Case

Study-1
Valuation
of P& M forBanks

To know fair market valle of the ptant for

negotiatiom
with the fin.nciatinstitutions,
2.

3, Naheofthe ownerofthe M/s YJ(tPlastic Pvt.nd.

ma.hinery/plantunder rr14 Karisayedstreet

lf theassetisunderjoint
ownership/ co-ownershiP,

5 . Det(riptionofthe ma(hin.ryl plantandthe purposefor whichir ir uritiz€dtr

Theownerhasinstalleda 200kwcapacitywindtlrbine generator(wTG)ptantat
Lambatit€, Ta. K.lvanplr, Dist.lamnasar(Gujaratstate).t totat investmentof
Rs.98,57Lakhs,The plant war erectedand commissioned in M.rch 1995for
caPtiveconsumptionunderthe wind powerpfvatimtion poticyof the Gljarat
State,lheplantis Cener.tin8elecbicttythroughwind enersy.Theptant.onrists
ot a 200 kW capa.ity WTGwith astocietedete.tricat plant of swir.hvard, 250kVA
tranrformer and iranrmirsion line upto GEDA subst.tion. Th€ detaited
identifi.ations
of the majorplantequipmentsare asunder:
. MAKE OfWTG: AHEL-NORDEX
. Capacity:200kW,28m.otor dlameter,30Mtowe.height.
. Bladesnos.& make : 530,532& 5350t LM Gta$ Fibefa/s
. Generator no, & make: GE-0091080f BRooKcRoMpToN
. GearBoxno,& make: 421404-122-1-8 ol FLENDER
. Cont.ollerno. & Make: 1994-09-0'|-S4P-U PSof NORDEX

Howevertheplantwarseverely afiededduringcy.lonesof 1998and2OOldurins

whichit undeMentmajor repairsof Re,23 Lakhs.nd Rr, 2 takhsr€spe.tivety.
Furthe.theearthquekeof 2001hadsh.kenrhe foundationof the wrc, invotving
€xo€nditure
of Rs.1 Lakh.

Sincethen the WTGt€chnologyhas develope.lquite well all over rhe world.

loday the wlca .v.ilable are .apacitiesransinsfrom 250 kW to lsoo kW
capacityand towef heiShtsof 50 M and above,lhe new technologyis more
with better power performance
sophisticated characrerirtiG
at towerinstatled

Furthertheplantis locatedin Gujaratandcompa.edto rhat statethe otherState

Governments have .nnoun.ed better incentivesfor promotionof wind power
 Corideringall the abovepoinb jf the marketlatue of the said ptantis to be
derivedthe positionof the owner of the ptant is no better rhan that of the

6 , Valuation
oflhe ma.hinery/planr:
The sald pl.nt of the owner is certinedto have fair market vatue of Rs.
19,3s,000/-
{Rlpeesnineteent thsthirtyfivethousandonty)

The marketvalueofthe saidpl.nt ir arlved.t.s the one towesrof the vatues

wo.kedout bv two 6ethods:
(1)Con CotutrqctionMethod,and
(2)€xpected RevenueMerhod.

CostConstructio
n Method:

Presentlyit an investorinJtallsa new wTG plantthe nearest/sm.ttertcapa.it

WTGplant avallableis 225 / 250 lW ar rot t instattedcost of Rs.90 Lakh5,
contideringthe discoontsfor lower 6pa.ity (2o%),economictire .tready
utilked/ pa5ted(40%),damaSesdue to cyclonesand earthquake(30%)and
betteroptionaltechnology/siter/ incentives.vailabl€for new ptant{20%);the
fair market!al!eworksout to be Rs.19.35Lakhs.

Expected
Revenue
Method:

Assumingtiat a prorpectivebuyer of the 3ald readt availablefor captive

consumption,the
criteria.onsidereda.e:

1. flle generation capacity fador of the 14%, p,a. based on previous

2. tariff of GEais Rs,4.50p€r kwh esdlatingat 10%p.a.j

Electricity
3. O & M costperannumRs,1 takhtodayescalating at r0%p...;
4. lnruran.ecostper annumRs.I r.akhtodayescalating at 10%p.a,;
5. Discounting future net benefts@ 20%net IRRplus@8.33% for recov€ry
of depre.iationchargefor the remaininSeconomic lifeof 12yeaEj
6, The pres€nt valueofnet benefitlsfurtherdlscolntedfor damases dueto
cyclonesand earthqlake{30%)and better optionalte.hnology/sites/
incentivetavailablefornee plant{2o%);

Thetair marketvaluewo.ks
out to he R5,20.77
Lakhs.