Financial Model BMRCL

The views expressed in these presentations are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors or the governments they represent. ADB does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented, nor does it make any representation concerning the same.

Salient Features

Non-sovereign lending opportunity originated directly by ADB Project configured prior to ADBs intervention Bankability assessment (DSCR focus) vis--vis viability estimation (IRRs) Equitable structure for enhancing project financials whenever needed shadow fees Leverage lending of <10% of project cost, robust financial structure comfort to stakeholders and other lenders Validation of assumptions capital and O&M costs , adequacy

Financial Modeling Process

Assumptions

Debt Service Coverage Ratio

Commercial conditions

Project Cost and Sources of Finance

Component Total Construction Cost Pre-operation Expenses

Financing Charges Interest During Construction

Amount USD mio 2514 151 8 143 2665

Organisation GoI GoK GoI GoK JICA ADB (NonSovereign) Commercial Banks
Particulars Equity Sub-debt Other Debt Debt

Type Equity Equity Sub debt Sub debt Debt Debt Debt Total

% of Project Cost 15.00% 15.00% 10.00% 15.00% 14.67% 9.52% 22.17% 100.00%

Total Project Cost

% of Project Cost 30.00% 25.00% 45.00% 70.00%

4

Cash Flows

Options considered for improving bankability Equity infusion in the initial operation period Longer tenure of debt drawdown Moratorium on interest payments Subordinate-debt financing with bullet repayment of principal and interest SHADOW FEE

Sensitivity Analysis

1.0

8000 6400 4800 3200 1600 Traffic Growth Factor Tariff Escalation
0 0.1 0.05 0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.02

Value 0 1600 3200 4800 6400 8000

0.05 0.1

Parameter Project IRR Project NPV @ WACC (Rs.Cr) DSCR (Min) DSCR (Average) LLCR PLCR

Value 5.68% Cumulative

Probability

.9 .8

% Swing Base Value Explained 0 0.05 0 0 0 0 0

.7 .6 .5 .4

Construction Cost Sensitivity Factor Base Traffic Increment Base Tariff Factor O&M - Manpower Cost Factor O&M - Energy Cost Factor

-2,358 0.45 2.06 1.67 1.81

.3 .2 .1 0 100

Base Value: 3601

1090 2080 3070 4060 5050 6040 Value EV=989 7030 8020 9010 10000

Description Traffic Growth Factor Tariff Escalation Construction Cost Sensitivity Factor Base Traffic Increment Base Tariff Factor O&M - Manpower Cost Factor O&M - Energy Cost Factor

Sens Low High Low High Base Type Value Value Result Result Swing 0 0.05 0 0 0 0 0 Value Value Value Value Value Value Value 0.05 0.1 0.1 0.1 0.1 0.1 0.1 0.02 0 0.1 0.05 0 0.1 0.1 4914 3158 2560 2744 2758 3467 3472 5496 10410 6992 10151 4636 2077 4030 1286 3601 842 3734 267 3729 258

Project Structure

Commercial Banks
loan Agreement

JICA

GOK

GOI &GOK
Equity/ sub-debt Agreement Trust and retention A/C SPV revenues

JICA loan Agreement

GoK support from non-project related non tax funds

BMRCL

ADB loan Agreement

ADB

Construction Contracts

Direct / Operation and Maintenance Contracts

Construction Contractors

Maintenance Contractors

Lending Structure*

ADB
De bt

Loan
GoK Support - Shadow Fees and security structure
Se rv ic i ng

(Triggers only when shortfall in Net cash flow)

First Charge (after O&M exp.) BMRCL

All revenues of BMRCL DSRA account TRA

*Simplified version

Thank You

D T V Raghu Rama Swamy

Chief Executive Officer
Infrastructure Development Corporation (Karnataka) Limited Bangalore, India (+91) (80) 43448004

raghu@idfc.com