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Features
Cash Intensive Highly leveraged Independent entity with a finite life Non-recourse or limited recourse financing Allocated risk
Participants
The Development Company The Host Government Banks Facility agent Operator and Off-take Purchaser
Research Methodology
Objective of the study
To understand the method of Project Financing at HUDCO. To analyze the process involved in appraising the report with special reference to U.P.S.R.T.C.
Problem statement
To decide whether to accept or reject the Loan Application from Uttar Pradesh State Road Transport Corporation for the purchase and fabrication of 850 bus chassis.
Scope of Study
For the purpose of this study Housing and Urban Development Corporation is selected because it is one of the top most NBFC in Project Finance. The study relates to the period from 2005-06 to 2009-10.
Sources of DATA
For the proposed project work secondary data has been used. The data was collected from the following resources:Books Research Articles Website Database of HUDCO
Limitations
The proposed study on the subject will be undertaken with a view to the following limitations: Project Financing is one of the crucial areas of HUDCO and hence some of the details might not have been revealed. Although the staff and mentor were really helpful, but could not give much of their time due to work constraints. Due to time constraints a deeper study could not be conducted.
Data analysis
Appraisal of urban infrastructure schemes
Institutional Appraisal Financial Appraisal Technical Assessment Demand and Marketability Risk Analysis and Mitigation Legal appraisal
My Report\Book2 (2).xlsx
Institutional Appraisal
My Report\Book2 (2).xlsx
Financial Appraisal
My Report\Book2 (2).xlsx
Findings
Current Rate of Interest is 10.25% UPSRTC has never defaulted. Positive Net cash flows in loan repayment period. Average DSCR is more than HUDCOs norms IRR is 18.70% Payback Period is 2 years and 5 months
Suggesstions
Net Present Value method should be used to make investment decisions. Reasons 1. Projects with same IRR. Project A IRR 18% Project B IRR 18%
IRR
A B
-100.00 -150.00
120.00 168.00
9.09 2.73
20.00% 12.00%
A+B
-250.00
288.00
11.82
15.20%
Cash Outflow Cash Inflow in 1st year Cash Inflow in second year
(50,000.00)
115,000.00
(66,000.00)
Key Learnings
About project financing and step wise appraisal of loans applied for project financing. I made an attempt to learn the various details on which assessment of the project and borrowing agency is done by HUDCO Mainly financial appraisal, legal appraisal, technical appraisal and demand and marketability assessment of the project and that of the borrowing agency is done.
How the financial assessment of the project and the borrowing agency is carried out. How projected cash flows of the project are made to check the profitability and capability to repay the loan. Project itself is being kept as collateral in project financing and the revenue earned by execution of project are the means of repayment of the loan.