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Financial Viability Analysis of the Road Sector Projects in

Financial Viability Analysis of the Road Sector Projects in

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Published by: anon_777502935 on Nov 23, 2011
Copyright:Attribution Non-commercial


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“Financial Viability Analysis of the Road SectorProjects in India.”
As India continues to grow at more than 8%, a balanced increase in the gross capitalformation (GCF) in infrastructure as a proportion of the GDP emerges as the mostimportant key in sustaining high economic growth. Though recently there have beeninvestments in the infrastructure sector, the GCF as a proportion of GDP continues to belower at around 5%. As far as the physical infrastructure is concerned, there exists a hugedeficiency, in our view. Inadequate infrastructure is identified as one of the biggestconstraints of doing business in India. Therefore, to give proper direction to highwaydevelopment The Planning Commission of India has estimated an investment of INR 
3118 billion under the Eleventh Plan versus the INR 1448 billion spent under the TenthPlan.Further Private participation is crucial to meet the investment goal in infrastructure because there are limitations to budgetary support from the Indian government. For this purpose a proper framework is being put in place to enhance participation of the privatesector in various segments of infrastructure. So we can expect a strong private participation in roads through BOT projects. BOT stands for "Built, Operate andTransfer". BOT model uses private investment to undertake the infrastructuredevelopment that has historically been the preserve for the public sector. In a BOT project a private company is given a concession to built and operate a facility that wouldnormally be built and operated by the government. The facility might be a power plant,airport, toll road, etc. But we are here concerned with the financial attractiveness of tollroad projects to the Private Infrastructure developers. For this purpose I have provided aninsight to the various opportunities available like the tax benefits and various aids andgrants announced by the Government. I have also tried to bring to notice all the major risks involved and steps to mitigate such risks.Further I have done a comprehensive financial analysis in which I have made certainassumptions and calculated the BOT toll road project’s IRR and DSCR, which provesthe fact that such projects are, indeed, not only financially lucrative but also has adazzling future.
The thesis “Financial Viability Analysis of the Road Sector Projects in India” submitted by for his MBA program has been pursued and completed under my guidance. The samehas been upto my expectation and so I, hereby, approve the same.ii

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