Sunrise Energy Pvt. Ltd. Is considering entering into a project finance contract to build port facilities on the shore of Gujarat for importing Liquified Natural Gas (LNG). The key distinctive features of this project as follows:

• Largest Foreign investments in India
• Largest infrastructure project financing in India
• In case of bankruptcy, the responsibility will fall on the private builder and not the government

What all steps will be involved in the entire project lifecycle during the construction of the port? Some key pointers that you may choose to include in your analysis are as follows:

• Choice of Debt vs. Equity
• Due diligence process involved
• Types of risks involved
• How to evaluate the present value of the project. Should it enter into the project?
• Break-even analysis
• Estimation of profits
• Allocation of Profits (Cash flow waterfall)

Please include any relevant numerical examples that may help you in strengthening your analysis. You may take some assumptions and base your analysis accordingly. Make sure that you specify every assumption clearly.

ASSUMPTION from my side :

COST 1cr

Yr 1 = 20 lakh

Yr 2 = 30 lakh

Yr 3 = 10 lakh

Yr 4 = 40 lakh

R consider as 10%

Debt-equity is 60 : 40