Project & Infrastructure Finance (PIF) – Prac ce Cases
1. TechWin Motors Pvt. Ltd. (TMPL) is a 2 wheeler OEM in India. The company is now
planning to foray into the EV space. It has plans for se ng up a dedicated plant to
manufacture and sell EVs. The details of the project are as follows –
i. The company will setup a greenfield project at Chakan near Pune for the
assembly of EVs.
ii. The plant will be established over 25 acres. The land is being allocated by the state
government at a rate of INR 20 lacs per acre.
iii. In the ini al phase the total construc on of the manufacturing facili es will be done
over an area of 1,00,000 sq. . with the cost of construc on being approx. INR 1500
per sq. .
iv. An administra ve block will have to be setup. The area for the same of approx. 15000
sq. . and the cost of construc on is expected to be INR 3500 per sq. .
v. The company will have to buy a transformer and transmission equipment worth INR
40 lacs. In addi on, it will have to keep a deposit of INR 25 lacs with MSEDCL for its
connec ons.
vi. The land development charges are expected to be around INR 5 lac per acre.
vii. The other miscellaneous charges associated with the development of the factory are
expected to be in the range of INR 50 lacs
viii. The plant and machinery which will have to be installed is expected to cost INR 25
crores. The company has outlined the following plans for this equipment –
1. Equipment worth INR 10 crores will be purchased from vendors
2. The balance equipment worth INR 15 crores will be leased from the vendors. Long
term leases will be signed. The ini al amount payable would be just 10% and the
balance would be payable yearly for 10 years with minimum lock in of 4 years.
ix. The project is expected to be financed by way of debt and equity in the ra o of 70:30.
x. Bank debt is available to TMPL at 12% p.a. TMPL plans to avail Term Loan with
moratorium of 2 years and repayment of 8 years.
xi. Currently the stocks of companies in the auto and auto ancillary space have delivered
approx. 18% to 22% ROE.
1. Calculate the total cost of the project for TMPL.
2. What is the WACC for TMPL?
3. Plot the term loan repayment schedule for TMPL basis the given informa on.
