CENTRE FOR CONTINUING EDUCATION EXECUTIVE MBA (POWER MANAGEMENT)

BATCH: _______________________ SEMESTER: _______________________ NAME: _______________________ SAP NO/REGN NO: _______________________

ASSIGNMENT 2 FOR Financing Energy Sector Projects MBPF 913 Last date for submission: 15th Nov.2012 UNIVERSITY OF PETROLEUM & ENERGY STUDIES

Section A (Write short notes on the following) 1. 2. 3. 4. PERT Private Placement Front End Fees Lease and Buy back Section B (Answer the following questions)

(Max Marks: 4*5)

(Max Marks: 3*10)

5. What is risk management Paradigm? Discuss the risk management procedure. 6. Discuss the norms of IREDA for loan financing of wind power project. 7. What is simulation? Discuss the technique of Monte Carlo Simulation. Section C (Answer the following questions) (Max Marks: 2*25) 8. Following is the consolidated statements of Anil Industries for the years 2008-2010. You are required to make a ratio analysis and give your recommendations with reference to the state of liquidity, activity, leverage, profitability and investment.

Extracted Consolidated Balance Sheet 2008 2009 Sources of Funds Share Capital (Equity with face value of Rs 10) 151500 151500 6% Preference Shares 100000 100000 Net Worth 251500 251500 Secured Loans Short Term Loans 138357 104393 7% Long Term Loans 43602 29066 181959 133459 Unsecured Loans Short Term Loans 32000 32000 Long Term Loans 213297 176437 245297 208437 Total Liabilities 678756 593396 Application of Funds Fixed Assets Gross Block 474005 494674 Goodwill 498333 519571 972338 1014245 Current Assets, Loans and Advances Short Term Investments 18366 81801 Inventories 251354 288959 Sundry Debtors 849038 871307 Accrued Revenues 35281 68846 Loans and Advances 192275 284940 Cash and Bank Balances 166488 186656 1512802 1782509 Current Liabilities & Provisions Sundry Creditors 458203 500546 Other Current Liabilities 534905 735466 Provisions 187848 267603 1180956 1503615 Net Current Assets 331846 278894 Total Assets 2485140 2796754 Year

20010

151500 135000 286500 145989 95000 240989 32000 132554 164554 692043

530266 571497 1101763 81801 242850 1282882 150853 380877 216839 2356102 637491 971480 365816 1974787 381315 3457865

Profit/Loss Account Year 2008 Net Sales 2881650 Other Income 77391 Total Revenue 2959041 Purchases 1300601 Manufacturing expenses 779737 Operating Expenses 653476 Earnings Before Interest, Depreciation and Tax 225227 Depreciation 69233 Interest 40499 Earnings Before Tax 115495 Provision for current tax 46000 Earnings After Tax 69495 Appropriations Dividend 15150 Transfer to reserves and Surpluses 54345

2009 3388867 72817 3461684 1371887 807359 1057236 225202 69071 30537 125594 52500 73094 15150 57944

2010 4570656 116788 4687444 2007399 1593401 787598 299046 60639 31405 207002 80000 127002 30300 96702

Other Information Market Price Principal Repayment

2006 630 34765

2007 546 36787

2008 786 43876

9. The following information of K.C.Ltd is available to you for your perusal: The present book value capital structure is as follows: Debenture Preference Shares Equity Shares (Rs 100 per Debenture) (Rs 100 per Share) (Rs 10 per Share) Rs 8,00,000 Rs 2,00,000 Rs 10,00,000

All these securities are traded in the secondary market. The recent prices of debentures are @Rs 110, preference shares @ Rs 120 and equity shares @ Rs 22. Anticipated external financing opportunities are: i. Rs 100 per debenture redeemable at par; 20 year maturity,8% coupon rate , 4% flotation cost and selling price in primary market Rs 100.

ii. iii.

Rs 100, 10% preference shares redeemable at par: 15 years maturity, 5% flotation cost, selling price in primary market Rs 110. Equity shares Rs 10; Rs 2 per share of flotation cost, selling price in primary market is Rs 22.

In addition, the dividend expected on the equity shares at the end of the year is Rs 2 per share; the anticipated growth rate in dividends is 5% and the company has the practice of paying all its earnings in the form of dividends. The corporate tax rate is 50%. You are required to determine the weighted average cost of capital using i. ii. The book value weights The market value weights