42034581 presentation on jaypee

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JAYPEE GROUP

12/6/2013NDIM 1



Established in 1979, under the foray of Mr.

Jaiprakash Gaur.

The group is a 7000 crore diverse industrial

conglomerate.

Company’s Vision -As a group, the company iscommitted to strategic business development in

infrastructure, as the key to nation building in the21st century. It aims to achieve perfection ineverything it undertakes with a commitment toexcel

Company Profile

12/6/2013NDIM 2



Engineering and construction

Power generation

Cement production

Real estate developments

Hospitality services

Education

Activities involved

12/6/2013NDIM 3



Jaypee Infratech Limited, has undertaken the ribbondevelopments of the expressways and the townshipsdevelopments.

Right to develop 6,175 acres of land with a 90-year lease. The real estate is presently marketed under the “Jaypee

Greens” brand.

The master planners of Jaypee Greens are Arcop Associates

Private Limited.Yamuna Expressway is a 6-lane road link of 165 kms

connecting Greater noida to Agra, with the basic aim to cutdown the travel time to nearly 100 minutes.

Real Estate

Developments

12/6/2013NDIM 4



The Yamuna Expressway Project is conceived withthe idea to not only reduce the travel timebetween New Delhi and Agra but also to open upavenue for Industrial and Urban development ofthe region and provide the base for convergenceto tourism and other allied industries.

Project Concept

12/6/2013NDIM 5



The objective of the project is to do a detailedfinancial feasibility study of the Yamuna expresswayproject undertaken by Jaypee Infratech Ltd. The

project involved following sub-objectives:Analyze Capital structure

Making Cash Flows Projections

Model for Traffic Estimation & Toll revenueRisk assessment

Objective of the Project

12/6/2013NDIM 6



ICICI Bank will be providing approximately Rs.32,000 Million ($745 Million)

Cash aggregating to Rs 2,500 million ($ 58 Million)

The Balance Rs 29,500 million ($ 686 Million) asrupee term loan in Jaypee Infratech Ltd.

Financial Features

12/6/2013NDIM 7



Crucial aspect of planning the facility.

Based on the traffic and the travel characteristics,gathered through primary surveys, as well as

secondary data, the traffic that is likely to use theproposed expressway is composed of twoelements:

Divertible Traffic

Development traffic

Traffic Estimation

12/6/2013NDIM 8



An equitable and calculated process for financingtransportation facilities.

Generate revenues to mitigate roadways and bridgeconstruction, operation and maintenance costs.

Rates are often assessed according to the number of axles ona vehicle and the category of traffic.

There are two systems of toll collection:

Open system

Closed system

Estimation of Toll

revenues

12/6/2013NDIM 9



The Close system of tolling is most suitable as this is asgreen filed project.

It must have the following objectives:

Value addition to the traveller in form of savings in timetravel and travel cost.

Easy entry to exit from the expressway.

Various ways of collecting toll revenues:

Manual toll collectionAutomatic toll collection

Semi-automatic toll collection

Tolling strategy

12/6/2013NDIM 10



Step for calculation are:- 1)Growth rates for the type of vehicles are taken from the consultant

report.

2)The road stretch of 165 km is divided in following 5 sections forprojected no. of vehicles

Sections Km

1 0 to 36.17

2 36.18 to 48.2

3 48.2 to 110

4 110 to 153.45

5 153.45 to 165.53 3)Traffic Distance is calculated using the formula

Summation of 1 to 5 (Distance of Section 1 X Traffic no for Section 1)

4)Toll rate structure is taken from the consultant report with 2010 as thebase year

5)Toll revenue= Toll rate X Traffic Distance

Toll Revenue Financial

Model

12/6/2013NDIM 11



Principal amount borrowed –Rs.9000 crores.Rate of interest-12.5% per annum compounded quarterly.

Loan tenure-13 years 3 months

Construction period- 3 years.

Loan being used as in construction period: 1st year- 20% of the amount

2nd year- 40% of the amount

3rd year- 40% of the amount

Construction period is taken as the moratorium period.Calculations have been taken for debt- equity of following

ratio’s:

60:40 ratio

50:50 ratio

Loan repayment schedule

12/6/2013NDIM 12



Cash flow statement

Profit and loss account

Balance sheet

Preparation of financial

statements

12/6/2013NDIM 13



Inflow of cash- annual revenues

Other incomes-from the petrol pumps, restaurants

Outflow of cash-maintenance and operational expenses

Calculation for 36 years durationMajor findings:

CAPEX is more than incomes, thus resulting in a negativecash flow for initial years.

Loan repayment outcasts the income being fetched fromthe toll.

But after 10 years, the company is able to get decentinflows from the expressway project.

Cash Flow statement

12/6/2013NDIM 14



Incomes- toll revenues

Expenditure- maintenance and operational expenses

Depreciation, also to be charged on the cost for 36 years.

Interest payment of loan also to be considered whiletabulation.

After tabulating the gross profit/loss, providing forprovision for taxation.

Also, the concept of MAT to be included.

Inferences drawn:

Negative cash flows result in losses, but gradually with theincrease in the toll rates and the traffic, the losses are

being converted to profits.

Profit and Loss account

12/6/2013NDIM 15



Sources of fund: equity share capital, reserves and surplus,term loans, advances

Application of funds: land and site development, cost ofconstruction, preliminary and preoperative expenses, IDC,

contingencies, cash and bank balancesDeficit sponsored by the real estate projects of the

company.

Findings:

The company being a big brand in the constructionindustry is able to carry off the burden of debt easily, withthe help of its subsidiaries. The expressway will turn to be amajor source of revenue for the company, although it has

to incur losses for the initial stage.

Balance Sheet

12/6/2013NDIM 16



Graphical

Representation

12/6/2013NDIM 17



Risk Area

Risk Descriptions

Impact

Traffic Numbers Error in traffic counts Incorrect traffic numbers

High Roll Rates Higher toll rates than alternative routes may

cause diversion away from project road Lower Traffic

Traffic volumes rates Economic downturn, projection period Difficult to assess and impact for the

liquidity of the project

Political Risk Change of government, change in policies Distraction of work and cash flow

Risk Assessment

12/6/2013NDIM 18



Initial financial trouble

Heavy debt amount with loan repayments

Eventually when revenues increase, the burden of debt getsloosen up.

Backed by the big brand name of the company.

Will prove to a major source of revenue generation for the

company.The expressway project is financially sound and feasible, and

will also prove beneficial for both the company as well as themasses.

12/6/2013NDIM 19



12/6/2013NDIM 20

42034581 presentation on jaypee

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