Project Appraisal and Finance.

Paper Code: 
EMF 625
Credits: 
4
Contact Hours: 
60.00
Objective: 
  • To familiarize students with issues related to the design, organization, and funding of complex projects.
12.00
Unit I: 

Introduction: Meaning of the term project finance, why project finance is used by sponsoring firms, main categories of project spensors, basic terminology of project finance, theory of project finance.

12.00
Unit II: 

The Market for Project Finance: Evolution of Project Finance and market Segments, The global project finance market, the domestic project finance market. Indetifying Project risks, Risk allocation with contracts stipulated by the SPV, Summary of the Risk Management Process.

12.00
Unit III: 

The Role of Advisors in a Project Finance Deal:  The role of legal advisors in project finance deals, the role of Independent Engineer in project finance deals, Role of Insurance Advisors and Insurance Companies in Project Finance Deals.

12.00
Unit IV: 

Valuing the Project  and Project Cash Flow Analysis: Analysis of Operating Cash Flows and their behaviour in different project life cycle phases, Defining the Optimal Capital Structure for the deal, Financial Viability and the Cover ratios used to measure it, Sensitivity Analysis and Scenario Analysis.

12.00
Unit V: 

Financing The Deal:
Financial intermediaries involved in project finance, funding options: Equity, Mezzanine financing, Subordinated debt and Senior debt, Project leasing, project bonds.
 

*A minimum of one case study will be discussed per unit of the syllabi.

References: 

Text Books:

  • Project Finance in Theory and Practice-Designing Structuring and Financing Private and Public Projects-Edition 2008 (Indian)-Stefano Gatti-Academic Press- An Imprint of Elsevier.

Suggested Readings:

  • Fabozzi, F, and Nevitt, P.K. (2006), Project Financing (7th edition), London: Euromoney.
  • Yescombe, E.r. (2002), Principles of Project Finance. San Diego, CA: Academic Press, 2002.
  • Prasanna Chandra, Projects- Planning, Analysis, Selection, Financing, Implementation and Review- CFM-TMH Professional Series in Finance.