A

RESEARCH PPROPOSAL

ON

“PROJECT FINANCE IN INFRASTRUCTURE

SECTOR”
(In partial fulfillment of MBA full time course)

SUBMITTED TO:

L. J. INSTITUTE OF MANAGEMENT STUDIES

SUBMITTED BY:

BIJAL SHAH (88)

  Statement of Project:

This project is undertaken with a purpose of studying the elements of

corporate finance with a special focus to project finance which today
has become an important aspect for bringing any project to life.

 Short Literature:

Project finance is the financing of long-term infrastructure and

industrial projects based upon a complex financial structure where
project debt and equity are used to finance the project. Usually, a
project financing scheme involves a number of equity investors, known
as sponsors, as well as a syndicate of banks which provide loans to the
operation. The loans are most commonly non-recourse loans, which
are secured by the project itself and paid entirely from its cash flow,
rather than from the general assets or creditworthiness of the project
sponsors, a decision in part supported by financial modeling. The
financing is typically secured by all of the project assets, including the
revenue-producing contracts. Project lenders are given a lien on all of
these assets, and are able to assume control of a project if the project
company has difficulties complying with the loan terms.

Infrastructure is the backbone of any economy and the key to

achieving rapid sustainable rate of economic development and
competitive advantage. Realising its importance governments commit
substantial portions of their resources for development of the
infrastructure sector. However despite such focus, governments in
developing economies face severe impediments due to their limited
spending power. This has prompted governments to open up the
infrastructure sector to private sector and foreign investment and has
increased reliance on innovative structures like public private
partnerships. Infrastructure requirements for a country like India are
massive, presenting enormous business potential for the private
sector.

Funding for infrastructure projects is complex and presents specific

challenges that require specialist knowledge and understanding to
create appropriate finance structures which will ensure that risks are
dealt with effectively and efficiently. Infrastructure project finance
requires involvement of multidisciplinary teams. Economists,
engineers, accountants and finance specialist all need to work together
to ensure that a project achieves its funding objectives. The long-term
nature of infrastructure project funding dictates specialist knowledge
of the many different institutions, both local and international that
offer financing in this sector.

 Research Design:

Primarily focusing on first hand information obtained through

information obtained through informal interview as well as secondary
sources, so that the design for research involved in the entire process
is descriptive in nature.
  Data Source:

 Primary Source:
Informal interview & discussion with the Official of the company &
bank.

 Secondary source:
Information obtains from articles of the newspapers, websites
magazines & journals.

 Tentative Chapter Plan

1. Introduction
2. Emerging need of project finance
3. Projects that can be funded
4. How to submit project requiring funding
5. Project Identification and Feasibility
6. Financial and Bid Structuring
7. Arranging Finance
8. Deal Closure & Post Closure
 Expected contribution of study:

This project report will help in understanding the whole process of

project financing in infrastructure. It would provide us useful insights
regarding the documentation procedure for obtaining finance for a new
project, the various calculations and analysis as well as the different
reports prepared along with the regulatory frameworks designed for
the same.

 Beneficiaries:

 Researcher and management students:

 To gain knowledge about the project finance as a whole.
 To understand the process of project financing in infrastructure
sector.
 To undertake development of large scale infrastructure projects.
 To participate in joint ventures/financial partnerships that would
undertake execution of infrastructure projects
 To understand Public Private Partnerships (PPP), whether from
the private sector bidding for a government led project, or from
the public sector aiming to create an effective partnership.