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FINANCIAL ANALYSIS=

 

1.1&= nbsp;  ASSUMPTIONS

 

1.1.1          Debt Equity Ratio: The Debt Equi= ty ratio is 70:30. Of the landed Project Cost of Rs 285 Crores<= /span>, the element of debt being considered is Rs 200 Crores<= /span> and Equity Rs 85 Crores. No element viability g= ap funding is being considered.

 

1.1.2          Interest Rate: The cost of debt = has been kept at 10.0%. In earlier reports the project was found to be viable at an interest of 7.5%. However since then there have been significant changes in terms of interest rates, traffic projections and higher loadabilty of wagons which impacts the analysis.

 

1.1.3          Inflation Rate: An annual escala= tion of 5% has been taken for O&M costs during the operating period. In the cas= e of tariff escalation, a lower escalation of 2% has been assumed during the lif= e of the project. In view of the construction period being short viz. less than = two years and very low level of inflation in the economy at present no inflation has been assumed in the construction cost.

 

1.1.4          Debt Tenure & Repayment:  Tenure of 15 years has been conside= red (from first draw down) comprising of 2 years drawdown during the construction per= iod, a 2 years moratorium from the drawdown year and 11 year repayment schedule after moratorium. Debt repayment has been considered lesser during the init= ial years and increased during the later years of operations to minimize the de= bt repayment burden i.e. 2% during first 2 years, 7% for next 2 years, 12% for next 6 years and 10% in the final year.

 

1.1.5          Syndication Fees & Other Fees to Lenders: These are as indicated in the table for the final structure.= In addition provision has been made for SPV operating costs for various annual operating costs in terms of rentals, utilities, travel, transportation and administration costs, Insurance premium and Preliminary Cash balances. The actual figures used are indicated in the Financial Structure.

 

1.1.6          Taxation: As per the tax exempti= ons available under 801A, a ten-year tax holiday over a 20 year time frame has = been assumed where it provides best benefit to the Company.

 

 

 

 

 

1.2.     Financial Struct= ure

&= nbsp;

  &nb= sp;            = Landed Costs – Rs. Crores

 

2007=

2008=

Total

= Construction Cost

80.5= 0

183.= 50

265.00

= Insurance Premium

0.50

1.00

=     1.50

= Loan Arranger Fee

0.50

1.50

=     2.00

= Upfront Fee

=       1.00

=     1.00

=     1.00

= Lenders Engr

0.10

0.10

=     0.20

= Security Trustee & other charges

0.05

0.15

=     0.20

= DPR/FA Consultancy

0.05

0.15

=     0.20

= SPV Incorporation / Establishment

0.80

0.80

=     1.80

= Prelim Cash Balance

0.50

2.10

=     2.60

= IDC

1.00

9.50

=    10.50

Total

  &= nbsp; 85.00

200.00

285.00

 

 

 

 

 

 

 

 

 

 

 

 

The debt and equity draw downs have been assumed to occur simultaneously as giv= en below.

&n= bsp;

 

Share %

2007

2008

Total

Debt

70%

20

180

200

Equity

30%

65

20

85

Total

100%

85

200

285

  &nb= sp;            = All Figures Rs Crores

 

1.3.     Financial Model Results

The viability of the project= has been assessed based on various parameters such as:

 

·         Pre-tax Project IRR

·         Post-tax Project IRR

·         Post Tax Equity IRR

·         Minimum Debt Service Cove= rage Ratio (DSCR)

·         Average Debt Service Cove= rage Ratio (DSCR)

 

The financial results are as under:

 

     Project IRR

(Pre Tax)

Project IRR (Post Tax)

Equity

IRR

Min DSCR

Av.

DSCR

Interest Rate 10%

13.36

12.71

15.08

1.03

1.41

 

The project returns are cons= idered to be satisfactory.

 

 

 

 

 

 

<= span lang=3DEN-US style=3D'mso-fareast-font-family:Calibri;mso-bidi-font-family:= Calibri'>1.4.=       SENSI= TIVITY ANALYSIS

 

1.4.1.

 

VARIATION

PROJECT IRR POST TAX

EQUITY IRR

AV. DSCR

Min. DSCR

TRAFFIC

 

%

%

 

 

 

-10%

10.71

11.33

1.19

0.86

 

0%

12.71

15.08

1.41

1.03

 

10%

14.59

18.87

1.62

1.21

PROJECT COST=

 

 

 

 

 

 

0%

12.71

15.08

1.41

1.03

 

10%

11.54

14.93

1.39

1.02

 

20%

10.53

12.24

1.17

0.86

O&M COST=

 

 

 

 

 

 

-10%

13.37

16.37

1.48

1.10

 

0%

12.71

15.08

1.41

1.03

 

10%

12.03

13.78

1.34

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.4.2. 

INTEREST RATE

P-IRR

E-IRR

M-DSCR

A-DSCR

9.50%

12.71

15.57

1.09

1.44

10.00%

12.71

15.08

1.03

1.41

10.50%

12.71

14.61

0.98

1.37

11.00%

12.71

14.15

0.94

1.34

11.50%

12.71

13.70

0.89

1.30

12.00%

12.71

13.27

0.85

1.27

12.50%

12.71

12.85

0.82

1.25

* M-DSCR= less than 1 in first year only

 

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