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TYPICAL STRUCTURE SPONSORS EPC Arrangement RAW MATERIALS LENDERS SPV Coal/ Coke Iron Ore Product Offtake/ Marketing 3 PROJECT FINANCE: CHARACTERISTICS Project set up through an SPV Borrower has no historical financial strength nor any assets lenders have limited/no recourse to existing operations and cash flows of the promoters Typically 1.5:1 can go upto 2:1 Project stands financially independent Large capital costs with high D/E ratio Debt funds required for long duration Long gestation periods Highly structured and complex documentation Banks are comfortable with door to door maturity of 10 years 4 .

PROJECT FINANCE : RISK Promoter/ Sponsor Risk Completion Risk Raw Material/ Power Availability Risk Market Risk Infrastructure / Logistics Risk Environmental Risks Technology Risk Financing Risk Operation & Maintenance Risk Interest rate risk Foreign exchange risk Force Majeure Legal Risk Political Risk 5 Usual Source of Finance Rupee Term Loans Export Credit Agency (ECA) External Commercial Borrowings (ECB) 6 .

Bank Finance: Asset Liability Mismatch Banks usually carry short term liabilities.better discipline required by project company because cost overrun. . the debt coming from FIs and Banks.closer monitoring. the worldwide practice is to have bond financing either at initial stage or more often project finance being taken out by bond financing after commercial operation. Project Completion risk and cost overruns need to be addressed either by a proper contractual structure or promoter undertakings Taxes & duties Approvals and permissions from various authorities Land Acquisition issues withholding taxes. stamp duty in various states & structure of equitable & legal mortgage 8 . The present financing structure is usually 60% debt and 40% equity. The market risk associated with cyclicality of the commodities market would need to be addressed. . usually 10 years. Advantages of bond financing: . To address Asset Liability Mismatch related issues. better disclosure. The Project finance loans are long term in nature. 7 Bank Finance: Other Major Issues Banks have an expertise and appetite for appraising and taking on credit risk. better discipline in reserves maintenance. delays etc would lead to problems.Exit option available to the Banks/FIs. .rating required.

490 crores through public.1 Fund Mobiliser in the Country. raised over Rs. Pioneer in Privatisation in the Country. having worked for several fund-raising. Securitisation of SEB overdues and the only non-lending institution to be a participant in a nodal committee set up by the Ministry of Power. rights issue and private placement of equity & debt during the past 5 years. Advisor to Government of India on crucial issues like studying India’s Power requirements and Role of Central PSUs. This has helped it in developing direct links with several Multilateral Agencies and International Financial Institutions. Pioneer in Securitisation: Accomplished the first true Securitisation in the power sector in the country and the only investment bank to be co-opted on the RBI’s Working Group on Asset Securitisation as a Special Invitee. fresh equity shares were issued to Asian Development Bank (ADB) and ADB now holds 13. 10 . strategic sale and other advisory transactions for Government of India and several State Governments. Strong relationship with the Government. In January 1997. SBICAP enjoys full support from SBI & its Indian associates and its overseas subsidiaries. No.15.84% stake in the equity of SBICAPS. country’s largest domestic investment bank. Being a part of the State Bank Group. 1.CREDIT ENHANCEMENT MEASURES Escrow Accounts Trust & Retention Accounts Debt Service Reserve Accounts Financial Covenants Pledge of Shares of Promoters Assignment of Contracts & Receivables Mortgage / Hypothecation of Assets 9 SBICAP: India’s Premier Investment Bank Was incorporated in 1986 as a wholly owned subsidiary of the State Bank of India.

Setting up of pellet plant. Bramhani Industries Ltd. Capacity Expansion by 3. Setting up Sponge Iron Plant. Topworth Pipes & Tubes Limited Setting up 340.2 MTPA Jindal Steel & Power Ltd. Setting up 270 MW Captive Power Plant Uttam Galva Metallics Ltd. Setting up of 150.000 MTPA Large Diameter ERW Pipes Plant Jewels Seamless Ltd.000 MTPA Steel Pipes Plant Valuation of 6 Iron Ore Mines in Chile Jun 2008 Advisor Jun 2008 Advisor & Debt Arranger May 2008 Advisor May 2008 Advisor 12 . Enterprise Valuation JSW Steel Ltd. Coke oven plant and captive power plant at Hospet. Captive Power Plant.000 MTPA Pig Iron Plant Aug 2008 Advisor Jul 2008 Advisor & Debt Arranger Jul 2008 Advisor & Debt Arranger Jul 2008 Advisor & Debt Arranger Jindal Steel & Power Ltd. Setting up 550. Ferro Alloys Plant & Coal Washery Sep 2008 Advisor Sep 2008 Advisor Sep 2008 Advisor Aug 2008 Advisor 11 SBICAP STEEL CREDENTIALS New Tech Forge & Foundry Ltd.8 MTPA Conros Steels Pvt Ltd Setting up a 36. Setting up 1.9 MTPA Integrated Steel Plant Bhushan Power & Steel Limited Capacity Expansion by 0. Setting up of 300.SBICAP STEEL CREDENTIALS Mackeil Ispat & Forging Ltd. Karnataka Action Ispat & Power Ltd. Setting up 2 MTPA DRI Plant JSW Steel Ltd.000 TPA Forging Unit FB and NFB working Capital Limits Jan 2009 Advisor & Debt Arranger Jan 2009 Advisor Dec 2008 Advisor & Debt Arranger Nov 2008 Advisor Bhushan Steel Ltd.000 MTPA SS Wire Rod Plant BMM Ispat Ltd. Setting up of 4 MTPA Integrated Steel Plant Jindal Steel & Power Ltd.

Ltd Neelachal Ispat Nigam Ltd. Setting up of 4 MTPA Iron Ore Pelletisation Plant Magnum Steels Ltd Setting up of Integrated Steel Plant Jindal Steel & Power Ltd. Orissa Action Ispat & Power Ltd.00. Setting up of Sponge Iron & Steel Billets Plant 2007 May 2007 Advisor Advisor & Debt Arranger May 2007 Advisor Aug 2007 Arranger 14 . Setting up of 1.5 mn MTPA Plate Mill Setting up Rolling Mill of Capacity 1. Integrated Steel Plant an Iron Ore Mines Hazira Plate Limited Setting up 1.SBICAP STEEL CREDENTIALS JSW Steel Ltd.000 TPA Apr 2008 Advisor Mar 2008 Advisor & Debt Arranger Mar 2008 Advisor Jan 2008 Advisor s SKS Ispat & Power Ltd Setting up 18 MVA Ferro Alloys Plant &30 MW power Plant Divine Alloys & Power Co. Integrated Steel Plant. Appraisal for development of 4 iron ore mines in Chile Kharkia Steels Pvt.2 MTPA Plate Mill JSPL – ECA Financial Appraisal for 4 MTPA Steel Plant for ECA Lenders 2008 Advisor & Debt Arranger Nov 2007 Advisor & Debt Arranger 2008 Advisor Oct 2007 Advisor 13 SBICAP STEEL CREDENTIALS Corporate Ispat Alloys Ltd. Setting up of 4 Lakh TPA HR Steel Plant Brahmani River Pellets Ltd.23 MTPA Galvanizing Plant at Dubai Maheshwary Ispat Ltd. Orisa – Phase II Stainless Steel Plant Asian Ispat FZC Setting up 0. 180000 TPA Mini Integrated Steel Plant Jindal Steel & Power Ltd. Setting up of 2 MTPA DRI Plant Sep 2007 Sep 2007 Advisor Advisor & Debt Arranger Sep 2007 Advisor Sep 2007 Advisor Jindal Stainless Steel Ltd. Ltd.

Orissa Sep 2006 Advisor 2006 Advisor 2006 Advisor 2006 Advisor & Debt Arranger s Ind Synergy Ltd. TMT Bar Plant. Jharkhand Bhubee Profiles Pvt. for IFCI Mangilal Rungta Gangotri Iron & Steel Co. Ltd.9 MTPA Plate Mill 2006 Advisor 2006 Advisor 2005 Advisor & Debt Arranger Dec 2005 Advisor 16 .34.24. Orissa 2007 Advisor Feb 2007 Advisor 2007 Advisor & Debt Arranger Jan 2007 Advisor Atibit Industries Company Ltd. Ltd.000 TPA JSPL – Bolivia Project Bid Advisory – Bidding for Concession of Iron ore Mines in Bolivia Pellet Plant. Setting up TMT Bars & Sponge Iron Plant SAIL-Malvika Steel Financial Viability Financial Viability for acquisition of Malvika Steel by SAIL Adhunik Alloys & Power Ltd. Integrated Steel Plant. Bihar 95000 TPA Ferro Alloy Plant. Setting up of Phase III of steel Project Maithan Ispat Ltd.SBICAP STEEL CREDENTIALS Saravana Alloy Steels Pvt.000 TPA JSPL – Raigarh Plate Mill Setting up of 0. Jharkand 2007 Advisor 2006 Advisor 2006 Advisor & Debt Arranger May 2006 Advisor 15 SBICAP STEEL CREDENTIALS IFCI – Nova Iron & Steel Valuation Business Valuation of Nova Iron & Steel Ltd. Integrated Steel Plant SKS Ispat & Power Ltd Setting up Rolling Mill of Capacity 2. Hot Rolled Plate Manufacturing Facility. Orissa Adhunik Mettaliks Ltd. s Essar Steel Sharjah FZC Rebar Mill Project SKS Ispat & Power Ltd Setting up Rolling Mill of Capacity 2. Steel Plant. Ltd.

Integrated Steel Plant 2005 Advisor & Debt Arranger 2005 Debt Arranger 2005 Debt Arranger 2005 Advisor & Debt Arranger 17 THANK YOU 18 . Mini Steel Plant. Refinancing of High cost Debt JSW Steel Ltd. 1. 1. Gujarat Bhushan Ltd. Expansion of Integrated Steel Plant Maheshwary Ispat Ltd. Kutch. 1 million integrated Sponge Iron Project Jindal Steel & Power Ltd.SBICAP STEEL CREDENTIALS Electrotherm (India) Ltd.75 MT Mild Steel Plant BMM Ispat Ltd.5 MMTPA Plate Mill Project Neelachal Ispat Nigam Ltd. 1.2 MMTPA Pellets Plant 2005 2005 Advisor 2005 Advisor Advisor & Debt Arranger 2005 Advisor Essar Steel Ltd.

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