CREDIT APPRAISAL OF MEJA URJA NIGAM PRIVATE LIMITED @ @

PUNJAB NATIONAL BANK

Circle Office Varanasi

Presented by:Yash Deep Srivastava 2010MB46 MNNIT- Allahabad

Outline

Introduction of PNB PNB Financials Research methodology Over view of Credit appraisal Factors for credit appraisal Credit appraisal process The project Introduction Project structure Physical progress of project Sensitivity analysis Risk analysis P & L account of project Balance sheet analysis Cash flow analysis Conclusion

Introduction Of Organization
Punjab National Bank was founded in 1894 PNB is the second largest state-owned

commercial bank in India.

It has about 5000 branches across 764 cities.
It serves over 37 million customers.

The bank has been ranked 248th biggest bank in

the world by the Bankers Almanac, London.

PNB Financials
Parameters Operating Profit Net Profit Deposit Advance Total Business
Source : www.pnb.org

Mar'09 5690 3091 209760 154703 364463

Mar'10 7326 3905 249330 186601 435931

Mar'11 9056 4433 312899 242107 555005

CAGR(%) 26.16 19.76 22.14 25.10 23.40

Rupees in Crores

Research Methodology
RESEARCH PROJECT Power project on meja urja nigam private limited RESEARCH DESIGN Analytical in nature. DATA COLLECTION Primary:- Discussion with credit manager and other staff members at Punjab National Bank. Secondary:- Books, websites, Database at PNB

Contd.
OBJECTIVE OF INTERNSHIP To get the practical knowledge management in the organization.
To study the credit appraisal methods. To

of

credit

understand the commercial, financial & technical viability of the proposal proposed and its finding pattern.

To get a good insight of banking industry.

Limitations
Some technicalities are not revealed Time constraints -> limited areas

Overview of Credit Appraisal

Process of appraising the credit worthiness of a

Loan applicant. A process to ascertain the risks associated with the extension of the credit facility. Organizations come for Working Capital finance Term loan for mega projects NFBL

Factors for Credit Appraisal

Financial performance Business performance

Industry outlook
Quality of management Conduct of account

Credit Appraisal Process

Receipt of application from applicant Receipt of documents (Balance sheet, KYC papers, Different govt. registration no., MOA, AOA, and properties documents

Pre-sanction visit by bank officers

Check for RBI defaulters list, willful defaulters list, CIBIL data, ECGC, Caution list etc

Contd
Title clearance reports of the properties to be obtained from empanelled Advocates Valuation reports of the properties to be obtained from empanelled valuer/engineers Preparation of financial data Proposal preparation

Sanction/approval of proposal by appropriate sanctioning authority

Contd.
Assessment of proposal Documentations, agreements, mortgages

Disbursement of Loan
Post sanction activities such as receiving stock statements, review of accounts, renew of accounts, etc (On regular basis)

THE PROJECT

Meja Urja Nigam Private Limited (MUNPL)

&

Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited

Introduction of Project
Its a Thermal Power project. Formed as a 50:50 joint venture between

National thermal Power corporation Limited (NTPC) and Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL)
A green-field project, with a capacity of 1320 MW

(2 X 660 MW).

Project Cost and Means of Finance

The total cost estimated Rs. 10,821.10 crore is

proposed to be financed in a debt-equity ratio of 70:30 which translates to a debt of Rs. 7,574.77 crore and equity of Rs.3,246.33 crore.
The total debt requirement is proposed to be

raised as long-term Debt from domestic banks / Financial Institutions (FIs) with 15 year door-todoor tenor i.e. principal repayment of 10 years after a moratorium of 5 years.

Location of Project
Meja tehsil in Allahabad

Meja Project

Source: DPR of MUNPL

Proposed Project Structure

Source: DPR of MUNPL

Physical Progress of the Project

Physical possession of acquired land has been obtained

and fenced
Construction of enabling township consisting of 100

dwelling units, CISF barracks, armoury and township boundary are about to complete.
Construction water is available through bore-well. Construction power is available through 33/11 kV

substation at project site, which is already charged and live.

Sensitivity Analysis of Project

Scenario Base Case Increase in Coal price escalation rate by 1% Mix of Domestic & Imported Coal Increase in Interest rate by 1% for Term Debt Decrease in Plant Availability by 5% Increase in O&M escalation rate by 1%
Source: DPR of MUNPL

Avg. DSCR
1.45 1.45 1.45 1.43

Min. DSCR
1.36 1.36 1.36 1.33

1.41 1.43

1.32 1.35

Risk Analysis
Risk Availability of water Fuel price escalation Mitigation Measure GoI has approved drawl of 44 cusecs of water from River Ganga

The primary fuel (coal) will be supplied from SECL coal mines at Rs. 1,430 per tonne . any change in fuel price is a pass-through to the beneficiaries in line with CERC norms. Hence MUNPL will be insulated from fuel price risk UP is continuously facing power deficit, it is expected that sufficient demand will exist in UP . The project is proposed to be implemented through award of welldefined contract packages. The contracts will include provisions for liquidated damages for delay in implementation so as to protect MUNPL against cost and time over runs. Hence, the risk associated has been considered as low.

Demand & tariff risk Cost and time overrun

Timeline for Project - Unit wise

Particulars Unit 1 Unit 2

Capacity (MW)
Notice to Proceed (NTP) No. of Months of Construction COD

660
April1, 2011

660
April 1, 2011

52

58

August 1, 2015 February 1, 2016

End of Life of Unit

August 1, 2040 February 1, 2041

Projected Profit and Loss Account

Source: DPR of MUNPL

Projected Balance Sheet

Source: DPR of MUNPL

Conclusion
Norms for providing loans are flexible & it may differ

from case to case.

In all, the viability of the project from every aspect has

analyzed.
The funding pattern & collateral security cover are

available for the recovery of credit.

The project is commercially , financially & technically

viable.

THANK YOU !