Project Appraisal and Financing (PAF)

SEM-IV; AY – 2012-13

(COURSE HANDOUT)

Faculty Introduction:

Name: Venugopal R. ( visiting faculty)

The faculty can be contacted at:

e-mail: venumanuri@gmail.com

Mobile: 09848538882

Room No: F104 (F block, 1st Floor)

Course Instructions

The detailed session plan attached (Annexure-I) provides the tentative schedule of the topics & cases that will be covered in each session. Care will be taken to stick to the schedule. In case the schedule is revised, the revision will be informed to the students in advance.

This is a case-based class and keeping into consideration that 20% weightage out of total marks is given to class participation (CP), the students expected to come prepared to the class.

The evaluation structure is provided after the detailed session plan in Annexure-II. The class tests will not have any make-up as the days on which the tests will be conducted have been informed in advance. In case you remain absent you will get an F grade in the component.

Students are advised to attend the classes and not bunk them even though it is their last semester. Students who take leave will get zero marks in class participation for the class when he is absent and these classes will be considered in finalizing their class participation grades. Hence be sure that you are present for all classes.

Discipline in the class is most important. Cell phones are not to be carried in class. If cell-phones are brought, they should be switched to silent mode. In case the cell phone of any student rings in the class, he gets zero for class participation for that class.

Students are expected to be in the class in time without fail. No one will be allowed in the class after the faculty member enters the class or the starting time of the class as per the schedule whichever is later. Do not disturb the class be entering after the faculty member has entered. In case someone tries to disturb, he will be penalized by giving zero in CP for the next three classes.

Please do not call the faculty unless urgent on his mobile after evening 8.00 pm.

The course consists of hand-outs and reading material to be studied along with the cases from time to time. Please note that the case-study as well as hand-out/reading material is to be carried to the class-room during the next session if the discussion is not over. In case it’s not brought, the student might be asked to go back and bring it. More important, any material is provided in advance to read and come prepared to the class and not start reading in the class.

I will appreciate any feedback on my class anytime during the semester. In case you mean to be anonymous you can always put in an anonymous note in my cabin or send me an anonymous mail. Be sure you will never be penalized for any criticism of my class and I would rather discuss your problems face-to-face.

In case any student wants to meet the faculty, he should inform the faculty in advance through mail or call and take prior permission from the faculty. This will help the faculty to organize well as well as save time of the student.

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Instructions for Class Participation:

Class Participation is a continuous evaluation component based on your participation and performance during the case discussion when the case is conducted in the class.

Each student will be evaluated two times during the semester for ten marks each.

The following points will be kept in mind while evaluating the students

o Conceptso Analysiso Preparednesso Attitude and Disciplineo Relevance and Communication

The students are expected to read the case and the assigned reading material thoroughly.

Apart from just reading the case, the students must also spend considerable time in analyzing the cases.

Please speak what is relevant NOW and not what was relevant about fifteen minutes before.

Quality rather than the quantity of contribution is important.

The faculty will ask any one from the students to speak and contribute. In case a student is unable to contribute, he will lose his marks and grade for the class. This prerogative to the faculty is to ensure that all students have an equal chance to contribute to the case-discussion and no student is left out from participating in the class.

Raise your hands if you wish to speak. Indiscipline, aggressive or unruly behavior can result in a zero marks for you.

Students are expected to listen carefully to their peers and the instructor.

Grading would be a combination of the above points. Paying attention to the above would help a student get an A. However, as the grading is relative in nature, it does not guarantee an A. For example, you may be good at concepts but somebody may be better than you.

Similarly, not paying attention to the above points, especially indiscipline or wrong attitude towards your peers, would bring you closer to securing a D grade.

Note: Any student who is absent or does not sit in his/her own seat would straight away be awarded a zero, i.e. F grade, if his/her name is called for evaluation on any given day.

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Annexure 1Project Appraisal and Financing (PAF)

# Topic Session Case title

1

Introduction 1

Need for Project Appraisal 1 Note on Financial Programming over Long Horizons

(9-294-087) Stryker Corporation: Capital Budgeting (9-208-046)

2Project Appraisal Techniques

2 Note on APV (9-293-092) MIRR a better measure (BH285-PDF-ENG)

1 Ocean Carriers (9-202-027)

3Project Cash-flow Estimation and Project Selection

1 Introduction to Cashflow Valuation Methods (9-295-155)

2 Flash Memory Inc. (4230)

4Capital Rationing and Project Selection

1 New Heritage Doll Company (4212)

5Risk Analysis and Project Selection

1 Pit-falls in evaluating risky projects (HBR 85106)

1 South-port Minerals (9-274-110)

NCP-I 1

6 Decision Trees1 Decision Trees for Decision Making (HBR 64410)

1Merck and Co.: Evaluating the drug licensing opportunity (9-201-023)

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Real-options in Capital Budgeting: Decision Trees and Application of Real options

1 Capital Projects as Real Options (9-295-074) Investment Opportunities as Real Options (HBR

98404)

2 Real Options Exercises (9-208-045) Penelope’s Personal Pocket Phones (9-299-004)

1 Bidding for Antamina (9-297-054)

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Project Finance: Introduction, Project Finance v/s Corporate Finance, Use of project Finance

1 Overview of project finance 2009 update (9-210-061) BP- Amco (A) (9-201-054)

2 Note on Caspian Oil Pipelines (9-299-044) BP- Amco (B) (9-201-067)

9Market & Demand Analysis of Projects

2

Market Analysis (9-576-056) Marketing Analysis Tool-kit (9-510-081)

Air-bus A3XX: Developing world’s largest commercial jet (A) (9-201-028)

NCP II 1 10 marks

10Social Cost-benefit Analysis of Projects

2An Economic Framework for Assessing Development Impact (9-202-052)

2 Nghe An Tate and Lyle Sugar Company (9-202-054)

11Structuring Project Finance: Sources of Financing and Choice of Financing

1 Detailed Project Report (DPR) Preparation

2Chase’s Strategy for Syndicating the HK Disneyland Loan (A) (9-201-072)

12Basel II Accord and Project Finance

2Basel II: Assessing the default and loss characteristics of project finance loans (9-203-035)

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Annexure 2

EVALUATION

The course evaluation consists of five components:

# Evaluation Component Weight

1 Class Participation 20%

2 2 Class Tests (NCP components) 20%

3Simulation Game (CP Component)

20%

4 End-semester Exam 40%

Total 100%

Class Participation

It is for 20% weightage and will be conducted in two components.

Class tests

Two class tests for 10% weightage each will be conducted based on curriculum discussed prior to the scheduled tests.

There will be no Make-up or retests.

Capital Budgeting Simulation

The Capital Budgeting Simulation Game is being introduced so as to provide the students hands on experience on project appraisal and financing process. The students will be evaluated in this game for their participation and decisions. This component will be evaluated for 20% weightage. Instruction for the same will be provided later.

End-Sem Exam

An end-sem exam covering the entire syllabus would be for 3hrs and would be comprehensive in nature.

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