NATIONAL INSTITUTE OF CONSTRUCTION

MANAGEMENT AND RESEARCH, PUNE

2022-24

Collaborations and PPP in Constructions

Submitted to:

Dr. Nagarjuna Pilaka

Submitted by –

P2270410 – Akash Patil

Section-3

MBA-Advance Construction Management

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 Assignment No – 5

1. What are the differences between a conventional company registered under The Companies
Act and an SPV company setup for the development of a project?


Conventional Company
1. A conventional company registered under
the Companies Act can engage in a wide
range of business activities. Its operations
are not limited to a specific project or
purpose. It can provide goods, services, or
conduct any lawful business activity.
SPV Company
1. A Special Purpose Vehicle (SPV) is
typically created for a specific purpose or
project. Its primary function is to isolate and
manage risks associated with that particular
project. SPVs are often used in complex
financial transactions, joint ventures, real
estate developments, and other projects with
specific funding
needs.

2. Shareholders' liability in a conventional 2. SPVs are designed to limit the project-

company is typically limited to their
investment in the company's shares. This
means their personal assets are generally
protected from the
company's liabilities.
3. Ownership of shares in a conventional
company can be widely distributed among
various shareholders. Ownership can change
hands easily through trading shares on the
stock market.
related risks from affecting the parent
company or the investors' other assets. In case
of project failure or legal issues, the liability
is generally limited to the assets
of the SPV itself.
3. Ownership of an SPV is often held by a
specific group of investors, often those
directly involved in the project or transaction.
It might not have the same level of widespread
ownership as a
publicly traded company.

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 4. A conventional company can raise capital 4. SPVs are often used for project
through various means, such as issuing financing. They issue securities or debt
shares, borrowing from banks, or securing instruments specific to the project,
other forms of financing. allowing investors to participate in the
project's financial performance without
exposing themselves to the broader
financial risks of the parent company.
5. Conventional companies are subject to the 5. SPVs might have specific regulatory
regulations and reporting requirements requirements based on the nature of the project
stipulated by the Companies Act and other they are involved in. These requirements
relevant regulations in the jurisdiction where could include compliance with securities laws,
they are registered. tax regulations, and
other relevant laws.

2. What are the ways by which a project is financed?

 Among the different ways a projct can be funded are the following:
1. Equity: Investors give funds in exchange for a share of ownership in the project or firm. This
might come from venture capitalists, private equity companies, or individual investors. A
private firm can also go public by issuing shares to the general public through an Initial Public
Offering (IPO).
2. Debt: This can be accomplished by obtaining loans from various banks, financial institutions,
or private businesses that provide debt finance. In this instance, the corporation (debtor) must
repay the principal amount as well as the accumulated interest, with the rate determined at the
time of signing the formal agreement. • Special Purpose Vehicle: This entails forming a distinct
legal entity expressly for the project's purposes. The SPV obtains financing by issuing project-
specific securities, and repayment is often related to the cash flows and assets of the enterprise.
3. Public-Private Partnerships: Governments collaborate with private organisations to fund and
run public infrastructure projects such as roads, bridges, and utilities. Private partners commit
funds and supervise project implementation, generally in exchange for a revenue share.
4. Subsidies: Governments and non-profit organisations may provide cash to specific projects that
coincide with their goals, such as research, development, or social activities. The government
provides financial assistance to minimise the expenses of specific activities or sectors, so
stimulating their growth.

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 3. Number of vehicles of different class of vehicles are given below:
I. Cars, Jeep, Van, and LMV: 8000
II. Light Commercial Vehicles: 6400
III. Bus/Truck: 11200
IV. 3-axle commercial vehicles: 3200
V. Heavy construction machinery, multi-axle vehicles (4-6): 1600
VI. Oversized vehicles (7 or more axles): 1600
Total no. of vehicles: 32,000

Toll fares:

Class I: Rs 123/-
Class II: Rs 199/-
Class III: Rs 418/-
Class IV: Rs 456/-
Class V: Rs 655/-
Class VI: Rs 797/-

Calculate total toll revenue.

 Toll revenue: Toll fares x Total no. of vehicles

Class I Rs (123 x 8000) = Rs 9,84,000/-

Class II Rs (199 x 6400) = Rs 12,73,600/-

Class III Rs (418 x 11200) = Rs 46,81,600/-

Class IV Rs (456 x 3200) = Rs 14,59,200/-

Class V Rs (655 x 1600) = Rs 10,48,000/-

Class VI Rs (797 x 1600) = Rs 12,75,200/-

Total toll revenue from all vehicle classes

= Rs (9,84,000/- + 12,73,600/- + 46,81,600/- + 14,59,200/- + 10,48,000/- + 12,75,200/-)

= Rs 1,07,21,600/-