Session taken by …Rath .

sir has given us insight to new way of arranging fund and freeing up
banks for public and other needy enterprises. In his process adopted by Power grid was
creating InvIT (infrastructure investment trust). The session gave us brief but clear view of
InvIT about its purpose, structure, parties, process, governing regulation of turst .

An infrastructure trust is an income trust that is to finance, construct, own, operate, and
maintain infrastructure projects. To offer a direct investment route to individuals and
institutional investors into infrastructure projects, such trust are developed and in
exchange, they earn a small portion of the income as return.

“Power Grid Infrastructure Investment Trust (InvIT) is set up to own, construct, operate,

maintain and invest as an infrastructure investment trust as permissible under the InvIT
Regulations. The Power Grid Corporation of India is the Sponsor and the Project Manager of
the Trust”

Source Image : Google image for Powergrid InvIT

Power Grid raised additional Equity by issuance of new Shares in to market also
Government also disinvested strategically in stepwise manner Oct-07,Nov 10, Dec-13 from
primary market . Through ETF too Government sold 6.56% equity and reached to holding of
51.34% in Power Grid.

To further expand fund was needed to grow and sustainable fund arrangement, asset
monetization through infrastructure investment trust .In this collective investment schme to
pool money from no. of investors to invest in asset .Investors earn return as dividend from
earning of the project, and a portion of return on investment. Power grid built projects after
some time to arrange funds for further invest in new projects power grid sold those project
and valuation based on the discounted cash flow forecast from those projects. Now trust
will sell these projects equity in market
This helped to release capital from operational assets and reinvest in other project.
Recurring income as Investment manager and project manager. High dividend distribution
capability will bring investors who are yield focused. InvITs are investment scheme to enable
the investment from individuals and institutional investors in big projects in which single
investor could hesitate to invest/lend money. This creates pool form small amounts of all
investors. Investors get cash flow over the this investment from projects. Monetization of
few asset by creating a single trust.

This releases capital, cycle of ‘develop –monetize-reinvest’ makes development projects

unstoppable by freeing the debt limit.

Based on eligibility Sponsors , Trustee, Investment manager(IM), Project manager(PM) are

chosen and have set responsibilities for InvIT setup and functioning .

In public issue, >80% amount is invested in completed projects and <10% could be in
construction project.

Source: Presentation shared

Image source: Google image for InvIT

Learnings of Session-12, Date 11th Aug, 2021

We were enlightened with the ways of possible finance sources and Financial Appraisal of
Project. Big projects have high gestation period, delayed cash flows, risk during
construction.

Funding could be from

1. Budgetary support from Govt

2. Term Loans from Banks/Financial Institutions , World bank , ADB, JICA etc.
3. Bonds ( zero coupon bonds, masala bond , Infra bonds)
4. Loans from Multilateral Agencies like World Bank
5. Loans from Agencies
6. Export Credit Agencies like US Exim Bank & Exim Japan etc.
7. External Commercial Borrowings
8. Private Equity
9. Venture capital ( risk capital)

Venture capitalists focus on new ideas/ new kind of risky projects and statups and private
equity provider look for ownership of established firm or project. Soft banks are not angel
investors as they invest after 2-3 years of startup and when they see idea working and scope
of return of their investment.

Ratios used for appraisal of the term loan ,

a) Debt Service Coverage Ratio

b) Debt-Equity Ratio
c) Earning Capacity

We also learnt about a new international rating system CAMELS used by regulatory
banking authorities to rate banks/financial institutions. Six factors of evaluation are :

a) Capital adequacy, ( Own capital ratio , if 20%= .2 is , )

b) Asset quality, ( high NPA low rating. if NPA 30%, 70% good asset means .7)
c) Management,
d) Earnings, ( ROI if 20% , .2 )
e) Liquidity ,( for Cash in bank-loan , if .25)
f) Systems ( for process, sensitivity)
 Source: businessjargons.com

Based on benchmarking , certification etc , tangible factors ( Management and

system)are rated. Adding rating/ration value of all these factors will give CAMELS
rating.

But every factor has different weightage for different evaluators. So, Z Score came. In the
Z score and weightage is given to different factors and afterwards added to get Z score.

This Z score (discriminant score ) if above 2.675 , It is good.

If it is below 2.675 either sick or tending to be sick. If Z score is below 1.86 , there is no
way to consider financing such institutions/project. When Z score lies between 1.86 and
2.675, financing should be avoided and must be critically reviewed if already has taken
decision. These type of firms/institutions would be tending towards bankruptcy and so
financing those would be risky. If z score moves between 2.675 to 5, firms are in cow
category( Big cash in hand or high revenue type firms, not growing fast but also has
ability to move in star category.). Z score above 5 is most acceptable and falls in star
category and captures high market share and comes under Nifty firms/companies.

Image : Self made

Learnings of Session-13, Date 12th Aug, 2021

The session was on Balanced Score card. It is a tool/technique to be used to achieve objective
of a company. It was implemented in NTPC at Semhadari project in 2003. The mechanism
was devised by Robert Kaplan to achieve the leap in organizational growth. Four pillars of
Management are

a) Value Management ( Economic Value added)

b) Information Management
c) Knowledge Management
d) Risk Management

The balanced scorecard (BSC) to keep track of the execution of activities by the staff within
their control and to monitor the consequences arising from these actions

Four quadrants of score card are four perspectives

i) Financial Perspective
ii) Internal Business perspective
iii) Learning and Growth perspective
iv) Customer perspective

These perspectives are voice of Business, process, employee and customer .All these are
to be aligned with the company’s objective

Source: http://www.managingforimpact.org/tool/balanced-scorecard
 Source: Steps
involved in using the
tool Balanced
scorecard | Managing for
Sustainable
Development
Impact

(managingforimpact.org)

Hypothesis Considered are:

1) For financial performance, intangibles (Customer orientation, Value in employees, patents,

Goodwill etc.) of company are must and would deliver financial results.
2) What can’t be measured, can’t be improved.
3) Measurement drives behavior. (When someone is being watched, he behaves differently.)

Lead indicators are proactive and preemptive for future where company is leading. Lag
indicators are like reviewing historical events/failures/achievements. BSC helps to make Lead
measurement and take midcourse correction if need. For every perspective Objective, Measures,
target and initiatives are set and reviewed.

- For financial one, revenue, EVA, profit etc. are measures.

Economic Value Added (EVA)

a) EVA is +ve implies it will create the value
b) EVA is –ve indicates that it will destroy value

EVA = NOPAT minus cost of capital

= (PAT plus Interest) - (capital * WACC)

- For customers, product attributes, brand, their relationship with brand and organization,
satisfaction, expansion and retention are measures.
- For Process, Asset effectiveness, quality, cost and delivery time are measures.
- For learning, Employee satisfaction and retention and Skill inventory and buildup and
investment for same in strategic system.
 In this Balanced score card each factor is important yet starts from Learning and Growth as HR is
important for satisfaction of employees. Which leads to process improvement and gives
customer satisfaction .Achieving all these will bring financial benefit for the organization.

Learnings of Session-14, Date 17th Aug, 2021

Project presentations were carried out on different topics assigned to the groups.

1) Innovative ways of financing: Models and instruments for financing were discussed such as
green bonds, guarantees, bonds, securities, masala bonds, swaps, contract for difference etc.
2) Masala Bonds: Rupee denominated bonds raised abroad for arranging the funds. It hedges the
currency risks.
3) Foreign currency bonds: When have expenses in foreign currency or have cheap loan abroad.
Example Yankee bond etc.
4) Innovations in Pre-Feasibility Study: For measuring the project viability, its challenges and the
benefit, Basic design, technical viability are part of prefeasibility study.
5) Innovation in Feasibility Study: In this the below were discussed:
- Revolving funds,
- Creation of SPV,
- municipal green bonds
- EPC Contracts,
- PPP model,
- crowdfunding
6) The Real Options: Application of real options, example of application of real option were shared.
7) PERT: For project management, using PERT to reduce cost and avoid time overrun. How
probabilistic method PERT is and how this could be used to estimate the possibility to reduce the
project time. Crashing of activities,
8) CPM (Critical Path Method) Application: Another tool of project management focusing on the
activities falling on Critical path only and not flexible.
9) Innovative methods in PPA: the below models were discussed.
o BOT (Build, Operate, Transfer) model,
o Design Build Finance Maintain Model
o BOO( Build, Operate and Own) ,
o BOLT (Build, own, lease, transfer) Own).
o Design Build Model
o LDO ( Lease, Develop, Operate)
o Design Build Finance Model
o BOOT ( Build, Own, Operate and Transfer),
o Design Build Finance Operate model
10) Carbon Financing in India, Tax advantages of green bonds: For financing the projects which
are not very viable but are beneficial for environment by reducing carbon emission (directly
or indirectly) are given a way to go for Carbon financing.
11) Financing the renewable project: Different aspects of financing the renewable projects like
solar, hydro and wind were presented and compared.
12) Green Ammonia : A new technology and discussions were beyond the presentations too as
was it is hot topic now a gays considering the climate mandate .Going green will enable the
reduction in CO2 emission.

Learnings of Session-15, Date 18th Aug, 2021

In this session very knowledgeable and experienced guest lecture Sh. Vijayasimha Kasi were invited
to ponder upon the Integrated Project Management Control (IPMC).
Sir explained about the processes /stages of a project

1. Project Initiation
2. Project planning
3. Project execution
4. Project control
5. Project Closure

During the execution stage, for handling the multiple project at same time with limited resources for
each project. Strategic process flow monitoring is used in form of IPMC. Same process flow if applied
if company has one project, may hinder the progress of project due to major time going for the
discussions/meetings/status preparing.

Multi-level project network:

Three-tier integrated project management system with zero date as the date of award of main plant
package of the project

1) Tier I, master networks (schedules)

2) Tier II networks for the contractors.
3) Tier-III networks for each of the construction activities in greater detail (developed at site)

Level-1: It generally makes part of the contract. It is basic schedule to get an overview of time span
and important deliverables (schedule for tendering).

a) Detailed Engineering , Manufacturing and supply , Civil Structure, and erection are further
expanded on package level having a linkage required for activities and focusing on activities
falling on critical path.

b) Management Level Schedule also called Major Milestone Schedule or Top Management
Report Schedule consist of major project activities and milestones on an entire project
calendar, and usually developed on the one page and used a bar chart or Gantt chart
technique.

Level-02: More detailed, clearly indicating the delivery of each work pack. Usually submitted by
contractor after contract award.

It is Summary Schedule shows the project milestones of engineering, procurement, construction and
start-up activities by network logic, identifies critical path, key deliverables divided by units and
system facilities includes key critical activities and units or systems. For each major process of project
different schedule is prepared by the contractor/supplier in consultation with the employer/owner.

a) Design /engineering
b) manufacturing/procurement
c) Site Activities

Level-03 : For execution, very extensive. Assignable activities. Could be used to extract ‘look
ahead program’ for a week. This is used to plan & track overall progress & productivity weekly
progress.

a) Project Control Level Schedule shows detail and individual work tasks and clearly defined
works by discipline or responsibility.

b) Main Network Schedule is expanded each key milestone related activities to get L-2
 c) The schedule is for engineering division, for Manufacturing and delivery units of Contractor
and for site activities.

d) Level-3 for site will be made bar chart type and easy to understand and adopt.

Monitoring of progress in light of these network schedules

e) L-3 schedule is reviewed weekly and fortnightly at GM/HOD level. Any shortfalls and hurdles
could be handled at activity level.

f) L-2 schedule reviewed during technical committee meeting, Site project Review meeting,
and Meeting with Contractor representatives to discuss the progress and challenges.

g) During PRT, Monthly review of L-1 Schedule and progress with respect to L-1 generates
Monthly exception report

h) These Exception reports used to put up to top management. Under guidance of Top
management, if any exception is not acceptable or has effect on the project, review of L2 or
L3 schedules are upgraded based on that. And becomes key points critical issues to
take/tackle on priority.

i) L-2 & 3 schedule were used to plan ahead and analyze the resources like different teams for
both the units yet doing different activity at the same time considering the space constraints
in the plant.

j) All the minutes/inputs from CRM, TCM and Site meetings were shared and prepared
accordingly for the further activities.

k) CRM , TCM and Site meetings were scheduled before PRT.

Process improvement: Discussion was further on this NTPC was concerned for schedule and reduce
it and less focus on cost. Review and control at project level increases the risk management,
schedule but also may go overrun on cost due to lack of budgeting and focus on target completion
and commissioning the project.
Source: Presentation shared during the session