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The document provides an introduction to derivatives presented by Nayan Parikh. It discusses the origin of derivatives dating back over 2000 years, the emergence of modern financial derivatives post-1970, and defines derivatives as contracts that derive their value from an underlying asset. It also outlines the key characteristics of over-the-counter derivatives markets and types of derivatives including futures, options, and their mechanisms.
Risk Management Using Derivatives in Financial Planning Journal by Gaurav K B...Corporate Professionals
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it is essential to identify business risks accurately and to use the right
control techniques, because derivative products can be used as insurances policies by paying
premium. An Individual/Corporate may think that they can reduce their risk, but in case of event
specific risk and unsystematic risk itâs not the same thing. Event specific risks can only be
managed by buying insurance & unsystematic risks can be managed by diversification. In this
article we'll discuss major financial risks and the way-out to use derivatives for managing those
risks. Before going to the risk management, we have to understand some of the basic concepts
of derivatives.
Risk Management Using Derivatives in Financial Planning Journal by Gaurav K B...Corporate Professionals
Â
it is essential to identify business risks accurately and to use the right
control techniques, because derivative products can be used as insurances policies by paying
premium. An Individual/Corporate may think that they can reduce their risk, but in case of event
specific risk and unsystematic risk itâs not the same thing. Event specific risks can only be
managed by buying insurance & unsystematic risks can be managed by diversification. In this
article we'll discuss major financial risks and the way-out to use derivatives for managing those
risks. Before going to the risk management, we have to understand some of the basic concepts
of derivatives.
what is the future of Pi Network currency.DOT TECH
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The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how can I sell pi coins after successfully completing KYCDOT TECH
Â
Pi coins is not launched yet in any exchange đą this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAYÂ you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers âĨī¸
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
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USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Â
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
Â
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
Â
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ â 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Â
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
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The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new productâit signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Â
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
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how to sell pi coins on Bitmart crypto exchangeDOT TECH
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Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
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3. Origin of Derivatives
īOver 2000 years ago, contracts for delivery in the
future was commonly used with Greek olive farmers
īIn the 1600s, Tulip derivatives were used by the Dutch
and it was more or less only as Louis Bachelier in 1900
formally introduced futures pricing when people
began to take derivatives at more than just face value.
īMore systematic derivative products initially
emerged as hedging devices against fluctuations in
commodity prices. Commodity linked derivatives
remained the sole form of such product for almost 3
centuries.
īEmergence of Financial Derivatives in the post-1970
period. These products are extremely popular and
account for 2/3 of the total derivatives transactions.
4. What are derivatives?
īDerivatives really on a fundamental level are:
â Merely pieces of paper or
â In modern days, electronic contracts
īTo give you a right or an obligation, or a
combination of the two to receive or give
something in the future
npcinfra@vsnl.net
5. īCharacteristics of OTC
OTC Derivatives Derivatives market:
â The management of counter-party (credit)
risk is located within individual institutions.
No formal limit on individual positions,
leverage, or margining.
â No formal rules of risk and burden sharing
â No formal rules for ensuring market stability
and integrity
â Lack of regulator, although they are affected
indirectly by national legal systems, banking
supervision and market surveillance.
npcinfra@vsnl.net
6. īDerivative is a product whose value is derived from
the value of the underlying asset.
īUnderlying asset can be equity, forex, commodity, or
any other asset say an agreement with your neighbour
for 2 bags of sugar next week.
npcinfra@vsnl.net
7. Government Rule
īSecurity Contract (Regulation) Act,1956
[SC(R)A] defines derivative to include
īA security derived from a debt instrument,
share, loan (secured/unsecured), risk
instrument or contract for differences or any
other form of security
īA contract which derives its value from
prices, or index of prices, of underlying
securities
īDerivatives thus are securities under the
SC(R)A and hence the trading of derivatives is
governed by the regulatory framework under
SC(R)A
9. Future
Forwards A forward contract is a customized contract
between two entities, where settlement takes place on a
specific date in the future at todayâs pre-agreed price
Futures A future contract is an agreement between
two parties to buy or sell an asset at a certain time in the
future at a certain price. Futures are special types of
forward contracts in the sense that futures are
standardized exchange-traded contracts.
npcinfra@vsnl.net
10. Forward Contracts
ī An agreement to buy/ sell an asset on a specified
ī
ī
ī
ī
date for a specified price
A bilateral contract with counter-party risk
exposure
Each contract is custom designed
Contract price is generally not available publicly
Reversing the contract needs mutual agreement
npcinfra@vsnl.net
11. Meaning of Futures
Example:- Forwards
ī Farmer growing any commodity
ī Uncertainty about price- Supply and demand
function
ī Merchant requires commodity
ī Oversupply- he/she is having negotiation power
ī Years/time of scarcity- exposed to price risk
Example:- Futures
ī Trade on MCX/ NCDEX/ NMCE
npcinfra@vsnl.net
12. Definition of Futures
ī It is an agreement between the parties to buy/
sell an asset at a certain price in future
ī A futures contract is a forwards contract which is
traded on an exchange
ī Unlike forwards, they are standardized as in
terms of: quantity, quality, and liquidity
ī Generally contracts are offset by an equal and
opposite transaction
npcinfra@vsnl.net
13. Difference Between Forwards and Futures
Futures Market
Futures Exchange
Standard
Standard
Forwards Market
OTC/ Not Fixed
Depends
Depends
Counterparty
Market Place
Clearing House
Central Exchange with wide
network
Bank or client
Over the Phone with
worldwide network
Valuation
Variation Margins
Regulations
Credit Risk
Settlement
Liquidation
Transaction Cost
Marked-to-Market
Daily
Regulated by Exchange
None
Through Clearing house
Offsetting the positions
Commission, charges, etc.
No unique method
None
Self-regulated
Counterparty
Depends
Actual delivery
Direct costs are low
Location
Size of Contract
Maturity/Expiry/
Payment Date
14. Margins
ī Buyers/ sellers are required to deposit a margin on the
ī
ī
ī
ī
contract
Typically 5-10% of the contract value, determined by the
exchange & the clearing house based on expected
volatility
Gains/ losses are netted against the initial margin:
marking-to-market
In case the margin becomes too low, investors is required
to replenish with maintenance margin (75% of initial
margin)
If balance falls below the maintenance margin, investor
receives a margin call and is required to deposit
additional funds called variation margin
npcinfra@vsnl.net
15. S&P CNXType : FUTIDX
Nifty Futures
ī Instrument
ī Underlying : NIFTY
ī Trading cycle: 3-month trading cycle - the near month
(one), the next month (two)& far month (three).
ī A new contract is introduced on the trading day
following the expiry of the near month contract. The
new contract will be introduced for a three month
duration
ī Expiry day: on the last Thursday of the expiry month
ī Contract size: may not be less than Rs. 2 lakhs at the
time of introduction. The permitted lot size for futures
contracts & options contracts shall be the same for a
given underlying or such lot size as may be stipulated by
the Exchange from time to time.
npcinfra@vsnl.net
16. Permitted Lot Sizes of Contracts
Underlying
Symbol
Market Lot
S&P CNX Nifty
NIFTY
50
CNX IT
CNXIT
100
BANK Nifty
BANKNIFTY
50
Derivatives on Individual Securities
ABB Ltd.
ABB
250
Associated Cement Co. Ltd.
ACC
250
Allahabad Bank
ALBK
2000
Alok Industries Ltd.
ALOKTEXT
3350
Andhra Bank
ANDHRABANK
2000
npcinfra@vsnl.net
17. Clearing House
ī Each contract between buyer-seller is substituted by
2 contracts such that the clearing house become
buyer to every seller and seller to every buyer
ī BUYER â Clearing House â SELLER
ī This removes counterparty risk
npcinfra@vsnl.net
18. Importance of Clearing House
ī Entirely different but, works closely with exchange
for its smooth functioning and as âde factoâ
guarantor for all transactions
ī Increases confidence of the traders, volume and
liquidity
ī Maintenance of delivery schedules, delivery of
underlying assets, delivery points, etc.
npcinfra@vsnl.net
19. Important Functions of Clearing House
ī Ensuring adherence to system and procedures
ī
ī
ī
ī
for smooth trading
Minimizing credit risk by being a counterparty
to all traders.
Accounting for all the gains/losses on daily
basis.
Monitoring the speculation margins.
Ensuring delivery of payment for the assets on
the maturity date for all outstanding contracts.
npcinfra@vsnl.net
20. NSE Clearing House
ī National Securities Clearing Corporation Ltd.
(NSCCL)
ī Clearing Members
ī Clearing Banks
ī Clearing & settlement process has three main
activities
ī Clearing
ī Settlement
ī Risk management
npcinfra@vsnl.net
21. Arbitraging
ī It is simultaneous purchase and sale of similar assets
in different markets to take advantage of price
discrepancy.
ī Transaction cost reduces the profit of the
arbitrageur to the minimum.
npcinfra@vsnl.net
22. ContinueâĻâĻ
ī Arbitrage
Arbitragers work at making profits by taking
advantage of discrepancy between prices of the same
product across different markets.
ī Practitioners working within risk finance or
quantitative finance often develop models to price
various assets being traded across the markets
ī Upon finding price discrepancies, one can make use
of a specific combination of derivatives in order to
make a risk less profit.
ī
npcinfra@vsnl.net
23. Types of Futures
ī An index
ī Foreign Currency
ī An Interest-earning asset
ī A physical commodity
ī Futures on individual stock
npcinfra@vsnl.net
24. Hedging with Currency Futures
ī An US exporter is exporting to Germany
ī On 01 May exported. Got confirmation that he
would get DM 625,000 on 01 July
ī Risk: If DM depreciates there will be a loss
ī Hedge with selling DM futures
npcinfra@vsnl.net
25. Illustration
01 July: spot rate $/DM is 0.4407
1 July spot cash flow is $275,437.5
Sell 1 July DM 6,25,000 @ $/DM 0.4407
01, July: Dollar depreciates and spot exchange
rate is 0.4508
ī $ value of DM is (625,000*0.4508) = 281,750
ī Gain on the spot mkt is $281,750 â $275,437.5 =
$6312.5
ī
ī
ī
ī
npcinfra@vsnl.net
28. Option
ī Options are of two types:
â Calls & Puts
īCalls give the buyer the right but not the
obligation to buy a given quantity of the
underlying asset, at a given price on or before
a given future date.
īPuts give the buyer the right but not the
obligation to sell a given quantity of the
underlying asset, at a given price on or before
a given future date.
npcinfra@vsnl.net
34. Hedging a long position in Stock
īBuy stock in the spot mkt
īRisk: price decline
īHedge the above risk by buying put
An investor buys a share for Rs. 100. Buys a put for Rs.
16 with an exercise price of Rs. 110.
Profit/ LossâĻ
npcinfra@vsnl.net
35. Types of Derivatives
īSwaps
īâ Interest Rate Swaps â Currency Swaps
īSwaptions are options to buy or sell a swap
that will become operative at the expiry of the
options. Swaption is nothing but an option on
a forward swap.
īReceiver Swaption is an option to receive fixed and
pay floating.
īPayer Swaption is an option to pay fixed and receive
floating.
npcinfra@vsnl.net
36. Types of Derivatives
ī§ Warrants. Longer -dated options are called warrants
and are generally traded over-the-counter (OTC)
ī§ LEAPS Long-Term Equity Anticipation Securities.
These are options having a maturity of up to three
years.
ī Baskets
Basket options are options on
portfolios of underlying assets. The underlying
asset is usually a moving average of a basket of
assets. Equity index options are a form of basket
options.
īSwaps are private agreements between two parties to
exchange cash flows in the future
â Agreement on formula to be used for exchange of
cash-flows is determined in advance
npcinfra@vsnl.net
37. Exchange Traded Derivatives Market
īIndividuals trade standardized contracts that
have been defined by the exchange. (First
Futures contract were traded in 1865 in CBOT)
īNSEâs derivatives market
īCommencement of derivative trading with
īS & P CNX Nifty Index futures on 12/06/2000.
īTrading in index options commenced on 04/06/2001.
īSingle Stock trading in options started on 02/07/2001
īSingle Stock trading in futures started on 09/11/2001
npcinfra@vsnl.net
38. Derivatives Market-NSE
īThree Contracts are available for trading with
1,2,3 month expiry. A new contract is
introduced on the next trading day following
the expiry of the near month contract.
īParticipants and Functions
ī Self Clearing Member (SCM)
īTrading Member Clearing Member (TM-CM)
īProfessional clearing Member (PCM)
īTrading Mechanism
īTurnover
npcinfra@vsnl.net
39. Economic Functions of Derivative Market
īDerivatives help in discovery of future as well
as current prices.
īThe derivatives market helps to transfer risks
from those who have them but may not like
them in comparison to those who have an
appetite for them.
īSpeculative trades shift to a more controlled
environment of derivatives market.
īAct as a catalyst for new entrepreneurial
activity.
npcinfra@vsnl.net
40. Uses of Derivatives
ī Hedging
Done by parties who seek to offset their existing risks
by entering into a derivatives transaction.
ī Existing risks could be an investment portfolio, price
changes in oil for a petroleum mining company or
perhaps investments in a foreign country.
ī
ī Speculating
ī
Speculation is more commonly used by hedge funds
or traders who aim to generate profits with only a
marginal investment
npcinfra@vsnl.net
41. Growth Driving Factors
īIncreased volatility in asset prices in Financial Markets
īIncreased integration between International Markets
īExponential improvement in communication at
exceptionally reduced costs
īDevelopment of more sophisticated Risk Management
tools, providing economic agents a wider choice of Risk
Management strategies
īInnovations in the derivatives markets, which optimally
combine the risks and returns over a large number of
financial assets leading to higher returns, reduced risk as
well as transactions cost as compared to individual
financial assets
42. Growth in Derivative Trading: NSE
Average Daily Turnover (Rs. cr.)
40000
35000
30000
25000
20000
15000
10000
5000
20
00
-0
20 1
01
-0
20 2
02
-0
20 3
03
-0
20 4
04
-0
5
Ap
r.0
5
M
ay
.0
5
Ju
n.
05
Ju
l.0
Au 5
g.
05
Se
p.
05
O
ct
.0
5
N
ov
.0
D 5
ec
.0
5
Ja
n.
06
Fe
b.
06
M
ar
.0
6
0
npcinfra@vsnl.net
43. Are Derivatives Dangerous?
-
"We view them as time bombs both for the parties that deal
in them and the economic system .. In our view ...
derivatives are financial weapons of mass destruction,
carrying dangers that, while now latent, are potentially
lethal.â
- Warren Buffett, the Chairman of Berkshire Hathaway and
his critique of the derivatives market.
-Are derivatives dangerous?
-That's almost like asking if water is dangerous.
-Derivatives can be dangerous if used incorrectly - as several
large companies and individuals have found out in recent
history.
npcinfra@vsnl.net
44. ContinueâĻâĻâĻ
īDerivatives contribute to the 'completeness' of
the global markets, and without them, loopholes
within the financial industry would exist.
īEven through numerous financial disasters ala
Barings, LTCM, Enron and others related to the
mismanagement of derivatives
īIt is key to consider that it has not been the use of
derivatives as a tool which has led to the downfall
of these companies - but rather, the misuse and
compromise of such instruments.
npcinfra@vsnl.net
46. īStructured investments arose from the needs of
companies which want to issue debt more
cheaply.
īCombinations of derivatives and financial
instruments create structures targeted
investments tied to their specific risk profiles,
returns requirements and market expectations.
īIn India, equity related structured products seem
to be in violation of the Securities Contract
Regulation Act (SCRA). SCRA prohibits the issue
and trade of equity derivative except those which
trade on nationally recognized stock and
derivatives exchange.
npcinfra@vsnl.net
47. Benefits of Structured Products
īPrincipal Protection
īTax-efficient access to fully taxable investments
īEnhanced returns within an investment
īReduced volatility (or risk) within an investment
npcinfra@vsnl.net
49. State Highways of MP :
From the Governmentâs perspective
Projects with government subsidy
npcinfra@vsnl.net
50. âĸ Conditions of roads in MP has substantially
deteriorated over last few years.
âĸ The bad conditions of roads led to lower
traffic
npcinfra@vsnl.net
52. âĸ To make an impact, 14 roads of 2000 kms of
length were taken up for reconstruction /
widening
âĸ These were the highest traffic density state
highways of MP
âĸ The DPRs of these roads were prepared and
the total capital expenditure for the projects
was around Rs. 1000 crores
npcinfra@vsnl.net
53. âĸ The GoMP decided to raise Rs. 500 crores
through Government guaranteed bonds for
road reconstruction projects. The repayment
of the bonds would happen through the
deduction from budgetary allocation to
MPPWD in five years.
npcinfra@vsnl.net
54. âĸ The initial idea was to reconstruct all these
roads by the MPPWD only. However this
approach had following limitations:
- Only 1000 kms of seven roads could be
reconstructed
- It was not possible to raise more than Rs.
500 crores as MPPWD budgetary
allocation did not have more debt
servicing capacity
npcinfra@vsnl.net
55. - As the road condition had deteriorated
substantially, the capital expenditure could
not be reduced without compromising on
the quality of reconstructed roads
- After reconstruction the regular
maintenance of the roads would again be
with MPPWD and had the risk of poor
maintenance in years to come
npcinfra@vsnl.net
56. âĸ In the above scenario the following options
were considered:
- To reconstruct only seven roads of 1000
kms that can be completed in Rs. 500 crores
- To reconstruct some roads completely and
on the remaining roads only very bad
patches to be repaired
- To maintain these roads from the toll to be
collected by MPPWD on completed roads
npcinfra@vsnl.net
57. âĸ As all the above options were not found very
suitable the following option was developed
- To take up all roads on BOT basis with
maintenance on BOT developer for the
concession period with a provision of capital
subsidy from MPPWD to make the projects
viable
- Rs.500 crores were to be utilized by
MPPWD to provide capital subsidy to BOT
developers
npcinfra@vsnl.net
58. âĸ After a lot of deliberation the option of BOT
with MPPWD subsidy was chosen. It was
estimated that though subsidy would differ
from road to road, in aggregate for all roads
50-60% of project costs will come from
MPPWD as subsidy and the remaining would
come from BOT developers. The BOT
developers would then maintain the roads for
the concession period as per the decided
standards
npcinfra@vsnl.net
59. âĸ Project cost on an average of Rs. 50 lacs per km.
âĸ Total road length 1700 kms
âĸ Concession Period : 15 years
âĸ Roughness index during concession Period : 3500mm/km
âĸ Subsidy : ______ bid criterion
âĸ IRR : 20 %
âĸ Bad patches to be repaired in four months of signing
concession agreement to create positive atmosphere
among road users
60. âĸ GoMP adopted uniform toll rates for the
state.The rates are:
Category
Car / Jeep
LCV/ Mini Bus
Bus
Truck
Multi axle
Rates/km/trip
Rs. 0.25
Rs. 0.60
Rs. 1.25
Rs. 1.50
Rs. 3.00
Toll rates to increase @ 7 % per year
61. âĸ Toll booths at locations to cover homogeneous
sections
âĸ For part/full travel on homogeneous sections,
the toll for that section would be charged.
âĸ Local traffic/traffic during important social
religious event exempt
âĸ Toll can start on a completed homogeneous
section
npcinfra@vsnl.net
62. âĸ Seven roads of 983 kms of length already awarded
on BOT basis
âĸ Total Project Cost Rs. 522 crores
âĸ Total subsidy asked Rs. 245 crores
âĸ Concession Agreements signed
âĸ Work on sites commenced
âĸ Financial closure expected in coming two months.
âĸ Roads likely to be completed in 15-18 months by
the last quarter of year 2002
63. âĸ This is for the first time in India that a state
has awarded around 1000 kms of important
state highways on BOT basis. This was
possible by structuring the commercially
unviable projects on viable format with the
help of government subsidy
âĸ Looking to this success many Governments
are likely to follow the public-private
partnership for reconstruction and
maintenance of important state highways
64. THANK YOU
Nayan Parikh
Nayan Parikh & Consultants,
303-B, Shapath- III, Nr. GNFC Info. Tower
Ahmedabad.
Ph- +91-79-2684 0022
Fax- +91-79-2685 1183
Email â npcinfra@vsnl.net
Website-www.nayanparikh.com
npcinfra@vsnl.net