PGDM II June 2011 To September 2011

Fourth Term

Course Outline

Subject No. of Credits No. of Sessions

: Project Appraisal and Financing :3 : Twenty (each session of 90 minutes duration)

By Gireesh Chandra Tripathi

Background: Except for the last few months, Indian economy has witnessed considerable growth in all sectors of the economy. A high growth rate of 9% had been achieved despite multiple limitations including infrastructure. Physical infrastructure of the country is a cause of concern for sustenance of this growth. Hence investment in Indian infrastructure has caught the attention of the entire globe. Hence many more projects are expected to be executed in India. Hence project finance has taken the centre stage in Indian economy. It has been booming since last many years, before the current global financial turmoil has applied breaks on it.

Course Objective The objective of this course is y To enable students to understand mechanism of project appraisal in various stages. y y To appreciate the usefulness different techniques applied in project appraisal. To explore new and innovative sources of financing projects in the present day world. y Infrastructure finance requirements and filling up of the gaps

Besides exposure to a wide range of topics, the course is designed to make students aware of different financing techniques of important constituents of our economy. Pedagogy: The subject shall be taught as a combination of lectures, case studies, presentations and solving of numerical problems. The lectures shall help in understanding theoretical concepts. Case studies shall illustrate the practical implementation of these concepts.

At the end of the course, the students shall be required to make a group presentation. Two to three students will form a group. This will be a study of application of one or more concepts studied during the trimester in a real life situation.

Sessions Plan
Session No 1-2 3-4 5-6 7-8 9-10 11-12 13-14 15-16 17-18 19-20 Topic Introduction of Projects, Issues in Projects, Project and its Purpose, Critical Success Factors, Project Life Cycle, Case on Capital Budgeting Project Cash Flows, Projects with Different Lives, NPV v/s IRR Methods, MIRR, Projecting the Cash Flow Statements Risk Adjusted Rate of Return, Certainty Equivalent Method, Decision Tree, Scenario Analysis, Simulation, Project Risk Appraisal Identifying and assessing Risk-Break-even, Sensitivity Analysis, Application of Risk Mitigation Measures Estimating hurdle rate for projects, Project selection techniques, Estimating levered and un-levered beta: Hamadas Paper Different Replacement Models, Application of DCF Techniques for Such Projects International Capital Budgeting Concepts. Inflation and Projects Cost Estimation Different Types of Infrastructure Project Financing with special emphasis on Public Private Partnership. Application of Real Options Concept in Project Project Presentations Case Studies on Power Project Financing or Telecom Project Financing

Group Project: Students are required to make a group presentation based on the concepts studied during the course. There will be 2 to 3 students in a group. The topic of presentations will be based on recent happenings in the industry. This will test the students understanding of real life applications of classroom concepts. The presentation shall be based on practical application of one or more concepts of this course in a real business. In the presentation, students shall be evaluated on content and analysis, quality of presentation and handling of queries pertaining to the presentation. Students are expected to collect all relevant data from the relevant cases. Students are requested to decide about their groups and topics of presentation and send an e-mail (gctripathi@imt.edu) intimating the same latest by 11th July, 2011. The topic should be relevant to this course and the data should be related to the actual business.

Evaluation: Evaluation shall consist of an end term examination and internal assessment which shall comprise a midterm examination, quizzes and a group presentation. This will ensure that the student is evaluated on a regular basis. The end term exams as well as internal assessment shall test the student for both theoretical concepts as well as quantitative analysis. The break up for evaluation shall be as follows: y y y End Term Examination: 50% marks Quizzes (Best 2 of 3) : 20% marks
(Objective Type)

Group Project:

30% marks

Suggested Main Text Book: 1. Project Financing, Finnerty, John Wiely and Sons Reference Books: 1. Projects: Planning, Analysis, Selection, Financing, Implementation and Review by Prasanna Chandra, Tata McGraw Hill, 8/e 2. Capital Budgeting and Investment Appraisal by Shapiro, Pearson Education 3. Project Management and Appriasal, Sitangshu Khatua, Oxford Higher Education 4. Project Reports and Appraisals, H.P.S.Pawha, Bharat 5. Project Management, Dennis Lock, Gower 6. International Project Analysis and Financing, Gerald Pollio, Macmillan Business 7. Modern Project Finance, Benjamin, John Wiely and Sons