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An in-depth analysis of project finance, its methods, advantages, and disadvantages. Project finance is a unique financing technique used for large-scale investments, particularly in infrastructure projects, and is essential for managing project cash flow and ensuring profits for multiple parties. the rationale for project financing, financial planning, risk assessment, and the benefits of off-balance-sheet treatment and tax optimization.
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Report on Summer Training
Project Financing in Delhi Metro Rail Corporation (DMRC)
Submitted to Lovely Professional University
In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration Submitted by: Name of the student : Anubhav Sharma University Roll No : 11301927(A14)
This report may not be able to fully express my gratitude and respect that I have towards the people of Delhi Metro Rail Corporation Limited. This formal dissertation would not have been successful without the help and support of management and employees with whom I have had the chance of interaction during the period of this internship. I am indebted to many of the good people of DMRC who always lent a helping hand. The knowledge and the experience gained during this internship from the credit worthy people will be the most rewarding phase of my career. I would like to thank Mr. Manish Jain (Assistant manager, Finance) and Mr. Pankaj Chand Thakur (Finance) for guiding and supporting me throughout this period of six weeks. Without their immaculate and intellectual guidance, sustained efforts and friendly approach, it would have been impossible to achieve result in a short span of time. Value the contribution of all other staff members of Finance department for sharing the wealth of knowledge, wisdom and experience.
Anubhav Sharma
MBA is stepping stone to management career. In order to achieve practical, positive and concrete results, the classroom learning needs to be effectively tied to the realities of the situation existing outside classroom. This is particularly true for management. To develop healthy managerial and administrative skills in potential managers, it is imperative that the theoretical knowledge be supplemented with the exposure of the real environment. Actually, it is quintessential that the management focuses on practiced learning. I took summer training in well managed organization and fortunate enough to get a good exposure. An attempt has been made to cover and showcase different aspects of internship as a part of undertaking this dissertation.
Anubhav Sharma 11301927
Secondary Sources:-
The secondary data relating to the procedures of assessment of project financing in MRTS, RBI guidelines etc. have been sourced from reference books and websites.
Hypothesis:-
Project finance is the one of the biggest source of borrowing the debts.
Scope of the project:-
Company has given various guidelines, advice and projection for obtaining the finance from the banking institutions and other financial services. And developing of the company keeping in the view economic of the country. It is necessary to under taken the impact of Delhi Metro & various services provide to their clients.
Limitation of the study:-
The time limitation is the most important problem to collect the various information. Study is not related to the current market position It requires lot of time & is more expensive
The growing demand for public transport in mega cities has serious effects on urban ecosystems, especially due to the increased atmospheric pollution and changes in land use patterns. An ecologically sustainable urban transport system could be obtained by an appropriate mix of alternative modes of transport resulting in the use of environmentally friendly fuels and land use patterns. The introduction of CNG in certain vehicles and switching of some portion of the transport demand to the metro rail have resulted in a significant reduction of atmospheric pollution in Delhi. The Delhi Metro provides multiple benefits: reduction in air pollution, time saving to passengers, reduction in accidents, reduction in traffic congestion and fuel savings. There are incremental benefits and costs to a number of economic agents: government, private transporters, passengers, general public and unskilled labor. The financial internal rate of return on investments in the Metro is estimated as 17 percent while the economic rate of return is 24 percent. Accounting for benefits from the reduction of urban air pollution due to the Metro has increased the economic rate of return by 1.4 percent.
-M N Murty, Kishore Kumar Dhavala, Meenakshi Ghosh and Rashmi Singh (Institute of Economic growth)
The use of non-recourse project financing has grown steadily in emerging markets, especially in basic infrastructure, natural resources and energy sector. Because of its cost and complexity, project finance is aimed at large-scale investments. The key is in the precise estimation of cash flows and risk analysis and allocation, which enables a high leverage and in ensuring that the project can be easily separated from the sponsors involved. Project financing is difficult because there are unpredictable risks associated with unfavorably biased results. This imposes the need to introduce contractual financing and structural elements that yield the maximum possible expatriation of operating flows. -Henrique Ghersi Y and Jaime Sabal
Project finance is the process of financing a specific economic unit that the sponsors create, in which creditors share much of the venture’s business risk and funding is obtained strictly for the project itself. Project finance, often used for capital-intensive facilities and utilities, is commonly used to segregate the credit risk of the project from that of its sponsors so that lenders, investors, and other parties will appraise the project strictly on its own merits. Project finance creates value by reducing the costs of
The loan contract provided that the lender would be entitled to control the operation of the mines for one year. The lender could take as much unrefined ore as it could extract during that year, but it had to pay all costs of operating the mines. There was no provision for interest. The English Crown did not provide any guarantees (nor did anyone else) concerning the quantity or quality of silver that could be extracted during that period. Such a loan arrangement was a forebear of what is known today as a production payment loan. -John D Finnerty
A metro system serving Delhi, Gurgaon, Noida, and Ghaziabad in the National Capital Region of India, the world's thirteenth largest metro system in terms of length is Delhi Metro. It is India's first modern public transportation system. As of June 2014, the network consists of six lines, plus a seventh Airport Express line, with a total length of 193.2 kilometers covering 139 stations, of which 38 are underground, five are at-grade, and the rest are elevated. All stations have escalators, elevators, and tactile tiles to guide the visually impaired from station entrances to trains. It uses both broad gauge and standard gauge rolling stock. Four types of rolling stock are used: Mitsubishi Rotem broad gauge, Bombardier Movia, Mitsubishi Rotem standard gauge, and CAF Beasain standard gauge.
Delhi Metro Rail Corporation Limited (DMRC), a state-owned company with equal equity participation from Government of India and Government of National Capital Territory of Delhi built and operates the Delhi Metro. However, the organization is under administrative control of Ministry of Urban Development, Government of India. Besides construction and operation of Delhi metro, DMRC is also involved in the planning and implementation of metro rail, monorail and high-speed rail projects in India and providing consultancy services to other metro projects in the country as well as abroad.
The trains are usually of four and six coaches, but due to increase in the number of passengers, eight-coach trains are added on the Yellow Line (Jahangirpuri to HUDA city centre) and Blue line (Dwarka Sector-21 to Noida City Centre/Vaishali). Yellow line being the first one with eight coach trains. The power output is supplied by 25- kilovolt, 50-hertz alternating current through overhead catenary. The metro has an average daily ridership of 2. million commuters, and, as of August 2010, had already carried over 1.25 billion commuters since its inception. The Delhi Metro Rail Corporation has been certified by the United Nations as the first metro rail and rail-based system in the world to get "carbon credits for reducing greenhouse gas emissions" and helping in reducing pollution levels in the city by 630,000 tonnes every year.
Planning started in 1984, when the Delhi Development Authority and the Urban Arts Commission came up with a proposal for developing a multi-modal transport system for the city. The Government of India and the Government of Delhi jointly set up the Delhi Metro Rail Corporation (DMRC) registered on 3 May 1995 under The Companies Act, 1956. Construction started in 1998, and the first section, on the Red Line, opened in 2002, followed by the Yellow Line in 2004, the Blue Line in 2005, its branch line in 2009, the Green and Violet Lines in 2010, and the Delhi Airport Metro Express in 2011.
As of September 2013, with the completion of Phase I, Phase II and the beginning of operations on Phase III, the Delhi Metro network comprises six lines (plus the Airport Express line), serving 135 metro stations (plus 6 Airport Express stations, for a total of 141), and operating on a total route length of 193.2 km (120.0 mi) (including the Airport Express line).
Line Stations Length (km)
Terminals Rolling stock
Red Line 21 25.09 Dilshad Garden Rithala 26 trains
Yellow Line 35 44.65 Jahangirpuri HUDA City Centre 60 trains
Blue Line
43 49.93 Noida City Centre Dwarka Sector 21 70 trains 7 8.74 Yamuna Bank Vaishali
Green Line
14 15.14 Inderlok Mundka 15 trains 1 3.32 Ashok Park Main Kirti Nagar
Violet Line 15 23.24 Mandi House Badarpur 30 trains
Airport Express 6 22.70 New Delhi Dwarka Sector 21 8 trains
TOTAL 141 192.
The Red Line was the first line of the Metro to be opened and connects Rithala in the west to Dilshad Garden in the east, covering a distance of 25.09 kilometers (15.59 mi). It is partly elevated and partly at grade, and crosses the Yamuna River between Kashmere Gate and Shastri Park stations. The inauguration of the first stretch between Shahdara and Tis Hazari on 24 December 2002 caused the ticketing system to collapse due to the line being crowded to four times its capacity by citizens eager to have a ride. Subsequent sections were inaugurated
from Tis Hazari – Trinagar (later renamed Inderlok) on 4 October 2003, Inderlok – Rithala on 31 March 2004, and Shahdara – Dilshad Garden on 4 June 2008. The red line has two interchange stations, the first being Kashmere Gate with the yellow line and the second Inderlok with the green line. Starting from 24 November 2013 six coach trains will be inducted in a phased manner in red line.
The Yellow Line was the second line of the Metro and was the first underground line to be opened. It runs for 44.36 kilometers (27.56 mi) from north to south and connects Jahangirpuri with HUDA City Centre in Gurgaon. The northern and southern parts of the line are elevated, while the central section through some of the most congested parts of Delhi is underground. The first section between Vishwa Vidyalaya and Kashmere Gate opened on 20 December 2004, and the subsequent sections of Kashmere Gate – Central Secretariat opened on 3 July 2005, and Vishwa Vidyalaya – Jahangirpuri on 4 February 2009. This line also possesses the country's deepest Metro station at Chawri Bazaar, situated 30 meters (98 ft.) below ground level. On 21 June 2010, an additional stretch from Qutub Minar to HUDA City Centre was opened, initially operating separately from the main line. However, Chhatarpur station on this line opened on 26 August 2010. Due to delay in acquiring the land for constructing the station, it was constructed using pre-fabricated structures in a record time of nine months and is the only station in the Delhi metro network to be made completely of steel. The connecting link between Central Secretariat and Qutub Minar opened on 3 September 2010. Interchanges are available with the Red Line and Kashmere Gate ISBT at Kashmere Gate station, Blue Line at Rajiv Chowk Station, Violet Line at Central Secretariat, Rapid MetroRail Gurgaon at Sikandarpur and with the Indian Railways network at Chandni chowk Delhi Junction Railway station and New Delhi railway stations. Yellow line is the first line of Delhi Metro which has phased out all four coach trains with six and eight coach configuration. The Metro Museum at Patel Chowk Metro station is a collection of display panels, historical photographs and exhibits, traces the genesis of the Delhi Metro.
The Blue Line was the third line of the Metro to be opened, and the first to connect areas outside Delhi. Mainly elevated and partly underground, it connects Dwarka Sub City in the west with the satellite city of Noida in the east, covering a distance of 47.4 kilometres (29.5 mi). The first section of this line between Dwarka and Barakhamba Road was inaugurated on 31 December 2005, and subsequent sections opened between Dwarka – Dwarka Sector 9 on 1 April 2006, Barakhamba Road – Indraprastha on 11 November 2006,
three new stations to the network and marking the completion of the line. The most recent section, between Mandi House and Central Secretariat, was opened on 26 June 2014.
The Airport Express line runs for 22.7 km (14.1 mi) from New Delhi Railway Station to Dwarka Sector 21, linking the Indira Gandhi International Airport. The line was operated by Delhi Airport Metro Express Pvt. Limited (DAMEL), a subsidiary of Reliance Infrastructure, the concessionaire of the line till 30 June 2013 and is now being operated by DMRC. The line was constructed at a cost of 57 billion (US$960 million), of which Reliance Infrastructure invested 28.85 billion (US$480 million) and will pay fees on a revenue-share model. The line has six stations (Dhaula Kuan and Delhi Aerocity became operational on 15 August 2011), with some featuring check-in facilities, parking, and eateries. Rolling stock consists of six-coach trains operating at intervals of ten minutes and having a maximum speed of 135 km/h (84 mph). Originally scheduled to open before the 2010 Commonwealth Games, the line failed to obtain the mandatory safety clearance, and was opened on 24 February 2011, after a delay of around 5 months. After 16 months of commencement of operations, the line was shut down for repairs of the viaducts on 8 July 2012. The line reopened on 22 January 2013. On 27 June 2013 Reliance Infrastructure Ltd intimated DMRC that they are unable to operate the line beyond 30 June 2013. Following this DMRC took over operations of Airport Express line from 1 July 2013 with an Operations and Maintenance team of 100 officials to handle the line.
Delhi Metro was planned to be built in phases spread over around 20 years as with each phase having a target of five years and end of one phase marking the beginning of another. Phase I (65 km) and Phase II (125 km) were completed in 2006 and 2011, respectively, and Phase III and Phase IV are scheduled for completion in 2016 and 2021, respectively. Work on Phase III started in 2011 while planning for Phase IV has begun. Ex-chief of DMRC hinted that by the time Phase IV is completed, the city will need Phase V to cope with rising population and transport needs.
Out of 2 new lines and 10 route extensions proposed for Phase III, cabinet approvals have been obtained for 2 new lines and 7 line extensions totaling 160.27 km, with an estimated cost of 350
billion (US$5.9 billion). Construction has already begun on many of these. In April 2014 the Delhi governor gave approval for two further extensions. All the approved lines are:
Line Stations Length (km)
Terminals
No. of interchanges planned
Yellow Line extension 3 4.48 Jahangirpuri Badli 0
Violet Line
Central Secretariat Kashmere Gate^2
11 13.875 Badarpur Ballabgarh 0
Blue Line branch
4 5.5 Dwarka Najafgarh 1
5 6 Noida Centre^ CityNoida Sector 62 0
Green Line 6 11.182 Mundka Bahadurgarh 0
Brown Line-Inner Ring Road Line (Line 7)
37 58.40 Mukundpur Shiv Vihar 10
Magenta Line-Outer Ring Road Line (Line 8)
26 37.25 Janakpuri West Botanical Garden 4
Red Line 6 9.6 Dilshad Garden New^ Bus^ Stand, Ghaziabad
Airport Express 5 11.63 Dwarka 21 SectorIFFCO Chowk 1
Total 104 167.277 18
