CHAPTER – 13

Financial Management and Economic Appraisal

13.1 General

13.2 Project Promoters

License of Arippara SHEP has been allotted to M/s. Cochin international

Airport Ltd., Cochin, by the Government of Kerala, on Build, Own, Operate

and Transfer (BOOT) basis under the policy of private sector participation

in implementation of Power Projects (3MW) vide G.O. (Ms) No.23/2014/

PD Dated: 21/07/2014. Subsequently on studying the detailed hydrology

and modifying the location, its capacity is enhanced to 4.5MW.

The financial forecast has been prepared following the guidelines issued by

Govt. of India / IREDA including all essential and requisite costs.

13.3 Project Cost

The Basic estimated Project Cost of 3260 Lakhs (without IDC & Excava-

tion) is based on current market rates. The cost also includes the cost of

Transmission Line from Arippara SHEP to nearest KSEB 33/11kV substa-

tion at Thampalmanna. The General Abstract & Abstract Cost is appended

with this Chapter.

13.4 Total Project Cost Estimate

The total funding required for the Project is as below:

Particulars Rs. Lakhs

1. Total cost of the Project (Excluding IDC) 3260

2. Contingencies

3. Working Capital margin

4. IDC

Total 30

Say

13.5 Project Schedule

Project Zero Date 01.05.2015

Period of Implementation 24 months

Expected date of Commissioning of

all the 3 units

30.04.20117

The Project is proposed to be completed in 24 months, presuming

that the financial closure can be achieved by 30.04.2015, and zero

date is 01.05.2017.

13.6 Means of Finance

CIAL plans to fund the total project cost through a combination of

debt and common equity with mix as shown in table below -

Particulars Amount (Rs. Lakhs) Percentage

Long Term Debt 2282 70%

Equity 978 30%

Total Project Cost 3260 100%

13.7 Assumptions for Financial Projections

Plant capacity 4.5 MW As per DPR

PLF 35% As per DPR

Design Energy (75% D.Y.) 14.717 MU As per DPR

Project Cost 32.6 crores Rs Lakh As per DPR

Equity Rs Lakh 30% of project cost

Loan Rs Lakh 70% of project cost

Cost / MW Rs Cr / MW

Auxiliary Consumption 1% KSERC

O&M Charges 14 Lac/MW KSERC

Escalation of O&M 5.72% KSERC

Rate of Interest on loan 12.5%

REC circular dated 27.10.14Non-conventional Generation – Pri-vate Sector Borrowers, Entity Grade III & IV

Interest on working capital 12.80% KSERC

Return on Equity for first 10 years

20% KSERC

Return on equity for 11th year onwards

24% KSERC

Plant Life 30 As per allotment of project

Loan repayment period12 years from moratorium

period

REC – Guidelines for Renewable Energy Projects

Sale rate (Rs /unit)

Rs. 4.16/unit for 13 years

from COD and Rs. 4.16/unit

thereafter

As per Kerala Small Hydro Power Policy 2012 and KSERC order No. 442/CT/2012/KSERC dated 1.1.2013

13.8 Profit and loss Statement

The profit and loss statement is enclosed in Annexure 13-1.

13.9 Balance Sheet

The balance sheet is enclosed in Annexure 13-2.

13.10 Cash Flow Statement

The Cash flow statement is enclosed in Annexure 13-3.

13.11 Profitability

Project IRREquity IRRAverage DSCRMin DSCRPayback period

13.12 Conclusion

The proposed Hydel Project gives an attractive Internal Rate of Return (IRR)

of 12.8%. Therefore, the Project is economically viable. The power gener-

ated through renewable energy resources is environmentally clean and Mini

Hydel Power Projects are being encouraged by World Bank, International In-

stitutions and has support from Ministry of Non-Conventional Energy

Sources, Government of India and Government of Kerala.