Working Capital Management Of Infrastructure Projects - Ppp-bot Highway Project

LITERATURE REVIEW Working Capital Management of Infrastructure Projects PPP – BOT Highway Projects

Guided by: Dr. D.R. Patel Prepared By: Soni Viral S. CP (1507)

M.Tech Construction & Project Management, Faculty of Technology, Soni Viral S, M.Tech CPM, CEPT CEPT University, Ahmedabad. University, Ahmedabad

Sr. No.

Content

2.1

Introduction

2.2

Definitions

2.3

Concepts of Working Capital Management

2.4

Concepts of PPPPPP-BOT Projects

25 2.5

Road blocks in PPP Projects

2.6

Issues in Financing BOT Projects

2.7

Balancing Net Working Capital

2.8

Means of financing Working Capital

2.9

Receivables Management Management-- Tolling trends

2.10

Research Gap

2.11

References

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.1 INTRODUCTION „

„

„

Need of PPP PPP--BOT schemes. In the year 1996, the world bank had estimated that an expenditure of US$200 billion a year must be made on infrastructure by developing countries, and Asian would account for 80% of this expenditure. The bottle necks in mobilization of public funds and foreign debts have enhanced the interests of developing countries in provision of infrastructure projects through BuiltBuilt-Operate Operate--Transfer (BOT) type scheme. A study of funding requirements for development and maintenance of roads in India reveals a large likely funding gap. Compared to an annual funding requirement of Rs. 32,700 cr projected for the years 20012001-2006 for development and maintenance of State highways and NHs, quantum of funds available annually for this purpose was Rs.10,100 cr. It will clearly not feasible for the state to meet the funding gap projected j t d without ith t affecting ff ti its it ability bilit tto meett th the requirements i t off other th priorities. i iti

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.2 Definitions „

„

Working Capital – (Gross Working Capital) it means the current assets which represent the proportion of investment that circulates from one to another in ordinaryy conduct of business. Net Working Capital – It can be defined as the difference between current assets and current liabilities or alternatively the portion of current assets financed with long--term funds. long

„

Current Assets – Assets which normally get converted into cash during normal operating cycle of the firm.

„

Current liabilities – Liabilities that are normally payable within a year.

„

Profitability – Implies the relationship between revenue and costs generated by using i both b th fixed fi d and d currentt assets t iin productive d ti activities. ti iti

„

Risk of technical insolvency – it is probability that a firm will be unable to meet its obligations as they become due. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.2 2 2 Definitions „

„

„

PPP Projects – Public Private Partnership Projects -describes a government service/project /p j or private p business venture which is funded and operated p through a partnership of government and one or more private sector companies. BOT Projects -BOT is build, build operate and transfer - a company builds a facility, an infrastructure project, gets to operate it for a while and is paid for that, and finally transfers it back to the public sector at the end of some time - determined by when the construction company is believed to have been paid a satisfactory amount. amount BOOT projects – BOOT: build, own, operate and transfer - the constructor builds the p project, j , theyy then get g to own and operate p it for some period p of time (like 20 or 25 years) during which they collect revenues. At the end of the certain duration , the project is handed back to the government.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.3 Concepts of Working Capital Management „

„

According to Khan & Jain, The goal of working capital management is to manage the firm’s firm s current assets and liabilities in such a way that a satisfactory level of working capital is maintained. If firm cannot maintain a satisfactory level of working capital it is likely to become insolvent and p y in case of infrastructure project p j it becomes mayy be forced to bankruptcy, crucial due to level of risk and longer gestation period. According to P Chandra, Under a flexible policy the investment in current asset is high. h h This h means a huge h balance b l off cash h and d marketable k bl securities, carries large amount of inventories, and grants generous terms of credits to customers. Under a restrictive policy (aggressive policy), the investment in current asset is low low. This means that the firms keeps a small balance of cash and marketable securities, manage with small amount of inventories and offer stiff terms of credit.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.4 Concepts p of PPPPPP-BOT Projects j : „

„

According to Cesar Queiroz (Lead Highway Engineer World Bank, Russia) A P bli -Private PublicPublic Pi Partnership P hi (PPP) constitutes i a sustained i d collaborative ll b i effort ff between the public sector (government agencies) and private enterprises to achieve a common objective (e.g., the road project) while they pursue their own individual interests. BOT Projects – According to R Kansal and M C Gupta, ( The ICFAI Journal of Infrastructure ) BOT is a device that helps p the government g to develop p infrastructure projects by transferring all the risk and responsibility to private sector, it requires appropriate allocation of risk and assigning risk to those best placed to control them.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.4 Concepts p of PPPPPP-BOT Projects j : „ „

„

„ „ „ „

BOT Projects in Indian Scenario According to Kansal & Gupta, In India budgetary allocation is not sufficient, the National Highway Act has been amended to enable levy of fee on the selected sectors of national highway highway. This way the private sector can participate in the construction, maintenance and operation of roads on BOT basis. The National Highway Authority of India (NHAI) on behalf of the Government of India (GOI) has invited global tenders from the parties for proposed Super National highways or Expressways, which connect major metropolitan cities and manufacturing town with the major ports in India. These are proposed to be built with the help of the private sector on the BOT basis. National Highways Development Projects (NHDP) Under BOT scheme The proposed 13,416 Km four/six lane roads at cost of Rs. 54,000 cr under BOT scheme, which include the following three corridors. Golden Quadrilateral (GQ): it connect four metros metros-- Delhi, Delhi Kolkata Kolkata, Chennai and Mumbai-- covering a distance of 5846 km length. Mumbai North--South Corridor: it runs from Jammu to Kanyakumari covering a length of North 4000 kms and was scheduled to be completed by 2007. East--west Corridor: it runs from Porbandar to Silchar covering a length of 3,300 East 3 300 Kms and was scheduled to be operational by 2007. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.4 Concepts p of PPPPPP-BOT Projects j : „

Concessions announced by NHAI The NHAI has also announced a number of concessions to private sector. They are

¾

The private sector allowed to retain the toll money on the highway it develops on the BOT basis.

¾

A 100% tax exemption granted for five years, and 30% relief for the next five years.

¾

The exemption may be availed by the contractor over a period of 20 years.

¾

The concession period may be extended up to 30 years.

¾

An exemption on import duty for import of high capacity modern equipments.

¾

Foreign direct investment has been permitted up to 100%.

¾

The Government would provide the land free of cost and also free from all encumbrances. encumbrances

¾

The NHAI permitted to take a 30% stake in BOT projects.

¾

The GOI and NHAI will Provide capital grant up to 40% of their Project cost

¾

Any arbitration would be settled as per the United Nations Commission on International Trade law (UNICTRAL) provisions. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.5 Road Blocks in PPP projects:projects:„

According to Kansal & Gupta, Despite of GOI’s and the NHAI’s concessions to the private sector to make them involve in the BOT projects, the private sector is hesitant to take part in the BOT projects due to the following reasons: Ö

Ö

More time is required in land acquisition, shifting of utilities, removing of structures etc. Procedures are so cumbersome that it takes a q the land;; and minimum of a yyear to acquire The project has gestation period of 20 years which is too long for blocking the investment. Normally, the capital expenditure plans of companies, including building a new manufacturing facility, do not have gestation t ti period i d off more than th six i to t seven years. Thus Th till such h period, i d the companies have to pay interest on its borrowing from the financial institutions. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.5 Road Blocks in PPP projects:projects:„

„

According to Rajiv Lall ( Indian Infrastructure, June 2007), At state level transition is not as smooth as it is in National level projects, Financier apprehension while funding projects stems from the lack of homogeneity in procedure adopted by states. Bankers demand standardization and but at the state government level, the Model Concession Agreement is variable. States having standardized MCAs like Maharashtra, Madhyapradesh, Gujarat, Punjab, Haryana, Rajasthan, Kerala and Karnataka have more PPP projects. A Accoring i to t Bharti Bh ti Gupta, G t ( IIndian di Infrastructure, I f t t JJune 2007) 2007), R Reason behind the financiers reluctance is the lower creditworthiness of state authorities compared to National Authorities. The financial capacity of the state to back the project is sometime a question. Inappropriate risk allocation due to issues like land acquisition problems delayed environmental clearances, among others are also causes of worry to financiers. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.7 Issues in Financing BOT projects „

According to Nayan C Parikh and Rajesh Samson (Vikalpa VolVol24.No.1 JanuaryJanuary-March 1999) Practical experienced has shown that the following hurdles are encountered arranging finances for BOT projects. ¾

Lack of Prime Security

¾

The Escrow Account

¾

Placement of Equity

¾

Back--ended Cash flows Back Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.7 Balancing Net Working capital „

There are number of problems faced by companies in trying to b l balance the th N Nett working ki capital. it l Major M j off these th are listed li t d below: „

Shortage of working capital

„

Slow S o a and d non o moving o g stocks s oc s

„

Funds locked in work in progress

„

Requirement of high growth company

„

Reduction in interest rates Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.8 Means of Financing working Capital „

Source of finances that are used to support current assets ::¾ ¾

¾ ¾ ¾ ¾ ¾ ¾

Accruals – amount owed but not paid, ( taxes, wages etc. ) Trade credit – credits extended byy suppliers pp of goods g and services. ( 25 to 50 % of short term financing in some cases ) Working capital advance by commercial banks Bank finance Inter--corporate deposits Inter Short term loans from financial institutions Commercial paper Validity Gap funding Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.8 Means of Financing working Capital As listed in Indian infrastructure, Major players Financing Infrastructure Projects in India: „

„

„

„

World Bank – Largest multilateral funding agency which provides low cost and long tenor financing to infrastructure projects. Asian Development Bank (ADB) – an active player in infrastructure financing providing support to India in the form of loans, technical assistance,grants, guarantees and equity investments. At the end of the year 2006 ADB had extended loans worth $ 10,606 million for infrastructure projects. Infrastructure Development Finance Company (IDFC) – IDFC was incorporated on January 30, 1997 as a specialized institution to facilitate flow of private finance to commercially viable infrastructure projects. ICICI Bank – largest Indian private sector bank. As on march 31, 2007 Loan worth Rs 141.58 billion was provided to various infrastructure projects.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Major players Financing Infrastructure Projects in India:

„

„

„

Industrial Development Bank of India (IDBI) – IDBI is among largest commercial banks in India. Industrial Finance Corporation of India (IFCI) – financial institution set up to promote development in India. As on March 31, 2007 IFCI’s net outstanding in infrastructure was amounted to Rs 14.02 billion. India Infrastructure finance company limited (IIFCL) – IIFCL was formed in January 2006 as 100 percent government owned Infrastructure financing SPV. The SPV funds infrastructure projects up to 20 percent of the total project cost.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.9 Tolling trends „

„

„

As per data given in Indian Infrastructure (November 2007), Toll revenues from National highways have increased consistently, Currently 66 stretches covering over 4000 km under NHDP are tolled. Toll collection in 20062006-2007 were estimated Rs. 10.3 billion, an increased about 30 percent over 20052005-2006. Of this 80 percent of the collection is public funded projects p j and 20 percent p from private p projects. p j Prior to from p this toll collection witnessed 76 percent in 20052005-2006 and 25 percent in 2004--2005. The decline in 2006 2004 2006--2007 has been attributed to the delay in bringing eight new stretches under the toll net. Estimated toll collection from the Golden quadrilateral and NorthNorth-South South-East--West Corridor are Rs 5 million per km and Rs 1.8 million per km East respectively. This constitutes 33-5 percent per annum of the cost of four laning this networks. networks After completion GQ and NSEW will have 95 and 112 toll plazas respectively. The Value of each toll plaza is estimated at $4.5 million.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.9 Tolling trends

„

„

The Gujarat Government was one of the first state governments to collect tolls on PPP projects. The Government began toll collection on VadodaraVadodaraHalol Toll road and subsequently on AhmedabadAhmedabad-Mehsana Toll Road. Average number of vehicles using Ahmedabad Ahmedabad--Mehsana toll road is 620 per hour, and average number of vehicles using VadodaraVadodara-Halol is 377 per hour. Toll collection on both stretches have mostly increased, except for a minor decline in 20042004-2005. Over all toll levied in India are amongst the lowest in the world. An average toll of US 1.08 cents per km is charged from cars in India as compared to 3-4 cents charged in china and 70 cent in Hong Kong.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.10 Research Gap „

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„

„

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Integrated study of Working capital management specially For PPP PPP--BOT project is needed as it represent unique structure of project and involves comple cash flo complex flows. s A detailed study of nature of current assets involved in such projects are needed to evaluate financing policy for the working capital management. Adequacy of Matching principle of financing policy with respects to the PPP PPP-BOT kind of project has to be evaluated and to be compared with current policies of financing such projects. projects Rules & Specifications to be followed by SPV in execution of project to entitle under concession from GOI in terms of tax and grants is to be studied and project specifications has to be aligned with the same. Need of Uniform MCA in all the states to ease of the operations of financiers and hence to promote more inflows in the field field. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.10 Research Gap „

„

Provision of security to the lenders by providing a solution from combining ‘step--in ‘step in--right’ and Escrow account. Forming a new policy for funding high growth company involved in PPP PPP-BOT projects to meet the higher current assets requirements which is higher than their growth of sales.

„

Use of options like VGF scheme In case of viability gap of project and to form a standard procedure to avail such scheme.

„

Evaluation of different methodologies and their accuracy to forecast traffic on PPP PPP--BOT projects.

„

I Impact t off b backk ended d d cash h flows fl ( its it increase i or decrease d ) on Profitability P fit bilit of project needs to be evaluated in concept stage of such project to evaluate contingencies required in financing the project.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2.10 References 1)

Anand, M. (2001), “Working Capital Performance of Corporate India: an Empirical Survey” Management and Accounting research (April (April--June 2001) pp 35 35--43.

2)

Bangia, N. (2007), “ Viability Gap Funding” Indian infrastructure, (February 2007) pp 6666-69.

3)

Bangia, N. (2007), “PPP Roadblock” Indian Infrastructure, (June 2007) pp 62 62--63.

4)

Chandra, P. (2007), “Financial Management” , 6th edition, Tata McGrawMcGraw-hill Publishing Company Limited, New Delhi.

5)

Debasish S. Debasish. S and Mallik, Mallik A. A (1998) “Working Working Capital and Profitability Profitability” The management accountant (Novemeber 1998) pp 805805-806.

6)

Kansal, R. and Gupta M. C. (2007), “Government Role in BOT Projects” The ICFAI journal of infrastructure, (Volume 5,No. 2), pp 7979-88.

7)

Khan, P. K. and Jain, P. K.(2004) “Financial Management”,4th edition, Tata McGraw McGraw--hill Publishing Company Limited, New Delhi.

8)

Kulkarni, lk M. S. S (1997), ( 99 ) “ Balancing l Net Working k Capital” C l” Udyog d Pragati (October (O b -December (Octoberb 1997) pp 2828-32.

9)

10)

Parikh, N. C. and Samson, R. (1999), “BOT Road Infrastructure Projects: Process, Problems and Suggestions Suggestions” Vikalpa ( Volume 24, 24 No. No 1), 1) pp 3 3--12. 12 Srivastava, R. M. (1992), “Comercial paper - A vibrant instrument of Working Capital in Soni Viral paperS, M.Tech CPM, CEPT India” Prabandh (October 9292-March 93) ppAhmedabad 3535-36. University,

OBJECTIVES „

„

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To study the various Working Capital policies, q y management, g , credit management g and liquidity cash CollectionCollection-Disbursement. To study and suggest various means of Working Capital Financing for construction firms involved in Infrastructure field. field To study various effects of back ended cash flows in BOT project and its implication on Soni Viral S, M.Tech CPM, CEPT other parameters. University, Ahmedabad

DATA COLLECTION & DATA ANALYSIS

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

3 1 Data 3.1 D t C Collection ll ti - Project P j tD Details t il ¾

Project ::- 4 Lanning of RAJAHMUNDRY – DHARMAVARAM SECTION OF NHNH-5 „

PROJECT INTRODUCTION „ The project road section from Km 200 (near Rajahmundry) to Km 253 (near Dharmavaram)) is a part of Vijayawada - Visakhapatnam segment of NHDharmavaram NH-5 in Andhra Pradesh „

„ „ „

The average formation width of the project road corridor is 12 m

Section I - Diwan Cheruvu (Km 200/0) to Rajaanagaram Road Junction (Km 207/3) Section II - Rajaanagaram Road Junction (Km 207/3) to Erravaram (Km 238/8) Section III - Erravaram (Km 238/8) to Km 253/0

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Section I - Diwan Cheruvu (Km 200/0) to Rajaanagaram Road Junction (Km 207/3)

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Section II - Rajaanagaram Road Junction (Km 207/3) to Erravaram (Km 238/8)

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Section III - Erravaram (Km 238/8) to Km 253/0

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Ann al Average A e age Daily Dail Traffic T affic Annual secti Two Auto Car / ons wheelers Rickshaw Jeep p

Van / Tempo p

Bus

Animal / Tractor Hand Cycle Total Tractor & Trail Drawn Cycle y rickshaw Pcus

Truck

Mini

Standard

LCV 2-Axle

3-Axle

MAV

I

1656

170

1138

42

29

296

288 2921

551

164

55

62

9

856

26

15573

II

750

124

546

10

21

222

207 2461

482

160

47

46

4

741

24

12325

III

457

97

309

9

3

143

134 1387

284

95

37

59

7

1048 46

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

7685

Chart Title Two wheelers

0% 1% 1% 0%

Auto Rickshaw

10%

Car / Jeep

20%

Van / Tempo

2%

Bus

7%

Standard Truck

2%

LCV Truck 2-Axle Truck 3-Axle Truck

14%

MAV Truck Tractor Tractor & Trail

35%

4% 3%

1% 0%

Animal / Hand Drawn Cycle C l rickshaw i k h Cycle

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

T affic - Projections P ojections Tollable Traffic Mode/year

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Cars

942

1015

1095

1180

1272

1371

1470

1576

1689

1811

1941

2058

2181

2312

2451

Bus

296

318

341

365

391

420

450

482

517

554

594

630

667

707

750

LCV

289

303

318

334

350

367

384

402

420

440

460

478

498

517

538

HCV

3777

4094

4438

4811

5215

5653

6094

6570

7082

7635

8230

8773

9352

9969

10627

MAV

274

296

321

348

378

409

441

476

513

553

596

635

677

722

770

Total

5578

6027

6513

7038

7607

8221

8840

9505

10221

10992

11821

12574

13376

14228

15136

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Tollable Traffic T affic - Projections P ojections Mode/year

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

Cars

2598

2741

2891

3050

3218

3359

3582

3779

3987

4206

4437

4681

4939

5210

5497

Bus

795

839

885

933

985

1039

1096

1156

1220

1287

1358

1432

1511

1594

1682

LCV

560

581

602

625

649

673

698

724

751

780

809

839

871

903

937

HCV

11329

12020

12753

13531

14356

15232

16161

17147

18193

19303

20480

21730

23055

24462

25954

MAV

820

870

924

980

1040

1103

1170

1242

1317

1398

1438

1574

1670

1771

1879

Total

16102

17051

18055

19119

20248

21406

22707

24048

25468

26974

28522

30256

32046

33940

35949

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Toll Rates ( Rs per Vehicle - Trip)

Mode/year

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Cars

34

34

34

41

41

41

49

49

49

59

59

59

71

71

71

Bus

120

120

120

144

144

144

173

173

173

208

208

208

250

250

250

LCV

60

60

60

73

73

73

88

88

88

106

106

106

127

127

127

HCV

120

120

120

144

144

144

173

173

173

208

208

208

250

250

250

MAV

120

120

120

144

144

144

173

173

173

208

208

208

250

250

250

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Toll Rates ( Rs per Vehicle - Trip)

Mode/year

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

Cars

85

85

85

102

102

102

123

123

123

147

147

147

177

177

177

Bus

300

300

300

360

360

360

432

432

432

518

518

518

622

622

622

LCV

152

152

152

183

183

183

219

219

219

263

263

263

316

316

316

HCV

300

300

300

360

360

360

432

432

432

518

518

518

622

622

622

MAV

300

300

300

360

360

360

432

432

432

518

518

518

622

622

622

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Ann al Toll Revenue Re en e – Projection P ojection Annual Mode/year ode/yea

2005 005

2006 006

2007 00

2008 008

2009 009

2010 0 0

2011 0

2012 0

2013 0 3

2014 0

2015 0 5

2016 0 6

2017 0

2018 0 8

2019 0 9

Cars

12

13

14

18

19

21

26

28

30

39

42

44

57

60

64

Bus

13

14

15

19

21

22

28

30

33

42

45

48

61

65

68

LCV

6

7

7

9

9

10

12

13

13

17

18

18

23

24

25

HCV

165

179

194

253

274

297

385

415

447

580

625

666

853

910

970

MAV

12

13

14

18

20

21

28

30

32

42

45

48

62

66

70

Total

208

225

244

317

343

371

480

516

556

720

775

825

1056

1124

1197

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Annual Toll Revenue – Projection Mode/year

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

Cars

81

85

90

114

120

125

161

170

179

226

238

251

319

337

355

Bus

87

92

97

123

129

137

173

182

192

243

257

271

343

362

382

LCV

31

32

33

42

43

45

56

58

60

75

78

81

100

104

108

HCV

1241

1316

1396

1778

1886

2001

2548

2704

2869

3650

3872

4108

5234

5554

5892

MAV

90

95

101

129

137

145

184

196

208

264

272

298

379

402

427

Total

1530

1620

1717

2186

2315

2453

3122

3310

3508

4458

4717

5009

6375

6759

7164

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

40000

Tollable Traffic - Projections

35000

30000

No of Veh hicles

25000

20000 Total Vehicles 15000

10000

5000

0

Soni Viral S,Years M.Tech CPM, CEPT University, Ahmedabad

8000

Total Revenue - Projections

7000

6000

Rs in miillion

5000

4000 Total Revenue 3000

2000

1000

0

Soni Viral S,Years M.Tech CPM, CEPT University, Ahmedabad

Project Cost Details Item No.

Description

1

Site Clearance

2

Earth Work

465,555,841

3

Sub-base and Base Course

412,773,459

4

Bituminous tu ous Course Cou se

5

Bridges and Culverts

6

Road Junction

7

Drainage g and Protection Works

90,727,452 , ,

8

Toll Plaza

95,249,162

9

PIU complex p

50,000,000 , ,

10

Miscellaneous Items

11

Provisional Items Base Cost Contingencies 3% Grand Total Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Cost (in Rs.) 2,519,547

1,149,379,488 , 9,3 9, 88 178,200,000 1,744,631

160,779,506 29,884,579 2,681,813,665 80,454,410 2,762,268,075

Project Cost Summary

1%

0%

3%

Site Clearance

0%

2%

6%

4%

18%

Earth Work Sub-base and Base Course

7% 16%

Bituminous Course Bridges and Culverts Road Junction Drainage and Protection Works

43%

Toll Plaza PIU complex Miscellaneous Items Provisional Items

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Data Analysis

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Project cost Parameters Evaluation E l ti Year Y (Yr. (Y Of costt estimates) ti t ) Year construction begins (proj. Yr.'1') Construction period (year) Opening Year (proj. Yr ''4'') L Length th off P Project j t road d (i (in Km) K ) Length of existing pavement (in Km) Project cost (Rs million) Total project cost - costt off additional dditi l 2 lanses l for f toll t ll plaza l Annual Inflation Rate (%) Government contribution in % Operation & Maintainance Costs T ll plaza Toll l O & M Cost C p.a in i phase h 1 (Rs (R million) illi )

2001 2002 2.5 2005 53 53 2001 values 2001 values l

2762.27 15 39 15.39 7.50% 40.00%

2001 values l

0 48 0.48

Environmental Monitoring Cost p.a. (Rs million) 2001 values Routine Maintenance p.a. for rigid and flexible pavements and d service i road d (Rs (R million) illi ) 2001 values l Major Maintenance - Flexible pavement and service road (Rs million) - 5th Yr 2001 - 10th 0 h Yr - 15th Yr Soni Viral S, M.Tech CPM, CEPT -20th Yr University, Ahmedabad

0.12

25th and 30th Yr

23

2009 20 2014 2019 2024

2029 2034

162 162 62 162 162 162

Financial Parameters Toll Rate

1997

1998

1999

2001

2005

(Rs/Km) (Rs/Km) (Rs/Km) (Rs/Km) (Rs/Km) 0.4 0.42 0.44 0.49 0.65 0.7 0.74 0.77 0.85 1.14 1.4 1.47 1.54 1.7 2.27 3 3.16 3.31 3.64 4.86 20.00% 2.00% 30 15 0

Car LCV HCV,MAV, Bus Oversized Toll indexing - every 3 year @ Advertisement Revenue (% of toll Rev.) Project concession period (After Construction) Loan Replayment Period (Years) Loan payback Grace period (Years) Rate of Calculation of interest During Construction (IDC) (%) Interest rate on Long Term Debt (%) Debt : Equity Ratio Equity Contribution (%) Loan (%) Tax rate Tax benefit limited to (Years) Tax Holiday (Years) Tax Rebate period (Years) Tax Rebate (in %) Soni Viral S, M.Tech CPM, CEPT Loss Carry Forward Period (Years) University, Ahmedabad Annual Depreciation - straight line @

16.00% 16.00% 2:01 33.33% 66.67% 35.07% 20 5 5 30.00% 8 1.63%

P oject Cost Phasing (Rs in million) Project Year

2002

2003

20.00%

45.00%

552.45

1243.02

966.79

2762.27

593.89

1436.47

1201.05

3231.4

28.51

207.67

291.01

527.19

622.4 Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

1644.14

1492.05

3758.59

Project Cost Phasing (%)

Phased Project Cost (2000 prices) Actual Costs in Year of Expediture (current prices) Interest during Construction Total Landed Cost including IDC

2004 Total

35.00% 100.00%

So ces of Finance (Rs in million) Sources Total Landing Cost Including IDC

3758.59

Govt. Contribution

1503.436

Cost ecluding Govt. Contribution

2255.154

Equity Contribution

751.6428

Loan Requirement

1503 511 1503.511 Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Depreciation Schedule of Depreciation by WDV method Particulars / Years

2005

2006

2007

2008

2009

2010

2255.2

2255.2

2029.6

1826.7

1644

1479.6

1332

10.00%

225.52

202.96

182.67

164.4

147.96

133.2

2029.6

1826.7

1644

1479.6

1331.6

1198

Beginning Balance Annual Depreciation WDV @ Ending Balance

Particulars / Years

2011

2012

2013

2014

2015

Beginning Balance

1198.5

1078.6 970.772 873.695 786.326 707.693 636.924 573.231 515.908

Annual Depreciation - WDV @

119 85 119.85

107 86 97.0772 107.86 97 0772 87.3695 87 3695 78.6326 78 6326 70.7693 70 7693 63.6924 63 6924 57.3231 57 3231 51.5908 51 5908

Ending Balance

1078.6

Viral S, 786.326 M.Tech CPM, CEPT 636.924 573.231 515.908 464.317 970.77 Soni 873.695 707.693 University, Ahmedabad

2016

2017

2018

2019

Depreciation Schedule of Depreciation p byy WDV method Particulars / Years

2020

2021

2022

2023

2024

2025

2026

2027

Beginning Balance

464.32

417.89

376.1

338.49

304.64

274.2

246.76

222.08

Annual Depreciation - WDV @

46 432 46.432

41 789 41.789

37 61 37.61

33 849 33.849

30 464 30.464

27 42 27.42

24 676 24.676

22 208 22.208

Ending Balance

417.89

376.1

338.49

304.64

274.17

246.8

222.08

199.87

Particulars / Years

2028

2029

2030

2031

2032

2033

2034

Beginning Balance

199.873

179.886

161.897

145.708

131.137

118.023

106.221

Annual Depreciation WDV @

19.9873

17.9886

16.1897

14.5708

13.1137

11.8023

10.6221

Ending Balance

179.886

Soni Viral S, M.Tech CPM, CEPT 161.897 145.708 University, Ahmedabad131.137

118.023

106.221

95.5988

Schedule of Repayment of Long term Loan (Rs in million) Particulars / Years

2005

2006

2007

2008

2009

2010

2011

1503.5

1403.3

1303

1202.8

1102.6

1002

902.11

Principle Repayment

100.23

100.23

100.23

100.23

100.23

100.2

100.23

Ending Balance

1403.3

1303

1202.8

1102.6

1002.3

902.1

801.87

16.00%

240.56

224.52

208.49

192.45

176.41

160.4

144.34

Perticulars / Years

2012

2013

2014

2015

2016

2017

2018

2019

Beginning Balance

801.87

701.639

601.404

501.17

400.936

300.702

200.468

100.234

Principle Repayment

100.23

100.234

100.234

100.234

100.234

100.234

100.234

100.234

Ending Balance

701.64

601.404

501.17

400.936

300.702

200.468

100.234 -4.00E-13

112.262 96.2247 64.1498 Soni Viral S, M.Tech80.1873 CPM, CEPT

48.1124

32.0749

Beginning Balance

Interest Payment @

Interest Payment @

1503.5

128.3

University, Ahmedabad

16.0375

Project Income Statement (Rs in million) Particulars / Years

2005

2006

2007

2008

2009

208.42

225.44

243.93

316.9

342.88

4 17 4.17

4 51 4.51

4 88 4.88

6 34 6.34

6 86 6.86

212.59

229.95

248.81

323.24

349.74

T ll plaza Toll l O &M

0 64 0.64

0 69 0.69

0 74 0.74

08 0.8

0 86 0.86

Environmental Monitoring

0.16

0.17

0.19

0.2

0.21

Annual Road Maintenance

23

24.73

26.58

28.57

30.72

0

0

0

0

213 5 213.5

23.8

25.59

27.51

29.57

245.29

C. Net Operating Income

188.78

204.36

221.31

293.67

104.45

D Less: Interest Expense D.

240 56 240.56

224 52 224.52

208 49 208.49

192 45 192.45

176 41 176.41

E. Net Profit (or Loss) before Tax & Dep.

-51.78

-20.16

12.82

101.22

-71.96

0

0

0

0

0

-51.78 51 78

-20.16 20 16

12 82 12.82

101 22 101.22

-71.96 71 96

36.76

36.76

36.76

-23.94

64.46

-108.72

A. Operating Income Toll Revenue Ad Advertisement i Revenue R Total Revenue B. Operating Exppense

Majo Maintenance Major Total

F. Taxes (-) G Net profit (or Loss) after Taxes G. H. Less : Depreciation by SLM @ 1.63% I. Net Profit (or Loss) After Taxes & Dep.

36.76 36.76 Soni Viral S, M.Tech CPM, CEPT -88.54 -56.92 University, Ahmedabad

Tax Calculation (Rs in million)

Particulars / Years

2005

2006

2007

2008

2009

A. Net profit (or Loss ) before Tax & Dep.

-51.78

-20.16

12.82

101.22

-71.96

B. Less Dep. By WDV

225.52

202.96

182.67

164.4

147.96

C. Net profit (or Loss) After Dep.

-277.29

-223.12

-169.85

-63.18

-219.92

D. Taxable Income

0

0

0

0

0

E. Taxes

0

0

0

0

0

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Project Income Statement (Rs in million) Particulars / Years

2010

2011

2012

2013

2014

370.99

479.69

516.45

555.93

719.72

7.42

9.59

10.33

11.12

14.39

378.41

489.29

526.78

567.05

734.11

Toll plaza O &M

0.92

0.99

1.06

1.14

1.23

Environmental Monitoring

0.23

0.25

0.27

0.29

0.31

Annual Road Maintenance

33.02

35.5

38.16

41.02

44.1

0

0

0

0

440.03

34.17

36.73

39.49

42.45

485.66

C. Net Operating Income

344.24

452.55

487.3

524.6

248.45

D. Less: Interest Expense

160.37

144.34

128.3

112.26

96.22

E. Net Profit (or Loss) before Tax & Dep.

183.87

308.22

359

412.34

152.22

0

0

0

0

16.207

183 87 183.87

308 22 308.22

359

412 34 412.34

136 02 136.02

36.76 36.76 Soni Viral S, M.Tech CPM, CEPT I. Net Profit (or Loss) After Taxes & Dep. 147.11 271.46 University, Ahmedabad

36.76

36.76

36.76

322.24

375.58

99.26

A. Operating Income Toll Revenue Advertisement Revenue Total Revenue B Operating Exppense B.

Major Maintenance Total

F. Taxes (-) G N G. Nett profit fit ((or LLoss)) after ft T Taxes H. Less : Depreciation by SLM @ 1.63%

Tax Calculation (Rs in million) Particulars / Years

2010

2011

2012

2013

2014

A. Net profit (or Loss ) before Tax & Dep.

183.87

308.22

359

412.34

152.22

B. Less Dep. By WDV

133.16

119.85

107.86

97.077

87.37

50.7

188.37

251.13

315.26

64.85

D. Taxable Income

0

0

0

0

45.397

E. Taxes

0

0

0

0

16.207

C. Net profit (or Loss) After Dep.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Project Income Statement (Rs in million) Particulars / Years

2015

2016

2017

2018

2019

774.76

824.9

1055.62

1123.95

1196.87

15.5

16.5

21.11

22.48

23.94

790.26

841.4

1076.73

1146.43

1220.81

Toll plaza pla a O &M

1 32 1.32

1 42 1.42

1 53 1.53

1 64 1.64

1 76 1.76

Environmental Monitoring

0.33

0.36

0.38

0.41

0.44

Annual Road Maintenance

47.4

50.96

54.78

58.89

63.31

0

0

0

0

440 03 440.03

49.06

52.73

56.69

60.94

505.54

C. Net Operating Income

741.2

788.66

1020.04

1085.49

715.27

p D. Less: Interest Expense

80.19

64.15

48.11

32.07

16.04

E. Net Profit (or Loss) before Tax & Dep.

661.02

724.51

971.93

1053.41

699.23

F. Taxes (-)

145.54

163.37

226.97

248.92

161.84

G. Net profit (or Loss) after Taxes

515.48

561.14

744.96

804.49

537.38

36.76

36.76

36.76

36.76

36.76

708.2

767.73

500.62

A. Operating Income Toll Revenue Advertisement Revenue Total Revenue B. Operating Exppense

Major Maintenance Total

H. Less : Depreciation by SLM @ 1.63% I. Net Profit (or Loss) After Taxes & Dep.

Soni Viral S, M.Tech CPM, CEPT 478.72 524.38 University, Ahmedabad

Tax Calculation (Rs in million) Particulars / Years

2015

2016

2017

2018

2019

A. Net profit (or Loss ) before Tax & Dep.

661.02

724.51

971.93

1053.41

699.23

B LLess Dep. B. D B By WDV

78 633 78.633

70 769 70.769

63 692 63.692

57 323 57.323

51 591 51.591

C. Net profit (or Loss) After Dep.

582.38

653.74

908.23

996.09

647.64

D. Taxable Income

407.67

457.62

635.76

697.26

453.35

E T E. Taxes

145 54 145.54

163 37 163.37

226 97 226.97

248 92 248.92

161 84 161.84

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Project Income Statement (Rs in million) Particulars / Years

2020

2021

2022

2023

2024

Toll Revenue

1530

1620

1717

2186

2315

Ad Advertisement i Revenue R

30 6 30.6

32 4 32.4

34 34 34.34

43 72 43.72

46 3 46.3

1560.6

1652.4

1751.34

2229.72

2361.3

19 1.9

2 04 2.04

2 19 2.19

2 36 2.36

2 53 2.53

Environmental Monitoring

0.47

0.51

0.55

0.59

0.63

Annual Road Maintenance

68.05

73.16

78.65

84.54

90.88

0

0

0

0

631 72 631.72

70.43

75.71

81.38

87.49

725.77

C. Net Operating Income

1490.17

1576.69

1669.96

2142.23

1635.53

D Less: Interest Expense D.

0

0

0

0

0

1490.17

1576.69

1669.96

2142.23

1635.53

F. Taxes (-)

515.42

547.96

582.75

752.69

573.01

G Net profit (or Loss) after Taxes G.

974 76 974.76

1028 73 1028.73

1087 21 1087.21

1389 54 1389.54

1062 52 1062.52

36.76 36.76 Soni Viral S, M.Tech CPM, CEPT I. Net Profit (or Loss) After Taxes & Dep. 938 991.97 University, Ahmedabad

36.76

36.76

36.76

1050.45

1352.78

1025.76

A. Operating Income

Total Revenue B. Operating Exppense T ll plaza Toll l O &M

Majo Maintenance Major Total

E. Net Profit (or Loss) before Tax & Dep.

H. Less : Depreciation by SLM @ 1.63%

Tax Calculation (Rs in million)

Particulars / Years

2020

2021

2022

2023

2024

A. Net profit (or Loss ) before Tax & Dep.

1490.175

1576.693

1669.955

2142.231

1635.529

B. Less Dep. By WDV

46.43174

41.78857

37.60971

33.84874

30.46387

C. Net profit (or Loss) After Dep.

1443.743

1534.904

1632.345

2108.382

1605.066

D. Taxable Income

1443.743

1534.904

1632.345

2108.382

1605.066

Soni Viral S, M.Tech CPM, CEPT 515.4163 547.9609 University, Ahmedabad

582.7473

752.6925

573.0084

E. Taxes

Project Income Statement (Rs in million) Particulars / Years

2025

2026

2027

2028

2029

2453

3122

3310

3508

4458

49.06

62.44

66.2

70.16

89.16

2502.06

3184.44

3376.2

3578.16

4547.16

Toll plaza O &M

2.72

2.93

3.15

3.38

3.64

Environmental Monitoring

0.68

0.73

0.79

0.85

0.91

Annual Road Maintenance

97.7

105.03

112.91

121.37

130.48

0

0

0

0

906 92 906.92

101.1

108.69

116.84

125.6

1041.94

C. Net Operating Income

2400.96

3075.75

3259.36

3452.56

3505.22

D. Less: Interest Expense

0

0

0

0

0

2400.96

3075.75

3259.36

3452.56

3505.22

F. Taxes (-)

847.35

1089.23

1155.66

1225.43

1244.94

G. Net profit (or Loss) after Taxes

1553.6

1986.52

2103.7

2227.13

2260.28

H. Less : Depreciation by SLM @ 1.63%

36.76

36.76

36.76

36.76

36.76

I. Net Profit (or Loss) After Taxes & Dep.

Soni Viral S,1516.84 M.Tech CPM,1949.76 CEPT University, Ahmedabad

2066.94

2190.37

2223.52

A. Operating Income Toll Revenue Advertisement Revenue Total Revenue B. Operating Exppense

Major Maintenance Total

E. Net Profit (or Loss) before Tax & Dep.

Tax Calculation (Rs in million) Particulars / Years

2025

2026

2027

2028

2029

A. Net profit (or Loss ) before Tax & Dep.

2400.956

3075.753

3259.361

3452.558

3505.218

B. Less Dep. By WDV

27.41748

24.67573

22.20816

19.98734

17.98861

C. Net profit (or Loss) After Dep.

2373.538

3051.077

3237.153

3432.571

3487.23

D. Taxable Income

2373.538

3051.077

3237.153

3432.571

3487.23

847.3531 1089.235 Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

1155.664

1225.428

1244.941

E. Taxes

Project Income Statement (Rs in million) Particulars / Years

2030

2031

2032

2033

2034

4717

5009

6375

6759

7164

94.34

100.18

127.5

135.18

143.28

4811.34

5109.18

6502.5

6894.18

7307.28

Toll plaza O &M

3 91 3.91

42 4.2

4 52 4.52

4 86 4.86

5 22 5.22

Environmental Monitoring

0.98

1.05

1.13

1.21

1.31

Annual Road Maintenance

140.26

150.78

162.09

174.25

187.32

0

0

0

0

1302

145.15

156.03

167.74

180.32

1495.84

C. Net Operating Income

4666.19

4953.15

6334.76

6713.86

5811.44

D. Less: Interest Expense

0

0

0

0

0

E. Net Profit (or Loss) before Tax & Dep.

4666.19

4953.15

6334.76

6713.86

5811.44

F. Taxes (-)

1660.05

1763.07

2256.83

2392.64

2070.89

G. Net profit (or Loss) after Taxes

3006.14

3190.07

4077.93

4321.23

3740.55

36 76 36.76

36 76 36.76

36 76 36.76

36 76 36.76

36 76 36.76

4041.17

4284.47

3703.79

A. Operating Income Toll Revenue Advertisement Revenue Total Revenue B. Operating Exppense

Major j Maintenance Total

H LLess : Depreciation H. D i ti b by SLM @ 1.63% 1 63% I. Net Profit (or Loss) After Taxes & Dep.

2969.38 3153.31 Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Tax Calculation (Rs in million) Particulars / Years

2030

2031

2032

2033

2034

A. Net profit (or Loss ) before Tax & Dep.

4666.192

4953.146

6334.763

6713.863

7113.439

B Less Dep B. Dep. By WDV

16 18975 16.18975

14 57077 14.57077

13 1137 13.1137

11 80233 11.80233

10 62209 10.62209

C. Net profit (or Loss) After Dep.

4650.002

4938.575

6321.649

6702.06

7102.817

D. Taxable Income

4650.002

4938.575

6321.649

6702.06

7102.817

E T E. Taxes

1660 051 1660.051

1763 071 1763.071

2256 829 2256.829

2392 636 2392.636

2535 706 2535.706

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Projected Funds Flow Statement (Rs in million) Particulars / Years Sources of funds Govt Contribution Long Term debt Equity Fuding Net Profit after Tax & Dep. Depreciation Totall sources Uses of Funds Govt Contribution C it l Expenditure Capital E dit Private Capitalised Interest Repayment of long term debt

End of 2004

2005

2006

2007

2008

2009

2010

2011

1503.436 1503.511 751.6428

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

3 8 9 3758.59

-88.54 36.76 -51.78 8

-56.92 36.76 -20.16 20 6

-23.94 36.76 12.82 2 82

64.46 36.76 101.22 0 22

-108.72 36.76 -71.96 96

147.11 36.76 183.87 83 8

271.46 36.76 308 22 308.22

1503.436

0

0

0

0

0

0

0

2255.154

0 0

0 0

0 0

0 0

0 0

0 0

0 0

100 23 100.23

100 23 100.23

100 23 100.23

100 23 100.23

100 23 100.23

100 23 100.23

100 23 100.23

100.23 -152.01

100.23 -120.39

100.23 -87.41

100.23 0.99

100.23 -172.19

100.23 83.63

100.23 207.98

-152.01 -120.39 -87.41 0.99 Soni Viral S, M.Tech CPM, CEPT -152.01University, -272.4 -359.82 -358.83 Ahmedabad

-172.19 -531.03

83.63 -447.4

207.98 -239.41

Total Uses Net Cash Flow Net Cash Flow for FIRR on Equity Cummulative Cash flow

-751.643

Projected Funds Flow Statement (Rs in million) Particulars / Years Sources of funds Govt Contribution Long Term debt Equity Fuding Net Profit after Tax & Dep. Depreciation Total sources

2012

2013

2014

2015

2016

2017

2018

2019

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

322.24 36.76 359

375.58 36.76 412.34

99.26 36.76 136.02

478.72 36.76 515.48

524.38 36.76 561.14

708.2 36.76 744.96

767.73 36.76 804.49

500.62 36.76 537.38

0

0

0

0

0

0

0

0

Uses of Funds Govt Contribution Capital Expenditure Private Capitalised Interest Repayment of long term debt

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

100.23

100.23

100.23

100.23

100.23

100.23

100.23

100.23

Total Uses Net Cash Flow

100.23 258.76

100.23 312.1

100.23 35.78

100.23 415.24

100.23 460.91

100.23 644.72

100.23 704.25

100.23 437.15

Net Cash Flow for FIRR on Equity Cummulative Cash flow

258.76 19.35

312.1 35.78 415.24 460.91 Soni Viral S, M.Tech CPM, CEPT 331.45 367.23 782.48 1243.39 University, Ahmedabad

644.72 1888.11

704.25 2592.37

437.15 3029.52

Projected Funds Flow Statement (Rs in million) Particulars P ti l /Y Years Sources of funds Govt Contribution Long Term debt Equity Fuding

2020

2021

2022

2023

2024

2025

2026

2027

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

938 36.76 974.76

991.97 36.76 1028.73

1050.45 36.76 1087.21

1352.78 36.76 1389.54

1025.76 36.76 1062.52

1516.84 36.76 1553.6

1949.76 36.76 1986.52

2066.94 36.76 2103.7

Uses of Funds Govt Contribution

0

0

0

0

0

0

0

0

Capital Expenditure Private Capitalised Interest

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

Repayment of long term debt

0

0

0

0

0

0

0

0

0 974.76

0 1028.73

0 1087.21

0 1389.54

0 1062.52

0 1553.6

0 1986.52

0 2103.7

Soni Viral1087.21 S, M.Tech1389.54 CPM, CEPT 1028.73 1062.52 University, Ahmedabad 5033.01 6120.21 7509.75 8572.27

1553.6 10125.88

1986.52 12112.39

2103.7 14216.09

Net Profit after Tax & Dep. Depreciation Total sources

Total Uses Net Cash Flow

Net Cash Flow for FIRR on Equity Cummulative Cash flow

974.76 4004.27

Projected Funds Flow Statement (Rs in million) Particulars / Years Sources of funds Govt Contribution Long Term debt E it Fuding Equity F di Net Profit after Tax & Dep. Depreciation Total sources Uses of Funds Govt Contribution Capital Expenditure Private Capitalised Interest Repayment of long term debt Total Uses Net Cash Flow Net Cash Flow for FIRR on Equity Cummulative Cash flow

2028

2029

2030

2031

2032

2033

2034

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

2190.37 36.76 2227 13 2227.13

2223.52 36.76 2260 28 2260.28

2969.38 36.76 3006 14 3006.14

3153.31 36.76 3190 07 3190.07

4041.17 36.76 4077 93 4077.93

4284.47 36.76 4321 23 4321.23

3703.79 36.76 3740 55 3740.55

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 2227.13

0 2260.28

0 3006.14

0 3190.07

0 4077.93

0 4321.23

0 3740.55

2260.28 3006.14 3190.07 Soni Viral S, M.Tech CPM, CEPT 18703.5 University,21709.64 Ahmedabad24899.72

4077.93 28977.65

4321.23 33298.88

3740.55 37039.42

2227.13 16443.22

Cashflows for IRR ((Rs in million))

Particulars / Years

End of 2004

2005

2006

2007

2008

2009

2010

2011

Cash flow for FIRR on Project Investment (pre-tax)

-2255.1

188.78

204.36

221.31

293.67

104.45

344.24

452.55

Cash flow for FIRR on Equity Investment

-751.6

-152.01

-120.39

-87.41

0.99

-172.19

83.63

207.98

Particulars / Years

2012

2013

2014

2015

2016

2017

2018

2019

Cash flow for FIRR on Project Investment (pre-tax)

487.3

524.6

248.45

741.2

788.66

1020.04

1085.49

715.27

Cash flow for FIRR on Equity Investment

258.76

312.1 Soni Viral35.78 S, M.Tech 415.24 CPM, CEPT460.91 University, Ahmedabad

644.72

704.25

437.15

Cashflows for IRR (Rs in million) Particulars / Years

2020

2021

2022

2023

2024

2025

2026

Cashflow for FIRR on Project Inv. (pre-tax)

1490.17

1576.69

1669.96

2142.23

1635.53

2400.96

3075.75

Cash flow for FIRR on Equity Investment

974.76

1028.73

1087.21

1389.54

1062.52

1553.6

1986.52

2027

2028

2029

2030

2031

2032

2033

2034

Cashflow for FIRR on Project Inv. (pre-tax)

3259.36

3452.56

3505.22

4666.19

4953.15

6334.76

6713.86

5811.44

Cash flow for FIRR on Equity Investment

2103.7

Viral S, M.Tech CPM, CEPT 2227.13Soni2260.28 3006.14 3190.07 University, Ahmedabad

4077.93

4321.23

3740.55

Particulars / Years

Calculation of FIRR Particulars / Years Concession year

2005

2006

2007

2008

2009

2010

2011

1

2

3

4

5

6

7

-27%

-23%

-12%

-5%

FIRR on Project Investment (pre-tax)

-

-

-

FIRR on Equity Investment

-

-

-

Particulars / Years Concession year

FIRR on Project Investment (pre-tax) FIRR on Equity Investment

-

-

-

-

-

2012

2013

2014

2015

2016

2017

2018

2019

8

9

10

11

12

13

14

15

0%

4%

5%

8%

10%

12%

13%

14%

4%

7%

9%

10%

-6% 0%CEPT Soni Viral S,-5% M.Tech CPM, University, Ahmedabad

Calculation of FIRR Particulars / Years

2020

2021

2022

2023

2024

2025

2026

16

17

18

19

20

21

22

FIRR on Project Investment (pre-tax)

15%

16%

16%

17%

17%

18%

18%

FIRR on Equity Investment

12%

13%

14%

15%

15%

16%

17%

2027

2028

2029

2030

2031

2032

2033

2034

23

24

25

26

27

28

29

30

FIRR on Project Investment (pre-tax)

19%

19%

19%

19%

20%

20%

20%

20%

FIRR on Equity Investment

17%

17%

18%

19%

19%

19%

Concession year

Particulars / Years Concession year

Soni Viral S, M.Tech CPM, CEPT 18% 18% University, Ahmedabad

FIRR Summary

FIRR on Project Investment (pre-tax)

20%

FIRR on Equity Investment

19%

Minimum Concession Period (y (years))

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

30

Year

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad 2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Rs in milliion

Cum. Cash Requirement

12000

10000

8000

6000 Cum. Cash flow

4000

2000

0

Year

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad 2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Rs in milliion

Inflow Vs Outflow

70000

60000

50000

40000

30000

20000

10000

0

Cum. Cash Outflow

Cum. Cash Inflow

Impact of change in Financing policy

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Impact of change in Financing policy „

„

„

„

To analyze effect of change in financing policy of project, Term of Loan is assumed to be shortened to 10 years. There are many financial institutes which provides funding at rate of interest of 14% for specified period. Impact which is analysed by mathematical model of project cash outflow shows that though principal payment part is increased due to shorter payback period of loan, as interest rate is substantially low compared with long term loan interest payment part comes down, hence EMI f repaymentt off lloan iis also for l lower. l This Thi effect ff t can b be observed b d in i cash h outflow tfl projection j ti In this particular case it is found that short term loan demands more liquidity in initial phase but p projects j more profitability p y when analyzed y for long g concession period p of 30 years. y Back ended cash out flow has severe effect on IRR which can be partially taken care by choosing right trade off between Liquidity requirement and IRR.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Schedule of Repayment of Loan Perticulars / Years Beginning Balance

1503.5

Principle Repayment Ending Balance

2005

2006

2007

2008

2009

2010

2011

1503.5

1353.2

1202.8

1052.5

902.1

751.8

601.4

150.4

150.4

150.4

150.4

150.4

150.4

150.4

1353.2

1202.8

1052.5

902.1

751.8

601.4

451.1

126.3

105.2

84.2

Interest Payment @

0.14

210.5

189.4

168.4

147.3

Perticulars / Years

2012

2013

2014

2015

2016

2017

2018

2019

Beginning Balance

451 1 451.1

300 7 300.7

150 4 150.4

0

0

0

0

0

Principle Repayment

150.4

150.4

150.4

0

0

0

0

0

E di Balance Ending B l

300 7 300.7

150 4 150.4

0

0

0

0

0

0

0

0

0

0

Interest Payment @

63.1

Soni Viral S, M.Tech CPM, CEPT 42.1 21 0 University, Ahmedabad

Comparison of Cash Flows with different Financing policy Year

Cum Cash Out flow-2 Cum.

Cum Cash Out flow-1 Cum.

i= 14%,n=10 y

i=16%,n=15 y

2001

0

0

00 2002

248.96 8 96

248.96 8 96

2003

906.62

906.62

2004

1503.44

1503.44

2005

1888.08

1868.03

2006

2253.46

2218.38

2007

2599.71

2554.6

2008

2926.97

2876.86

2009

3448.9

3398.79

2010

3738.67

3693.57

2011

4009.95

3974.87

2012

4262.94

4242.89

2013

4497.84

4497.84

2014

5154.9

5179.96

2015

5203 95 5203.95

5409 43 5409.43

2016 2017

5256.69 Soni Viral S, M.Tech CPM, CEPT 5313.38 University, Ahmedabad

5626.55 5831.59

Comparison of Cash Flows with different Financing policy Year

Cum Cash Out flow Cum. flow-2 2

Cum Cash Out flow Cum. flow-1 1

i= 14%,n=10 y

i=16%,n=15 y

2018

5374.32

6024.84

2019

5879.86

6646.65

2020

5950.29

6717.08

2021

6025.99

6792.78

2022

6107.38

6874.17

2023

6194.87

6961.66

2024

6920.64

7687.43

2025

7021.74

7788.53

2026

7130 43 7130.43

7897 22 7897.22

2027

7247.27

8014.06

2028

7372.87

8139.66

2029

8414 81 8414.81

9181 6 9181.6

2030

8559.96

9326.75

2031

8715.99

9482.78

2032

8883.73

9650.52

2033

9064.05

9830.84

2034

Soni Viral S, M.Tech CPM, CEPT 10559.89 University, Ahmedabad

11326.68

Comparison of Cash Outflows 12000

10000

Rs in millio on

8000

6000

4000

2000

0 1

2

3

4

5

6

7

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Years Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Soni Viral S, M.Tech CPM, CEPT Year University, Ahmedabad 2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Rs in million

Inflow Vs Outflow

70000

60000

50000

40000

30000

Cum. Cash Out flow

Cum. Cash Inflow

20000

10000

0

Analysis of Step Step--in Right action and its viability

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Analysis of StepStep-in Right action and its viability „

„

to analyze the effectiveness of StepStep-in right of financial institute, situation is assumed where due to the unforeseen calamity project had suffered heavyy damage g in year y 2009 and additional maintenance was incurred (Rs ( 250 million). Due to this situation SPV files bankruptcy and becomes defaulter for payment of loan. Financial institute use step in right and takes over project for remaining recovery of fund. Hence remaining fund with additional loss in year 2009 will be considered as an investment to generate further analysis.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Base Data Sheet Particulars / Years

2005

2006

2007

2008

2009

2010

2011

208.42

225.44

243.93

316.9

342.88

370.99

479.69

4.17

4.51

4.88

6.34

6.86

7.42

9.59

212.59

229.95

248.81

323.24

349.74

378.41

489.29

Toll plaza O &M

0.64

0.69

0.74

0.8

0.86

0.92

0.99

Environmental Monitoring

0.16

0.17

0.19

0.2

0.21

0.23

0.25

Annual Road Maintenance

23

24.73

26.58

28.57

30.72

33.02

35.5

0

0

0

0

463.4

0

0

23 8 23.8

25 59 25.59

27 51 27.51

29 57 29.57

495 19 495.19

34 17 34.17

36 73 36.73

C. Net Operating Income

188.78

204.36

221.31

293.67

-145.45

344.24

452.55

D. Less: Interest Expense E. Net Profit ((or Loss)) before Tax & Dep.

240.56

224.52

208.49

192.45

176.41

0

0

-51.78

-20.16

12.82

101.22

-321.86

344.24

452.55

0

0

0

0

0

0

0

-51.78

-20.16

12.82

101.22

-321.86

344.24

452.55

36.76

36.76

36.76

36.76

36.76

36.76

36.76

Soni Viral S, M.Tech CPM, CEPT -88.54 -56.92 -23.94 64.46 University, Ahmedabad

-358.62

307.48

415.79

A. Operating Income Toll Revenue Advertisement Revenue Total Revenue B. Operating Exppense

Major Maintenance Total

F. Taxes (-) G. Net profit (or Loss) after Taxes H Less : Depreciation by SLM @ H. 1.63% I. Net Profit (or Loss) After Taxes & Dep.

Base Data Sheet Particulars / Years

2012

2013

2014

2015

2016

2017

2018

2019

516.45

555.93

719.72

774.76

10.33

11.12

14.39

15.5

526.78

567.05

734.11

790.26

Toll plaza O &M

1.06

1.14

1.23

1.32

1.42

1.53

1.64

1.76

Environmental Monitoring

0.27

0.29

0.31

0.33

0.36

0.38

0.41

0.44

Annual Road Maintenance

38.16

41.02

44.1

47.4

50.96

54.78

58.89

63.31

0

0

440.03

0

0

0

0

440.03

39.49

42.45

485.66

49.06

52.73

56.69

60.94

505.54

C. Net Operating Income

487.3

524.6

248.45

741.2

788.66 1020.04 1085.49

715.27

D. Less: Interest Expense

0

0

0

0

487.3

524.6

248.45

741.2

0

0

40.253

165.58

487.3

524.6

208.19

575.63

609.26

781.05

828.55

549.41

36.76 36.76 36.76 36.76 Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad 450.54 487.84 171.43 538.87

36.76

36.76

36.76

36.76

572.5

744.29

791.79

512.65

A. Operating Income Toll Revenue Advertisement Revenue Total Revenue

824.9 1055.62 1123.95 1196.87 16.5

21.11

22.48

23.94

841.4 1076.73 1146.43 1220.81

B. Operating Exppense

Major Maintenance Total

E. N E Nett P Profit fit ((or LLoss)) b before f T Tax & Dep. F. Taxes (-) G. Net profit (or Loss) after Taxes H. Less : Depreciation by SLM @ 1.63% I. Net Profit (or Loss) After Taxes & Dep.

0

0

0

0

788.66 1020.04 1085.49

715.27

179.4 238.991 256.938 165.852

Comparison of Cashflows year

2009

2010

2011

2012

2013

2014

2015

Cum.Cashflow Cum Cashflow in case of Default

-1461.19

-1153.71

-737.92

-287.38

200.46

371.89

910.76

Cum. Cashflow in case of Successful payment

-1102.5

-841.89

-597.32

-368.79

-156.29

40.17

220.59

year

2016

2017

2018

2019

Cum.Cashflow in case of Default

1483.26

2227.55

3019.34

Cum. Cashflow in case of Successful payment

384.97

533.32

665.63

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

NPV

IRR

3531.99

($84.80)

27%

781.9

($63.90)

13%

Default Case Vs Regular Payment Cashflows 4000 00 4000.00

3000.00

Rs in million R n

2000.00

1000.00

0.00 2009

2010

2011

2012

2013

2014

2015

2016

2017

-1000.00

-2000.00 2000 00

Years Viral S, M.Tech CPM, CEPT Cum.Cashflow in caseSoni of Default Cum. Cashflow in case of Successful payment University, Ahmedabad

2018

2019

Annuity Approach

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Annuity Approach „

„

„

Annuity approach is different from conventional BOT approach as far as uncertainty of cash inflows are concerned. Cash inflows are much more uncertain in conventional BOT projects as traffic data and financial data projected are highly susceptible to alteration due to many factors like political, environmental, economical etc. Annuity approach eliminates the risk arising from uncertainty of cash inflows by providing constant annual amount to SPV and thus providing assured IRR and reducing SPV’s financial risk. This makes project more feasible for loan assessments, hence it reduces the burden of interest rate on SPV. It gives advantage of surplus profit to the government with sharing off fi financial i l risk. i k Analysis by Mathematical model is same except cash inflow projection as compared with conventional BOT approach Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Base Data sheet (Rs in million) Project Costs Evaluation Year (Yr. Of cost estimates) Year construction begins (proj. Yr.'1') Construction period (year) Opening Year (proj. Yr ''4'') Length of Project road (in Km) Length of existing pavement (in Km) Project cost (Rs million) Total project cost - cost of additional 2 lanses for toll plaza Annual Inflation Rate (%) Government contribution in % Operation & Maintainance Costs Toll plaza O & M Cost p.a in phase 1 (Rs million)

2001 2002 2.5 2005 53 53 2001 Values 2001 Values

2762.27 0 7.50% 0.00%

2001 Values

0

Environmental Monitoring Cost p.a. (Rs million) 2001 Values Routine Maintenance p.a. for rigid and flexible pavements and service road (Rs million) 2001 Values Major Maintenance - Flexible pavement and service road (Rs million) - 5th Yr 2001 - 10th Yr - 15th Yr -20th Yr Soni Viral S, M.Tech CPM, CEPT -25th and 30th Yr 2029, 2034 University, Ahmedabad Annuity Payable to private Operator by NHAI (Rs million) per annum

0.12 23 2009 2014 2019 2024

310 310 310 310 310 884.31

Financial data (Rs in million) Toll Rate

1997 (Rs/Km)

1998 (Rs/Km)

1999 (Rs/Km)

2001

2005

(Rs/Km) (Rs/Km)

Car

0

0

0

0

0

LCV

0

0

0

0

0

HCV MAV Bus HCV,MAV,

0

0

0

0

0

Oversized

0

0

0

0

0

Toll indexing - every 3 year @

0.00%

Advertisement Revenue (% of toll Rev.)

0.00%

Project concession period (After Construction)

15

Loan Replayment Period (Years)

9

Loan payback Grace period (Years)

0

Rate of Calculation of interest During Construction (IDC) (%)

16.00%

Interest rate on Long Term Debt (%)

16.00%

Debt : Equity Ratio

2:01

Equity Contribution (%)

33.33%

Loan (%)

66.67%

Tax rate

35.70%

Tax benefit limited to (Years)

20

Tax Holiday (Years)

5

Tax Rebate period (Years)

5

Tax Rebate ((in %))

30.00%

Loss Carry Forward Period (Years) Annual Depreciation - straight line @ Annual Depreciation - WDV @

8

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

1.63% 10.00%

Project Cost Phasing

2001

2002

20.00%

45.00%

35.00%

100.00%

552.45

1243.02

966.79

2762.27

593 89 593.89

1436 47 1436.47

1201 05 1201.05

3231 4 3231.4

Interest during Construction

28.51

207.67

291.01

527.19

Total Landed Cost including IDC

622.4

1644.14

1492.05

3758.59

Project Cost Phasing (%)

Phased Project Cost (2000 prices) Actual Costs in Year of Expediture (current prices)

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

2003 Total

Sources of Financing

Total Landing Cost Including IDC

3758.59

Govt. Contribution

0

Cost ecluding Govt. Govt Contribution

3758 59 3758.59

Equity Contribution

1252.74

Loan Requirement

2505.85

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Calculation of FIRR Particulars / Years Concession C i year

2005

2006

2007

2008

2009

2010

2011

1

2

3

4

5

6

7

FIRR on Project Investment (pre-tax)

-

-

-16.70%

-3.50%

2.80%

8.50%

12.20%

FIRR on Equity Investment

-

-

-24.40%

-8.40%

-3.60%

3.30%

8.00%

Particulars / Years

2012

2013

2014

2015

2016

2017

2018

2019

8

9

10

11

12

13

14

15

FIRR on Project Investment (pre (pre-tax) tax)

14.80%

16.60%

17.30%

18.30%

19.10%

19.70%

20.10%

20.30%

FIRR on Equity Investment

11.40%

Soni Viral S, M.Tech CPM, CEPT 13.90% University, 15.60% Ahmedabad 17.80% 19.30%

20.30%

21.10%

21.40%

Concession year

FIRR Summary

FIRR on Project Investment (pre-tax)

20%

FIRR on Equity Investment

21%

Minimum Concession Period (years)

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

15

Net Cash Flow Statement of NHAI

Particulars / Years

2005

2006

2007

2008

2009

2010

2011

2012

Toll Revenue

208

225

244

317

343

371

480

516

Advertisement Revenue

4.17

4.51

4.88

6.34

6.86

7.42

9.59

10.33

0.64

0.69

0.74

0.80

0.86

0.92

0.99

1.06

188.78

204.36

221.31

293.67

317.95

344.24

452.55

487.30

884.31

884.31

884.31

884.31

884.31

884.31

884.31

884.31

-695.53

-679.95

-663.00

-590.64

-566.36

-540.07

-431.76

-397.01

A. Operating Income

B. Operating Expenses Toll Plaza O&M C. Net Operating Income Less Annuity Payments D. Surplus / Deficit

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Net Cash Flow Statement of NHAI Particulars / Years

2013

2014

2015

2016

2017

2018

2019

556

720

775

825

1056

1124

1197

11.12

14.39

15.50

16.50

21.11

22.48

23.94

1 14 1.14

1 23 1.23

1 32 1.32

1 42 1.42

1 53 1.53

1 64 1.64

1 76 1.76

524.60

688.48

741.20

788.66

1020.04

1085.49

1155.30

884.31

884.31

884.31

884.31

884.31

884.31

884.31

-359.71

-195.83

-143.11

-95.65

135.73

201.18

270.99

A. Operating Income Toll Revenue Advertisement Revenue B. Operating Expenses Toll Plaza O&M C. Net Operating Income Less Annuity Payments D. Surplus / Deficit

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

CONCLUSION & FUTURE SCOPE OF WORK

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

CONCLUSION „

„

„

PPP-BOT Project as compared with industrial projects posses longer PPPgestation period and extended break break--even point. Due to back ended cash flows working g capital p requirement q of projects p j of PPP PPP--BOT structure is highly g y depended on cost of capital and payback period of loan. Risk evaluated for such projects has direct impact on cost of capital. Expected return from PPP PPP--BOT project is about 20 % in concession period of 30 years. If internal rate of return is not achieved as per targeted IRR concession period can be extended up to 3 years.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

CONCLUSION „

„

Case-study ::-- Project :Case:- 4 Lanning of RAJAHMUNDRY – DHARMAVARAM SECTION OF NHNH-5 Calculated FIRR for analyzed project for project investment and FIRR for Equity investment is summarized as below.

Final Summary of IRR for the project :-

FIRR on Project Investment (pre-tax) (pre tax)

20%

FIRR on Equity Investment

19%

Minimum Concession Period (years) Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

30

CONCLUSION „

„

„

As Projected data meets the return requirements project will be considered feasible without viability gap funding. And debt can be raised easily. As per data projected Table - 3.2.7.3 expected IRR is achieved at the end of 28th year, its shows additional absolute profit margin for next two years. Analyzed Income statement of this project shows that net cash inflow is in negative (loss) for initial years and most of the positive portion is back ended and hence impact on NPV of the project is discounted discounted.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

CONCLUSION „

Financing policy for the PPPPPP-BOT project plays a major role in terms of Liquidity Vs Profitability decision. Most of the projects are financed by long term sources and hence cost of debt p paid is also high, g which reduces the profitability. It is necessary as far as liquidity and company’s financial capability is concerned. Financing project with comparatively short term debts cause widening of gap negatively between cash outflows and inflows in initiall period d but b ends d up with h higher h h profitability f b l due d to reduced d d totall cost of debt paid.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

CONCLUSION „

Analysis results for financing policy shows comparison of cash flows with different financing policy, comparable summary of the same is ::-

IRR for the Project with short term loan :-

FIRR on Project Investment (pre-tax)

21%

FIRR on Equity Investment

20%

Minimum Concession Period (years) Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

30

CONCLUSION „

„

„

As huge amount of finances are required to fund the PPPPPP-BOT project and unavailability of required amount of fixed asset which can be mortgaged, Financial institutes are g given step p in right, g in this analysis y in particular p project which is financially viable (Hence not funded under Viability Gap Funding) step in right can be effectively used for loan recovery purpose. Annuity approach can also be used in PPPPPP-BOT projects in such cases cash inflows are fixed and it distributes financial risk and hence concession period can be reduce according to the annuity payment. Annuity in such project structure is awarded keeping IRR at 20 %.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

CONCLUSION „

„

Thought Annuity approach can be proved less risk prone but demands higher amount of working capital in initial years as Government contribution is not available. PPP-BOT projects have long gestation period and hence prone to number of PPPrisks, back ended cash flows have major impact on returns of the project. Any delay caused in such project will lead to reduction of returns by reducing tollable (Inflow) period and it shifts the cash inflow which already is in back ended position.

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Future Scope of work „

There is a wide future scope for this topic, Some of the key points are as follows:-follows: ¾

¾

¾

¾

¾

Design of integrated system which projects need of cash flow in detail during construction period. Modified loan Repayment model which can be parallel with cash inflows projected. Working out alternative ways of increasing cash inflows to reduce capital requirement for PPP PPP--BOT projects projects. Impact of economic parameters on cash inflowsinflows-outflows and finally on return of the project. Calculation & Impact of Economic Rate of Return on PPPPPP-BOT project project’ss performance. Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad

Soni Viral S, M.Tech CPM, CEPT University, Ahmedabad