Deepa Chandiramani 08

Ansel Fernandes 21

Rucha Jadhav 39

Chinmay Kambli 46

Akshay Nagbhire 87

POSSIBLE FINANCING OPTIONS FOR PROJECTS IN INDIA

CONTENT Bank Financing & Own Funds IIFCL IFCs FDI Infrastructure Bonds Infrastructure Debt Funds Take-Out Financing Take-Out Financing through ECB Route

BANK FINANCING & OWN FUNDS Own Funds Term Loans – Rupee and Foreign Currency Soft loans Deferred payment guarantee Syndicated loans IRB infrastructure

Total amount – Rs. 3177 Cr. Equity – Rs. 863 Cr. Debt – Rs. 1756 Cr. Cost of debt- 11.75% Consortium lead by IDBI

IIFCL Sectors eligible Cumulative gross sanctions of over Rs. 63,800 crore under direct

lending to more than 360 projects Financing instruments & schemes

Direct lending Takeout finance Credit enhancement scheme Refinance scheme

IFC’S

ELIGIBILITY OR ENTRY POINT NORMS FOR REGISTRATION

A minimum of 75 per cent of the total assets of an IFC-NBFC should be deployed in infrastructure loans.

The company should have minimum net-worth of Rs. 300 crore.

The minimum credit rating of the company should be at 'A' or equivalent of CRISIL,CARE, ICRA or equivalent rating by any other accrediting rating agencies.

Sr. No. Category Infrastructure sub-sectors

1. Transport

i. Roads and bridges ii. Ports

iii. Inland Waterways iv. Airport

2. Energy

i. Electricity Generation ii. Electricity Transmission iii. Electricity Distribution

iv. Oil pipelines

3. Water & Sanitation

i. Solid Waste Management ii. Water supply pipelines iii. Water treatment plants

iv. Irrigation (dams, channels, embankments etc.)

4. Communication i. Telecommunication (Fixed network) ii. Telecommunication towers

“Infrastructure loan” means a credit facility extended by NBFCs to a borrower for exposure in the following infrastructure sub-sectors:

FOREIGN DIRECT INVESTMENTPROCEDURE FOR RECEIVING FDI

Automatic Route

Government Route

GOVERNMENT INITIATIVES TO ENCOURAGE FDI IN INFRASTRUCTURE

100 percent FDI is allowed under automatic route for infrastructure development in power sector.

FDI of 100% is permitted under automatic route in infrastructure related to petroleum products, natural gas pipelines and petroleum refining by private sector.

100 percent FDI is permitted under automatic route in setting up new and established industrial park.

Single window clearance mechanism for issue and review of clearance associated with important projects under the Cabinet secretary.

TAKE OUT FINANCING

Meaning

Eligibility

Institutions that can engage in such practices

Problems with takeout financing

TAKE OUT FINANCING APPROVED THROUGH ECB ROUTE

Eligible Borrowers : Sea ports , roads including bridges and power sectors for the development of new projects

Conditions

Tripartite Agreement : The Buyer , The Banker & The Builder Maturity- 7 Years The fee payable, if any, to the overseas lender until the take-out shall

not exceed 100 bps per annum. Domestic banks / Financial Institutions will not be permitted to

guarantee the take-out finance. The domestic bank will not be allowed to carry any obligation on its

balance sheet after the occurrence of the take-out event. ECB should not be raised from overseas branches / subsidiaries of

Indian banks.

INFRASTRUCTURE BONDS Floated for infrastructure projects

Benefits the investor and the country

Expected returns

Tax benefits

Conditions

Subscriber

Minimum investment

Lock-In period

Eg. - State-owned IDBI Bank raised Rs. 1,000 crore from bonds on Feb 9, 2016 to fund infrastructure projects.

IDBI Omni Infrastructure Bonds 2015-16 Series III are unsecured, non-convertible redeemable bonds.

The 10-year bonds will have coupon rate of 8.80 %

INFRASTRUCTURE DEBT FUNDS

Mechanism

Regulators

Tax Benefits

Shareholding pattern

Member %

ICICI 31

Bank of Baroda 30

Citi Bank 29

LIC 10

Total 100

First Infra-Debt Fund of India

BORROWING CAPACITY ESTIMATION

Suppose the project company would like to know how much debt can be raised for the project which is expected to generate $ 200 million in the first year of operation. This revenue is expected to grow at an annual rate of 6% per annum and period of operation is around 15 years. Similarly, in the first year of operation, the expected expenses has been estimated to be around $34 million and this expense is expected to grow at the rate of 4% per annum. The project will be placed in the income tax bracket of 40% and non-cash expenses deductible for tax purposes each year is estimated to be around $2 million. The targeted coverage ratio is 1.50 and the interest rate on debt is 10%.

Substituting the values in the equation, the present value of the net revenue is

PV = $1278.85 million - $ 193.42 million + $ 6.08 million

PV = $ 1091.52 million

Thus, the maximum amount of loan that can be raised is $ 727.68 million.

THANK YOU !!!