FINANCIAL MODEL OF A POWER PROJECT

FINANCIAL MODEL OF A POWER PROJECT - EXECUTIVE SUMMARY...

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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY The purpose of this report is to explain what I did and learned during my internship period with GMR Infrastructure Ltd (GIL) for a period of eight weeks from 12 th April to 10 th June. The report is also a requirement for the partial fulfilment of MBA program. The report focuses primarily on the assignments handled, working environment, successes and short comings that I as intern did encounter when handling various tasks assigned by the supervisor. Capital Budgeting is a project selection exercise performed by the business enterprise. It uses the concept of present value to select the projects. Capital budgeting models are one of several techniques used to measure the value of investing in long-term capital investment projects. Firms invest in capital projects to expand production to meet anticipated demand or to modernize production equipment to reduce costs. Financial planning is a continuous process of directing and allocating financial resources to meet strategic goals and objectives. Financial model is the best tool to forecast these objectives. The study focuses primarily on understanding of the development of the power projects using financial model by observing the existing financial model of the Kamalanga power project (1050 MW). The research involved primary data collection from the industry guide through detailed interview and the secondary data were more of the assumptions provided by the project team. The figures mentioned in this report are to the nearest estimates of the actual figure due to the confidentiality of the Financial Statements/Agreements. It is hoped that this report would serve as a prime vehicle to the improvement of the internship program. 2 |  P a g e
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INTRODUCTION 3 |  P a g e
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INDUSTRY OVERVIEW 4 |  P a g e
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INDUSTRY OVERVIEW India is a power deficit country with an average energy deficit of 11% and peak deficit of 12% in year 2008- 09. India has historically failed to meet its power sector targets by a significant margin and with tremendous opportunities ahead the power sector continues to be affected by the shortfall both on generation as well as transmission side. The various proposals in generation and transmission are currently under different implementation stages. However, the power sector in India has been plagued with a set of problems for meeting the planned targets. The biggest indicator of a poor track record is the inability to meet targets on the power generation capacity additions. Variance with the target has been as high as 50 percent in the past. An indication of targets and actual additions is provided in the graph below: Graph 1 Overall power demand increased at a CAGR of around 5 per cent in the last decade till 2007- 08. There has been a shift in the demand for electricity from various sectors. The share of the industrial sector had declined steadily till 2000-01 and then started rising at a muted rate. The agricultural consumption, after peaking at 31 per cent in 1995-96, declined to 22 per cent in
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FINANCIAL MODEL OF A POWER PROJECT - EXECUTIVE SUMMARY...

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