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    Project Financing - A Case Study On Coimbatore Bypass Road Project DR - Hiren Maniar

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    Vignesh Sridharan
    The document discusses a case study on the Coimbatore Bypass Road Project in Tamil Nadu, India. It outlines implications of poor government support for the project, including contractors being reluctant for future projects and difficulty obtaining loans. It also discusses the role of innovative financial instruments in infrastructure projects. Instruments like takeout financing, credit enhancement, infrastructure debt funds, and securitization can help mobilize long-term debt and free up bank capital. They provide liquidity support and a way to fulfill debt obligations for infrastructure companies with assets that generate steady cash flows over time.

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    Project Financing - A Case Study On Coimbatore Bypass Road Project DR - Hiren Maniar

    Uploaded by

    Vignesh Sridharan
    107 views3 pages
    The document discusses a case study on the Coimbatore Bypass Road Project in Tamil Nadu, India. It outlines implications of poor government support for the project, including contractors being reluctant for future projects and difficulty obtaining loans. It also discusses the role of innovative financial instruments in infrastructure projects. Instruments like takeout financing, credit enhancement, infrastructure debt funds, and securitization can help mobilize long-term debt and free up bank capital. They provide liquidity support and a way to fulfill debt obligations for infrastructure companies with assets that generate steady cash flows over time.

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    Project Financing

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    Project Financing

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    The document discusses a case study on the Coimbatore Bypass Road Project in Tamil Nadu, India. It outlines implications of poor government support for the project, including contractors being reluctant for future projects and difficulty obtaining loans. It also discusses the role of innovative financial instruments in infrastructure projects. Instruments like takeout financing, credit enhancement, infrastructure debt funds, and securitization can help mobilize long-term debt and free up bank capital. They provide liquidity support and a way to fulfill debt obligations for infrastructure companies with assets that generate steady cash flows over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    107 views3 pages

    Project Financing - A Case Study On Coimbatore Bypass Road Project DR - Hiren Maniar

    Uploaded by

    Vignesh Sridharan
    The document discusses a case study on the Coimbatore Bypass Road Project in Tamil Nadu, India. It outlines implications of poor government support for the project, including contractors being reluctant for future projects and difficulty obtaining loans. It also discusses the role of innovative financial instruments in infrastructure projects. Instruments like takeout financing, credit enhancement, infrastructure debt funds, and securitization can help mobilize long-term debt and free up bank capital. They provide liquidity support and a way to fulfill debt obligations for infrastructure companies with assets that generate steady cash flows over time.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Project Financing - A Case study on

    Coimbatore Bypass Road Project


    Dr.Hiren Maniar

    GROUP - 8
    RANJITH K | VIGNESH S | SRI SHARAN M
    1. Discuss the implications of the state government’s poor support to the project, on the
    future investment in the concerned state? Give reasons.
     Contractors would be reluctant to come forward to take up such projects in
    future because of lack of support provided by the government to L&T.
     Future contractors could not avail bank loans easily, since there was a high
    chance of L&T not paying SBI loan on time and the banks becoming
    conservative.
     Contractors in future might ask for the overall control of the projects to take
    actions against non-compliance from the stakeholders after seeing the
    struggles of L&T.
     Future contractors would also also under tremendous pressure from the
    financial institutions, which lend money, to create additional securities.
     Tamil Nadu government would be asked by the future contractors to bear the
    losses, if any.
     Government and contractors might want to have the clarity in future in resolving
    the unanticipated problems like non-payment of toll by private trucks.
     Construction and maintenance of city roads would be ignored in toll-based road
    development concept, since the willingness to pay toll in city roads is nil and
    the homework is more to identify various user segments.

    2. What is the role of innovative financial instruments like takeout financing in the
    infrastructure sector?
    Infrastructure financing can present challenges owing to the nature of infrastructure assets.
    The following are some common characteristics of infrastructure assets that differentiate
    them from other assets:

     Capital intensity and longevity


     Economies of scale and externalities
     Heterogeneity, complexity and presence of a large number of parties
     Opaqueness
    Banks are giving the finance but that is not sufficient. You need to have different instruments,
    that is exactly where financial institutions come into picture. Some of the instruments provided
    by these institutions are:
    Credit Enhancement – Better rating for infrastructure projects, effective in mobilization of
    long term debt, freeing up of bank’s capital as well as exposure, development of bond markets.
    Infrastructure debt fund - The Infrastructure Debt Funds are meant to infuse funds into the
    infrastructure sector. IDF is an emerging investment vehicle which as per regulations can be
    created in the form of Mutual Fund or NBFC to invest in the infrastructure sector
    Infrastructure investment trusts - Often, infrastructure projects such as roads or highways
    take some time to generate steady cash flows. Meanwhile, the infrastructure company has to
    pay interest to banks for the loans taken by it. An InvIT essentially gives the company the
    leeway to fulfil its debt obligations quickly.
    Securitization and asset backed securities - Infrastructure assets such as roads, power
    transmission and airports are best-suited for securitisation compared with other corporate
    assets given their stable cash flows backed by long-tenure concession agreements and
    higher recovery rates.
    Other instruments include green bonds, take out financing and liquidity support.

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