vasant final project

PROJECT REPORT

Student Name:Vasant Patil

Batch & Section: 2012-2013

Company/Institution Name: Punjab National Bank

Title of the report: Financial Appraisal of project finance by Punjab National

Bank

Area of research: Banking

Internship Duration: 2nd May 2013 to 30th June

Name & Logo of Institute: Alkesh Dinesh Mody Institute ofFinancial and

Management Studies

Alkesh Dinesh Mody Institute for Financial & management

Summer Internship Project Report (2013)

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Alkesh Dinesh Mody Institute of finance and management Summer Internship Project Report (2013) Vasant Patil

University of Mumbai’s

Alkesh Dinesh Mody Institute of Financial and Management Studies

Summer Internship Certificate

This is to certify that Mr. Vasant Patil M.M.S. (Finance) Batch 2012-14 of Alkesh Dinesh

Mody Institute of Financial And Management Studies has successfully completed his

summer internship during 2nd may 2013 to 30th June 2013.

The project was undertaken by him at Punjab National Bank titled “Financial Appraisal of

Project Financed by Punjab National Bank” under the guidance of Mr. N.K. Ramakrishnan,

Senior Manager (Credit).

The project fulfills all the stated criteria and the student findings are his original work.

I hereby certify his work is good to the best of my knowledge.

Director

Dr. S. Ratnaparkhi

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Acknowledgement

I would like express my sincere thanks to Punjab National Bank for giving me the

opportunity to do my summer training with the organization & for providing opportunity to

work on a challenging project. I would like to extend my gratitude to various people who

provided their continuous support during these two months of our Project.

I express my sincere thanks to Mr. N.K. Ramakrishnan– Sr. Manager (Credit),

Circle Office Bandra Kurla Complex, for helping me and guiding me to understand the

organizational process of Project Finance through my internship process & geared me to

extract the best. I would like to thanks staff of Credit Department as well as Rating

Department of the Bank. I would like to thank Mr. Sanjay Chauhan Sr. Manager (HRD) to

giving me this opportunity to work in the precise bank of the country.

My sincere thanks to Prof. SmitaShukla, a highly esteemed professor, whose

precious suggestion, constructive guidance has been indispensible in the completion of my

project. She has been a source of inspiration to me and I am indebted to her for initiating me

in the project.

I would also like to thank teaching, non-teaching staff and all who had directly or

indirectly helped me to complete my project.

Vasant Patil

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Table of Contents

Executive Summary...................................................................................................................4

Introduction...............................................................................................................................5

Objective & Methodology.........................................................................................................6

Sector Overview........................................................................................................................7

Company Overview..................................................................................................................10

Organizational structure............................................................................................................11

Theoretical Background for the project....................................................................................13

Advantages and Disadvantages................................................................................................14

Project Phases...........................................................................................................................17

Financing sources used in project financing.............................................................................18

Participants in project Financing..............................................................................................20

Process of Project Finance........................................................................................................21

The Project Company...............................................................................................................22

Project Company Agreements..................................................................................................23

Project Risks.............................................................................................................................28

Risk Minimization Process.......................................................................................................30

Process of Sanctioning..............................................................................................................31

Pre-sanction Process.................................................................................................................32

Case Study................................................................................................................................37

Recommendations & Limitation..............................................................................................56

An Assessment of Internship....................................................................................................57

Conclusion................................................................................................................................58

Bibliography.............................................................................................................................59

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Executive Summary

“Financial Appraisal of the Project Financed By PNB, MUMBAI”

This project report mainly consists of the financial appraisal of the project financed by Punjab

national Bank. Project finance is a financing which is repaid solely out of cash flows from a specific

asset and secured by just that asset and its contracts. Lenders do not have recourse to the owners of

the project for repayment of the debt. It entails allocation of risks to entities best equipped to handle

that risk.

Such project is appraised considering various factors which are important from the lenders point of

view. The project undertaken was to sanction of term loan of Rs. 50 Crores being part finance of total

debt requirement of Rs. 126 Crores for setting up a 150,000 TPA Coal Tar distillation plant at

Halkarni, Maharashtra at total cost of Rs. 189 Crores, proposed to be funded by DER of 2:1 at the rate

of 12.75% repayable in 27 equal quarterly installments commencing from 31.12.2014 with total term

of 8 years & 10 Months.

The financials of the project are studied and various interpretations were derived to arrive at certain

conclusion for the acceptance of the project. The balance sheet, profit or loss statements and cash flow

statements were analyzed. Ratio analysis helped to evaluate the project as viable and the liquidity

position of the firm isgood and it is maintaining the standard ratio. Debt Equity ratio is in decreasing

trend, it shows that the firm is reducing itsliability portion by paying the loan year on year so

the financial risk less.

The project may face various risks. These risks and their mitigation are also taken under

consideration.

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Introduction

As a part of curriculum, every student studying MMS has to undertake a project on a particular

subject assigned to him/her. Accordingly I have been assigned the project work on the study of

analysis of project finance in Banking Sector.

As it is rightly said that finance is the life blood of every business so every business need funds for

smooth running of its activities and bank is the one of the source through which the business gets

fund, before financing the bank appraise the project and if the projects meet the requirement of the

rules than only they will finance.

Project financing is commonly used as a financing method in capital-intensive industries for project

requiring large investment of funds, such as the construction of power plants, pipeline, transportation

system, mining facilities, industrial facilities and heavy manufacturing plants.

The core area of this project focuses on the financial appraisal of ABC chemicals pvt. LTD, who are

going to start Tar coal Distillation plant at Halkarni, Maharashtra. The financial projections and

finding are discussed and the project is evaluated on various parameters. The feasibility study consists

mainly of ration analysis. On the basis of all this analysis and various observations, recommendations

are suggested and conclusions are derived.

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Objective and Methodology

Main objective

“Financial appraisal of project financed by Punjab National Bank”

Sub Objectives:

1. To know the projects financed by Punjab National Bank

2. To know the policies of Punjab National Bank towards project financing

3. To know the Risks involved in project finance

4. To appraise the projects using financial tools

5. To know the measures taken by bank when the clients fail to repay the amount

Methodology:

Data collection method: The report will be prepared mainly using secondary data viz,

Primary Data:

Meetings with the project guide and staff members.

Meetings and discussions with raters at PNB.

Meetings with various other department head.

Secondary Data:

www.pnbindia.com

PNB Book of instructions

PNB Compendium

http://www.pnbindia.com/

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Sector overview

Banking Industry

History of banking in India

Without a sound and effective banking system, India cannot have a healthy economy. The banking

system of India should not only be hassle free but it should be able to meet new challenges posed by

the technology and any other external and internal factors. For the past three decades India’s banking

system has several outstanding achievements to its credit. The most striking is its extensive reach. It

is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system

has reached even to the remote corners of the country. This is one of the main reasons for India’s

growth. The government’s regular policy for Indian bank since 1969 has paid rich dividends with the

nationalization of 14 major private banks of India.

Figure 1: Overview of Banks

Reserve Bank of India

Scheduled Banks

Commercial Banks

Foreign banks Regional Rural

Banks Public Sector

Banks

State Bank of India and

Associate banks

Other Natinalised bank

Private Sector Banks

Old

New

Coperatives

Urban Co-operative

State Co-operative

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The first bank in India, though conservative, was established in 1786. From 1786 tilltoday, the

journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned

below:

Early phase from 1786 to 1969 of Indian Banks.

Nationalization of Indian Banks and up to 1991 prior to Indian Banking sector Reforms.

New phase of Indian Banking System with the advent of IndianFinancial & Banking Sector

Reforms after 1991.

Phase I

The General Bank of India was set up in the year 1786. Next came the Bank of Hindustanand Bengal

Bank. The East India Company established Bank of Bengal (1809), Bank

ofBombay(1840)andBank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established which

started as private shareholders banks, mostly Europeanshareholders.In 1865 Allahabad Bank was

established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with

headquarters at Lahore. Between 1906 and1913, Bank of India, Central Bank of India, Bank of

Baroda, Canara Bank, IndianBank, and Bank of Mysore were set up. Reserve Bank of India came in

1935.During the first phase the growth was very slow and banks also experienced periodicfailures

between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline

thefunctioning and activities of commercial banks, the Government of India came up withThe

Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per

amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of Indiawas vested with extensive powers

for the supervision of banking in India as the CentralBanking System.In those days, public has lesser

confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings

bank facility provided by the Postaldepartment was comparatively safer. Moreover, funds were

largely given to traders.

Phase II

Government took major steps in the form of Indian Banking Sector Reform after independence.In

1955, it nationalized Imperial Bank of India with extensive banking facilities on alarge scale

especially in rural and semi-urban areas. It formed State Bank of India to actas the principal agent of

RBI and to handle banking transactions of the Union and stategovernment all over the country.Seven

banks forming subsidiary of State Bank of India was nationalised in 1960 on 19thJuly 1969, major

process of nationalisation was carried out. It was the effort of the thenPrime Minister of India, Mrs.

Indira Gandhi that 14 major commercial banks in the countrywere nationalized.Second phase of

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nationalisation Indian Banking Sector Reform wascarried out in 1980 with seven more banks. This

step brought 80% of the bankingsegment in India under Government ownership.

The following are the steps taken by the Government of India to Regulate BankingInstitutions

in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 crores.

After the nationalization of banks, the branches of the public sector bank India rose toapproximately

800% in deposits and advances took a huge jump by 11000%. Bankingin the sunshine of Government

ownership gave the public implicit faith and immenseconfidence about the sustainability of these

institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector as part of the

reforms process. In 1991, under the chairmanship of M Narasimham, a committee was set up, which

worked for the liberalization of banking practices. Now, the country is flooded with foreign banks and

their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking

and net banking are introduced. The entire system became more convenient and swift. Time is given

importance in all money transactions.

The financial system of India has shown a great deal of resilience. It is sheltered from crises triggered

by external macroeconomic shocks, which other East Asian countries often suffered. This is all due to

a flexible exchange rate regime, the high foreign exchange reserve, the not-yet fully convertible

capital account, and the limited foreign exchange exposure of banks and their customers.

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Company overview

Punjab National Bank at a Glance

Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act, with its office

in Anarkali Bazaar, Lahore. The founding board was drawn from different parts of India professing

different faiths and a varied back-ground with, however, the common objective of providing country

with a truly national bank which would further the economic interest of the country. The board first met

on 23 May 1894.The bank opened for business on 12 April 1895 in Lahore.

PNB has the distinction of being the first Indian bank to have been started solely with Indian capital that

has survived to the present. With over 72 million satisfied customers and 5937 domestic branches, PNB

has continued to retain its leadership position amongst the nationalized banks. The Bank enjoys strong

fundamentals, large franchise value and good brand image.

Mission Statement:

"Banking for the unbanked"

Vision Statement:

“To be a Leading Global Bank with Pan India footprints and become a household brand in the Indo-

Gangetic Plains providing entire range of financial products and services under one roof"

Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to have been

started with Indian capital, Punjab National Bank has continuously strived for growth in business which

at the end of June 2012 amounted to Rs.6,79,823 crore. PNB is the largest nationalised Bank in the

country in terms of Branch Network, Total Business, Advances, Operating Profit and Low Cost CASA

Deposits. The CASA deposits share to the Total Deposits of the Bank was at 35.6% as on June 2012.

Bank achieved a Net Profit of ` 1246 crore during the Q1 FY’13. Bank also has a strong capital base

with Capital Adequacy Ratio of 12.57% as on June’12 as per Basel II with Tier I and Tier II capital ratio

at 9.33% and 3.24% respectively.

Punjab National Bank continues to maintain its frontline position in the Indian Banking industry. The

performance highlights of the Bank in terms of business and profit are shown below:

Rs. In Crore

Parameters Mar'10 Mar'11 Mar'12 CAGR

(3 yearly%) June’11 June’12 YOY Growth%

Operating Profit 7326 9056 10614 23.10 2474 2841 14.8

Net Profit 3905 4433 4884 16.47 1105 1246 12.8

Deposit 249330 312899 379588 21.86 324097 385355 18.9

Advance 186601 242107 293775 23.83 242908 294468 21.2

Total Business 435931 555005 673366 22.71 567005 679823 19.9

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ORGANISATIONAL STRUCTURE

Bank has its Corporate Office at New Delhi and supervises 68 Circle Offices under which the

branches Function. The delegation of powers is decentralized up to the branch level to facilitate quick

decision making.

Head Office

FGM Offices

Circle Offices

Branches

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A typical Hierarchy of a bank has been shown below:

Chairman

Executive Director

Chief Genaral Manager

Genaral Manager

Deputy Genaral Manager

Assistant General Manager

Chief Manager

Senior Manager

Manager

Officer

Clerical/ Subordinate

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Theoretical Background for the project work

Project Finance

Introduction

While riding on a high-speed train through India, Europe, or Taiwan, a passenger may see massive

wind turbines scattered throughout the countryside. Marveled by the landscape, the passenger may

take a snapshot on her phone camera and send it to her family. Without realizing it, the passenger is

likely to have benefitted from infrastructure projects that have been financed by a mechanism called

“project finance”. The high-speed rail, the wind turbine, and the telecommunication towers are all

large and complex infrastructure undertakings. Sometimes such projects are made possible by

traditional financial methods; increasingly, however, infrastructure projects are financed by a

mechanism that engages a multitude of participants including multilateral organizations, governments,

regional banks, and private entities. In project finance, participants negotiate amongst themselves to

spread risks associated with an undertaking, thereby increasing the chances for success in developing

vital infrastructure projects for that country and its population.

Meaning

Project financing involves non-recourse financing of the development and constructionof a particular

project in which the lender looks principally to the revenues expected to be generated by the project

for the repayment of its loan and to the assets of the projectas collateral for its loan rather than to the

general credit of the project sponsor.

Rationale

Project financing is commonly used as a financing method in capital-intensiveindustries for projects

requiring large investments of funds, such as the construction of power plants, pipelines,

transportation systems, mining facilities, industrial facilitiesand heavy manufacturing plants. The

sponsors of such projects frequently are notsufficiently creditworthy to obtain traditional financing or

are unwilling to take therisks and assume the debt obligations associated with traditional financings.

Projectfinancing permits the risks associated with such projects to be allocated among anumber of

parties at levels acceptable to each party.

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Advantages and Disadvantages of project finance

■ Non-recourse/limited recourse financing Non-recourse project financing does not impose any

obligation to guarantee the repayment of the project debton the project sponsor. This is important

because capitaladequacy requirements and credit ratings mean that assuming financialcommitments to

a large project may adversely impact the company’s financial structure and credit rating (and ability to

access fundsin the capital markets).

■Off balance sheet debt treatment: The main reason for choosingproject finance is to isolate the

risk of the project, taking it off balancesheet so that project failure does not damage the owner’s

financialcondition. This may be motivated by genuine economic arguments suchas maintaining

existing financial ratios and credit ratings. Theoretically,therefore, the project sponsor may retain

some real financial risk inthe project as a motivating factor, however, the off balance sheettreatment

per se will effectively not affect the company’s investmentrating by credit rating analysts.

■ Leveraged debt: Debt is advantageous for project finance sponsorsin that share issues (and equity

dilution) can be avoided. Furthermore,equity requirements for projects in developing countries

areinfluenced by many factors, including the country, the projecteconomics, whether any other project

participants invest equity inthe project, and the eagerness for banks to win the project financebusiness.

■Avoidance of restrictive covenants in other transactions: Because theproject financed is separate

and distinct from other operations andprojects of the sponsor, existing restrictive covenants do not

typicallyapply to the project financing. A project finance structure permits aproject sponsor to avoid

restrictive covenants, such as debt coverageratios and provisions that cross-default for a failure to pay

debt, inthe existing loan agreements and indentures at the project sponsorlevel.

■ Favorable tax treatment: Project finance is often driven by taxefficientconsiderations. Tax

allowances and tax breaks for capitalinvestments etc. can stimulate the adoption of project finance.

Projectsthat contract to provide a service to a state entity can use these taxbreaks (or subsidies) to

inflate the profitability of such ventures.

■ Favorable financing terms: Project financing structures can enhancethe credit risk profile and

therefore obtain more favorable pricingthan that obtained purely from the project sponsor’s credit risk

profile.

■ Political risk diversification: Establishing SPVs (special purposevehicles) for projects in specific

countries quarantines the projectrisks and shields the sponsor (or the sponsor’s other projects)

fromadverse developments.

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■ Risk sharing: Allocating risks in a project finance structure enablesthe sponsor to spread risks over

all the project participants, includingthe lender. The diffusion of risk can improve the possibility of

project success since each project participant accepts certain risks; however, themultiplicity of

participating entities can result in increased costs whichmust be borne by the sponsor and passed on to

the end consumer –often consumers that would be better served by public services.

■ Collateral limited to project assets: Non-recourse project finance loansare based on the premise

that collateral comes only from the projectassets. While this is generally the case, limited recourse to

the assetsof the project sponsor is sometimes required as a way of incentivizingthe sponsor.

■ Lenders are more likely to participate in a workout than foreclose: The non-recourse or limited

recourse nature of project finance meansthat collateral (a half-completed factory) has limited value in

a liquidationscenario. Therefore, if the project is experiencing difficulties,the best chance of success

lies in finding a workout solution ratherthan foreclosing. Lenders will therefore more likely cooperate

in a workoutscenario to minimize losses.

Disadvantages of project finance

■ Complexity of risk allocation Project financings are complex transactionsinvolving many

participants with diverse interests. This resultsin conflicts of interest on risk allocation amongst the

participants andprotracted negotiations and increased costs to compensate third partiesfor accepting

risks.

■ Increased lender risk Since banks are not equity risk takers, the meansavailable to enhance the

credit risk to acceptable levels are limited,which results in higher prices. This also necessitates

expensive processesof due diligence conducted by lawyers, engineers and other

specializedconsultants.

■Higher interest rates and fees Interest rates on project financingsmay be higher than on direct loans

made to the project sponsor sincethe transaction structure is complex and the loan

documentationlengthy. Project finance is generally more expensive than classic lendingbecause of:

- the time spent by lenders, technical experts and lawyers to evaluatethe project and draft

complex loan documentation;

- the increased insurance cover, particularly political risk cover;

- the costs of hiring technical experts to monitor the progress of theproject and compliance with

loan covenant;

- thecharges made by the lenders and other parties for assumingadditional risks.

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■Lender supervision: In order to protect themselves, lenders will wantto closely supervise the

management and operations of the project(whilst at the same time avoiding any liability associated

with excessiveinterference in the project). This supervision includes site visits bylender’s engineers

and consultants, construction reviews, and monitoringconstruction progress and technical

performance, as well as financialcovenants to ensure funds are not diverted from the project.

Thislender supervision is to ensure that the project proceeds as planned,since the main value of the

project is cash flow via successful operation.

■Lender reporting requirements: Lenders will require that the project company provides a steady

stream of financial and technical information to enable them to monitor the project’s progress. Such

reporting includes financial statements, interim statements, reports on technical progress, delays and

the corrective measures adopted, and various notices such as events of default.

■Increased insurance coverage: The non-recourse nature of project finance means that risks need to

be mitigated. Some of this risk can be mitigated via insurance available at commercially acceptable

rates. This however can greatly increase costs, which in itself, raises other risk issues such as pricing

and successful syndication.

■Transaction costs may outweigh the benefits: The complexity of the project financing

arrangement can result in a transaction whose costs are so great as to offset the advantages of the

project financing structure. The time-consuming nature of negotiations amongst various parties and

government bodies, restrictive covenants, and limited control of project assets, and burgeoning legal

costs may all work together to render the transaction unfeasible.

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Project phases

Project financings can be divided into two distinct stages:

■ Construction and development phase – here, the loan will be extended and debt service may be

postponed, either by rolling-up interest or by allowing further drawdowns to finance interest payments

prior to the operation phase. The construction phase is the period of highest risk for lenders since

resources are being committed and construction must be completed before cash flow can be

generated. Margins might be higher than during other phases of the project to compensate for the

higher risks. The risks will be mitigated by taking security over the construction contract and related

performance bonds.

■ Operation phase – here, the lenders will have further security since the project will begin to

generate cash flows. Debt service will normally be tailored to the actual cash flows generated by the

project – typically a ‘dedicated percentage’ of net cash flows will, via security structures such as

blocked accounts, go to the lenders automatically with the remainder transferred to the project

company. The terms of the loan will frequently provide for alternative arrangements should cash

flows generate an excess or shortfall due to unanticipated economic or political risks arising.

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Financing sources used inproject financing

Just as financial instruments range from debt to equity and hybrids suchas mezzanine finance, project

finance can raise capital from a range ofsources.

Raising financing depends on the nature and structure of the projectfinancing being proposed. Lender

and investor interest will varydepending on these goals and risks related to the financing.

Commerciallenders seek projects with predictable political and economic risks.Multilateral

institutions, on the other hand, will be less concerned withcommercial lending criteria and will look

towards projects that ostensiblysatisfy not only purely commercial criteria.In assembling a project

financing, all available financing sources shouldbe evaluated. This would include equipment suppliers

with access toexport financing; multilateral agencies; bilateral agencies, which may providefinancing

or guarantees; the International Finance Corporation orregional development banks that have the

ability to mobilize commercialfunds; specialized funds; institutional lenders and equity investors;

andcommercial banks, both domestic and international.

Equity

Equity, as it is well known, is more expensive than debt financing. Domesticcapital markets provide

access to significant amounts of funds for infrastructureprojects, although capital markets in

developing countriesmay lack the depth to fund large transactions. However, this is generally limited

totransactions whose sponsors are large, multinational companies.

Developmental loan

A development loan is debt financing provided during a project’s developmentalperiod to a sponsor

with insufficient resources to pursuedevelopment of a project. The developmental lender is typically a

lenderwith significant project experience. Developmental lenders, who fundthe project sponsor at a

very risky stage of the project, desire someequity rewards for the risk taken. Hence, it is not unusual

for the developmentallender to secure rights to provide permanent financing for theproject as part of

the development financing arrangement.

Subordinated loans

Subordinated loans, also called mezzanine financing or quasi-equity, aresenior to equity capital but

junior to senior debt and secured debt.Subordinated debt usually has the advantage of being fixed rate,

longterm, unsecured and may be considered as equity by senior lenders forpurposes of computing

debt to equity ratios.

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Unsecured loans

Unsecured loans basically depend on the borrower’s general creditworthiness,as opposed to a

perfected security arrangement. Unsecuredloans will usually contain a negative pledge of assets to

prohibit theliquid and valuable assets of the company from being pledged to a thirdparty ahead of the

unsecured lender.The loan agreement may include ratio covenants and provisions calculatedto trigger

a security agreement, should the borrower’s financialcondition begin to deteriorate. An unsecured

loan agreement may alsocontain negative covenants which limit investments and other kinds ofloans,

leases debt obligations of the borrower.

Secured loans

Secured loans are loans where the assets securing the loan have value ascollateral, which means that

such assets are marketable and can readilybe converted into cash.In a fully secured loan, the value of

the asset securing the debt equals orexceeds the amount borrowed. The reputation and standing of the

projectmanagers and sponsors, and the probable success of the project, allenter into the lending

decision. The lending, however, also relies on thevalue of the collateral as a secondary source of

repayment. The securityinterest is regarded by lenders as protection of loan repayment in the unlikely

event the loan is not repaid in the ordinary course of business.Because of the security interest, a

secured loan is superior since it ranks ahead of unsecured debt.

Syndicated loans

A syndicated loan is a loan that is provided to the borrower by two or more banks, known as

participants, which is governed by a single loan agreement. The loan is arranged and structured by an

arranger and managed by an agent. The arranger and the agent may also be participants. Each

participant provides a defined percentage of the loan, and receives the same percentage of

repayments.

Bonds

In recent years, the use of the bond market as a vehicle for obtaining debt funds has increased. Bond

financings are similar to commercial loan structure, except that the lenders are investors purchasing

the borrower’s bonds in a private placement or through the public debt market. The bond holders are

represented by a trustee that acts as the agent and representative of the bondholders. Bond purchasers

are generally the most conservative source of financing for a project.

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Participants in Project Financing:

Stakeholder Summary of role in a project financing

Sponsors

The equity investor(s) and owner(s) of the Project Company – can be a single

party, or more frequently, a consortium of Sponsors

Subsidiaries of the Sponsors may also act as sub-contractors, feedstock providers,

or offtaker to the Project Company

Procurer

Only relevant for PPP - the Procurer will be the municipality, council or

department of state responsible for tendering the project to the private sector,

running the tender competition, evaluating the proposals and selecting the

preferred Sponsor consortium to implement the project

Contractors

The substantive performance obligations of the Project Company to construct and

operate the project will usually be done through engineering procurement and

construction (EPC) and operations and maintenance (O&M) contracts

respectively

Feedstock

provider(s) and/or

Off taker

More typically found in utility, industrial, oil & gas and petrochemical projects

One or more parties will be contractually obligated to provide feedstock (raw

materials or fuel) to the project in return for payment

One or more parties will be contractually obligated to ‘offtake’ (purchase) some

or all of the product or service produced by the project

Feedstock/Offtake contracts are typically a key area of lender due diligence given

their criticality to the overall economics of the project (i.e. the input and output

prices of the goods or services being provided)

Lenders

Typically including one or more commercial banks and/or multilateral agencies

and/or export credit agencies and/or bond holders

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Process of Project Financing

Feasibility Study

As one of the first steps in a project financing is hiring of a technical consultant and hewill preparea

feasibility study showing the financial viability of the project. Frequently, a prospective lender will

hire its own independent consultants to prepare an independent feasibility study before the lender will

commit to lend funds for the project.

Contents

The feasibility study should analyze every technical, financial and other aspect of the project,

including the time-frame for completion of the various phases of the projectdevelopment, and should

clearly set forth all of the financial and other assumptionsupon which the conclusions of the study are

based, Among the more important itemscontained in a feasibility study are:

1.Description of project

2.Description of sponsor(s).

3.Sponsors' Agreements.

4.Project site.

5.Governmental arrangements.

6.Source of funds.

7.Feedstock Agreements.

8.Off take Agreements.

9.Construction Contract.

10.Management of project.

11.Capital costs.

12.Working capital.

13.Equity sourcing.

14.Debt sourcing.

15.Financial projections.

16.Market study.

17.Assumptions.

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The Project Company

Legal Form

Sponsors of projects adopt many different legal forms for the ownership of the project. The specific

form adopted for any particular project will depend upon many factors, including:

The amount of equity required for the project

The concern with management of the project

The availability of tax benefits associated with the project

The need to allocate tax benefits in a specific manner among the project company investors.

The three basic forms for ownership of a project are:

Corporations-

This is the simplest form for ownership of a project. A special purpose corporation may be formed

under the laws of the jurisdiction in which the project is located, or it may be formed in some other

jurisdiction and be qualified to do business in the jurisdiction of the project.

General Partnerships-

The sponsors may form a general partnership. In most jurisdictions, a partnership is recognized as a

separate legal entity and can own, operate and enter into financing arrangements for a project in its

own name. A partnership is not a separate taxable entity, and although a partnership isrequired to file

tax returns for reporting purposes, items of income,

gainlosses,deductionsandcreditsareallocatedamong the partners which include their allocated

share in computing their own individual taxes.Consequently, a partnership frequently will be used

when the tax benefits associated with the project are significant. Because the general partners of

a partnership are severally liable for all of the debts and liabilities of the partnership, a sponsor

frequently will form a wholly owned, single-purpose subsidiary to act as its general partner in a

partnership.

Limited Partnerships-

A limited partnership has similar characteristics to a general partnership except that the limited

partners have limited control over the business of the partnership and are liable only for the debts and

liabilities of the partnership to the extent of their capital contributions in the partnership. A

limited partnership may be useful for a project financing when the sponsors do not have substantial

capital and the project requires large amounts of outside equity.

23


Project Company Agreements

Depending on the form of Project Company chosen for a particular project financing, the sponsors

and other equity investors will enter into a stockholder agreement, general or limited partnership

agreement or other agreement that sets forth the terms under which they will develop, own and

operate the project.

Principal Agreements in a Project Financing-

1) Construction Contract-

Some of the more important terms of the construction contracts are-

2) Project Description-

The construction contract should set fortha detailed description of all the Work necessary to complete

the project

3) Price:-

Most project financing construction contracts are fixed- price contracts although some projects may

be built on a cost- plus basis. If the contract is not fixed-price, additional debt or equity contributions

may be necessary to complete the project, and the project agreements should clearly indicate the party

or parties responsible for such contributions.

4) Payment-

Payments typically are made on a "milestone" or "completed work" basis, with a retain age. This pay

ment procedure provides an incentive for the contractor to keep onschedule and useful

monitoring points for the owner and thelender.

5) Completion Date-

The construction completion date, together with any time extensions resulting from an event of force

majeure, must be consistent with the parties' obligations under the other project documents. If

construction is not finished by the completion date, the contractor typically is required to pay

liquidated damages to cover debt service for each day until the project is completed. If construction is

completed early, the contractor frequently is entitled to an early completion bonus.

24


6) Performance Guarantees-

The contractor typically will guarantee that the project will be able to meet certain performance

standards when completed. Such standards must be set at levels to assure that the project will generate

sufficientrevenues for debt service, operating costs and a return on equity.Such guarantees are

measured by performance tests conducted by the contractor at the end of construction. If the project

doesnot meet the guaranteed levels of performance, the contractor typically is required to make

liquidated damages payments to

thesponsor.Ifprojectperformance exceeds the guaranteedminimumlevels, the contractor may be entitle

d to bonus payments.

7) Feedstock Supply Agreements

The project company will enter into one or more feedstock supplyagreements for the supply of raw

materials, energy or other resources over the life of the project. Frequently, feedstock supply

agreements arestructured on a "put-or-pay" basis, which means that the supplier must either supply

the feedstock or pay the project company the difference in costsincurred in obtaining the feedstock

from another source. The price provisions of feedstock supply agreements must assure that the cost of

thefeedstock is fixed within an acceptable range and consistent with thefinancial projections of the

project.

8) Product off take Agreements

In a project financing, the product off take agreements represent the sourceof revenue for the project

.Such agreements must be structured in amanner to provide the project company with sufficient

revenue to pay its project debt obligations and all other costs of operating, maintaining andowning the

project .Frequently,offtake agreements are structured on a"take-or-pay" basis, which means that the

offtaker is obligated to pay for product on a regular basis whether or not the offtaker actually takes

the product unless the product is unavailable due to a default by the project company. Like feedstock

supply arrangements, offtake agreements frequently are on a fixed or scheduled price basis duringthe

term of the project debt financing.

9) Operations and Maintenance Agreement

The project company typically will enter into a long-term agreement for the day-to-day operation and

maintenance of the project facilities with a company having the technical and financial expertise to

operate the projectin accordance with the cost and production specifications for the project.The

operator may be an independent company, or it may be one of the sponsors. The operator typically

will be paid a fixed compensation and may be entitled to bonus payments for extraordinary project

25


performance and be required to pay liquidated damages for project performance below specified

levels.

10) Loan and Security Agreement

The borrower in a project financing typically is the project company formed by the sponsor(s) to own

the project. The loan agreement will set forth the basic terms of the loan and will contain general

provisions relating tomaturity, interest rate and fees. The typical project financing loan agreement also

will contain provisions such as-

11) Disbursement Controls

These frequently take the form of conditions precedent to each drawdown, requiring the borrower to

present invoices, builders’ certificates or other evidence as to the need for and use of the funds.

12) Progress Reports

The lender may require periodic reports certified byan independent consultant on the status of

construction progress.

13) Covenants Not to Amend

The borrower will covenant not to amendor waive any of its rights under the construction, feedstock,

off take,operations and maintenance, or other principal agreements without theconsent of the lender.

14) Completion Covenants

These require the borrower to complete the project in accordance with project plans and specifications

and prohibit the borrower from materially altering the project plans without theconsent of the lender.

15) Dividend Restrictions

These covenants place restrictions on the payment of dividends or other distributions by the borrower

until debtservice obligations are satisfied.

16) Debt and Guarantee Restrictions

The borrower may be prohibitedfrom incurring additional debt or from guaranteeing other obligations

17) Financial Covenants

Such covenants require the maintenance of working capital and liquidity ratios, debt service coverage

ratios, debtservice reserves and other financial ratios to protect the credit of the borrower.

26


18) Subordination

Lenders typically require other participants in the project to enter into a subordination agreement

under which certain payments to such participants from the borrower under projectagreements are

restricted (either absolutely or partially) and madesubordinate to the payment of debt service.

19) Security:

The project loan typically will be secured by multiple forms of collateral, including:-

Mortgage on the project facilities and real property.

Assignment of operating revenues.

Pledge of bank deposits

Assignment of any letters of credit or performance or completion bonds relating to the

project.

Project under which borrower is the beneficiary.

Liens on the borrower's personal property

Assignment of insurance proceeds.

Assignment of all project agreements

Pledge of stock in Project Company or assignment of partnership interests.

Assignment of any patents, trademarks or other intellectual property owned by the borrower.

20) Site Lease Agreement

The project company typically enters into long-term lease for the life of the project relating to the real

property on whichthe project is to be located. Rental payments may be set in advance at afixed rate or

may be tied to project performance.

27


Insurance

The general categories of insurance available in connectionwith project financings are:

1) Standard Insurance-

The following types of insurance typically areobtained for all project financings and cover the most

commontypes of losses that a project may suffer.

Property Damage, including transportation, fire and extendedcasualty.

Boiler and Machinery.

Comprehensive General Liability.

Worker's Compensation.

Automobile Liability and Physical Damage.

Excess Liability.

2) Optional Insurance

The following types of insurance often are obtained in connection with a project financing. Coverages

such as these are more expensive than standard insurance and require more tailoring to meet the

specific needs of the project

Business Interruption.

Performance Bonds.

Cost Overrun/Delayed Opening.

Design Errors and Omissions

System Performance (Efficiency).

Pollution Liability.

28


Project Risks

Project finance is finance for a particular project, such as a mine, toll road, railway, pipeline, power

station, ship, hospital or prison, which is repaid from the cash-flow of that project. Project finance is

different from traditional forms of finance because the financier principally looks to the assets and

revenue of the project in order to secure and service the loan. In contrast to an ordinary borrowing

situation, in a project financing the financier usually has little or no recourse to the non-project assets

of the borrower or the sponsors of the project. In this situation, the credit risk associated with the

borrower is not as important as in an ordinary loan transaction; what is most important is the

identification, analysis, allocation and management of every risk associated with the project.

The following detail shows the manner in which risks are approached by financiers in a project

finance transaction. Such risk minimization lies at the heart of project finance.

In a no recourse or limited recourse project financing, the risks for a financier are great. Since the loan

can only be repaid when the project is operational, if a major part of the project fails, the financiers

are likely to lose a substantial amount of money. The assets that remain are usually highly specialized

and possibly in a remote location. If saleable, they may have little value outside the project.

Therefore, it is not surprising that financiers, and their advisers, go to substantial efforts to ensure that

the risks associated with the project are reduced or eliminated as far as possible. It is also not

surprising that because of the risks involved, the cost of such finance is generally higher and it is more

time consuming for such finance to be provided.

Types of Risks:

Basically different types of projects are posed to different risks. Similarly the risks mentioned below

are related to this particular project.

1) Completion Risk-

Completion risk allocation is a vital part of the risk allocation of any project. This phase carries the

greatest risk for the financier. Construction carries the danger that the project will not be completed on

time, on budget or at all because of technical, labor, and other construction difficulties. Such delays or

cost increases may delay loan repayments and cause interest and debt to accumulate. They may also

jeopardize contracts for the sale of the project's output and supply contacts for raw materials.

29


2) Operating Risk-

These are general risks that may affect the cash-flow of the project by increasing the operating costs

or affecting the project's capacity to continue to generate the quantity and quality of the planned

output over the life of the project. Operating risks include, for example, the level of experience and

resources of the operator, inefficiencies in operations or shortages in the supply of skilled labour.

Operating risks are managed during the loan period by requiring the provision of detailed reports on

the operations of the project and by controlling cash-flows by requiring the proceeds of the sale of

product to be paid into a tightly regulated proceeds account to ensure that funds are used for approved

operating costs only.

3) Market Risk-

Obviously, the loan can only be repaid if the product that is generated can be turned into cash. Market

risk is the risk that a buyer cannot be found for the product at a price sufficient to provide adequate

cash-flow to service the debt. The best mechanism for minimizing market risk before lending takes

place is an acceptable forward sales contact entered into with a financially sound purchaser.

4) Credit Risk-

These are the risks associated with the sponsors or the borrowers themselves. The question is whether

they have sufficient resources to manage the construction and operation of the project and to

efficiently resolve any problems which may arise. To minimize these risks, the financiers need to

satisfy themselves that the participants in the project have the necessary human resources, experience

in past projects of this nature and are financially strong.

5) Technical Risk-

This is the risk of technical difficulties in the construction and operation of the project's plant and

equipment, including latent defects. Financiers usually minimize this risk by preferring tried and

tested technologies to new unproven technologies. Technical risks are managed during the loan period

by requiring a maintenance retention account to be maintained to receive a proportion of cash-flows to

cover future maintenance expenditure.

6) Regulatory or Approval Risk-

These are risks that government licenses and approvals required to construct or operate the project

will not be issued, or that the project will be subject to excessive taxation, royalty payments, or rigid

requirements as to local supply or distribution. Such risks may be reduced by obtaining legal opinions

confirming compliance with applicable laws and ensuring that any necessary approvals are a

condition precedent to the drawdown of funds.

30


Risk minimization process

Financiers are concerned with minimizing the dangers of any events which could have a negative

impact on the financial performance of the project. If a risk to the financiers cannot be minimized, the

financiers will need to build it into the interest rate margin for the loan.

Step 1- Risk identification and analysis-

The project sponsors will usually prepare a feasibility study, e.g. as to the construction and operation

of a mine or pipeline. The financiers will carefully review the study and may engage independent

expert consultants to supplement it. The matters of particular focus will be whether the costs of the

project have been properly assessed and whether the cash-flow streams from the project are properly

calculated. Some risks are analyzed during financial models to determine the project's cash-flow and

hence the ability of the project to meet repayment schedules. Different scenarios will be examined by

adjusting economic variables such as inflation, interest rates, exchange rates and prices for the inputs

and output of the project. Various classes of risk that may be identified in a project financing will be

discussed below.

Step2- Risk allocation-

Once the risks are identified and analyzed, they are allocated by the parties through negotiation of the

contractual framework. Ideally a risk should be allocated to the party who is the most appropriate to

bear it (i.e. who is in the best position to manage, control and insure against it) and who has the

financial capacity to bear it. It has been observed that financiers attempt to allocate uncontrollable

risks widely and to ensure that each party has an interest in fixing such risks. Generally, commercial

risks are sought to be allocated to the private sector and political risks to the state sector.

Step3- Risk management-

Risks must be also managed in order to minimize the possibility of the risk event occurring and to

minimize its consequences if it does occur. Financiers need to ensure that the greater the risks that

they bear, the more informed they are and the greater their control over the project. Since they take

security over the entire project and must be prepared to step in and take it over if the borrower

defaults. This requires the financiers to be involved in and monitor the project closely. Such risk

management is facilitated by imposing reporting obligations on the borrower and controls over project

accounts. Such measures may lead to tension between the flexibility desired by borrower and risk

management mechanisms required by the financier.

31


Processof sanctioning

The bank usually asks the firm to give the following details

1) Nature of the proposal

The purpose for which the term loan is required. (whether for expansion, modernization,

diversification etc.)

2) Brief History

In case of an existing company, essential particulars about its promoters, its incorporation,

subsequent corporate growth to date, major developments or changes in management.

3) Past Performance

A summary of past performance in terms of licensed/installed or operating capacities, sales, operating

capacities, and sales and net profit for the three years should be analyzed. The figures relating to sales

and profitability should be analyzed to ascertain the trend during the 3years. In sum, the company’s

past performance has to be assessed to study if there has been a steady improvement and growth

record has been satisfactory.

4) Present financial position-

The Company’s audited balance sheets and profit and loss account have to be analyzed. If the latest

audited balance sheet has more than 6 months old, a pro-forma balance sheet as on a recent date

should be obtained and analyzed.

5)Project-

Here the technical feasibility and the financial feasibility of the project are studied.

6) Project implementation schedule-

Examine the project implementation schedule with reference to Bar Chart or PERT/CPM chart (if

proposed to be used by the company for monitoring the implementation of the project) and in the light

of actual implementation schedules of similar project.

32


Pre sanction process-

Appraisal –

1. Preliminary appraisal-

The following aspects have to be examined if the proposal is to financing a project-

Whether the project cost is prima facie acceptable.

Debt and equity gearing proposed and whether acceptable

Promoter’s ability to access capital market for debt/ equity support

Whether critical aspects of project- demand, cost of production, profitability etc. are prima

facie in order. After undertaking the preliminary examination of the proposal, the branch will

arrive at a decision whether to support the request or not. If the branch finds the

proposalacceptable, it will call for from the applicants, a comprehensive application in the

prescribed pro-forma, along with a copy of project report, covering specific

creditrequirements of the company and other essential data/ information.

The informationamong other things should include:

Organization setup with a list of board of directors and indicating theQualifications,

experience and competence of the key personnel inCharge of the main functional areas e.g.

Production, purchase,Marketing and finance in other word brief on the managerial

resourceand whether these are compatible with the size and the scope of the proposed activity.

Demand and supply projections based on the overall market prospects together with a copy of

market research report. The report may comment on the geographic spread of the market

where the unit proposes to operate, demand and supply gap, the competitor’s share,

competitive advantage of the applicant, proposed marketing arrangement.

Current practices for the particular product or service especially relating to terms of credit

sales, probability of bad debts.

Estimates of sales cost of production and profitability.

Projected profit and loss account and Balance Sheet for the operating years during currency r

of the bank assistance.

Branch should also obtain additionally Appraisal report from any other bank/financial

institution in case appraisal has been done by them.

NO Objection Certificatefrom term lenders if already financed by them and Report from

Merchant bankers in case the company plans to access capital market,wherever necessary.In

respect of existing concerns, in addition to the above particulars regarding the historyof the

concern, its past performance, present financial position, etc. should also becalled for.

33


This data should be supplemented by supporting statements such as:

Audited profit and loss account and balance sheet for the past three years

Details of existing borrowing arrangements, if any,

Credit information reports from the existing bankers on the applicant company

Financial statements and borrowing relationship of associate firms/group companies.

2. Detailed Appraisal-

The viability of a project is examined to ascertain that the company would have the ability to service

its loan and interest obligations out of cash accruals from the business. While appraising a project all

the data/ information furnished by the borrower is counter checked and wherever possible, inter-firm

and inter-industry comparisons should be made to establish their veracity.

The appraisal of the new project could be broadly divided into the following subheads-

Promoters track record

Types of fixed assets to be acquired

Technical feasibility

Marketability

Production process

Management

Time schedule

Cost of project

Sources of finance

Commercial Profitability;

Security and Margin

Repayment period and debt service coverage;

Funds Flows statement and

Rates of return.

34


If the proposal involves financing of a new project, the commercial, economic and financial viability

and other aspects are to be examined as indicated below-

Statutory clearance from various government depts/agencies

License/ clearance /permits as applicable

Details of sources of energy requirements, power, fuel etc..

Pollution control clearance

Cost of project and source of finance

Buildup of fixed assets.

Arrangements proposed for raising debt and equity

Capital structure

Feasibility of arrangements to access capital market

Feasibility of the projections/estimates of sales cost of production and profit covering the

period of repayment.

Break-even point in terms of sales value and percentage of installed capacityunder a normal

production year.

Cash flows and fund flows

Whether profitability is adequate to meet stipulated repayments with referenceto Debt Service

Coverage Ratio, Return on Investment.

Industry profile and prospectus

Critical factors of industry and whether the assessment of these and management plans in this

regard are acceptable

Technical feasibility with reference to report of technical consultants, if available

Management quality, competence, track record

Company’s structure and systems. Also examine and comment on the status of approvals

from other term lenders, project implementation schedule. A pre-sanction inspection of the

project site or the factory should be carried out in the case of existing units.

35


3. Present relationship with the Bank

The banks also take into consideration the relationship of the firm or the customer with the banks. It

takes into account the following aspects-

Credit Facilities now granted.

Conduct of the existing accounts.

Utilization of limits- FB & NFB.

Occurrence of irregularities, if any.

Frequency of irregularity i.e.; the number of times and the total number of days the account

was irregular during the last twelve months.

Repayment of term commitments.

Compliance with requirements regarding submission of stock statements, Financial Follow-up

Reports, renewal data, etc…

Stock turnover, realization of book debts.

Value of accounts with breakup of income earned. Pro-rata share of

Non-fund and foreign exchange business.

Concessions extended and value thereof.

Compliance with other terms and conditions.

Action taken on comments /observations contained in

RBI inspection Reports.

CO inspection and audit reports.

Verification Audit Reports.

Concurrent audit reports.

Stock Audit Reports

Spot Audit Reports.

Long Form Audit Report (statutory Report)

36


4. Creditrisk Rating

Draw up rating for Working Capital and Term Finance.

5.Opinion Reports

Compile opinion Reports on the company, partners/ promoters and the proposed guarantors.

6. Existing charges on assets of the unit

If the company, report on search of charges with proposed guarantors.

7.Structure of facilities and Terms of Sanction

Fix terms and conditions for exposures proposed facility wise and overall:

Limit for each facility- sub limits.

Security- Primary & collateral, Guarantee

Margins- for each facility as applicable.

Rate of interest.

Rate of commission/exchange/other fees.

Concessional facilities and value thereof.

Repayment terms, where applicable.

Other standard covenants.

8. Review of the proposal

Review of the proposal should be done covering Strengths and weaknesses of the exposure proposed

Risk factors and steps proposed to mitigate them Deviations if any, proposed from usual norms of the

bank and the reasons thereof.

9.Proposal for sanction

Prepare a draft in prescribed format with required back-up details and with recommendations for

sanction.

37


Case Study:

The further part has been dealt with respect to the project of M/s ABC Chemicals Pvt. Ltd

Project in Brief:

Name of the company: M/s ABC Chemicals Pvt. Ltd

Purpose:Setting up a 150,000 TPA Coal Tar distillation plant at Halkarni, Maharashtra

Brief Background: The plant is being designed for production of different grades of Coal Tar Pitch

(82,500 TPA), Light Oils (22,500 TPA), Heavy Oils (22,500 TPA) and Naphthalene (15,000 TPA),

which find wide applications in the aluminium and graphite industry. The product category proposed

to be manufactured by the Company is already in short supply and with increase in aluminium

production capacity in the country the demand supply gap is expected to widen further.

Technology and Equipment Supplier: Handan Xinbao Coal Chemical Company Limited, China

Borrowers profile:

a. Group Name No recognized group

b. Address of Regd./Corporate Office Raj Mahal, Veer Nariman Road, Churchgate,

Mumbai – 400 020

c Works/Factory Halkarni Industrial Area, Kolhapur, Maharashtra

d Constitution and constitution code as per

ladder

Private Limited Company

e Date of incorporation/Establishment August 27, 2010

f Dealing with PNB since New Account

g Industry/Sector Manufacturing (Chemicals)

h Business Activity (Product)/Installed

Capacity.

Setting up a 150,000 TPA Coal Tar distillation

plant at Halkarni, Maharashtra

38


Security:

A. Primary

1stParipassu charge on fixed assets of the Company, both present and future

B. Collateral

2nd charge on current assets of the Company, both present and future

Pledge of promoter’s shareholding to the extent of 26% of the paid up capital of the Company

and will be released after 2 years of COD

DSRA equivalent to 1 quarter principal and 1 month interest payment (interest amount to be

created upfront, Principal amount to be created one month prior to commencement of

repayment)

Appraising agency – The Techno Economic Viability Study of the term loan requirement is

conducted by Mott MacDonald, Chennai and the financial appraisal is done by Axis Bank

39


Financial Analysis:

1) Cost of project:

Cost of project 189 cr

Total Debt 126 cr

Promoter’s Contribution 63 cr

Proposed loan (PNB share) 50 cr

DER 2:1

Summary of cost of project and means of finance

The total project cost is estimated at Rs. 189 Crores by M/s Mott MacDonald Pvt. Ltd, the consultant

for the project.

(Rs. In Crores)

Particulars Amount

Land & Site Development Cost 7.14

Infrastructure Development 11.43

Buildings & Civil Work 8.40

Plant & Machinery 103.44

Misc. Fixed Assets 1.00

Design, Engineering & Technical support 10.37

Total Hard Cost 141.78

Provision for Contingency 9.92

Pre-operative Expenses 13.02

IDC & Finance cost 11.84

Working Capital Margin 12.43

Total Soft Cost 47.22

Total Project Cost 189.00

40


2) Financial Position of the Company:

The company has not commenced commercial operations as on date. The COD is 30th April 2014.

Hence, the projected financial indicators for the tenor of the term loan facility are provided as

under:(Rs. in Crores)

2015 2016 2017 2018 2019 2020 2021 2022

Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj.

Net Sales

- Domestic 447.48 503.42 503.42 503.42 503.42 503.42 503.42 503.42

- Export 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

% growth * N/A 12.5% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Gross Sales 447.48 503.42 503.42 503.42 503.42 503.42 503.42 503.42

Other Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Operating

Profit/Loss

30.71 37.45 38.83 39.96 41.47 42.43 43.75 44.51

Profit before tax 30.71 37.45 38.83 39.96 41.47 42.43 43.75 44.51

Profit after tax 20.75 24.12 26.23 26.99 28.02 28.66 29.56 30.07

Depreciation/ 8.52 8.52 8.52 8.52 8.52 8.52 8.52 8.52

Cash profit/ (Loss) 34.27 36.51 37.66 37.61 37.94 37.98 38.37 38.44

PBIDTA 57.34 64.61 63.88 62.64 61.77 60.36 59.30 58.13

Paid up capital 63.00 63.00 63.00 63.00 63.00 63.00 63.00 63.00

Reserves and

Surplus excluding

20.74 44.87 71.10 98.10 126.11 154.77 184.32 214.39

Deferred Tax Liab /

(Assets)

4.99 8.87 11.78 13.87 15.26 16.06 16.34 16.19

a) Tangible Net 88.74 116.73 145.87 174.97 204.37 233.83 263.66 293.58

41


Worth

b) Investment in

allied concerns and

amount of cross

holdings

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

c) Net owned

funds/Adjusted

TNW

88.74 116.73 145.87 174.97 204.37 233.83 263.66 293.58

(a –b) *

Share application

money

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Borrowings 153.96 139.94 121.30 102.67 84.04 65.42 46.80 42.16

Secured 153.96

Unsecured (0.00) 139.94 121.30 102.67 84.04 65.42 46.80 42.16

Investments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Assets 271.86 289.49 299.99 310.46 321.22 332.07 343.27 368.55

Out of which net

fixed assets

168.05 159.52 151.00 142.48 133.95 125.43 116.91 108.38

Net Working Capital 56.03 73.87 92.88 111.83 131.09 150.40 156.09 185.20

Current Ratio 2.17 2.32 2.66 2.99 3.33 3.67 3.22 3.47

Debt Equity Ratio 1.31 0.84 0.54 0.35 0.21 0.10 0.02 (0.00)

Operating

Profit/Sales

6.86% 7.44% 7.71% 7.94% 8.24% 8.43% 8.69% 8.84%

Long Term Sources 29.27 32.65 34.75 35.52 36.54 37.19 38.08 38.59

Short Term Sources 66.46 8.31 0.02 0.04 0.03 0.05 0.04 0.03

Short Term Uses 91.38 26.15 19.02 18.99 19.29 19.36 19.73 33.81

42


Surplus/ Deficit (24.93) (17.84) (19.00) (18.95) (19.26) (19.31) (19.69) (33.78)

3) Projected Profitability Statement

(Rs. in Crores)

Particulars FY15 FY16 FY17 FY18 FY19 FY20 FY21

Net Sales 447.48 503.42 503.42 503.42 503.42 503.42 503.42

Cost of Sales

Raw Material 309.60 348.30 348.30 348.30 348.30 348.30 348.30

Direct Labour 6.60 7.26 7.99 8.78 9.66 10.63 11.69

Other Manufacturing

expenses

46.46 52.27 52.27 52.27 52.27 52.27 52.27

Depreciation 8.52 8.52 8.52 8.52 8.52 8.52 8.52

Total Cost of Sales 371.18 416.35 417.08 417.88 418.75 419.72 420.78

Selling, Admin and General

expenses

27.48 30.98 30.98 31.42 31.42 31.86 31.86

Total Operating Cost 398.67 447.33 448.05 449.29 450.17 451.58 452.64

Operating Profit before

interest

48.81 56.09 55.36 54.12 53.24 51.84 50.77

Interest 18.11 18.64 16.53 14.16 11.78 9.41 7.03

PBT 30.71 37.45 38.83 39.97 41.46 42.43 43.74

Provision for Taxation 9.96 13.33 12.60 12.97 13.45 13.77 14.19

Net Profit/Loss 20.74 24.12 26.23 27.00 28.01 28.66 29.55

43


4) Projected Balance Sheet

(Rs. in Crores)

Particular FY15 FY16 FY17 FY18 FY19 FY20 FY21

Sources of Funds

Net Worth 83.74 107.87 134.10 161.10 189.11 217.77 247.32

Share Capital 63.00 63.00 63.00 63.00 63.00 63.00 63.00

Reserves & Surplus 20.74 44.87 71.10 98.10 126.11 154.77 184.32

Term Liabilities 158.95 148.81 133.08 116.55 99.30 81.48 63.14

Rupee Term Loans 116.67 98.00 79.33 60.67 42.00 23.33 4.67

Working Capital 37.29 41.95 41.97 42.01 42.04 42.09 42.13

Deferred Tax Liability 4.99 8.87 11.78 13.87 15.26 16.06 16.34

Total Liabilities 242.69 256.68 267.18 277.64 288.41 299.25 310.46

Application of Funds

Gross Block 176.57 176.57 176.57 176.57 176.57 176.57 176.57

Less: Acc. Depn. 8.52 17.05 25.57 34.09 42.61 51.14 59.66

Net Block 168.05 159.52 151.00 142.48 133.95 125.43 116.91

Capital Work In Progress - - - - - - -

MAT Credit Entitlement 1.18 - - - - - -

Current Assets, Loans &

Advances

102.64 129.97 148.99 167.98 187.27 206.63 226.36

Less: Current Liabilities &

Provisions

29.17 32.81 32.81 32.81 32.81 32.81 32.81

Net Current Assets 73.47 97.15 116.18 135.17 154.46 173.82 193.55

Total Assets 242.69 256.68 267.18 277.64 288.41 299.25 310.46

44


5) Projected Cash Flow Statement

(Rs. in Crores)

Particulars FY15 FY16 FY17 FY18 FY19 FY20 FY21

PAT 20.74 24.12 26.23 27.00 28.01 28.66 29.55

Depreciation 8.52 8.52 8.52 8.52 8.52 8.52 8.52

DTL 4.99 3.87 2.91 2.09 1.39 0.80 0.28

Interest 18.11 18.64 16.53 14.16 11.78 9.41 7.03

CFO before WC 52.37 55.16 54.20 51.77 49.71 47.39 45.39

Changes in WC (49.72) (6.21) (0.03) (0.06) (0.04) (0.06) (0.05)

Net CFO 2.65 48.95 54.17 51.71 49.67 47.32 45.34

Invest.in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Change in non-CA (1.18) 1.18 0.00 0.00 0.00 0.00 0.00

Net CFI (1.18) 1.18 (0.00) 0.00 (0.00) 0.00 0.00

Increase in Share Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Increase in term loans (9.33) (18.67) (18.67) (18.67) (18.67) (18.67) (18.67)

Increase in WC Borrowing 37.29 4.66 0.02 0.04 0.03 0.05 0.04

Interest (18.11) (18.64) (16.53) (14.16) (11.78) (9.41) (7.03)

CFF 9.85 (32.65) (35.17) (32.78) (30.42) (28.02) (25.66)

Change in cash 11.32 17.47 18.99 18.93 19.25 19.30 19.68

Opening Cash Balance 12.43 23.75 41.23 60.22 79.15 98.40 117.70

Closing Cash Balance 23.75 41.23 60.22 79.15 98.40 117.70 137.38

45


6) Detailed Sensitivity Analysis:

Assumptions/Projections FY15 FY16 FY17 FY18 FY19 FY20

Base Case 1.91 1.48 1.54 1.58 1.63 1.69

Sales decrease by 5% 1.79 1.39 1.44 1.48 1.53 1.58

Sales decrease by 10 % 1.66 1.30 1.35 1.38 1.43 1.47

Raw Material cost increases by 5 %. 1.44 1.13 1.17 1.19 1.23 1.26

Sales decrease by 5 % & RM cost

increases by 5 %

1.31 1.04 1.07 1.09 1.12 1.15

Average Interest Rate Increases by 2% 1.75 1.39 1.45 1.49 1.56 1.62

The DSCR is found to be acceptable under all scenarios, except in case of sales decrease by 5% &

raw material cost increases by 5%. In this scenario, DSCR falls to 1.04 in FY16. However, with

available cash at the end of FY15, the Company is expected to be able to service debt obligation

without additional equity infusion.

46


7) Ratio Analysis:

While analyzing the financial aspects of project, it would be advisable to analyze the important

financial ratios over a period of time as it may tell us a lot about a unit's liquidity position,

managements' stake in the business, capacity to service the debts etc. The financial ratios which are

considered important are discussed as under:

The two major aspects of financial analysis are liquidity analysis and capital structure.For this

purpose ratios are employed which reveal existing strengths and weakness of the project.

a) Liquidity ratios

Liquidity ratio or solvency ratio measure a project’s ability to meet its current or short-term

obligations when they become due. Liquidity is the pre-requisite for the very survival of a firm. A

proper balance between the liquidity and profitability is required for the efficient

financial management. It reflects the short-term financial strength or solvency of the firm. Two ratios

are calculated to measure liquidity, the current ratio and quick ratio.

Current ratio-

The current ratio is defined as the ratio of total current assets to total currentliabilities. It is computed

by,

�� =��

��

FY15 FY16 FY17 FY18 FY19 FY20 FY21

Current

Ratio

2.17 2.32 2.66 2.99 3.33 3.67 3.22

Interpretation-

It is an indicator of the extent to which short term creditors are covered byassets that are expected to

be converted to cash in a period corresponding to the maturityof claims. The ideal current ratio is 2:1.

The firm current ratio indicate that the firm is ina position to meet its short term obligation because

the ratio is in increasing trend , byobserving the above table we can say that though the firm does not

maintain ideal currentratio, it is still in a position to meet its current obligations. After clearing all the

dues thefirm is still in a position to maintain liquidity.

47


b) Capital structure ratio:

The long-term lenders/creditors would judge the soundness of a firm on the basis of the long term

financial strength measured in terms of its ability to pay the interest regularly as well as repay the

installment of the principal on due dates or in one lump sum at the time of maturity. The long term

solvency of firm can be examined by using leverage or capital structure ratios. The

leverage or capital structure ratio’s may be defined as financial ratios which throw light on the long

term solvency of a firm as reflected in its ability to assure the long term lenders with regard to (i)

periodic payment of interest during the period of the loan and (ii) repayment of the principal on

maturity or in predetermined installments at due dates.

Debt equity ratio-

This ratio measures the long term or total debt to shareholder’s equity. This ratio reflects claims

of creditors and shareholders against the assets of the firm. Debt Equity Ratio is given by:

�� =��

��

FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22

Debt Equity Ratio 1.31 0.84 0.54 0.35 0.21 0.10 0.02 (0.00)

Interpretation-

The debt equity ratio is an important tool of financial analysis to appraise the financialstructure of the

firm. The ratio reflects the relative contribution of creditors and ownersof the business in its financing.

A high ratio shows a large share of financing by thecreditors of the firm; a low ratio implies a smaller

claim of the creditors. Debt – Equity ratio indicates the margin of safety to the creditors. The debt-

equity ratio is in decreasing and in 2022 it become nil, which implies that the owners are putting

uprelatively more money of their own.

48


c) Profitability ratio’s related to sales-

These ratios are based on the premise that a firm should earn sufficient profit on each rupee of sales.

If adequate profits are not earned on sales, there will be difficulty in meeting the operating expenses

and no returns will be available to the owners.

Net profit margin-

It is also known as net margin. This measures the relationship between the net profits and sales of

a firm. Depending on the concept of net profit employed. , this ratio can be computed as follows-

�� =��

��× 100

Net Profit/Loss 20.74 24.12 26.23 27 28.01 28.66 29.55

Net Sales 447.48 503.42 503.42 503.42 503.42 503.42 503.42

Net profit

margin 4.634844 4.791228 5.210361 5.363315 5.563943 5.693059 5.86985

Interpretation

The net profit margin is indicative of management’s ability to operate the business with sufficient

success not only to recover from revenues of the period, the cost of services, the operating expenses

and the cost of borrowed funds, but also to leave a margin of reasonable compensation to the owners

for providing their capital at risk. A high profit margin would ensure the adequate return to the owners

as well as enable the firm to withstand adverse economic conditions. A low net profit margin

has theopposite implications. With respect to the above firm the net profit margin is increasing trend

so it will show that the company is in good condition and the demand for the product is increasing.

49


Debt Service Coverage Ratio: (DSCR)

It is considered a more comprehensive and apt measure to compute debt service capacity of firm. It

provides the value in terms of the number of times the total debt service obligations consisting of

interest and repayment of principal in installments are covered by the operating funds available after

the payment of tax : earnings after taxes,EAT+interest+Depreciation+Other non cash expenditure like

amortization

�� =��

��

(In Rs. crores)

Financial Year 2015 2016 2017 2018 2019 2020 2021

Cash Accruals 34.26 36.52 37.67 37.61 37.93 37.98 38.36

Add: Interest 18.11 18.64 16.53 14.16 11.78 9.41 7.03

Total (a) 52.37 55.16 54.20 51.77 49.71 47.39 45.39

Debt repayment 9.34 18.69 18.69 18.69 18.69 18.69 18.69

Interest 18.11 18.64 16.53 14.16 11.78 9.41 7.03

Total (b) 27.45 37.30 35.20 32.82 30.45 28.07 25.70

DSCR (a/b) 1.91 1.48 1.54 1.58 1.63 1.69 1.77

Min. DSCR 1.48

Average DSCR 1.68

Since the debt repayment starts in the 3rd quarter of FY15, the DSCR is higher at 1.91

The lowest DSCR occurs in FY16 due to the highest interest payment in FY16.

Overall, considering the business model of the Company of manufacturing activity, average

DSCR of 1.68 may be considered acceptable.

50


8) Capital Investment Evaluation:

Net Present Value

It is calculated by discounting the future cash flows of the project to the present valuewith the

required rate of return to finance the cost of capital. A project is acceptable if thecapital value of the

project is less than or equal to the net present value of cash flows over the operating life cycle of the

project. This method is highly useful when selection has to be made among many projects, which are

mutually exclusive, and there are no budgetaryconstraints. Selection of projects with the largest

positive NPV will yield highest returns.But this method is useful only to determine whether a project

is acceptable or not butdoesn’t indicate which project is best under budgetary constraints. It is difficult

to rank different compatible projects with NPV as there is no account for ‘scale’ of investmentwhile

calculating NPV

Year Cash flow PV factor @ 10% Total present value

1 34.27 0.909 31.15

2 36.51 0.826 30.17

3 37.66 0.751 28.29

4 37.61 0.683 25.69

5 37.94 0.621 23.56

6 37.98 0.564 21.44

7 38.37 0.513 19.69

8 38.44 0.467 17.93

Total PV 197.93

less:Initial Outlay 189

NPV 8.93 The acceptance rule using NPV method is to accept the investment proposal if its

net present value is positive (NPV > 0) and to reject it if the NPV is negative (NPV<0).Positive

NPV’s contribute to the net wealth of the shareholders which should result in theincreased price of a

firm’s share. The positive net present value will result only if the project generates cash inflows at a

rate higher than the opportunity cost of capital. Sincethe Net Present Value of the above project is

positive, the proposal can be accepted.

51


Internal Rate of Return-

It is the rate of return at which the Net Present Value (NPV) of a project becomes zero.A project is

acceptable if the IRR exceeds the cost of capital. It is possible to rank variouscompatible projects with

IRR method and a project with highest IRR can be selected.However, this method is not useful when

selection has to be made among mutuallyexclusive projects. This method assumes that the net cash

flows from a project are firstnegative and then positive for the rest of the project life and vice

versa. But thiscondition is not always fulfilled resulting in multiple IRRs for the same project. Due

toambiguous results, project selection becomes difficult. Further, selection of a

projectbasedonhighest IRR alone, without taking project specific risk factors intoconsideration, may

be often misleading.

Year Cash flow weights weighted average

1 34.27 8 274.16

2 36.51 7 255.57

3 37.66 6 225.96

4 37.61 5 188.05

5 37.94 4 151.76

6 37.98 3 113.94

7 38.37 2 76.74

8 38.44 1 38.44

total PV

36 1324.62

��ℎ�� =1321.62

36

= 36.795

�� =��

��ℎ��

=189

36.795

= 5.14

52


A)

Year Cash flow pv factor @ 10% Total present value

1 34.27 0.909 31.15

2 36.51 0.826 30.17

3 37.66 0.751 28.29

4 37.61 0.683 25.69

5 37.94 0.621 23.56

6 37.98 0.564 21.44

7 38.37 0.513 19.69

8 38.44 0.467 17.93

total PV 197.93

less:Initial Outlay 189

NPV 8.93

B)

Year Cash flow

pvfacttor @ 12 % Total present value

1 34.27 0.893 30.60

2 36.51 0.797 29.11

3 37.66 0.712 26.81

4 37.61 0.636 23.90

5 37.94 0.567 21.53

6 37.98 0.507 19.24

7 38.37 0.452 17.36

8 38.44 0.404 15.53

total PV

184.06

less:Initial Outlay

189

NPV

-4.94

�� = � +�

� − �∗ (� − �)

= 10 +8.93

8.93 − 4.94∗ (12 − 10)

=14.47

Thus the project with higher IRR is good and could be accepted.

53


Demand Supply Scenario

Domestic Market:

As per the analysis conducted by Mott MacDonald (consultant for the project), the present demand

supply equation for CTP in domestic market is as under:

(In ’000 Tons)

Financial Year 2007 2008 2009 2010 2011 2012

Demand 153.53 169.99 185.83 210.17 224.61 244.03

Supply 130.80 154.87 169.29 197.94 211.26 231.73

Gap 22.73 15.12 16.54 12.23 13.35 12.30

The demand supply gap is primarily met by imports. Domestic CTP demand is expected to reach

0.67 MTPA owing to huge CTP requirements from aluminium industry and other application

industries like graphite electrodes.

The demand for CTP is expected to witness a CAGR growth of 10.8%. Around 3.34 MTPA of

aluminium smelter capacity is expected to be set up by FY20 in India which will create an

additional demand of about 0.34MTPA of high QI CTP.

Demand-supply gap for CTP is expected to shoot up in FY13 owing to the commercial

operational of VAL aluminium smelter plant of 1.1 MTPA during FY13. This indicates the need

for more CTP plants in the country.

Due to commissioning of new CTP plants by AVH during FY14 and Himadri Chemicals during

FY15 the demand supply gap is expected to be met to a large extent.

54


Strengths & Weakness with mitigations, if any

Strengths

The project is being implemented by an experienced project execution team having past experience in

implementing large projects in other companies.

The product category proposed to be manufactured by the Company is already in short supply and

with increase in aluminium production capacity, the demand is expected to increase considerably in

future.

The Company has proposed to enter into a long term agreement with JSW Steel Limited for the

supply of key raw material i.e. coal tar.

The Company has already received environmental clearance from the Ministry of Environment and

Forests for the project. The Company has received Consent to Establish from Maharashtra Pollution

Control Board.

The Company has appointed Handan Xinbao Coal Chemical Company Limited as technology and

equipment supplier for the proposed coal tar distillation unit and for initial support. By virtue of

technical arrangement and agreement for support at operational level for initial period, the Company

is not expected to face significant difficulty in installing and operating the plant.

55


Risk Factors Risk Mitigants

Project

Implementation

Risk

The Company has already appointed competent project execution team for the

project.For technical installation and sourcing, the Company has already

appointed Handan Xinbao of China.

By virtue of technical arrangement and agreement for support at operational

level in the initial period, the Company is not expected to face significant

difficulty in installing and operating the plant.

Project Off take

and Competition

Risk

The existing CTP market is mainly catered to by Himadri Chemical. The

capacity of AVH’s plant will be one third of Himadri Chemicals’ capacity. Even

after increase in overall capacity, increasing demand from aluminium industry

and high demand supply gap globally will ensure that the Company will not face

any difficulty in selling its product.

By virtue of new plant & machinery and support from the supplier in operations

during initial years, the Company is expected to meet quality standards of the

end consumer segments.

Raw Material

Risk

The Company has planned to enter a long term purchase agreement with JSW

Steel Ltd for supply of coal tar of 150,000 TPA.

The plant of the Company is located near its key raw material supplier.

Some coal tar is also proposed to be purchased from different sources like

RINL, Vizag for blending with JSW tar and achieving the various grades

required in the market.

Geographical

Concentration

Risk

The Company’s products are proposed to be marketed across a number of states

in India to downstream sector users like aluminium, steel etc. Majority of end

customers of the Company are located in east and central India

Considering the industrial applications of the product and demand supply

scenario, the Company is not expected to face geographical concentration risk.

Environment

Risk

The Company has already obtained the most critical environmental approvals

from Environment Department (State Environmental Impact Assessment

Authority (SEIAA), Environment Department, Govt. of Maharashtra), which is

the key approval required for the proposed project.

Consent to Establish approval (required from Maharashtra Pollution Control

Board) was obtained on 16.08.2012.

The Company has also proposed to invest in adequate effluent treatment

facilities.

56


Measures taken by Punjab National Bank when the repayment is

not possible

1) Firstly they send a notice to the clients stating therein to pay their dues.

2) When there no improvements in the repayments even after the notice being sent then

the bank will forward the legal notice stating the clients to make payments

3) Third is the compromise dealing wherein both the parties sit together and decide what

measures has to be taken which means whether the clients make the payments, or whether to

file a suit or decide to sell the Properties etc.

Recommendations:

The time taken for appraisal and sanctioning of loan is experienced to be more in Punjab National

Bank. They should look after the time frame and decision making should be quick.

Limitation of the study:-

Some of the information are confidential in nature that could not divulged for study

57


An Assessment of the Internship:

Skills and Qualifications Acquired:

I have learnt both Financial and technical skill that are required in appraisal of Project financial.

Financial skills which I have learnt consist of analyzing actual balance sheet, sensitivity analysis,

profit and loss account and cash flow of a company.

Responsibilities Undertaken:

I was working as an assistant of my mentor in analysing the appraisal of Project Finance.

Influence of Internship on career plan:

Now I am more confident that, whatever career path I will choose in future because both technical and

financial skills are required in Corporate.

Correlation with classroom Knowledge:

Whatever I have learn like ration analysis, Balance sheet analysis, cash flow, sensitivity analysis in

my classroom was quite helpful for me during my internship and I came to know that how this

concept are implemented in business.

58


Conclusion:-

The project undertaken has helped a lot in understanding the concept of project financing in

nationalized bank with reference to state bank of India. The project financing is an important aspect

which helps in increasing the profit of the banks .Project financing is a vast subject and it is very

difficult to apply all the aspect in all type of project when bank want to finance, and it is very difficult

to cover all aspect in this project. To sum up it would not be out of way to mention here that the state

bank of India has given a special impetus on “Project Financing” .the concerted efforts of the

management and staff of state bank of India has helped the bank in achieving remarkable progress in

almost all important aspects .Finally the success of project financing would mostly depend on the

proper analysis of the projects before financing project in accordance with the cost and production

specifications for the project. The operator may be an independent company, or it may be one of the

sponsors. The operator typically will be paid a fixed compensation and may be entitled to bonus

payments for extraordinary project performance and be required to pay liquidated damages for project

performance below specified levels.

59


Bibliography

The data is collected from the list of books and web site given below

www.pnbindia.com.

www.Google.com

www.wikipedia.com

www.investopedia.com

PNB Book of instruction.

Commercial Banks Book.

Project financing by Machiraju

Introduction to project finance by Andrew Fight

Financial management by Khan and Jain

http://www.pnbindia.com/

http://www.google.com/

http://www.wikipedia.com/

http://www.investopedia.com/

vasant final project

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