ANALYZING THE FINANCING STRUCTURE OF INFRASTRUCTURE PROJECTS WITH SPECIAL REFERENCE TO HIGHWAYS IN THE SPHERE OF PUBLIC PRIVATE PARTNERSHIPS

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 Indias largest road development program in its history. This project began in the last decade and acknowledged the importance of private sector in Indias 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.

LIST OF CONTENTS

Executive Summary.................................................................................................... 1 List of contents........................................................................................................... 2 ABBREVIATIONS.......................................................................................................... 5 Objective.................................................................................................................... 7 1.INTRODUCTION........................................................................................................ 8 1.1Project Finance.................................................................................................. 8 1.1.1Introduction................................................................................................. 8 1.2 Forms of Project Financing (Especially in Highway sector)..............................10 1.2.1 Traditional Approach.................................................................................10 1.2.2 Current Scenario....................................................................................... 10 1.3 Public Private Partnerships.............................................................................. 11 1.3.1 The key drivers for PPP are:......................................................................11 1.3.2 Misconceptions about PPPs.......................................................................12 1.3.3 Principles of PPP........................................................................................ 13 The following key principles will underpin all PPP actions in the highway sector: ........................................................................................................................... 13 2

1.4 Government Initiative...................................................................................... 15 1.4.1 Current Scenario....................................................................................... 16 1.5 Modes of Financing a PPP Project in Highway Sector.......................................19 1.6 Company Profile ............................................................................................. 22 1.6.1 Infrastructure Leasing & Financial Services Limited (IL&FS).....................22 1.6.2 Services ................................................................................................... 22 1.6.3 IL&FS Financial Services Limited ..............................................................24 1.6.4 Key Strengths of IFIN are:..........................................................................25 1.6.5 Sources of funds of IL&FS..........................................................................26 Methodology............................................................................................................. 27 2. DEHRADUN HARIDWAR PROJECT LIMITED............................................................28 2.1 Project Details................................................................................................. 28 2.2 Background..................................................................................................... 29 2.3 Sponsors Profile............................................................................................... 30 2.4 Concession Agreement.................................................................................... 32 2.5Project Cost and Means of Financing................................................................36 2.6 Project Implementation Framework.................................................................41 3. FINANCIAL MODEL................................................................................................ 42 3.1 Output and Sensitivity..................................................................................... 42 3.2 Assumptions.................................................................................................... 46 3.3 Phasing............................................................................................................ 57 3.4 Working Capital.................................................................................................. 70 3.5 Revenue and Expenditure............................................................................... 71 3.6 Depreciation and Tax...................................................................................... 76 3.7 Financial.......................................................................................................... 85 3.8 Ratios............................................................................................................ 100 3

REFERENCES........................................................................................................... 103 3. FINANCIAL MODEL..46 3.1Output and Sensitivity.............46 3.2 Assumptions.49 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

ABBREVIATIONS

BOT COD CA DBFOT DER DSCR DSRA EBIDTA EA FY DHPL EIEL OJSC-SIBMOST IE

Build Operate & Transfer Commercial Operation Date Concession Agreement Design, Build, Finance, Operate & Transfer Debt Equity Ratio Debt Service Coverage Ratio Debt Service Reserve Account Earnings Before Interest Depreciation Taxation and Amortization Escrow Account Financial Year Dehradun Highways Project Limited ERA Infra Engineering Limited OJSC-SIBMOST (Technical Partner) Independent Engineer 5

IFIN IL&FS IRR KM LOA LoC MAT Cr Bn MoEF MOU NH NHAI NHDP O&M PAT PBT PMC RFP RFQ Rs SPV TL

IL&FS Financial Services Limited Infrastructure Leasing & Financial Services Limited Internal Rate of Return Kilo Meter Letter of Award Letter of Credit Minimum Alternate Tax Crores Billion Ministry of Environment and Forests Memorandum of Understanding National Highway National Highways Authority of India National Highways Development Programme Operation and Maintenance Profit After Tax Profit Before Tax Project Management Consultant Request for Proposal Request for Qualification Indian Rupees Special Purpose Vehicle Term Loan

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.

1. 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 projects 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.

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.

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) 10

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 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 (nongovernment) 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. 3. 4. Need for capital investment Innovation in service delivery and 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

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6.

Optimal transfer of risks to the entity best suited to manage the risks to deliver value for money through synergies such as: Impact - time overrun, cost overruns, change of scope, defective designs, leakage of revenues, high maintenance costs Design Financing Construction Operations and Maintenance

7.

Efficiency gain by transferring responsibilities Appropriate technology Innovative design solutions and spread of best practices Project management Establishing standards through the life cycle of a project

8. 9.

Rigorous enhancement in the bankability of the project and 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. 12

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.

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 13

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 BuildOperate-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 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 Indias 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 Indias economic growth The Government is planning to increase spends on road development substantially with funding already in place based on a cess on fuel 14

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.

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 Quadrilateral and other high traffic stretches. in Golden

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 fourlaning 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.

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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. 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 16

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(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-ChennaiKolkata, 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) 17

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) 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:

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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)

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 20

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 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 broadbased 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
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engineering, finance, risk management and environmental-social management, all of which are strategic to the infrastructure development activity:

IL & FS Group Infrastructure Services Project Development & Implementation

Cluster Management Environmental & Social

Financial Services
Project Finance Private Equity

Investment Banking
Trust & Fiduciary Depository, Custodian and

Education/ Technology

Logistic & Fleet Management Facility Management

professional clearing service

Auto Infrastructure

Table 1: List of various infrastructure and financial services of IL&FS Group Companies Infrastructure Services IL&FS Infrastructure Development Corporation Limited
IL&FS Transportation Networks

Financial Services
IL&FS Investment Managers Limited

IL&FS Trust Company Limited ORIX Auto Infrastructure Services

Limited
IL&FS Ecosmart Limited IL&FS Education and Technology

Limited
IL&FS Securities Services Limited IL&FS Financial Services Limited IL&FS Financial Services Limited

Services Limited
New Tirupur Area Development

Corporation Limited
Noida Toll Bridge Company Limited

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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 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 24

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, 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. 25

 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 Cooperation 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 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:

Adityapur Industrial Water Supply Scheme Ahmedabad-Mehsana Toll Road Ambur Vaniyambadi Effluent Program International Convention Centre Complex at Thiruvananthapuram International Convention Centre, Hyderabad IT Corridor Project

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Artisan Clusters Assam State Electricity Board Bihar State Electricity Board Container Transhipment Terminal Delhi Cab Radio Taxi Scheme Project Delhi Cab Launches Forshe Radio Taxi Service Delhi-Noida Toll Bridge Dighi Port Project East Coast Road East Godavari Power Plant For-She Mumbai Cab World Class Exclusive Ladies Taxi Service Gangavaram Port Haldia Integrated Infrastructure Development Program Howrah Foundry Cluster Hydro Projects Industrial Clusters Info Nepal Transmission Lines Initiatives Under Industrial Infrastructure Upgradation Scheme Integrated Urban Infrastructure Development in Nanded

Jal Mahal, Jaipur Jawaharlal Nehru National Urban Renewal Mission Joint Venture with Coal India Limited Joint Venture with Power Grid Karimnagar Thermal Power Project Karnataka Toll Bridges Kotakatta-Kurnool Road Project Krishnapatnam Thermal Power Project Ludhiana Bus Terminal Project Ludhiana Textile Cluster Maha Mumbai Integrated SEZ Project Maharashtra State Electricity Board National Games Village, Hyderabad North Karnataka Expressway Nuclear Power Corporation of India Limited ONGC Tripura Power Project Punjab Roads Quila Nabha 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 27

Project background in reference to the bidding process Sponsors profile Concession Agreement Project cost and financing Project approvals and clearances

4. The projects financial model was studied in detail.

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 NH72 (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 28

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 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 29

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

After an evaluation of bids, NHAI accepted the bid of the consortium of EIEL & OJSCSIBMOST 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: 30

Financial Year

2007 (Audited)

2008 (Audited) 1464.48 293.10 209.73 121.37 20.01% 23.10 443.11 489.59 1447.09 710.15 218.49 1411.18 339.73 1791.68 3.66 4.15

2009 (Audited) 2376.90 413.61 257.07 202.62 17.40% 28.71 850.18 878.89 1796.35 1200.97 176.14 1927.99 549.84 2346.19 2.67 3.51

Net Sales EBITDA Profit before tax Profit after taxes EBITDA Margin (%) Equity Share capital Reserves & Surplus Tangible Net Worth(TNW) Total Loans Net Fixed assets Investments Current Assets Current Liabilities Total Outstanding Liabilities (TOL) TOL/TNW Current Ratio

763.02 140.59 111.41 79.12 18.42% 18.61 272.07 304.96 814.03 369.98 125.20 784.06 136.10 950.13 3.12 5.76

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 31

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 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. 32

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 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 33

4. Obligations of the Concessionaire The Concessionaire shall: a. procure finance for and undertake design, engineering, procurement, construction, operation and maintenance of Project Highway 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 34

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 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

35

2.5

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 EPC Cost Preliminary & Pre-Operative Cost Interest during construction(IDC) Total

Rs Cr 630.00 9.29 52.12 691.41

The detailed break-up of each element of project cost is as under:

Engineering, Procurement and Construction Cost (EPC)

36

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 Construction Cost Escalation Consultancy & Maintenance Expenses during Construction Total

Rs. Crores 583.53 36.50 9.97 630.00

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 Equity share capital 37

Rs. Cr 5.00

Particulars

Rs. Cr

Equity Like Instruments Sponsors Sub- Debt including Accrued Interest Total Sponsor Contributions (A) Term Loan-Senior Debt Total Debt(B) Total

102.75 55.21 162.96 528.45 528.45 691.41

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.

38

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.

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) Qtr No. 1 2 3 4 5 6 Senior Debt Drawdown 56.52 63.26 66.47 67.77 69.08 80.21 SubDebt Drawdown 8.84 8.82 6.42 6.55 7.60 Equity & Equity Like Instruments 26.94 11.03 13.81 14.08 16.35 39 Total Capital Expenditure 83.46 83.13 75.29 88.00 89.71 104.16

Qtr No. 7 8 Total

Senior Debt Drawdown 81.77 43.37 528.45

SubDebt Drawdown 7.75 4.12 50.10

Equity & Equity Like Instruments 16.67 8.87 107.75

Total Capital Expenditure 106.19 56.36 686.30

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.

40

2.6 Project Implementation Framework

The project implementation framework is illustrated in the figure below:

Concession Agreement NHAI

Sponsors EIEL & SIBMOST 41

Lenders Banks/ FIs

Dehradun Highways Project Limited (DHPL)

O&M CONTRACT EIEL

DEVELOPMENT CONTRACT 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:

Description
Concession Agreement Financial Closure Commercial Operations Date (COD) Project Period

Period
20 Years from Appointed Date Within 180 Days from the Date of Signing the Concession Agreement 2 Years (730 days) from the date of Financial Closure 20 Years from the Appointed Date including Construction

Date 24-Feb10 23-Aug10 23-Aug12 23-Aug30

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

42

Particulars Project Cost EPC Cost Preliminary and PreOperative Expenses IDC-Senior Debt IDC-Sponsor Debt Total Project Cost

Rs. Crores 630.00 9.29 47.01 5.11 691.41

MOF

Means of Finance Debt Sub-Debt-Lenders Equity Sub Debt-Sponsors Total Debt Equity Sponsor Sub-Debt Accrued int. on Sponsor debt Total

77.0% 0.0% 15.7% 7.3% 100.00% 528.45 107.75 50.10 5.11 691.41

Financing Rate of Interest Door To Door Constn Period + Moratorium Repayment Period Repayment Starts on Repayment Ends on Balance Sheet Check

10.0% 15.00 2.50 12.50 23-Mar13 23-Mar25 Ok 43

Project Cost/MOF Check IDC Check Sensitivity Analysis

Ok Ok

% Particulars Base Case ROI Base case Increase by Project IRR (Post Tax) 0.00% 10.36% 1.00 %

Sensiti vity

Chan ge Facto r

Min. DSCR 1.27

Avg. DSCR 1.31 1.25

0%

0% 1.18

Project IRR (Pre Tax) 0.00% 10.72%

EIRR 0.00% 13.90 %

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 44

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: Rate of Interest Construction Period Repayment Period Repayment date Checks of the balance sheet Checks of the project cost Interest during construction checks

45

3.2 Assumptions
100000 00

Figures in Rs. Assumptions Key Dates Particulars Date of Concession Time for Financial Closure (FC) Construction Starts from COD Concession Period Ends from FC First Annuity Period after COD Last Annuity period First Financial Year Ending Last Financial Year No.of Days/Year Financing Senior Debt Sub-Debt-Lenders Equity Sub Debt-Sponsors Total Debt & Equity Rate of Interest 46

Crores

Days/Months

180 Days

730 Days 240 months 180 Days 210 months

Date 24-Feb10 23-Aug10 24-Aug10 23-Aug12 23-Aug30 19-Feb13 19-Aug30 31-Mar11 31-Mar31 365

FY 2010 2011 2011 2013 2031 2013 2031 2011 2031

% % % %

77.0% 0.0% 15.7% 7.3% 100.0% 10.00%

Refinancin g

% of Senior Debt reqd. Amount of Refinance Rate of Interest Reapayment period Repayment Starts on

22.00% 116.26 10% 2 Years 23-Sep-25 30Sep-25 30Sep-27 Years Years Years Years Date 2 0.50 12.50 23-Mar13 23-Mar25 31Mar-13 31Mar-25

Tenor

Repayment ends on 23-Sep-27 Door To Door Tenor Construction Period Moratorium after COD Repayment Period Repayment Starts Repayment Ends on

15.00

Upfront Equity Financing Chages Interest Rate on WC/STL DSRA - BG Commission Rate

25% 0.80% 12.00% 0%

Sub DebtLenders

Rate of Interest Repayment starts Repayment Ends on

0.00% 23-Jun25 23-Dec25

47

Sub DebtSponsors

Rate of Interest Repayment starts Repayment Ends on

12.00% 23-Jun25 23-Dec25

Project Cost

EPC Cost Including Escalation Preliminary Expenses IDC-Senior Debt Contingency Total Project Cost IDC-Sub Debt Total Project Cost

Crores Crores Crores Crores Crores Crores

630.00 9.29 47.01 686.30 5.11 691.41

Rs. Crores MOF Senior Debt Sub-Debt-Lenders Equity Sub Debt-Sponsors Interest on Sub Debt Sponsors 48 528.45 107.75 50.10 5.11

Total Means of Finance

691.41

Prelims & Pre-Ops

Finance Charges, BG Commn, Audit Fee, LLC & LE Fee, Project Insurance etc Preliminary Exp, Project Insurance, Establishment Exp etc. Total Performance BG

Crores Crores Crores Crores

5.47 3.82 9.29 23.90

Particulars Equity Debt Sub Debt-Sponsors Sub Debt-Lenders Total Depreciation Method Tax Depreciation - WDV Tax rate Mat Rate Service Tax Rate

Upfront 27 21 13 60 Useful Life % % % %

Balanc e 81 508 38 626 5.56% 10% 33% 20% 11%

Accounting:

Capex Related

Contingency

0%

Operations:

Annuity - Semi Annually Routine Maintenance/Km p.a. 49

53.22 Rs. Crores

0.24 Establishment Cost/p.a. MMR/km Escallation of O&M Periodic Maintenance from Operations Total Length Expenses Based on FY Rs. Crores Rs. Crores % Years Km 0.5 0.77 5.0% 5 39.025 2013

Repayment Schedule

Repayment Schedule - Senior Lenders

23-Mar-13 31-Mar-13 0.75%

Quarter End 100.000% Semi Annually (15 Years) Repayment Schedule - Sub Debt

23-Jun13 30-Jun13

23Sep-13 30Sep-13 1.25% 23Sep-13 30Sep-13 0% 0% 0%

23-Mar-13 31-Mar-13 0% 0% 0%

100.00% Sponsor Sub-debt Repayment% 0.00% Lenders Sub-debt Repayment % 100.00% Refinancing Debt-Repayment%

23-Jun13 30-Jun13 0% 0% 0%

23-Dec-13 31-Dec-13

23-Mar-14 31-Mar-14 2.25%

23-Jun-14 30-Jun-14

23Sep-14 30Sep-14 2.00% 23Sep-14 30Sep-14 0% 0% 0%

23Dec-14 31Dec-14

23Mar-15 31Mar-15 2.25% 23Mar-15 31Mar-15 0% 0% 0%

23-Jun15 30-Jun15

23Sep-15 30Sep-15 2.25% 23Sep-15 30Sep-15 0% 0% 0%

23-Dec-13 31-Dec-13 0% 0% 0%

23-Mar-14 31-Mar-14 0% 0% 0%

23-Jun-14 30-Jun-14 0% 0% 0% 50

23Dec-14 31Dec-14 0% 0% 0%

23-Jun15 30-Jun15 0% 0% 0%

23Dec-15 31Dec-15

23Mar-16 31Mar-16 2.25% 23Mar-16 31Mar-16 0% 0% 0% 23Sep-18 30Sep-18 2.25% 23Sep-18 30Sep-18 0% 0% 0% 23Mar-21 31Mar-21 3.75% 23Mar-21 31Mar-21 0% 0% 0% 23-Jun23

23-Jun16 30-Jun16

23Sep-16 30Sep-16 2.00% 23Sep-16 30Sep-16 0% 0% 0% 23Mar-19 31Mar-19 4.00% 23Mar-19 31Mar-19 0% 0% 0% 23Sep-21 30Sep-21 4.00% 23Sep-21 30Sep-21 0% 0% 0% 23Dec-23

23Dec-16 31Dec-16

23Mar-17 31Mar-17 3.00% 23Mar-17 31Mar-17 0% 0% 0% 23Sep-19 30Sep-19 3.25% 23Sep-19 30Sep-19 0% 0% 0% 23Mar-22 31Mar-22 4.00% 23Mar-22 31Mar-22 0% 0% 0% 23-Jun24

23-Jun17 30-Jun17

23Sep-17 30Sep-17 2.00% 23Sep-17 30Sep-17 0% 0% 0% 23Mar-20 31Mar-20 3.50% 23Mar-20 31Mar-20 0% 0% 0% 23Sep-22 30Sep-22 4.00% 23Sep-22 30Sep-22 0% 0% 0% 23Dec-24

23Dec-17 31Dec-17

23Mar-18 31Mar-18 3.50% 23Mar-18 31Mar-18 0% 0% 0% 23Sep-20 30Sep-20 3.50% 23Sep-20 30Sep-20 0% 0% 0%

23Dec-15 31Dec-15 0% 0% 0% 23-Jun18 30-Jun18

23-Jun16 30-Jun16 0% 0% 0% 23Dec-18 31Dec-18

23Dec-16 31Dec-16 0% 0% 0% 23-Jun19 30-Jun19

23-Jun17 30-Jun17 0% 0% 0% 23Dec-19 31Dec-19

23Dec-17 31Dec-17 0% 0% 0% 23-Jun20 30-Jun20

23-Jun18 30-Jun18 0% 0% 0% 23Dec-20 31Dec-20

23Dec-18 31Dec-18 0% 0% 0% 23-Jun21 30-Jun21

23-Jun19 30-Jun19 0% 0% 0% 23Dec-21 31Dec-21

23Dec-19 31Dec-19 0% 0% 0% 23-Jun22 30-Jun22

23-Jun20 30-Jun20 0% 0% 0% 23Dec-22 31Dec-22

23Dec-20 31Dec-20 0% 0% 0% 23Mar-23

23-Jun21 30-Jun21 0% 0% 0% 23Sep-23

23Dec-21 31Dec-21 0% 0% 0% 23Mar-24 51

23-Jun22 30-Jun22 0% 0% 0% 23Sep-24

23Dec-22 31Dec-22 0% 0% 0% 23Mar-25

31Mar-23 4.00% 23Mar-23 31Mar-23 0% 0% 0%

30-Jun23

30Sep-23 4.25%

31Dec-23

31Mar-24 4.50%

30-Jun24

30Sep-24 4.50%

31Dec-24

31Mar-25 27.00 % 23Mar-25 31Mar-25 0% 0% 0%

23-Jun23 30-Jun23 0% 0% 0%

23Sep-23 30Sep-23 0% 0% 0%

23Dec-23 31Dec-23 0% 0% 0%

23Mar-24 31Mar-24 0% 0% 0%

23-Jun24 30-Jun24 0% 0% 0%

23Sep-24 30Sep-24 0% 0% 0%

23Dec-24 31Dec-24 0% 0% 0%

23-Jun25 30-Jun25

23Sep-25 30Sep-25 0.00% 23Sep-25 30Sep-25 100% 0% 24% 23Dec-27 31Dec-27

23Dec-25 31Dec-25

23Mar-26 31Mar-26 0.00% 23Mar-26 31Mar-26 0% 0% 24% 23-Jun28 30-Jun28

23-Jun26 30-Jun26

23Sep-26 30Sep-26 0.00% 23Sep-26 30Sep-26 0% 0% 23% 23Dec-28 31Dec-28

23Dec-26 31Dec-26

23Mar-27 31Mar-27 0.00% 23Mar-27 31Mar-27 0% 0% 28% 23-Jun29 30-Jun29

23-Jun27 30-Jun27

23-Jun25 30-Jun25 0% 0% 0% 23Sep-27 30Sep-27 0.00% 23Sep-27 30Sep-27 0% 0%

23Dec-25 31Dec-25 0% 0%

23-Jun26 30-Jun26 0% 0%

23Dec-26 31Dec-26 0% 0%

23-Jun27 30-Jun27 0% 0%

23Mar-28 31Mar-28 0.00% 23Mar-28 31Mar-28 0% 0%

23Sep-28 30Sep-28 0.00% 23Sep-28 30Sep-28 0% 0%

23Mar-29 31Mar-29 0.00% 23Mar-29 31Mar-29 0% 0%

23Sep-29 30Sep-29 0.00% 23Sep-29 30Sep-29 0% 0%

23Dec-27 31Dec-27 0% 0%

23-Jun28 30-Jun28 0% 0%

23Dec-28 31Dec-28 0% 0%

23-Jun29 30-Jun29 0% 0%

52

23Dec-29 31Dec-29

23Mar-30 31Mar-30 0.00% 23Mar-30 31Mar-30 0% 0%

23-Jun30 30-Jun30

23Sep-30 30Sep-30 0.00% 23Sep-30 30Sep-30 0% 0%

23Dec-30 31Dec-30

23Mar-31 31Mar-31 0.0% 23Mar-31 31Mar-31 0% 0%

23-Jun31 30-Jun31

23Sep-31 30Sep-31 0.0% 23Sep-31 30Sep-31 0% 0%

23Dec-31 31Dec-31

23Dec-29 31Dec-29 0% 0%

23-Jun30 30-Jun30 0% 0%

23Dec-30 31Dec-30 0% 0%

23-Jun31 30-Jun31 0% 0%

23Dec-31 31Dec-31 0% 0%

23Mar-32 31Mar-32 0.0% 23Mar-32 31Mar-32 0% 0%

23-Jun32 30-Jun32

23-Jun32 30-Jun32 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 53

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: i. ii. iii. iv. v. Date of concession Time of financial closure Date of commencement of construction Commercial operation Date 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. ii. iii. iv. Tenor Senior Debt: Sub Debt Lenders Equity Sub Debt Sponsors

54

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 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.

55

 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. ii. iii. iv. v. Finance charges Audit Fee Limited Liability Company Fee Limited Entity Fee 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. ii. iii. iv. v. vi. vii. viii. Equity Debt Sub Debt Sponsors Sub Debt Lenders Depreciation Method Tax Rate MAT Rate Service Tax Rate 56

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. ii. Senior Lenders Sub Debt

The repayment starts in the year 2013 i.e. the year when the operations or the year when highway becomes operational.

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 % of Completion as per CA 29-Jun11 35% 25-Jan12 70% 22-Aug12 100% 1-Oct10 3119-Feb-11 15%

Quarter Begins Quarter Ending 57

Total

1-Jul-10 30-Sep-

FY % Completion of EPC % Completion of Preliminary & Pre Operative exp % Completion of Contingency EPC Costs Preliminary Expenses Interest During Construction Contingency Total Project Cost 1-Jan11 31-Mar11 2011 11.00% 6.25% 1-Apr11 30-Jun11 2012 13.00% 6.25% 1-Jul11 30Sep-11 2012 13.00% 6.25% 1-Oct11 31Dec-11 2012 13.00% 6.25% 630.00 9.29 47.01 686.30 1-Jan12 31-Mar12 2012 15.00% 6.25% 1-Apr12 30-Jun12 2013 15.00% 6.25%

2010

10 2011 1.25% 55.00%

Dec-10 2011 11.00% 5.00%

7.88 5.11 -

69.30 0.46 0.71

12.98 1-Jul12 30Sep-12 2013 7.75% 2.50%

70.47

1-Oct12 31Dec-12 2013 0.00% 0.00%

69.30 0.58 2.20

81.90 0.58 3.82

81.90 0.58 5.50

81.90 0.58 7.21

94.50 0.58 9.08

94.50 0.58 11.10

48.82 0.23 7.38

72.08

86.31

87.98

89.69

104.16

106.18

56.44

12.98 83.45 12%

Cum Funding Requirement Cum % of Completion Equity Drawdown Upfront Equity Balance Equity Total Equity Infusion 58 26.94 80.81 107.75 -

12.98 12.98

13.95 13.95

155.54 241.84 329.83 419.52 523.68 629.86 686.30 686.30 23% 35% 48% 61% 76% 92% 100%

11.03 11.03

13.81 13.81

14.08 14.08

16.35 16.35

16.67 16.67

8.86 8.86

Cumulative Equity Debt Senior Debt 528.45

12.98

26.94

56.52

26.94

37.97

51.78

65.86

82.22

98.89

107.75

107.75

63.25

66.46

67.75

69.06

80.20

81.76

43.46

Cumulative Senior debt

56.52

119.76

186.22

253.97

323.03

403.23

484.99

528.45

528.45

Sub Debt-Sponsors Cumulative sub debt-Sponsors

50.10 -

8.84 8.84

8.82 17.65

6.42 24.08

6.55 30.62

7.60 38.23 59

7.75 45.98

4.12 50.10

50.10

Total Funds drawn Check

12.98 -

70.47 -

72.08 -

86.31 -

87.98 -

89.69 -

104.16 -

106.18 -

56.44 -

2011 1-Jul-10 30-Sep10 2011 1-Oct10 31-Dec10 56.52

Debt Schedule- Senior Debt Period beginning period Closing Beg. Balance Debt d/d during the period Repayment Schedule End Balance Interest IDC Interest to P&L 47.01 461 528.45 -

56.52 0.71 0.71 -

2011 1-Jan11 31-Mar11 56.52 63.25

2012 1-Apr11 30-Jun11 119.76 66.46

2012 1-Jul-11 30-Sep11 186.22 67.75

2012 1-Oct11 31Dec-11 253.97 69.06

2012 1-Jan12 31-Mar12 323.03 80.20

2013 1-Apr12 30-Jun12 403.23 81.76

2013 1-Jul-12 30-Sep12 484.99 43.46

2013 1-Oct12 31-Dec12 528.45 -

119.76

186.22

253.97

323.03

403.23 60

484.99

528.45

528.45

2.20 2.20 2013 1-Jan13 31-Mar13 528.45 3.96 524.48 13.16 13.16

3.82 3.82 2014 1-Apr13 30-Jun13 524.48 524.48 13.11 13.11

5.50 5.50 2014 1-Jul-13 30-Sep13 524.48 6.61 517.88 13.03 13.03

7.21 7.21 2014 1-Oct13 31Dec-13 517.88 517.88 12.95 12.95

9.08 9.08 2014 1-Jan14 31-Mar14 517.88 11.89 505.99 12.80 12.80

11.10 11.10 2015 1-Apr14 30-Jun14 505.99 505.99 12.65 12.65

12.67 7.38 5.29 2015 1-Jul-14 30-Sep14 505.99 10.57 495.42 12.52 12.52

13.21 13.21 2015 1-Oct14 31Dec-14 495.42 495.42 12.39 12.39 2015 1-Jan15 31-Mar15 495.42 11.89 483.53 12.24 12.24

Sub Debt-Sponsors Period beginning period Closing Beg. Balance Debt d/d during the period Repayment Schedule Repayment of Interest 61 50.10 50.10 -

2011 1-Jul-10 30-Sep10

2011 1-Oct10 31Dec-10 -

2011 1-Jan11 31-Mar11 8.84

End Balance Interest IDC Interest Accrued to P&L Int on Sponsor debt macro Cum Int on Sponsor debt 5.11 78 83

8.84 0.13 0.13 0.13 0.13

IDC Macro - Senior Debt

47.01

IDC Macro-Sub Debt-Lenders

IDC Macro-Sub Debt-Sponsors

5.11

2012 1-Apr11 30-Jun11 8.84 8.82

2012 1-Jul-11 30-Sep11 17.65 6.42

2012 1-Oct11 31Dec-11 24.08 6.55

2012 1-Jan12 31-Mar12 30.62 7.60

2013 1-Apr12 30-Jun12 38.23 7.75

2013 1-Jul-12 30-Sep12 45.98 4.12

2013 1-Oct12 31-Dec12 50.10 -

17.65 0.40 0.40 0.40 0.53

24.08 0.63 0.63 0.63 1.16

30.62 0.82 0.82 0.82 1.98

38.23 1.03 1.03 1.03 3.01

45.98 1.26 1.26 1.26 4.27 62

50.10 1.44 0.84 0.60 1.44 5.71

50.10 1.50 1.50 1.50 7.22

11

Project Cost & MOF Financial Year wise EPC Cost Preliminary & Preoperatives IDC-Senior Debt IDC-Sponsor Debt Total Cost 2013 143.33 0.81 18.48 2.10 2014 2015 2016 691.41 2017 2018 -

2010

2011 146.48 6.15 2.91 0.13 155.67

2012 340.20 2.32 25.62 2.88 371.02

164.72 Means of Finance Senior Debt

Senior Debt OB Draw Down Repayment Senior Debt CB 63

119.76 119.76

119.76 283.47 403.23

403.23 125.22 3.96 524.48

524.48 18.50 505.99

505.99 22.46 483.53

483.53 23.78 459.75

459.75 26.42 433.33

433.33 29.06 404.26

404.26 33.03 371.23

371.23 35.67 335.56

335.56 38.31 297.25

297.25 42.28 254.98

254.98 42.28 212.70

212.70 46.24 166.46

166.46 166.46 -

Sub debt-Sponsors Sub Debt OB Draw Down Repayment Repayment on Interest Sub Debt CB 50.10 50.10 8.84 8.84 8.84 29.39 38.23

38.23 11.87 50.10

50.10 50.10

50.10 50.10

50.10 50.10

50.10 50.10

50.10 50.10

50.10 50.10

50.10 50.10

50.10

50.10

50.10

50.10

50.10 64

50.10

50.10

50.10

50.10

50.10

50.10

50.10 83.12 -

Equity Equity During the Year Total Means of Finance MOF Check Refinancing Schedule Sub Debt OB Draw Down Repayment Repayment on Interest Sub Debt CB 116.26 116.26 -

26.94 156 -0.13

55.28 368 -2.88

25.53 163 -2.10

Then again from 2015: 116.26 116.26 116.26 56.12 83.12 60.13 60.13 60.13 0.00 0.00 0.00

65

FY

2010

2011

2012

2013

2014

CWIP

155.67

371.02

164.72

Cost of Additions

691.41

FY Interest to P&L Senior Debt Refinancing Debt Sub Debt-Lenders Sub Debt-Sponsors Cum Sub Debt InterestSponsors -

2010

2011

2012

2013

2014

31.66 3.61 3.61

51.89 6.01 9.62

2015

2016

2017

2018

2019

2020

2021

2022

49.79 6.01 15.63 2023

47.46 6.01 21.64 2024

45.12 6.01 27.66 2025

42.44 6.01 33.67 2026

39.42 6.01 39.68 2027

35.82 6.01 45.69 2028

32.15 6.01 51.70 2029

28.14 6.01 57.72 2030 2031

66

23.91 6.01 63.73

19.57 6.01 69.74

13.38 1.45 6.01 75.75

9.52 2.25 78.01

3.90 78.01

0.00 78.01

0.00 78.01 31Mar11 -

0.00 78.01

0.00 78.01

Termination Payment Check Annuity Payments Termination Payment - IF Concessioner Defaults Termination Payment - IF Concessioner Defaults 31-Mar14 106.44 752.96 1,017.4 4 31-Mar23 106.44 570.09 673.69 31-Mar15 106.44 741.89 990.72 31-Mar24 106.44 532.23 617.03 31-Mar16 106.44 729.45 961.87 31-Mar25 106.44 488.60 555.27 14.75 % 8.75% 31-Mar17 106.44 714.90 930.28 31-Mar26 106.44 438.53 488.10 31-Mar18 106.44 698.21 895.93 31-Mar27 106.44 381.07 415.06 31-Mar19 106.44 679.06 858.57 31-Mar28 106.44 315.26 335.70

31Mar-12 -

31Mar-13 53.22 709.40 988.80

31-Mar20 106.44 657.33 818.13 31-Mar29 106.44 239.62 249.32

31-Mar21 106.44 632.14 773.96 31-Mar30 106.44 152.82 155.38

31-Mar22 106.44 603.25 725.93 31-Mar31 53.22 53.22 53.22

Refinancing Schedule Debt ScheduleRefinancing Period beginning 0

2011 1-Jul10 67

2011 1-Oct10

period Closing Beg. Balance Debt d/d during the period Repayment Schedule End Balance Interest IDC Interest to P&L 2025 2026 1-Jan1-Apr25 25 31- 30-JunMar-25 25 116.26 116.2 6 1.45 116.26 116.2 6 2.91 15 2026 2026 1-Jul1-Oct25 25 3031Sep-25 Dec-25 116.26 28.06 88.20 2.56 2.56 88.20 88.20 2.20 2.20

30Sep-10 116.26 116.26 2026 1-Jan26 31Mar-26 88.20 28.06 60.13 1.85 1.85

31-Dec10 -

2027 1-Apr26 30-Jun26 60.13 60.13 1.50 1.50

2027 1-Jul26 30Sep-26 60.13 27.26 32.87 1.16 1.16

2027 1-Oct26 31Dec-26 32.87 32.87 0.82 0.82

2027 1-Jan27 31Mar-27 32.87 32.87 0.00 0.41 0.41

1.45 2.91 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. ii. iii. iv. EPC (Engineering Procurement and construction) Preliminary and operative Expense Completion of contingency EPC Costs 68

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 The equity drawdown is noted down from the assumptions sheet.

Debt Equity Ratio The debt equity ratio is a leverage ratio that compares a companys total liabilities to its total shareholders 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 / Shareholders 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 69

The sheet also explains about the debt schedule in terms of: Senior Debt Sub Debt Sponsors

The sheet also explains the Interest during construction for: Senior Debt Sub Debt Lenders Sub Debt Sponsors

The sheet also gives detail about the Project cost and means of finance required yearly.

3.4 Working Capital

WC in due course of Annuity Receipt FY ending Short Term Loan Requirement OB Additions Repayment CB Interest

2011 31Mar-11

2012 31Mar-12 -

2013 31-Mar13

2014 31-Mar14 27.27 27.27 1.64

38.96 11.69 27.27 1.42

Required Amount Before Annuity WC-Repayment Schedule 70

38.96 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. ii. iii. iv. Net income Long Term Loans Sale of Capital Injection of funds by the owners

Amount of available working capital is a measure of a firms ability to meet its short term obligations.

3.5 Revenue and Expenditure

No.of Days FY wise 23Aug-12 23Aug-30

31-Mar10 2010

365.00 366.00 365.00 31-Mar- 31-Mar- 31-Mar11 12 13 2011

-

2012
-

2013
221

Operation Starts Operation Closes

Annuity

53.22

O&M Expenses

5.88

365.00 365.00 366.00 365.00 365.00 365.00 366.00 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar71

14 2014
365

15 2015
365

16 2016
366

17 2017
365

18 2018
365

19 2019
365

20 2020
366

106.44

106.44

106.44

106.44

106.44

106.44

106.44

10.20

10.71

11.24

11.80

12.39

13.01

13.66

365.00 365.00 365.00 366.00 365.00 365.00 365.00 366.00 365.00 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar21 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

106.44

106.44

106.44

106.44

106.44

106.44

106.44

106.44

106.44

14.35

15.06

15.82

16.61

17.44

18.31

19.22

20.19

21.20

-48,304. 365.00 365.00 366.00 00 31-Mar- 31-Mar- 31-Mar30 31 32 0-Jan-00 0-Jan-00 2030
365

2031
145

2032
-

1900
-

1900
-

106.44

53.22

22.26

9.28

19-Feb13 72 19-Aug13 19-Feb14 19-Aug14

Annuity Calculation

FY ending Annuity 19-Feb15 2015 19-Aug15 2016 19-Feb16 2016 19-Aug16 2017

2013

2014

2014

2015 19-Feb19 2019

53.22 53.22 53.22 53.22 19-Feb- 19-Aug- 19-Feb- 19-Aug17 17 18 18 2017 2018 2018 2019

53.22 53.22 53.22 53.22 53.22 53.22 53.22 53.22 53.22 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug- 19-Feb- 19-Aug19 20 20 21 21 22 22 23 23 2020 2020 2021 2021 2022 2022 2023 2023 2024 53.22 53.22 53.22 53.22 19-Feb- 19-Aug- 19-Feb1924 24 25 Aug-25 2024 53.22 19Aug-28 2029 53.22 2025 53.22 19-Feb29 2029 53.22 2025 53.22 19-Aug29 2030 53.22 2026 53.22 19-Feb30 2030 53.22 53.22 19Feb-26 2026 53.22 19Aug-26 2027 53.22 53.22 53.22 191919Feb-27 Aug-27 Feb-28 2027 2028 53.22 2028 53.22

53.22 53.22 53.22 19-Aug- 19-Feb30 31 2031 53.22 2031

No.of Years Operation FY ending FY ending Operation Factor Routine Maintenance including insurance Administration Expenses Total O & M Expenses

31Mar-10 2010 -

31Mar-11 2011 -

31Mar-12 2012 -

1 31Mar-13 2013 0.61 5.58 0.30 5.88

2 3 4 5 6 7 8 9 10 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar73

14 2014 1.00 9.67 0.53 10.20

15 2015 1.00 10.15 0.55 10.71

16 2016 1.00 10.66 0.58 11.24

17 2017 1.00 11.19 0.61 11.80

18 2018 1.00 11.75 0.64 12.39

19 2019 1.00 12.34 0.67 13.01

20 2020 1.00 12.96 0.70 13.66

21 2021 1.00 13.61 0.74 14.35

22 2022 1.00 14.29 0.78 15.06

11 12 13 14 15 16 17 18 19 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar23 24 25 26 27 28 29 30 31 2023 2024 2025 2026 2027 2028 2029 2030 2031 1.00 15.00 0.81 15.82 1.00 15.75 0.86 16.61 1.00 16.54 0.90 17.44 1.00 17.37 0.94 18.31 1.00 18.23 0.99 19.22 1.00 19.15 1.04 20.19 1.00 20.10 1.09 21.20 1.00 21.11 1.15 22.26 0.40 8.81 0.48 9.28

31-Mar32 0-Jan-00 0-Jan-00 2032 1900 1900 -

Major Maintenance Reserve Account 3174 313131-

Mar-10 Operation Factor Expected Major Maintenance at inflated Rate (100%) Opening Balance Transfer from Cash MMR Spending 31-Mar14 1.00 31.50 4.31 7.13
-

Mar-11 -

Mar-12 -

Mar-13 0.61 18.16 4.31

-

31-Mar15 1.00 33.08 11.44 7.13

-

31-Mar16 1.00 34.73 18.57 7.13

-

31-Mar17 1.00 36.47 25.69 7.13 32.82 31-Mar26 1.00 56.57 35.64 11.88
-

31-Mar18 1.00 38.29 9.31

-

31-Mar19 1.00 40.20 9.31 9.31

-

31-Mar20 1.00 42.21 18.62 9.31

-

31-Mar21 1.00 44.32 27.92 9.31

-

31-Mar22 1.00 46.54 37.23 9.31

46.54

11.44 31-Mar23 1.00 48.87 11.88

-

18.57 31-Mar24 1.00 51.31 11.88 11.88

-

25.69 31-Mar25 1.00 53.88 23.76 11.88

-

9.31 31-Mar27 1.00 59.40 47.52 11.88

59.40

18.62 31-Mar28 1.00 62.37 13.75

-

27.92 31-Mar29 1.00 65.49 13.75 13.75

-

37.23 31-Mar30 1.00 68.76 27.50 13.75

-

31-Mar31 28.68 41.26 -

11.88 31-Mar32 -

23.76 0-Jan00 -

35.64 0-Jan00 -

47.52

13.75

27.50

41.26

41.26

75

41.26 -

41.26 -

41.26 -

41.26

41.26

41.26

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. ii. Routine Maintenance including insurance Administration Expense

3.6 Depreciation and Tax

Books Book Depreciation FY Ending Factor Opening Balance Additions Net Block Depreciation No.of Years 365.00 365.00 366.00 365.00 76 365.00 2010 31-Mar10 155.67 155.67 20 365.00 2011 31-Mar11 155.67 371.02 526.69 19 366.00 2012 31-Mar12 221.00 2013 31-Mar13 0.61 526.69 164.72 668.15 23.26 18 365.00

2014 31-Mar14 1.00 668.15 628.85 39.30 17

2015 31-Mar15 1.00 628.85 589.54 39.30 16

2016 31-Mar16 1.00 589.54 550.24 39.30 15

2017 31-Mar17 1.00 550.24 510.94 39.30 14

2018 31-Mar18 1.00 510.94 471.64 39.30 13

2019 31-Mar19 1.00 471.64 432.33 39.30 12

2020 31-Mar20 1.00 432.33 393.03 39.30 11

2021 31-Mar21 1.00 393.03 353.73 39.30 10

365.00 365.00 366.00 365.00 365.00 365.00 366.00 365.00 2022 2023 2024 2025 2026 2027 2028 2029 31-Mar31-Mar31-Mar31-Mar31-Mar31-Mar31-Mar31-Mar22 23 24 25 26 27 28 29 1.00 353.73 314.42 39.30 9 1.00 314.42 275.12 39.30 8 1.00 275.12 235.82 39.30 7 1.00 235.82 196.51 39.30 6 1.00 196.51 157.21 39.30 5 1.00 157.21 117.91 39.30 4 1.00 117.91 78.61 39.30 3 1.00 78.61 39.30 39.30 2

365.00 145.00 2030 2031 2032 31-Mar31-Mar31-Mar30 31 32 1.00 39.30 39.30 1 0.40 0 0 77

Tax Depreciation FY Ending Factor Opening Balance additions Gross Block Tax Depreciation No.of Years 2014 31-Mar14
1.00 -

2010 31Mar-10
-

2011 31-Mar11
-

2012 31-Mar12

2013 31-Mar13
1.00

10% 2016 31-Mar16

1.00

155.67 155.67 20 2018 31-Mar18

1.00

155.67 371.02 526.69 19 2019 31-Mar19

1.00

526.69 164.72 691.41 69.14 18 2020 31-Mar20

1.00

2017 31-Mar17
1.00

2015 31-Mar15
1.00

2021 31-Mar21
1.00

622.27 622.27 62.23 17 2022 31-Mar22 1.00 2 87.24 46.54 3 33.78 33.38 9 2030 31-Mar30

560.04 560.04 56.00 16 2023 31-Mar23 1.00 3 00.41 3 00.41 30.04 8 2031 31-Mar31

504.04 504.04 50.40 15 2024 31-Mar24 1.00 2 70.37 2 70.37 27.04 7 2032 31-Mar32

453.63 32.82 486.45 48.65 14 2025 31-Mar25 1.00 2 43.33 2 43.33 24.33 6

437.81 437.81 43.78 13 2026 31-Mar26 1.00 2 19.00 2 19.00 21.90 5

394.03 394.03 39.40 12 2027 31-Mar27 1.00 1 97.10 59.40 2 56.49 25.65 4

354.62 354.62 35.46 11 2028 31-Mar28 1.00 2 30.84 2 30.84 23.08 3

319.16 319.16 31.92 10 2029 31-Mar29 1.00 2 07.76 2 07.76 20.78 2

78

1.00

1.00

186.98 186.98 18.70 1

168.29 168.29 16.83 0

151.46 151.46 0 31Mar-10 31-Mar11 31-Mar12 31-Mar13 -12.60 23.26 69.14 -58.49 -58.49 -58.49 31-Mar14 -2.59 39.30 62.23 -25.52 -25.52 -84.00 -

Tax Computation PBT Add: Book Depreciation Less: Tax Depreciation Gross Taxable Profit Loss Carryforward used Loss Brought forward Net Taxable Profit

31-Mar15 0.63 39.30 56.00 -16.07 -16.07 -100.07 -

31-Mar16 2.42 39.30 50.40 -8.68 -8.68 -108.75 -

31-Mar17 -2.36 45.87 48.65 -5.14 -5.14 -113.89 -

31-Mar18 -0.27 45.87 43.78 1.81 1.81 -112.07 79

31-Mar19 2.13 45.87 39.40 8.59 8.59 -103.48 -

31-Mar20 5.08 45.87 35.46 15.48 15.48 -87.99 -

31-Mar21 8.06 45.87 31.92 22.01 22.01 -65.98 -

31-Mar22 8.61 48.61 33.38 23.85 23.85 -42.13 -

31-Mar23 12.09 48.61 30.04 30.66 30.66 -11.48 31-Mar31 32.06 11.88 16.83 27.11 27.11

31-Mar24 15.64 48.61 27.04 37.22 11.48 -

31-Mar25 19.55 48.61 24.33 43.83 -

31-Mar26 27.74 48.61 21.90 54.46 54.46

31-Mar27 32.13 51.18 25.65 57.67 57.67

31-Mar28 35.07 51.18 23.08 63.17 63.17

31-Mar29 34.06 51.18 20.78 64.47 64.47

31-Mar30 33.00 51.18 18.70 65.49 65.49

25.74 43.83 31-Mar32 -0.00 -0.00 -0.00 -0.00 -

Normal Tax Payable 80IA Counter Operating Year

MAT Calculation

Tax Payable Less: MAT Credit 80

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 OB Additions deletions Closing Balance Depreciation on Major Maintenance reserve

1 -

0.13

0.48

0.42

1.01

1.61

0.13 0.13

0.48 0.48

81

0.42 0.42

1.01 1.01

1.61 1.61

0.13 0.13 0.13 0.13

0.13 0.48 0.61 0.61 0.61

0.61 0.61 0.61 0.61

0.61 0.61 0.61 0.61

0.61 0.42 1.03 1.03 1.03

1.03 1.01 2.05 2.05 2.05

2.05 1.61 3.65 3.65 3.65

2 -

3 -

4 -

5 32.82 32.82

6 32.82 32.82

7 32.82 32.82

8 32.82 32.82

9 32.82 32.82

6.56

6.56

6.56

6.56

6.56

20.98
-

21.41
-

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 1.72

2.41 2.41

3.12 3.12

3.90 3.90

5.53 5.53

6.40 6.40

20.98 13.99 6.99

21.41 10.69 10.73

82

3.65 1.72 5.37 5.37 5.37

5.37 2.41 7.78 7.65 7.65

7.65 3.12 10.90 10.29 10.29

10.29 3.90 14.79 14.18 14.18

14.18 5.53 20.32 19.71 19.71

19.71 6.40 26.73 25.69 25.69

25.69 26.73 24.68 13.99 10.69

10.69 26.73 23.07 10.69 -

10 32.82 46.54 32.82 46.54

11 46.54 46.54

12 46.54 46.54

13 46.54 46.54

14 46.54 46.54

15 46.54 59.40 46.54 59.40

16 59.40 59.40

17 59.40 59.40

9.31

9.31

9.31

9.31

9.31

11.88

11.88

11.88

21.75
-

9.00
-

18

19

6.58

6.39

21.75 21.75

9.00 9.00

83

26.73 21.36 -

26.73 18.95 -

26.73 15.83 -

18 59.40 59.40

19 59.40 59.40

59.40 59.40 -

11.88

11.88

Analysis of Data 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. ii. Book Depreciation 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 84

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.

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. Crores 3131Mar-10 Mar-11 85

PROFIT AND LOSS ACCOUNT Year Ending March 31st

31Mar-12

31Mar-13

31Mar-14

Annuity Other Revenue Total Revenue O&M

53.22

106.44

53.22 5.88

106.44 10.20

Total Expenses EBITDA Interest - Senior Debt Interest-Refinancinng debt Interest -WC Interest Sub Debt- Lenders Interest Sub Debt - Sponsors EBTDA Depreciation Amortization Profit Before Tax Tax

5.88 47.34 31.66 1.42 3.61 10.66 23.26

10.20 96.24 51.89 1.64 6.01 36.71 39.30

-12.60 -

-2.59 -

Profit After Tax

-12.60

-2.59

31Mar15 106.44

31Mar16 106.44

31Mar17 106.44

31Mar18 106.44

31Mar19 106.44

31Mar20 106.44

31Mar3121 Mar-22 106.44 106.44

86

106.44 10.71

106.44 11.24

106.44 11.80

106.44 12.39

106.44 13.01

106.44 13.66

106.44 14.35

106.44 15.06

10.71 95.73 49.79 6.01 39.93 39.30

11.24 95.20 47.46 6.01 41.73 39.30

11.80 94.64 45.12 6.01 43.51 45.87

12.39 94.05 42.44 6.01 45.59 45.87

13.01 93.43 39.42 6.01 48.00 45.87

13.66 92.78 35.82 6.01 50.95 45.87

14.35 92.09 32.15 6.01 53.93 45.87

15.06 91.38 28.14 6.01 57.22 48.61

0.63 0.13

2.42 0.48

-2.36 -

-0.27 -

2.13 0.42

5.08 1.01

8.06 1.61

8.61 1.72

0.50

1.94

-2.36

-0.27

1.71

4.07

6.46

6.90

31Mar23 106.44

31Mar24 106.44

31Mar25 106.44

31Mar26 106.44

31Mar27 106.44

31Mar28 106.44

31Mar3129 Mar-30 106.44 106.44

87

106.44 15.82

106.44 16.61

106.44 17.44

106.44 18.31

106.44 19.22

106.44 20.19

106.44 21.20

106.44 22.26

15.82 90.62 23.91 6.01 60.70 48.61

16.61 89.83 19.57 6.01 64.25 48.61

17.44 89.00 13.38 1.45 6.01 68.16 48.61

18.31 88.13 9.52 2.25 76.35 48.61

19.22 87.22 3.90 83.32 51.18

20.19 86.25 0.00 86.25 51.18

21.20 85.24 0.00 85.24 51.18

22.26 84.18 0.00 84.18 51.18

12.09 2.41

15.64 3.12

19.55 3.90

27.74 5.53

32.13 6.40

35.07 6.99

34.06 10.73

33.00 21.75

9.68

12.52

15.65

22.21

25.73

28.08

23.33

11.25

31Mar3131 Mar-32 53.22 -

88

53.22 9.28

9.28 43.94 0.00 43.94 11.88

0.00 -0.00 -

32.06 9.00

-0.00 -

23.05

-0.00

BALANCE SHEET Year Ending March Equity Reserves & Surplus

Figures in Rs. Crores 31-Mar-10 89 31Mar-11 26.94 31Mar-12 82.22

Networth Senior Debt Refinancing Debt WC Loan/STL Sub Debt-Lenders Sub Debt-Sponsors Interest Accrued on sub debt from sponsors Loan Funds Total Sources of Funds 26.94 119.76 8.84 0.13 128.73 155.67

82.22 403.23 38.23 3.01 444.47 526.69

Gross Fixed Assets/CWIP Depreciation Net Fixed Assets

155.67 155.67

526.69 526.69

Cash Major Maintenance Reserve Total Application of Funds

155.67

526.69

31Mar13 107.75 -12.60

31Mar14 107.75 -15.20

31Mar15 107.75 -14.69

31Mar16 107.75 -12.75

31Mar17 107.75 -15.11 90

31Mar18 107.75 -15.38

31Mar3119 Mar-20 107.75 -13.67 107.75 -9.61

95.15 524.48 27.27 50.10 8.72 610.57 705.72

92.55 505.99 50.10 14.73 570.82 663.37

93.06 483.53 50.10 20.74 554.37 647.43

95.00 459.75 50.10 26.76 536.60 631.60

92.64 433.33 50.10 32.77 516.19 608.83

92.37 404.26 50.10 38.78 493.14 585.51

94.07 371.23 50.10 44.79 466.13 560.20

98.14 335.56 50.10 50.80 436.47 534.61

691.41 23.26 668.15

691.41 62.56 628.85

691.41 101.86 589.54

691.41 141.17 550.24

724.23 187.03 537.19

724.23 232.90 491.33

724.23 278.77 445.46

724.23 324.63 399.59

33.25 4.31 705.72

23.08 11.44 663.37

39.32 18.57 647.43

55.67 25.69 631.60

71.64 608.83

84.88 9.31 585.51

96.12 18.62 560.20

107.09 27.92 534.61

31Mar21 107.75 -3.15

31Mar22 107.75 3.75

31Mar23 107.75 13.42

31Mar24 107.75 25.95

31Mar25 107.75 41.60 91

31Mar26 107.75 63.82

31Mar3127 Mar-28 107.75 89.55 107.75 117.63

104.60 297.25 50.10 56.82 404.17 508.76

111.49 254.98 50.10 62.83 367.90 479.40

121.17 212.70 50.10 68.84 331.64 452.81

133.70 166.46 50.10 74.85 291.41 425.11

149.35 116.26 50.10 80.86 247.22 396.57

171.56 60.13 60.13 231.70

197.29 0.00 0.00 197.29

225.38 0.00 0.00 225.38

724.23 370.50 353.73

770.77 419.11 351.66

770.77 467.72 303.04

770.77 516.33 254.43

770.77 564.94 205.82

770.77 613.55 157.21

830.16 664.74 165.43

830.16 715.92 114.24

117.81 37.23 508.76

127.74 479.40

137.89 11.88 452.81

146.92 23.76 425.11

155.11 35.64 396.57

26.97 47.52 231.70

31.87 197.29

97.38 13.75 225.38

31Mar29 107.75 140.96 248.71

31Mar30 107.75 152.21 259.96

31Mar3131 Mar-32 107.75 175.26 283.01 107.75 175.26 283.01 92

0.00 0.00 248.71

0.00 0.00 259.96

0.00 0.00 283.01

0.00 0.00 283.01

830.16 767.10 63.06

830.16 818.28 11.88

830.16 830.16 -

830.16 830.16 -

158.14 27.50 248.71

206.82 41.26 259.96

241.76 41.26 283.01

241.76 41.26 283.01

CASH FLOW STATEMENT Year Ending March Profit After Tax Depreciation & Amortization Increase In Equity Increase in Senior Debt Increase in Short Term Loan Increase in Sub Debt-Sponsors

Figures in Rs. Crores 31-Mar-10 93 31Mar-11 26.94 119.76 8.84 31Mar-12 55.28 283.47 29.39

Increase in Sub Debt-Lenders Increase in Refinancing Interest on Sub debt to P&L (As accrued) Total Inflows Capex including Preliminary Exp. 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 Total Outflows Net Cashflows before Periodic Maintenance Reserve Periodic Maintenance Reserve Cash Balance : Surplus/(Deficit ) for the year Opening Balance Closing Balance 31Mar13 -12.60 23.26 25.53 125.22 31Mar14 -2.59 39.30 31Mar15 0.50 39.30 31Mar16 1.94 39.30 31Mar17 -2.36 45.87 94

155.54 155.54 155.54 -

368.14 368.14 368.14 -

31Mar18 -0.27 45.87 -

31Mar3119 Mar-20 1.71 45.87 4.07 45.87 -

38.96 11.87 3.61 215.84 162.62 3.96 11.69 178.27 37.57 4.31

6.01 42.72 18.50 27.27 45.77 -3.04 7.13

6.01 45.82 22.46 22.46 23.36 7.13

6.01 47.26 23.78 23.78 23.48 7.13

6.01 49.52 26.42 26.42 23.10 7.13

6.01 51.61 29.06 29.06 22.54 9.31

6.01 53.58 33.03 33.03 20.56 9.31

6.01 55.95 35.67 35.67 20.28 9.31

33.25 33.25 31Mar21 6.46 45.87

-10.17 33.25 23.08 31Mar22 6.90 48.61

16.23 23.08 39.32 31Mar23 9.68 48.61

16.35 39.32 55.67 31Mar24 12.52 48.61

15.97 55.67 71.64 31Mar25 15.65 48.61 95

13.23 71.64 84.88 31Mar26 22.21 48.61

11.25 84.88 96.12

10.97 96.12 107.09

31Mar3127 Mar-28 25.73 51.18 28.08 51.18

6.01 58.33 38.31 38.31 20.02 9.31

6.01 61.52 42.28 42.28 19.24 9.31

6.01 64.30 42.28 42.28 22.03 11.88

6.01 67.15 46.24 46.24 20.91 11.88

116.26 6.01 186.53 166.46 166.46 20.07 11.88

2.25 73.08 56.12 50.10 83.12 189.34 -116.26 11.88

76.91 60.13 60.13 16.78 11.88

79.26 79.26 13.75

10.71 107.09 117.81 31Mar29

9.94 117.81 127.74 31Mar30

10.15 127.74 137.89

9.03 137.89 146.92

8.19 146.92 155.11

-128.14 155.11 26.97

4.90 26.97 31.87

65.51 31.87 97.38

31Mar3131 Mar-32 96

23.33 51.18 74.52 74.52 13.75

11.25 51.18 62.43 62.43 13.75

23.05 11.88 34.93 34.93 -

-0.00 -0.00 -0.00 -

60.76 97.38 158.14

48.68 158.14 206.82

34.93 206.82 241.76

-0.00 241.76 241.76 97

Analysis of Data Financials This sheet contains the Balance Sheet, Profit and Loss Account and the Cash Flow statement.

Profit and Loss Account i. ii. iii. iv. It contains the detail about the annuity and revenue which together constitute the total revenue. The cost of operations and maintenance. The EBITDA which is calculated by deducting the total expenses from the total revenue. 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. vi. Profit before tax which is further calculated by deducting the depreciation and amortization from EBTDA. And finally by deducting the tax from PBT we get Profit after tax.

Balance Sheet It contains the details about the i. ii. Net worth which is calculated by adding the Equity and Reserves and Surplus . The Total Source of Funds which is calculated by adding the: Senior Debt Refinancing Debt Working Capital Loan 98

 Sub Debt Lenders Sub Debt Sponsors 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 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 99

 Repayment of refinancing debt Repayment of working capital Repayment o f Sub debt Lenders Repayment of sub debt sponsors Payment of accrued interest on sponsors 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 PARTICULARS PAT Depreciation & Amortization Interest on Senior Loan Interest on Sub Debt-Lenders Interest Accrual on Sub Debt Total Available for servicing

2010 31-Mar10

2011 31-Mar11 -

2012 31Mar-12 -

2013 31Mar-13 -12.60 23.26 31.66 3.61 45.93

Debt servicing Interest on Senior Loan Senior Debt Servicing Total DSCR for Senior Debt 100 31.66 3.96 35.63 1.29

Minimum DSCR Average DSCR 2014 2015 3131Mar-14 Mar-15 -2.59 39.30 51.89 6.01 94.61 0.50 39.30 49.79 6.01 95.61

1.27

2016 31Mar-16 1.94 39.30 47.46 6.01 94.72

2017 31Mar-17 -2.36 45.87 45.12 6.01 94.64

1.31 2018 2019 3131Mar-18 Mar-19 -0.27 45.87 42.44 6.01 94.05 1.71 45.87 39.42 6.01 93.00

2020 31Mar-20 4.07 45.87 35.82 6.01 91.76

2021 31Mar-21 6.46 45.87 32.15 6.01 90.49

2022 31Mar-22 6.90 48.61 28.14 6.01 89.66

2023 31Mar-23 9.68 48.61 23.91 6.01 88.21

51.89 18.50 70.38 1.34 2024 31Mar-24 12.52 48.61 19.57 6.01 86.72

49.79 22.46 72.25 1.32 2025 31Mar-25 15.65 48.61 13.38 6.01 83.65

47.46 23.78 71.24 1.33

45.12 26.42 71.54 1.32

42.44 29.06 71.51 1.32

39.42 33.03 72.45 1.28

35.82 35.67 71.49 1.28

32.15 38.31 70.47 1.28

28.14 42.28 70.42 1.27

23.91 42.28 66.19 1.33

101

19.57 46.24 65.81 1.32

13.38 50.20 63.58 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. ii. iii. iv. v. PAT Depreciation and Amortization Interest on Senior Loan Interest on Sub Debt Lenders Interest accrual on Sub Debt

102

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)

103