+ CREDIT APPRAISAL AND PROJECT FINANCING Course Code: MIB Credit Units: 04

Course Objective: Project finance is used to finance billions of dollars of capital-intensive projects annually. This increasingly critical financial technique relies on the cash flows of a specific project, not the cash flows of a corporation or third party guarantor, to service debt and provide investor returns. Not all projects can support project financing. Project finance is a specialized financial tool requiring both proper structuring and risk mitigation. Learning Outcomes: To understand the elements the business and its credit-worthiness to make sound business and credit decisions To understand what project finance is, why it is used, and how it is used. What the necessary elements are that support the use of project finance to include contractual agreements, technology, sponsors, risk identification and mitigation, sources of capital. Course Contents: Module I: Overview of Credit Analysis Objectives, Credit Risk, Credit Analysis, Seven Cs, Credit Analysis Process, Lending Process: Credit Process, Documentation, Loan Pricing and Profitability Analysis, Regulations. Module II: Financial Statement Analysis Objectives, Introduction, Ratio Analysis, Liquidity Ratios, Turnover Ratios, Profitability Ratios, Market Ratios, Objectives, Introduction, Elements of Cash Flow Statement, Direct Method, Indirect Method, Interpreting Cash Flows. Non financial analysis, Economy analysis, Industry analysis, Business analysis Module III: Characteristics and Analysis of Project Finance Objectives, Assessing the project cost, Means of financing projects, Estimation of project cash flows, Use of free and equity cash flow valuation for assessing projects, Financial Analysis: Break-even point analysis, decision tree, scenario analysis and sensitivity analysis, Module IV: Project Finance Parties to a Project Financing, Necessary Contracts, Environmental Consideration, Political and Regulatory Background, Senior Debt Banks, Insurance Companies, Public Markets; Mezzanine Debt; Equity - Financial Equity, Strategic Equity Module V: Economic Aspect of Project Development

Project Development, Project Development: Government's Perspective, Infrastructure Projects, Credit Enhancement, Financial Model, Real Options Analysis, Specialized Credit Enhancements Teaching and Learning Methods: Tutorials, Interactive sessions, Case studies, Field visits, Management games, Extensive research projects, Seminars, Weekend experience in companies - the course is covered by adopting a combination of lecture methods, class presentation by groups of students, self study sessions. Each student is required to do the back ground reading from the specified chapters of the prescribed book before coming to class. Cases are also to be analyzed, discussed in groups (teams) outside the class as preparatory work. Examination Scheme: Components Weightage (%) References: Premalatha Suresh,Management of Banking and Financial Services Sitangshu Khatua,Project Management and Appraisal Shashi K Gupta,Financial Management Prasanna Chandra, Projects: Planning, Analysis, Selection, Financing, Implementation And Review (5th Edn.), Tata McGraw Hill DD Mukherjee, Credit Appraisal, Risk Analysis & Decision Making, (5th Edn.), Snow White Publications Machiraju, Project Finance, Vikas Publishing House Gatti, Project Finance in Theory and Practice, 1st Edn., Elsevier Hrishikesh Bhattacharya, Banking Strategy, Credit Appraisal, 1st Edn., Oxford University Press K Nagarajan, Elements of Project Management, New Age International D Van Well Stam, Project Risk Management, Kogan Page Limited C1 10 V 5 A 5 CT 10 EE 70