55602526 a project report on investment decision final

8/18/2019 55602526 a Project Report on Investment Decision Final

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A Project Report on

Investment Decision (Payback period &NPV) For

Submitted to-

Mr. C. Nagapawan (Coordinator, IMBA) & Mr. R. K. Das (Faculty, IMBA)

Submitted by- ars!a "and#y (Rollno. $ %%)


2/23

Mitus!a Kuari (Roll no. ' ) M##ra Mis!ra (Roll no. $ *) Manis!a Mis!ra (Roll no. $ +)

Apura -tars! (Roll no. $ /%)ACKNOWLEDGEMENT

We would like to avail the presentation of the project report on the

topic Investment decision by NPV and PAY BA! period method

of "N"# #td $%his report would have been impossible wuthout thesupport and &uidance that we received from various people at

different sta&es of the project' We were &iven an insi&ht of all

practical aspects and learnt valuable thin&s by makin& this project

report '

(ur sincere thanks to our &uide )r' *aju !umar +as

whose e,cellent &uidance$ encoura&ement and patience has made

possible the successful completion of this project'

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3/23

Date-

CERTIFICATE

0!is is to c#rti1y t!at Ms. ars!a "and#y, Ms. Mitus!a,

Ms. M##ra Mis!ra, Ms. Manis!a Mis!ra and Mr.

Apura -tars! !a# suc#ss1ully copl#t#d and

su2itt#d t!# pro3#ct r#port on t!# topic Inevestment

+ecision by NPV and Payback Period )ethod for "nel #td' under

the &uidance of the undersi&ned'

Mr. C. Nagapawan Mr. R.K. Das

(Coordinator, IMBA) (Facult, IMBA)

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Index:

• Opening of the project… 5

• Foreign Direct Investment… 6

• FDI in India… 7

• Areas of investment… 9

• Investing Company’s rofi!e "#ne!$… %&

• 'hy #ne!…(( %)

• *ocation… %5

• 'hy +har,hand…(( %6

• -.merica! assessment of the project… %9

• Conc!.sion / recommendation… 0)

• 1i2!iography… 03

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Opening…

E!er econo" #as its own c#aracteristics. Indian

econo" also #as. $o"e o% its c#aracteristics are-

• &ow le!el o% inco"e

• 'oor capital %or"ation

• &ow le!el o% tec#nolog

• neploited natural resources

• 'oor in%rastructure

*#ese issues can +e addressed in a nu"+ero% was. ne o% w#ic# is Foreign Direct In!est"ent orFDI.

0


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Foreign Direct

Investment- FDI re%ers to capitalin%lows %ro" a+road t#at in!est in t#e productioncapacit o% t#e econo". It is a "ore pre%erred%or" o% eternal %inance. It +ene%its an econo"+-

• triggering tec#nolog

spillo!ers,• assisting #u"an capital

%or"ation,

• contri+uting to international

trade integration andparticularl eports,

•#elping create a "oreco"petiti!e +usinessen!iron"ent,

• en#ancing enterprise

de!elop"ent,

• increasing total %actor

producti!it and,

• "ore generall, i"pro!ing t#e

e%%icienc o% resource use.

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FDI in India- Foreign direct in!est"ent(FDI) in India #as plaed an i"portant role in t#ede!elop"ent o% t#e Indian econo". FDI in India#as - in a lot o% was - ena+led India to ac#ie!ea certain degree o% %inancial sta+ilit, growt# and

de!elop"ent. *#is "one #as allowed India to%ocus on t#e areas t#at "a #a!e neededecono"ic attention, and address t#e !ariouspro+le"s t#at continue to c#allenge t#e countr.

India #as continuall

soug#t to attract FDI %ro" t#e worlds "aor in!estors.In /001 and /000, t#e Indian national go!ern"entannounced a nu"+er o% re%or"s designed toencourage FDI and present a %a!ora+le scenario %orin!estors. FDI are per"itted t#roug# %inancialcolla+orations, t#roug# pri!ate e2uit or pre%erentialallot"ents, + wa o% capital "ar3ets t#roug# 4uro

issues, and in oint !entures. FDI is not per"itted int#e ar"s, nuclear, railwa, coal 5 lignite or "iningindustries.

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A nu"+er o% proects #a!e +een announced in

areas suc# as electricit generation, distri+ution

and trans"ission, as well as t#e de!elop"ent o%

roads and #ig#was, wit# opportunities %or

%oreign in!estors.

But e!en toda a lot o% natural resources are

untapped and a lot is needed to +e done %or a

rapid capital %or"ation. *#us FDI is one o% t#e

"ost soug#t a%ter "easures to tac3le t#ese

issues.

Areas of Investment-

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Areas t#at need special attentionare #ealt# care, in%rastructure, electricit generation,real estate, etc. 6e #a!e considered electricitgeneration or energ sector as our area o% interest %ort#is proect.

Investing Company

4


10/23

Prole- Enel 5Ente Na6ionale per l7Ener&ia eLettrica8 is an

Italian energ pro!ider, t#e t#ird-largest in 4urope +"ar3et capitali7ation. For"erl a state-owned"onopol, it is now partiall pri!ati7ed wit# Italiango!ern"ent control8 t#e largest s#are#olders are t#e

Italian Ministr o% 4cono" 5 Finance (/9.0:) andt#e state-run +an3 Cassa Depositi e 'restiti (/;.


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• Headuarter- Ro#, Italy

• !reas ser"ed- Italy, 8pain, Franc#,B#lgiu, 9r##c#, Bulgaria, 8loaia,

Roania, Russia, -8A, C!il#, Nicargua, 4l8alador, "anaa, Costa Rica and Bra:il

• Products- Natural 9as and 4l#ctricityproduction & distri2ution

• #e"enue- ;*%.% 2illion (5//)

•

$peratin% income- ;.57 2illion(5//)

• Prot- ;+.%6/ 2illion (5//)

• 'ota assets- ;7./+ 2illion (#nd5//)

• 'ota euity- ;+%.++ 2illion (#nd5//)

99


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In a nutshell, 4nel is Itals largest power co"pan,and 4uropes second listed utilit + installed capacit.It is an integrated plaer, acti!e in t#e power and gassectors. 4nel operates in "ore t#an ,=== M6 o% net installedcapacit and sells power and gas to "ore t#an ?/

"illion custo"ers.

!y Enel…""

9-


13/23

It is clear %ro" t#e c#art +elow t#at t#eproceeds o% t#e co"pan #as increased o!er earsand so #as #appened wit# t#e pro%it w#ic# rose %ro"

@ 9,=9? "illion in ==? to @ 910> "illion in ==; to @90;; "illion in ==1 to @ >09 "illion in ==0.

According to For+es, t#e net pro%it o%4nel stood around @ >90= "illion at t#e end o% =/=.

All fi&ures are in million "uros

*#e co"pan #as also +een a+le to pa di!idends toits s#are#olders e!er ear. 4nel #as got plent o%eperience in t#e international "ar3et and #as +eendoing well.

9.


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It can +e concluded t#at 4nel isin sound position to start its operation in India andin!est on a new proect.

#ocation- 6#ile selecting t#e location %or a

proect %ew t#ings are essentiall considered-a!aila+ilit o% raw "aterials, c#eap and plent o% "anpower, transportation %acilities, connecti!it wit# t#e"ar3et, go!ern"ent policies, etc. Keeping t#esepoints in "ind t#e +est suited place %or 4nel to in!estis #ar3#and.

9/


15/23

!y $!ar%!and-

#ar3#and is gi%ted wit# a!ariet o% natural endow"ents. It #as a greatnatural storage o% coal and "inerals including ironore, "ica, uraniu", etc. . Most o% t#e electricitgeneration potential are untapped. *#ere isi""ense potential %or setting up o% *#er"al,del, eot#er"al, Ato"ic, Met#ane and as+ased new power plants in #ar3#and.

90


16/23

All g& in '

*#e installed capacit o% power in #ar3#and is ,>0=

M6. *#is includes


17/23

Roads 8 *#e total lengt# o% roads in t#e $tate is


18/23

Considering t#e need andscope o% t#e energ sector and also considering t#e

in!est"ent potential o% 4nel, it is reco""ended toin!est Rs. /== cr. on electricit generation proect in#ar3#and %or a period o% > ears in initial stage.

A%ter co"pletion o% > ears t#e %uturecourse o% operation will +e decided.

Considering t#e potential in t#e powersector t#e inco"e %orecast %or t#e proect a%terdepreciation and ta %or a period o% > ears is Rs. =cr. , Rs.


19/23

ear Cas# in%low Cu"ulati!e cas#in%low

=/ =,oo,oo,=== =,==,==,===

=


20/23

*#e N'E "et#od discounts in%lows andout%lows to t#eir present !alue at t#e appropriate costo% capital and sets t#e present !alue o% cas# %lows

against t#e present !alue o% out%lows. *#us, t#e netpresent !alue is o+tained + su+tracting t#e present!alue o% cas# out%lows.

I% t#e re2uired rate o% return isassu"ed to +e =: + t#e co"pan t#en

ear Cas# in%low (Rs.) Discounting %actor 'E o% cas# in%low (Rs.)

/ =,==,==,=== =.109 /?,??,==,===

;0 /;,9;,==,===

<


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Net 'resent EalueJ Cas# in%low L Cas# out%lowB %or"ula8

N'EJ Rs. (/,=>,;9,==,=== L /,==,==,==,===)

J Rs.>,;9,==,===

CMM4N*8 6e can see t#at N'E o% t#e proect is positi!e.*#us, t#is proect s#ould +e considered + 4nel.

,oncusion and #ecommendation-

*#e calculations s#ow t#at t#e N'E o%t#e proect is "ore t#an t#e in!est"ent done and t#eco"pan will get t#e repa"ent o% t#e in!est"ent "ade in9.> ears. *#e return generated a%ter t#e pa+ac3 periodwill o+!iousl +e surplus %or t#e co"pan. A%ter co"pletion o%

> ears, t#e co"pan will #a!e to decide w#et#er it wants togo a#ead wit# t#e proect %or so"e "ore ti"e or notdepending on t#e t#en situations. I% t#e co"pan decides togo a#ead a%ter > ears, it will not #a!e to spend "uc# ongetting t#e %ied assets. *#e surplus return generated at t#eend o% > ears will itsel% +e a+le to "eet t#e t#en

-9


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re2uire"ents (ecept in so"e odd circu"stances). *#ese%acts altoget#er suggest t#at t#ere is a %a!ora+le condition%or in!est"ent in t#is proect.

*#us t#e proect is reco""ended to +eaccepted + 4nel.

BIBLIOGRAPHY

• *et +oo3 o% Financial Manage"ent + M. .

K#an

• 6e+site o% Dept. o% Industries, o!t. o%

#ar3#and

• 6e+site o% 4nel 4nerg &td.

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• 6e+site o% For+es

55602526 a project report on investment decision final

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