Project

EXECUTIVE SUMMARY 1.
Auro Mira Wind Sakthi Limited, promoted by Auro Mira Energy
Company Private Limited (AME), proposes to set up two wind farms, with an aggregate capacity of 49.5 MW, in Dist. Hassan, Karnataka. 2. The turnkey contract for the Project would be awarded to Suzlon Energy Limited (SEL), which is one of the largest Wind Turbine Generator manufacturers in the world. SEL has successfully implemented wind farm projects of more than 3700 MW capacity in India and 500 MW in other countries. 3. Based on the company's negotiations with SEL, the cost of the project has been estimated at Rs.290.75 crore, which is proposed to be financed by way of equity capital of Rs.101.75 crore and term loan of Rs.189 crore (DER of 65:35). 4. The power generated from the wind farm would be sold to the State Discoms at Rs.3.40/ unit. The company would enter into a PPA with BESCOM (a distribution licensee) for a period of 20 years. 5. 6. The company has requested XYZ to part finance the project by way of The project is financially viable (average DSCR 1.40). Sensitivity term loan and syndicate the balance debt for the project. analysis indicates that the Project would remain financially viable under modest adverse fluctuations. 7. XYZs current committed exposure to the Group is Rs.20 crore, by way of RTL sanctioned to Sugnaneswara Hydel Power Private Limited, in March 2009. The project is under implementation. Loan disbursements have not yet commenced. 8. 9. Head-ICG has approved the proposal for the taking up detailed appraisal. The proposal has been referred to Risk Department for rating, which is
awaited.
Auro Mira Wind Sakthi Limited Detailed Appraisal Note
10. It is proposed to sanction rupee term loan of Rs.75 crore as XYZ's share of the Project Debt and tie-up the balance debt of Rs.114 crore with other banks/ FIs. DETAILED APPRAISAL NOTE PART I - PROMOTER / COMPANY ASSESSMENT A. COMPANY
Background 1.01 Auro Mira Wind Sakthi Ltd (Auro Mira Wind) was incorporated on 15th August 2008 as a 100% subsidiary of Auto Mira Energy Company Pvt. Ltd (AME), with the main objective of generating green energy using wind resources. In the first phase, Auro Mira Wind proposes to implement a 49.5 MW wind power project, which is scheduled to be completed by March 2010. 1.02 Auro Mira Wind has not yet started its commercial operations and, therefore, no financial statement has been prepared for the company till now. Management 1.03 As per the Articles of Association, Auro Mira Wind would have at least 3 and not more than 12 Directors on the Board. At present, the company has 3 Directors viz. S/Shri N. Srinivasan (47, CA, more than 22 years experience), I. Krishna Pillai (40, Civil Engineer with over 17 years experience in the wind power sector) and P. Chandramouli (58, Mechanical Engineer and MBA from IIM-A), all of whom are from the promoter group. 1.04 The day-to-day affairs of the company are being looked after by Shri R. Balaji, Chief Operating Officer, who is supported by professionals in various fields. B. 1.05 PROMOTERS AME, incorporated on December 07, 2005, is promoted by first
generation entrepreneurs viz. S/Shri N. Srinivasan, P. Chandramouli, Santosh Kamat and I. Krishna Pillai, who have prior experience in the sector. Mr. Srinivasan, a Chartered Accountant, was the CEO of Shriram TTG (the wind division) for over 10 years. Shri Krishna Pillai has over 17 years experience in wind resource assessment, micro-siting, procurement of land, liaison with
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Electricity Boards, execution of civil & electrical works, etc. He has secured more than 30,000 acres of land in Tamilnadu, Karnataka, Andhra Pradesh and West Bengal, on behalf of almost all the wind energy companies in the country. Shri Santosh Kamat, former CEO of Shriram Infrastructure, has experience in business development, organisation building, marketing and supply chain management. AME has identified business opportunities in generation of clean energy from biomass, small hydel and wind farm. In the long run, it proposes to enter the solar and bio-diesel sector also. In the next 5 years, AME plans to invest approximately 300 million US$ to develop power plants of around 250 MW capacity based on renewable energy sources like wind energy, biomass & small hydel plants. 1.06 AME has more than 100 personnel, with experience in the fields of engineering, capital goods and power sector. It promotes SPVs for setting up different projects and provides necessary technical & managerial expertise to these companies. Major operational areas of AME are briefly described below: Biomass: AME owns & operates a 7.5 MW biomass power plant in Pudukottai, Tamilnadu (registered with UNFCCC under CDM), which is the first ISO-certified biomass plant in India. The second plant of 10 MW was commissioned in February 2009 at Kalupatti, near Madurai. The third plant of 15 MW is proposed to be commissioned by 2010 in Tirunelveli & Kanyakumari Districts of Tamilnadu. By FY 2012, AME proposes to set up 50 MW biomass-based power plants in Karnataka and Maharashtra. Hydel: AME has already obtained licence for 80 MW hydel power plants to be set up in Karnataka & Orissa and will add another 50 MW in North & North Eastern States. These projects would be executed in stages, over next 5 years. The 1st plant of 13.5 MW is being constructed at Gulburga district in Karnataka. The construction work for the 2nd plant of 9 MW (also in Karnataka) is expected to begin sometime in September 2009. Wind: AME has identified land suitable for setting up wind farms of 150 MW aggregate capacity. These projects would be executed over next 3-4 years; the
land acquisition process has started. It has also installed wind mast in different locations for carrying out an in-depth study of the wind pattern. AME is in the advanced stage of discussion with different WTG suppliers for supply of the equipment on turnkey basis. For the proposed 49.5 MW project under consideration, Suzlon Energy has been short listed as the turnkey contractor. Working results and financial position 1.07 AME, incorporated in December 2005, acquired its first energy generation unit (Auro Mira Bio Energy Pudukottai India Ltd.) in February 2007. Till FY 2008, there was no major income in AME as it was mainly investing in the SPVs. The only source of income was interest on deposits and mutual funds; since this amount was nominal, the company did not prepare any profit & loss account till FY 2008. Analyses of AME's financial position for last 3 years are given in Annexure - I. The highlights of the same are as under; Working Results (Rs. crore) For the year ended March 31, 2009 Total Income (*) 3.07 Interest & financial charges Nil Depreciation 0.25 Other non-cash expenses 0.30 Operating profit 0.10 Other income 0.74 Profit / (loss) after tax (0.21) Gross cash accruals 0.34 (*) mainly technical fees earned from professional services. Financial Position As on March 31, Net fixed assets Investment Current Assets Current Liabilities Secured & unsecured loans Net Worth Net Worth represented by: Equity share capital Reserves & Surplus 2007 0.08 17.95 4.62 0.10 Nil 22.65 0.23 22.42
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2008 0.10 24.59 19.35 1.80 Nil 42.54 0.36 42.18
(Rs. crore) 2009 1.69 22.53 51.61 0.76 Nil 75.27 0.60 74.67
Net Worth
22.65
42.54
75.27
The investments of Rs.22.53 crore were by way of equity share capital in 14 different SPVs. Current Assets include unsecured loans to one of the subsidiaries and also certain market investments. AME does not have any secured or unsecured loan on its own balance sheet. The SPVs have approximately Rs. 59.22 crore debt outstanding as on date; the sanctioned but un-drawn debt aggregates to another Rs. 44.78 crore (for Sugnaneswara Hydel Power Private Ltd.) Auro Mira Group is setting up another windmill project (19.8 MW) in Tamil Nadu under Auro Mira Vaayu Energy Ltd. The company has approached IREDA for financial assistance of Rs. 71 crore for financing the project cost of Rs. 102.46 crores. As on March 31, 2009, the company has furnished Corporate Guarantees for an aggregate amount of Rs. 59.22 crore on behalf of various subsidiaries against facilities sanctioned to them. Management profile 1.08 Sr. no 1 The existing Board of Directors of AME, the promoter company, is Name & Designation Pradeep Mallik, Chairman & Independent Director Education Experience given below;
Electrical Ex-Managing Director, Wartsila Engineer from India Limited IIT-Madras; Over 40 years' experience in T & Diploma in D sector and in gas/liquid-fuel Business based power plants. Management; Ex-Chairman of CII (Western Chartered Region) and Ex-President of Engineer Bombay Chamber of Commerce Chartere d Account ant
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2.
N. Srinivasan, Promoter Director
Ex-CEO of EPC Energy Division of Shriram Group. Over 22 years experience in Finance, Project Management,
Sr. no
Name & Designation
Education
Experience Operations & Supply Chain Management Earlier served in Fisher Xomax, Tanfac, Lovelock & Lewes, EID Parry India Over 35 years experience in industry at various senior level positions Worked with General Signal, Fisher Xomax, SPX Corp, Akay Industries, Bajaj Tempo Former CEO of Shriram Infrastructure, where his scope of work included business development, organisation. building, marketing and supply chain management. Over 17 years experience in wind resource assessment, micro-siting, procurement of land, liaison with Electricity Boards, execution of civil & electrical works. He has performed the above activities in Tamilnadu, Karnataka, Andhra Pradesh and West Bengal, securing more than 30,000 acres of land in the above states, on behalf of almost all the wind energy companies in the country. Owns Cape Infrastructure, which employs over 100 people. Also runs a private engineering college, Cape Institute of Technology at Nagercoil in Tamilnadu. In AME he is mainly responsible for purchase of potential sites and arranging for all the required clearances, approvals, etc. Over 20 years experience in service industry in India & UAE.
3. P.Chandramou li, Promoter Director Mechanical Engineer and MBA (from IIM-A) Mechanical Engineer and Management Graduate
4.
Santosh Kamat, Promoter Director
5.
Mr. I. Krishna Civil Engineer Pillai, Promoter Director
6.
Subbu Subramanian,
FCA, FICWA, FCS and MBA
Sr. no
7.
8.
Name & Designation Independent Director (representative of Baring Private Equity Partner since resigned) Rahul Bhasin, Independent Director (representative of Baring Private Equity Partner) P. Vishwanath, Independent Director
Education (from IIM-A)
Experience
MBA IIM-A)
(from Over 18 years global experience in investment & banking; Senior Partner in Baring Global; Ex-Chairman of BFL Software
Chartered Accountant
Over 35 years experience in Financial Accounting, MIS and Consultancy Co-founder of Alacrity Housing Limited
The Board of the holding company is adequately broad-based and its composition may be considered satisfactory. 1.09 The day-to-day affairs of AME are being looked after by S/Shri. R. Balajee, Chief Operating Officer, and Y V Krishnam Raju, General Manager. Shri Balajee, a finance professional, has 24 years work experience, of which 12 years were in wind energy sector. Shri Raju is a metallurgical engineer, with post-graduate diploma in Business Management. He has 30 years' work experience in various corporates, especially in the areas of quality control, purchase & material planning. Shareholding pattern 1.10 The authorized share capital of AME is Rs.1 crore, divided into 10 lakh equity shares of Rs.10/- each. As on June 30, 2009, the paid-up equity share capital of AME was Rs.59.80 lakh. Baring India Private Equity Fund II holds around 53.58 crore equity shares, representing around 89.6% of the total paid-
up equity capital; balance shares are with the promoters. Details are given below: Sr. No. 1 2 3 4 5 6 7 8 Name of the share-holder Baring India Private Equity (Fund-II) N. Srinivasan P. Chandramouli I. Krishna Pillai Santosh Kamat Uday kumar Mathiyalagan R. Jayajothi Total No of equity shares held 535,790 56,654 1,190 2,856 1,190 100 100 100 597980 % of total 89.60 9.47 0.20 0.47 0.20 0.02 0.02 0.02 100.00
Considering that the three Promoter Directors hold a minority stake in the company, a condition has been stipulated that the Promoter Directors would not resign / withdraw from AMEs Board without obtaining the prior consent of XYZ / Lenders Agent. 1.11 Baring Private Equity International was founded in 1984, with ING Group, a Dutch major, as the anchor investor. The Indian operations started in 1997-98 and, in August 2004, the Fund Managers bought out ING. The Indian operations are now carried out under Baring Private Equity Partners (India) Pvt. Ltd. (BPEP), which has floated two funds till now for making investments in India. Fund-1, with a corpus of USD 175 million, stands fully invested. One of the investments was in mPhasis BFL (the company was created through merger of mPhasis Corporation and BFL Software). Fund-II, registered in Mauritius, was created last year, with a corpus of USD 500 million. It is a longterm fund, with a 10-year investment period, extendible by another 2 years. BPEP uses Barings brand name as well as network. Baring International provides BPEP governance guidelines & other regulatory framework for effective management of its funds and charges royalty for this service. 1.12 BPEP is a strategic investor in the holding company (Auro Mira Energy Company Private Ltd). After assessing the technical & managerial capabilities
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of the Promoter Directors, in October 2007, BPEP committed to make longterm investment of USD 175 mn in the Group (of which, an amount of USD 22 mn has already been invested). BPEP & the promoters of Auro Mira Group have entered into a Share Subscription Agreement, copy of which is not available with XYZ. The company has confirmed that the Agreement does not contain any specific clause for BPEPs exit, except for a stipulation that the company would go public within 5 years i.e. some time in 2012. Besides, the Agreement provides for the flexibility of bringing in additional PE investors in future, if so required by the company. It may also be mentioned here that though AME would be the 100% share-holder of Auro Mira Wind (the project company), a condition has been stipulated that 51 % of the envisaged paid-up equity capital of Auro Mira Wind would be pledged with the Project Lenders. C. 1.13 Sr. No. 1 GROUP COMPANIES AME has floated a number of SPVs for implementing different projects, Status
brief details of which are given below: Name of the group companies Activity
2 3 4 5 6
Acquired in February 2007; Auro Mira Bio Energy Energy generation from bio earned net profit of Pudukottai India Limited mass 35 lakh in FY 2009. Commenced Auro Mira Bio Energy operations in April Madurai Limited -do2009 Financial Auro Mira Energy Closure in Biopower Private Limited -doprogress Auro Mira Bio Systems Kanyakumari Private Limited -do-doAuro Mira Bio Sakthi Projects Limited -doMerit Biozone Limited To act as the holding company for units generating energy from bio fuel -
7 8
9 10
11 12
13 14
Auro Mira Energy Hydel To act as the holding Company Private Limited company for hydel projects Financial closure Small hydel project in achieved (XYZ Sugnaneswara Hydel Karnataka assisted) project Power Private Limited under implementation Sri Jagannath Power Projects Private Limited Small hydel project Applied for licence Sharan Powers Private Financial assistance Limited tied-up with L&T Infrastructure Small hydel project Finance. Auro Mira Wind Power To act as the holding Projects Limited company for wind power projects Auro Mira Energy For developing wind farm Infrastructure India infrastructure viz. buying Private Limited land and studying wind potential after installing wind mast. Auro Mira Vaayu Energy 19.8 MW Wind energy Financial Closure in Limited project in TN progress with IREDA Auro Mira Wind Sakthi 49.5 MW wind energy Limited project in Karnataka Financial Closure in [present project] progress with XYZ
D.COMPLIANCE WITH THE EXPOSURE NORMS (i) (ii) XYZs existing exposure to the company: Nil XYZs existing exposure to the Group (as on July 31, 2009) Sugnaneswara Hydel Power Private Limited: Rs. 20 crore disbursement yet) (no
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(iii)
Internal exposure norms Proposed Pre-defined limits Status (Rs. crore) 75 Rs.2400 crore + Rs.600 Complied with crore for infrastructure projects 95 Rs.6400 crore + Complied with Rs.1600 crore for infrastructure projects
Existing (Rs. crore) Company Nil Group 20
(iv)
Prudential Limits
(As a percentage of XYZ's capital funds of Rs.16,241 crore as on March 31, 2009) Project ed exposu re (Rs. crore) 75 % of XYZs capital funds 0.46% Pre-defined limit Status of complianc e
Comp any
Group
95
0.58%
15% + 5% for Complied with infrastructure projects + 5% with Board/EC approval 40% + 10% for - do infrastructure projects + 5% with Board/EC approval
(v) Industry exposure (Power sector) XYZs exposure to Power Sector as on March 31, 2009 17,430 XYZs Total Industry Portfolio (as on March 31, 2009) 249,302 Exposure to Pre-defined limit / power sector as a Status % of total industry portfolio 6.99% 10% of XYZs total portfolio / Complied with.
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E.
OVERALL PROMOTER ASSESSMENT Auro Mira Group was promoted by professionallyqualified, first generation entrepreneurs for developing green energy projects in biomass, small hydel and wind energy sector. Its biomass-fuelled power plants have started generation; the hydel project is under implementation; wind energy projects are negotiating Financial Closure. The Group has been in business for around 4 years. The promoter Directors, who have long experience in wind energy sector, have now built a team of more than 100 members, most of whom are professionals having relevant background. Baring Private Equity Partners (BPEP) has taken a majority stake in Auro Mira Energy Company, the main holding company of the group. BPEP, which is considered to be a pioneer in the private equity space in India, has assets under management of USD 1 billion in India. BPEP's nominees are on the Board of the holding company. As per newspaper reports, the two founding partners of BPEP have recently parted ways - this, however, is not expected to affect BPEP's long-term investment plans in Auro Mira Group. The proposal complies with the internal exposure norms and RBI's prudential limits. The overall promoters assessment is satisfactory. ______________________
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PART II - TECHNICAL ASSESSMENT A. PROJECT BACKGROUND 2.01 Auro Mira Wind proposes to set up wind farms of 49.5 MW aggregate capacity (33 nos. WTGs, each of 1500 kW rating) at Gopalpura & Modurgudda in Hassan District, Karnataka. For setting up a wind farm, the project developer has to obtain approval from the State Government/ SEB and also complete a host of other formalities with the concerned agencies, which takes considerable time. But, specialised wind farm developers like Suzlon, Enercon or Vestas already possess land banks with good wind potential and also have the expertise to secure the requisite clearances expeditiously; this enables them to install the wind farms in a short period of time, almost on demand. For present project also, Suzlon Energy Ltd. (SEL) has a ready land bank and so WTGs can be commissioned within six to seven months from the Financial Closure. 2.02 Layout of a typical wind farm is given below;
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B. 2.03
LOCATION AND SITE The proposed wind farm locations have been selected after considering
the following benefits: High wind potential; Possibility of securing the requisite clearances at the earliest, so that the project could be commissioned on or before March 2010; Proximity to an existing sub-station and flexibility of wheeling the power for third party sale; Favourable State Government policies (attractive tariffs, model draft PPA). 2.04 The proposed wind farm would be located in two different villages in Hassan District of Karnataka. The sites are in forest land, on a hilly terrain, with no agriculture produce and about 22 km from the nearest road head. Government of Karnataka has allotted 72.518 hectares of leasehold land to SEL for setting up a 43.5 MW wind farm at Madurgudda and 46.5 MW wind farm at Gopalpura. The said land has been allotted to SEL on 30 years lease vide notification no. G.O.FEE 30FLL 2006 dated 17.4.2008 and agreement no. 2/2008-2009 dated 23.4.2008. As per the specimen lease deed for use of the forest land for development of wind farms, the user agency can sub-lease the land in favour of the developer within a specified period. However, being forest land, the project sites cannot be mortgaged to the developers lenders. C. 2.05 TURNKEY CONTRACT The company would enter into a turnkey contract with Suzlon Energy
Ltd. (SEL) for setting up the proposed wind farms. The scope of SELs work includes supply, installation and commissioning 33 nos. 1500 kW of WTGs, acquisition of the project site, civil works including the construction of approach roads on the hilly terrain, electrical works including installing the unit transformers & laying the overhead transmission lines, setting up sub-station for evacuation of power, insurance / risk cover upto commissioning and free O&M for the first two year of operations (with spares and consumables). SEL,
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through its associates, would also establish and maintain in the vicinity of the wind farm, suitable offices & storage facilities, service centre, workshop, communication & transportation facilities, etc. as may be necessary for maintaining the wind farm assets. The ownership of such facilities would, however, vest with Suzlon Group, unless otherwise specifically agreed to between the parties. The salient features of the draft Turnkey Contract are given in Annexure-II. The contract would contain warranties regarding machine availability, power curve, reactive power and transmission losses within the firm. The turnkey contract also envisages time bound implementation of the project. In the event of delay in commissioning of the project, SEL would pay liquidated damages to the company @ 0.5% of the contract price for every weeks delay, subject to a maximum value of 2.5% of the contract price. If the delay exceeds 5 weeks, the company would be entitled to revoke the contract. Besides, the turnkey contract shall contain a suitable clause whereby the Purchaser (i.e. Auro Mira Wind) shall have the right to assign the contract in favour of its lenders (or their nominees) at any time, either in whole or in part, provided the Supplier (i.e. SEL) shall be immediately intimated of any invocation of the assignment clause and the new party shall adhere to all the terms & conditions of the Turnkey Contract, without any deviation. A condition has been stipulated that, before seeking any disbursement of the assistance, the company shall, to the satisfaction of XYZ, enter into a Turnkey Contract with Suzlon Energy Ltd and/ or its affiliate companies, for execution of the Project. 2.06 SEL, an ISO 9001-2000 company, is the 5th largest wind turbine
manufacturer in the world. It is one of the leading players in Asia and has operations in a number of other countries viz. US, UK, China, Netherlands, Germany, Australia, South Korea, etc. Till March 31, 2009, SEL has installed wind farms with aggregate capacity of around 4500 MW in India and 8650 MW world-wide. In 2008-09, SEL commissioned 749 MW in India and 2041 world-wide, which worked out to a market share of over 50% in India and
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12.7% world-wide. Besides manufacture & installation of WTGs, SEL is also involved in wind resource mapping, identification of suitable sites, technical evaluation and planning of wind power projects. In addition to its role of a turnkey contractor and O&M operator, SEL, through its associate companies, also acquire the land with potential for wind power generation, and secure necessary approvals / clearances from the Government agencies for setting up the wind farm projects, which are then sold or leased out to SEL's customers. Some of the prestigious corporate customers of SEL are Bajaj Auto, Tata Power, Godrej, Dhariwal Group, Ajanta Clocks, Aditya Birla Group, Kajaria Ceramics Ltd., Jindal Group, Madras Cement, etc. 2.07 SEL currently has a total of 11 manufacturing units, 6 in India (spread in six States) and 5 overseas, where it manufactures WTGs of 1500 kW, 1250 kW and 600 kW rating. SEL also manufactures generators (rotor and stator windings/assembly), control mechanisms, mechanical parts (yaw control and pitch control), control panels, blades and towers at its various production facilities. SEL has about 10,000 employees with more than 4000 engineers, spread across its manufacturing facilities, various sites and offices. It has a large team of erection, supervision and commissioning engineers for site planning and co-ordination with sub-contractors for obtaining access ways, developing approach roads and securing requisite permissions/clearances. Specification of the wind turbine generator 2.08 The essential components of a Wind Power System are: Wind Turbine Generator, including nacelle, rotor blades, hub, with various mountings inside such as shafts, gear box, alternator, couplings, yaw motor, hydraulic system, cooling system and other electronic panels. Tower Anemometer / Wind Vane Transformer & transmission lines Control Room (including the control panels) 2.09 A WTG converts the kinetic energy of the wind into rotary motion, which is then used to rotate the shaft of an electric generator. The power output of a WTG depends on the velocity & density of the wind and also the size
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(diameter) of the rotor. The minimum velocity of wind, at which a 1500 kW WTG can operate, is around 15 km/h (4 m/s). The technical specifications of SELs S-82 WTG is given below: Particulars Turbine Rated Power Rotor Diameter Tower Turbine type Power regulation Design lifetime Cut-in wind speed Rated wind speed Cut-out wind speed Extreme Wind Speed Rated rotational speed Operating range rotational speed Orientation No of blades Blade Material Gear Box type Generator Type Braking Output Voltage Hub Height C WET Approval Machine availability 2.10 Specifications Suzlon make S-82 1500 kW 82 meter Tubular Type (Tower ht: 76 mtrs, Hub ht: 78.5 mts) Horizontal axis wind turbine with flexi-slip control Independent electro-mechanical pitch system for each blade and Suzlon flexi-slip system 20 years 4 meter/sec 14 m/s 20 m/s 52.5 m/s 16.30 rpm (Rotor) 1511 rpm (Generator shaft) 15.6 to 18.4 rpm (Rotor) 1511 rpm (Generator shaft) Up-wind 3 Epoxy bonded fiber glass 1 Planetary stage-2 Helical stages Single speed induction generator with slip rings, variable rotor resistance via Suzlon flexi-slip system. Air brake- pitch/full blade type Mechanical brake- hydraulic disc brake, activated by hydraulic pressure + mechanical rotor lock, activated by hydraulic pressure. 690 Volts AC 78.5 meter Approved SEL warrants a combined machine availability of 95% per year (for all the WTGs put together)
The above machines (WTGs) have the ability to withstand erratic wind
and grid conditions. It has a micro-processor based fully automatic control system with an interface to Central Monitoring System and also adequate safety systems. The WTGs are also equipped with integrated lightning
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protectors, which would prevent sudden shutdown in case of lightning. S-82 is an established model and about 1000 nos. S-82 WTGs are in operation in India. DLF Group, which entered the wind power sector last year, has installed 45 of these WTGs in its windfarms spread across the country. It has been informally ascertained from DLF Group that the operating performance of these WTGs has been satisfactory. C. 2.11 OTHER TECHNICAL ARRANGEMENTS For identifying suitable sites for the wind farm, a wind pattern study was
Assessment of the potential for energy generation conducted by SEL at both the potential locations, based on its own wind mast, which was installed at a height of 56 meters. The wind data collection in Gopalpura was carried out for a period of two years (from January 05 to December 06) and at Modurgudda for a period of one year (from January 07 to December 07). The data collected by the wind mast was analysed by SEL and the gross wind power generation potential (per WTG) in the sites was estimated at 40.58 lakh units p.a. at Gopalpura & 38.77 lakh units p.a. at Modurgudda (equivalent to a PLF of 30.88% & 29.55% respectively). A condition has been stipulated that the company shall, to the satisfaction of XYZ, appoint an independent technical consultant for assessing the wind energy generation potential of the proposed wind farms and disbursement for the project would commence only upon receipt of a satisfactory report from the consultant. Power evacuation 2.12 SEL is developing wind farms at Madurgudda and Gopalpura with an aggregate capacity of 90 MW. Of this, 49.5 MW would be handed over to SEL and the balance capacity would be acquired by other clients. Around 15 WTGs have already been installed in these sites, most of which have also started generation. To cater to these upcoming wind farms, SEL has already established a sub-station in Doddakunja village, which is 4 km from Gopalpura and 2.5 km from Madurgudda. This sub-station would be connected to all the unit
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transformers (i.e. the 690 V / 11 kV transformers catering to the individual WTGs) by overhead conductors. 2.13 The present capacity of SELs sub-station is 50 MVA; this would be enhanced to 90 MVA, which would be adequate for servicing the proposed 90 MW wind farms. In SELs sub-station, 11 kV electrical power would be converted to 220 kV power and this would be supplied to the state grid. BESCOMs nearest sub-station is in Kadavinakote village, which is around 10 km from SELs substation. SEL would lay the overhead transmission lines, as would be required for establishing connection between its existing sub-station in Doddakunja village and the state grid. 2.14 In terms of the turnkey contract, SEL would set up and maintain the necessary infrastructure facilities for evacuation of the power generated by the WTGs supplied by it. However, the O & M charges for these facilities (including the sub-station) would be collectively borne by all the WTGs connected to the said sub-station, on a pro rata basis. Besides, all the WTG owners shall always have unhindered and irrevocable right of sharing the common evacuation facility, irrespective of whether or not it has a continuing arrangement with SEL for O&M of the WTGs. Implementation Schedule 2.15 The project is schedule to be commissioned by March 31, 2010; the milestones are is given below: Sr. No. Item 1. Land acquisition 2. Infrastructure development at the site (levelling, fencing, approach road construction, etc.) 4. Receipt of WTGs at the site. 5. Installation of WTGs at site 6. Internal lines, cabling, etc. 7. Commissioning of WTGs / Commercial Operation Date Period 3 weeks from the Zero Date 12 weeks from Zero Date
10 weeks from Zero Date 13 weeks from Zero Date 13 weeks from Zero Date Not later than March 31, 2010
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(COD) Zero Date has been assumed as October 1, 2009 Manpower 2.16 The implementation of the wind farm project would be awarded to SEL on a turnkey basis. After COD, for the first 2 years, SEL would also provide free O&M services to the windfarm. Subsequently the O&M activities would be carried out through an in-house team. Auro Mira Wind is in the process of building up a suitable operation and maintenance (O&M) team which would supervise the wind farm operations during the free period also (first 2 years) and shall then take over the responsibilities from Suzlon team. After the company takes over the O&M, a reasonable stock of spares will be maintained so as to reduce any WTG down time.
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D.
OVERALL TECHNICAL ASSESSMENT been declared by MNRE as windy area and the sites have been identified by SEL after monitoring the wind characteristics over an extended period. A condition has been stipulated that an independent technical agency shall evaluate the data and estimate the wind energy generation potential of these sites and the loan disbursements shall commence after receipt of satisfactory report from the independent agency.
Wind farms at the proposed sites have high wind potential. The area has
Suzlon Energy Ltd. (SEL) is the largest Indian manufacturer of Wind Turbine Generators and the fifth largest in the world. SEL and its group companies would be executing the project on a turn-key basis. No difficulty is, therefore, envisaged on the project implementation front. S-82 is a wellestablished model and about 1000 nos. of these WTGs are in operations today in India. A pre-disbursement condition has been stipulated that the company would enter into a turn-key contract with SEL and the terms of the contract would be satisfactory to XYZ. During the first two years, SEL would carry out the O & M of the windfarms. It would furnish its warranty for the major parts of the machine and also guarantee the machine availability. After expiry of 2 years, the O&M of the wind farms are proposed to be undertaken in-house Auro Mira Group, which is developing another wind farm in Tamil Nadu, is recruiting skilled manpower and building up a professional O & M team. The power evacuation arrangements (upto SEB sub-station) will be taken care of by SEL as part of the turnkey contract, subject to the inspection and approval of Chief Electrical Inspectorate of the State Government. With the involvement of SEL in all aspects of the project, the construction and operational risks have been mitigated effectively. The overall technical arrangements of the Project are satisfactory. _________________
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PART III - MARKET ASSESSMENT Wind power scenario - World 3.01 USA is today the leading wind power market and has taken over the global number one position from Germany. In Asia, China is getting ahead of India and becoming the largest wind power producer in the continent. USA and China accounted for more than 50% of the wind turbine sales in 2008. Eight countries now represent almost 80% of the world market for new wind turbines. One year ago, only 5 countries represented 80% of the global sales; this indicates that wind turbine installation has started taking roots in more number of countries around the world. With aggressive capacity build-up by USA, China & India, Denmark, the pioneering country in wind power generation, has slipped down to no. 9 position (in terms of total capacity), whilst until four years ago it held the number 4 position for several years. However, with around 20% of the total electricity supply in the country being generated through the wind power route, Denmark is still considered a leading wind energy country worldwide. The capacity installation figures are given below: Position in 2008 Country Total capacity installed (end 2008) [MW] 25170.0 23902.8 16740.3 12210.0 9587.0 3736.0 3404.0 3287.9 3160.0 2862.0 2369.0 2225.0 1880.0 1494.0 1244.7
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Added Capacity (in 2008) [MW] 8351.2 1655.4 1595.2 6298.0 1737.0 1009.9 949.0 898.9 35.0 732.0 523.0 478.0 352.0 676.7 439.7
Growth Rate (2008)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
USA Germany Spain China India Italy France United Kingdom Denmark Portugal Canada The Netherlands Japan Australia Ireland
49.7% 7.4% 10.5% 106.5% 22.1% 37.0% 38.7% 37.6% 1.1% 34.4% 28.3% 27.4% 23.0% 82.8% 54.6%
16 Sweden 1066.9 17 Austria 994.9 18 Greece 989.7 19 Poland 472.0 20 Norway 428.0 (Source: World Wind Energy Report 2008) Wind power scenario-India 3.02
235.9 13.4 116.5 196.0 95.1
28.4% 1.4% 13.3% 71.0% 28.5%
Since 1990, a massive exercise of wind monitoring and wind resource
assessment has been carried out by the Government agencies. Indian Wind Energy Association (IWEA) has estimated that Indias gross potential for wind power generation is of the order of 48,000 MW. Against this, the total installed capacity was about 10,000 MW in March 2009, indicating that substantial future growth potential still exists. In 2008, wind turbine sector registered a growth of 23% over the previous year. The state-wise break-up is as under; Gross potential (MW) 8,968 10,645 11,531 1,171 1,019 4,584 2,55 4,858 -5,530 -48,561 Installed capacity (MW) till 31.03.09 122 1566 1327 27 213 1939 738 1 4305 3 10242 Installed capacity as % of the gross potential 1.36% 14.71% 11.50% 2.30% 20.90% 42.30% 15.19% 77.85% 21.09%
State Andhra Pradesh Gujarat Karnataka Kerala Madhya Pradesh Maharashtra Orissa Rajasthan West Bengal Tamil Nadu Others Total (All India)
(Source: Indian Wind Energy Association)
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Gross potential vs installed capacity per state 3.03 Major potential sites for wind energy are in the states of Tamil Nadu,
Gujarat, Andhra Pradesh, Karnataka, Maharashtra, Kerala, Rajasthan and Madhya Pradesh. Tamil Nadu has the highest installed capacity in the country (~ 48% of the total). The state-wise break-up of the additions in installed capacity (in the past five years) is given below; it may be observed that nearly 50% of the fresh capacity was installed in Tamil Nadu. State March 2009 Tamilnadu 4304.5 Karnataka 1327.4 Maharashtra 1938.9 Rajasthan 738.4 Andhra 122.5 Pradesh Madhya 212.8 Pradesh Kerala 27.0 Gujarat 1566.5 West Bengal 1.1 Total 10242 MW 3.04 March 2008 3873.4 MW 1011.4 MW 1755.9 MW 538.8 MW 122.5 MW 187.7 MW March 2007 March 2006 March 2005 3492.7 MW 2894.6 MW 2037 MW 821.1MW 584.5 MW 410.7 MW 1487.7 MW 1001.3 MW 456.2 MW 469.8 MW 358.1 MW 284.8 MW 122.5 MW 57.3 MW 121.1 MW 40.3 MW 2 MW 338 MW 1.1 MW 5341 MW 120.6 MW 28.9 MW 2 MW 253 MW 1.1 MW 3594 MW
10.5 MW 2 MW 1252.9 MW 636.6 MW 1.1 MW 1.1 MW 8754 MW 7091 MW
In the coming years, the renewable energy is expected to contribute
more to the generation of electricity in the country. On one hand, the efficiency of wind power generation has been increasing, leading to reduction in the capital as well as operating cost and, on the other hand, the cost of conventional (fossil fuel-based) power is increasing everyday. Besides grid supply augmentation, renewable energy technologies offer possibilities of distributed generation at or near the points of actual consumption, which can reduce the peaking loads and also save on costly maintenance of transmission & distribution network. Wind power projects qualify under the Clean Development Mechanism (CDM), which improves their financial attractiveness (generating additional income through sale of CERs). In fact, together with solar power, wind energy is the most promising technology for reducing the
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greenhouse gas (GHG) emission, which is the key objective of CDM. Government of India has announced several fiscal incentives for the wind power projects, so as to attract private investment in this area. With only 19% of the potential wind energy being harnessed in the country so far, Indian market offers enormous scope for capacity addition to the wind power generation. Government Policies 3.05 Ministry of New and Renewable Energy (MNRE) has issued guidelines to all State Governments to create an attractive environment for the export, purchase, wheeling and banking of electricity generated by wind power projects. After the Electricity Act 2003, State Electricity Regulatory Commissions (SERC) are promoting wind energy through preferential tariffs and have introduced Renewable Portfolio Standards (RPS), under which every utility has to source a certain percentage of its supply from renewable energy sources. Simultaneously, several fiscal incentives have been extended by Indian Government to the wind energy sector, including lower direct taxes (on account of 80 % depreciation in the first year of installation), exemption from income tax (on net earnings from the project for a block of 10 years), quick clearance of FDI investments, generation based incentive of Rs.0.50 per unit to the wind farms supplying power to the state-grid, availability of soft loans (from IREDA), customs & excise duty relief on purchase of WTG equipment, etc. As a result of these policies, profit-earning industries have been heavily investing in wind power projects. More than 97 % of investment in the wind sector in India has come from the private sector, often consisting of clusters of individually owned generators. In recent times, large wind farms have started coming up as Independent Power Producers (IPPs). 3.06 Under Karnataka Renewable Energy Policy 2009, the State has proposed to develop additionally 2269 MW of wind power projects during the five years up to 2014, involving a total investment of Rs.14,626 crore. To facilitate successful & expeditious commissioning of the targeted wind projects, the various statutory clearances would be granted by the Government
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under a Single Window Mechanism. KREDL will undertake Wind Resource Assessment and offer the identified windy sites for development on Public Private Participation/BOOT mode. To avoid locking of huge capacities, the wind project allotment will be restricted to 50 MW at a given area each time. Carbon Credit 3.07 Auro Mira Group's wind projects are expected to get registered with UNFCC and be eligible for carbon credits under CDM of Kyoto Protocol. The proposed project is expected to generate about 36,06,598 CERs p.a. and the companys share in the revenue of carbon credits has been assumed at 56 paise per kWh of energy sold to the grid. As per the present estimates, the company is likely to earn additional revenues of around Rs. 7 crore p.a. from CER Sales. A condition has been stipulated that XYZ shall have the first right of refusal for extending Carbon Credit Consultancy Services to the company, covering registration of the project with CDM Executive Board of UNFCCC and also for CER sales. Wind power generation in Karnataka 3.08 The peak demand of power in Karnataka (in FY 2008-09) was 6827 MW against the peak supply of 6156 MW, thus leaving a deficit of 671 MW (as per MOP data). The 17th EPS report has projected that the peak demand would increase to 8486 MW by FY 2011-12. In order to cater to this increasing demand, coupled with the existing renewable purchase obligations, the State Government is encouraging substantial capacity addition in the renewable sector, especially wind power generation. 3.09 As may be observed from the Table given in paragraph 3.02, Karnataka has wind energy generation potential of 11,531 MW, against which the installed capacity is only 1327 MW, which indicates a huge potential for harnessing the wind energy in Karnataka, especially in the inland hilly areas. On the basis of the wind speed data collected and analyzed under the aegis of the MNES (erstwhile MNRE), 26 sites in Karnataka have been approved for setting up wind-farms. The state has a favorable regulatory environment also and the salient features of the State policies are as under:
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Allowed Allowed Rs.3.40 / kWh for 10 years which is extendable for another 10 years. Tariff after 10 years would be decided at the beginning of the 11th year and, if it is unacceptable to the company, then it would be free to sell the output to the third party. Renewable Purchase Obligation (*) 20% Electricity duty 100 % exemption (*) In terms of Karnataka Government notification no. GO No EN 216 NCE 2006 dated 2.3.2007 3.10 In the Power Sector, Karnataka is one of the progressive states in India.
Parameters Captive Usage Third Party Sale Sale to Electricity Board
Karnataka
As per the latest annual performance rating of the SEBs (carried out by CRISIL & ICRA in 2006 on behalf of the Ministry of Power), BESCOM was rated as the 4th best SEB in the country. Since BESCOM would be the sole buyer of electricity from the windfarm, the satisfactory track-record of BESCOM would mitigate the payment risk for the lenders. 3.11 As mentioned in 3.09, the power generated from the wind farms in the State would be sold to the State Discoms at a fixed tariff of Rs.3.40/ kWh for a period of 10 years, which is extendable by another 10 years. The wind power producers normally enter into PPAs with the discoms / state electricity utilities for a period of 20 years from COD. In terms of the PPA finalized for sale of wind power, the State Discoms would allow the wind farms to operate as baseload generating stations and grant them Must Run Status, subject to emergency conditions. The payments would be made to the windfarms within 30 days of the receipt of invoice, after deducting the wheeling losses and the charges for the reactive power drawn by the windfarms from the state grid. As per the prevailing practice, BESCOM would sign the PPA only after the wind farm is commissioned. It may be, however, mentioned that Karnataka Power Transmission Corporation Ltd. (KPTCL), the State Transco, has already approved the evacuation scheme for 90 MW wind-farms being set up by Suzlon at Maddurgudda & Gopalpura in District Hassan.
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3.12
The salient features of the draft PPA are given in Annexure-III. The
PPA would contain provisions for third party sale, termination of the PPA, compensation payable by the discom, etc to safeguard the financial interest of the wind power producers and the Project Lenders. In view of the same and since the distribution companies in the state are under obligation to purchase a minimum 20% of their total power requirements from renewable energy sources, no difficulty is envisaged on the off-take front. Overall Marketing Assessment The wind power to be generated by the proposed wind farm would be sold to the State Discom under a long-term PPA. Electricity Regulatory Commission in the State has determined Rs.3.40/unit as the price for procurement of wind power by the distribution licensees. This is a general tariff (i.e. not project specific) and would apply for a period of 10 years from COD. Besides, the company would be eligible to receive (from IREDA) another Re 0.50 per unit by way of Generation Based Incentive (GBI). GOI has been placing great emphasis on generation of clean energy and has announced several fiscal incentives for the wind power projects. While the states have declared renewable power purchase obligations for the distribution licensees, many of the wind turbines have been installed for captive use and the distribution licensees are, therefore, facing difficulties in meeting their renewable power purchase obligations. In this scenario, the project is not likely to face any problem on the off-take front. The PPA would contain provisions like termination right in the event of default by the power purchasers. The sale of power would also be secured against a L/C for one month billing. The sale proceeds would be routed through a TRA, to be opened with XYZ. The overall marketing assessment is considered satisfactory.
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PART IV FINANCIAL ASSESSMENT A. 4.01 PROJECT COST The break up of the project cost is given below: (Rs. Crore) Amount 282.15 5.65 2.80 290.75
Particulars Turnkey Contract (land, plant & machinery, erection & commissioning, misc. fixed assets) Interest during construction Preliminary & pre-operative expenses Total Turnkey Contract (Rs. 282.15 crore)
4.2
As per the terms informally agreed to by both the parties, SEL would
supply 33 nos. 1500 kW WTGs at a total cost of Rs.282.15 crore; the contract is, however, yet to be executed. The company is still holding price negotiations with SEL and expects to sign the firm contract in September 2009. The scope of the contract includes acquisition of land, construction of civil works, supply of plant & machinery, erection & commissioning of plant & machinery, electrical works (including setting up the Transformer Yard), making arrangements for evacuation of wind power (including establishing the internal grid for power evacuation), free O&M in the first two years of operations (with spares and consumables), etc. Government of Karnataka has allotted the site (72.518 Ha) to SEL on a 30-year lease. KPTCL has approved the evacuation scheme for the wind farms. To facilitate the power evacuation, SEL has already established a sub-station in the nearby area. A condition has been stipulated that, before the loan disbursement commences, a fixed-price, fixed-time Turnkey Contract would be entered into between Auro Mira Wind & SEL and the terms of the same would be satisfactory to XYZ.
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Preliminary & pre-operative expenses (Rs. 3.7 crore) 4.03 The preliminary and pre-operative expenses include stamp duty (Rs 0.10 crore), up-front fee (Rs.0.45 crore), finance charges, administrative expenses, consultancy fees, etc. (Rs 3.15 crore). Provision for contingency (nil)
4.4
Auro Mira Wind would enter into a fixed-price turnkey contract with
SEL / its group companies for setting up the wind farm. The company is also hopeful of negotiating a reduction in the estimated price of the turnkey contract. In view of the same, no contingency provision has been made in the project cost. A condition has been stipulated that any overrun in the project cost shall be met by the company, without any recourse to XYZ or other Project Lenders. Interest during construction (Rs.4.94 crore)
4.5
The company would make payment to SEL as per the terms of the
Turnkey Contract. Approximate draw-down during first two months would be around 25% of the total debt. Another 15% would be drawn in the third month and fourth month and balance 35% in the sixth month. The project is expected to be completed by March 31, 2010. The debt draw-down schedule has been chalked out with a provision for 50% equity capital being infused upfront and the balance amount being raised pro-rata with the debt. For the purpose of calculations, term loan interest has been considered at 12% p.a. Project Cost comparison 4.6 The cost per MW of the wind power projects of Gujarat Paguthan Energy Corporation Ltd. was. 100.8 MW (126 X 800 kW) in Gujarat and 82.4 MW (103 X 800 kW) in Karnataka, was Rs.6.00 crore. The project was appraised by XYZ in February 2008. In 2008, PAD also carried out the merchant appraisal of SAILs Wind Power Project at Salem, where the capital cost worked out to Rs. 5.80 crore per MW. In September 2008, PAD apprised the wind power project of DLF Home Developers Ltd., when the capital cost was estimated at Rs.5.96 crore per MW. In light of these, Auro Mira Wind's capital cost of Rs.5.70 crore per MW may be considered reasonable.
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B. 4.7
MEANS OF FINANCE The cost of the Project, estimated at Rs.290.75 crore, is proposed to be Amount (Rs. crore) 101.75 189.00 290.75 65:35 35%
financed as under: Particulars Equity contribution from holding company (35%) Rupee Term Loan from banks/ FIs (65%) Total DER Promoters contribution Equity share capital (Rs.101.75 crore) 4.8 The entire equity capital for the project is to be infused by the holding company i.e. AME. Equity contribution in the projects undertaken by Auro Mira Group are being mainly funded by Baring Private Equity Partners (BPEP). Currently, about 90% of the equity capital of AME is being held by BPEP, through Baring India Pvt. Equity Fund-II, a Mauritius-based Fund. BPEP has given a commitment letter to AME, confirming that it would make long-term equity investment in AME and continue to support its growth initiatives in the alternative energy space. In view of the same, no problem is envisaged in timely infusion of the equity capital in the project. Till date, BPEP has invested about USD 22 million in AME. A condition has been stipulated that at least 50% of the envisaged equity capital would be raised before the company seeks any disbursement of the RTL. Debt (Rs. 189 crore) 4.9 It has been proposed that the term loan would carry interest at XYZs BPLR minus 100 bps, which presently works out to 11.75% p.a. (payable monthly). In addition, the NPV of the interest differential between 12% p.a. and 11.75% p.a., over the entire period of the RTL, shall be payable to XYZ as Management Fee, which works out to Rs.70 lakh. The fee would be paid by the company on or before issue of the sanction letter. The loan shall be repayable in 36 equal quarterly instalments commencing from January 1, 2011 i.e. after a moratorium of 9 months from the scheduled
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COD (door to door tenure of 10 years). 4.10The company has requested XYZ to arrange for the total debt of Rs 189 crore. It is proposed to sanction RTL Rs.75 crore and syndicate the balance amount of Rs.113.90 crore with other banks. The company has agreed to pay XYZ a syndication fee @ 0.40% of the total debt. XYZ would also receive appraisal fee of Rs.10 lakh and up-front fee @ 0.25% on its share of the loan. The total appraisal fee, up-front fee, syndication fee and management fee would aggregate to around Rs.175 lakh. If these fees are factored in, XYZ's return on the proposed assistance of Rs.75 crore works out to around 13.0% p.a. (IRR, with quarterly rests). Security 4.11Since the project is being set up on forest land, the same cannot be mortgaged to the Project Lenders. The term loan would be, therefore, secured by way of first charge on all the movable assets of Auro Mira Wind (including the receivables, bank accounts, etc). A condition has been stipulated that, within 6 months from COD, Karnataka Renewable Energy Development Ltd (the renewable energy agency of the State Government) would issue a Facilitation Letter confirming that, in the event of the company defaulting in servicing the dues of the Project Lenders, sale of the moveable properties would be permitted and the new party shall be allowed to operate the Project at the existing site on the same terms & conditions as agreed for the original allotee. 4.12 The receivables from BESCOM would be routed through a Trust & Retention Account (TRA) opened with XYZ. The Project Documents, would be assigned / charged to the Project Lenders. The company would also create 2 quarters DSRA in favour of the Project Lenders. AME, the promoter company, would furnish its corporate guarantee and pledge (with the Project Lenders) 51% of the equity capital of Auro Mira Wind.
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C.
PERFORMANCE INDICATORS Annexure- IV. Projected Profitability Statement, Projected Cash-flow Statement and Projected Balance Sheets are furnished in Annexure V, VI & VII respectively. Summary of the projected performance are as follows;
4.13 The assumptions underlying the profitability estimates are given at
(Rs. crore) Year ended March 31, Net Sales (under PPA) Income from CDM Total Income Gross profit (PBIDT) Interest on term loan Depreciation Tax Net profit Gross cash accruals DSCR (year-wise) DSCR (average) IRR (post-tax)
4.14
2011 39.83 6.60 52.30 51.87 22.52 14.89 1.63 12.82 25.75 1.52
2012 39.83 6.60 52.30 49.41 20.47 14.89 1.87 14.63 32.14 1.21
2013 39.83 6.60 52.30 46.94 17.95 14.89 1.59 12.49 40.55 1.16
2014 39.83 6.60 52.30 46.69 15.43 14.89 1.85 14.50 50.96 1.23
2015 2016 39.83 39.83 6.60 6.60 52.30 52.30 46.43 46.16 12.91 10.39 14.89 14.89 2.11 2.36 16.51 18.50 63.36 77.75 1.31 1.40 1.40 12.32%
2017 2018 39.83 39.83 6.60 6.60 52.30 52.30 45.87 45.57 7.87 5.35 14.89 14.89 2.61 2.86 20.48 22.45 94.10 112.41 1.50 1.62
2019 39.83 6.60 52.30 45.26 2.83 14.89 3.11 24.41 25.75 1.77
The project would earn profit from the beginning. The projections have
not considered 80% depreciation provision in the 1st year of operations. Ministry of New and Renewable Energy (MNRE) has announced a Generation Based Incentive (GBI) scheme for the grid connected wind power projects, so as to provide thrust on generation of electricity, rather than on capacity addition. As per the scheme, over and above the SERC tariff, a GBI of Rs.0.50 per kWh would be provided to the wind energy producers through Indian Renewable Energy Development Agency (IREDA), for a period of 10 years. The scheme eligibility would apply to producers (i) who would not avail of accelerated depreciation benefits for making investments in wind power projects, (ii) set up IPPs, with a minimum 5 MW installed capacity, for sale to
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the State grid and (iii) projects not set up either for captive consumption or for third-party sale (merchant plants, etc). 4.15Auro Mira Group had earlier planned to set up a 20 MW wind power project in Karnataka and sought financial assistance of Rs.40 crore from XYZ. In September 2008, Rating Committee assigned BB rating (score of 52) to the proposal. At the request of the Dealing Group (ICG, Chennai Branch), the proposal was reviewed by Risk Department in November 2008, but the rating was maintained at BB (score of 53). The proposal was then rejected by RCC as it was rated below the investment grade. 4.16The project size has now been increased to 49.5 MW and the DER has been improved to 65:35 as against 70:30 earlier (for the 20 MW project). This has improved the financial viability of the project. Besides, the security profile for the project loan has also been strengthened by stipulating pledge of companys shares up to 51% of the paid-up equity capital (additional security). To ensure Management continuity, a condition has also been stipulated that the Promoter Directors of AME (holding company) would not withdraw from AMEs Board without obtaining XYZs prior approval. 4.17Various concerns of the Risk Department (for the earlier project) have been addressed in this proposal by stipulating suitable conditions for protecting the interest of XYZ / Project Lenders viz. (i) signing of the turnkey contract to the satisfaction of XYZ (pre-disbursement condition), (ii) undertaking from AME (holding company) for meeting any cost over rum and / or shortfall in funds (pre-commitment condition), (iii) achieving financial closure (pre-commitment condition), (iv) maintenance of financial convenants like minimum DSCR of 1.15 & minimum FACR of 1.33, (v) all revenues (including cash flows from sale of CER) to be routed through a TRA (XYZ would be the TRA Agent), (vi) maintenance of 2 quarters DSRA, etc. 4.18Risk Department also expressed concern about the background and financial resourcefulness of the promoters of Auro Mira Group, who are
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the first generation entrepreneurs. It may be mentioned that all the 3 promoter Directors are qualified professionals and have prior experience in the sector. After assessing their technical & managerial capabilities, Baring PE Fund has committed to make long-term investment in the Group, of which, an amount of USD 22 mn has already been invested. 4.19 Risk Departments other major concern was that the tariff assumed in the financial projections include sale to corporates at Rs.4 /unit, which appear to be optimistic. The profitability projections have been now reworked with sale of power only to the State Discom at the SERC approved tariff of Rs.3.40 /unit. GBI of Rs.0.50 per unit has also been considered since the company would satisfy all the eligibility criteria for the same. Besides, the PLF has been assumed lower at 27% (instead of 29.67% as considered in the original proposal). Because of the lower gearing, the base case DSCR (average) still works out acceptable at 1.40. 4.20Risk Department expressed concern regarding the companys eligibility for the Generation Based Incentive (GBI). It may be mentioned that, as laid out under the guidelines provided by Ministry of New & Renewable Energy, the company meets the basic eligibility criteria for GBI. Besides, to safeguard the financial interest of Project Lenders, a condition has been stipulated that, before seeking any disbursement of the proposed assistance, the company shall satisfy XYZ and establish that the Project would receive the Generation Based Incentive (GBI) from Govt. of India / IREDA. In the event of companys failure to establish the same to the satisfaction of XYZ, it shall arrange for additional promoters contribution by way of equity share capital / interest-free sub-ordinated unsecured loans from the Promoter, so as to lower the Debt Equity Ratio for the project to 62:38. The project debt would then reduce by around Rs. 9 crore and the commitment of the respective Lender would also decrease proportionately. With this lower DER of 62:38, even without GBI of Rs.0.50 / unit, the project would be financially viable (average DSCR 1.30).
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D. SENSITIVITY ANALYSIS Sr. No. Parameter Project IRR (post-tax) 12.32% 12.08% DSCR (min) DSCR (avg.)
1 Base Case (*) 1.16 1.40 2 15% increase in O 1.11 1.34 & M expenses and increase in the interest rate of Project Loan by 100 bps 3 Reduction in PLF 10.70% 1.08 1.30 by 2% (i.e. PLF of 25% instead of 27%) (*) PLF 27%, tariff Rs.3.40/ kWhr, GBI - Re.0.50/ kWhr, CER price Euro 11; O & M charges -1.75% of the EPC cost; interest on RTL 12% 4.21While the Project would be sensitive to reduction in PLF, the operations of the company would still remain financially viable, even with a conservative PLF of 25%. Since the implementation schedule is short and a fixed-price turnkey contract would be entered into, sensitivity analysis has not been carried out for any increase in the project cost. E. OVERALL FINANCIAL ASSESSMENT The capital cost of the wind farm works out to Rs.5.70 crore per MW, which is considered reasonable. The turnkey contractor for the project would be Suzlon Energy Ltd, one of the largest wind turbine manufacturers in the world. Before the commencement of loan disbursements, the turnkey contract would be executed to the satisfaction of XYZ. The DER would be 65:35, which may be considered acceptable for infrastructure projects. The promoter's contribution would come in the form of equity infusion by AME, the holding company of the Project SPV. Baring Private Equity Partners (BPEP), a leading private equity player, holds about 90% equity stake in AME. In India, BPEP has almost 1 billion USD of assets under its management. Considering the scale of BPEPs operations, no delay is envisaged in timely infusion of the promoters' contribution. A condition has
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been stipulated that minimum 50% of the equity capital would be raised upfront i.e. before the loan disbursement commences. Project IRR (post-tax) is 12.32% and the average DSCR works out to 1.40, which are satisfactory. **********************
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5.01
PART V RISK ANALYSIS The analysis of various risks in the proposal and proposed mitigation
measures are summarised below; Risk Factors Risk Proposed mitigation mechanism Carriers I. Pre-construction Stage Land acquisition Turnkey The Turnkey Contract negotiated by Auro Mira Contractor Wind with Suzlon Energy Ltd (SEL) includes the cost of land. Government of Karnataka has already allotted the land to SEL on a 30-year lease. After the Turnkey Contract is entered into and the micrositing work for the wind farms is completed, SEL would request the State Government for canceling its lease on the areas earmarked for setting up the proposed WTGs. The matter would be initially examined by KREDL, a State Government agency, and a Comfort Letter would be issued by KREDL within 2-3 months. Subsequently, State Government enters into a fresh lease agreement with the Project Developer w.r.t. the plots utilized by the Developer for installing its WTGs. Considering SELs established trackrecord in this field, no problem is envisaged in acquisition of the land by Auro Mira Wind, though it is understood that the entire formalities normally take 3-4 years for completion. Finalization of key Project The entire execution of the project would be contracts/agreements Developer carried out by Suzlon Group, which has proven track record in this regard. The turnkey contract for supply of WTGs would be awarded to SEL before the loan disbursement commences (predisbursement condition). Power Purchase Agreement would be entered into at the time of commissioning of the WTGs. Considering the electricity deficit in Karnataka and the obligation of the distribution licensees to meet a minimum amount of their total requirement from renewable sources, no delay is envisaged in execution of the PPA. Moreover, KPTCL has already approved the evacuation scheme for the wind farms. The overall position in this regard may be considered satisfactory.
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Obtaining the Turnkey SEL would arrange for various statutory / nonstatutory approvals Contractor statutory clearances & approvals required for & permits setting up the project. A suitable predisbursement condition has been stipulated in this regard. Infusion of AME The entire equity capital for the project is to be Promoters (holding infused by the holding company i.e. AME. All Contribution company the projects undertaken by Auro Mira Group are of the being funded through this route. About 90% of project the equity capital of AME is held by Baring developer) India Pvt. Equity Fund-II, a PE investor. Baring Private Equity Partners (BPEP), is one of the leading PE investors in India and it has given a written commitment (in October 2007) that it would invest USD 176.77 million (around Rs.850 crore) in AME, which indicates its intention of making long-term equity investments in the renewable energy business being pursued by the Group. BPEP has issued another such letter in August 09, reiterating its commitment to make long-term equity investments in the Group. In India, BPEP has assets of more than USD 1 billion under its management and no difficulty is envisaged in its timely infusion of the required equity contribution. A pre-disbursement condition has been stipulated that promoters would bring in minimum 50% of the envisaged equity contribution towards the project. II. Construction Risk Technological risk Turnkey The WTGs would be supplied by Suzlon Contractor Energy Ltd (SEL), one of the leading global players in the wind energy industry. The execution of the entire project would be carried out by SEL and its group companies, which have proven track record in this regard. The S82 turbines are well established in the Indian wind-farms and are capable of operating under erratic wind conditions. DLF Group, which has set up wind power projects of more than 88.5 MW capacity, has also install this model in its wind farms. Besides, the turnkey contract would stipulate a defect liability period of 24 months from the date of commissioning, when SEL
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Cost / Time overrun
would provide free O&M to the company, with a guarantee of minimum machine availability of 95%. Thus, the technological risk in the project is considered to be nominal. Turnkey The turnkey contract would have a time-bound Contractor implementation schedule and also a fixed-price contract for supply, erection and commissioning of the wind farm. Any cost overrun could be only in event of delay in commissioning, which would increase the IDC. The company will be then entitled to invoke the penalty clause in the contract and recover liquidated damages from SEL (@ 0.5% of the contract value per week with maximum liability of 2.5% of the contract value). If the delay exceeds 5 weeks, the company would also be entitled to revoke the contract. Considering the integrated nature of SELs operations, the possibility of any delay in the supply is considered to be nominal. Auro Mira Wind would enter into a Power Purchase Agreement with the state discom for a period of 20 years, at a tariff determined by the SERC. However, the PPA would be signed only after the WTGs are commissioned. As per the wind energy policies in the states, the distribution licensees are obligated to fulfill a minimum of 20% of their total requirement through purchase of renewable energy. In keeping with the thrust given to wind power projects in all the states, no offtake risk is envisaged. A condition has been stipulated that the company would enter into a PPA with the state discom within 30 days of the COD. It is also stipulated that the PPA would have provisions for LC covering 30 days sales, termination of PPA on BESCOMs default, etc. which would safeguard the financial interest of the Project Lenders.
III. Operational Risks Off take risk Project Developer
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Government policies Project / guidelines Developer/ Project Lenders
Ministry of New and Renewable Energy (MNRE) has issued guidelines to all State Governments to create an attractive environment for the export, purchase, wheeling and banking of electricity generated by wind power projects. State Electricity Regulatory Commissions (SERC) are promoting wind energy through preferential tariffs and have introduced Renewable Portfolio Standards (RPS), under which every utility has to source a certain percentage of its supply from renewable energy sources. Keeping in mind the emphasis being currently given on global warming, any change in the policy/ guidelines is expected to be favourable to the wind power producers.
Force Majeure
Force Majeure events will be insured by the company to the extent possible. Wind power projects are designed to operate and withstand effects of earthquake and storms. Operations & Turnkey Suzlon Group would provide O&M assistance Maintenance Contractor/ during the warranty period of 2 years. After the Project expiry of this period, O&M of the project Developer would be taken care of by the in-house team, which would be built-up during this period. Weak wind Project The inland hilly areas in Karnataka have good conditions (lower Developer potential for wind power generation. The generation) proposed sites have high wind potential and the area has been declared by MNRE as windy area. A wind pattern study was conducted by SEL at both the sites, based on its own wind mast and the results were encouraging. In the financial projections, the PLF has been assumed at 27%; but, even with a lower PLF of 25%, the company's operations would remain financially viable. Environmental risks Wind energy is a renewable source of energy and provides an alternative to the use of fossil fuels. It does not emit green house gases and does not pose any environmental hazard.
Project Developer
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Evacuation Risk
Project Developer
KPTCL has already approved the evacuation scheme for the wind farm. SEL already has an existing sub-station close to the project site. In terms of the Turnkey Contract, SEL would install the unit transformers and also lay cables for connecting the wind farm to its sub-station. Moreover, KPTCL, the State Transco, has already approved the evacuation scheme for wind farms, with an aggregate capacity of 90 MW, being set up by Suzlon at Maddurgudda & Gopalpura in District Hassan. The evacuation risk in the project is thus considered to be nominal.
Payment Risk
Project Karnataka is one of the progressive states in Developer/ India and has implemented a number of Project measures for power sector reforms. The project Lenders SPV would enter into a PPA with BESCOM, which has the distribution license for part of the Karnataka State. As per the latest annual performance rating of the SEBs (carried out by CRISIL & ICRA in 2006 on behalf of the Ministry of Power), BESCOM was rated as the 4th best SEB in the country. Besides, as mentioned earlier, as per the state wind energy policy, distribution licensees are obligated to source a minimum percentage of their requirements from renewable energy projects. The PPA with BESCOM would have provisions for revolving L/C, escrowing the receivables of the proposed windfarm, termination in case of power purchasers default, etc. which would safeguard the financial interest of the Project Lenders. The payment risk in the project is thus considered to be within normal limits.
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PART VI - TERMS OF SANCTION A. i FINANCIAL TERMS Sanction of Rupee Term Loan (RTL) of Rs.75 crore, under Project Finance Scheme. ii Project Setting wind farms of 49.5 MW aggregate capacity (33 nos. WTGs, each of 1500 kW capacity to be supplied by Suzlon Energy Limited) at Gopalpura & Modurgudda in Hassan District, Karnataka. iii Project cost and Project cost estimated at Rs.290.75 crore to be means of finance funded at a debt-equity ratio of 65:35 as under: (Rs. crore) Particulars Amount % Debt 189.00 65% Equity 101.75 35% Total 290.75 100% iv. Interest Rate (a) The company shall, until the RTL is fully paid off, pay to XYZ interest (fully floating) on the principal amount, as may be outstanding from time to time, on monthly basis, at XYZs BPLR minus 100 bps p.a.. (currently equivalent to 11.75 % p.a.). (b) The interest, as at (a) above, shall be payable by the company in arrears on 1st of each month (each an Interest Payment Date) and shall become payable from the first Interest Payment Date falling immediately after the date of first disbursement v. Management Fee The NPV of the interest differential between 12% p.a. and 11.75% p.a., over the entire period of the RTL, shall be payable to XYZ as Management Fee. As per the envisaged draw-down schedule and repayment terms, the Management Fee works out of Rs. 70 lakh, which would be payable by the company on or before the issue of the Sanction Letter. (a) XYZ shall have the right to reset the Interest Rate after expiry of 12 months from the date of first disbursement of the RTL and every 12 months thereafter (the Interest Reset Dates). (b) The company shall then pay interest at such reset rates (the Reset Interest Rate) as may be notified by XYZ to the company [the Interest Rate or the Reset
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Amount
vi. Interest Reset
Interest Rate, as the case may be, shall be hereinafter referred to as the Applicable Interest Rate]. vii Further Interest All interest on the RTL and all other monies accruing due under the RTL Agreement or any other financing documents to be entered into between the company and XYZ shall, in case the same be not paid on the respective due dates, carry further interest at the Applicable Interest Rate (the Further Interest), computed from the respective due date until the date of actual payment. Such Further Interest shall be compounded monthly and shall become payable on demand, or in the absence of any such demand, on the next Interest Payment Date falling after the date of default. viii Liquidated In case of default in payment of any instalment of damages principal amount of the RTL, interest thereon or other monies (except liquidated damages) becoming due on their respective due dates, the company shall pay on such defaulted amounts, liquidated damages at the rate of 2% per annum for the period of default. Liquidated Damages shall be payable on demand and in the absence of any such demand on the next Interest Payment Date falling after the date of default. ix. Interest tax, All rates of interest mentioned herein are exclusive of levies and duties interest tax and/or any such other levies / duties. Any interest tax / other levies / duties, if applicable, shall be payable by the company to XYZ over and above the rates mentioned hereinabove. All Interest and other costs, charges, expenses shall accrue from day to day and be calculated on the basis of the actual number of days elapsed and a year of 365 days. x. Up - front fee The Company shall pay to XYZ one-time, nonrefundable and non-adjustible up-front fee @ 0.25% plus applicable taxes on the amount agreed to be granted under the Rupee Loan Agreement, on or before the date of signing of the Rupee Loan Agreement. xi. Syndication fee The company shall pay to XYZ one-time, nonrefundable and nonadjustable syndication fee @ 0.40% of the total Project Debt of Rs.189.00 crore, plus applicable taxes, which shall be payable as under: (i) Rs.1
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lakh
on
or
before
awarding
the
syndication mandate; (ii) 50% of the balance amount on receipt of the Sanction Letters from all the lenders; Balance amount on signing of the Common Loan Agreement. The above fee shall be exclusive of the out-of-pocket expenses, which would be claimed on actuals. Rs.10 lakh (plus service tax and educational cess thereon), payable on or before issuance of XYZs LOI. xiii Legal fees and The company shall pay legal fees / charges to XYZ other charges towards preparation / review of legal documents. If required, LLC would be appointed, for which the company would make the payment to LLC directly. xiv. Commercial COD for the Project has been tentatively fixed at Operations Date April 1, 2010. (COD) xv. Last date of Unless XYZ otherwise agrees, the companys right to Drawal make drawal from the RTL shall cease at the end of 6 months from the scheduled COD (such period shall be called the Availability Period). However, for the purpose of meeting any outstanding project liability towards the retention payment of the turnkey contract, the company shall have the right to make drawal of the Project Assistance upto the end of 24 months from the COD. (a) The principal amount of the RTL would be repayable in 36 equal quarterly installments w.e.f. January 1, 2011 i.e. after a moratorium of 9 months from the COD. xii. Appraisal Fee
xvi. Repayment
(b) The repayment schedule mentioned in (a) above is tentative and would be reviewed by XYZ after the company commences its commercial operations. xvii. Pre-payment (a) In the event of the Reset Interest Rate being not option acceptable to the company, it shall have the right to prepay, on the Interest Reset Dates, XYZ's entire outstanding amount of RTL (and not in part), without any pre-payment premium / penalty, within a period of 90 days from the Interest Reset Date, after giving at least clear thirty (30) days prior notice to XYZ. The company shall pay the Applicable Interest Rate from the Reset Dates till such prepayment is made to
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XYZ. (b) The company may also prepay a part of the RTL, from the surplus cash flow of its operations, any time during the currency of the RTL, without any prepayment premium, subject to the condition that such voluntary pre-payment would be made: Only if there is no overdue amount, to any party whatsoever, under any of the Financing Documents; Only after the company has given at least clear 30 days prior notice to XYZ of such prepayment The amount of each pre-payment would not be less than Rs. 2 crore. (c) The outstanding principal amount of the Rupee Term Loan shall not be prepaid, except for (a) & (b) above, without obtaining the prior written approval of XYZ, which may be granted subject to such conditions as XYZ may deem fit to stipulate, including payment of premium @ 1% p.a. on the outstanding amount upto the next Interest Reset Date. a) Create a Debt Service Reserve Account (DSRA), before December 31, 2010, to meet the debt service requirements for the ensuing 6 months of principal and interest payment due to the Project Lenders, from the cash flow available after meeting the debt service obligations or provide a letter of credit / bank guarantee acceptable to the Lenders, for an amount equivalent to the ensuing 6 months principal and interest payment due to the Project Lenders, in lieu of such deposit. Such letter of credit / bank guarantee shall be provided at least 1 month before December 31, 2010 and be renewed from time to time during the currency of the RTL. b) The amount accumulated in the DSRA shall not be used for any purpose other than for servicing of RTL and would be utilised only in case of a shortfall in the cash flows for meeting the companys debt service requirements from time to time. c) The company shall invest company shall invest the funds in DSRA only in permitted investments and securities as may be approved by XYZ.
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xviii Debt Service Reserve
xix
Financial Covenants
During the tenure of the loan, the company shall maintain the following financial covenants: (i) Minimum Debt Service Coverage Ratio (DSCR) of 1.15 calculated at the end of each FY; (ii) Minimum Fixed Asset Coverage Ratio (FACR) of 1.33. In the event of any adverse deviation of more than 10% from the levels stipulated as above and as calculated at the end of each Financial Year, the company shall pay penal interest @ 1% p.a. on the outstanding principal amount of the RTL, during the period of such default. XYZ shall have the right to novate / assign the RTL in favour of any other lender, at its own cost and after giving prior intimation to the company. The company shall appoint XYZ as the TRA Agent for the Project, at a fee of Rs.5 lakh for the first year (fee for the subsequent years would be mutually decided between the company & XYZ). The company shall appoint XYZ Trusteeship Services Ltd. as the Security Trustee for the Project, at a fee of Rs.3 lakh for the first year and Rs.2 lakh for the subsequent years. The company shall appoint XYZ as the Lenders' Agent for the Project at a fee of Rs.5 lakh for the first year (fee for the subsequent years would be mutually decided between the company & XYZ). XYZ shall have the first right of refusal for providing working capital, as well as providing Carbon Credit Advisory Services to the company on mutually acceptable terms and conditions in addition to providing all other banking services.
xx
Novation/ assignment TRA Agent
xxi
xxii
Security Trustee
xxiii Lenders' Agent
xxiv Other services
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B. SECURITY The Rupee Term Loan together with interest, liquidated damages, costs, charges, expenses and other monies whatsoever, shall be secured as under: A first charge by way of hypothecation, in favour of XYZ, of all the movables pertaining to the Project, including movable plant and machinery, machinery spares, tools & accessories, present and future; (ii) A first charge on or assignment of, in favour of XYZ, (a) all the rights, title, interest, benefits, claims and demands whatsoever of the company in the Project Documents, (b) all the rights, title, interest, benefits, claims and demands whatsoever of the company in the statutory/ non-statutory clearances & approvals obtained/ to be obtained for the Project; (c) all the rights, title, interest, benefits, claims and demands whatsoever of the company in any letter of credit, guarantee, performance bond, etc. provided by any party for the Project and (d) all Insurance Contracts/Insurance Proceeds pertaining to the Project; (iii) First charge on all the Projects book debts, receivables, operating cash flows, revenues of whatsoever nature & wherever arising, intangibles & goodwill, both present and future; (iv) First charge on all the Projects bank accounts, including but not limited to the Debt Service Reserve Account (DSRA), the Trust & Retention Account (TRA) [where all the cash inflows from the Project shall be deposited and all proceeds therein shall be utilized in a manner & priority to be decided by the Lenders Agent/ Project Lenders] and any other bank account of the company wherever maintained, present and future; (v) Pledge of shares of the borrowing company, held by Auro Mira Energy Company Pvt. Ltd., to the extent of 51% of the borrowers envisaged paid-up equity share capital; (vi) Corporate Guarantee of Auro Mira Energy Company Private Limited (the pledged shares, negative lien and the corporate guarantee would be released on full repayment of the Project Debt). The above charge shall rank pari-passu with the charges to be created in favour of the other term lenders participating in the Project. The company would execute the documents for creating the above security at the time of execution of the Loan Agreement. XYZ reserves the right to modify the above security structure, prior to the Financial Closure of the Project. (i)
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C. I.
SPECIAL TERMS AND CONDITIONS Pre-commitment conditions
The obligation of XYZ to commit the assistance for the Project shall be effective upon the company complying with the conditions given below. The company shall, to the satisfaction of XYZ; (i) tie-up the entire Project Debt amounting to Rs.189.00 crore; (ii) furnish an undertaking from Auro Mira Energy Company Pvt. Ltd. to bring in the entire envisaged equity contribution of Rs.101.70 crore in a manner so as to facilitate smooth implementation of the Project; (iii) furnish an undertaking from Auro Mira Energy Company Pvt. Ltd. that the completion cost of the Project shall not exceed Rs.290.75 crore and, in case of any cost overrun, the same shall be met by Auro Mira Energy Company Pvt. Ltd. by way of additional equity contribution /sub-ordinated debt, without any recourse to the Project assets; (iv) Furnish an undertaking from the Promoter Directors of Auro Mira Energy Company Pvt. Ltd. that they would not resign or withdraw from the Board of Auro Mira Energy Company Pvt. Ltd., without obtaining the prior written consent of XYZ. II. Pre-disbursement conditions Before seeking any disbursement of assistance sanctioned, the company shall, to the satisfaction of XYZ:
(i) (ii)
bring in minimum 50% of the equity contribution envisaged for the Project and deploy the same for part-financing the Project; enter into a Turnkey Contract with Suzlon Energy Ltd. and / or its affiliate companies for execution of the Project; the scope of the turnkey contract would include, acquisition of the site, civil works, electrical works (including power evacuation facilities), supply/ erection, commissioning of 33 nos. of 1500 kW wind turbines, free operations & maintenance for 2 years from the COD (including supply of all spares & consumables), etc; the Turnkey Contract, the term of which would be to the satisfaction of XYZ, would also contain suitable warranty clauses regarding machine performance (power curve guarantee), machine availability, transmission loss (within the windfarm), reactive power loss, etc. Establish that the Project would receive the Generation Based Incentive (GBI) from Govt. of India / IREDA In the event of the company failure to establish the same to the satisfaction of XYZ, it shall arrange for additional promoters contribution by way of equity
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(iii)
share capital / interest-free sub-ordinated unsecured loan from the Promoter, so as to maintain a maximum Debt Equity Ratio of 62:38 for the project. The project debt would then reduce by an equal amount and the commitment of the respective Lender would be decreased proportionately. (iv) (v) open a Trust & Retention Account (TRA), through which all the Project cash flows would be routed undertake to establish and maintain, at least 1 month before December 31, 2010, Debt Service Reserve Account (DSRA) for the ensuing 6 months principal & interest payment due to the Project Lenders, from the cash flows available after meeting the debt service obligations during the operational phase, or, in lieu of such deposit, provide a letter of credit/ bank guarantee acceptable to XYZ/ Project Lenders, for an amount equivalent to the ensuing 6 months principal & interest payment to XYZ / Project lenders; appoint an independent technical consultant, for assessing the wind energy generation potential of the proposed wind farms and the consultants report on the same would be to the satisfaction of XYZ; obtain all applicable statutory & non-statutory clearances / approvals as may be required for smooth implementation of the Project (including environmental clearances from Government of Karnataka and Ministry of Environment & Forests) and ensure that appropriate measures are taken to address the environmental concerns, if any.
(vi)
(vii)
III. (i)
Other conditions The company shall, to the satisfaction of XYZ, enter into PPA with Bangalore Electricity Supply Company Ltd., within 30 days of the COD. The PPA would have provisions for making prompt payment, opening L/C for 30 days sales, termination of PPA on BESCOMs default, etc. which would safeguard the financial interest of the Project Lenders. obtain a Facilitation Letter from Karnataka Renewable Energy Development Limited, within 6 months from the COD, to the effect that in the event of the company defaulting in servicing the RTL of XYZ / Project lenders, the sale of movable property (plant and machinery, etc.) shall be permitted (without creating any encumbrance on the land) and the new party shall be then allowed to operate the project at the site on the same terms and conditions as agreed for the original allottee; agree to appoint a Lenders Engineer, if so required by XYZ, and make satisfactory arrangements to resolve any issue raised by the LE;
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(ii)
(iii)
(iv)
agree that XYZ shall have the first right of refusal for extending Carbon Credit Consultancy Services to the company, covering registration of the project with CDM Executive Board of UNFCCC and also for CER sales; adequately insure the assets both during the construction and operations phase; maintain in full force all the required statutory/ non-statutory clearances for the Project; agree that any saving in Project Cost would result in a pro-rata reduction in the debt for the project;
(v) (vi) (vii)
(viii) agree that, during the implementation of the Project, XYZ shall have the right to review the cost of the project & means of finance and the company would provide all necessary information to XYZ as may be required for this purpose; (ix) provide regular progress reports on the Project, both during the construction and operations, in such form and manner as may be required by XYZ. satisfy XYZ that the physical progress, as well as the expenditure incurred on the Project, are as per the original schedule and shall provide such information / data as may be required by XYZ for this purpose; agree to comply with all provisions of Corporate Governance; agree not to create any lien or charge of whatsoever nature over the Project assets, without obtaining the prior approval of XYZ;
(x)
(xi) (xii)
(xiii) agree that in case of a default in repayment of debt or payment of interest thereon on due dates, XYZ and/or Reserve Bank of India (RBI) will have an unqualified right to disclose the name of the company and its directors as defaulters, in such manner and through such medium as XYZ and RBI, in their absolute discretion, may deem fit. (xiv) XYZ reserves the right to stipulate any other condition deemed necessary in case the Project implementation is delayed or if the project warrants such additional conditions for ensuring smooth completion / operations; (xv) (xvi) submit copies of all consents / approvals with respect to the Project and address concerns, if any, to the satisfaction of XYZ; undertake to comply with all applicable regulations and any issues on the environmental front or under the CDM mechanism and submit the data/ report to XYZ;
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(xvii) at all times during the currency of the assistance, comply with the environmental, health, safety and social requirements with provisions of all applicable legislations and clearances issued thereunder. 2. XYZ reserves the right to disburse the loan amount directly to the
turnkey contractors of the Project. 3. The company shall not, without obtaining the prior written approval of XYZ. Make any modification to any of the Project Documents; Create any security interest in favour of any other person on the project assets, Moreover or immoveable, fixed or current, present or future.
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PART VII - RECOMMENDATIONS A. 7.1 Summary of Assessments Auro Mira Group was promoted by professionally-qualified, first
generation entrepreneurs for developing green energy projects in biomass, small hydel and wind energy sector. The Group has been in business for around 4 years. The promoter Directors, who had prior experience in the wind power sector, have built a team of more than 100 members, most of whom are professionals having relevant background. 7.2 Baring Private Equity Partners (BPEP) has taken a majority stake in Auro
Mira Energy Company, the main holding company of the group. BPEP is considered to be a pioneer in the private equity space in India. Its nominees are on the Board of the holding company. 7.3 Wind farms at the proposed sites have high wind potential. The area has
been declared by MNRE as windy area and the sites have been identified by SEL after monitoring the wind characteristics over an extended period. A predisbursement condition has been stipulated that an independent technical agency shall evaluate the data and estimate the wind energy generation potential of these sites; the loan disbursements shall commence after receipt of satisfactory report from the independent agency. 7.4 Suzlon Energy Ltd. (SEL) is the largest Indian manufacturer of Wind
Turbine Generators and the fifth largest in the world. It has installed windfarms of around 4500 MW capacity in India. SEL and its group companies would be executing the project on a turnkey basis, from land identification / acquisition to commissioning of the machines and connecting them to the state grid. No difficulty is, therefore, envisaged on the project implementation front. S-82 is a well-established model and about 1000 nos. of these WTGs are in operations today in India. The capital cost of the wind farm has been estimated at Rs. 5.7/ MW, which is reasonable. A pre-disbursement condition has been
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stipulated that the company would enter into a turnkey contract with SEL and the terms of the contract would be satisfactory to XYZ. 7.5 During the first two years, SEL would carry out the O&M of the
windfarms and furnish its warranty for machine performance as well as machine availability. The power evacuation arrangements (upto SEB substation) will also be made by SEL, as a part of the turnkey contract. With the involvement of SEL in all aspects of the project, the construction and operational risks have been mitigated effectively. 7.6 The wind power to be generated by the proposed wind farm would be
sold to the State Discom under a long-term PPA. Electricity Regulatory Commission in the State has determined Rs.3.40/unit as the price for procurement of wind power by the distribution licensees. This is a general tariff (i.e. not project specific) and would apply for a period of 10 years from COD. Besides, the company would be eligible for another Re 0.50 per unit by way of Generation Based Incentive (GBI). 7.7 The PPA would contain provisions like Termination Right in the event of
default by the power purchasers. The sale of power would also be secured against a L/C for one month billing. The sale proceeds would be routed through a TRA Account. 7.8 The DER would be 65:35, which may be considered acceptable for
infrastructure projects. The promoter's contribution would come in the form of equity infusion by AME, the holding company of the Project SPV. Baring Private Equity Partners (BPEP), a leading private equity player, holds 90% stake in AME. In India, BPEP has almost 1 billion USD of assets under its management. Considering the scale of BPEPs operations, no delay is envisaged in timely infusion of the promoters' contribution. A condition has been stipulated that minimum 50% of the equity capital would be raised upfront i.e. before the loan disbursement commences. 7.9 Project IRR (post-tax) is 12.32% and the average DSCR for the company
works out to 1.40, which are satisfactory.
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7.10 Risk Department has assigned rating of ___ to the Project (score of __). 7.11 The proposal complies with the internal exposure norms and RBI's prudential limits. B. RBI Defaulters list/ CIBIL list / Litigations pending/ Directors
Interest 7.12 As on March 31, 2008, the names of the company/Directors did not appear either in RBIs list or in CIBILs list of defaulter / wilfull defaulter companies. The companys name does not appear in RBIs last Caution Advice also. There are no litigations pending against the borrower, other than those in the normal course of business. 7.13 None of the Directors of XYZ Bank Ltd., either directly or through their relatives, is interested in the proposal. None of the directors of other banking companies or their relatives are also interested in the proposal. C. Recommendation Rupee Term Loan of Rs.75 crore to Auro Mira Wind Shakthi Ltd. for setting up wind power projects of an aggregate capacity of 49.5 MW, subject to the special terms & conditions set out in Part-VI of this Memorandum, besides the normal terms & conditions applicable to the grant of such assistance by XYZ. 7.14 In view of the foregoing, Credit Committee is requested to sanction
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Annexure-I Auro Mira Energy Company Private Limited Balance Sheet Analysis (Rs.crore) (Rs.crore) (Rs. crore) As on March 31, 2007 2008 2009 Audited Audited Audited Liabilities Current Liabilites Sundry Creditors (Trade) 0.00 0.05 0.07 Other Current Liabilities 0.08 1.70 0.50 Provisions 0.02 0.06 0.18 0.00 0.00 0.00 Sub total (II) 0.11 1.81 0.76 Total current liabilites (I+II) (III) 0.11 1.81 0.76 Term Liabilites Deferred Tax Liability Total Term Liabilites (IV) Ordinary share capital Reserves & Surplus Surplus(+) or deficit (-) in P & L Account Net worth (V) Total Liabilities (III+IV+V) ASSETS: As on March 31, Current assets Cash and Bank Balances Investments (Other than Long Term) (i) Govt. & other securities Other Current Assets: (i) Deposits (EB/Excise.etc.) (ii) Duties & Taxes paid in Advance (iii) Others (iv) Loans and Advnces (iv) Interest Accrued on Invest & Deposits Total current assets Fixed Assets (Net) (I) Land (ii) Building
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0.00 0.00 0.24 22.41 0.00 23 22.76
0.00 0.00 0.36 42.18 0.00 43 44.35
0.02 0.02 0.60 74.68 -0.21 75 75.84
2007 Audited 0.21 13.07 0.00 0.11 0.00 4.29 0.00 18 0.00 0.00
2008 Audited 0.74 14.58 0.00 0.05 0.00 18.56 0.00 34 0.00 0.00
2009 Audited 4.68 10.31 0.00 0.13 0.09 46.71 0.00 62 0.00 0.00
(iii) Plant & Machinery (iv) Furnitures & Fixtures (v) Other Fixed Assets Net block Gross fixed assets Other non current assets (i) Investments in Subsidiary companies/ Affiliates (iv) Deferred receivables(maturity > 1 year) Total Other non current assets Intangible Assets (patents, goodwill, prelim. expenses, bad/doubtfull expenses not provided for) Total assets
0.09 0.01 0.00 0.00 0.20 0.10
0.10 0.01 0.00 0.00 0.11 0.17
1.08 0.61 0.00 0.00 1.68 2.00
4.89 0.00 4.89 0.00 22.77
10.01 0.30 10.31 0.00 44.35
12.22 0.00 12.22 0.00 75.83
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Annexure II Auto Mira Energy Sakthi Ltd. Salient features of the turnkey contract proposed to be executed by the company with Suzlon Energy Ltd. Scope SELs scope of work would cover procurement of land, developing necessary infrastructure, (including the arrangements for power evacuation) engineering/ manufacturing/ supply/ installation of 33 nos. Wind Turbine Generators (WTGs) and commissioning the wind farm, so that the project is implemented as per the schedule agreed upon. Contract Price Auro Mira would pay Rs. 282.15 crores to SEL towards (i) cost of land & civil works, (ii) supply, installation, erection, commissioning of WTG, (iii) setting up the internal grid for evacuation of power to the nearest sub-station (iv) free O&M (with spares & consumables) for the first two years, (v) insurance upto the commissioning date, and (iv) establishing the necessary common infrastructure facilities. This price is inclusive of all taxes & duties, except for service tax. Equipment Warranty SEL would give warranty that all equipment shall be new, of good quality and free of defects in design, materials & workmanship. Any repair/ replacement during the defect liability period would be carried out free of cost. Machine Availability SEL would give a machine availability warranty of minimum 95% p.a., for all the WTGs in the wind farm, on half yearly basis, during each year after stabilization period of 90 days from COD. In case the average machine availability falls below 95%, then SEL would compensate the company @ 2% of the annual maintenance charges for every 1% shortfall (below 95% average machine availability), subject to a maximum of 10% of the annual maintenance charges. Power curve The turnkey contract would also include a power curve warranty, the exact details of which are being worked out. Transmission Loss SEL would give warranty that the loss of power during transmission between the WTG meter(s) and the SEB/SEB authorized meter(s) located within the Wind Farm shall not be more than 5% per annum for all the WTGs put
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together. In the event of such transmission loss exceeding 5% (for all the WTG s put together) in any year, SEL shall compensate the Company for such loss @ 2% of the annual maintenance charges for every 1% of excess transmission loss over 5%, subject to a maximum of 10% of annual maintenance charges. Compliance with safety and health rules SEL shall comply with all the applicable Government Rules relating to the health and safety. Compensation due to delay in Commissioning of Project If SEL fails to attain completion of the works or any part thereof within the time of completion specified or within such extended time entitled as per provisions, SEL shall, as sole remedy, pay liquidated damages to the company at the rate of 0.5% of the contract value per week of delay. However the maximum aggregate liability for liquidated damages for delay and defects payable under any warranty, or any other liability arising out of or in connection with the contract, shall not exceed 2.5% of the contract value. Statutory obligations relating to manpower SEL shall make its own arrangement for labor and for their transport, housing and payment. All labor engaged by SEL shall be the employees of SEL. Central Monitoring System The CMS being developed by SEL at the project site would be the property of SEL. It would be the part of common infrastructure of the wind farm and will be shared by the company along with any other investor (WTG owner) at the wind farm sites located in Modurgudda & Gopalpura. Evacuation facility Evacuation infrastructure including installation of the sub-station and laying the internal cable/ conductors at the site shall also be a part of the common infrastructure of the wind farm.
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Annexure III Auro Mire Wind Sakthi Pvt. Ltd. Salient features of the draft of the PPA to be entered into with BESCOM 1. The Financial Closure for the Project shall have occurred and the company shall have received all permits, clearances & approvals for the Project before the PPA becomes effective. 2. The company shall undertake, at its own cost, maintenance of the interconnection facilities and the receiving stations, including the dedicated transmission line beyond the receiving station, as per the specifications and requirements of Karnataka Power Transmission Corporation Ltd. (KPTCL). 3. BESCOM would off take all the electricity generated by the company at the delivery point at decided tariff rate. 4. BESCOM would provide start up power required for the plant, as and when necessary & requested for.
5. BESCOM would pay for the delivered energy, for the first 10 years
from the COD, @ Rs.3.40 per kWh. From the 11th year, BESCOM would pay at the rate determined by the Karnataka Electricity Regulatory Commission (KERC). In case BESCOM is unwilling to purchase the power at the price determined by the KERC, the company shall be permitted to sell the power to the third parties and, for this purpose, enter into a wheeling agreement with KPTCL and pay transmission charges at the applicable rate from time to time. 6. The company shall pay to KPTCL Rs.37,000/- per MW of the installed capacity as a one time lump sum payment for the sole purpose of providing required capacity at the substation of the BESCOM. 7. BESCOM shall make payment of the billed amount within 15 days form the date of receipt of tariff invoice. 8. In the event of delay of payment by BESCOM, it shall pay interest on the outstanding amount at the rate of SBI medium term lending rate per annum, from the due of date such payment until the payment is made.
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9. BESCOM shall open non-revolving Letter of Credit in favor of the company, at least 30 days prior to COD of the project, and the same shall be maintained consistently during the term of the PPA. The L/C amount shall be equal to one months projected payment based on the average annual generation. 10. Neither party is liable for or deemed in breach of any delay in the performance of its obligation hereunder beyond the reasonable control of the party i.e. under the Force Major Event. 11. The agreement shall be in force for period of 20 years from the COD and may be renewed for a further period of 10 years under mutually agreed terms. 12. O&M default or failure or refusal to perform any of the material obligations under the agreement by the company would amount to the event of default by the company. 13. Failure or refusal to perform its financial and other material obligation under the agreement would constitute event of default by BESCOM. 14. On the occurrence of the event of default by the company, BESCOM may after the period of 90 days from the date of notice period may terminate the agreement. 15. On the occurrence of the event of default by BESCOM, company may after the period of 30 days from the delivery of the default notice, may terminate the agreement by delivery of termination notice. 16. The dispute first need to be compulsorily resolved by mutual negotiation within 90 days, else it may be referred to the KERC; however no judicial intervention or appeal would be permissible. **********************
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Annexure IV Auro Mire Wind Shakti Pvt. Ltd. Assumptions underlying the profitability estimates 1. Total number of WTG: 33 nos.; each of 1500 kW rating 2. The installed capacity and annual power generation per WTG have been assumed as below; Location of the wind Installed capacity of Annual farm Hassan District Karnataka the windfarm - 49.5 MW power generation 1171.65 lakh kWh (equivalent PLF) 3. The tariff of the generated power is assumed as Rs. 3.40/-; besides, the company would earn Generation Based Incentive of Rs.0.50/- per unit.
4. The WTGs are scheduled to commence commercial operation form
to
27%
March 31st 2010. 5. Income from the carbon credits (CER Sales) has been assumed @ Euro 11/ CER. The CER per unit amounts to Rs. 0.56/- and the total income from CER would amount to Rs. 6.61 crore. p.a. 6. As per the turnkey contract, Operation and Maintenance expenses would be free for the first two years from COD. Thereafter, it has been assumed @ 1.75% of the total turnkey project cost and 5% annual escalation has been provided thereon. 7. Insurance premium has been assumed @ 0.15% of the turnkey project cost i.e. 42.30 lakh. 8. Interest on term loan has been assumed @ 12% p.a. 9. Depreciation on SLM basis has been assumed @ 5.28%. 10. MAT has been assumed @ 11.33%
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Annexure- V Auro Mira Wind Sakthi Ltd. Projected Profitibility Statement (Rs. Crore) 2019 2020 39.84 39.84 6.61 6.61 46.44 46.44 6.62 0.42 7.04 39.40 4.82 14.90 19.69 2.23 17.46 32.35 6.95 0.42 7.37 39.07 2.55 14.90 21.62 2.45 19.17 34.07
Year ended on March 31, Sale of Wind Energy Carbon Credit - Income Generation Based Incentive Total Income Operations & Maintenance expenses Insurance charges Total cost of operation Gross profit (PBIDT) Interest Depreciation Misc expenses written off PBT Tax PAT Gross cash accruals
2011 39.84 6.61 46.44 0.42 0.42 46.02 22.54 14.90 1.72 6.86 0.97 5.89 22.51
2012 39.84 6.61 46.44 0.42 0.42 46.02 20.69 14.90 1.72 8.71 1.18 7.53 24.14
2013 39.84 6.61 46.44 4.94 0.42 5.36 41.08 18.43 14.90 1.72 6.04 0.88 5.16 21.78
2014 39.84 6.61 46.44 5.18 0.42 5.61 40.84 16.16 14.90 1.72 8.06 1.11 6.95 23.57
2015 39.84 6.61 46.44 5.44 0.42 5.87 40.58 13.89 14.90 1.72 10.07 1.34 8.73 25.35
2016 39.84 6.61 46.44 5.72 0.42 6.14 40.30 11.62 14.90 13.78 1.56 12.22 27.12
2017 39.84 6.61 46.44 6.00 0.42 6.42 40.02 9.36 14.90 15.77 1.79 13.98 28.88
2018 39.84 6.61 46.44 6.30 0.42 6.73 39.72 7.09 14.90 17.73 2.01 15.72 30.62
Annexure- VI Auro Mira Wind Sakthi Ltd. Projected Cashflow Statement (Rs. Crore) For the year ended on March 31, Inflow Sale of wind energy Carbon Credit Sale Generation Based Incentive Equity capital (from promoters) Project loans Total cash inflow (A) Outflow Capital expenditure (project) Misc expenses to be written off O & M expenses Interest on project loans Tax Insurance charges Repayment of project loan Total cash outflow (B) Net cash inflow Opening Balance Net surplus / deficit 290.76 282.15 8.61 22.54 0.97 0.42 9.45 33.38 13.06 13.06 20.69 1.18 0.42 18.90 41.20 5.24 13.06 5.24 4.94 18.43 0.88 0.42 18.90 43.57 2.88 18.31 2.88 5.18 16.16 1.11 0.42 18.90 41.77 4.67 21.18 4.67 5.44 13.89 1.34 0.42 18.90 39.99 6.45 25.85 6.45 5.72 11.62 1.56 0.42 18.90 38.22 8.22 32.30 8.22 6.00 9.36 1.79 0.42 18.90 36.47 9.98 40.52 9.98 6.30 7.09 2.01 0.42 18.90 34.72 11.72 50.50 11.72 6.62 4.82 2.23 0.42 18.90 32.99 13.45 62.22 13.45 6.95 2.55 2.45 0.42 18.90 31.27 15.17 75.68 15.17 101.76 188.99 290.76 46.44 46.44 46.44 46.44 46.44 46.44 46.44 46.44 46.44 46.44 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 39.84 6.61 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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Closing Balance DSCR Average DSCR 13.06 1.41 1.31 18.31 1.13 21.18 1.08 25.85 1.13 32.30 1.20 40.52 1.27 50.50 1.35 62.22 1.45 75.68 1.57 90.85 1.71
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Annexure- VII Auro Mira Wind Sakthi Ltd. Projected Balance Sheets (Rs. Crore) 2019 2020 101.76 114.53 216.30 9.45 225.75 282.15 148.98 133.17 90.85 0.00 224.03 0.04 0.00
As on March 31, Liabilities Equity share capital Reserve & Surplus Networth Loans (Project loans) Total Liabilities (A) Assets Gross fixed assets Less: Depreciation Net fixed assets (B1) Cash & bank balance (B2) Misc. exp to be written off (B3) Total Assets(B1+B2+B3) DER (Project loan/ Networth) FACR
2011 101.76 0.00 101.76 188.99 290.76 101.76 5.89 107.66 179.54 287.20
2012 101.76 13.42 115.18 160.64 275.82
2013 101.76 18.58 120.34 141.74 262.08
2014 101.76 25.53 127.29 122.84 250.13
2015
2016
2017
2018
101.76 101.76 101.76 101.76 101.76 35.98 48.20 62.18 77.90 95.36 137.74 149.96 163.94 179.67 197.12 103.95 85.05 66.15 47.25 28.35 241.69 235.01 230.09 226.92 225.47 282.15 104.28 177.87 50.50 0.00 228.37 0.40 2.69 282.15 119.18 162.97 62.22 0.00 225.19 0.26 3.45 282.15 134.08 148.07 75.68 0.00 223.75 0.14 5.22
282.15 282.15 282.15 282.15 282.15 282.15 282.15 0.00 14.90 29.80 44.69 59.59 74.49 89.39 282.15 267.25 252.35 237.46 222.56 207.66 192.76 0.00 13.06 18.31 21.18 25.85 32.30 40.52 8.61 6.88 5.16 3.44 1.72 0.00 0.00 290.76 287.20 275.82 262.08 250.13 239.97 233.29 1.86 1.67 1.39 1.18 0.97 0.75 0.57 1.49 1.49 1.57 1.68 1.81 2.00 2.27
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EXECUTIVE SUMMARY 1.

Auro Mira Wind Sakthi Limited, promoted by Auro Mira Energy

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

2008 0.10 24.59 19.35 1.80 Nil 42.54 0.36 42.18

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

N. Srinivasan, Promoter Director

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Name & Designation

Santosh Kamat, Promoter Director

Mr. I. Krishna Civil Engineer Pillai, Promoter Director

FCA, FICWA, FCS and MBA

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Education (from IIM-A)

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Existing (Rs. crore) Company Nil Group 20

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Growth Rate (2008)

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

235.9 13.4 116.5 196.0 95.1

28.4% 1.4% 13.3% 71.0% 28.5%

Since 1990, a massive exercise of wind monitoring and wind resource

(Source: Indian Wind Energy Association)

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

10.5 MW 2 MW 1252.9 MW 636.6 MW 1.1 MW 1.1 MW 8754 MW 7091 MW

In the coming years, the renewable energy is expected to contribute

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Parameters Captive Usage Third Party Sale Sale to Electricity Board

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

4.13 The assumptions underlying the profitability estimates are given at

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Cost / Time overrun

III. Operational Risks Off take risk Project Developer

Auro Mira Wind Sakthi Limited Detailed Appraisal Note

Government policies Project / guidelines Developer/ Project Lenders