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CASE STUDY

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DEWAS BHOPAL CORRIDOR PVT LTD

Padmalatha Suresh1

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1
Prepared with extensive inputs from Piyush Rohankar,N. Sri Ramya devi,Constantine, and Ritu raj,

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students of SIBM, Bangalore, class of 2010. Their contribution to the case is acknowledged with
gratitude.
This case has been developed solely as the basis for class discussion from published sources. Names/
details have been disguised, and hypothetical characters have been introduced to facilitate case

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analysis. Cases are not intended to illustrate effective or ineffective management or decision making

Page | 1

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Introduction

Gaurav Sharma2 re-arranged the sheaf of papers on his desk. He had been hired in July 2007 to represent
the three private investors in the Rs 560 crore Dewas Bhopal Corridor project, and entrusted with the task
of arranging the Rs 345 crore non recourse project financing for the project before the end of 2007. He
had already discussed the proposal with the State Bank of India [SBI] a few times. However, he knew that
the meeting with the bankers scheduled for the following day would be crucial. He had to convince
Rashmi Gupte, the astute senior manager of the bank, that most of the critical risks of the project had been
mitigated by the project structure, and of the project viability. If financing could not be closed before
January 2008, the concession agreement with the Madhya Pradesh government would expire.

Although the syndicate of bankers led by State Bank of India, had agreed in principle to fund the project,
Gaurav knew that their final commitment was subject to due diligence, including a review of the financial
projections, the underlying assumptions and other factors. The terms and conditions of sanction also
depended on the credit rating awarded by CARE, the rating agency. While calling for the meeting in
December 2007, the bankers had expressed concerns with the traffic forecasts, and had also indicated that
a larger contingency fund [ over and above the 10% proposed fund] might be required as equity to cover
shortfalls arising from downside scenarios. Gaurav was aware that any increase in equity funding would
not be welcomed by the shareholders. The bank had indicated that, to be satisfied with the credit risk,
corporate guarantees from the sponsors could also be sought for.

Before SBI had called for the final meeting the following day, Gaurav had been reasonably convinced
that the project structure was appropriate, and designed to effectively allocate major risks. The deal team
had comprised of well known consultants, and he was sure that it had effectively identified, assessed and
proposed mitigating features for all the major risks. However, Gaurav now knew that many of the key
assumptions would have to be revisited by the team of transaction advisors before the bankers agreed to
finance the project.

Madhya Pradesh and MPRDC

Madhya Pradesh Road Development Corporation Ltd (MPRDC), a state government owned corporation,
is responsible for implementation of various road projects in the state of Madhya Pradesh. These projects
included 15 State Highway and Major District road projects, the majority operating under the "public -
private partnership" scheme and others being developed under the regular contract scheme.

2
All names disguised, and some characters are hypothetical to help in teaching the case

2|Page
MPRDC floated the project of strengthening / up-gradation of the existing SH-18 Bhopal to Dewas (Km.
6/800 to Km. 149/400) road to 4 lane divided carriageway standards, under PPP (Public Private
Partnership) model of Central government through tenders floated in September 2006. The project was to
follow the Build-Rehabilitate-Operate-Transfer [BROT] structure, and was viewed as one of the most
lucrative and ambitious road projects in the state. Exhibit 1 presents a pictorial view of the project site.

Based on competitive bidding, MPRDC awarded the project to the consortium comprising of Chetak
Enterprises Private Limited (CEPL), MSK Projects (I) Ltd (MSKPL) and BSBK Limited (BSBKL)
[hereinafter called the „consortium‟].

The consortium incorporated Dewas Bhopal Corridor Pvt Ltd (DBCPL) as special purpose company for
executing the project. DBCPL signed the Concession Agreement on 30/06/2007 as concessionaire for the
project. The Concession was granted for a period of 25 years including construction period of 30 months.
The project implementation schedule is shown in Exhibit 2.

India’s and MP’s highways

Roads are the preferred mode of transportation in India. According to the Central Statistical Organisation,
road transport has emerged as the dominant segment in India‟s transportation sector; in 2004-05, the
sector contributed 4.5 percent to the country‟s GDP as against the mere 1 percent contributed by the
railways.

The national highways constitute the primary system of road transportation in the country, while State
highways (SH) and major district roads represent the secondary system. The SHs provide linkages with
the national highways, district headquarters of the state and important towns, tourist centres, and minor
ports. Major district roads run within the district, linking areas of production with the markets and
connecting the rural areas to the district headquarters and to state and national highways.

The secondary system of roads carries about 40 percent of the total road traffic, although they constitute
around 18 percent of the total road length. They contribute significantly to the rural economy as also to
the industrial development of the country by enabling movement of industrial raw materials and products
from and to the hinterland.

There had been significant progress in the development of the road sector across states since the mid-
1990s. In state of Madhya Pradesh (MP), Madhya Pradesh Road Development Corporation Ltd (MPRDC)
has been set up for the construction and up-gradation of roads. The policy initiatives by MP state
government include amendment of the Indian Tolls (MP) Act, 1932 which permits the levy of toll on

3|Page
newly constructed as well as improved road and bridge projects. Apart from regular plan outlays and
private capital, additional resources have been mobilised through NH funds, Central Road Fund,
NABARD loans for rural roads, mandi cess, infrastructure bonds, external assistance, and HUDCO loans.
ADB sanctioned a $ 180 million loan to GoMP for the rehabilitation of 1,750 km of state roads. MPRDC
had already acquired and handed over 91% of the land required for widening the project highway and
constructing the bypasses in Ashta, Mehatwara & Sonkachh.

Madhya Pradesh has a national-highway length of 4,677 km, of which, 2,163 km have been added since
1991. The state has 7.74 km of national highways per lakh population as against the national average of
only 6.43 km per lakh population.

The project

The project section was a part of State Highway No. 18, which served as an important link between the
state capital, Indore and other important cities of MP and North India. Project influence area had, besides
agricultural production, a number of industries located mainly surrounding Bhopal and Dewas. The
Dewas Industrial Area is the oldest Industrial area of Madhya Pradesh and in terms of size, second only to
Pithampur near Indore. The project section would also provide connectivity to the major pilgrimage
centres of Ujjain and Omkareshwar.

Since the project section would be able to provide good connectivity between NH-3 and NH-12, there
was good reason to believe that the present traffic on the section would increase substantially in future.
The project company entered into a concession agreement of 25 years with the MP government. The
government would provide a grant of Rs 81 crore, as in the case of similar projects, some of which are
shown in Exhibit 3.

Equity contribution by private sponsors

Of the total proposed equity of Rs 215 crore, the amount brought in by CEPL and MSKPL comprised of
Rs 10 lacs as the paid up capital, and remaining amount of Rs 98 crs being share premium. The third
member of the consortium, BSBK Ltd, had a small shareholding of Rs 0.78 lacs. Therefore, the major role
in project implementation would be that of the two major stakeholders in DBCPL. In terms of the
Concession agreement signed on 30.6.2007, the aggregate equity shareholding of the consortium and their
associates in the issued & paid up equity share capital of the Concessionaire shall not be less than 78%
during the construction period and not less than 26% during the toll period.

The profile of the equity sponsors is provided in Exhibit 4

4|Page
Management

CEPL nominated Shri Udailal Anjana and Hukmi Chand Jain; and MSKPL nominated Shri Ashok M
Khurana and Amit A Khurana as the promoter directors on the board of DBCPL. As the project was to be
implemented under two separate EPC contracts by the two promoter companies, the day to day project
management during construction period would vest with the management of each respective promoter
company. A committee of the four promoter Directors would monitor the project. Post construction
DBCPL proposed to appoint a professional CEO for toll and maintenance management operations. The
chairmanship of the Board of Directors of the company would be held on rotation basis by the nominee of
each of the promoter company. The first Chairman was Shri Udailal Anjana.

The Concession Agreement

The Concession Agreement (CA), signed on June 30, 2007, was based on the Model Concession
Agreement of NHAI. The following are the key terms and conditions as per CA:

 The Concession shall be for a period of 30 years (including construction period of 30

months) from the commencement date; commencement date being the date on which
financial closure is achieved or an earlier date that the parties may by mutual consent
determine.

 The concessionaire shall provide to MPRDC security of Rs.21.33 crore in form of

irrevocable and unconditional bank guarantee upon signing of the agreement. The
performance security shall be released by MPRDC to the concessionaire up on the
concessionaire having spent on the project on sum not less than 50% of the project cost.

 The Concessionaire shall be entitled to levy and collect fees from the users of the Project
Highway or part thereof in accordance with the Fee Notification in the CA, which
provides for annual revision in the fees based on variation of the WPI. There is a non-
competing facility clause for 8 years from the appointed date.

 MPRDC has to make available the land/ site free from physical encumbrances and at no
cost to the Concessionaire. The Scheduled Project Completion period is 30 months from
the date of signing of the concession agreements. An independent consultant shall be
appointed by the MPRDC.

 MPRDC agrees to pay to the concessionaire Grant/subsidy of Rs 81 crores. Out of the

grant for the project, up to 20% of the total project cost is to be provided by Govt. of

5|Page
 India as per provisions of Scheme for support to Public Private Partnerships in
Infrastructure. Remaining amount of the grant will be disbursed by MPRDC.

 A State Support Agreement is provided and the obligations of the Government of MP are
similar to that of NHAI in the Agreement, including in ensuring that no competing
facility is put up without being subject to the conditions set out in the CA.

 Force Majeure clause, incorporating default events and termination payments, is as given
in Table 1

Table 1 : Force Majeure clause under the Concession Agreement

Force Majeure Event Termination payments to concessionaire by NHAI

90% of the Debt Due and 100% of subordinated debt less due insurance
Non Political Event
claims and 90% of amount of such claims not admitted.

(a) The total Debt due, less due Insurance claims and 80% of such claims
Indirect Political Event not admitted, plus (b) 100% of the subordinated debt outstanding; plus (c)
100% of the Equity subscribed

(a) The total Debt due, plus (b) 100% of the Subordinated Debt
Political Event
outstanding plus (c) 100% of the Equity.

A tripartite Substitution Agreement was signed between MPRDC, the Concessionaire and the senior
lenders providing that the senior lenders shall have the right to substitute the Concessionaire by a selectee
for the residual period of the concession, in case of Concessionaire‟s event of default under any of the
Financing Documents. The CA had provisions for payments in respect of terminations due to MPRDC
event of default or concessionaire event of default (if substitution does not happen).

The CA provided for charging and assignment of project contracts, including the CA, with prior
permission of MPRDC and rights and titles of the project in favour of the lenders for obtaining financing
for the Project. The concessionaire also had to enter into a tripartite agreement with an empowered
institution and the lead financial institution specified under the PPP in the Infrastructure scheme. Further,
prior to financial closure. Rehabilitation and resettlement plan had to be implemented by the
concessionaire, while the cost was to be borne by MPRDC.

6|Page
Environmental clearance: The Company is required to obtain all the required applicable permits and
approvals as per applicable laws. As per the CA, MPRDC will provide necessary support to the
concessionaire in obtaining necessary clearances/ permissions/ permits in respect of environmental
clearances, tree cutting, compensatory afforestation, shifting of all types of utility services, and
rehabilitation and resettlement. Since the project road passes through reserve forest area at change of
113.00 km for a length of 400 m. MPRDC has obtained environment clearances for the project. The EIA
has been carried out by MPRDC through their consultant.

Construction phase - EPC Cost and contingency provision

The project construction work would be executed through fixed price EPC contracts, which DBCPL
proposed to enter into with its two main sponsors, who were experienced civil contractors. The overall
works would be divided under two segments – the first for road work requiring mechanized and manual
labour and preparation of the base of the road; and second for bituminous work to be conducted on the
road. The total value of the EPC contracts including 10% escalation provision was estimated at Rs.497.22
crore.

The salient features of the EPC contract proposed were:

 The Project construction work would be on the same basis as the scope of construction work
specified under the terms of concession agreement.
 Any cost escalation will be covered by the 10% contingency provision in EPC contract.
 The period for completion of road construction for EPC contractors would be specified as 24
months as against the maximum period of 30 months provided under Concession Agreement.
However, there will be no liquidated damages charged for any delay up to the maximum period
of 30 months.
 Liquidated damages would be recovered from the EPC Contractors equal to that payable to
MPRDC in case there is any delay in the implementation of the project regarding the project
milestones specified under the concession agreement including overall completion of project
within 30 months.
 Pre-disbursement condition will be stipulated for execution of EPC contracts with suitable clauses
to the satisfaction of lenders and their consultants.

7|Page
Operations phase – O&M and other contracts

Operations & Maintenance [O&M]: Under the BOT framework, DBCPL would be responsible for
the O&M of the Project Highway throughout the concession period. O&M work will be carried out
by the Company as per provisions of Concession agreement.

Operation: The operational activities will principally comprise of 1) operation of toll collection
system, 2) traffic management, and 3) emergency and recovery functions.

Toll collection system: To ensure that optimal toll collection is achieved, appropriate operating
procedures and policies will be implemented with special emphasis on internal controls. In addition,
the Company will be setting up an Independent Toll Monitoring unit to monitor and report the toll
collection activities. The Toll monitoring unit will be equipped with all the necessary surveillance
equipment/ tools and will be trained and supported by the Company to ensure that an efficient and
effective toll collection system is put in place for this Project

Traffic Management: The Company shall draw up a comprehensive traffic management procedure to
ensure traffic safety and smooth traffic flow along the Project Highway. A key component of traffic
management is the emergency and recovery procedures. Smooth traffic flow will enable the users of
the Project Highway to benefit from safe travel as well as predictability of their journey in terms of
time and conditions of the road.
Maintenance: A comprehensive maintenance programme will be followed to ensure the expected
performance of the Project Highway. The maintenance is broadly classified into two type of activities
viz. routine and major maintenance.

Routine maintenance work would be typically repetitive in nature such as grass cutting, roadway
clearing, de-silting and drainage system cleaning and prompt repairs of potholes, cracks, lighting, etc.

Major maintenance would primarily involve road resurfacing, repairs to structures, equipment
refurbishment and replacement, and heavy maintenance. The Major maintenance works is scheduled
to be carried out every 6 years from the COD which includes renewal cost. The cost of major
maintenance work has been factored in the financial projections.

Traffic Assessment:

M/s Westline infrastructure Consultants Pvt Ltd (WICPL), conducted a comprehensive and independent
traffic study on the Project Highway in the month of July ‟07. The scope of traffic study included the
following:

8|Page
  Specific traffic census / count for 7 days – 24 Hours.
 Identification of area of influence.
 Origin and destination study, Survey of willingness to pay toll.
 Traffic forecast and projection of toll collection.
 Traffic diversions parallel roads etc. if any.
The major findings of the traffic study are given below –

Origin- destination study:

Most of the vehicles plying on this route are from the area of influence. There is significant commercial
traffic transporting agricultural and industrial goods. Presently it takes 4 ½ to 5 hours to travel through the
project section. Bus traffic and light passenger traffic comprises local as well as inter-state traffic.
Reduction in base traffic volume due to exempted category local personal and local commercial traffic is
considered – 15% for cars/ jeeps, 5% for LCV, 20% for buses, and 5% for standard axle trucks.

Willingness to pay survey:

The traffic consultant concluded that there would be no resistance for paying tolls by the users of the
project highway. Incidentally, the project highway was tolled in the year 1999-2001 by maintenance
contractors appointed by government. The users are quite used to paying tolls in Madhya Pradesh as
evident by fact that the roads leading to Bhopal – Dewas project section are already tolled viz. Indore –
Dewas section, Badnawar – Ujjain –Dewas section, Jabalpur- Damoh section etc.

Location of toll plazas

In terms of the concession agreement, for purpose of tolling, the project has been divided in to three
homogenous sections. The concessionaire would provide three toll plazas including administrative
building and services. However, concessionaire has the option to erect the toll plaza at different locations
within the homogenous sections but with the prior approval of MPRDC.

Traffic forecast

The traffic forecast is based on actual traffic count on three locations on the project section close to the
proposed toll plazas over a period of seven days. The average traffic count thus arrived has been subjected
to seasonal variations and reduction on account of exempted categories. The seasonal variations have
been arrived at based on the variance in sales of diesel and petrol collected from the fuel stations along
the project road. Reduction on account of local personal and commercial traffic has been accounted for as
such traffic will be enjoying concession in toll rates.

9|Page
Based on the general trend in toll collections in Madhya Pradesh and road sector data available, the traffic
consultant recommended following traffic growth rates .In view of the traffic disruption and diversion due
to construction activity, the traffic growth is considered at 3% for all categories of vehicles during
implementation period; After completion of the project, the traffic growth rates are projected as shown in
Table 2.

Table 2: Traffic growth rate projections.

Category of vehicles 2010-11 to 2014-15 Up to 2032-33

Car/Jeep 10% 5%

LCV 5% 3%

Bus 8% 5%

Truck standard axle 5% 3%

MAV 5% 3%

Based on the analysis, the annual average daily traffic for base year 2008-09 was estimated as shown in
Table 3.

Table 3: Average daily traffic estimated for base year 2008-09.

Toll plaza I Toll plaza II Toll plaza III

Class of Vehicles
(km 35.80) (km 60-65) (km 136-140)
Car / Van / Jeep 2644 1971 1469
Bus 433 221 197
LCV 874 675 806
1976
Truck standard Axle 145 1100 816
MAV 1319 1357 808

Calculation of toll revenue streams

The toll revenue streams have been worked out based on toll notification issued by Govt of MP in
December 2006. As per the notification, the toll rates would increase by 7% every year and rounded off to
the nearest rupee on each toll plaza.

10 | P a g e
The toll fee for the year 2008-09 are given in Table 4

Table 4: The toll fee for the year 2008-09

Toll rate per Toll plaza I Toll plaza II Toll plaza III
Class of Vehicles
km (km 35.80) (km 60-65) (km 136-140)
Car / Van / Jeep 0.37 13 15 25
Bus 1.87 67 75 125
LCV 0.89 32 36 59
Truck standard Axle 2.26 81 90 151
MAV 4.50 161 180 301

Insurance Arrangements:
The Company will be adopting a comprehensive insurance programme necessary for the successful
management of risks for the Project. The proposed insurance programme will be arranged with separate
coverage for construction and operation. The construction period insurance will cover contractor‟s all risk
policy for the full contract value; policy against third party liability and Fire policies to cover for all the
completed building/ toll plazas etc. In addition, a Lenders‟ Insurance Advisor will be appointed to provide
assistance to the lenders in assessing the adequacy of insurance and other related aspects.

The financing plan and projections

The sources and uses of funds for the project is shown in Table 5. The final allocation of equity among
the equity holders would be as follows: CEPL – 50% share, MSK – 39% share and BSBK -11% share.
The EPC contract of Rs 497 crore is to be shared equally between CEPL and MSK.

The total project cost of Rs.560 crore was to be financed by way of equity of Rs.101.45 crore [paid up
capital+ share premium], subsidy of Rs.81 crore, pre-operative income (toll revenue during construction
phase and interest on deposits) of Rs.33.18 crore and term loans of Rs.345 crore.

The cash flow projections for the period 2010 -2022 are presented in Exhibit 5. Gaurav also anticipated
that the DSCR projections in Exhibit 6 could be an issue with the bankers. He felt that the bankers may
look at other indicators as well before committing funds to the project.

11 | P a g e
Table 5 : Project sources and uses of cash

Conclusion

As Gaurav finalized his review of the construction, operating and financial plans for the concession, he
tried to envisage the concerns the bankers might have about the success of the project. He made a list of
the probable concerns:

a. Timely completion of the project

b. The traffic forecast
c. Achievement of projected toll revenue
d. The equity infusion and the sponsor‟s ability/ willingness to bring in additional equity if required
e. Sponsor‟s willingness to give corporate guarantee
f. The environmental impact
g. The impact on interest rate risk on project viability
h. The DSCR and other indicators of healthy debt service
i. Timely release of subsidy by the government

Following his meeting with the bankers, Gaurav had to prepare the final recommendation for the DBCPL
Board.

12 | P a g e
At SBI‟s local head office, the credit team was preparing its brief for the following day‟s meeting with
Gaurav Sharma and his deal team. The discussion paper for Rashmi with the following queries:

a. The major sponsors, MSKPL and CEPL, though seasoned civil contractors, have been badly hit
by the economic downturn, and are presently involved in multiple projects at various stages that
are in questionable states depending on who one inquired from. Sources were unable to validate
the liquidity of the sponsors especially considering the magnitude of the project in question.
b. Though the contract with the sponsors said that the MPRDC would be responsible for land
acquisition and timely delivery from all the parties concerned, failure to do so on time would
upset the project schedule drastically. The status of these acquisitions could not also be verified
as there were numerous lawsuits now being filed over them.
c. In addition to the land to be acquired, there are also few encroachments on the project section
and with the stay order they obtained from courts , this could further delay project completion.
d. The proposed expansion project is through a very busy and crowded market where road and
traffic conditions have become really difficult to manage. The expansion of such a road would be
heavily dependent on alternate routes through which the traffic can be rerouted
e. If due to these issues or others, the cost overshoots the budget, then that would again mean that
the company would not be able to collect the expected money through tolls, and would require
either further credit, or an extension of the credit maturity period, or increase in the toll amount
[which the government may not agree to].
f. However, if SBI considered the project favourably, it would be easy to syndicate the loan with
other prospective lenders.

Rashmi considered the issues presented by the credit team, and asked for a risk analysis to be done
before her meeting with the project team of DBCPL the following day.

Exhibit 1

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A VIEW OF THE PROJECT SITE

14 | P a g e
 Exhibit-2: Project implementation schedule
Particulars Date
Concession Agreement date June 30, 2007

Financial Closure date January 1, 2008

Construction Start Date January 1, 2008

Construction Completion Date December 31, 2009

Tolling Start Date Section I – November 1, 2008

(for homogenous sections) Section II – May 1, 2009

Section III – Jan 1 2010

COD (for the project as a whole) January 1, 2010

End of Concession period December 31, 2032

Exhibit 3: Some similar road projects

Debt
Length Debt/
Project Section / sponsors Grant Tenor Project Cost
(km) Equity
(years)
Jaipur-Mahua Rs 99.0 Cr
Rs 529 Cr
(NH-11) 108 (Positive Grant from 12 1.85:1
(Rs 4.89 Cr per km)
IJM Malaysia NHAI)
Bharatpur- Mahua Rs 38.4 Cr
Rs 297 Cr
(NH-11) 57 (Positive Grant from 11.6 1.99:1
(Rs 5.2 Cr per Km)
Madhucon & SREI NHAI)
Ulunderpet – Padalur (NH- Rs 40 Cr
Rs 747.56 Cr
45) 93 (Positive Grant from 14.25 1.86:1
(Rs 8 Cr per km)
IJM / Shapoorji Pallonji NHAi)
Pimpalgaon – Dhule (NH-3) Rs 28.3 Cr
Rs 606.04 Cr
IRCON & Soma 115 (Positive Grant from 12.5 2.88:1
(Rs 5.3 Cr per Km)
NHAI)
Dewas Bhopal Rs 81.00
Rs 563.44 cr
(SH-18) 142.60 (Positive grant from 14 1.70:1
(Rs 3.8 Cr per Km)
DBCPL GOI)

15 | P a g e
Exhibit 4: Brief profile of equity sponsors

1. MSK Projects (India) Limited (MSKPIL):

MSKPIL, is a Public Limited company incorporated in 1994, [MSK – rated CARE BBB+] and having its
registered office in Vadodara. The promoters have more than 30 years of experience in the construction
business. MSKPIL brought out its maiden successful public issue in Oct 2004. The company operates in
three distinct business segments in the infrastructure sector – industrial, roads, and residential and other
civil construction, contributing to 65%, 28%, and 7% respectively of contract receipts in 2007. Since
inception, the company had executed 8 road projects on BOT basis with total project cost amounting to
Rs 209 crores in the states of Madhya Pradesh, Rajasthan and Uttar Pradesh. The Dewas Bhopal corridor
would be the largest road sector project to be handled by the company.

Some important financial parameters of MSKPIL are given below [Rs crore]

Particulars FY05 (aud) FY06 (aud) FY07 (aud)

Income 78.85 82.55 88.17

PBT 4.90 8.47 11.96

PBT/Net Sales % 6.21 10.26 13.56

Cash accruals 7.38 10.61 12.70

Projects Under 12.12 14.62 16.01

Construction

TNW 49.23 72.50 182.74

TOL/TNW 0.84 0.59 1.06

2. Chetak Enterprises Pvt. Ltd (CEPL):

M/s Chetak Enterprises Private Limited (CEPL) Udaipur was incorporated in 2000 for taking over the
running business and operations of the partnership firm M/s Chetak Enterprises, which was working since
1991 in the field of Roads and Bridges Construction, both on BOT and payment based Contracts. CEPL
is a registered contractor in the state of Rajasthan (Category “AA” – unlimited value) and Madhya

16 | P a g e
Pradesh (Category A-5 – unlimited value). One of the three promoter directors, Shri Udai Lal Anjana, is a
former Member of Parliament with significant influence in MP state. CEPL had completed six BOT road
projects up to 2007 with total project cost of about Rs 50 crore, and all of them had been completed well
ahead of the time schedule.

Some important financial parameters of CEPL are given below [Rs crore]

Particulars FY05 (aud) FY06 (aud) FY07 (aud)

Income 89.65 65.16 90.74

PBT 12.18 23.29 24.23

PBT/Net Sales % 13.58 35.74 26.70

Cash accruals 19.27 34.71 33.14

PUC 1.65 1.65 1.65

TNW 59.88 88.00 107.58

TOL/TNW 0.88 0.58 0.62

3. BSBK Limited

BSBK Limited, a member of the consortium which has won the bid, will be having a nominal stake in the
SPV.

17 | P a g e
Exhibit -5

PROJECTED CASH FLOW STATEMENTS

Con
stru
Particulars ction 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Sources of
Funds

Equity 101.
Capital 45 - - - - - - - - - - - - -

Subsidy 81.0

33.1 12.3 56.0 63.7 72.4 81.9 63.6 71.8 113. 125. 139. 153. 169. 110.
PBDIT 8 2 8 5 0 5 4 7 89 81 44 50 03 51

Long Term 345.

Debt 00 - - - - - - - - - - - - -

Refund of
BG Margin 1.59 - - - - - - - - - - - - -

565. 12.3 56.0 63.7 72.4 81.9 63.6 71.8 113. 125. 139. 153. 169. 110.
TOTAL A 03 2 8 5 0 5 4 7 89 81 44 50 03 51

Uses of
Funds

Capital
Expenditure 561.
for Project 85 - - - - - - - - - - - - -

Decrease in
Long Term 12.4 17.7 17.7 19.5 35.5 42.6 53.2 53.2 53.2 42.6
Debt - - 7.10 3 5 5 3 0 0 5 5 5 0

Interest on 11.0 44.3 43.9 42.7 40.8 38.6 36.2 32.8 27.9 21.9 15.3
Loans 9 8 3 1 3 1 8 4 6 7 1 8.65 2.66

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 Con
stru
Particulars ction 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Provision for 10.5 12.8 15.4

Tax - - - - - 0.07 1.27 6.41 8.32 4 8 0 9.39

Other
Deposits - 4.26 - - - - - - - - - - -

BG Margin 1.59 0.32 - - - - - - - - - - - -

563. 11.4 48.6 51.0 55.1 58.5 56.4 57.0 74.7 78.8 85.7 81.4 77.3 54.6
TOTAL B 44 1 4 3 4 8 3 7 5 8 6 4 1 6

Opening
Cash in 22.6 39.9 63.3 70.5 85.3 124. 171. 225. 297. 388.
Hand 0.00 1.59 2.50 9.94 7 3 1 3 2 47 39 07 13 85

Net Surplus/
Deficit ( A - 12.7 17.2 23.3 14.8 39.1 46.9 53.6 72.0 91.7 55.8
B) 1.59 0.91 7.44 2 7 8 7.22 0 4 3 8 6 2 6

Closing
Cash 22.6 39.9 63.3 70.5 85.3 124. 171. 225. 297. 388. 444.
Balances 1.59 2.50 9.94 7 3 1 3 2 47 39 07 13 85 71

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 Exhibit 6: DSCR calculations
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Net
Operating
Income* 12.32 56.08 63.76 72.4 81.95 63.58 70.6 107.48 117.49 128.9 140.62 153.62 101.12
Interest
payment 11.09 44.38 43.93 42.71 40.83 38.61 36.28 32.84 27.96 21.97 15.31 8.65 2.66
Principal
repayment 0 0 7.1 12.42 17.75 17.75 19.53 35.5 42.6 53.25 53.25 53.25 42.6
DSCR 1.11 1.26 1.25 1.31 1.40 1.13 1.26 1.57 1.66 1.71 2.05 2.48 2.23
Min DSCR 1.11

Avg DSCR 1.56

 Net operating income = PAT + depreciation/amortization + interest

Select References:
• www.moneycontrol.com
• http://www.statebankofindia.com/user.htm
• www.google.com
• www.wikepedia.com
• Information Memorandum
• causelists.nic.in/jabalpur/jtues/cl.html
• www.skyscrapercity.com/archive/index.../t-447508-p-2.html
• www.careratings.com

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