Final Report ON NTPC (Ankit Doveriyal, 15) PDF

SUMMER INTERNSHIP REPORT
PROJECT APPRAISIAL AND FINANCIAL MODELLING

OF A THERMAL POWER PLANT

UNDER THE GUIDANCE OF
Mrs Indu Maheshwari, Dy Director, CAMPS, NPTI
&
Mrs. Priya Kumar, Senior Manager, Project Division, Power Finance
Corporation Limited

At
Power Finance Corporation, New Delhi

Submitted By
Ankit Doveriyal
Roll No. 15
MBA (POWER MANAGEMENT)

(Under ministry of Power, Govt. of India)
Affiliated to

MAHARSHI DAYANAND UNIVERSITY, ROHTAK
AUGUST 2013

i

DECLARATION

I, Ankit Doveriyal, Roll No 15, student of MBA-Power Management (2012-14) at
National Power Training Institute, Faridabad hereby declare that the Summer Training
Report entitled PROJECT APPRAISIAL AND FINANCIAL MODELLING OF A
THERMAL POWER PLANT is an original work and the same has not been submitted
to any other Institute for the award of any other degree.

A Seminar presentation of the Training Report was made on
________________________ and the suggestions as approved by the faculty were duly
incorporated.

Presentation In-Charge Signature of the Candidate
(Faculty)

Countersigned
Director/Principal of the Institute

ii

ACKNOWLEDGEMENT

It is often said that life is a mixture of achievements, failures, experiences, exposures and
efforts to make your dream come true. There are people around you who help you realize
your dream. I acquire this opportunity with much pleasure to acknowledge the invaluable
assistance of Power Finance Corporation and all the people who have helped me through
the course of my journey in successful completion of this project.

I wish to express my sincere gratitude to my Company Guide, Mrs. Priya Kumar
(Senior Manager, Project Appraisal Division, PFC) for her guidance, help and
motivation. Apart from the subject of my study, I learnt a lot from her, which I am sure,
will be useful in different stages of my life. I would like to thank Mrs. Shweta Vithal
(Dy Manager, Project Appraisal Division) for her help in understanding and formulating
the model design and methodology as well as help me in acquitting to the Power Sector
and clearing my concepts and Mr. Natesh Sarma (Officer, Project Appraisal Division)
for his review and helpful comments.

I would like to thank Mr. Rakesh Mohan, Senior Manager (HR) for providing me
with this wonderful opportunity to work at Power Finance Corporation. I express my
thanks to Mrs. Indu Maheshwari, Dy. Director, Faculty guide, NPTI for her kind co-
operation during the period of my summer internship.

I feel deep sense of gratitude towards Mr S.K.Chaudhary, Principal Director,
CAMPS(NPTI), NPTI and Mrs. Manju Mam, Director, Mrs. Indu Maheshwari,
Dy. Director, NPTI for arranging my internship at Power Finance Corporation and
being a constant source of motivation and guidance throughout the course of my
internship.

I am grateful to my friends who gave me the moral support in my times of difficulties.
Last but not the least I would like to express my special thanks to my family for their
continuous motivation and support.

Regards,

Ankit Doveriyal

Class of 2012- 2014 (NPTI)

iii

EXECUTIVE SUMMARY

Rapid economic growth has increased the burden of Indias infrastructure, one of the
countrys week spots. An infrastructure deficit is widely considered to be one of the
factors that could severely affect the economic growth of the country. In the past few
years, policy makers have recognized the importance of infrastructure in economic
growth and have made concrete efforts to accelerate infrastructure development.

Power Sector continues to lag behind despite the introduction of progressive measures.
Power shortages, increased tariffs, shortage of coal and dependence on imported fuel are
on rise, while the poor health of the distribution continues to inhibit the inflows of
investments which have possessed growth risk for the Indian Electricity Sector.
India's demand for electricity is likely to cross 300 GW, in few years earlier than most
estimates. Meeting this demand will require a fivefold to tenfold increase in the pace of
capacity addition.

With the growing demand of power, there is huge potential of investment in power
sector of India. The power sector which is in the concurrent list of the Indian
Constitution is under the purview of both the central government and the state
government. The power sector which was earlier dominated by public sector undertaking
is now seeing effective participation of the private sector which is now accountable for
28% of power generation in the country.

Power Finance Corporation Ltd. (PFC) a public financial institution established In 1986
by the Ministry Of Power as a Financial Institution (FI) to provide financing solution to
large capital intensive power project across India including generation, transmission,
distribution and RM&U projects.

My Summer Internship Project is Project & Entity Appraisal of Thermal Power Plant.
It resolves around the appraisal of the power project promoted by the company ABC
Power Limited, which has come for financial assistance of its Capital Expenditure and
Working Capital Requirements. The project is being appraised after evaluating it on the
various parameters set by Central Electricity Regulatory Commission (CERC) and the
set parameters at PFC.

My work also include appraisal of Promoters of the project which is based on set
parameters at PFC .The aim of the appraisal is to finally arrive at the decision: whether
PFC should finance the project or not.
As per the guidelines of PFC the project is evaluated into two parts: Project Appraisal
and Entity Appraisal. The format of the project report will be in the form of Agenda
Note as per PFC norms.

Project Appraisal is carried out by Project Appraisal Department which evaluate the
financial and technical viability of the project.

iv

Entity Appraisal is carried out by Entity Appraisal Department and involves
evaluation of the promoter of the company on its financial flexibility and stability, the
analysis of their business operations and the competence of the management.

In the end the project involves the subjective analysis on both Project & Entity fronts and
come up with the risk involved.

The project reports ends with the Recommendations on whether to finance the project or
not.

v

LIST OF ABBREVIATIONS

BTG Boiler, Turbine & Generator

BU Billion Units

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

COD Commercial Operation Date

DPR Detailed Project Report

EPC Engineering, procurement & construction Contract

FSA Fuel Supply arrangement/agreement

FTA Fuel Transport Agreement

GCV Gross Calorific Value

GoI Government of India

IPP Independent Power Producer

IDC Interest During Construction

Kcal Kilo Calories

KV Kilo Volts

KWh Kilo Watt Hour

MoP Ministry of Power

MoEF Ministry of Environment & Forest

NOC No Objection Certificate

O&M Operations & Maintenance

PFC Power Finance Corporation Ltd.

PGCIL Power Grid Corporation of India Limited

PLF Plant Load Factor

PPA Power Purchase Agreement

REC Rural Electrification Corporation

vi

LIST OF FIGURES

Figure 1: Power Sector Structure...4
Figure 2: Energy Production in Billion kWh (2010)..5
Figure 3: All India Generation capacity.7
Figure 4: Business Strategy of PFC.13
Figure 5: Project Finance Structure..19
Figure 6: Actual power supply position in Tamil Nadu...40

vii

LIST OF TABLES

Table 1: All India Region wise generation capacity..6
Table 2: Different Rating by major rating agencies.11
Table 3: Sanctions & Disbursements for the respective financial years..14
Table 4: Major Projects Funded by PFC..14
Table 5: Financial Highlights for the year 2011-12.14
Table 6: Approvals and Agreement Status...22
Table 7: Preliminary appraisal.24
Table 8: Detailed Appraisal..26
Table 9: Approval and Agreement Status........38
Table 10: Project Cost Details..39
Table 11: Power requirement and availability for Tamil Nadu40
Table 12: Project details...41
Table 13: Snapshot of project financial projections.45
Table 14: Sensitivity analysis sheet.46

viii

TABLE OF CONTENTS

DECLARATIONi
ACKNOWLEDGEMENT ii
EXECUTIVE SUMMARY. iii
LIST OF ABBREVIATIONS... v
LIST OF FIGURES. vi
LIST OF TABLES.. vii

CHAPTER 1: INTRODUCTION...1
1.1 INDIAN POWER SECTOR....1
1.2 POWER SECTOR REFORMS2
1.3 INTRODUCTION TO INDIAN POWER SECTOR...5
1.4 POWER SECTOR: DEVELOPMENTS & CURRENT STATUS..7
1.5 MAJOR ISSUES..8
1.6 INITIATIVES..8
1.7 OPPORTUNITIES...9

CHAPTER 2: COMPANY PROFILE.....10
2.1 BACKGROUND........10
2.2 MISSION....10
2.3 CREDIT RATINGS...10
2.4 OBJECTIVE OF PFC.....11
2.5 CLIENTS OF PFC.....12
2.6 RANGE OF SERVICES12
2.7 REFORMS.13
2.8 SWOT ANALYSIS....15

CHAPTER 3: OBJECTIVE AND SCOPE..16
3.1 OBJECTIVE OF THE PROJECT..16
3.2 SCOPE........16

ix

CHAPTER 4: LITERATURE REVIEW AND RESEARCH
METHODOLOGY...17
4.1 LITERATURE REVIEW...17
4.2 PROJECT FINANCE.18
4.3 PROJECT APPRAISAL19
4.4 CALCULATION OF TARIFF...20
4.5 RESEARCH METHODOLOGY...21

CHAPTER 5: PROJECT APPRAISAL & FINANCIAL MODELLING....22
5.1 GUIDING PRINCIPAL FOR PROJECT APPRAISAL22
5.2 PROJECT & ENTITY APPRAISAL.23
5.3 FINANCIAL MODELLING..28

CHAPTER 6: CASE STUDY29
6.1 PROJECT PURPOSE & SCOPE...29
6.2 PROJECT DETAILS..29
6.3 PROJECT COST....38

CHAPTER 7: RISK ANALYSIS & SWOT ANALYSIS...47
7.1 RISK ANALYSIS..47
7.2 SWOT ANALYSIS49
7.3 LIMITATIONS..50

CHAPTER 8: CONCLUSION, RECOMMENDATION & LEARNING52
8.1 CONCLUSION..52
8.2 RECOMMENDATIONS...53
8.3 LEARNING....53

BIBILIOGRAPHY.....54

ANNEXURE...55
1|P a g e
ProjectAppraisal&FinancialModeling
CHAPTER 1: INTRODUCTION

1.1. INDIAN POWER SECTOR

Electricity is one of the most vital infrastructure inputs for economic development of a
country. The demand of electricity in India is enormous and is growing steadily. The vast
Indian electricity market, today offers one of the highest growth opportunities for private
developers.

At the time of independence in 1947, the country had a power generating capacity of
1,362 MW. Prior to independence the power sector was regulated by The Indian
Electricity Act, 1910 which was the first basic legal framework for the electricity sector
in the country. Supply of energy was the main concept around which various
provisions were woven. The act talked about the Licence for generating and supplying
electricity, Competition in generation and supply areas, Framework of wires and works,
Licensee and Consumer relationship, Safety Measures and Theft of electricity in the
power sector.

Post independence our priorities changed, the supply of electricity which was limited to
cities and towns was to be spread across the country, especially in rural areas. This was
seen as a social responsibility of the Government to provide electricity to all. Thus The
Electricity Supply Act, 1948 was passed in the Central legislature to facilitate the
establishment of regional co-ordination in the development of electricity which
envisaged formation of State Electricity Boards (SEB) as an arm of State Government to
discharge their responsibility of providing electricity to all. The act mandated that every
State shall constitute a SEB. SEBs were entrusted with the task of developing power
generation, transmission as well as distribution facilities. The Act also called for
formation of Central Electricity Authority (CEA), which was envisaged as the main
technical arm of the Central Government. It also had to perform the role of technical
advisor to the State Government, SEB, Generation Company or any other agency and
form regulations on certain aspects of which the most important was the techno-
economic clearance of generation projects.

However, in 1970s SEBs started making losses largely on account of political
interference, mismanagement and inefficiencies in operations. Flat rate tariff (near zero
usage charge) were introduced for the agricultural connections and high tariff was
imposed on industrial & commercial users, such cross-subsidy led to increase in theft
and the losses increased. As the boards were not able to make money, they became
increasingly dependent on the government for funding. Because of the shortage of funds,
SEBs were unable to increase generation capacity and were not maintaining their assets.
Therefore, SEBs went into a vicious cycle that led to further drop in the performance of
their operations and subsequently increased their losses. In 1980s, the SEBs were able to
show about 3% of statutory returns with the help of flawed accounting system but in
practice the accruals were not sufficient for growth and the boards sought assistance
from state governments. In this situation, the government decided to create central
generating utilities i.e. National thermal power corporation (NTPC) & National Hydro
Power Corporation (NHPC) to improve the condition of power sector. The government
also tried to connect the generating entities scattered all over the country non-uniformly
2|P a g e
by forming The National Grid and thus trying to overcome generation demand supply
gap prevalent in different states.

In response to the balance-of-payment crisis in 1991, the government of India decided to
open up various sectors in the economy including power sector. The power generation
sector was de-licensed and the private parties were allowed to setup generating facilities.
The change in notification gave numerous incentives to private sector such as 16% return
on equity for plants that operated at plant load factor (PLF) of 68.5%, five year tax
holiday, two part tariff, equity requirements as low as 20% of project cost and selective
guarantees from central government for payment default by SEBs. This liberal set of
policies initially created excitement among the private investors to setup plants.
However, the excitement soon subsided because of the large political risks and payment
capacity of the already bleeding SEBs. The state boards losses were increasing mainly
due to theft and had to increasingly depend upon government subsidy. Less than 17,000
MW were added vis--vis a planned addition 40,000 MW in the period 1971-1992.
Further, such generous incentives given by the government to the foreign investors
wherein almost all the risks were borne by the state board drew lot of criticism. SEBs
were earning 12.2% internal rate of return on their own plants and therefore paying 16%
return to IPPs which did not make sense.

Under the 1910 and 1948 Acts, powers of regulation including tariff regulations were
vested on the Government. This concentration of power in the Government and
Government organizations resulted in inefficiencies of various sorts, the most prominent
manifestation was being lack of rational and professional approach to tariff fixation. As
part of reforms strategy, it was, therefore, considered necessary to distance the sensitive
aspect of tariff regulation from the political executives on the independent Regulatory
Commissions. Thus, Government brought in The Electricity Regulatory Commissions
(ERC) act, 1998 which was the first step taken by the government to move itself away
from the regulatory aspect of the power sector and fixation of tariff for the energy being
used by the consumer. By this act the various losses occurring at the SEBs level and the
bottleneck caused due to bureaucracy prevalent in the government organizations and
political interference were tried to minimize by formation of Central Electricity
Regulatory Commissions (CERC) at central level and State Electricity Regulatory
Commissions (SERC) at every state. The CERC and SERC had main responsibility of
tariff determination for Central Government and State Government owned generating
stations respectively.
Bullish economic growth story of any country depends on a robust power generation &
delivery model.

1.2. POWER SECTOR REFORMS

1.2.1. THE ELECTRICITY ACT 2003: A REVOLUTION

Competition with regulatory oversight is the framework around which the Electricity
Act, 2003 is woven - competition to encourage efficiency in performance and regulatory
oversight, to safeguard consumers interest and at the same time ensure recovery of costs
for the investors. The journey of distancing of Government from regulations that started
in 1998 has culminated in The Electricity Act of 2003. According to the new law The
3|P a g e
Government is distanced from all forms of regulation, viz., licensing, control over
generation, captive generation, tariff fixation etc. Now the Government remains there
only as a facilitator.
The Act talks about the need and ways of implementing Competition in the power sector
while considering the concerns associated with it, about the electrification of rural areas
and about liberalization of power sector. While Liberalization is the mantra, the
Electricity Act does not encourage an unbridled growth for the sector. The regulatory
Commission have been envisaged as the watchdogs which have a responsibility to put a
check on the cost of generation through powers to regulate tariffs for supply of electricity
from a generating company to the distribution licensees on long term power purchase
agreements, as also with power to look into the costs of generation.
The act also provides the bases for formation of National Electricity Policy (NEP),
National Tariff Policy (NTP), Rural Electrification, Open access in transmission, phased
open access in distribution, Mandatory SERCs, licence free generation and distribution,
power trading, mandatory metering and stringent penalties for theft.
SERCs provide Regulatory guidelines on quality of service standards that are to be
achieved and maintained by the utility and ensure their compliance by providing for
Complaint Redressal Mechanism & Appointment of Ombudsman. SERCs mentions
about the consequences that are to be followed by the utility for non-compliance of the
guidelines.

1.2.2. NATIONAL ELECTRICITY POLICY

In pursuance of the provisions of the Electricity Act, 2003 the Central Government came
out with National Electricity Policy on 6th February 2005.

The policy prescribes the following objectives:
Providing universal access in next five years for which significant capacity
addition and expansion would be required.
Meeting the demand fully by 2012 and to have spinning reserves after meeting
peak requirements.
Bringing about improvements in quality of supply at reasonable rates.
Increasing per capita availability to over 1000 kWh per year by 2012.
Ensuring a minimum lifeline consumption of 365 kWh per year per household as
a merit good by 2012.
Financial turnaround and attainment of commercial viability of all entities in the
sector.
Protection of consumers interest.

1.2.3. NATIONAL TARIFF POLICY

In pursuance with section 3 of the Electricity Act 2003, the Central Government notified
the Tariff Policy on 6th J anuary 2006. According to the Act, the CERC and SERCs are
to be guided by the Tariff Policy in framing its regulations.

It lays out the following objectives:
Ensuring availability of electricity to consumers at reasonable and competitive
rates;
Proj

jectAppraisa

1.2.4. R

Electri
econom
develo
August
rural a
input
govern
Vidhyu

1.
2.
3.

Subsid
which
electrif
@ 150
is unde
scheme
connec

1.2.5. I
Sour
al&Financia
Ensuring f
Promoting
across juri
Promoting
supply.
RURAL EL
icity has be
mic growth
pment espe
t 2006, with
areas so as
for produc
nment has l
utikaran Yo
Rural Ele
substation
Village E
transforme
Stand alon
dy towards
is a noda
fied Below
00/- per con
ertaken thro
e. RGGVY
ctions in rur
INDIAN PO
rce: powerm
alModeling
financial via
g transparen
sdictions an
g competitio
LECTRIFI
een recogni
h, generatio
ecially in ru
h the object
to ensure r
ctive uses i
aunched in
ojana (RGG
ctricity Dis
;
Electrificatio
er in a villag
ne grids with
capital exp
al agency f
Poverty Lin
nnection in a
ough franch
Y has thus
ral India.
OWER SE
min.gov.in
ability of the
ncy, consiste
nd minimizi
on, efficien
ICATION P
ized as a b
on of emp
ural areas. T
tive of impr
rapid econo
in agricultu
April, 200
VY) aimed
stribution B
on Infrastru
ge or hamle
h generation
penditure to
for implem
ne (BPL) h
all rural hab
isees. A thr
s resulted
CTOR STR
Figure 1: P
e sector and
ency and p
ing percepti
ncy in opera
POLICY
basic human
ployment,
The Rural
roving acce
omic develo
ure, rural
05 an ambit
d to establish
Backbone
ucture (VE
et;
n where grid
o the tune o
mentation of
households i
bitations. Th
ree-tier qual
in huge i
RUCTURE
Power Secto
d attracting
redictability
ion of regul
ations and i
n need. It
elimination
Electrificati
ess and qual
opment by p
industries
tious schem
h
(REDB) w
EI) with a
d supply is
of 90% is c
f the schem
is financed
he Managem
lity monitor
investments
E
or Structure
investments
y in regulat
latory risks;
improvemen
is the key
n of povert
ion Policy
lity of elect
providing e
etc. For th
me Rajiv G
with at leas
at least on
not feasible
channelized
me. Electrif
with 100%
ment of Ru
ring has bee
s in provid
4|P a
s;
tory approa
;
nt in qualit
to accelera
rty and hu
was notifie
tricity suppl
electricity a
his the Cen
Gandhi Gram
st a 33/11
ne Distribu
e.
d through R
fication of
capital sub
ural Distribu
en built into
ding electr
a g e
aches
ty of
ating
uman
ed in
ly in
as an
ntral
meen
KV
ution
REC,
f un-
bsidy
ution
o the
ricity

5|P a g e
1.3 INTRODUCTION TO INDIAN POWER SECTOR

Electricity is one of the most vital infrastructure inputs for economic development of a
country. The demand of electricity in India is enormous and is growing steadily. The vast
Indian electricity market, today offers one of the highest growth opportunities for private
developers.

Since independence, the Indian electricity sector has grown many folds in size and
capacity. The generating capacity has increased from a meagre 1,362 MW in 1947 to
more than 225,113 MW by May 2013, a gain of almost 200 times in capacity addition.
India's per capita energy consumption is 778kWh in 2011 -- a rise of almost 400 percent
since 1980. Although, India's energy consumption per unit of output is still rising, but it
is expected to level off and to decline in the future. India consumes two-thirds more
energy per dollar of gross domestic product (GDP) as the world average. India consumes
only about 18 percent of the energy per person as the world average. Over 65 per cent of
India's electricity is produced in thermal facilities using coal or petroleum products.
Almost 19 per cent electricity is generated by hydroelectric facilities. In its quest for
increasing availability of electricity, the country has adopted a blend of thermal, hydro
and nuclear sources. Out of these, coal based thermal power plants and in some regions,
hydro power plants have been the mainstay of electricity generation. Of late, emphasis is
also being laid on non-conventional energy sources i.e. solar, wind and tidal which
constitutes about 12 percent of the total energy generation.

Figure 2: Energy Production in Billion kWh (2010)

Source: wikipedia.org

India is one of the main manufacturers and users of energy. Globally, India is presently
positioned as the fifth largest manufacturer of energy, representing roughly 2.4% of the
overall energy output per annum. It is also the worlds fifth largest energy user,
comprising about 3.3% of the overall global energy expenditure per year. In spite of its
4,326
4,207
1,145
1,037
922
630 621
573
497 485
381
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
6|P a g e
extensive yearly energy output, Indian Power Sector is a regular importer of energy,
because of the huge disparity between oil production and utilization.

Usually energy, especially electricity, has a major contribution in speeding up the
economic development of the country. The existing production of per capita electricity in
India is above 778 kWh per annum. Ever since 1990s, Indias gross domestic product
(GDP) has been increasing very rapidly and it is estimated that it will maintain the pace
in couple of decades. The rise in GDP should be followed by an increase in the
expenditure of key energy other than electricity. The gross electricity production
capability of Indian Power Sector is placed at around 2,25,133 MW as on May 2013.
Though, this is still not enough.

All the Regions in the Country namely Northern, Western, Southern, Eastern and North-
Eastern regions continued to experience energy as well as peak power shortage of
varying magnitude on an overall basis, although there were short-term surpluses
depending on the season or time of day. The energy shortage varied from 19.1% in the
Southern Region to 1.2% in the Western Region. As per CEAs forecast for 2013-2014
among the regions, only the Eastern region would have a surplus of 10.2%. Region-wise
picture in regard to actual power supply position in the country during the year 2013 -14
is given below:

Table 1: All India Region wise generation capacity
Sl
No.
Region Coal Gas DSL Total Nuclear Hydro R.E.S Total
1 Northern
33073.50 5031.26 12.99 38117.75 1620.00 15467.75 5589.25 60794.75
2 Western
49584.51 8988.31 17.48 58590.30 1840.00 7447.50 8986.93 76864.73
3 Southern
25182.50 4962.78 939.32 31084.60 1320.00 11353.03 12251.85 56009.48
4 Eastern
23727.88 190.00 17.20 23935.08 0.00 4113.12 454.91 28503.11
5 N.
Eastern
60.00 1187.50 142.74 1390.24 0.00 1242.00 252.68 2884.92
6 Islands
0.00 0.00 70.02 70.02 0.00 0.00 6.10 76.12
7 All India
131628.39 20359.85 1199.75 153187.99 4780.00 39623.40 27541.71 225133.10
Source: Power ministry as on 31-5-2013

In the past, the power sector growth has not kept pace with the economic expansion and
this has resulted in India experiencing a 13 per cent shortage in peak capacity and 8 per
cent in energy terms, on an overall basis. Driven by the requirement to enhance the
budgetary allocations to social sectors to meet the emerging requirements of sustainable
growth, the Government has envisaged a manifold increase in the role of the private
sector in the financing and operations of the power sector. Significant structural and
regulatory reforms have paved the way for increased private sector participation in all
aspects of the sector. Many of the legal and regulatory requirements to enable this are in
place, while the operational provisions are in different stages of implementation in
different states.

As per CEAs forecast for 2013-14 18,432 MW of capacity is expected to be added,
comprising 15,234 MW of thermal power, 1,198 MW of hydropower and 2000 MW of
nuclear power. Capacity addition during 2012-13 stood at 20,502 MW.

7|P a g e
1.4 POWER SECTOR: KEY DEVELOPMENTS AND CURRENT
STATUS

Indian government forecasted the economic growth to be 6.1% - 6.7% for the year 2013-
2014 and to sustain this growth it is imperative for the power sector to grow with the
same pace. Therefore, it becomes essential to assess the power sector by analysing its
current status, the key challenges faced by it, and its future growth drivers.

Power is considered to be a core industry as it facilitates development across various
sectors of the Indian economy, such as manufacturing, agriculture, commercial
enterprises and railways. Though India currently has the fifth largest electricity
generation capacity in the world pegged at 2,25,133 MW, the growth of the economy is
expected to boost electricity demand in coming years.

Figure 3: All India Generation Capacity

Source: powermin.gov.in

India saw a total capacity addition of approximately 54,000 MW during the 11
th
Five
Year plan, of which approximately 47 per cent was contributed by the central
government, 34 per cent from the state government, and a little over 19 per cent from the
private sector. As per the Planning Commission report capacity addition of 88000MW is
estimated in 12
th
five year plan. Some examples of top public sector companies include
National Thermal Power Corporation (NTPC), Damodar Valley Corporation (DVC) and
National Hydroelectric Power Corporation (NHPC). Some key companies in the private
sector include Tata Power and Reliance Energy Limited. In India, power is primarily
generated from thermal and nuclear fuels, hydro energy and renewable sources.

Indias power generation capacity has significantly increased since 2008, and is also
expected to show a strong growth in the future. However, India faced a power deficit of
approximately 8.5 per cent and a peak demand deficit of over 10 per cent in FY11
primarily due to fuel shortage. This shortage can be attributed to aggregate technical and
commercial (AT&C) losses, which is about 30 per cent with a high variance across
various utilities. Therefore, it is essential for the government to work proactively to
increase the sectors generation capacity in a sustainable manner by addressing key
153188
4780
39623
27542
225133.1
34444.12
0
50000
100000
150000
200000
250000
Thermal Nuclear Hydro RES Total Captive
8|P a g e
challenges, such as supply shortage and distribution losses without damaging the
environment, to attain a high growth rate during the 12th Five Year Plan.

To cope with the demand deficit, the Indian government has implemented various
progressive measures to maximise the countrys power generation capacity and improve
distribution. Some examples of such measures include rural electrification programmes
and ultra mega power projects. In particular, the inflow of foreign direct investments is
expected to step up capacity addition significantly. The government has allowed FDI of
up to 100 per cent through the automatic route in all segments of the power sector except
for nuclear energy. Consequently, the sector has drawn about US$ 4.6 billion investment
over the past decade, of which US$ 1.6 billion came in FY12 alone.

Hence, we can comfortably say that the Indian power sector has strong future growth
prospects. Consequently, we need to assess the various policy initiatives that have had a
positive impact on the sector, and capitalise upon them further to ensure a strong future
growth.

1.5 MAJOR ISSUES

The most important sector in infrastructure is the power sector. There is about 90 GW of
capacity under various stages of construction and attending to the outstanding issues
facing these projects must be given a high priority. However, given the time lag involved
in implementing power projects, it is necessary to ensure that projects which will be
commissioned only in the Thirteenth Plan can also move ahead satisfactorily. Almost
half the capacity in the Twelfth Plan is projected to come from the private sector and the
position is likely to be the same in the Thirteenth Plan. Private sector investors in power
generation have faced many problems in recent times. They include

(i) Inadequate supply of domestic coal and unanticipated increase in prices of imported
coal.
(ii) Difficulties with clearances for captive mines, as well as for generating stations.
(iii) Land availability
(iv) Poor financial health of some state electricity distribution companies which are the
main customers and which suffer from insufficient tariff adjustment plus
inefficiencies in collection.
(v) Inadequate availability of domestic natural gas.
(vi) Inadequate fuel supply agreements for coal.
(vii) More recently, difficulties in obtaining finance from both external and domestic
sources.

1.6 INITIATIVES

PPP IN POWER
To attract private sector participation, government has permitted the private sector to set
up coal, gas or liquid-based thermal, hydel, wind or solar projects with foreign equity
participation up to 100 per cent under the automatic route. The government has also
launched Ultra Mega Power Projects (UMPPs) with an initial capacity of 4,000 MW to
attract 160200 billion of private investment. Out of the total nine UMPPs, four UMPPs
at Mundra (Gujarat), Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and
Tilaiya Dam (J harkhand) have already been awarded. The remaining five UMPPs,
9|P a g e
namely in Sundergarh District (Orissa), Cheyyur (Tamil Nadu), Girye (Maharashtra),
Tadri (Karnataka) and Akaltara (Chattisgarh) are yet to be awarded. To create
Transmission Super Highways, the government has allowed private sector participation
in the transmission sector. A PPP project at J hajjar in Haryana for transmission of
electricity was awarded under the PPP mode. Further, to enable private participation in
distribution of electricity, especially by way of PPP, a model framework is being
developed by the Planning Commission.

ADVANCED TECHNOLOGIES
It has already been announced that 50 per cent of the Twelfth Plan target and the coal-
based capacity addition in the Thirteenth Plan would be through super-critical units,
which reduce the use of coal per unit of electricity produced. Supercritical (SC) power
plants, which operate at steam conditions 560
o
C/250 bars, can achieve a heat rate of
2,235 kCal/kWh as against a heat rate of 2,450 kCal/kWh for sub-critical power plants.
The specific CO2 emission for super-critical plants is 0.83 kg/ kWh as against 0.93
kg/kWh for sub-critical plants. Super-critical technology is now mature and is only
marginally more expensive than sub-critical power plants. Determined efforts are needed
to achieve these results, and prioritisation of coal linkages will be necessary to
incentivise adoption of super-critical technology.

ULTRA SUPER CRITICAL
An Ultra Super Critical (USC) coal-based power plant has an efficiency of 46 per cent
compared with 34 per cent for a sub critical plant and 40 per cent for a Super Critical
(SC) plant. Thus, with an USC or SC plant, the savings in coal consumption and
reduction in CO2 emission can be substantial. A 10,000 MW power plant will generate
60 billion units of electricity per year at around 70 per cent load factor. It has a specific
heat of 1,870 kcal/kwh compared to 2,530 kcal/kwh for a sub-critical plant. Thus, every
unit generated with USC will save 0.165 kg [(2,530-1,870)/4,000] coal of 4,000 kcal/kg;
and 60 billion units will save 9.9 million tonnes of coal per year.

1.7 OPPORTUNITIES

1. Long-term health of power sector seriously undermined (losses Rs 70,000 crore per
year). However, aggregate technical and commercial (AT&C) losses are slowly
coming down. State Governments must push distribution reform.

2. Hydropower development seriously hindered by forest and environment clearance
procedures. Need to look at special dispensation for these States, especially
Arunachal Pradesh.

3. A time-bound plan to operationalize development and evacuation of hydropower
from NER required. Road connectivity is an issue for expeditious project completion.

4. Given limited connectivity of NER with other parts of the country (through Siliguri
corridor), access through Bangladesh needs to be explored.

5. Electricity tariffs not being revised to reflect rising costs. Regulators are being held
back from allowing justified tariff increases.

10|P a g e
CHAPTER 2: COMPANY PROFILE

2.1 BACKGROUND

PFC was established in J uly 1986 as a Development Public Financial Institution (PFI)
under Section 4A of the Companies Act, 1956. It is dedicated to the Power Sector. It is a
wholly owned by Government of India. A Nav-Ratna public Sector Undertaking. It has
highest safety ratings from domestic and international credit rating agencies and
also ISO 9001-2000 Certification for the Project Appraisal System.

PFC provides financial assistance to all types of power projects like Generation,
R&M, Transmission, Distribution, system improvement, etc. PFC encourages optimal
growth and balance development of all segments of power sector through assigning
priorities for financing different categories of projects. The state sector utilities are the
main beneficiary of PFCs financial assistance. PFC has also been funding private sector
projects for last 5-6 years.

2.2 MISSION

PFC's mission is to excel as a pivotal developmental financial institution in the power
sector committed to the integrated development of the power and associated sectors by
channelling the resources and providing financial, technological and managerial services
for ensuring the development of economic, reliable and efficient systems and
institutions.

* Consistently rated Excellent for its overall performance against the targets set in
Memorandum of Understanding (MoU) by the Government of India (GoI) since 1993-94.
* Nav-Ratna Public Sector Undertaking.
* Ranked among the top 10 PSUs for the last four years.

2.3 CREDIT RATINGS

Placed at Sovereign Rating by International Rating Agencies - Moodys and
Standard & Poors for long term foreign currency debt.

Placed at the highest safety ratings by accredited rating agencies in India - CRISIL and
ICRA

Domestic borrowings include term loans and bonds; External borrowings take the form
of Syndicated Loans, Fixed & Floating Notes.

Consistently rated Excellent by the Government of India (GOI) for overall performance
against the targets set in Memorandum of Understanding (MoU) between GOI and PFC.

Proj

jectAppraisa
DOM

CRISIL
ICRA
Interna
Moody
Finch
Standa
Source

2.4 O

PFC in

al&Financia
MESTIC RA
L
ational Ratin
ys
ard & Poors
e: PFC webs
BJECTIV
n its present
To rise the
rates and t
the power
To act as
improvem
To assist s
sector duri

alModeling
Table 2: D
ATING AG
ng Agency
s
site
VE OF PF
t role has the
e resources
terms and co
projects in
catalyst to
ent in the fu
state power
ing transitio
Different Ra
GENCY
FC
e following
from intern
onditions an
India.
o bring inst
unctioning o
sector in ca
onal period o
ating by maj
Long
A
LA
B
BB
BB
g main objec
national and
nd on-ward
titutional, m
of the state
arrying out r
of reforms
jor rating a
RUPEE BO
g Term
AAA
AAA

aa3
BB-
BB-
ctives: -
d domestic
lend these
managerial,
power utilit
reforms and
agencies
ORROWING
Sho
At p
sovere
sources at t
funds on op
operationa
ties
d to support
11|P a
G
ort Term
P1+
A1+

par with
eign Rating
the compet
ptimum bas
al and finan
the state po
a g e
g
titive
sis to
ncial
ower

Proj

jectAppraisa
2.5 CL

2.6 RA

Fu

al&Financia
LIENTS
State Elect
State Powe
State Elect
Other Sta
Departmen
the power
Central Po
J oint Sec
operative S
Municipal
Private Sec
ANGE O
nd Based
Rupee Ter
Foreign Cu
Buyers Li
Working C
Loan to Eq
Debt Restr
Take out F
Bridge Lo
Lease Fina
Bill Discou
alModeling
OF PFC
tricity Boar
er Utilities
tricity/Powe
ate Departm
nt) engaged
project
ower Utilitie
ctor Power
Societies
Bodies
ctor Power
F SERVI
rm Loan
urrency Ter
ine of Credi
Capital Loan
quipment m
ructuring/ R
Financing
an
ancing
unting
ds
er Departme
ments (like
d in the deve
es
r Utilities
Utilities
ICES
rm Loan
it
n
manufacturer
Refinancing
ents
e irrigation
elopment o
and Co
rs

n
f
-
12|P a a g e
Proj

jectAppraisa
No

2.7 RE

PFC ha
power
initiativ

al&Financia
on-Fund Ba
Guarantee

Exchange
EFORMS
as been acti
sector in
ves have be
PFC is pr
lending cri

PFC has d
Utilities fo
Reform G
Utilities to
alModeling
ased
s
Risk Manag
S & REST
ively persua
order to m
een taken:-
roviding fin
iteria/expos
decided to p
or structural
Group consti
o formulate
F
gement
TRUCTU
ading State
make them
nancial assi
sure limit no
rovide tech
l reforms of
ituted in PF
suitable res
Figure 4: Bu
Sourc
URING IN
Govt. to ini
commercia
istance to
orms.
hnical/financ
f the State P
FC to advic
structuring p
usiness Stra
ce: PFC We

NITIATIV
itiate reform
ally viable.
reform-min
cial assistan
Power Secto
ce and assis
programmes
ategy of PF
Website
VES
m and restru
In this re
nded States
nce to State
or.
sts the State
s.
C
13|P a
ucturing of t
egard follow
s under rela
Govts. / Po
te Govt. /Po
a g e
their
wing
axed
ower
ower

14|P a g e

Table 3: Sanctions & Disbursements for the respective financial years

Particulars Financial Year
2007-08 2008-09 2009-10 2010-11 2011-12
Sanctions 69498 57030 65466 75197 69024
Disbursement 16211 21054 25808 34121 41418
Source: PFC website

Table 4: Major Projects Funded by PFC

Name of the Project Capacity (MW) Cost (Crs) Amount funded
Malwa TPS 2x500 4054 2730
Khaperkheda TPS Extn. 1x500 2191 1753
Kameng HEP 4x150 2485 1740
Koradi TPS 3x660 10019 6250
Mejia Extn. Unit 2x250 2800 1456
Sagardighi TPS PH1 2x300 2754 1925
Chandrapura Extn. Unit
7&8
2x250 2053 1435
Panipat TPS Stage V 2x250 1785 1428
Source: PFC website

Table 5: Financial Highlights for the year 2011-12

Profit after Tax Rs 3032 Crore
Loans and Grants Sanctioned Rs 69024 Crore
Loans and Grants Disbursed Rs 41418 Crore
Net Worth Rs 19493 Crore
Reserves and Surplus Rs 19388 Crore
No. of Employees 379
Source: PFC website
15|P a g e
2.8 SWOT Analysis

Strengths

Govt. of Indias undertaking.

Good quality management

Well established, long standing relations in the power industry Implementing
agency for Mops schemes including AG &SP and APDRP Highest credit rating
(due to government ownership)

Weaknesses

Poor asset quality with most of the lending to SEBs, whose loan repayment
capabilities in the long run is doubtful.

Concentration risk attributed to lending in single sector.

Opportunities

Power sector presents significant investment opportunities.

Providing investment gateways & consultancy for domestic and external
financial agencies.

Having new business opportunities to cover the entire range of activities in the
Power sector.

Threats

PFC has significant exposures entities which are loss making, financially
weak an dare defaulting to most of their creditors. Delinquencies by these
entities to PFC could impair the currently sound Balance Sheet of PFC.

With increasing exposure to SEBs, their weak balance sheet may affect PFCs
creditworthiness.

16|P a g e
CHAPTER 3: OBJECTIVE AND SCOPE

3.1 OBJECTIVE OF THE PROJECT
The objective of the Project Report is:

1. Finding out the factors affecting a projects capital and operational expenditure
which in turn have an impact on the cash outlay and revenue flow of the project and
their study. Thus, performing Project Appraisal of a 660 MW Coal Based Super-
critical Thermal Power Project.

2. A financial model of a 660 MW Coal Based Super-critical Thermal Power Project so
as to study the effect of above factors on tariff and revenue flows.

3. To find out probable values of IRR, DSCR among other ratios using the financial
model to study the feasibility and attractiveness of a 660 MW Coal Based Super-
critical Thermal Project.

3.2 SCOPE
Scope of project covers installation, commissioning, operation and maintenance of 660
MW coal fired Thermal Power Plant and associated systems.

Indian power sector wants to ramp up the installed capacity to meet the growing demand.
Large Power Projects enjoy economics of scale and help in lowering the tariff of supply.
This project helps to find out the factors that will affect the project cost and thus have an
impact on total investment and operational expenses of the project. The assessment and
analysis of these factors will help in determining the project cost, the associated risks and
ultimately the tariff for supply from the project and thus the revenue and cash flows.
Such information is vital in making financial decisions and project appraisal. The study
may also help in understanding of ways to mitigate the risks.

17|P a g e
CHAPTER 4: LITERATURE REVIEW AND
RESEARCH METHODOLOGY

4.1. LITERATURE REVIEW
The literature survey was carried out by reviewing various journals on project appraisal
and financial model of a power plant. Few journals reviewed are:

P.L.Kingston [1973] in IBM System J ournals suggested, The use of computers in
financial planning has become an area of increasing interest to financial management and
data processing users. Computing systems facilitate the use of financial models in that
they allow for the storage and retrieval of a representation of a financial plan and also for
the evaluation of the consequences of what if conditions. Thus a financial model is a
tool that can assist in the entire business planning process whether it be forecasting, cash
management, or projection of profits. This paper presents introductory concepts that
provide a basis for systems design and implementation of financial models. Described
are the terminology, the basic components of financial models, and two general
approaches to the construction of these models.

W Wetekamp [2011] suggests how Net Present Value (NPV) can be used as a proper
tool to ensure effective project management. The author proves that investment project's
appraisal methods, such as e.g. NPV, can and should be used as an ongoing monitor of
project health. What is more, even in case of project turbulences Net Present Value can
be used as a key instrument for finding the most appropriate solutions.

Robert Lundmark et al [2012] analyzed how market and policy uncertainties affect the
general profitability of new investments in the power sector, and investigate the
associated investment timing and technology choices. They developed an economic
model for new investments in three competing energy technologies in the Swedish
electric power sector. The model takes into account the policy impacts of the EU ETS
and the Swedish green certificate scheme. By simulating and modeling policy effects
through stochastic prices the results suggest that bio-fuelled power is the most profitable
technology choice in the presence of existing policy instruments and under our
assumptions. The likelihood of choosing gas power increases over time at the expense of
wind power due to the relative capital requirement per unit of output for these
technologies. Overall the results indicate that the economic incentives to postpone
investments into the future are significant.

Reports of similar projects for thermal power plants were also reviewed. The reports of
previous batches on similar topic and the referenced data were helpful in determining
data for this project. The literature available within the company helped a lot in
understanding Project Finance and factors of project cost which are summarized as:

18|P a g e
4.2 PROJECT FINANCE
Project financing is an innovative and timely financing technique that has been used on
many high profile corporate projects, including infrastructural and power. Employing a
carefully engineered financing mix, it has long been used to fund large scale natural
resource projects, from pipelines and refineries to electric-generating facilities and
hydroelectric projects. Increasingly, project financing is emerging as the preferred
alternative to conventional methods of financing infrastructure and other large-scale
projects worldwide.

Project financing discipline includes understanding the rationale for project financing,
how to prepare the financial plan, assess the risks, design the financing mix, and raise the
funds. In addition, one must understand the cogent analyses of why some project
financing plans have succeeded while others have failed. A knowledge base is required
regarding the design of contractual arrangements to support project financing; issues for
the host government legislative provisions, public/private infrastructure partnerships,
public/private financing structures; credit requirements of lenders, and how to determine
the project's borrowing capacity; how to analyze cash flow projections and use them to
measure expected rates of return; tax and accounting considerations; and analytical
techniques to validate the project's feasibility.

Project finance is different from traditional forms of finance because the credit risk
associated with the borrower is not as important as in an ordinary loan transaction rather
the identification, analysis, allocation and management of every risk associated with the
project is given more importance.

Project finance is the financing of long term infrastructure and industrial projects based
upon a complex financial structure where project debt and equity are used to finance the
project. Usually, a project financing scheme involves a number of equity investors,
known as sponsors. As well as a syndicate of banks which provide loans to the
operations. The loans are most commonly non-recourse loans, which are secured by the
project itself and paid entirely from its cash flow, rather than from the general assets or
creditworthiness of the project sponsors. The financing is typically secured by all of the
project assets, including the revenue-producing contracts. Project lenders are given a lien
on all of these assets, and are able to assume control of a project if the project company
has difficulties complying with the loan terms.

Generally, a special purpose entity is created for each project, thereby shielding other
assets owned by a project sponsor from the detrimental effects of a project failure. As a
special purpose entity, the project company has no assets other than the project. Capital
contribution commitments by the owners of the project company are sometimes
necessary to ensure that the project is financially sound. Project finance is often more
complicated than alternative financing methods. It is most commonly used in the mining,
transportation, telecommunication and public utility industries.

19|P a g e
Figure 5: Project Finance Structure

Source: PFC Library

Risk identification and allocation is a key component of project finance. A project may
be subject to a number of technical, environmental, economic and political risks,
particularly in developing countries and emerging markets. Financial institutions and
project sponsors may conclude that the risks inherent in project development and
operation are unacceptable (unfinanced able). To cope with these risks, project sponsors
in these industries (such as power plants or railway lines) are generally completed by a
number of specialist companies operating in a contractual network with each other that
allocates risk in a way that allows financing to take place. The various patterns of
implementation are sometimes referred to as "project delivery methods." The financing
of these projects must also be distributed among multiple parties, so as to distribute the
risk associated with the project while simultaneously ensuring profits for each party
involved.

4.3 PROJECT APPRAISAL
It is an assessment of a project in terms of its economic, social and financial viability. A
lending financial institution makes an independent and objective assessment of various
aspects of an investment proposition. It is defined as taking a second look critically and
carefully at a project by a person who is in no way involved or connected with its
preparation. He is able to take independent, dispassionate and objective view of the
project in totality, along with its various components. There are some steps for Project
appraisal.

Management Appraisal: Management appraisal is related to the technical and
managerial competence, integrity, knowledge of the project, managerial competence of
the promoters etc. The promoters should have the knowledge and ability to plan,
implement and operate the entire project effectively. The past record of the promoters is
to be appraised to clarify their ability in handling the projects.

Construction
Contracts
O&M
Support
Licenses
Certification
ZoningLocal
Permits
Tariffforsuch
electricity
Obligationto
buyelectricity
Electricity
Deliveries
ElectricityPayments
Debt
DebtService
Dividend
Sponser(s)
Lenders
ProjectCompany
EquipmentProvider
Connections
CivilWorks
RegulatoryAuthorities
PowerPurchaser
Equity
20|P a g e
Technical Feasibility: Technical feasibility analysis is the systematic gathering and
analysis of the data pertaining to the technical inputs required and formation of
conclusion there from. The availability of the raw materials, power, sanitary and
sewerage services, transportation facility, skilled man power, engineering facilities,
maintenance, local people etc are coming under technical analysis. This feasibility
analysis is very important since its significance lies in planning the exercises,
documentation process, and risk minimization process and to get approval.

Financial feasibility: One of the very important factors that a project team should
meticulously prepare is the financial viability of the entire project. This involves the
preparation of cost estimates, means of financing, financial institutions, financial
projections, break-even point, ratio analysis etc. The cost of project includes the land and
sight development, building, plant and machinery, technical know-how fees,
preoperative expenses, contingency expenses etc. The means of finance includes the
share capital, term loan, special capital assistance, investment subsidy, margin money
loan etc. The financial projections include the profitability estimates, cash flow and
projected balance sheet. The ratio analysis will be made on debt equity ratio and current
ratio.

Commercial Appraisal: In the commercial appraisal many factors are coming. The
scope of the project in market or the beneficiaries, customer friendly process and
preferences, future demand of the supply, effectiveness of the selling arrangement, latest
information availability an all areas, government control measures, etc. The appraisal
involves the assessment of the current market scenario, which enables the project to get
adequate demand. Estimation, distribution and advertisement scenario also to be here
considered into.

Economic Appraisal: How far the project contributes to the development of the sector;
industrial development, social development, maximizing the growth of employment, etc.
are kept in view while evaluating the economic feasibility of the project.

Environmental Analysis: Environmental appraisal concerns with the impact of
environment on the project. The factors include the water, air, land, sound, geographical
location etc.

4.4 CALCULATION OF TARIFF BASED ON CERC REGULATIONS
The tariff for supply of electricity from a thermal generating station shall comprise two
parts, namely, capacity charge (for recovery of annual fixed cost consisting of the
components) and energy charge (for recovery of primary fuel cost and limestone cost
where applicable).

Annual Fixed Cost: The annual fixed cost (AFC) of a generating station or a
transmission system shall consist of the following components

Return on equity: 15.5% tax free return on total equity. Only 30% of the project
cost can be treated as equity.
21|P a g e
Interest on loan capital: Year to year loan interest is calculated on full debt
amount by weightage average rate of interest.
Depreciation: Depreciation up to 90% of the capital cost of asset is allowed.
Depreciation shall be calculated annually based on Straight Line Method and rate
defined in CERC guidelines.
Interest on working capital: Working capital shall include Cost of coal or
lignite and limestone, if applicable, for 1 months for pit-head generating
stations and two months for non-pit-head generating stations.
Cost of secondary fuel oil for two months.
Operation and maintenance expenses for one month.
Maintenance spares @ 20% of operation and maintenance expenses.
Receivables equivalent to two months of capacity charges and energy charges for
sale of electricity.

Energy Cost: It is also calculated on norms of CERC, the yearly consumption of
primary fuel and secondary fuel is taken for the calculation.

DPR (Detailed Project Report) of various projects of similar kinds helped in
understanding the project technically. Reports and notifications available on various
websites listed in bibliography also helped in adding value to the project. The data
mainly obtained by interviews with experts and experience of plant operations and form
the basis of assumptions taken for modelling. The data thus analysed was processed in
model for finding out the required ratios and check the project feasibility.

4.5 RESEARCH METHODOLOGY
Methodology used for the project:

Project Appraisal: To evaluate the project rating and conducting the feasibility report of
a project based on the DPR/information memorandum/application form and other related
materials submitted by the borrower.

Assesses the capital needs of the business project and how these needs will be
met.

Calculating the cost of generation and relevance

Calculation of DSCR, IRR and sensitivity analysis.

Entity Appraisal: To assess the financial health of organizations that approach PFC for
credit for power projects. This would entail undertaking of the following procedures:

Analysis of past and present financial statements

Examination of Profitability statements
22|P a g e
CHAPTER 5: OVERVIEW OF PROJECT
APPRAISAL & FINANCIAL MODELLING

5.1. GUIDING PRINCIPAL FOR PROJECT APPRAISAL AT PFC
Offering credit is an operation fraught with risk. Before offering credit to an
organization, its financial health must be analysed. Credit should be disbursed only after
ascertaining satisfactory financial performance. Based on the financial health of an
organization, PFC assigns integrated ratings. These credit ratings are used to fix the
interest rate, exposure limit and security criteria.

5.1.1. ENTITY ELIGIBILITY CRITERIA: While considering the eligibility of an
entity, last two year Auditors report and notes to annual accounts along with Income tax
assessment order for last three years be also examined. Type of securities and mode of
repayments is also to be suggested by the help of entity rating.

5.1.2. STATUTORY CLEARANCES: All statutory clearances requires at
Central/State level for the implementation of the project are to be ensured. Depending on
the cost of project, techno economic clearances of CEA/SEB may be asked.

Clearances/Agreements required for implementation of project:
1. Land Acquisition
2. Water Availability
3. Stack Height: Airport Authority of India
4. Forest Clearance: Such that no sanctuary, reserve, national park within the project
5. No defence establishment
6. Ministry of environment and Forest
7. Fuel Supply Arrangement/Agreement through various coal linkages
8. Fuel Transportation Arrangement
9. PPA for selling Electricity
10. Transmission agreement with Transmission agency
11. Pollution Control Board

Table 6: Approvals and Agreement Status

Major Clearances/ Agreements
S No Requirement Agency Status
1
Consent to establish /
NoC
Tuticorin Airport Certified
2 Environment Clearance MoEF
The Company has
applied for the
clearance.
3 Forest clearance MoEF
The Company has
applied for the clearance
4 Water Drawl SG Agreement made
23|P a g e
5 Stack height Clearance
Airport Authority of
India (AAI)
Approved
6
Pollution control board
NOC for power plant
Tamil Nadu
Pollution control
board (TNPCB)
All the required
standards of Pollution
control board are met
7 Land Availability State Government
600 acres has been
acquired
8 Primary Fuel Coal India Limited
Long term agreement
made on 15 April 2010
9 Transportation of Fuel Aspinwall Co Ltd
Fuel Transport
Agreement made
10 Transmission Line PGCIL
Open Access and
Transmission
Agreement made
11 EPC / package contract
Consolidated
Construction
Consortium Ltd.
Agreement made on 18
J une 2010

5.1.3. COST ESTIMATE: The base date for estimation of cost shall not be more than
six month old at the time of talking up the project for appraisal. Physical contingencies
and the price contingencies shall be made depending on the project completion period of
1,2,3,4 and 5 years as per PFC guidelines. Also IDC, to be considered to arrive at project
cost.

5.1.4. PROJECT COST-BENEFIT ANALYSIS: Calculate Financial Internal rate of
return (FIRR). Techno-economically sound with Financial IRR not less than the
minimum required rate. Sensitivity analysis is also done.

5.1.5. PROJECT ANALYSIS: The project is evaluated on various parameters and then
ranked according to the PFC guidelines. The method is explained later on.

5.2. PROJECT & ENTITY APPRAISAL
The Project Analysis is intended for arriving at a relative measure of merit for the
project. This model involves:
1. Entity rating
2. Project rating

5.2.1. ENTITY APPRAISAL METHODOLOGY
Analysis and critical comments on the strength and weakness of organization,
management, its working result, financial position etc. are made on the basis of
organization set up, capital/financial structure, operating/working results, credit
worthiness, financial result, entity related risks and mitigation measures proposed. Power
Sector entities are evaluated with reference to a set of qualitative and quantitative factors
to arrive at the Aggregate Entity Score. In addition to the performance parameters,
milestones giving weightage to core reform activities have also been included in the
overall grading mechanism. Both the public and private entities are evaluated separately
on set of measures.
24|P a g e
It is a two-stage process i.e. preliminary evaluation and detailed evaluation in which all
the promoters are evaluated for their ability to contribute equity, carry the project to
completion and operate the project as per the contracts.

PRELIMINARY APPRAISAL

In this, the scrutiny is based on the analysis of quantitative parameters, so as to access
the financial strength of the promoters, track record of the project implementation and
the credit worthiness. The scoring of all the factors is on a six- point scale, with 6 being
the best and 1 being the worst. It involves analysis under two categories for Preliminary
Evaluation:
Business analysis
Financial flexibility

I. BUSINESS ANALYSIS

Business analysis evaluates the performance of the present business of the promoters.
The analysis involves evaluation of the market position and financial position of the
company along with a view on management expertise and integrity of the promoters. The
parameters and factors used in business analysis have been enumerated below:

a) Market Position
Here relative market share of the company is determined. It is calculated as the ratio
of the turnover of the promoting company divided by the turnover of the market
leader in the business. In case of diversified companies the same process is repeated
for each division.

b) Financial Risk
It evaluates the past financial performance of the promoting companies. Performance
of at least the last three years is evaluated. Financial risk parameter is represented by 5
ratios, which cover various aspects of companys financial performance:

Table 7: Preliminary appraisal
Ratios Meaning of Scoring Attribute
Return on Capital Employed
(ROCE)
Quantitative Return on Investment
Operating Margin Quantitative Profitability of the Business
Debt Service Coverage Ratio
(DSCR)
Quantitative Coverage Ratio
Total Debt to Net Worth Quantitative Gearing
Cash Flow From Operation
to Total Debt
Quantitative Cash Flow
Source: PFC Library

Return on Capital Employed (ROCE)

ROCE =PBIT/ Opening capital employed

25|P a g e
Here, Capital Employed =(Capital +Reserves +Short term debt +Long term debt
evaluation reserves Capital work in progress)ROCE is scored as a simple average
of the last three years but if the latest ROCE is lower than one for the preceding
year then the latest ROCE should be used for calculation instead of the average.

Operating Margin
OM =Operating Profit before Depreciation, Interest and Taxes/ Income from
operations

Debt Service Coverage Ratio (DSCR)
DSCR =(PBIT Taxes)/ (Repayment due to Long term Loan +Interest on long
term and Short term loans)

Total Debt/Total Net Worth
Total debt/ total net worth =(Long term loans +Short term loans +Working
Capital loans)/(Capital +Reserves Revaluation reserve Loss brought forward
Intangible Assets)

Cash Flow from Operation / Total Debt
Cash flow from operations/ Total debt =Cash flow from Operations/ (Long term
loans +Short term loans +Working Capital Loans from Banks)

II. FINANCIAL FLEXIBILITY

It is used to judge the ability of promoters to financially manage the project. Thus, key
points evaluated are:
Ability to contribute equity to the project
Ability to bring the project to financial closure
Ability to fund temporarily funding mismatches

Ratios Meaning Attribute being Evaluated
Equity Funding Potential Quantitative Equity Raising Potential
Bridge Finance Ability
Quantitative Quarterly cash surplus from
operations
Track Record of Fund raised
Quantitative Funds raised in last 10 years
Aggregate Project cost
Handled
Quantitative Projects established in last 10
years
Source: PFC Library

Equity Funding Potential: A Promoting company can contribute equity to the
project by raising debt on its books or raising equity or through cash surpluses in
the books.

Bridge Financing Ability: This parameter basically judges the ability of
company to fund short term cash flow imbalances in the project. This attribute is
useful to prevent delay in project implementation due to small disbursals from the
institutions.
26|P a g e

Track Record of Fund Raised: This technique is basically used to judge the
promoters ability to achieve financial closure and tie up funds for the project.
This factor is scored by comparing the aggregate fund raised in the last ten years
as a proportion of the project cost with the benchmark, to arrive at a score.

Aggregate Project Cost: This factor evaluates the ability of the promoters to
manage new project. Scoring is done by comparing the aggregate cost of the
project implemented by the promoting group in the last years as a proportion of
the cost of the present projects with the benchmark, to arrive at a score.

DETAILED APPRAISAL
It involves Qualitative Analysis of Promoter Company. The scoring of all the factors is
on a four-point scale. The factors are judgmental and the model provides broad
guidelines for the evaluation for the same. It involves analysis under two categories
parameters for Detailed Evaluation:
Management risk
Management past experience

I. MANAGEMENT RISK
It evaluates two factors:

Table 8: Detailed Appraisal
Managerial Competency
Quantitative Competency in running the
business
Business and Financial
Policy
Quantitative Risk Propensity

Source: PFC Library

II. MANAGEMENT EXPERIENCE

Experience in Power Sector Quantitative
Power Sector Experience

Experience in Setting the
Project Size
Quantitative
Project Management Capability

Experience in India Quantitative
Experience in dealing with
Developed Economies

Project Preparedness Quantitative
Preparedness of the group to
Execute the Project

Source: PFC Library
27|P a g e

5.2.2. PROJECT RATING
The project is rated against a set of qualitative and quantitative parameters. The
qualitative parameters being Cost/MW, first full year of generation, levellised cost of
generation and DSCR. The qualitative parameters are type of implementation structure,
security of fuel, power sale agreement and satisfactory operation and maintenance. The
weightage of parameter in calculating the score of qualitative and quantitative parameters
is assigned on the company norms and policies.
The upper and lower limits of qualitative and quantitative parameters are fixed and then
on basis of pro-rata basis, assigning of rank is done. The parameters point and their
allocation are also discussed on the set of standards.

Quantitative Parameters

First full year cost of generation w/o RoE.
Levellised tariff/ cost of generation with RoE and tax
Average DSCR

Qualitative Parameters

Power off take
Fuel supply
o Long term agreement
o Short term agreement
o Captive Coal mine
o Transportation facility
Construction Contract
o Warranty
o Market standard
o Performance
Type of contract and bidding
Experience of the EPC contractor
Commercial terms of Contract
O&M
o Past Experience
o Management Team and efforts
The criteria of two parameters are evaluated, assessed and quantified on the above
factors, there is a set of scoring range and on the basis of that model project is ranked.

28|P a g e
5.3. FINANCIAL MODELING: A TOOL FOR PROJECT
APPRAISAL

In every project finance deal, where everyones financial security rests on the future
performance of a new undertaking, a thorough analysis of the projects finances under a
arrange of assumptions is prerequisite for arranging debt and equity funding, financial
model play a crucial role in decision-making.

5.3.1. STEPS TAKEN FOR DESIGNING A MODEL
The essential steps to be taken for designing a financial model for any infrastructure
project financing through private participation are as follow:
Determining the scope of the project and the related EPC cost.
Determining other expenditure such as Development expense, Preliminary &
Preoperative expenses, financial costs, etc.
Determine the total Cost of the project with interest during construction.
Assessment of tariff in order to determine revenue potential for the project.
Determine O&M cost through the concession period.
Calculating the fixed and variable cost relating to the project.
Financial analysis to determine the most efficient means of financing.

5.3.2. PURPOSE AND USES OF FINANCIAL MODEL
The financial model provide a basic analysis, usually based on relatively raw,
preliminary data and simplified financing assumptions, to establish weather a given
project is worth pursuing further. The required output may be:
Basic Project IRR
Debt service Coverage Ratios and other debt ratios.
Establishing a financial structure that is sustainable by the project.
An indication of tariff levels required for achieving appropriate returns.
Preparation of sensitivity analysis.

29|P a g e
CHAPTER 6: CASE STUDY

6.1 PROJECT PURPOSE AND SCOPE

PURPOSE
To bridge the nations energy deficit, both average and peak load, by capacity addition of
660 MW by setting-up Coal fired Thermal Power Project based on super critical
technology at Tamil Nadu, India.

SCOPE
Scope of this project covers installation, commissioning, operation and maintenance of
660 MW with Super critical & Pulverised Coal fired boiler and associated systems.

The Scope shall broadly cover:
660 MW power plant and associated systems.
Construction and commissioning of the Balance of Plants (BoP) required for
efficient reliable and safe operation of the plant.
Installation of BTG, their auxiliaries and commissioning.
Construction of water intake system for the project site.
Transportation Arrangement for Coal to the Project site.
Power evacuation system including transmission lines.
Construction of facilitation infrastructure such as administration building.

6.2 PROJECT DETAILS

6.2.1 LOCATION
The location of the proposed plant is in Tamil Nadu. The project site is located at a
distance of about 14 kms from the National High way and 15 kms from Trichendur town.
The site elevation is +12 m above mean sea level. The site terrain is generally plain
requiring minimum efforts to grade them suitable for construction of the project.
The site was selected considering the followings:

SNo Geographic Items Details
1 Location Tamil Nadu State
2 Nearest Railway Station Thoothukkudi
3 Road Approach Madurai Tiruchendur- Manapad
4 Altitude +12 m above MSL
5 Nearest Airport Thoothukkudi
30|P a g e
6 Nearest Port Thoothukkudi
7 Rainfall (Annual) 600 mm
8 Climatic Conditions Tropical Climate
9 Latitude / Longitude
8
o
48N / 78
o
10E
10 Soil bearing capacity 25 T/M

There is no cultivation in the project site and rehabilitation of resident population from
the project site does not arise. Around the project site there is no reserve forest within 15
Km radius.

6.2.2 LAND
The project is being implemented in Tamil Nadu. The company has already acquired 600
acres of land and site development works will commence shortly. The land is currently
not in use and there are no inhabitants requiring rehabilitation or resettlement.

Specifications Land area(Acres)
Plant area 260
Ash disposal 130
Colony 10
Green belt others 100
Others 100
Total 600

The site identified for the Project is generally plain requiring minimum efforts to grade
them suitable for construction of the project. . Around the project site there is no reserve
forest within 15 Km radius. The Company has paid Rs. 50 Crore towards allotment of
land and development works.

The Company proposes to use the allotted land for setting up Main Power Plant, colony
and Ash Dyke requiring about 400 acres. The remaining allotted land, about 100 acres,
would be used for Green Belt development. The balance land of about 100 acres would
be acquired by the Company in due course. The site development for the Proposed
Project site, covering levelling, boundary wall, internal and approach roads and other
miscellaneous requirements, is estimated to cost about Rs. 20 Crore.

6.2.3 WATER
The requirement of water for the plant will be for meeting the requirement of make up
for the water system, dust suppression system in coal handling plants, ash disposal
31|P a g e
system and the D.M. water plant which will be supplying the power cycle make up
requirements. In addition the water requirements will be for drinking and service
purposes.
The total requirement of water for the plant will be around 150 m/hr for the project.

Water requirement for the plant

Sl No. Item Quantity (m/hr)
1 ACW System make up 80
2 Power Cycle make up 45
3 Service Water Requirement 15
4 Portable Water Requirement 10
Total 150

ABC Ltd. has made an agreement of minimum SG portable water supply of 4000m
3
/day
of SG portable water by SG. A raw water reservoir of 25200m
3
capacity to hold 7 days
requirement for plant requirement of water will be constructed at the plant site. Air
cooled condenser for turbine is proposed. Water drawl approval has been obtained by the
company.
The basic features of the sweet water system and auxiliary cooling water for the
proposed station will be proposed to buy from prospective water suppliers. Air cooled
condenser is proposed for condensing steam. At the Plant, a water reservoir will be
installed to meet 7 days requirement of the plant.
The overall cost of water arrangement as estimated by the Company is about Rs. 90
Crore and has been considered in the Project cost.

6.2.4 SUPER CRITICAL TECHNOLOGY

The Proposed Project is based on Super Critical Boiler Technology instead of more
prevalent Sub-Critical Boiler Technology in India. The basic difference between the two
technologies is the steam pressure at which the boiler is operated. In case of Sub Critical
Technology the operating pressure in boiler is less than 19 MPa as against 24 MPa in
typical subcritical power plant. The supercritical power plant can achieve considerably
higher cycle efficiencies with resulting savings in fuel costs and reductions in CO2 and
other emissions.

Plant costs are comparable for both the technologies. However, overall economics for
super critical technology are more favorable because of the increase in cycle efficiency.
Economic performance is also influenced by other factors, including plant availability,
flexibility of operation and auxiliary power consumption. The once-through boiler
design used in super critical technology based plants is inherently more flexible than
drum designs used in subcritical technology based plant, due to fewer thick section
components allowing increased load change rates. Typical average availability of super
32|P a g e
critical technology based power plants is about 85%. However, with appropriate design
and materials, a plant availability of >90% is achievable. Efficiencies of supercritical
power generation are also less affected by part load operation, with efficiency reductions
less than half those experienced in subcritical plant.

The major environmental benefit of supercritical power generation is from reduced coal
consumption per unit of electricity generated, leading to lower CO2 and other emissions.
CO2 emissions for supercritical plant would be 17% lower than for a typical subcritical
plant. Similarly, all other emissions e.g. NOx and SOx, would also be reduced pro-rata
with the reduction in coal consumption.

However, for optimum environmental performance, supercritical power generation
technology can benefit from advanced emissions-control technologies to minimize
harmful emissions. These include flue gas desulphurization (FGD), low-NOx
combustion, selective catalytic reduction (SCR), selective non-catalytic reduction
(SNCR), air staging and reburn technologies.

The lower CO2 emissions from super critical plants are quantifiable and the project can
be registered as a CDM project for accruing CERs which can be traded with international
markets. This can potentially work as an additional revenue stream for the project.

6.2.5 TECHNOLOGY

Thermodynamic cycle
Thermodynamic reheat cycle. The thermodynamic reheat cycle consists of steam
generator, steam turbine generator with condenser, the Condensate extraction and boiler
feed pumps along with H.P & L.P feed water heaters & deaerator.

Technical and performance parameters
This project is based on supercritical technology. The critical pressure point of water and
steam is 22.1 MPa, below this pressure it is called sub-critical pressure and above this
pressure it is called as supercritical pressure. In the supercritical region, co-existence of
water and steam is not present, therefore in the absence of steam/water mixture, the
recalculating boiler technology adopted for subcritical pressure could not be used. This
was the key to the advancement of cycle efficiency through the adoption of economic
and reliable once-through supercritical boilers.
The drive for enhancing the efficiency of generating plants in and environmentally
friendly manner has been realized mainly through advancing the steam conditions, i.e.
increasing pressure and temperature. This led to the development of some new power
generation technologies like integrated gasification combined cycle (IGCC) and
pressurized fluidized bed boilers (PFB).

Boiler Feed Pump
Three nos., horizontal, multistage, centrifugal type boiler feed pumps will be provided.
Two nos. pumps will be turbine driven with steam extracted from turbine & one no
pump will be motor driven as standby. Each boiler feed pump will have one matching
capacity single stage booster pump. The booster pump will take suction from feed water
storage tank and discharge into the suction of corresponding main boiler feed pump
33|P a g e
which in turn, will supply feed water to boiler through the high pressure heaters and feed
control station.

Condensate extraction pumps
The condensate extraction pumps will be vertical, multi stage enclosed canister type with
flanged connection driven by electric motor. Two nos. condensate extraction pumps are
used in this system.

Supercritical Boilers
Different boiler technology is used which is the critical requirement in the adoption of
supercritical pressure and temperature. With supercritical pressure boiler need to increase
the wall thickness of the pressure components and also use advanced materials for its
effective working.

Super critical steam turbine
Steam turbine is of 3000rpm and is designed for main steam parameters of 247kg/cm2 &
540C before emergency stop. High pressure steam turbines must be designed to
withstand the higher pressure and temperature. Typical feedwater temperatures are
around 275C to 290C compared to around 235C to 250C for sub-critical plants. With
supercritical pressures, because of the greater steam pressure range in the turbine from
inlet through to the condenser, there is greater scope for including an extra stage or
stages of feedwater heating. This will further increase the cycle efficiency.

6.2.6 PRIMARY FUEL

The primary fuel for the Proposed Project would be domestic coal. The Company
proposes to use coal available from CIL mines.

Coal India Limited has made a LoA with the company for use of coal in the Proposed
Project. The Company has approved the agreement. The average calorific value of the
coal is expected to be about 3400 kcal/kg. Considering this Gross Calorific Value and
PLF of 85% the coal requirement of the Project works out to be about 3771700 TPA.

The Company has estimated the capital investment of Rs. 900 per tonne at an escalation
of 5% p.a and the same has been incorporated in the overall Project Cost.

6.2.7 SECONDARY FUEL

HFO, which is the secondary fuel for pulverized coal, will be used for flame stabilisation
at low loads and for supporting purposes. Heavy fuel oil will be supplied from oil depot
by means of truck. Two HFO storage tanks each of capacity 1000m with necessary
heating arrangement within the tank will be provided. The estimated maximum annual
requirement of HFO is 4914 KL. Capital investment of Rs 50 per kg at an escalation of
4% p.a has been estimated.

LDO system will be designed for 7.5 % of BMCR, which will be considered sufficient to
introduce heavier grade fuel. The light diesel oil will have provision for supply to the
steam generator for startup purpose. The estimated maximum annual requirement of
LDO is 1000 KL.

34|P a g e
6.2.8 TRANSPORTATION

Coal will be transported from the Indian Coal fields to the Paradeep Port by Rail and
from the port to the Manappadu Port located near to the project site by ship. Coal
unloaded from ship will be stored in a separate coal yard to be set up by prospective Coal
sellers at Manappadu port and coal will be supplied at the plant boundary by conveyors.
Calorific value of Indian F grade coal will be in the range of 3400 kcal/kg. Rail route
already exists upto Tiruchendur. About 12 km of rail route from Tiruchendur to project
site is under approval. For transportation of coal, the Company would enter into Coal
Transportation Arrangement (CTA) with the Indian Railways.

Due to the availability of port facilities for transportation of coal from the mines, it is
convenient and economical to unload and transport the coal to the plant. Coal will be
also be transported from the port to the Manappadu Port located near to the project site
by ship. Alternatively trucks will also be used for coal transfer from port to plant.
Company has made a logistic agreement with Aspinwall Co Ltd for transportation of
coal from port and railway station to the plant.

6.2.9 EPC CONTRACT

Under an EPC contract, the contractor designs the installation, procures the necessary
materials and builds the project, either directly or by subcontracting part of the work.
EPC contract for this project is been given to Consolidated Construction Consortium
Ltd. It is proposed to entrust the entire work of project execution covering all civil
works, electrical and mechanical systems to a single EPC (Engineering, Procurement and
Construction) Contractor who will take overall responsibility for timely project
execution and plant performance and provide guarantees for the same.

SCOPE

The EPC Contractors scope of work includes design, engineering, manufacture,
supply, erection, testing and commissioning within the Power Plant site.
The EPC Contractor would be responsible for all basic and conceptual
engineering, detailed system engineering, design & drawings for all mechanical
and electrical systems, detailed designs and construction drawings for all civil
works, manufacture of equipment as applicable, procurement of sub-contracted
equipment and materials, review of sub-contractors design and engineering,
inspection and expediting of sub- contracted equipment, transport of equipment
and materials to site, stores management at site, overall site management
covering construction, erection and commissioning activities and performance
testing for the complete Power Plant.

The contractor agrees to provide all civil and structural works including supplies
of cement, reinforcement steel and structural steel etc.

The lump sum amount of Rs 524 crore represents the lump sum fixed price towards the
services to be provided by the contractor, pursuant to the scope of work under this
Agreement. The contractor shall complete all the works as per project schedule approved
by owner, pursuant to various conditions of this agreement, within 30 months from the
start of project commencement date.
35|P a g e

6.2.10 OPERATION AND MAINTENANCE

In order to ensure a high level of performance of the power station, it is proposed to
entrust the operation and maintenance of the power station to an experienced O&M
Contractor. In order to ensure that the design and construction of the power station
incorporates all necessary features required for easy and efficient operation and
maintenance of the proposed power plant, the proposed O&M Contractor will also be
consulted during the review of EPC contract documents, plant design features,
operational and maintenance features of plant systems and equipment.

O&M Contractors general manager would have primary responsibility for the operation
& maintenance of the power station. O&M Contractors site organisation is expected to
comprise four broad functional areas viz. operations, maintenance, engineering and
administration.

Operation of Power Plant, coal and ash handling systems, water systems including water
treatment system, switchyard and other auxiliary plant. Operations manager would be
overall in charge of operations, all other operation personnel would work on three - shift
basis. Shift personnel manpower planning for key areas has been generally done on
(3+1) concept to take into account leave taken by shift personnel.

Maintenance of all mechanical and electrical plant, control systems, buildings, roads,
drainage and sewage systems, etc., operation of the plant workshop, planning for
scheduled maintenance works and deciding requirement of spare parts.

The O&M team of the power station would be headed by a Senior Vice President, under
whom separate groups viz. Operation, Mechanical, Electrical, Civil and C&I
maintenance would operate. In addition to these groups, operation and efficiency
improvement group and maintenance planning group would monitor the efficiency in
operations and maintenance management respectively and suggest continual
improvements.

6.2.11 INFRASTRUCTURAL REQUIREMENTS

Construction Power
The company has received approval for drawl of construction power from nearby
substation of Tamil Nadu Power Distribution Company Ltd. (TNPDCL).

Construction Water
The total water requirement for the project is 2000 m
3
/day. This water will be sourced
from nearby desalination plant. The requirement of construction water for potable and
service purposes will be met by the nearby desalination plant located within the allotted
land for the Project. The Company has taken over the desalination plant along with the
auxiliary and paid about Rs. 50 Crore for the same.

6.2.12 EVACUATION OF POWER

The power generated from the plant will be evacuated at 400 KV through PGCIL /
TNEB grid lines. Three / Four 400 KV transmission line circuits are proposed from
36|P a g e
400KV switch yard to Udangudi STPP Substation for further connectivity to southern
grid. Companys generation project shall implement, maintain and operate dedicated
transmission system for immediate evacuation of power from their generation projects.

a) Companys Power generation switchyard-tuticorin pooling station 400kV D/c
quad/high capacity line.

b) Two nos of 400kV bays each at Companys switchyard & Tuticorin Pooling
POWERGRID station.

The cost of the transmission line is estimated by the Company is about Rs. 52 Crore.

6.2.13 ENVIRONMENTAL ASPECTS

The project site is located at a distance of about 14 kms from the National High way and
15 kms from Trichendur town. There is no cultivation in the project site and
rehabilitation of resident population from the project site does not arise. Around the
project site there is no reserve forest within 15 Km radius.

Since all necessary pollution control measures to maintain the emission levels of dust
particles and sulphur dioxide within the permissible limits would be taken and necessary
treatment of effluents would be carried out, there would be no adverse impact on either
air or water quality in and around the power station site on account of installation of the
proposed plant.

Ash Handling System
The fly ash generated in thermal power stations has commercial value because of its
usage in cement and construction industries in various forms. Fly ash generated from the
proposed power plant would be commercially utilized in one or more of the following
industries, to the extent possible
a. Manufacture of fly ash bricks
b. Manufacture of aerated wall blocks and panels
c. Fly ash Aggregate
d. Land reclamation
e. Ready Mixed Fly Ash Concrete
f. Utilisation in Roads/Paving
g. Use in cement manufacturing using fly ash in combination
h. Manufacture of fly ash bricks
i. Export of Fly ash to countries like Bangladesh and Middle East.

Water Handling System
Hydrochloric acid and caustic soda would be used as reagents in the proposed water
treatment plant. The acid and alkali effluents generated during the regeneration process
of the ion exchangers would be drained into an underground neutralising pit. The
effluent would be neutralised by the addition of either acid or alkali to achieve the
required pH.

37|P a g e
Waste water from the Coal yard suppression system and leaching water is collected in
the settling tank. The clear water will be disposed to the nallah through CEMS. The
Sludge will be dried in a Drying Pond and then Reused.

Sewage water from power plant and canteen will be collected in the Anaerobic
treatment pond and from there it will be sent to the clarifier. The treated water will be
used for horticulture purpose. The oily waste water will be treated in an Oily Water
Separator. The clear water is disposed through CEMS and the Oily Sludge is disposed
offsite.

Air Handling System
The height of the stack which disperses the pollutants have been fixed based on the
above guidelines of the Indian Emission Regulations. The electrostatic precipitators
which remove most of the fly ash from the flue gas, thereby limiting the quantity of fly
ash emitted to atmosphere.

By selecting a suitable furnace and burner for the steam Generator, NOx formation has
been avoided and no additional equipment for NOx control is required. Although there is
no statutory stipulation for regulation of NOx emission, the boiler will be designed for
maximum of 750 mg/Nm3 with provision of low NO burners. Dust nuisance due to Coal
handling would be minimised by providing suitable dust suppression/extraction systems
at crusher house, junction towers etc. For the coal stockyard, dust suppression system
would be provided. Boiler bunkers would be provided with ventilation system with bag
filters to trap the dust in the bunkers.

Noise Handling System
As per State Pollution Control Board, Ambient noise level for Industrial area will be

Sl. No Time dB (A)
1. Day Time 6 AM to 9 PM 75
2. Night Time 9 PM to 6 AM 70

The above noise level at plant boundary during normal operation is ensured by proper
selection of the system. Controlled noise level from originating equipment and green
belts around the plant area. Project clearances received from statutory authorities, Tamil
Nadu State Pollution Control Board (TNPCB) and the concerned agencies of the
Government of Tamil Nadu and India.

Statutory Clearances
All statutory clearances requires at Central/State level for the implementation of the
project are to be ensured. Depending on the cost of project, techno economic clearances
of CEA/SEB may be asked.

Clearances/Agreements required for implementation of project:
1. Land Acquisition
2. Water Availability
3. Stack Height: Airport Authority of India
4. Forest Clearance: Such that no sanctuary, reserve, national park within the project
5. No defense establishment
38|P a g e
6. Ministry of environment and Forest
7. Fuel Supply Arrangement/Agreement through various coal linkages
8. Fuel Transportation Arrangement
9. PPA for selling Electricity
10. Transmission agreement with Transmission agency
11. Pollution Control Board

Table 9: Approval and Agreement Status

Major Clearances/ Agreements
S No Requirement Agency Status
1
Consent to establish /
NoC
Tuticorin Airport Certified
2 Environment Clearance MoEF
The Company has applied
for the clearance.
3 Forest clearance MoEF
The Company has applied
for the clearance
4 Water Drawl SG Agreement made
5 Stack height Clearance
Airport Authority of
India (AAI)
Approved
6
Pollution control board
NOC for power plant
Tamil Nadu Pollution
control board
(TNPCB)
All the required standards
of Pollution control board
are met
7 Land Availability State Government
600 acres has been
acquired
8 Primary Fuel Coal India Limited
Long term agreement
made on 15 April 2010
9 Transportation of Fuel Aspinwall Co Ltd
Fuel Transport
Agreement made
10 Transmission Line PGCIL
Open Access and
Transmission Agreement
made
11 EPC / package contract
Consolidated
Construction
Consortium Ltd.
Agreement made on 18
J une 2010

6.3 PROJECT COST

6.3.1 COMPONENTS OF PROJECT COST
The Project is estimated to be set up at an aggregate cost of Rs. 4251 Crore comprising
of expenditure towards Land, EPC Cost, Transmission Line, Coal Transportation
Arrangement, Water Arrangement, Preliminary & Preoperative Expenditure,
Contingencies, Interest During Construction Period and Margin Money for Working
Capital. A summary of the components of Project cost is presented below:

39|P a g e
Table 10: Project Cost Details
Sl No. Particulars Total Cost
1 Land & Site Development 50
2 Total Plant & Equipment 2038.48
3 Civil Works 545
4 Electric Works 135
5 Miscellaneous 146.5
Total Hard Cost 2914.98

6 Overhead & Pre-Op. Expenses 114.59
7 Interest During Construction 656.20
8 Working Capital Margin 565.43
Total Soft Cost 1336.22
(in crore) Total Project Cost 4251

6.3.2 FINANCING PLAN

The tentative financial plan for the proposed project is as follows:

Particulars Percentage
Cost (Rs
Crore)
Debt Equity Ratio 3.00
Equity 25% 1062.80
Debt 75% 3188.40
Upfront Equity 51.5% 547.342
Total 100% 4251

6.3.3 DEMAND AND SUPPLY

Inspite of 18,382 MW of installed capacity the state of Tamil Nadu is struggling to fulfil
its electricity demand. The electricity demand in the State had increased but the capacity
of the generating facilities had dropped due to inefficiencies resulting in shortfall. Most
of the districts in Tamil Nadu face power cuts lasting over six hours. Between April 2012
and February 2013, the energy and peak shortage of power in Tamil Nadu were 17.4 %
and 12.3 % respectively of the demand.

40|P a g e
Electricity deficit in the state has increased from 1% in 2005-06 to 11% in 2011-
12. Between 2005-06 and 2011-12, electricity requirement grew at CAGR of 9%, while
availability only grew at around 7% leading to increasing electricity deficits.

Source: CEA website

Table 11: Power requirement and availability for year 2012-2013 for Tamil Nadu
Period
Peak
Demand
(MW)
Peak
Availabilit
y
(MW)
Peak
Deficit/Surp
lus
(MW)
Energy
Requiremen
t
(MU)
Energy
Availabilit
y
(MU)
Energy
Deficit/S
urplus
(MW
Apr 12 12499 9841 -2658 7583 5817 -1766
May 12 11967 10182 -1785 6796 5840 -956
J une 12 12296 11053 -1243 7868 6834 -1034
J uly 12 12269 10877 -1392 8043 7333 -710
Aug 12 12004 10566 -1438 7840 6763 -1077
Sep 12 12606 10348 -2258 7990 6606 -1384
Oct 12 12538 10269 -2269 8233 6574 -1659
Nov 12 11755 8306 -3449 7110 5254 -1856
Dec 12 12323 9409 -2914 7450 5831 -1619
J an 13 12038 9698 -2340 7859 6668 -1191
4
7
8
7
2
5
4
1
9
4
6
1
4
9
9
6
5
7
8
0
6
9
6
6
8
7
6
2
9
3
8
0
3
1
4
8
5
6
8
5
4
7
5
7
0
5
3
8
5
3
6
0
4
4
5
6
3
9
5
4
6
4
2
0
8
7
1
5
6
8
7
5
1
0
1
7
6
7
0
5
1% 1%
2%
3%
8%
6%
7%
11%
0%
2%
4%
6%
8%
10%
12%
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
M
U
Figure6:ActualpowersupplypositioninTamilNadu
Requirement Availability %deficit
41|P a g e
Feb 13 11803 10021 -1782 7288 5998 -1290
Mar 13 12736 10556 -2180 8242 6643 -1599
TOTAL 134565 121126 -13439 92302 76161 -16141
Source: CEA, Load Generation Balance Report (2012-2013)

6.3.4 COST BENEFIT ANALYSIS

Table 12: Project details sheet
No. of units 1
Capacity per unit 660 MW
Total project capacity 660 MW

Without IDC 3595 Rs Crore
IDC 656 Rs Crore
With IDC 4251 Rs Crore

Equity (25%) 1062.80 Rs Crore
Debt (75%) 3188.40 Rs Crore
Upfront Equity (51.5%) 547.34 Rs Crore
Interest Rate pre COD 13.25% p.a.
Interest rate post COD 13.25% p.a.
Working Capital 13% p.a.

Repayment Period 12 Years
Moratorium Period 6 Months
Principle Repayment Start Date 01-J ul-14 Date
Principle Repayment End Date 01-J an-26 Date
Interest Repayment Start Date 01-J an-14 Date
Interest Repayment End Date 01-J an-26 Date

MOU with PTC (including all units)
% of total capacity 70%
PPA Tariff
As per CERC
based tariff
Rs/unit
No. of years 25 years
Selling through Merchant Basis (including all
units)

PPA Tariff 3.5 Rs/unit
Escalation per year 5%

Corporate Tax 33.99%
MAT 20.96%
42|P a g e

GSHR 2392 kCal/kwh
Auxiliary Consumption 7% %
Plant Load Factor 85% %
O&M Escalation 5.72% %
O&M Expense 0.155 crore/MW

Fuel Price 900 Rs/tonne
Price Escalation 5% p.a.
Gross Calorific Value 3400 kCal/kg

Secondary Fuel Price 50 Rs/kg
Secondary Fuel Consumption 1 ml/kwh
Specific Gravity value of Secondary Fuel 0.95
Transportation & Handling Charges
Escalation

Coal Stock 2 Months
Secondary Fuel 2 Months
O&M Expenses 1 Month
Maintenance Spares (20% of O&M Expense) 1 Year
Receivables from Energy Sales 2 Months

Rate For Tariff Calculation 5.28%
Land 0%
Civil Works & Building 3.34%
Plant & Machinery 5.28%
Max Depreciable Value 90%

Machinery 15%
Building 10%

Discount Rate 13.10% %
Return on Equity 15.50% %
Return on Equity pre tax (first 12 years) 19.38% %
Return on Equity pre tax (last 13 years) 22.95% %
Project Life 25 years
Total units generated 4914.36 MU

43|P a g e
6.3.5 FINANCIAL MODELLING AND PROJECTIONS

After doing through study of the information Memorandum and all the contracts and the
agreements signed by ABC Ltd. the Financial Analysis is performed. Various parameters
that need to be calculated as a part of the financials of the project are:

INTEREST DURING CONSTRUCTION
In the Interest during construction phase is the period were the power plant is in the
process of making and during this time it generates no revenues. The complete infusion
of term loan and the equity by the financers and promoters respectively is done in this
phase. This period starts from the date when the sub debt and then the upfront equity
starts flowing into the project (upto 51.5 % of the total equity) by the promoters, when
the Upfront Equity part finishes Upfront Debt starts flowing till the time Debt Equity
ratio becomes 75:25. Once, the ratio is achieved the Matching Debt and Matching Equity
flows simultaneously in the ratio of 75:25. During the construction period the project has
to pay the interest on the debt fused till that month. The interest rates depends on the Pre
COD Rates and sub debt rates are specified by the leading Financial Institution (FI),
which is also the syndicator of the project.
(IDC Sheet Attached in Annexure III)

DEBT PAYMENT
When the project is commissioned then the borrower company has to pay the interest on
the Term Loan. The interest rate used is the weighted average of Post COD Rates and
sub debt rates are specified by the leading Financial Institution (FI), which is also the
syndicator of the project.

The First Six months after the project commissioning is the Moratorium Period that is
during this period no principle repayment will be done but the interest will be charged
according to the Post COD Rates. After the Moratorium period the project has to pay
both the principle repayment and interest on the term loan.
(Sheet is attached in the Annexure V)

FUEL REQUIREMENT
The main objective of this part is to calculate the requirement of fuel for the project and
thus calculate overall cost of fuel required per annum for each of the next 25 years of
operation of the plant from the date of start of operations, which is assumed as the life of
the Thermal Power plant.

Here we first calculate the primary fuel cost and secondary fuel cost on yearly basis for
25 years depending upon the energy exported and GCV of the fuel that will be charged
to the project. While calculating the fuel cost we consider the Fuel Charges Escalation
(as mentioned in Power Purchase Agreement).For this we calculate the amount of units
that the project will be producing every year for 25 years. This is done on the basis of
installed capacity (MW) from the point the very first unit becomes operational to the
point 25 years ahead of the last commissioning of last unit. Plant Load factor (PLF) is
also taken into consideration. This collectively gives the amount of fuel required to
generate the stipulated amount of power. After knowing the amount of fuel required and
the cost for 25 years we calculate the fuel cost on yearly basis.
(Fuel requirement sheet is attached in Annexure VI)

44|P a g e
TARIFF
This is among the most important parameters of the project. In this the main objective is
to calculate the Variable Cost and Fixed Cost of generation of one unit of electricity.
This cost is the cost to the company. This cost is compared with the Quoted Tariff, as
specified in the PPA so as to figure it that whether the company is selling the electricity
on profit and loss.

VARIABLE TARIFF:
Variable tariff only takes into account the primary fuel cost. This is obtained by using
formula:

Variable Cost
Electricity Units sold

FIXED TARIFF:
As per CERC norms, the fixed cost takes the following parameters into consideration:
Secondary Fuel Cost
Interest on Loan Capital
Return on Equity
Depreciation
O&M Expenses
Interest on Working Capital

Fixed tariff is calculated as: Fixed Cost
Electricity Units sold

The sum of variable cost and the fixed cost gives the total Tariff that should be charged
to get the desire return on Equity.

(Tariff sheets attached in Annexure VIII)

DEPRECIATION
Depreciation is calculated on the Machinery and Building strictly according to the CERC
Guidelines. Depreciation shall be calculated on straight line method and at rates
specified in the CERC guidelines for the assets of the generating station but the company
files the tax according to IT ACT section 80.
(Tariff sheets attached in Annexure IV)

WORKING CAPITAL REQUIREMENT
The working capital requirements as specified in the CERC guidelines are as follows:

Working Capital Limits
Primary Fuel Stock 2 Months
Secondary Fuel Stock 2 Months
45|P a g e
O&M Expense 1 Month
Maintenance Spares 20% O&M
Receivables from energy sales 2 Months

(Detailed Working Capital requirement sheets is attached in Annexure VII)

CASH FLOW
The Objective of this part is to calculate the total cash flow Inflow and Outflows, and
then to calculate the excess/shortfall.
(Detailed Cash flow sheets is attached in Annexure X)

PROFIT AND LOSS ACCOUNT
The main aim of this part is to calculate the Profit & Loss of the project for the 25 years
after the commissioning of first unit. In case of PTC (long term) the levelised cost of
electricity is Rs 2.475/kWh and that for short term is Rs 3.5/kWh. The sale of electricity
to PTC is done at the rate of Rs 2.475/kWh for aggregate cap of 70% and rest at variable
cost of Rs 0.63/kWh.
(Detailed P&L is attached in Annexure IX)

BALANCE SHEET
This part accounts for the assets and liabilities per year for the project for 25 years from
COD.
(Detailed Balance sheet is attached in Annexure XI)

RATIOS
This part is used to calculate the relevant ratios in order to determine the financial
viability of the project. The Minimum, average and maximum Debt Service Coverage
Ratio is calculated along with Internal Rate of Return and Net present Value are
calculated.
(Detailed Ratios sheet is attached in Annexure XII)

6.3.6 SNAPSHOT OF FINANCIAL PROJECTIONS

The financial projections, based on the capital/project cost as specified by the borrower,
would be as below:

Table 13: Snapshot of project financial projections
Particular Value Value
Parameters

DSCR

Minimum 1.403
Average 2.106
46|P a g e
Maximum 4.212
Project IRR, 25 years 18.54%
Equity IRR, 25 years 21.41%
Levelised cost of generation 2.475 Rs/kwh

6.3.7 SENSITIVITY ANALYSIS

A sensitivity analysis of the Companys financial position has been carried to ascertain
the robustness of its financials. Various scenarios for which the sensitivities was carried
out and the results are as follows:

Table 14: Sensitivity analysis sheet
Scenario Min DSCR Avg DSCR
Project IRR
(%)
Equity IRR
(%)
Base Case 1.403 2.106 18.54 21.41
Case 1: PLF at 65% 1.238 1.784 16.44 18.12
Case 2: Increase Fuel
cost by 20%
1.371 2.043 18.20 20.81
Case 3: Increase project
cost by 10%
1.332 1.974 17.70 20.35
Case 4: Decrease in
calorific value of coal by
1000 kcal/kg
1.336 1.975 17.83 20.13
Case 5: Increase interest
rate by 100 bps
1.373 2.068 18.73 21.25

It may be observed from above mentioned results that project financials are quite robust
in various scenarios and the DSCR levels are above satisfactory.

47|P a g e
CHAPTER 7: RISK ANALYSIS AND SWOT
ANALYSIS

7.1 RISK ANALYSIS

i) PRE CONSTRUCTION

Sno Risk

Mitigation / Allocation
1
Grant of approvals /
Clearances
Obtain all statutory and non statutory clearances
including the MOEF clearance, Pollution Control Board
NOC and agree to comply with all the conditionality of
these clearances.

2
Finalization of
Contracts
The Company has already awarded the EPC Contract
Project. The service contract has also been awarded by
the Company. The EPC contract has provided for
liquidated damages in case of delay in implementation
and for plants various performance parameters below
stipulated level.
3 Procurement of land
Land has been already acquired which is sufficient for
the main power block, Ash Dyke and Raw Water
Reservoir.

ii) CONSTRUCTION

Sno Risk

Mitigation/Allocation
1 Cost estimate
Since the technology is based on super critical parameters,
it is difficult to fairly compare costs and to estimate the cost
precisely.
2
Cost increase and
price Escalation
Package contracts are expected to have suitable safeguards
and will be subject to LIE review. Also, any increment in
project cost would be met by the promoters without
recourse to either the project or its lenders.
3
Completion delay
and Equipment
Supply delay
The package contract is expected to have suitable provision
for timely project completion. Also, LDs have been
stipulated for delay in equipment supply.
48|P a g e
4 Equity infusion
The equity in company will be infused by promoters
Group as also by raising funds from financial/strategic
investors.

iii) POST CONSTRUCTION

Sno Risk

Mitigation/Allocation
1 Fuel supply risk
The Company has made a long term fuel agreement with
CIL. Hence, fuel supply risk is perceived to be moderate.
2 Fuel price risk
The fuel supply agreement is yet to be signed.
The fuel supply agreement shall be subject to review by
Lenders / Lenders agencies.
3
Performance
shortfall
The EPC Contract is expected to provide suitable defect
liabilities / warranties. LD clauses would also be stipulated
for ensuring performance. As a preventive measure, the
design shall be subject to review by both the Owners
Engineer and LIE.
4 Technology risk
EPC contract have been awarded to a contractor having
super critical technology and sufficient experience.
Company is also implementing other project on the same
technology, which again reduces the risk.
5 Force Majeure
The risk will have to be borne by the project Company, and
may prove to be damaging for the project and by extension
the lenders. This may be mitigated to some extent by
ensuring adequate security for the lenders.
6 Off take risk
The Company would sell 70% of net power to State
Discom through a long term PPA at a levelized tariff and
rest at Rs 3.5 per unit on merchant basis with escalation of
3% p.a.
7 Price risk
The cost of generation, is lower than the assumed average
purchase price of power. The risk may be perceived to be
low.
8 Payment risk
Payment risk is perceived to be low as the major portion of
power is being sold to State Discom under a long term take
or pay PPA.
49|P a g e
Also, LDs have been specified in the PPA for payment
security.
9
Environmental
Hazards
Obtained MOEF Clearance and Pollution Control Board
NOC.
10
Lower cost power
producers
With newer technology, the cost of energy generated might
be significantly lower than cost of energy. Older plants,
with depreciated assets would also be able to compete with
company.

7.2 SWOT ANALYSIS

STRENGTH

The Project has long term fuel supply agreement with Coal India Limited of Coal
for use in the Project.

The Project is located in severe power shortage region. State itself has been
facing severe power shortage and the power deficit is likely to continue in short
and medium term.

The Company has already acquired 600 Ha land which is adequate for the main
power plant block. The work on site may start immediately without any delay.

Promoting Group has demonstrated its infrastructure project development and
execution skills in the port sector and is on the verge of completion of the power
project.

The Project is based on Super Critical Technology which is expected to provide
efficiency gains to the Company resulting in lower cost of generation. Use of
Super Critical Technology will reduce the pollution and the Project may be
qualified to get CER under CDM. This would act as additional revenue stream
for the Project and improve the financials of the Company.

WEAKNESS

Company shall be selling 30% of power on Merchant Basis and may get lower
return than the levelised cost of generation.

Environment and Forest Clearances still to be obtained.

50|P a g e
OPPORTUNITY

The Electricity Act 2003 and subsequent National Electricity Policy and Tariff
Policy have opened up several opportunities for the power sector. The Act allows
the IPPs and captive power producers open access to transmission system, thus
allowing them to bypass the SEBs and sell power directly to bulk consumers.
These provisions will give credence to the concept of merchant power.

With the advent of the era of competitive bidding for tariff for procurement of
power, the new capacities would not be subject to regulated tariff and regulated
return of equity and thus provide investment opportunities to Developers in the
power sector where returns would be market determined.

There is huge power deficit in the country and the demand supply situation in the
country is expected to remain favourable to power generators for the next 8/10
years at least. This presents huge opportunities in the power sector for power
generators.

THREATS

A part of power generated will be sold on Merchant basis and may get lower
return than the levelised cost of generation.

Fuel supply agreement with Coal India Limited may result in delay

7.3 LIMITATIONS

This analysis is limited to an examination of annualized expenses and revenue and
represents a prototypical year of operations. This analysis should examine alternative pay
as- you-go and debt financed scenarios, be conducted in year-of-expenditure, and address
the underlying uncertainties associated with inflation, interest rates, project cost
(exclusive of inflation), foreign exchange rate, grant funding levels and rates of payment,
and other factors over which the project sponsor will have no direct control.
The assumptions and sources of information underlying the development of the capital
and operating cost estimates are an integral part of the financial analyses documented in
this report. Uncertainties associated with fluctuating economic conditions and other
factors may result in the actual results of the financial program varying from the
projections in the financial analyses, and the variations could be material.

Some of the major limitations and issues regarding the project appraisal are as follow:

The rate of escalation is taken as constant over the life of the project (about 25
years); being the life of project large it is not easy to predict the actual cost and
inflationary effect on the price of fuels and other inputs with the change in market
conditions.

Cash flows not really known until the project is in service no history of cash
flows.
51|P a g e

Value of debt and equity driven by cash flow.

Measure the value of different securities supported by project cash flow.

Risk analysis depends on contracts used to allocate risk to different parties.

52|P a g e
CHAPTER 8: CONCLUSION,
RECOMMENDATIONS AND LEARNING

8.1 CONCLUSION

Company has proposed to set-up 660 MW Coal fired Thermal Power Project based on
Super Critical Technology. State Government has supported this Project and has issued
letter of support to provide all kind of administrative support required.

The Company has already acquired the land required for the Main plant from Industrial
Development Corporation and has made the requisite payments. The remaining required
land has been identified and the process of acquisition is underway.

The Proposed Project will be implemented by way of a turnkey Engineering,
Procurement and Construction (EPC) contract to be awarded on Competitive Bidding
Process.

The Project requires about 3771700 TPA coal based on average GCV of 3400 kcal/kg
and PLF of 85%. The company made an FSA with CIL for the Proposed Project.
Appropriate arrangements are proposed to be done. The Project will require about 150
cubic meter per hour make-up water during operation. A raw water reservoir of 25200m
3

capacity to hold 7 days requirement for plant requirement of water will be constructed at
the plant site.

Of the total 462 MW of power is proposed to be sold as PPA as per CERC tariff.
Balance 198 MW will be sold on Merchant basis at Rs 3.5 per unit with an escalation of
3% p.a. Considering the cost of generation of Rs. 2.475 per unit, company does not
envisage any difficulties in selling the power through merchant route. Power Evacuation
will be through two double circuit 400 KV transmission lines connecting the Project to
the PGCIL substation and State TRANSCO substation.

The Electricity Act 2003 and subsequent National Electricity Policy and Tariff Policy
have
opened up several opportunities for the power sector. The Act allows the IPPs and
captive power producers open access to transmission system, thus allowing them to
bypass the SEBs and sell power directly to bulk consumers. Slowly open access in
distribution system is also being allowed.

Assessment of the financial feasibility of the Proposed Project, delivers satisfactory
financial parameters as per base financial model. It has also assessed the viability of the
Project under the impact of various scenarios, which could be at variance with the base
case scenario assumed.

Subject to the weaknesses and threats enumerated in the SWOT analysis and the impact
of the various scenarios as envisaged under the sensitivity analysis, the Proposed Project
is viewed as economically viable. Thus, loan amount should be granted by PFC equal to
the request of the borrower.

53|P a g e
8.2 RECOMMENDATIONS

To minimize the risk, the extent of financing to a single project should be
proportionate; it will also affect the exposure limit for borrower or utilities and
chance to fund in more projects rather in some.

With the deficit of electricity in our country, there is need of many projects and
the exposure limit should be increased to effectively assist the new projects. The
exposure limit of some utility is going to reached, which resist PFC to fund.

With the increasing IPPs in power generation the exposure to them should be
more and the portfolio size for IPPs should be increased. It will increase the
revenue because of higher interest rate and some extra charges.

Currently PFC has less % funding in renewable energy, PFC should also
concentrate to increase its share in renewable energy.

With the changes in project parameters, the re-rating of project should be done at
an appropriate time and linkages of interest rate, exposure limit and security to
the new project rating should be done.

There should be more bifurcation in the linkages to integrated project rating. A
detailed and comprehensive model study should be made for accordingly.

8.3 LEARNING

The experience and know-how gained from this internship, has left me in more
compliant form and stature in order to fare better in areas of similar interest. Now I
here make it sort with few but most important points what I have learned:

A practical exposure of financial world.
Learnt about investment scenario in power generation.
Know about various complicacies in power generation and their mitigation.
Know about project implication and investment.
Learnt financing aspect of various investment related parameters.
Learnt the formulation and analysis of various financials sheets through model.
Learnt corporate culture.

54|P a g e
BIBILIOGRAPHY

1. Chandra Prasanna, Project Management, 4th Edition, 2005
2. I.M.Pandey, Financial Management, 9
th
Edition, 2010
3. PFC website: www.pfcindia.com
4. www.cerc.gov.in
5. www.powermin.nic.in
6. Operational policy statement of PFC
7. Project Appraisal Manual
8. Load Generation Balance Report for 2013-14, CEA
9. Integrated Project Rating Model Manual
10. Detailed Project Report of the Company
11. www.powergrid.com
12. Power Finance Corporation, Project Term Loan and Short Term Loans

55|P a g e
ANNEXURE

Project Capacity No. of units 1
Capacity per unit 660 MW
Total project capacity 660 MW
Project Cost Without IDC 3595 Rs Crore
IDC 656 Rs Crore
With IDC 4251 Rs Crore
Financing Plan Equity (25%) 1062.80 Rs Crore
Debt (75%) 3188.40 Rs Crore
Upfront Equity (51.5%) 547.34 Rs Crore
Interest Rate pre COD 13.25% p.a.
Interest rate post COD 13.25% p.a.
Working Capital 13% p.a.
Repayment Details Repayment Period 12 Years
Moratorium Period 6 Months
Principle Repayment Start Date 01-Jul-14 Date
Principle Repayment End Date 01-Jan-26 Date
Interest Repayment Start Date 01-Jan-14 Date
Interest Repayment End Date 01-Jan-26 Date
PPA Details PPA with PTC (including all units)
PPA Tariff
As per CERC
based tariff
Rs/unit
Selling through Merchant Basis (including all
units)
PPA Tariff 3.5 Rs/unit
Escalation per year 5%
Tax Rates Corporate Tax 33.99%
MAT 20.96%
Technical Parameters GSHR 2392 kCal/kwh
Auxiliary Consumption 7% %
Plant Load Factor 85% %
O&M Escalation 5.72% %
O&M Expense 0.155 crore/MW
Fuel : Primary Fuel Fuel Price 900 Rs/tonne
ANNEXURE I: ASSUMPTION SHEET
Secondary Fuel Price 50 Rs/kg
Secondary Fuel Consumption 1 ml/kwh
Specific Gravity value of Secondary Fuel 0.95
Transportation & Handling Charges
Escalation
Working Capital Limits Coal Stock 2 Months
Secondary Fuel 2 Months
O&M Expenses 1 Month
Maintenance Spares (20% of O&M Expense) 1 Year
Receivables from Energy Sales 2 Months
Depreciation Rate For Tariff Calculation 5.28%
Land 0%
Civil Works & Building 3.34%
Plant & Machinery 5.28%
Max Depreciable Value 90%
Depreciation Rate for IT Machinery 15%
Building 10%
Miscellaneous Discount Rate 13.10% %
Return on Equity 15.50% %
Return on Equity pre tax (first 12 years) 19.61% %
Return on Equity pre tax (last 13 years) 23.48% %
Project Life 25 years
Total units generated 4914.36 MU
Sl No. Particulars Base Amount Escalation Total Cost
1 Land & Site Development 50 0% 50
2 Total Plant & Equipment 2038.48 0% 2038.48
3 Civil Works 545 0% 545
4 Electric Works 135
5 Miscellaneous 146.5
Total Hard Cost 2914.98
6 Overhead & Pre-Op. Expenses 114.59
7 Interest During Construction 656.20
8 Working Capital Margin 565.43
Total Soft Cost 1336.22
Total Project Cost 4251
Particulars Percentage Cost (Rs Crore)
Debt Equirt Ratio 3.00
Equity 25% 1062.80
Debt 75% 3188.40
Upfront Equity 51.5% 547.34
Total 100% 4251
ANNEXURE II: PROJECT COST
MEANS OF FINANCE
i) Land & Site Development
Particulars Amount (In Crore)
Land 30
Site Development 20
TOTAL 50
ii) Civil Construction
Civil & Construction Works 545
TOTAL 545
iii) Plant & Equipment
Steam generators (boilers) &
Steam turbine generators with all
auxiliaries
1431.5
Coal handling system 50
Ash handling plant 50
CW System 10.5
DM plant including all accessories 5.05
Air conditioning plants 2.15
Fire protection system 4.25
Miscellaneous pumps 2.5
CW treatment plant 3.3
IDCT Electro-Mechanical 6
Effluent treatment system 2.38
Chemical laboratory equipment 1.5
Cranes and hoists 2.23
Air compressors and accessories 2.05
Instrumentation and Control
system
5
Computers and software 1.05
Emergency D.G. Sets 3.05
Fuel unloading, storage and
forwarding system
6.2
Workshop Equipment 2.75
Cost of Mechanical Spares 4
Freight and Insurance 15.95
Excise and Central Sales tax 199.53
Erection testing and
commissioning
159.15
Transmission Line 52
Service tax 16.39
TOTAL 2038.48
PROJECT COST BREAKUP
iv)
Start-up fuel 14.57
Design, engineering, construction
supervision, inspection and
expediting and project
management
56.3
Pre-operative Expenses 29.15
Insurance during construction 14.57
TOTAL 114.59
v) Electric Works Expenses
Power transformers 21
GCB 8
Other electric equipments 76.98
Cost of Electrical Spares 2.65
Miscellaneous 26.37
TOTAL 135
vi) Miscellaneous
Coal conveyor from Port 12
Railway siding 55
Water intake 29.5
Desalination plant and auxiliaries 50
TOTAL 146.5
Date of Commencement 01-Apr-10
No. of quarters of construction 15
Period of Construction 45 months
End of Construction 31-Dec-13
Commercial operation period 01-Jan-14
Overheads & Preoperative Expenses
Particulars Amount Total Upfront Balance
Project Cost without IDC 3595 Equity 25% 1062.801 547.34 515.46
IDC 656 Debt 75% 3188.402 1642.03 1546.38
Project Cost with IDC 4251 Upfront 51.50%
Interest Rate pre COD 13.25%
Interest Rate post COD 13.25%
Month Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11
Financial Year 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Total
Percentage 100% 1.50% 1.50% 1.50% 2.00% 2.00% 2.00% 2.00% 2.00% 1.00% 1.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Amount 4251 63.76804 63.76804 63.76804 85.02406 85.02406 85.02406 85.02406 85.02406 42.51203 42.51203 85.02406 85.02406 85.02406 85.02406 85.02406 85.02406
Upfront Equity 547.34 63.76804 63.76804 63.76804 85.02406 85.02406 85.02406 85.02406 15.94 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Upfront Debt 1642.03 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.08205 42.51203 42.51203 85.02406 85.02406 85.02406 85.02406 85.02406 85.02406
Matching Equity 515.46 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Matching Debt 1546.38 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Total Equity 1062.80 63.768 63.768 63.768 85.024 85.024 85.024 85.024 15.942 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Total Debt 3188.40 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.08205 42.51203 42.51203 85.02406 85.02406 85.02406 85.02406 85.02406 85.02406
Total Senior Debt 3188.402 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082 42.512 42.512 85.024 85.024 85.024 85.024 85.024 85.024
Total Sub Debt 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Opening Balance 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082 111.594 154.106 239.130 324.154 409.178 494.202 579.226
Monthly Disbursement 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082 42.512 42.512 85.024 85.024 85.024 85.024 85.024 85.024
Closing Balance 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082 111.594 154.106 239.130 324.154 409.178 494.202 579.226 664.250
Interest During Construction 656.203 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.381 0.997 1.467 2.171 3.110 4.049 4.987 5.926 6.865
Year Ending on 31 March 2010 2011 2012 2013
Total Expenditure 4251.2 658.9364 977.7766 1254.105 1360.385
IDC 656.203 1.379 76.982 219.945 357.897
Expenditure less IDC 3595.000 657.558 900.794 1034.160 1002.488
Total Equity 1062.801 547.342 0.000 175.362 340.096
Debt 3188.402 111.594 977.777 1078.743 1020.289
PROJECT PHASING
YEARLY PHASING
ANNEXURE III: INTEREST DURING CONSTRUCTION
Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13
2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013
17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
2.00% 2.00% 2.00% 2.00% 2.00% 2.50% 2.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 3.00% 2.50% 2.50%
85.02406 85.02406 85.02406 85.02406 85.02406 106.2801 85.02406 106.2801 106.2801 106.2801 106.2801 106.2801 106.2801 106.2801 106.2801 106.2801 106.2801 127.5361 106.2801 106.2801
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
85.02406 85.02406 85.02406 85.02406 85.02406 106.2801 85.02406 106.2801 106.2801 106.2801 42.5120 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 15.942 26.570 26.570 26.570 26.570 26.570 26.570 31.884 26.570 26.570
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 47.826 79.710 79.710 79.710 79.710 79.710 79.710 95.652 79.710 79.710
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 15.942 26.570 26.570 26.570 26.570 26.570 26.570 31.884 26.570 26.570
85.02406 85.02406 85.02406 85.02406 85.02406 106.2801 85.02406 106.2801 106.2801 106.2801 90.338 79.710 79.710 79.710 79.710 79.710 79.710 95.652 79.710 79.710
85.024 85.024 85.024 85.024 85.024 106.280 85.024 106.280 106.280 106.280 90.338 79.710 79.710 79.710 79.710 79.710 79.710 95.652 79.710 79.710
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
664.250 749.274 834.299 919.323 1004.347 1089.371 1195.651 1280.675 1386.955 1493.235 1599.515 1689.853 1769.563 1849.273 1928.983 2008.693 2088.403 2168.113 2263.766 2343.476
85.024 85.024 85.024 85.024 85.024 106.280 85.024 106.280 106.280 106.280 90.338 79.710 79.710 79.710 79.710 79.710 79.710 95.652 79.710 79.710
749.274 834.299 919.323 1004.347 1089.371 1195.651 1280.675 1386.955 1493.235 1599.515 1689.853 1769.563 1849.273 1928.983 2008.693 2088.403 2168.113 2263.766 2343.476 2423.186
7.804 8.743 9.681 10.620 11.559 12.615 13.671 14.728 15.901 17.075 18.160 19.099 19.979 20.859 21.739 22.619 23.500 24.468 25.436 26.316
Civil Works 0 1 2 3 4 5 6 7 8 9 10 11
Opening Balance 545.00 531.38 478.24 430.41 387.37 348.64 313.77 282.39 254.16 228.74 205.87 185.28
Depreciation 13.625 53.1375 47.82375 43.04138 38.73724 34.86351 31.37716 28.23945 25.4155 22.87395 20.58656 18.5279
Closing Balance 531.38 478.24 430.41 387.37 348.64 313.77 282.39 254.16 228.74 205.87 185.28 166.75
Opening Balance 2038.48 1962.037 1667.731 1417.572 1204.936 1024.196 870.5662 739.9813 628.9841 534.6365 454.441 386.2749
Depreciation 76.443 294.3056 250.1597 212.6358 180.7404 153.6293 130.5849 110.9972 94.34762 80.19547 68.16615 57.94123
Closing Balance 1962.037 1667.731 1417.572 1204.936 1024.196 870.5662 739.9813 628.9841 534.6365 454.441 386.2749 328.3336
Total Dep as per IT 90.068 347.4431 297.9835 255.6771 219.4776 188.4929 161.9621 139.2366 119.7631 103.0694 88.75271 76.46913
Depreciation rate after
taking the weighted avg.
0 1 2 3 4 5 6 7 8 9 10 11
Depreciation 31.53483 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393
Cumulative Depreciation 31.53483 157.6742 283.8135 409.9529 536.0922 662.2315 788.3709 914.5102 1040.65 1166.789 1292.928 1419.068
Plant & Machinery
Depreciation as per IT act
ANNEXURE IV: DEPRECIATION
4.89%
12 13 14 15 16 17 18 19 20 21 22 23 24 25
166.75 150.08 135.07 121.56 109.41 98.46 88.62 79.76 71.78 64.60 58.14 52.33 47.10 42.39
16.67511 15.0076 13.50684 12.15616 10.94054 9.846486 8.861837 7.975654 7.178088 6.460279 5.814252 5.232826 4.709544 3.178942
150.08 135.07 121.56 109.41 98.46 88.62 79.76 71.78 64.60 58.14 52.33 47.10 42.39 39.21
328.3336 279.0836 237.2211 201.6379 171.3922 145.6834 123.8309 105.2562 89.4678 76.04763 64.64049 54.94442 46.70275 39.69734
49.25005 41.86254 35.58316 30.24568 25.70883 21.85251 18.57463 15.78844 13.42017 11.40715 9.696073 8.241662 7.005413 4.465951
279.0836 237.2211 201.6379 171.3922 145.6834 123.8309 105.2562 89.4678 76.04763 64.64049 54.94442 46.70275 39.69734 35.23139
65.92516 56.87014 49.09 42.40184 36.64937 31.69899 27.43647 23.76409 20.59826 17.86742 15.51032 13.47449 11.71496 7.644893
12 13 14 15 16 17 18 19 20 21 22 23 24 25
89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 66.88929
1508.253 1597.439 1686.625 1775.81 1864.996 1954.182 2043.368 2132.553 2221.739 2310.925 2400.111 2489.296 2578.482 2645.371
Plant & Machinery
Depreciation as per IT act
4.89%
2014
0
Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept Oct-Dec
3188.40 3188.40 3188.40 3119.09 3049.78 2980.46 2911.15 2841.84 2772.52 2703.21 2633.90 2564.58
105.62 105.62 105.62 103.32 101.02 98.73 96.43 94.14 91.84 89.54 87.25 84.95
0.00 0.00 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31
105.62 105.62 174.93 172.63 170.34 168.04 165.74 163.45 161.15 158.86 156.56 154.26
3188.40 3188.40 3119.09 3049.78 2980.46 2911.15 2841.84 2772.52 2703.21 2633.90 2564.58 2495.27
2017
3
2495.27 2425.96 2356.65 2287.33 2218.02 2148.71 2079.39 2010.08 1940.77 1871.45 1802.14 1732.83
82.66 80.36 78.06 75.77 73.47 71.18 68.88 66.58 64.29 61.99 59.70 57.40
69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31
151.97 149.67 147.38 145.08 142.78 140.49 138.19 135.90 133.60 131.30 129.01 126.71
2425.96 2356.65 2287.33 2218.02 2148.71 2079.39 2010.08 1940.77 1871.45 1802.14 1732.83 1663.51
2020
6
1663.51 1594.20 1524.89 1455.57 1386.26 1316.95 1247.64 1178.32 1109.01 1039.70 970.38 901.07
55.10 52.81 50.51 48.22 45.92 43.62 41.33 39.03 36.74 34.44 32.14 29.85
69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31
124.42 122.12 119.83 117.53 115.23 112.94 110.64 108.35 106.05 103.75 101.46 99.16
1594.20 1524.89 1455.57 1386.26 1316.95 1247.64 1178.32 1109.01 1039.70 970.38 901.07 831.76 Outstanding Balance
Year
Quarters
Loan Opening Balance
Quarterly Interest
Principle Amount
Loan Repayments
ANNEXURE V: DEBT SERVICING
Outstanding Balance
Year
Quarters
Quarterly Interest
Principle Amount
Loan Repayments
Quarterly Interest
Principle Amount
Loan Repayments
Outstanding Balance
Year
Quarters
4 5 6
7 8 9
2021 2022
2020
2017
1 2 3
2018 2019
2015 2016
2023
2023
9
831.76 762.44 693.13 623.82 554.50 485.19 415.88 346.57 277.25 207.94 138.63 69.31
27.55 25.26 22.96 20.66 18.37 16.07 13.78 11.48 9.18 6.89 4.59 2.30
69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31
96.87 94.57 92.27 89.98 87.68 85.39 83.09 80.79 78.50 76.20 73.91 71.61
762.44 693.13 623.82 554.50 485.19 415.88 346.57 277.25 207.94 138.63 69.31 0.0 Outstanding Balance
Year
Quarters
Quarterly Interest
Principle Amount
Loan Repayments
10 11 12
2026 2024 2025
2392
10280
10.28
2381.72
3400
0.7005
0.9
0.63
0.001
0.95
0.00095
50
0.0475
23.34
0.63
7%
0.59
Year 0 1 2 3 4 5 6 7 8 9 10 11 12
Total Coal cost per annum
(in crs)
77.457 325.320 341.586 358.665 376.598 395.428 415.200 435.960 457.758 480.646 504.678 529.912 556.407
Total secondary fuel oil cost
per annum (in crs)
5.84 24.277 25.248 26.258 27.308 28.401 29.537 30.718 31.947 33.225 34.554 35.936 37.373
13 14 15 16 17 18 19 20 21 22 23 24 25
584.2277 613.4391 644.111 676.3166 710.1324 745.639054 782.9210065 822.0671 863.1704 906.3289 951.6454 999.2276 786.8918
38.86816 40.42289 42.0398 43.72139 45.47025 47.2890603 49.18062275 51.14785 53.19376 55.32151 57.53437 59.83575 46.67188
Variable charges for single unit (Rs/kwh)
Auxiliary Consumption
Rate of Energy delivered to Ex Bus
Secondary Fuel Oil Consumption (L/kwh)
Specific gravity of Secondary Fuel Oil
Secondary Fuel Oil Consumption (kg/kwh)
Secondary Fuel Oil cost (Rs/kg)
Secondary Fuel Oil cost per unit of electricity (Rs/kwh)
Total Fuel Oil consumption per annum (Rs Crs)
PRIMARY FUEL (COAL)
ANNEXURE VI: ENERGY CHARGE
Gross Calorific value of Secondary Fuel oil (kCal/L)
Gross station heat rate (kCal/kwh)
ENERGY CHARGE
Coal price to produce 1 unit of electricity (Rs/kwh)
SECONDARY FUEL
Heat contribution from secondary fuel oil (kCal/kwh)
Heat contribution from primary fuel oil (kCal/kwh)
Gross calorific value for coal (kCal/kg)
Cost of Coal (Rs/kg)
Coal required to produce 1 unit of electricity (kg/kwh)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
0 1 2 3 4 5 6 7 8 9 10
Primary Fuel 2 Months 12.910 54.220 56.931 59.778 62.766 65.905 69.200 72.660 76.293 80.108 84.113
Secondary Fuel 2 Months 0.973 4.046 4.208 4.376 4.551 4.733 4.923 5.120 5.324 5.537 5.759
O&M Expense 1 Month 8.498 8.984 9.498 10.042 10.616 11.223 11.865 12.544 13.261 14.020 14.822
Maintenance
Spares
20% O&M 20.396 21.563 22.796 24.100 25.479 26.936 28.477 30.105 31.828 33.648 35.573
Receivables 2 Months 56.723 231.998 235.202 238.503 242.191 246.287 250.810 255.784 261.229 267.172 273.636
99.500 320.812 328.635 336.798 345.603 355.084 365.275 376.213 387.936 400.485 413.902
99.500 221.312 7.823 8.163 8.805 9.481 10.191 10.938 11.723 12.549 13.418
74.625 240.609 246.476 252.599 259.203 266.313 273.956 282.160 290.952 300.364 310.427
9.701 31.279 32.042 32.838 33.696 34.621 35.614 36.681 37.824 39.047 40.355
91.001 311.827 319.137 326.756 334.987 343.861 353.410 363.669 374.674 386.465 399.080
91.001 220.826 7.309 7.620 8.231 8.873 9.549 10.259 11.006 11.790 12.616
Total Working Capital
Increase in Working Capital
Total Current Assets
Increase in Current Assets
Interest on Working Capital
Working Capital Debt
CURRENT ASSETS
ANNEXURE VII: WORKING CAPITAL
Year
WORKING CAPITAL
ITEMS
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
88.319 92.735 97.371 102.240 107.352 112.719 118.355 124.273 130.487 137.011 143.862 151.055 158.608 166.538 131.149
5.989 6.229 6.478 6.737 7.007 7.287 7.578 7.882 8.197 8.525 8.866 9.220 9.589 9.973 7.779
15.670 16.566 17.514 18.515 19.575 20.694 21.878 23.129 24.452 25.851 27.330 28.893 30.546 32.293 34.140
37.607 39.759 42.033 44.437 46.979 49.666 52.507 55.510 58.686 62.042 65.591 69.343 73.309 77.503 81.936
280.648 288.731 299.635 312.800 326.635 341.172 356.448 372.500 389.368 407.092 425.718 445.291 465.858 487.471 349.734
428.233 444.019 463.030 484.730 507.547 531.539 556.767 583.294 611.189 640.522 671.367 703.802 737.910 773.777 604.737
14.331 15.786 19.011 21.699 22.817 23.992 25.228 26.528 27.895 29.333 30.845 32.435 34.108 35.868 -169.041
321.175 333.014 347.273 363.547 380.660 398.654 417.575 437.471 458.392 480.391 503.525 527.851 553.432 580.333 453.553
41.753 43.292 45.145 47.261 49.486 51.825 54.285 56.871 59.591 62.451 65.458 68.621 71.946 75.443 58.962
412.564 427.453 445.517 466.214 487.972 510.844 534.889 560.165 586.737 614.671 644.037 674.909 707.364 741.485 570.597
13.483 14.889 18.064 20.698 21.758 22.872 24.044 25.276 26.572 27.934 29.366 30.872 32.455 34.120 -170.888
CURRENT ASSETS
WORKING CAPITAL
ITEMS
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Energy Available
for Sale
Million
Units
1228.59 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 3685.77
Variable Fuel Cost Rs Crore 77.46 325.32 341.59 358.67 376.60 395.43 415.20 435.96 457.76 480.65 504.68 529.91 556.41 584.23 613.44 644.11 676.32 710.13 745.64 782.92 822.07 863.17 906.33 951.65 999.23 786.89
Variable Fuel Cost per
Unit
Rs/kwh 0.63 0.66 0.70 0.73 0.77 0.80 0.84 0.89 0.93 0.98 1.03 1.08 1.13 1.19 1.25 1.31 1.38 1.45 1.52 1.59 1.67 1.76 1.84 1.94 2.03 2.13
Interest Rs Crore 105.62 415.58 381.14 344.40 307.66 270.93 234.19 197.46 160.72 123.98 87.25 50.51 13.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Return on Equity Rs Crore 52.10 208.42 208.42 208.42 208.42 208.42 208.42 208.42 208.42 208.42 208.42 208.42 249.56 249.56 249.56 249.56 249.56 249.56 249.56 249.56 249.56 249.56 249.56 249.56 249.56 187.17
Depreciation Rs Crore 31.53 126.14 126.14 126.14 126.14 126.14 126.14 126.14 126.14 126.14 126.14 126.14 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 66.89
Cumulative
Depreciation
Rs Crore 31.53 157.67 283.81 409.95 536.09 662.23 788.37 914.51 1040.65 1166.79 1292.93 1419.07 1508.25 1597.44 1686.62 1775.81 1865.00 1954.18 2043.37 2132.55 2221.74 2310.92 2400.11 2489.30 2578.48 2645.37
O&M Expense Rs Crore 25.50 107.81 113.98 120.50 127.39 134.68 142.38 150.53 159.14 168.24 177.86 188.04 198.79 210.16 222.19 234.89 248.33 262.53 277.55 293.43 310.21 327.96 346.72 366.55 387.51 25.60
Interest on Working
Capital
Rs Crore 9.70 31.28 32.04 32.84 33.70 34.62 35.61 36.68 37.82 39.05 40.36 41.75 43.29 45.15 47.26 49.49 51.83 54.28 56.87 59.59 62.45 65.46 68.62 71.95 75.44 58.96
Fixed Cost Rs Crore 224.45 889.23 861.72 832.30 803.31 774.79 746.75 719.22 692.24 665.83 640.02 614.86 594.61 594.05 608.19 623.13 638.90 655.56 673.17 691.76 711.41 732.16 754.08 777.24 801.70 338.63
Fixed Cost per unit Rs/kwh 1.83 1.81 1.75 1.69 1.63 1.58 1.52 1.46 1.41 1.35 1.30 1.25 1.21 1.21 1.24 1.27 1.30 1.33 1.37 1.41 1.45 1.49 1.53 1.58 1.63 0.92
Total Cost per unit Rs/kwh 2.46 2.47 2.45 2.42 2.40 2.38 2.36 2.35 2.34 2.33 2.33 2.33 2.34 2.40 2.49 2.58 2.68 2.78 2.89 3.00 3.12 3.25 3.38 3.52 3.66 3.05
PV Factor 1.00 0.8842 0.7818 0.69121 0.6112 0.5404 0.4778 0.4224 0.3735 0.3302 0.292 0.2582 0.2283 0.2018 0.1785 0.1578 0.1395 0.1233 0.1091 0.0964 0.0853 0.0754 0.0667 0.0589 0.0521 0.046072
Variable Tariff Rs/kwh 0.6305 0.5853 0.5434 0.50447 0.4683 0.4348 0.4037 0.3747 0.3479 0.323 0.2999 0.2784 0.2584 0.2399 0.2228 0.2068 0.192 0.1782 0.1655 0.1536 0.1426 0.1324 0.1229 0.1141 0.1059 0.098361
Fixed Tariff Rs/kwh 1.8269 1.5999 1.3708 1.17064 0.999 0.8519 0.726 0.6182 0.5261 0.4474 0.3803 0.323 0.2762 0.244 0.2208 0.2001 0.1814 0.1645 0.1494 0.1357 0.1234 0.1123 0.1023 0.0932 0.085 0.042328
Total tariff Rs/kwh 2.4574 2.1852 1.914 1.67511 1.4673 1.2867 1.1296 0.993 0.874 0.7704 0.6801 0.6014 0.5346 0.4839 0.4436 0.4069 0.3734 0.3428 0.3149 0.2894 0.266 0.2447 0.2252 0.2073 0.191 0.140689
Levelised Tariff Rs/kwh
ANNEXURE VIII: TARIFF
PV Calculation
Discounted Tariff
2.475
Year
Fixed Tariff
Variable Tariff
0 1 2 3 4 5 6 7 8 9 10
Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Revenue from Energy Sale
to PTC
211.336 850.182 842.311 833.672 825.936 819.150 813.363 808.627 804.998 802.532 801.292
Revenue from energy sale
on Merchant basis
129.002 541.8082 568.8986 597.3435 627.2107 658.5712 691.4998 726.0748 762.3785 800.4975 840.5223
Total Revenue 340.338 1391.990 1411.210 1431.016 1453.147 1477.721 1504.863 1534.702 1567.376 1603.030 1641.814
Expenses
Fuel 77.457 325.320 341.586 358.665 376.598 395.428 415.200 435.960 457.758 480.646 504.678
O&M Expenses 25.495 107.813 113.980 120.500 127.393 134.679 142.383 150.527 159.138 168.240 177.864
Depreciation 31.53483 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393
Interest payments 115.32 446.85 413.18 377.24 341.36 305.55 269.81 234.14 198.54 163.03 127.60
Total Expenditure 249.804 1006.127 994.883 982.542 971.490 961.795 953.528 946.763 941.578 938.056 936.284
Profit before tax, PBT 90.534 385.863 416.327 448.474 481.657 515.926 551.334 587.939 625.798 664.974 705.530
PBT+Dep on books 122.069 512.002 542.466 574.613 607.796 642.065 677.474 714.078 751.938 791.113 831.669
PBT for IT purposes 32.001 164.559 244.483 318.936 388.318 453.572 515.512 574.842 632.174 688.044 742.917
MAT 18.97593 80.87692 87.2621 94.00017 100.9552 108.138 115.5597 123.232 131.1673 139.3785 147.8791
Corporate Tax 10.87709 55.93375 83.09967 108.4064 131.9894 154.1692 175.2224 195.3887 214.8761 233.866 252.5174
Payable Tax 18.97593 80.87692 87.2621 108.4064 131.9894 154.1692 175.2224 195.3887 214.8761 233.866 252.5174
Profit after tax, PAT 71.558 304.986 329.065 340.068 349.667 361.757 376.112 392.550 410.922 431.108 453.013
ANNEXURE IX: PROFIT & LOSS
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
801.340 805.709 824.798 855.142 887.065 920.652 955.988 993.165 1032.279 1073.433 1116.731 1162.287 1210.219 1260.651 787.862
882.5484 926.6759 973.0097 1021.66 1072.743 1126.38 1182.699 1241.834 1303.926 1369.122 1437.578 1509.457 1584.93 1664.177 1310.539
1683.889 1732.385 1797.807 1876.802 1959.809 2047.032 2138.687 2234.999 2336.205 2442.555 2554.309 2671.744 2795.149 2924.828 2098.401
529.912 556.407 584.228 613.439 644.111 676.317 710.132 745.639 782.921 822.067 863.170 906.329 951.645 999.228 786.892
188.037 198.793 210.164 222.186 234.895 248.330 262.535 277.552 293.428 310.212 327.956 346.715 366.547 387.514 25.605
126.1393 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 66.88929
92.26 57.07 45.15 47.26 49.49 51.83 54.28 56.87 59.59 62.45 65.46 68.62 71.95 75.44 58.96
936.353 901.454 928.723 972.071 1017.677 1065.658 1116.138 1169.248 1225.126 1283.916 1345.771 1410.851 1479.325 1551.371 938.348
747.536 830.931 869.084 904.730 942.132 981.374 1022.549 1065.751 1111.080 1158.639 1208.539 1260.894 1315.824 1373.457 1160.053
873.675 920.117 958.270 993.916 1031.317 1070.560 1111.735 1154.937 1200.266 1247.825 1297.725 1350.079 1405.010 1462.643 1226.943
797.206 854.192 901.400 944.826 988.915 1033.911 1080.036 1127.501 1176.501 1227.227 1279.857 1334.569 1391.536 1450.928 1219.298
156.6835 174.1632 182.1601 189.6315 197.4708 205.6961 214.3264 223.3815 232.8823 242.8508 253.3097 264.2833 275.7968 287.8766 243.1472
270.9702 290.3398 306.3858 321.1463 336.1324 351.4263 367.1043 383.2375 399.8929 417.1343 435.0234 453.62 472.9829 493.1704 414.4393
270.9702 290.3398 306.3858 321.1463 336.1324 351.4263 367.1043 383.2375 399.8929 417.1343 435.0234 453.62 472.9829 493.1704 414.4393
476.565 540.591 562.698 583.584 605.999 629.948 655.445 682.514 711.187 741.505 773.515 807.274 842.841 880.287 745.614
0 1 2 3 4 5 6 7 8 9 10 11 12
Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Inflow
Equity 1062.80 0 0 0 0 0 0 0 0 0 0 0 0
Debt 3271.53 166.46 6.39 6.66 7.18 7.71 8.29 8.87 9.51 10.17 10.86 11.60 12.74
Term Loan 3188.40 0 0 0 0 0 0 0 0 0 0 0 0
WC Debt 83.12 166.46 6.39 6.66 7.18 7.71 8.29 8.87 9.51 10.17 10.86 11.60 12.74
PBT 90.534 385.863 416.327 448.474 481.657 515.926 551.334 587.939 625.798 664.974 705.530 747.536 830.931
Depreciation 31.535 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 89.186
Total cash inflow 4456.40 678.47 548.85 581.28 614.98 649.78 685.77 722.95 761.45 801.28 842.53 885.27 932.86
Outflow
Project expenditure 4251.20 0 0 0 0 0 0 0 0 0 0 0 0
Increase in WC 99.500 221.312 7.823 8.163 8.805 9.481 10.191 10.938 11.723 12.549 13.418 14.331 15.786
Tax 18.976 80.877 87.262 108.406 131.989 154.169 175.222 195.389 214.876 233.866 252.517 270.970 290.340
Loan repayments 0.000 207.939 277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 207.939
Total cash outflow 4369.68 510.13 372.34 393.82 418.05 440.90 462.67 483.58 503.85 523.67 543.19 562.55 514.06
Excess/Shortfall 86.718 168.338 176.516 187.454 196.933 208.873 223.101 239.373 257.598 277.617 299.345 322.720 418.791
Opening Balance 0.000 86.718 255.056 431.572 619.026 815.959 1024.832 1247.934 1487.306 1744.905 2022.522 2321.867 2644.587
Closing Balance 86.718 255.056 431.572 619.026 815.959 1024.832 1247.934 1487.306 1744.905 2022.522 2321.867 2644.587 3063.378
ANNEXURE X: CASH FLOW
13 14 15 16 17 18 19 20 21 22 23 24 25
2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
0 0 0 0 0 0 0 0 0 0 0 0 0
15.20 17.28 18.16 19.11 20.11 21.15 22.24 23.40 24.61 25.89 27.24 28.64 -124.93
0 0 0 0 0 0 0 0 0 0 0 0 0
15.20 17.28 18.16 19.11 20.11 21.15 22.24 23.40 24.61 25.89 27.24 28.64 -124.93
869.084 904.730 942.132 981.374 1022.549 1065.751 1111.080 1158.639 1208.539 1260.894 1315.824 1373.457 1160.053
89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 66.889
973.47 1011.20 1049.48 1089.67 1131.85 1176.08 1222.51 1271.22 1322.34 1375.97 1432.25 1491.28 1102.01
0 0 0 0 0 0 0 0 0 0 0 0 1
19.011 21.699 22.817 23.992 25.228 26.528 27.895 29.333 30.845 32.435 34.108 35.868 -169.041
306.386 321.146 336.132 351.426 367.104 383.237 399.893 417.134 435.023 453.620 472.983 493.170 414.439
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
325.40 342.85 358.95 375.42 392.33 409.77 427.79 446.47 465.87 486.06 507.09 529.04 246.40
648.071 668.355 690.531 714.256 739.514 766.318 794.719 824.757 856.470 889.911 925.160 962.246 855.614
3063.378 3711.450 4379.805 5070.335 5784.591 6524.105 7290.423 8085.142 8909.899 9766.37 10656.28 11581.44 12543.69
3711.450 4379.805 5070.335 5784.591 6524.105 7290.423 8085.142 8909.899 9766.37 10656.28 11581.44 12543.69 13399.30
0 1 2 3 4 5 6 7 8 9 10 11
Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Liabilities
Equity Capital 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801
Reserve and Surplus 71.558 376.544 705.609 1045.677 1395.344 1757.100 2133.213 2525.763 2936.685 3367.793 3820.805 4297.371
Loan Funds 3263.027 3221.072 2949.687 2678.557 2407.908 2137.767 1868.157 1599.108 1330.648 1062.808 795.618 529.114
Term Loan 3188.402 2980.463 2703.210 2425.958 2148.706 1871.453 1594.201 1316.949 1039.696 762.444 485.192 207.939
Working Capital loan 74.625 240.609 246.476 252.599 259.203 266.313 273.956 282.160 290.952 300.364 310.427 321.175
Total Liabilities 4397.39 4660.42 4718.10 4787.03 4866.05 4957.67 5064.17 5187.67 5330.13 5493.40 5679.22 5889.29
Assets
Project Asset 4219.67 4093.53 3967.39 3841.25 3715.11 3588.97 3462.83 3336.69 3210.55 3084.41 2958.27 2832.14
Depreciation 31.535 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139
Current Asset 91.001 311.827 319.137 326.756 334.987 343.861 353.410 363.669 374.674 386.465 399.080 412.564
Coal Stock 12.910 54.220 56.931 59.778 62.766 65.905 69.200 72.660 76.293 80.108 84.113 88.319
Secondary Fuel 0.973 4.046 4.208 4.376 4.551 4.733 4.923 5.120 5.324 5.537 5.759 5.989
Maintenance Spares 20.396 21.563 22.796 24.100 25.479 26.936 28.477 30.105 31.828 33.648 35.573 37.607
Receivables 56.723 231.998 235.202 238.503 242.191 246.287 250.810 255.784 261.229 267.172 273.636 280.648
Cash 86.718 255.056 431.572 619.026 815.959 1024.832 1247.934 1487.306 1744.905 2022.522 2321.867 2644.587
Total Assets 4397.39 4660.41 4718.10 4787.03 4866.06 4957.66 5064.18 5187.67 5330.13 5493.40 5679.22 5889.29
Difference 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
ANNEXURE XI: BALANCE SHEET
12 13 14 15 16 17 18 19 20 21 22 23 24 25
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801
4837.962 5400.660 5984.244 6590.244 7220.192 7875.637 8558.151 9269.338 10010.843 10784.358 11591.632 12434.473 13314.760 14060.37
333.014 347.273 363.547 380.660 398.654 417.575 437.471 458.392 480.391 503.525 527.851 553.432 580.333 453.553
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
333.014 347.273 363.547 380.660 398.654 417.575 437.471 458.392 480.391 503.525 527.851 553.432 580.333 453.553
6233.78 6810.73 7410.59 8033.70 8681.65 9356.01 10058.42 10790.53 11554.03 12350.68 13182.28 14050.71 14957.89 15576.73
2742.95 2653.76 2564.58 2475.39 2386.21 2297.02 2207.84 2118.65 2029.46 1940.28 1851.09 1761.91 1672.72 1606.83
89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 66.889
427.453 445.517 466.214 487.972 510.844 534.889 560.165 586.737 614.671 644.037 674.909 707.364 741.485 570.597
92.735 97.371 102.240 107.352 112.719 118.355 124.273 130.487 137.011 143.862 151.055 158.608 166.538 131.149
6.229 6.478 6.737 7.007 7.287 7.578 7.882 8.197 8.525 8.866 9.220 9.589 9.973 7.779
39.759 42.033 44.437 46.979 49.666 52.507 55.510 58.686 62.042 65.591 69.343 73.309 77.503 81.936
288.731 299.635 312.800 326.635 341.172 356.448 372.500 389.368 407.092 425.718 445.291 465.858 487.471 349.734
3063.378 3711.450 4379.805 5070.335 5784.591 6524.105 7290.423 8085.142 8909.899 9766.369 10656.280 11581.440 12543.685 13399.30
6233.78 6810.73 7410.60 8033.70 8681.64 9356.01 10058.42 10790.53 11554.03 12350.68 13182.28 14050.71 14957.89 15576.73
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-657.558 -900.794 -1034.16 -1002.49
0 0 0 0 71.558 304.986 329.065 340.068 349.667 361.757 376.112 392.550 410.922 431.108
0 0 0 0 31.535 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139
0 0 0 0 105.616 415.575 381.135 344.399 307.663 270.928 234.192 197.456 160.720 123.984
0 0 0 0 9.701 31.279 32.042 32.838 33.696 34.621 35.614 36.681 37.824 39.047
0 0 0 0 18.976 80.877 87.262 108.406 131.989 154.169 175.222 195.389 214.876 233.866
0 0 0 0 237.386 958.857 955.643 951.851 949.156 947.613 947.280 948.215 950.481 954.144
-657.558 -900.794 -1034.16 -1002.49 237.386 958.857 955.643 951.851 949.156 947.613 947.280 948.215 950.481 954.144
18.49%
-547.342 0 -175.362 -340.10
0 0 0 0 71.558 304.986 329.065 340.068 349.667 361.757 376.112 392.550 410.922 431.108
-547.342 0 -175.362 -340.10 71.558086 304.98623 329.06473 340.06764 349.66729 361.75651 376.11202 392.5503 410.92209 431.10764
21.37%
ANNEXURE XII: RATIOS
Cash Outflow
Cash Inflow
Cash to the project
PAT
Add: Depreciation
Add: Interest on loan
Add: Interest on WC
Add: Tax
Total cash inflow
Project IRR
Cash Inflow
Cash to equity holder
Equity IRR
Cash Outflow
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
453.013 476.565 540.591 562.698 583.584 605.999 629.948 655.445 682.514 711.187 741.505 773.515 807.274 842.841 880.287
126.139 126.139 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186
87.248 50.512 13.776 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
40.355 41.753 43.292 45.145 47.261 49.486 51.825 54.285 56.871 59.591 62.451 65.458 68.621 71.946 75.443
252.517 270.970 290.340 306.386 321.146 336.132 351.426 367.104 383.237 399.893 417.134 435.023 453.620 472.983 493.170
959.273 965.940 977.185 1003.415 1041.177 1080.803 1122.385 1166.020 1211.808 1259.857 1310.276 1363.183 1418.700 1476.956 1538.086
959.273 965.940 977.185 1003.415 1041.177 1080.803 1122.385 1166.020 1211.808 1259.857 1310.276 1363.183 1418.700 1476.956 1538.086
453.013 476.565 540.591 562.698 583.584 605.999 629.948 655.445 682.514 711.187 741.505 773.515 807.274 842.841 880.287
453.01274 476.56532 540.59141 562.69847 583.58389 605.9992 629.94819 655.44518 682.51395 711.18699 741.50481 773.51537 807.27366 842.841393 880.286707
0 1 2 3 4 5 6 7 8 9 10 11 12
Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
PAT 71.558 304.986 329.065 340.068 349.667 361.757 376.112 392.550 410.922 431.108 453.013 476.565 540.591
Add: Depreciation 31.535 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 89.186
Add: Interest on Term Loan 105.616 415.575 381.135 344.399 307.663 270.928 234.192 197.456 160.720 123.984 87.248 50.512 13.776
Add: Tax 18.976 80.877 87.262 108.406 131.989 154.169 175.222 195.389 214.876 233.866 252.517 270.970 290.340
Total 227.685 927.578 923.602 919.013 915.460 912.993 911.665 911.534 912.657 915.097 918.917 924.187 933.893
Principal Repayment 0.000 207.939 277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 207.939
Interest Payment 105.616 415.575 381.135 344.399 307.663 270.928 234.192 197.456 160.720 123.984 87.248 50.512 13.776
Total Debt Services 105.616 623.515 658.388 621.652 584.916 548.180 511.444 474.708 437.972 401.236 364.500 327.764 221.715
DSCR 2.156 1.488 1.403 1.478 1.565 1.665 1.783 1.920 2.084 2.281 2.521 2.820 4.212
Minimum DSCR 1.403
Average DSCR 2.106
Maximum DSCR 4.212
ANNEXURE XIII: DSCR

Final Report ON NTPC (Ankit Doveriyal, 15) PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final Report ON NTPC (Ankit Doveriyal, 15) PDF

Uploaded by

Copyright:

Available Formats

SUMMER INTERNSHIP REPORT

PROJECT APPRAISIAL AND FINANCIAL MODELLING

You might also like