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Infrastructure Project Finance

Basics


Mona Iyer
CEPT University
Session Outline

Components of Project Financing Plan


Components of P & L Account



Project Financing Plan
• Equity Contribution
• Promoter
• Contribution of state Govt./Central Govt.
• Any special Grant or Capital Subsidy
• Interest Subsidy during construction Period
• Debt
• Sub-ordinated Debt
• Senior Debt


Equity Contribution
Equity Contribution 32.03% of Capital Cost
Equity
Unsecured Loans 32.03%
0.00% of Capital Cost
Unsecured Loans
Upfront Contribution 0.00%
50.00%
Upfront Contribution
Government of India 50.00% of Promoters Contribution
Government of India
Karnataka 50.00% of Promoters Contribution
Contribution
Government of Karnataka 50.00% of Promoters Contribution
Interest Subsidy During Construction Period 8.98%
Interest
Debt Subsidy During Construction Period 8.98% of Capital Cost
58.99%
Debt
Sub-ordinated Debt (GoI / GoK) 58.99%
6.41% of
of Capital
Capital Cost
Cost
Senior
Sub-ordinated
Debt Debt (GoI / GoK) 6.41% of Capital Cost
52.59%
Senior Debt
Term Debt 52.59% Loans (INR)
Term Debt of Total Senior Debt
Proportion Loans (INR)
53%
Term Debt Total Senior Debt
Proportion Loans (INR)
Amount (inof INR crores) 53%
1,554
Proportion
Amount (inof
INR Total Senior Debt
crores) 53%
1,554
Prime Lending Rate 8.50%
Amount
Prime
Margin on(inLINR
Lending oan crores)
Rate 1,554
8.50%
0.00%
Prime Lending
Margin
Interest on
RateLoan Rate Construction Period)
(During 8.50%
0.00%
8.50%
Margin on
Interest RateLoan(During Construction Period)
Operations Period) 0.00%
8.50%
Interest
Interest Rate
Rate (During
Borne by Construction
Operations
BMRTL Period)
Period) 8.50%
2.00%
Interest
Drawdown Rate (During
Borne
Starts Operations
by BMRTL Period) 8.50%
2.00%
1-Apr-05
Interest Rate
Drawdown
Repayment Borne by BMRTL
S(years)
tarts 2.00%
1-Apr-05 10
Drawdown S(years)
Repayment
Repayment tartsyear
per 1-Apr-05 10
2
Repayment (years)
per
No. of Instalments year 10
202
Repayment
No. /per
of Instalments
Repayment year
Redemption Starts 31-Mar-12202
No. of Instalments
Repayment / Redemption
Repayment / Redemption Ends Starts 31-Mar-12
30-Sep-2120
Repayment
Tenor (including/ Redemption Starts
Ends
construction period) - years 31-Mar-12
30-Sep-21
16.5
Repayment
Tenor (including / Redemption Ends
construction period) - years 30-Sep-21
16.5
Tenor (including
Guarantee Charges construction period) - years 16.5
-
Guarantee
Upfront Fees Charges -
0.50%
Guarantee
Upfront FeesCharges
Arrangement Fees -
0.50%
0.40%
Upfront F
Arrangementees
Documentation Fees Fees 0.50%
0.40%
0.10%
Arrangement
Base Days for Fees
Documentation Fees Calculation
Interest 0.40%
0.10%
365
Base Days for Interest
Documentation Fees Calculation 365
0.10%
Base Days
Interest for Interest
Subsidy Calculation
provided by the government 365
2%
Interest S ubsidy provided
Discount Rate for PV of Interest by the government
Subsidy during operations 2%
6%
Discount Rate forprovided
Interest Subsidy PV of Interest
by theSubsidy during operations
government 6%
2%
Profit and loss Account
•The companies act has prescribed format for
Balance Sheet but not for P & L account.
However, the P & L account should give clear
idea about the operations of the project and
show specific information required for the same.
Basically gives revenues and expenditure

Prepared for the operations period



Profit and loss Account
• OPERATING REVENUE
• Fare Revenue
• Advertisement Revenue
• Property Development Revenue
A. Total Revenue
• OPERATING EXPENSES
• Manpower Cost
• Energy Cost
• Maintenance Cost
• Insurance Charges
• Administrative Expenses
B. Total Expenses
NET OPERATING INCOME (A-B)
Profit and loss Account
• NON-OPERATING REVENUES
• Interest on Cash Balance
• Interest on Debt Service Reserve
• Interest Subsidy from Government
• C. Total Non-operating Revenues
• NON-OPERATING EXPENSES
• Interest Expenses on Debts
• Commission on Debt Service Reserve LC
• D..Total Non-Operating Expenses
NET Non-Operating Income (C-D)
• PROFIT BEFORE DEPRE & TAX (A-B)+(C-D)
Profit and loss Account
Depreciation as per CO Act

PROFIT BEFORE TAX


Corporate Tax
PROFIT AFTER TAX

(Rs. in million)
Financial Year Begins 1-Apr-10 1-Apr-11 1-Apr-12 1-Apr-13 1-Apr-14 1-Apr-
Financial Year Ends 31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar
Year 1 2 3 4 5 6
No. of Months 12 12 12 12 12 12

OPERATING REVENUE
Fare Revenue 346 379 413 452 491
Advertisement Revenue 17 19 21 23 25
Property Development Revenue 17 19 21 23 25
Total Revenue 380 417 454 497 540
OPERATING EXPENSES
Manpower Cost 57 63 69 76 83
Energy Cost 31 51 53 55 57
Maintenance Cost 31 51 53 55 57
Insurance Charges 14 15 15 15 15
Administrative Expenses 4 4 4 5 5
Total Expenses 137 184 194 206 218
NETOPERATING INCOME 243 233 260 292 322
NON-OPERATING REVENUES
Interest on C ash Balance - - - - -
Interest on Debt Service - - 0 0 0
Interest Subsidy from Government 27 74 82 72 31
Forex Fluctuation absorbed by GoI - - - - -
Total Non-operating Revenues 27 74 82 72 31
NON-OPERATING EXPENSES
Interest Expenses on Debts 258 259 253 245 235
Commision on Debt Service Reserve LC - - - - -
Forex Losses on Debt Servicing - - - - -
Total Non-Operating Expenses 258 259 253 245 235
PROFITBEFORE DEPRE & TAX 11 48 89 119 119
Depreciation as per C O Act 167 178 178 178 178
PROFITBEFORE TAX (155) (130) (89) (59) (59)
C orporate Tax - - - - -
PROFITAFTER TAX (155) (130) (89) (59) (59)
• Upfront: Straightforward. Paid well in advance
• Drawdown: An actual takedown (borrowing) of money by the
borrower under the terms of a loan facility. Date from which the loan
disbursement starts based on financing agreement between lender
and borrower.
• Redemption: payment of an obligation. Redemption is the process
by which asset that has been mortgaged or pledged is bought back or
reclaimed. It is accomplished through a payment of the debt.
• Moratorium: Authorized delay in the repayment of a loan. OR An
authorization, permitting temporary suspension of payments. OR An
authorized period of delay in the performance of an obligation.


• Debt Service Reserve: A reserve set up to ensure the
timely payment of principal and interest.
• Depreciation: A regular reduction in asset value over time.
• Prime Lending Rate: The rate at bank lends Money to its
most creditworthy customers.


Depreciation
A regular reduction in asset value over time.

As per IT act and Co. Act


WDV for IT purpose


SLM for Company’s internal P & L