
1.6.3.1 Asset and Structured Finance

The Asset and Structured Finance Group (ASF) of IFIN is the primary relationship originator with
corporate clients. Thus it plays the role of being the principal interface between IL&FS Group/ IFIN and
the corporate world.
1.6.3.2 Project Syndication Group

The Project Syndication Group (PSG) has established itself as a bridge between Project Sponsors and
Lenders by leveraging the knowledge, expertise and resources in the field of mobilising funds for
projects. PSG focuses on the role of a Funds Arranger for Projects along with support for related
Advisory initiatives. While fund mobilisation services provided across various sectors, the Infrastructure
sector remains a key area of activity.
1.6.3.3 Corporate Advisory

The Corporate Advisory Services (CAS) team plays a key role in advising clients on their organic as well
as inorganic growth objectives. The team has proven expertise in rendering the following advisory
services to its clients:
 Syndication of growth capital, i.e. private equity and mezzanine capital
 Advising on Mergers & Acquisitions
 Advising on Capital Restructuring
1.6.3.4 International Business

IFIN over a period of time has a developed a strong platform for syndication of debt and equity in the
domestic financial markets. Today IFIN is recognized as one of the major players in the project
syndication market with a niche carved out in the Infrastructure segment
1.6.4 Key Strengths of IFIN are:
The ability of IFIN to provide strong sector insights, understanding of the trends and risks impacting
Projects, enables it to impart the most optimal advice towards providing innovative financing structures,
29
on a complete project-recourse basis. Similarly, a high acceptability of IL&FS appraisal amongst Lenders
and the demonstrated capability of the Group to close complex transactions within tight deadlines have
provided IFIN a distinctive edge in delivery and positioning with other Project Debt Arrangers &
Advisors in the market.
 Ability to offer customized / Tailor made solutions to clients financial needs.

 Healthy relationship with most of the large business group that generates recurring businesses.
 Capability of execute innovative /first of its kind structured deals to suit the clients requirement
 Diverse sector expertise.
 Strong relationships with other corporate finance and investment institutions.
 Robust network of relationships with leading Global and Domestic investors.
 Ability to align Client needs with Investor requirements - ensures the right 'fit' of investors for the
Client.
 Strong Parentage - Potential to leverage IL&FS Group capabilities to deliver 'Best-in-Class'

solutions to the Client.
 Wide experience both in domestic and international transactions across sectors like Infrastructure,
Real Estate, Manufacturing and Services.
 Strong awareness of financial market trends and regulatory matters.
 Global reach with offices in London, Singapore and Middle East.
 Well qualified and multi faceted team with immense business understanding.
 Client focused and high impact solutions.
 Invaluable advice on transaction structuring and execution.
 Quick turnaround of mandates.
1.6.5 Sources of funds of IL&FS
Given the rapid pace of urbanization in India, the urban infrastructure sector which is one of the key
drivers of the Indian economy, requires an enhanced focus. Traditionally, HUDCO and multilateral
institutions such as the World Bank, the Asian Development Bank, Japan International Co-
operation Agency, KfW etc., have been providing project finance assistance to government and
local level authorities executing urban infrastructure projects. Such assistance is generally routed
through the Government of India (GoI) and the respective state governments following the
30
budgetary mechanism and generally sanction is based on guarantees provided by the respective
state governments.
Attracting commercial debt to fund urban infrastructure has always been a challenge. Considering that
GoI has announced various initiatives and programmes, to attract and promote sustainable investments in
urban infrastructure projects, there is a significant opportunity for financing such urban infrastructure
projects.
The Pooled Municipal Debt Obligation (PMDO) facility has been structured through a partnership of 15
Banks/FIs including IL&FS with a corpus of Rs 2750 cr to primarily finance urban local bodies and
Special Purpose Vehicles (SPVs) promoted under PPP arrangements, to implement urban infrastructure
projects for Water Supply and Sewerage, Solid Waste Management, Roads and Urban Transport,
Environment Projects, Healthcare and Education etc.
The underlying strategy of the PMDO is to improve credit worthiness and bankability of urban
infrastructure projects, and use efficient transaction structures built on robust risk management processes,
that have been successfully replicated in other infrastructure sectors.
The local bodies are encouraged to conceive and implement projects in the Public Private Partnerships
(PPP) framework based on long-term concession agreements, to make service delivery more efficient and
to utilise private sector funding by tapping the commercial debt and equity market. This arrangement is
expected to relieve the urban local bodies of substantial investment burden on their books and to make
scarce public resources available for core civic services.
The list of various physical infrastructure projects:
International Convention Centre Complex at

Adityapur Industrial Water Supply Scheme Thiruvananthapuram
Ahmedabad-Mehsana Toll Road International Convention Centre, Hyderabad
Ambur Vaniyambadi Effluent Program IT Corridor Project
Artisan Clusters Jal Mahal, Jaipur
Assam State Electricity Board Jawaharlal Nehru National Urban Renewal Mission
Bihar State Electricity Board Joint Venture with Coal India Limited
Container Transhipment Terminal Joint Venture with Power Grid
Delhi Cab – Radio Taxi Scheme Project Karimnagar Thermal Power Project
Delhi Cab Launches ‘Forshe’ – Radio Taxi Service Karnataka Toll Bridges
Delhi-Noida Toll Bridge Kotakatta-Kurnool Road Project
Dighi Port Project Krishnapatnam Thermal Power Project
East Coast Road Ludhiana Bus Terminal Project
East Godavari Power Plant Ludhiana Textile Cluster
For-She Mumbai Cab World Class Exclusive Ladies Taxi
Service Maha Mumbai Integrated SEZ Project
31
Gangavaram Port Maharashtra State Electricity Board
Haldia Integrated Infrastructure Development Program National Games Village, Hyderabad
Howrah Foundry Cluster North Karnataka Expressway
Hydro Projects Nuclear Power Corporation of India Limited
Industrial Clusters ONGC Tripura Power Project
Info Nepal Transmission Lines Punjab Roads
Initiatives Under Industrial Infrastructure Upgradation Scheme Quila Nabha
Integrated Urban Infrastructure Development in
Nanded DHPL
METHODOLOGY
The methodology adopted in the course of the study is as follows:
1. A basic understanding of project finance was obtained.
2. The importance of the emergence of the Public Private Partnerships in the field of infrastructure
especially in highways sector was established.
3. A project named as Dehradun Highways Project Limited was studied in detail.
The details of the project were studied in reference to:
• Project Details
• Project background in reference to the bidding process
• Sponsor’s profile
• Concession Agreement
• Project cost and financing
• Project approvals and clearances
4. The projects financial model was studied in detail.

32
2. DEHRADUN HARIDWAR PROJECT LIMITED
2.1 Project Details
The project which ‘I am considering for my study is the 4 laning of Haridwar –Dehradun highway from
Km 211.00 to Km 218.200 of NH 58 and from Km 165.000 to Km 196.825 of NH-72 (approx 39.03 ms)
in the state of Uttarakhand on BOT Annuity basis on DBFOT pattern.
Dehradun Highways Project Limited (“DHPL”) is a Special Purpose Vehicle (SPV) company promoted
by Era Infra Engineering Limited (EIEL-74%) and OJSC-SIBMOST (26%). DHPL has been awarded the
bid, by the National Highways Authority of India (“NHAI"), for development of 4 laning of the Haridwar
– Dehradun section from km 211.000 to km 218.2000 of NH-58 and km 165.000 to km 196.825 of NH-
72 (approximately 39.03 Km) on Design, Build, Finance, Operate and Transfer (DBFOT) Annuity basis
under NHDP-III in state of Uttarakhand. The aggregate cost of the project is estimated at Rs.691.41 Cr,
which is proposed to be financed in a debt: equity ratio of 77:23 with Rs.528.45 Cr being raised as Senior
debt from Banks and Financial Institutions and the balance amount of Rs.162.96 Cr being infused as
Sponsors contribution.
The company has mandated IL&FS Financial Services Limited (“IFIN”) to mobilize the Senior debt
facility of Rs. 528.45 Cr to part finance the project cost.
The highlights of the project are:
1. Project sponsors: Era Infra Engineering Limited (EIEL)
2. Technical Partner: OJSC – SIBMOST
33
3. Concession Period: 20 years from the date of commencing from appointed date i.e. date of
Financial Closure (including 2 years of the construction period).
4. Project Cost: 691.41 Crores
2.2 Background
The Government of India (GoI) has entrusted to the National Highways Authority of India (NHAI), the
development, maintenance and management of national highways. NHAI is currently augmenting the
Haridwar – Dehradun section from km 211.000 to km 218.2000 of NH-58 and km 165.000 to km 196.825
of NH-72 (approximately 39.03 Km) on Design, Build, Finance, Operate and Transfer (DBFOT) pattern
on BOT Annuity basis by 4 laning of the existing Road.
The bidding process:
 The NHAI accordingly invited proposals by its Request for Qualification (RFQ) in August 2009
for short listing of bidders for the Project and subsequently short listed bidders, including the
consortium of Era Infra Engineering Limited (EIEL) and .its technical partner OJSC-SIBMOST
(Russian Company).
 The NHAI then invited bids or Request for Proposals (RFP) from shortlisted bidders under
prescribed technical & commercial terms and conditions.
The list of other shortlisted bidders is:

• Ramky Infrastructures Limited
• Soma Enterprises Limited
• NCC Infra Holdings Limited
• Era Infra Engineering Limited & OJSC-SIBMOST
34
 After an evaluation of bids, NHAI accepted the bid of the consortium of EIEL & OJSC-
SIBMOST and communicated its bid vide Letter of Award (LOA) No.
NHAI/BOT/11019/2/2009/45 dated December 29, 2009. The Concession Agreement has been
executed on 24th February, 2010.
2.3 Sponsors Profile

 Era Infra Engineering Limited (EIEL) – Lead Sponsor
Era Infra Engineering Limited (formerly Era Constructions (India) Ltd.) is the flagship company of
the ERA group, a reputed business house with primary business interests in Construction and a
growing Real Estate business. EIEL is an ISO 9001:2000 certified company and is engaged in
diversified construction activities of power projects, roads, railways, runway & integrated cargo
complex for airports, drainage, institutional & industrial complexes, multiplexes and residential
buildings. Since inception, EIEL has completed more than 60 projects for renowned clients like
NTPC, PGC, NHPC, RVNL, BHEL, NBCC, PWD, NALCO etc. EIEL has a robust current order
book of over Rs. 8000 Cr across all sectors. With the Government's thrust on infrastructure
development in the country, EIEL has started focusing on bidding for BOT projects to take advantage
of the opportunities that sector offers
Key Financial indicators of EIEL for the past three years are given below:
Financial Year 2007 2008 2009
(Audited) (Audited) (Audited)
Net Sales 763.02 1464.48 2376.90
EBITDA 140.59 293.10 413.61
Profit before tax 111.41 209.73 257.07
Profit after taxes 79.12 121.37 202.62
EBITDA Margin (%) 18.42% 20.01% 17.40%
Equity Share capital 18.61 23.10 28.71

35
Financial Year 2007 2008 2009
(Audited) (Audited) (Audited)
Reserves & Surplus 272.07 443.11 850.18
Tangible Net Worth(TNW) 304.96 489.59 878.89
Total Loans 814.03 1447.09 1796.35
Net Fixed assets 369.98 710.15 1200.97
Investments 125.20 218.49 176.14
Current Assets 784.06 1411.18 1927.99
Current Liabilities 136.10 339.73 549.84
Total Outstanding Liabilities (TOL) 950.13 1791.68 2346.19
TOL/TNW 3.12 3.66 2.67
Current Ratio 5.76 4.15 3.51
Balance Sheet Analysis:
• Net Sales in FY 2009 stands at Rs. 2376.90 crore an increase of 62.30% over previous financial
year. Contract revenue forms a major portion of total turnover contributing approximately 80 % in FY
09. Contract revenues have grown from Rs. 1244 crores in FY 08 to Rs. 1960 crores in FY 09 an
increase of 57.5% over the previous financial year
• There has been an increase in order book from approximately Rs. 5122 crore in FY 2008 to
Rs. 7250 crore in FY 2009 an increase of 41.5%
• Profit after tax as on 31.03.2009 stood at Rs. 202.62 crore an increase of 66.13% over previous
financial year
• Major activities of the company are in construction division and they have undertaken bigger
projects in FY09. The cost of raw material including steel and cement increased steeply during FY2009
 OJSC-SIBMOST – Technical Partner
36
SIBMOST (Sibmost) is a leading Russian construction company with over six decades of
experience.Sibmost has built over 3,500 bridges and overbridges with a total length of over 200
kilometres in Ukraine, Siberia, Kazakhstan, the Russian Far East and the Polar North, including
scores of super-class bridges across the Siberian rivers of Yenisei, Ob, Tom, Irtysh, Angara, Abakan,
Biryusa, Chulym, Ob, Katyn. Out of the thirty projects raised in the former USSR, four bridges built
by the firm are included in the UNESCO hand book entitled “Bridge Building Worldwide”.
2.4 Concession Agreement
1. Concession period
The Concession has been awarded to DHPL for a period of 20 years from the Appointed Date,
which is 180 days from the date of execution of the Concession Agreement i.e. February 24,
2010. NHAI is the Concessioning Authority .
2. Annuity
The Concessionaire would be compensated through a fixed payment (Annuity) of Rs 53.22 cr to

be paid semi-annually by NHAI during the operations period.
The first annuity payment date shall be 180 days from COD. The number of annuities shall not
exceed 2 per year over the Concession Period.
The CA provides for availability of the entire carriageway assured by the Concessionaire for each
Annuity Payment (Assured Availability) period, with a proportionate reduction in annuity
payment if the actual availability is less than assured availability.
The CA also provides for adherence to Maintenance Requirements during each Annuity Period
with proportionate reduction in annuity payment if the maintenance requirements are not adhered
to.
The CA specifies that the Concessionaire shall either receive Bonus for early completion of the
Project or incur Reduction in the Annuity for delayed completion of the Project. The Bonus shall
37
be paid one month after COD, or reduction shall be effected on the first Annuity Payment date
after COD.
3. Conditions Precedent
The following Conditions Precedent is to be satisfied by the Authority before Financial Closure:
a. Provide to the Concessionaire right of way in accordance with the provisions of the
Concession Agreement
b. Procured approval of the Railway authorities that would enable the Concessionaire to
construct road over bridges / under bridges at level crossings on the Project Highway
c. Procure all applicable permits relating to environmental protection and conservation of

the project site
The Conditions Precedent to be satisfied by the Concessionaire prior to the Appointed Date
will be deemed to be fulfilled if the Concessionaire has:
a. provided Performance Security to the Authority
b. executed and procured execution of the Escrow and Substitution Agreement
c. procured all the Applicable Permits specified and executed the Financing Agreements
d. The Concessionaire shall have delivered to NHAI from the Consortium Members, their
respective confirmation, in original, of the correctness of their representations and
warranties set forth in the Concession Agreement
e. NHAI shall have received the legal opinion of legal counsel of the Concessionaire with
respect to the authority of the Concessionaire to enter into the CA and the enforceability
of the provisions thereof
4. Obligations of the Concessionaire
The Concessionaire shall:
a. procure finance for and undertake design, engineering, procurement, construction,

operation and maintenance of Project Highway
38
b. comply with all applicable laws and Applicable Permits
c. procure and maintain appropriate proprietary rights, licenses, agreements and permissions
d. make reasonable efforts to facilitate acquisition of land required for the purpose of the
Concession Agreement
e. perform and fulfill its obligations under the Financing Agreements
f. transfer the highway to NHAI upon Termination of the Concession Agreement
g. ensure that the Project Site remains free from all encroachments and take all steps
necessary to prevent or remove encroachments
h. not to undertake or permit any Change in Ownership, except with the prior approval of
NHAI
i. not, except with the previous written consent of NHAI, become engaged in any other
business other than as envisaged herein
5. Obligations of NHAI
Specific Obligations
a. Handover peaceful physical possession of the Project Site to the Concessionaire, in

accordance with the Project Site Delivery Schedule
b. Grant in a timely manner all such approvals, permissions and authorisations which the
Concessionaire may require from the Government Agency / the Board in connection with
implementation and operations of the Project
General Obligations
a. provide assistance to the Concessionaire in procuring Applicable Permits
b. assist the concessionaire in obtaining access to all necessary infrastructure facilities and
utilities
c. ensure that no barriers are erected or placed on the Project Highway
d. make best endeavors to procure that no local tax, toll or charge is levied or imposed on
the use of whole or any part of the Project Highway
e. assist the Concessionaire in procuring Police assistance for regulation of traffic, removal
of trespassers and security on the Project Highway
39
f. Support, cooperate with and facilitate the Concessioner in the implementation and
operation of the project in accordance with CA
g. Provide reasonable assistance to the Concessionaire or its contractors to obtain applicable

visas and work permits for the purposes of discharge of their obligations by the
Concessionaire or its Contractors
h. During the development period NHAI shall maintain the Project Highway, at its own cost
and expense, so that its traffic worthiness and safety are at no time materially inferior as
compared to its condition 7 days prior to the last date for submission of the Bid, and in
the event of any material deterioration or damage other than normal wear and tear,
undertake repair thereof, or pay to the Concessionaire the cost and expense, as
determined by the Independent Engineer, for undertaking such repair after the Appointed
Date
40
Project Cost and Means of Financing
1. Project Cost
The project cost has been estimated at Rs. 691.41 Cr. The detailed break-up of Project Cost is presented
in the table below:
Cost Head Rs Cr
EPC Cost 630.00
Preliminary & Pre-Operative Cost 9.29
Interest during construction(IDC) 52.12
Total 691.41
The detailed break-up of each element of project cost is as under:
Engineering, Procurement and Construction Cost (EPC)
The EPC cost has been taken on the basis of proposed EPC contract which shall be entered into with
EIEL, the EPC Contractor. The EPC contract will be lumpsum contract with specific provisions to ensure
timely completion of the project implementation. The break-up of EPC is as follows:
Particulars Rs. Crores
41
Construction Cost 583.53
Escalation 36.50
Consultancy & Maintenance Expenses during Construction 9.97
Total 630.00
Preliminary & Pre-Operative Expenses
Preliminary expenses include company incorporation expenses. Pre-operative expenses include financing
cost, Project Insurance, Establishment expenses, BG Commission etc.
Interest during Construction
Interest on Senior Debt and Sponsor Sub-debt for the implementation period of 24 months has been
computed based on the proposed phasing of capital expenditure & debt drawdown schedule. Accordingly,
the total IDC component on Senior Debt is Rs.47.01 and on Sponsor Sub-debt is Rs. 5.11 Cr
Interest on Sponsor sub-debt shall be accrued throughout the tenor of the loan and shall be paid after the
repayment of entire senior debt. The accrued IDC of Rs. 5.11 Cr on the Sponsor sub-debt has not been
considered for the purpose of debt: equity ratio of 77:23
2. Means of Financing
The fund requirement for the Project shall be met through a mix of Shareholders’ equity, Senior Debt
from Lenders at an aggregate Debt to Equity Ratio (DER) of 77:23
Particulars Rs. Cr
Equity share capital 5.00
Equity Like Instruments 102.75
Sponsors’ Sub- Debt including Accrued Interest 55.21
Total Sponsor Contributions (A) 162.96
Term Loan-Senior Debt 528.45
42
Particulars Rs. Cr
Total Debt(B) 528.45
Total 691.41
The details of the funding pattern is summarised below:
Sponsor Contributions
Sponsors contribution for this project is as follows:
i. Equity Share Capital
Equity share capital for the project shall be Rs. 5 Crores (50, 00,000 Equity Shares of Rs.10/-
each) which would be contributed by both EIEL and OJSC SIBMOST in 74% and 26%
respectively.
ii. Equity Like Instruments
The Equity Like instruments shall be in the nature of Preference Share capital for Rs.102.75 Cr.
These Preference Shares shall be cumulative in nature and would carry 0.1% p.a. coupon rate.
Such preference shares shall not be redeemed during the tenor of the Senior Term Loan.
iii. Sponsor Sub-debt
The financing plan includes Sponsor sub-debt Rs 50.10 Cr. Interest for the same would accrue
throughout the loan tenor including construction period. The repayment of sub-debt including
accrued interest would also be made subsequent to the repayment of entire senior debt from
lenders.
43
Senior Debt
The senior debt requirement is estimated at Rs. 528.45 cr, which is proposed to be raised from domestic
Banks/ Financial Institutions
(i) Drawdown Schedule
The debt and equity drawdown schedule, over the implementation period of the Project will be as follows:
(Rs. Cr)
Senior Sub- Equity & Equity Total Capital

Qtr
Debt Debt Like Instruments Expenditure
No.
Drawdown Drawdown
1 56.52 - 26.94 83.46
2 63.26 8.84 11.03 83.13
3 66.47 8.82 - 75.29
4 67.77 6.42 13.81 88.00
5 69.08 6.55 14.08 89.71
6 80.21 7.60 16.35 104.16
7 81.77 7.75 16.67 106.19
8 43.37 4.12 8.87 56.36
Total 528.45 50.10 107.75 686.30
44
The total project cost is Rs.691.41 Cr. However since the interest on Sponsors Sub-debt for Rs.5.11 Cr
shall be accrued during the construction as well as operations period, the same has not been considered as
part of financing requirement.
Performance Guarantee
As per the CA, the Concessionaire is required to provide an irrevocable and unconditional Performance
Bank Guarantee within 180 days from the date of the CA to NHAI (towards performance obligations) for
a sum equivalent to Rs 23.90 cr for a period of one year.
45
2.6 Project Implementation Framework
The project implementation framework is illustrated in the figure below:
Concession Sponsors
Lenders
Agreement
EIEL & SIBMOST
Banks/ FIs
NHAI
Dehradun Highways Project Limited
(DHPL)
DEVELOPMENT
O&M CONTRACT
CONTRACT
EIEL
EIEL
The Project would be implemented over 2.0 years from the appointed date (which is the date of financial
closure) as per the Concession Agreement. The COD of the project is envisaged as 23-Aug-2012.
The implementation timelines of the project are as under:
46
Description Period Date
24-Feb-
Concession Agreement 20 Years from Appointed Date 10
Within 180 Days from the Date of 23-Aug-
Financial Closure
Signing the Concession Agreement 10
2 Years (730 days) from the date of 23-Aug-
Commercial Operations Date (COD)
Financial Closure 12
20 Years from the Appointed Date 23-Aug-
Project Period including Construction 30
3. FINANCIAL MODEL
It is an abstract representation of a financial decision making solution. The financing is typically secured
by all the project assets including the revenue producing contracts.
Project lenders are given a lien on all the assets and are able to assume control on a project.
3.1 Output and Sensitivity
Particulars Rs. Crores

Project
Cost EPC Cost 630.00
Preliminary and Pre-
Operative Expenses 9.29
IDC-Senior Debt 47.01
IDC-Sponsor Debt 5.11
Total Project Cost 691.41
MOF Means of Finance

Debt 77.0%
Sub-Debt-Lenders 0.0%
Equity 15.7%
Sub Debt-Sponsors 7.3%
Total 100.00%
Debt 528.45
47
Equity 107.75
Sponsor Sub-Debt 50.10

Accrued int. on
Sponsor debt 5.11
Total 691.41
Financing
Rate of Interest 10.0%
Door To Door 15.00

Constn Period +
Moratorium 2.50
Repayment Period 12.50

23-Mar-
Repayment Starts on 13
23-Mar-
Repayment Ends on 25
Balance Sheet Check Ok
Project Cost/MOF
Check Ok
IDC Check Ok
Sensitivity Analysis
Chan
Sensiti ge Min. Avg.
%
vity Facto DSCR DSCR
Particulars r
Base
Base Case
case 1.27 1.31
Increase 1.00
ROI
by % 0% 0% 1.18 1.25
Project
Project
IRR
IRR (Pre EIRR
(Post
Tax)
Tax)
0.00% 0.00% 0.00%
13.90
10.72% 10.36% %
48
Analysis of the data
This sheet gives the details about the:
1. Project cost
The project cost is explained in terms of:
 EPC Cost
 Preliminary and Pre Operative Expenses
 Interest During Construction Senior Debt
 Interest During Construction Sponsor Debt
2. Means of Finance
This section gives the details about the various means of finance in terms of percentages and
figures with respect to:
 Debt
 Sub Debt Lenders
 Equity
 Sub Debt Sponsors
3. Sensitivity Analysis
The sensitivity analysis is also given in terms of various ratios for the base case and return on
investment.
The ratios used for sensitivity analysis are taken from the ratios sheet.
4. This sheet also gives the details about financing of the project with respect to:
49
 Rate of Interest
 Construction Period
 Repayment Period
 Repayment date
 Checks of the balance sheet
 Checks of the project cost
 Interest during construction checks
3.2 Assumptions
100000
Figures in Rs. Crores 00
Assumptions
Key Dates Particulars Days/Months Date FY

24-Feb-
Date of Concession 10 2010
23-Aug-
Time for Financial Closure (FC) 180 Days 10 2011
Construction Starts from 24-Aug- 2011
50
10
23-Aug-
COD 730 Days 12 2013
23-Aug-
Concession Period Ends from FC 240 months 30 2031
19-Feb-
First Annuity Period after COD 180 Days 13 2013
19-Aug-
Last Annuity period 210 months 30 2031
31-Mar-
First Financial Year Ending 11 2011
31-Mar-
Last Financial Year 31 2031
No.of Days/Year 365
Financing Senior Debt % 77.0%

Sub-Debt-Lenders % 0.0%
Equity % 15.7%
Sub Debt-Sponsors % 7.3%
Total Debt & Equity 100.0%
Rate of Interest 10.00%
Refinancin % of Senior Debt

g reqd. 22.00%
Amount of
Refinance 116.26
Rate of Interest 10%

Reapayment
period 2 Years
Repayment 30-
Starts on 23-Sep-25 Sep-25
Repayment ends 30-

on 23-Sep-27 Sep-27
Tenor Door To Door Tenor Years 15.00
Construction Period Years 2
Moratorium after COD Years 0.50
Repayment Period Years 12.50

Repayment Starts Date 23-Mar- 31-
51
13 Mar-13
23-Mar- 31-
Repayment Ends on 25 Mar-25
Upfront Equity % 25%

Financing Chages 0.80%
Interest Rate on WC/STL 12.00%
DSRA - BG Commission Rate 0%
Sub Debt-
Lenders Rate of Interest 0.00%
23-Jun-
Repayment starts 25
23-Dec-
Sub Debt-
Sponsors Rate of Interest 12.00%
23-Jun-
Repayment starts 25
23-Dec-
63
Project Cost EPC Cost Including Escalation Crores 0.00
Preliminary Expenses Crores 9.29
52
IDC-Senior Debt Crores 47.01
Contingency Crores -
6
Total Project Cost Crores 86.30
IDC-Sub Debt Crores 5.11

6
Total Project Cost 91.41
Rs.
Crores
52
MOF Senior Debt 8.45
Sub-Debt-Lenders -
10
Equity 7.75
Sub Debt-Sponsors 50.10
Interest on Sub Debt Sponsors 5.11

6
Total Means of Finance 91.41
Prelims & Finance Charges, BG Commn, Audit Fee,

Pre-Ops LLC & LE Fee, Project Insurance etc Crores 5.47
Preliminary Exp, Project Insurance,
Establishment Exp etc. Crores 3.82
Total Crores 9.29
Performance BG Crores 23.90
Balanc
Particulars Upfront e
Equity 27 81
Debt
53
21 508
Sub Debt-Sponsors 13 38
Sub Debt-Lenders - -
Total 60 626
Accounting: Depreciation Method Useful Life 5.56%
Tax Depreciation - WDV % 10%
Tax rate % 33%
Mat Rate % 20%
Service Tax Rate % 11%
Capex Related Contingency % 0%
Operations: Annuity - Semi Annually 53.22
Routine Maintenance/Km p.a. Rs. Crores 0.24

Establishment Cost/p.a. Rs. Crores 0.5
MMR/km Rs. Crores 0.77

Escallation of O&M % 5.0%
Periodic Maintenance from
Operations Years 5
Total Length Km 39.025
Expenses Based on FY 2013
Repayment Repayment Schedule - Senior 23-Jun- 23-

Schedule Lenders 23-Mar-13 13 Sep-13
30-Jun- 30-
Quarter End 31-Mar-13 13 Sep-13
100.000% Semi Annually (15 Years) 0.75% 1.25%
54
Repayment Schedule - Sub 23-Jun- 23-
Debt 23-Mar-13 13 Sep-13
30-Jun- 30-
31-Mar-13 13 Sep-13
100.00% Sponsor Sub-debt Repayment% 0% 0% 0%
0.00% Lenders Sub-debt Repayment % 0% 0% 0%
100.00% Refinancing Debt-Repayment% 0% 0% 0%
23- 23- 23- 23-Jun- 23-

23-Dec-13 23-Mar-14 23-Jun-14 Sep-14 Dec-14 Mar-15 15 Sep-15
30- 31- 31- 30-Jun- 30-
2.25% 2.00% 2.25% 2.25%
23- 23- 23- 23-Jun- 23-

30- 31- 31- 30-Jun- 30-
0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0%
23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23-
Dec-15 Mar-16 16 Sep-16 Dec-16 Mar-17 17 Sep-17 Dec-17 Mar-18
31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31-
2.25% 2.00% 3.00% 2.00% 3.50%
23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23-
31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31-
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23-
18 Sep-18 Dec-18 Mar-19 19 Sep-19 Dec-19 Mar-20 20 Sep-20
30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30-
2.25% 4.00% 3.25% 3.50% 3.50%
55
23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23-
30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30-
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23-

Dec-20 Mar-21 21 Sep-21 Dec-21 Mar-22 22 Sep-22 Dec-22
31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31-
3.75% 4.00% 4.00% 4.00%
23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23-

31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31-
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23-

Mar-23 23 Sep-23 Dec-23 Mar-24 24 Sep-24 Dec-24 Mar-25
31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31-
27.00
4.00% 4.25% 4.50% 4.50% %
23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23-

31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31-
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23- 23-Jun-

25 Sep-25 Dec-25 Mar-26 26 Sep-26 Dec-26 Mar-27 27
30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31- 30-Jun-
0.00% 0.00% 0.00% 0.00%
56
23-Jun- 23- 23- 23- 23-Jun- 23- 23- 23- 23-Jun-
30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31- 30-Jun-
0% 100% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 24% 24% 23% 28%
23- 23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23-

Sep-27 Dec-27 Mar-28 28 Sep-28 Dec-28 Mar-29 29 Sep-29
30- 31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30-
0.00% 0.00% 0.00% 0.00% 0.00%
23- 23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23-

30- 31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30-
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23-

31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31-
0.00% 0.00% 0.0% 0.0%
23- 23- 23-Jun- 23- 23- 23- 23-Jun- 23- 23-

31- 31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31-
0% 0% 0% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0%
23- 23-Jun-
Mar-32 32
31- 30-Jun-
Mar-32 32
0.0%
57
23- 23-Jun-
Mar-32 32
31- 30-Jun-
Mar-32 32
0% 0%
0% 0%
Analysis of the Data
The first sheet of the financial model is of the assumptions made during the preparation of the
concessional agreement.
It contains the detail of the project in terms of the:
1. Key Dates
2. Financing
3. Refinancing
4. Tenor
5. Lenders
6. Sponsors
7. Project cost
8. Means of Finance
9. Preliminary and Operating Expenses
10. Accounting
11. Capital Expenditure
12. Operations
13. Repayment Schedule
Key Dates
The details of the key dates and timeline that needs to be adhered to are mentioned in this part of the
assumptions. The main dates that need to be adhered to are:
58
i. Date of concession
ii. Time of financial closure
iii. Date of commencement of construction
iv. Commercial operation Date
v. First and last annuity Period etc.
Financing
The details of various types of financing used for the project are mentioned in this section. The various
modes used are:
i. Senior Debt:
ii. Sub Debt Lenders
iii. Equity
iv. Sub Debt Sponsors
Tenor
The amount of time left for the repayment of the loan or the initial length of the loan is known as tenor. It
can be expressed in years, months or days.
In this project tenor is expressed in years.
The tenor is given in terms of :
 Door to Door Tenor
This means the tenor in terms of the completion of the project from Dehradun to Haridwar i.e the
total completion of the project.
In this case the tenor is used interchangeably with the completion or maturity.
 Construction Period
 Moratorium after COD
59
 Repayment Period
Project Cost
This sheet gives the detail about the project cost in terms of the:
 EPC cost
 Preliminary Expense
 Interest during Construction of the Senior Debt
 Contingency
Means of Finance
The sheet also gives the detail about the means of finance used for funding the project which includes:
 Senior Debt: A debt that takes priority over other debt securities sold by the issuer.
 Sub Debt Lenders: It is the subordinate debt by the lenders which is a debt which ranks after
other debts should a company becomes bankrupt.
 Equity: It is a stock or any other security representing an ownership interest.
 Sub Debt Sponsors: It is the subordinate debt by the sponsors which is ranked after other debts
should a company becomes bankrupt.
Prelims and Pre Operation Expense
This sheet also gives information about the prelim and pre operative expenses . These include:
i. Finance charges
ii. Audit Fee
iii. Limited Liability Company Fee
iv. Limited Entity Fee

60
v. Project insurance
Accounting
This sheet also gives the information about the various accounting particulars and their breakup in terms
of the upfront and balance components. These accounting particulars include:
i. Equity
ii. Debt
iii. Sub Debt Sponsors
iv. Sub Debt Lenders
v. Depreciation Method
vi. Tax Rate
vii. MAT Rate
viii. Service Tax Rate
Capital Expenditure
This is the amount spend to acquire or upgrade productive assets such as buildings, machinery and
equipment, vehicles to increase the capacity or efficiency of a firm for more than one accounting period.
Repayment Schedule
This contains the detail about the repayment for:
i. Senior Lenders
ii. Sub Debt
The repayment starts in the year 2013 i.e. the year when the operations or the year when highway
becomes operational.
61
The repayment is funded from the annuity which is paid by the NHAI on a semi annually basis.
3.3 Phasing
Construction Phasing
Milestone date as per CA 19-Feb-11
% of Completion as per CA 15%
29-Jun- 25-Jan- 22-Aug-

11 12 12
35% 70% 100%
1-Oct-
Quarter Begins Total 1-Jul-10 10
30-Sep- 31-
Quarter Ending 10 Dec-10
FY 2010 2011 2011
% Completion of EPC 1.25% 11.00%
% Completion of Preliminary & Pre
Operative exp 55.00% 5.00%
% Completion of Contingency
63 6
EPC Costs 0.00 7.88 9.30
Preliminary Expenses 9.29 5.11 0.46

4
Interest During Construction 7.01 - 0.71
Contingency -
68 7
Total Project Cost 6.30 12.98 0.47
1-Jan- 1-Apr- 1-Jul- 1-Oct- 1-Jan- 1-Apr- 1-Jul- 1-Oct-

11 11 11 11 12 12 12 12
31-Mar- 30-Jun- 30- 31- 31-Mar- 30-Jun- 30- 31-
11 11 Sep-11 Dec-11 12 12 Sep-12 Dec-12
2011 2012 2012 2012 2012 2013 2013 2013
62
11.00% 13.00% 13.00% 13.00% 15.00% 15.00% 7.75% 0.00%
6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 2.50% 0.00%
8 8 4
69.30 81.90 1.90 1.90 94.50 94.50 8.82 -
0.58 0.58 0.58 0.58 0.58 0.58 0.23 -
2.20 3.82 5.50 7.21 9.08 11.10 7.38 -
8 8 10 10 5
72.08 86.31 7.98 9.69 4.16 6.18 6.44 -
8
Cum Funding Requirement 12.98 3.45
Cum % of Completion 12%
Equity Drawdown
2 1
Upfront Equity 6.94 12.98 3.95
8
Balance Equity 0.81 - -
10 1
Total Equity Infusion 7.75 - 12.98 3.95
15 24 32 41 52 62 68 68
5.54 1.84 9.83 9.52 3.68 9.86 6.30 6.30
23% 35% 48% 61% 76% 92% 100%
- - - - - - - -
1 1
- 11.03 3.81 4.08 16.35 16.67 8.86 -
1 1
- 11.03 3.81 4.08 16.35 16.67 8.86 -
2
Cumulative Equity - 12.98 6.94
Debt
52 5
Senior Debt 8.45 - 6.52
5 6 10 10
63
26.94 37.97 1.78 5.86 82.22 98.89 7.75 7.75
6 6 4
63.25 66.46 7.75 9.06 80.20 81.76 3.46 -
5
Cumulative Senior debt - - 6.52
11 18 25 32 40 48 52 52
9.76 6.22 3.97 3.03 3.23 4.99 8.45 8.45
5
Sub Debt-Sponsors 0.10 - -
Cumulative sub debt-Sponsors - - -
8.84 8.82 6.42 6.55 7.60 7.75 4.12 -

2 3 5 5
8.84 17.65 4.08 0.62 38.23 45.98 0.10 0.10
7
Total Funds drawn 12.98 0.47
Check - -
8 8 10 10 5
72.08 86.31 7.98 9.69 4.16 6.18 6.44 -
- - - - - - - -
Debt Schedule- Senior Debt 2011 2011

1-Oct-
Period beginning 1-Jul-10 10
30-Sep- 31-Dec-
period Closing 10 10
Beg. Balance - -
52 5
Debt d/d during the period 8.45 - 6.52
64
Repayment Schedule -
End Balance - 56.52
Interest - 0.71
4
IDC 7.01 - 0.71
Interest to P&L 461 - -
2011 2012 2012 2012 2012 2013 2013 2013

1-Jan- 1-Apr- 1-Oct- 1-Jan- 1-Apr- 1-Oct-
11 11 1-Jul-11 11 12 12 1-Jul-12 12
31-Mar- 30-Jun- 30-Sep- 31- 31-Mar- 30-Jun- 30-Sep- 31-Dec-
11 11 11 Dec-11 12 12 12 12
11 18 25 32 40 48 52
56.52 9.76 6.22 3.97 3.03 3.23 4.99 8.45
6 6 4
63.25 66.46 7.75 9.06 80.20 81.76 3.46 -
1 1 2 3 4 4 5 5
19.76 86.22 53.97 23.03 03.23 84.99 28.45 28.45
1 1
2.20 3.82 5.50 7.21 9.08 11.10 2.67 3.21
2.20 3.82 5.50 7.21 9.08 11.10 7.38 -

1
- - - - - - 5.29 3.21
2013 2014 2014 2014 2014 2015 2015 2015 2015

1-Jan- 1-Apr- 1-Oct- 1-Jan- 1-Apr- 1-Oct- 1-Jan-
13 13 1-Jul-13 13 14 14 1-Jul-14 14 15
31-Mar- 30-Jun- 30-Sep- 31- 31-Mar- 30-Jun- 30-Sep- 31- 31-Mar-
13 13 13 Dec-13 14 14 14 Dec-14 15
52 52 52 51 51 50 50 49 49
8.45 4.48 4.48 7.88 7.88 5.99 5.99 5.42 5.42
- - - - - - - - -
1 1 1
3.96 - 6.61 - 1.89 - 0.57 - 1.89
5 5 51 51 5 5 49 49 4
24.48 24.48 7.88 7.88 05.99 05.99 5.42 5.42 83.53
1 1 1 1 1 1 1 1 1
3.16 3.11 3.03 2.95 2.80 2.65 2.52 2.39 2.24
65
- - - - - - - - -
1 1 1 1 1 1 1 1 1
3.16 3.11 3.03 2.95 2.80 2.65 2.52 2.39 2.24
Sub Debt-Sponsors 2011 2011 2011

1-Oct- 1-Jan-
Period beginning 1-Jul-10 10 11
30-Sep- 31- 31-Mar-
period Closing 10 Dec-10 11
Beg. Balance - - -
5
Debt d/d during the period 0.10 - - 8.84
5
Repayment Schedule 0.10
Repayment of Interest
End Balance - - 8.84
Interest - - 0.13
IDC 5.11 - - 0.13
Interest Accrued to P&L 78 - - -
Int on Sponsor debt macro 83 - - 0.13
Cum Int on Sponsor debt - - 0.13
4
IDC Macro - Senior Debt 7.01 - 1 2
IDC Macro-Sub Debt-Lenders - - - -
IDC Macro-Sub Debt-Sponsors 5.11 - - 0
66
2012 2012 2012 2012 2013 2013 2013
1-Apr- 1-Oct- 1-Jan- 1-Apr- 1-Oct-
11 1-Jul-11 11 12 12 1-Jul-12 12
30-Jun- 30-Sep- 31- 31-Mar- 30-Jun- 30-Sep- 31-Dec-
11 11 Dec-11 12 12 12 12
1 2 4 5
8.84 7.65 4.08 30.62 38.23 5.98 0.10
8.82 6.42 6.55 7.60 7.75 4.12 -
17.65 24.08 30.62 38.23 45.98 50.10 50.10
0.40 0.63 0.82 1.03 1.26 1.44 1.50
0.40 0.63 0.82 1.03 1.26 0.84 -
- - - - - 0.60 1.50
0.40 0.63 0.82 1.03 1.26 1.44 1.50
0.53 1.16 1.98 3.01 4.27 5.71 7.22
4 6 7 9 11 7 -
- - - - - - -
0 1 1 1 1 1 -
Project Cost & MOF Financial Year

wise 2010 2011 2012
14 34
EPC Cost 6.48 0.20
Preliminary & Preoperatives 6.15 2.32
IDC-Senior Debt 2.91 25.62
IDC-Sponsor Debt 0.13 2.88

69 15 37
Total Cost 1.41 - 5.67 1.02
67
2013 2014 2015 2016 2017 2018
14
3.33 - - - - -
0.81 - - - - -
18.48 - - - - -
2.10 - - - - -
16
4.72 - - - - -
Means of Finance
Senior Debt
11
Senior Debt OB - - 9.76
11 28
Draw Down - 9.76 3.47
Repayment - - -
11 40
Senior Debt CB - 9.76 3.23
40 52 50 48 45 43
3.23 4.48 5.99 3.53 9.75 3.33
12
5.22 - - - - -
1 2 2
3.96 8.50 2.46 23.78 26.42 9.06
52 50 48 45 43 40
4.48 5.99 3.53 9.75 3.33 4.26
40 37 33 29 25 21 16
4.26 1.23 5.56 7.25 4.98 2.70 6.46
- - - - - - -
3 3 3 4 4 4 16
3.03 5.67 8.31 2.28 2.28 6.24 6.46
37 33 29 25 21 16
1.23 5.56 7.25 4.98 2.70 6.46 -
Sub debt-Sponsors
Sub Debt OB - - 8.84
68
5
Draw Down 0.10 - 8.84 29.39
5
Repayment 0.10 - - -
Repayment on Interest - - -
Sub Debt CB - 8.84 38.23
5 5 5 5 5
38.23 0.10 0.10 50.10 50.10 0.10 0.10 0.10
11.87 - - - - - - -
- - - - - - - -
- - - - - - - -
5 5 5 5 5
50.10 0.10 0.10 50.10 50.10 0.10 0.10 0.10
5 5 5 5 5 5
0.10 0.10 0.10 0.10 0.10 0.10
- - - - - -
5
- - - - - 0.10
8
- - - - - 3.12
5 5 5 5 5
0.10 0.10 0.10 0.10 0.10 -
Equity
Equity During the 2
Year 6.94 55.28 25.53
Total Means of
Finance 156 368 163
- - -
MOF Check 0.13 2.88 2.10
Refinancing
Schedule
Sub Debt OB - - - -
11
Draw Down 6.26 - - - -
Repayment 11
69
6.26 - - - -
Repayment on
Interest - - - -
Sub Debt CB - - - -
Then again from 2015:
11 6
- 6.26 0.13 0.00
11
6.26 - - -
5 6
- 6.12 0.13 -
8
- 3.12 - -
11 6
6.26 0.13 0.00 0.00
FY 2010 2011 2012 2013 2014
15 37 16
CWIP - 5.67 1.02 4.72 -
69
Cost of Additions - - - - 1.41
FY 2010 2011 2012 2013 2014

Interest to P&L
5
Senior Debt - - - 31.66 1.89
Refinancing Debt - - - - -
Sub Debt-Lenders - - - - -
Sub Debt-Sponsors - - - 3.61 6.01

Cum Sub Debt Interest-
Sponsors - - - 3.61 9.62
70
2015 2016 2017 2018 2019 2020 2021 2022
4 4 3 3 3 2
9.79 47.46 45.12 2.44 9.42 5.82 2.15 8.14
- - - - - - - -
- - - - - - - -
6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01

1 3 3 4 5 5
5.63 21.64 27.66 3.67 9.68 5.69 1.70 7.72
2023 2024 2025 2026 2027 2028 2029 2030 2031
2 1 1
3.91 9.57 3.38 - - - - - -
- - 1.45 9.52 3.90 0.00 0.00 0.00 0.00
- - - - - - - - -
6.01 6.01 6.01 2.25 - - - - -

6 6 7 7 7 7 7 7 7
3.73 9.74 5.75 8.01 8.01 8.01 8.01 8.01 8.01
31-
Mar- 31- 31-
Termination Payment Check 11 Mar-12 Mar-13
Annuity Payments - - 53.22

Termination Payment - IF 14.75 7
Concessioner Defaults % 09.40
Termination Payment - IF 9
Concessioner Defaults 8.75% 88.80
31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar-

14 15 16 17 18 19 20 21 22
10 10 10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44
71
75 74 72 71 69 67 65 63 60
2.96 1.89 9.45 4.90 8.21 9.06 7.33 2.14 3.25
1,01 99 96 93 89 85 81 77 72
7.44 0.72 1.87 0.28 5.93 8.57 8.13 3.96 5.93

23 24 25 26 27 28 29 30 31
10 10 10 10 10 10 10 10 5
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44 3.22
57 53 48 43 38 31 23 15 5
0.09 2.23 8.60 8.53 1.07 5.26 9.62 2.82 3.22
67 61 55 48 41 33 24 15 5
3.69 7.03 5.27 8.10 5.06 5.70 9.32 5.38 3.22
Refinancing Schedule
Debt Schedule-
Refinancing 2011 2011
1-Jul- 1-Oct-
Period beginning 0 10 10
30- 31-Dec-
period Closing Sep-10 10
Beg. Balance - -
Debt d/d during the 11
period 6.26
11
Repayment Schedule 6.26
End Balance - -
Interest - -
IDC - - -
Interest to P&L 15 - -
2025 2026 2026 2026 2026 2027 2027 2027 2027
1-Jan- 1-Apr- 1-Jul- 1-Oct- 1-Jan- 1-Apr- 1-Jul- 1-Oct- 1-Jan-
25 25 25 25 26 26 26 26 27
31- 30-Jun- 30- 31- 31- 30-Jun- 30- 31- 31-
11 11 8 8 6 6 3 3
- 6.26 6.26 8.20 8.20 0.13 0.13 2.87 2.87
11
6.26 - - - - - - - -
2 2 2 3
- - 8.06 - 8.06 - 7.26 - 2.87
72
1 11
16.26 6.26 88.20 88.20 60.13 60.13 32.87 32.87 0.00
1.45 2.91 2.56 2.20 1.85 1.50 1.16 0.82 0.41
- - - - - - - - -
1.45 2.91 2.56 2.20 1.85 1.50 1.16 0.82 0.41

Analysis of the Data
The sheet of the phasing gives the details about the various milestones and phases of construction as per
the concession agreement.
It also gives the detail of various percentages of completions in terms of various expenses namely:
i. EPC (Engineering Procurement and construction)
ii. Preliminary and operative Expense
iii. Completion of contingency
iv. EPC Costs
The EPC cost is calculated by multiplying the percentage of completion of EPC with the total
EPC cost.
Eg. (1.25 * 630) / 100 = 7.88
v. Preliminary Expense
The preliminary expenses are calculated by multiplying the percentage of Preliminary expense
with the total preliminary expense.
E.g. (55 * 9.29) / 100 = 5.11
vi. Interest during Construction
The interest during construction is calculated by adding the interest during construction of Senior
Debt and interest during construction Sub Debt Lenders.
This sheet also gives the detail about the cumulative funding requirement and cumulative
percentage of completion.
 The cumulative funding requirement is a calculated as per the total project cost required during
different phases of construction.
 The cumulative percentage of completion is calculated by finding out the percentage of

cumulative funding requirement with respect to the total project cost.
Equity Drawdown
73
The equity drawdown is noted down from the assumptions sheet.
Debt Equity Ratio
The debt equity ratio is a leverage ratio that compares a company’s total liabilities to its total
shareholder’s equity. This is a measurement of how much suppliers, lenders, creditors have committed to
the company versus what the shareholders have committed.
The formula for the debt equity ratio is :
Debt Equity Ratio = (Total Liabilities / Shareholder’s Equity)
In this project:
The debt equity ratio is calculated by dividing the Cumulative Senior debt by the sum of Cumulative
Equity, Cumulative Sub Debt lenders, Cumulative Sub Debt Sponsors, Cumulative Senior Debt and
Interest During Construction for Sub Debt Sponsors.
E.g. [56.52 / (56.52 + 26.94 + 0 + 0 + 0)] * 100 = 67.72
The sheet also explains about the debt schedule in terms of:
 Senior Debt
The sheet also explains the Interest during construction for:
 Senior Debt
The sheet also gives detail about the Project cost and means of finance required yearly.
3.4 Working Capital
74
WC in due course of Annuity Receipt
FY ending 2011 2012 2013 2014
31- 31- 31-Mar- 31-Mar-
Short Term Loan Requirement Mar-11 Mar-12 13 14
OB - - 27.27
Additions - 38.96 -
Repayment - 11.69 27.27
CB - 27.27 -
Interest - 1.42 1.64
3
Required Amount Before Annuity 8.96
WC-Repayment Schedule - 30% 70%
This sheet gives the details about the working capital.
Working capital is the cash available for day to day operations of a firm.
It is calculated by deducting current liabilities from current assets. Sources of working capital are:
i. Net income
ii. Long Term Loans
iii. Sale of Capital
iv. Injection of funds by the owners
Amount of available working capital is a measure of a firm’s ability to meet its short term obligations.
3.5 Revenue and Expenditure
75
36 36 36
5.00 6.00 5.00
No.of Days FY 31-Mar- 31-Mar- 31-Mar- 31-Mar-
wise 10 11 12 13
2010 2011 2012 2013
23-
Operation Starts Aug-12 - - - 221
23-
Operation Closes Aug-30
5
Annuity - - - 3.22
O&M Expenses - - - 5.88

365 36 36 36 36 36 36
.00 5.00 6.00 5.00 5.00 5.00 6.00
31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar-
14 15 16 17 18 19 20
2014 2015 2016 2017 2018 2019 2020
365 365 366 365 365 365 366
10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44
1 1 1 1 1 1 1
0.20 0.71 1.24 1.80 2.39 3.01 3.66
36 36 36 36 36 36 36 36 36
5.00 5.00 5.00 6.00 5.00 5.00 5.00 6.00 5.00
21 22 23 24 25 26 27 28 29
2021 2022 2023 2024 2025 2026 2027 2028 2029
365 365 365 366 365 365 365 366 365
10 10 10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44
1 1 1 1 1 1 1 2 2
4.35 5.06 5.82 6.61 7.44 8.31 9.22 0.19 1.20
76
36 36 36 -48,304
5.00 5.00 6.00 .00 -
31-Mar- 31-Mar- 31-Mar-
30 31 32 0-Jan-00 0-Jan-00
2030 2031 2032 1900 1900
365 145 - - -
10 5
6.44 3.22 - - -
2
2.26 9.28 - - -
Annuity 19-Feb- 19-Aug- 19-Feb- 19-Aug-

Calculation 13 13 14 14
FY ending 2013 2014 2014

2015
5
Annuity 53.22 53.22 53.22 3.22
19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb-
15 15 16 16 17 17 18 18 19
2015 2016 2016 2017 2017 2018 2018 2019
2019
5
53.22 53.22 53.22 53.22 53.22 53.22 53.22 53.22 3.22
19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug-
19 20 20 21 21 22 22 23 23
2020 2020 2021 2021 2022 2022 2023 2023 2024
5
53.22 53.22 53.22 53.22 53.22 53.22 53.22 53.22 3.22
19-Feb- 19-Aug- 19-Feb- 19- 19- 19- 19- 19- 19-
24 24 25 Aug-25 Feb-26 Aug-26 Feb-27 Aug-27 Feb-28
2024 2025 2025 2026 2026 2027 2027 2028 2028

5 5 5 5 5 5
53.22 53.22 53.22 3.22 3.22 3.22 3.22 3.22 3.22
19- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb-
Aug-28 29 29 30 30 31
2029 2029 2030 2030 2031 2031

5
3.22 53.22 53.22 53.22 53.22 -
77
No.of Years Operation - - - 1
31- 31- 31- 31-
FY ending Mar-10 Mar-11 Mar-12 Mar-13
FY ending 2010 2011 2012 2013
Operation Factor - - - 0.61

Routine Maintenance
including insurance - - - 5.58
Administration Expenses - - - 0.30
Total O & M Expenses - - - 5.88
2 3 4 5 6 7 8 9 10
14 15 16 17 18 19 20 21 22
2014 2015 2016 2017 2018 2019 2020 2021 2022
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

1 1 1 1 1 1 1 1
9.67 0.15 0.66 1.19 1.75 2.34 2.96 3.61 4.29
0.53 0.55 0.58 0.61 0.64 0.67 0.70 0.74 0.78
10.20 10.71 11.24 11.80 12.39 13.01 13.66 14.35 15.06
11 12 13 14 15 16 17 18 19
23 24 25 26 27 28 29 30 31
2023 2024 2025 2026 2027 2028 2029 2030 2031
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0.40

1 1 1 1 1 1 2 2
5.00 5.75 6.54 7.37 8.23 9.15 0.10 1.11 8.81
0.81 0.86 0.90 0.94 0.99 1.04 1.09 1.15 0.48
15.82 16.61 17.44 18.31 19.22 20.19 21.20 22.26 9.28
78
- - -
31-Mar-
32 0-Jan-00 0-Jan-00
2032 1900 1900
- - -
- - -
- - -
- - -
Major Maintenance Reserve

Account
31- 31- 31- 31-
Mar-10 Mar-11 Mar-12 Mar-13
Operation Factor - - - 0.61

Expected Major Maintenance at
inflated Rate (100%) - - - 18.16
Opening Balance - - - -
Transfer from Cash - - - 4.31

MMR Spending - - - -

14 15 16 17 18 19 20 21 22
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

4
31.50 33.08 34.73 36.47 38.29 40.20 42.21 44.32 6.54
3
4.31 11.44 18.57 25.69 - 9.31 18.62 27.92 7.23
7.13 7.13 7.13 7.13 9.31 9.31 9.31 9.31 9.31

46.
- - - 32.82 - - - - 54
11.44 18.57 25.69 - 9.31 18.62 27.92 37.23 -
79
23 24 25 26 27 28 29 30 31
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 -

2
48.87 51.31 53.88 56.57 59.40 62.37 65.49 68.76 8.68
4
- 11.88 23.76 35.64 47.52 - 13.75 27.50 1.26
11.88 11.88 11.88 11.88 11.88 13.75 13.75 13.75 -

59.
- - - - 40 - - - -
4
11.88 23.76 35.64 47.52 - 13.75 27.50 41.26 1.26
31-Mar- 0-Jan- 0-Jan-

32 00 00
- - -
- - -
4
41.26 41.26 1.26
- - -
- - -
4
41.26 41.26 1.26
Analysis of Data
This sheet gives the detail about the revenue and expenditure related to the project.
It gives the details about the annuity and operation and maintenance expenses on a yearly basis.
The operation and maintenance expenses include:
i. Routine Maintenance including insurance
ii. Administration Expense
80
3.6 Depreciation and Tax
2
Books - - - 21.00
Book
Depreciation 2010 2011 2012 2013
31-Mar- 31-Mar- 31-Mar- 31-Mar-
FY Ending 10 11 12 13
Factor - - - 0.61
1 5
Opening Balance - - - 55.67 26.69
1 3 1
Additions - - 55.67 71.02 64.72
1 5 6
Net Block - - 55.67 26.69 68.15
Depreciation - - - - 23.26
No.of Years 20 19 18
36 3 3 3 3 3 3 3
5.00 65.00 66.00 65.00 65.00 65.00 66.00 65.00
2014 2015 2016 2017 2018 2019 2020 2021
31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar-
14 15 16 17 18 19 20 21
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

6 6 5 5 5 4 4 3
68.15 28.85 89.54 50.24 10.94 71.64 32.33 93.03
- - - - - - - -
6 5 5 5 4 4 3 3
28.85 89.54 50.24 10.94 71.64 32.33 93.03 53.73
39.30 39.30 39.30 39.30 39.30 39.30 39.30 39.30

17 16 15 14 13 12 11 10
3 3 3 3 3 3 3 3
65.00 65.00 66.00 65.00 65.00 65.00 66.00 65.00
2022 2023 2024 2025 2026 2027 2028 2029
22 23 24 25 26 27 28 29
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

3 3 2 2 1 1 1
53.73 14.42 75.12 35.82 96.51 57.21 17.91 78.61
- - - - - - - -
3 2 2 1 1 1
14.42 75.12 35.82 96.51 57.21 17.91 78.61 39.30
81
39.30 39.30 39.30 39.30 39.30 39.30 39.30 39.30
9 8 7 6 5 4 3 2
3 1
65.00 45.00 -
2030 2031 2032
31-Mar- 31-Mar- 31-Mar-
30 31 32
1.00 0.40 -
39.30 - -
- - -
- - -
39.30 - -
1 0 0
Tax Depreciation 2010 2011 2012 2013

31- 31-Mar- 31-Mar- 31-Mar-
FY Ending Mar-10 11 12 13
1.
Factor - - - 00
1 5
Opening Balance - - 55.67 26.69
1 3 1
additions - 55.67 71.02 64.72
1 5 6
Gross Block - 55.67 26.69 91.41
Tax Depreciation 10% - - - 69.14
No.of Years 20 19 18
2014 2015 2016 2017 2018 2019 2020 2021
14 15 16 17 18 19 20 21
1. 1. 1. 1. 1. 1. 1. 1.
00 00 00 00 00 00 00 00
6 5 5 4 4 3 3 3
22.27 60.04 04.04 53.63 37.81 94.03 54.62 19.16
- - - 32.82 - - - -
6 5 5 4 4 3 3 3
22.27 60.04 04.04 86.45 37.81 94.03 54.62 19.16
82
62.23 56.00 50.40 48.65 43.78 39.40 35.46 31.92
17 16 15 14 13 12 11 10
2022 2023 2024 2025 2026 2027 2028 2029
22 23 24 25 26 27 28 29
1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

2 3 2 2 2 1 2 2
87.24 00.41 70.37 43.33 19.00 97.10 30.84 07.76
46.54 - - - - 59.40 - -
3 3 2 2 2 2 2 2
33.78 00.41 70.37 43.33 19.00 56.49 30.84 07.76
33.38 30.04 27.04 24.33 21.90 25.65 23.08 20.78

9 8 7 6 5 4 3 2
2030 2031 2032

31-Mar- 31-Mar- 31-Mar-
30 31 32
1. 1.
00 00 -
1 1 1
86.98 68.29 51.46
- - -
1 1 1
86.98 68.29 51.46
18.70 16.83 -
1 0 0
31- 31-Mar- 31-Mar- 31-Mar- 31-Mar-

Tax Computation Mar-10 11 12 13 14
-
PBT - - - 12.60 -2.59
Add: Book
Depreciation - - - 23.26 39.30
Less: Tax
Gross Taxable - -
Profit - - - 58.49 25.52
Loss Carryforward - -
used - - - 58.49 25.52
Loss Brought - -
forward - - - 58.49 84.00
Net Taxable Profit
83
- - - - -

15 16 17 18 19 20 21 22
0.63 2.42 -2.36 -0.27 2.13 5.08 8.06 8.61
39.30 39.30 45.87 45.87 45.87 45.87 45.87 48.61
56.00 50.40 48.65 43.78 39.40 35.46 31.92 33.38

-
16.07 -8.68 -5.14 1.81 8.59 15.48 22.01 23.85
-
16.07 -8.68 -5.14 1.81 8.59 15.48 22.01 23.85
-1 -1 -1 -1 -1 - - -
00.07 08.75 13.89 12.07 03.48 87.99 65.98 42.13
- - - - - - - -
23 24 25 26 27 28 29 30
12.09 15.64 19.55 27.74 32.13 35.07 34.06 33.00
48.61 48.61 48.61 48.61 51.18 51.18 51.18 51.18
30.04 27.04 24.33 21.90 25.65 23.08 20.78 18.70
30.66 37.22 43.83 54.46 57.67 63.17 64.47 65.49
30.66 11.48 - - - - - -
-
11.48 - - - - - - -
- 25.74 43.83 54.46 57.67 63.17 64.47 65.49

31-Mar- 31-Mar-
31 32
32.06 -0.00
11.88 -
16.83 -
27.11 -0.00
- -0.00
84
- -0.00
27.11 -
Normal Tax Payable - - - -
80IA Counter - - - -
Operating Year - - - 1
MAT Calculation - - - -
Tax Payable - - - -
Less: MAT Credit - - - -
Actual Tax Payable - - - -
MAT Credit
Opening - - - -
Addition - - - -
Cum Credit available - - - -

Cum Credit available for set
off - - - -
Utilised - - - -
Closing - - - -
Depreciation of MMR
No.of Years Operation - - - 1
OB - - - -
Additions - - - -
deletions - - - -
Closing Balance - - - -
85
Depreciation on Major
Maintenance reserve - - - -
- - - - - - - -
- - - - 1 1 1 1
2 3 4 5 6 7 8 9
- 0.13 0.48 - - 0.42 1.01 1.61
- 0.13 0.48 - - 0.42 1.01 1.61
- - - - - - - -
- 0.13 0.48 - - 0.42 1.01 1.61
- - 0.13 0.61 0.61 0.61 1.03 2.05
- 0.13 0.48 - - 0.42 1.01 1.61
- 0.13 0.61 0.61 0.61 1.03 2.05 3.65
- 0.13 0.61 0.61 0.61 1.03 2.05 3.65
- - - - - - - -
- 0.13 0.61 0.61 0.61 1.03 2.05 3.65
2 3 4 5 6 7 8 9
- - - - 32.82 32.82 32.82 32.82
- - - 32.82 - - - -
- - - - - - - -
- - - 32.82 32.82 32.82 32.82 32.82
- - - 6.56 6.56 6.56 6.56 6.56

86
- - - - - - 20.98 21.41
1 1 1 1 1 1 - -
10 11 12 13 14 15 16 17
1.72 2.41 3.12 3.90 5.53 6.40 6.99 6.79
1.72 2.41 3.12 3.90 5.53 6.40 20.98 21.41
- - - - - - 13.99 10.69
1.72 2.41 3.12 3.90 5.53 6.40 6.99 10.73
3.65 5.37 7.65 10.29 14.18 19.71 25.69 10.69
1.72 2.41 3.12 3.90 5.53 6.40 - -
5.37 7.78 10.90 14.79 20.32 26.73 26.73 26.73
5.37 7.65 10.29 14.18 19.71 25.69 24.68 23.07
- - - - - - 13.99 10.69
5.37 7.65 10.29 14.18 19.71 25.69 10.69 -
10 11 12 13 14 15 16 17
32.82 46.54 46.54 46.54 46.54 46.54 59.40 59.40
46.54 - - - - 59.40 - -
32.82 - - - - 46.54 - -
46.54 46.54 46.54 46.54 46.54 59.40 59.40 59.40
9.31 9.31 9.31 9.31 9.31 11.88 11.88 11.88
87
21.75 9.00 -
- - -
18 19 -
6.58 6.39 -
21.75 9.00 -
- - -
21.75 9.00 -
- - -
- - -
26.73 26.73 26.73
21.36 18.95 15.83
- - -
- - -
18 19 -
59.40 59.40 59.40
- - -
- - 59.40
59.40 59.40 -
11.88 11.88 -
Analysis of Data
88
Depreciation and Tax
This sheet gives the details about the depreciation and tax related to the project.
There are two types of depreciation used in this project:
i. Book Depreciation
ii. Tax Depreciation
Book Depreciation
It is defined as the amount of depreciation for one or more assets, as shown in the books of accounts
rather than the real value of the depreciation.
This depreciation is used for financial purpose.
Book Depreciation for this project is calculated by the following formula:
[(Opening Balance + Construction Work in Progress) / No. of Years] * Factor
The factor is calculated dividing the no. days from the commencement of operations with the no. of
days in the year.
Tax Depreciation
It is the depreciation computed on the tax return according to the income tax code and regulations.
This depreciation is used for the income tax purpose.
The tax depreciation for this project is calculated by the following formula:
{[(Opening Balance + Construction Work in Progress)] * Tax Depreciation Rate} * 100
The factor in this case is 1.0.
Tax Computation
It is calculated by calculating the Normal Tax payable.
Normal Tax Payable is calculated by Deducting the Loss Carry Forward used from Gross Taxable Profit.
Gross Taxable Profit is calculated by adding book depreciation to the PBT and deducting the tax
depreciation from the sum.
Loss Carry Forward is the minimum of either Gross Taxable Profit or the negative of Loss
Brought forward.
89
The other taxes calculated in this sheet are:
MAT (Minimum Alternative Tax)
It is the tax which has to be paid by the companies that are enjoying some kind of tax benefits.
And one more depreciation i.e. the depreciation on major maintenance reserve is also calculated in
this sheet.
3.7 Financial
Figures in Rs.
PROFIT AND LOSS ACCOUNT Crores
31- 31- 31- 31- 31-
Year Ending March 31st Mar-10 Mar-11 Mar-12 Mar-13 Mar-14
5 10
Annuity - - - 3.22 6.44
Other Revenue
5 10
Total Revenue - - - 3.22 6.44
1
O&M - - - 5.88 0.20
1
Total Expenses - - - 5.88 0.20
EBITDA - - - 47.34 96.24

3 5
Interest - Senior Debt - - - 1.66 1.89
Interest-Refinancinng debt - - - - -
Interest -WC - - - 1.42 1.64
Interest Sub Debt- Lenders - - - - -
Interest Sub Debt - Sponsors - - - 3.61 6.01
EBTDA - - - 10.66 36.71

2 3
Amortization
-1 -
Profit Before Tax - - - 2.60 2.59
90
Tax - - - - -
-1 -
Profit After Tax - 2.60 2.59
31- 31- 31- 31- 31- 31- 31-

Mar- Mar- Mar- Mar- Mar- Mar- Mar- 31-
15 16 17 18 19 20 21 Mar-22
10 10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44
10 10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44
1 1 1 1 1 1 1 1
0.71 1.24 1.80 2.39 3.01 3.66 4.35 5.06
1 1 1 1 1 1 1 1
0.71 1.24 1.80 2.39 3.01 3.66 4.35 5.06
95.73 95.20 94.64 94.05 93.43 92.78 92.09 91.38

4 4 4 4 3 3 3 2
9.79 7.46 5.12 2.44 9.42 5.82 2.15 8.14
- - - - - - - -
- - - - - - - -
- - - - - - - -
6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01
39.93 41.73 43.51 45.59 48.00 50.95 53.93 57.22

3 3 4 4 4 4 4 4
9.30 9.30 5.87 5.87 5.87 5.87 5.87 8.61
- -
0.63 2.42 2.36 0.27 2.13 5.08 8.06 8.61
0.13 0.48 - - 0.42 1.01 1.61 1.72
- -
91
0.50 1.94 2.36 0.27 1.71 4.07 6.46 6.90
31- 31- 31- 31- 31- 31- 31-

23 24 25 26 27 28 29 Mar-30
10 10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44
10 10 10 10 10 10 10 10
6.44 6.44 6.44 6.44 6.44 6.44 6.44 6.44
1 1 1 1 1 2 2 2
5.82 6.61 7.44 8.31 9.22 0.19 1.20 2.26
1 1 1 1 1 2 2 2
5.82 6.61 7.44 8.31 9.22 0.19 1.20 2.26
90.62 89.83 89.00 88.13 87.22 86.25 85.24 84.18

2 1 1
3.91 9.57 3.38 - - - - -
- - 1.45 9.52 3.90 0.00 0.00 0.00
- - - - - - - -
- - - - - - - -
6.01 6.01 6.01 2.25 - - - -
60.70 64.25 68.16 76.35 83.32 86.25 85.24 84.18

4 4 4 4 5 5 5 5
8.61 8.61 8.61 8.61 1.18 1.18 1.18 1.18
1 1 1 2 3 3 3 3
2.09 5.64 9.55 7.74 2.13 5.07 4.06 3.00
1 2
2.41 3.12 3.90 5.53 6.40 6.99 0.73 1.75
1 1 2 2 2 2 1
92
9.68 2.52 5.65 2.21 5.73 8.08 3.33 1.25
31-
Mar- 31-
31 Mar-32
5
3.22 -
5
3.22 -
9.28 -
9.28 -
43.94 -
- -
0.00 0.00
- -
- -
- -
43.94 -0.00
1
1.88 -
3 -
2.06 0.00
9.00 -
2 -
93
3.05 0.00
Figures in Rs.
BALANCE SHEET Crores
31- 31-
Year Ending March 31-Mar-10 Mar-11 Mar-12
2 8
Equity - 6.94 2.22
Reserves & Surplus - - -

2 8
Networth - 6.94 2.22
11 40
Senior Debt - 9.76 3.23
Refinancing Debt - - -
WC Loan/STL - - -
Sub Debt-Lenders - - -
3
Sub Debt-Sponsors - 8.84 8.23
Interest Accrued on sub debt from
sponsors - 0.13 3.01
12 44
Loan Funds - 8.73 4.47
1 5
Total Sources of Funds - 55.67 26.69
15 52
Gross Fixed Assets/CWIP - 5.67 6.69
Depreciation - - -
15 52
Net Fixed Assets - 5.67 6.69
Cash - - -
94
Major Maintenance Reserve - - -
1 5
Total Application of Funds - 55.67 26.69
31- 31- 31- 31- 31- 31- 31-

13 14 15 16 17 18 19 Mar-20
10 10 10 10 10 10 10 10
7.75 7.75 7.75 7.75 7.75 7.75 7.75 7.75
-1 -1 -1 -1 -1 -1 -1 -
2.60 5.20 4.69 2.75 5.11 5.38 3.67 9.61
9 9 9 9 9 9 9 9
5.15 2.55 3.06 5.00 2.64 2.37 4.07 8.14
52 50 48 45 43 40 37 33
4.48 5.99 3.53 9.75 3.33 4.26 1.23 5.56
- - - - - - - -
2
7.27 - - - - - - -
- - - - - - - -
5 5 5 5 5 5 5 5
0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10
1 2 2 3 3 4 5
8.72 4.73 0.74 6.76 2.77 8.78 4.79 0.80
61 57 55 53 51 49 46 43
0.57 0.82 4.37 6.60 6.19 3.14 6.13 6.47
7 6 6 6 6 5 5 5
05.72 63.37 47.43 31.60 08.83 85.51 60.20 34.61
69 69 69 69 72 72 72 72
1.41 1.41 1.41 1.41 4.23 4.23 4.23 4.23
2 6 10 14 18 23 27 32
3.26 2.56 1.86 1.17 7.03 2.90 8.77 4.63
66 62 58 55 53 49 44 39
8.15 8.85 9.54 0.24 7.19 1.33 5.46 9.59
3 2 3 5 7 8 9 10
3.25 3.08 9.32 5.67 1.64 4.88 6.12 7.09
1 1 2 1 2
95
4.31 1.44 8.57 5.69 - 9.31 8.62 7.92
7 6 6 6 6 5 5 5
05.72 63.37 47.43 31.60 08.83 85.51 60.20 34.61
31- 31- 31- 31- 31- 31- 31-

21 22 23 24 25 26 27 Mar-28
10 10 10 10 10 10 10 10
7.75 7.75 7.75 7.75 7.75 7.75 7.75 7.75
- 1 2 4 6 8 11
3.15 3.75 3.42 5.95 1.60 3.82 9.55 7.63
10 11 12 13 14 17 19 22
4.60 1.49 1.17 3.70 9.35 1.56 7.29 5.38
29 25 21 16
7.25 4.98 2.70 6.46 - - - -
11 6
- - - - 6.26 0.13 0.00 0.00
- - - - - - - -
- - - - - - - -
5 5 5 5 5
0.10 0.10 0.10 0.10 0.10 - - -
5 6 6 7 8
6.82 2.83 8.84 4.85 0.86 - - -
40 36 33 29 24 6
4.17 7.90 1.64 1.41 7.22 0.13 0.00 0.00
5 4 4 4 3 2 1 2
08.76 79.40 52.81 25.11 96.57 31.70 97.29 25.38
72 77 77 77 77 77 83 83
4.23 0.77 0.77 0.77 0.77 0.77 0.16 0.16
37 41 46 51 56 61 66 71
0.50 9.11 7.72 6.33 4.94 3.55 4.74 5.92
35 35 30 25 20 15 16 11
3.73 1.66 3.04 4.43 5.82 7.21 5.43 4.24
11 12 13 14 15 2 3 9
7.81 7.74 7.89 6.92 5.11 6.97 1.87 7.38
3 1 2 3 4 1
7.23 - 1.88 3.76 5.64 7.52 - 3.75
96
5 4 4 4 3 2 1 2
08.76 79.40 52.81 25.11 96.57 31.70 97.29 25.38
31- 31- 31-

Mar- Mar- Mar- 31-
29 30 31 Mar-32
10 10 10 10
7.75 7.75 7.75 7.75
14 15 17 17
0.96 2.21 5.26 5.26
24 25 28 28
8.71 9.96 3.01 3.01
- - - -
0.00 0.00 0.00 0.00
- - - -
- - - -
- - - -
- - - -
0.00 0.00 0.00 0.00

2 2 2 2
48.71 59.96 83.01 83.01
83 83 83 83
0.16 0.16 0.16 0.16
76 81 83 83
7.10 8.28 0.16 0.16
6 1
3.06 1.88 - -
15 20 24 24
8.14 6.82 1.76 1.76
2 4 4 4
7.50 1.26 1.26 1.26
2 2 2 2
48.71 59.96 83.01 83.01
97
Figures in Rs.
CASH FLOW STATEMENT Crores
31- 31-
Year Ending March 31-Mar-10 Mar-11 Mar-12
Profit After Tax - - -
Depreciation & Amortization - - -

2 5
Increase In Equity - 6.94 5.28
11 28
Increase in Senior Debt - 9.76 3.47
Increase in Short Term Loan - - -

2
Increase in Sub Debt-Sponsors - 8.84 9.39
Increase in Sub Debt-Lenders - - -
Increase in Refinancing - - -
Interest on Sub debt to P&L (As
accrued) - - -
1 3
Total Inflows - 55.54 68.14
15 36
Capex including Preliminary Exp. - 5.54 8.14
Repayment - Senior Debt - - -
Repayment of Refinancing debt - - -
Repayment of WC - - -
Repayment of Sub Debt-Lenders - - -
Repayment of Sub Debt-Sponsors - - -

Payment of accrued Interest on
Sponsors Sub debt - - -
1 3
Total Outflows - 55.54 68.14
Net Cashflows before Periodic
Maintenance Reserve - - -
Periodic Maintenance Reserve - - -
Cash Balance :
Surplus/(Deficit ) for the year - - -

98
Opening Balance - - -
Closing Balance - - -
31- 31- 31- 31- 31- 31- 31-

13 14 15 16 17 18 19 Mar-20
-1 - - -
2.60 2.59 0.50 1.94 2.36 0.27 1.71 4.07
2 3 3 3 4 4 4 4
3.26 9.30 9.30 9.30 5.87 5.87 5.87 5.87
2
5.53 - - - - - - -
12
5.22 - - - - - - -
3
8.96 - - - - - - -
1
1.87 - - - - - - -
- - - - - - - -
- - - - - - - -
3.61 6.01 6.01 6.01 6.01 6.01 6.01 6.01

2
15.84 42.72 45.82 47.26 49.52 51.61 53.58 55.95
16
2.62 - - - - - - -
1 2 2 2 2 3 3
3.96 8.50 2.46 3.78 6.42 9.06 3.03 5.67
- - - - - - - -
1 2
1.69 7.27 - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
1
78.27 45.77 22.46 23.78 26.42 29.06 33.03 35.67
3 - 2 2 2 2 2 2
7.57 3.04 3.36 3.48 3.10 2.54 0.56 0.28
4.31 7.13 7.13 7.13 7.13 9.31 9.31 9.31
99
3 -1 1 1 1 1 1 1
3.25 0.17 6.23 6.35 5.97 3.23 1.25 0.97
3 2 3 5 7 8 9
- 3.25 3.08 9.32 5.67 1.64 4.88 6.12
3 2 3 5 7 8 9 10
3.25 3.08 9.32 5.67 1.64 4.88 6.12 7.09
31- 31- 31- 31- 31- 31- 31-

21 22 23 24 25 26 27 Mar-28
1 1 2 2 2
6.46 6.90 9.68 2.52 5.65 2.21 5.73 8.08
4 4 4 4 4 4 5 5
5.87 8.61 8.61 8.61 8.61 8.61 1.18 1.18
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
11
- - - - 6.26 - - -
6.01 6.01 6.01 6.01 6.01 2.25 - -

1
58.33 61.52 64.30 67.15 86.53 73.08 76.91 79.26
- - - - - - - -
3 4 4 4 16
8.31 2.28 2.28 6.24 6.46 - - -
5 6
- - - - - 6.12 0.13 -
- - - - - - - -
- - - - - - - -
5
- - - - - 0.10 - -
8
- - - - - 3.12 - -
1 1
38.31 42.28 42.28 46.24 66.46 89.34 60.13 -
2 1 2 2 2 -11 1 7
0.02 9.24 2.03 0.91 0.07 6.26 6.78 9.26
100
1 1 1 1 1 1
9.31 9.31 1.88 1.88 1.88 1.88 1.88 3.75
1 1 -12 6
0.71 9.94 0.15 9.03 8.19 8.14 4.90 5.51
10 11 12 13 14 15 2 3
7.09 7.81 7.74 7.89 6.92 5.11 6.97 1.87
11 12 13 14 15 2 3 9
7.81 7.74 7.89 6.92 5.11 6.97 1.87 7.38
31- 31- 31-

Mar- Mar- Mar- 31-
29 30 31 Mar-32
2 1 2 -
3.33 1.25 3.05 0.00
5 5 1
1.18 1.18 1.88 -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
74.52 62.43 34.93 -0.00
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
101
- - - -
7 6 3 -
4.52 2.43 4.93 0.00
1 1
3.75 3.75 - -
6 4 3 -
0.76 8.68 4.93 0.00
9 15 20 24
7.38 8.14 6.82 1.76
15 20 24 24
8.14 6.82 1.76 1.76
Analysis of Data
Financials
This sheet contains the Balance Sheet, Profit and Loss Account and the Cash Flow statement.
Profit and Loss Account
i. It contains the detail about the annuity and revenue which together constitute the total revenue.
ii. The cost of operations and maintenance.
iii. The EBITDA which is calculated by deducting the total expenses from the total revenue.
iv. EBTDA which is calculated by deducting the various interest components such as:
 Interest Senior Debt
 Interest Refinancing Debt
 Interest Working Capital
 Interest Sub Debt Lenders
 Interest Sub Debt Sponsors
from the EBITDA.
v. Profit before tax which is further calculated by deducting the depreciation and amortization from
EBTDA.
vi. And finally by deducting the tax from PBT we get Profit after tax.
102
Balance Sheet
It contains the details about the
i. Net worth which is calculated by adding the Equity and Reserves and Surplus .
ii. The Total Source of Funds which is calculated by adding the:
 Senior Debt
 Refinancing Debt
 Working Capital Loan
 Interest accrued on sub debt by the sponsors
 Loan Funds
iii. The Total Application of Funds i.e. the areas where the funds are being used. These include:
 Gross Fixed Assets
 Depreciation
 Net Fixed Assets
 Cash
 Major Maintenance Reserve
Cash Flow Statement
It includes:
i. Total inflows which include the following components:
 Profit after Tax
 Increase in Equity
 Depreciation and Amortization
 Increase in senior debt
103
 Increase in Short term loan
 Increase in sub debt sponsors
 Increase in sub debt lenders
 Increase in refinancing
 Interest on sub debt to P&L
ii. Total outflows which include:
 Capital Expenditure
 Repayment of senior debt
 Repayment of refinancing debt
 Repayment of working capital
 Repayment o f Sub debt Lenders
 Repayment of sub debt sponsors
 Payment of accrued interest on sponsor’s sub debt
iii. The Cash balance is calculated by deducting the sum of Total Outflow and Periodic Reserve.
The same cash balance is used as the closing balance for the same year.
3.8 Ratios
Debt Service Coverage Ratio

(DSCR)-Senior Debt -15 Years 2010 2011 2012 2013
31-Mar- 31-Mar- 31- 31-
PARTICULARS 10 11 Mar-12 Mar-13
-1
PAT - - 2.60
2
Depreciation & Amortization - - 3.26
3
Interest on Senior Loan - - 1.66
104
Interest on Sub Debt-Lenders - - -
Interest Accrual on Sub Debt - - 3.61

4
Total Available for servicing - - 5.93
Debt servicing
3
Interest on Senior Loan - - 1.66
Senior Debt Servicing - - 3.96

3
Total - - 5.63
DSCR for Senior Debt 1.29

1
Minimum DSCR .27 -
1
Average DSCR .31
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
31- 31- 31- 31- 31- 31- 31- 31- 31- 31-
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
- - -
2.59 0.50 1.94 2.36 0.27 1.71 4.07 6.46 6.90 9.68
3 3 3 4 4 4 4 4 4 4
9.30 9.30 9.30 5.87 5.87 5.87 5.87 5.87 8.61 8.61
5 4 4 4 4 3 3 3 2 2
1.89 9.79 7.46 5.12 2.44 9.42 5.82 2.15 8.14 3.91
- - - - - - - - - -
6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01 6.01
9 9 9 9 9 9 9 9 8 8
4.61 5.61 4.72 4.64 4.05 3.00 1.76 0.49 9.66 8.21
5 4 4 4 4 3 3 3 2 2
1.89 9.79 7.46 5.12 2.44 9.42 5.82 2.15 8.14 3.91
1 2 2 2 2 3 3 3 4 4
8.50 2.46 3.78 6.42 9.06 3.03 5.67 8.31 2.28 2.28
7 7 7 7 7 7 7 7 7 6
0.38 2.25 1.24 1.54 1.51 2.45 1.49 0.47 0.42 6.19
1.34 1.32 1.33 1.32 1.32 1.28 1.28 1.28 1.27 1.33
2024 2025
105
31- 31-
Mar-24 Mar-25
1 1
2.52 5.65
4 4
8.61 8.61
1 1
9.57 3.38
- -
6.01 6.01
8 8
6.72 3.65
1 1
9.57 3.38
4 5
6.24 0.20
6 6
5.81 3.58
1.32 1.32
Analysis of Data
DSCR (Debt Service Coverage Ratio)
It is the amount of cash flows available to meet annual interest and principle payment on debt.
In general it is calculated by the following formula:
Net Operating Income / Total Debt Service
In this project it is calculated by the following formula:
Total Amount Available For Servicing
( Debt Servicing Amount + Interest on Senior Loan + Amount for Senior Debt Servicing )
The total amount available for servicing is calculated by adding the following components:
i. PAT
106
ii. Depreciation and Amortization
iii. Interest on Senior Loan
iv. Interest on Sub Debt Lenders
v. Interest accrual on Sub Debt
REFERENCES
1. Projects – Planning, Implementation and Review (Prassana Chandra, 2009)
2. Introduction to Accountancy (T.S. Grewal, 2009)
3. Guidelines for Investment in Road Sector ( Publication by the Ministry of Shipping, Road
Transport and Highways)
4. Model Concession Agreement (Published by the Planning Commission)
5. Project Information Memorandum (Published by IL&FS)
107

Analysis of The Financing Structure of Infrastructure Projects With Special References To Highways in The Sphere of Public Private Partnerships.

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Analysis of The Financing Structure of Infrastructure Projects With Special References To Highways in The Sphere of Public Private Partnerships.

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ANALYZING THE FINANCING STRUCTURE OF

INFRASTRUCTURE PROJECTS WITH SPECIAL

Submitted in partial fulfillment of the requirements for

Post Graduate Diploma in Management (PGDM)

Bharatiya Vidya Bhavan’s

Usha & Lakshmi Mittal Institute of Management

Copernicus Lane, Kasturba Gandhi Marg

I --------------------------------------------------- Roll No -------------- Class of 2008, a full time bonefide

Date: July 01, 2010

Date: July 01, 2010

 Model Concession Agreement

Certificate By The Company.......................................................................................4

cERTIFICATE BY THE INDUSTRY MENTOR....................................................................5

1.2 Forms of Project Financing (Especially in Highway sector)..............................15

1.2.1 Traditional Approach.................................................................................15

1.2.2 Current Scenario.......................................................................................15

1.3 Public Private Partnerships..............................................................................16

1.3.1 The key drivers for PPP are:......................................................................16

1.3.2 Misconceptions about PPPs.......................................................................17

1.3.3 Principles of PPP........................................................................................18

1.4 Government Initiative......................................................................................20

1.4.1 Current Scenario.......................................................................................21

1.5 Modes of Financing a PPP Project in Highway Sector.......................................24

1.6 Company Profile .............................................................................................27

1.6.2 Services ...................................................................................................27

1.6.3 IL&FS Financial Services Limited ..............................................................28

1.6.4 Key Strengths of IFIN are:..........................................................................29

1.6.5 Sources of funds of IL&FS..........................................................................30

2. DEHRADUN HARIDWAR PROJECT LIMITED............................................................33

2.1 Project Details.................................................................................................33

2.3 Sponsors Profile...............................................................................................35

2.4 Concession Agreement....................................................................................37

Project Cost and Means of Financing.....................................................................41

2.6 Project Implementation Framework.................................................................46

3.1 Output and Sensitivity.....................................................................................47

3.4 Working Capital.................................................................................................. 74

3.5 Revenue and Expenditure...............................................................................75

3.6 Depreciation and Tax......................................................................................81

3.1Output and Sensitivity…………………………………………………………………….............46

3.4 Working Capital………………………………………………………………………………….72

3.5 Revenue and Expenditure………………………………………………………………………..73

3.6 Depreciation and Tax…………………………………………………………………………….78

BOT Build Operate & Transfer

COD Commercial Operation Date

DBFOT Design, Build, Finance, Operate & Transfer

DER Debt Equity Ratio

DSCR Debt Service Coverage Ratio

DSRA Debt Service Reserve Account

EBIDTA Earnings Before Interest Depreciation Taxation and Amortization

EIEL ERA Infra Engineering Limited

OJSC-SIBMOST OJSC-SIBMOST (Technical Partner)

IFIN IL&FS Financial Services Limited

IL&FS Infrastructure Leasing & Financial Services Limited

IRR Internal Rate of Return

LOA Letter of Award

LoC Letter of Credit

MAT Minimum Alternate Tax

MoEF Ministry of Environment and Forests

MOU Memorandum of Understanding

NHAI National Highways Authority of India

NHDP National Highways Development Programme

O&M Operation and Maintenance

PAT Profit After Tax