a case study of Project appraisal and finance

1. A presentation on
Coimbatore bypass road project
case study
By:
THE WORTHY
Arshiya Khan
Mayuri Patil
Umesh Sikka
Samidha Parulkar
Nikita Jaisinghani
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2. Introduction
First road project to be implemented in South India on BOT basis.
 Why:
 The bypass was expected to ease the traffic congestion in
Coimbatore city , Tamilnadu and Salem-Cochin national Highway
running b/w Tamilnadu and Kerala.
 What:
 Construction of a 28 km long two lane bypass road,
 The 32.2 m new Athupalam bridge across the river Noyal,
 The Railway over Bridge at Chettipalayam Tamilnadu and
 The maintenance of the old bridge at Athupalam
 When:
 Contracted to be completed in 29 months, but completed in 22
months
 Investment
 1.04 billion
 Management:
 L&T
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4. Financing of the Project
• Ministry of Surface Transport (MoST) invited tenders from the
Private Sector to Finance and implement the Construction.
• The Project was financed by Share Capital of Rs. 416 mn and Term
Loan of Rs. 620 mn with a debt- equity ratio of 1.5:1
• The financing was done by SBI, L&T finance, HUDCO, HDFC and
IDBI.
• IDBI sanctioned Rs. 300 mn for the project in the form of
Infrastructure Bonds.
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5.  The loan was given in two tranches of Rs. 150 mn each at 15% interest
each.
 SBI loaned Rs. 300 mn to the project.
 IDFC had structured a “Liquidity Support” for SBI
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7. Toll charges of using bypass road
TYPES OF VEHICLE Toll charged
Car. jeep& van 19
Light Commercial Vehicle 28
Heavy commercial vehicle 56
Multi-axle vehicle 84
Toll charges of using old bypass
TYPES OF VEHICLE Toll charged
Car. jeep& van 5
Light Commercial Vehicle 15
Heavy commercial vehicle 15
Multi-axle vehicle 2

8. Revenue generation
 Ploughed back for maintenance
 Lesser operating cost on fuel
 Reduction in distance and time
 Wayside facilities and amenities on road
 Trauma care with ambulance
 Growth in the economy
 Diversification of govt. funds
 Lesser Pollution, more safety
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9. Challenges Faced By LTTIL
 Project Structuring
 Pubic Consultation
 Biased Revenue Analysis
 Delays due to Queuing
 Local Traffic
 Multiple Trips
 Toll on Existing Bridge
 Enforcement
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10. Implications of State Government Poor Support
to the Project On Future Investment in the State
 There is no clarity between the government and the developer on the
resolution of problems
 if the project does get into unanticipated problems. This would be a
major deterrent for private players to invest in road development
projects.
 Government is not fulfilling its role by taking action towards ensuring
toll compliance or compensating for the losses.
 The response from the government remains so poor , future public
private road projects would be in jeopardy
 The poor support and delayed decisions from state government cause
L&T under tremendous pressure as huge funds have been borrowed in
financing the project from financial institutions which may result in
adverse impacts on BOT project in the state.
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11. Key Takeaways
 BOT
 Take-out financing
 Force Majuere clause
 Importance of government support
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