It's a viva relating to my internship project on topic project financing of RINL

1. Amity Business School
1
Amity Business School
NTCC(Summer Internship) Viva
Student Name: Dasari rohit
Enrollment No:A001110722082
Programme Name:MBA (FINANCE)
Class of 2024

2. Amity Business School
Project finance
Project finance is a specialised financial method used to support complicated and
capital-intensive undertakings. The goal of this project is to give a thorough study
and analysis of project finance, its concepts, methodology, and applications in
many sectors. This study sheds light on the importance of project financing in
allowing large-scale projects that would otherwise be difficult to finance through
traditional means by investigating its essential components. Project finance has its
origins in the natural resource and infrastructure sectors. The current demand for
infrastructure and capital investments is being fuelled by deregulation in the
power, telecommunications, and transportation sectors.

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Introduction
Meaning and definition of project finance: Project finance may be defined in many ways and
there does not exist any single definition for it. Project finance is the long term financing of
infrastructure and industrial projects based upon the projected cash flows of the project rather than
the balance sheet of its sponsors.
scope of study: The study of project finance will aid in understanding the distribution of financial
resources and how it applies to particular projects undertaken by any organisation .
Industry Profile: The steel industry in India dates back more than a century. Prior to the early
1990s economic reforms, the Indian steel industry was heavily regulated, with the public sector
dominating the business. In India, Tata Steel was the only significant private sector enterprise
active in steel manufacturing. Sail and Tata Steel have traditionally been India's two largest steel
manufacturers. The liberalisation of the Indian economy in 1992 resulted in the opening up of
several industries, including the steel industry.

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Purpose of the Study
Every industry has a unique function based on the need for essentiality, where
everything must be done in line with government-regulated criteria. We must learn
about project finance in order to manage project cash flow and ensure profits that
can be dispersed among many parties, such as investors, lenders, and other parties

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Objectives of The Study
This study states that every industry has a unique function based on the need for
essentiality, where everything must be done in line with government-regulated
criteria. We must learn about project finance in order to manage project cash flow
and ensure profits that can be dispersed among many parties, such as investors,
lenders, and other parties, as well as to determine the feasibility of the project's
financials and expenses. Nowadays, it is vital to study Project Finance in order to
understand how financial resources are allocated in the implementation of a new
project or the extension of an existing project in any organisation

6. Amity Business School
Review of Literature
Author Name with
Year
Topic [Context] Methodology Key Findings
Jakob muller International project
finance:review and
implications for
international finance
I used this article as
database for my literature
review and I found this on
site called springer link and
I took many insights from
this article
I found theoretical
implications for project
finance of each
discipline
Klimier and Megginson Project finance useful for
large investments
This article states Large
capital expenses, self-
contained cash inflows and
outflows, and no continuous
need for research and
development expenditures
or capital investments are
criteria of acceptable
project financing
application.
i found that Despite its
vast volume and fast
expansion over the
previous three
decades, project
finance has received
insufficient scholarly
attention. There is no
universally accepted
definition of project
finance.

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Research Methodology
Primary Data
It is the information collected directly from financial department for further
studies, it was mainly through interviews with concerned officers and staff,
individually or collectively, sum of the information has been verified or
supplemented with personal observation.
The data collection includes:
Conducting group seminars and with the concerned managers and officers of
finance department of V.S.P.
Secondary Data
This is taken from the annual reports, websites, company journals, magazines and
other sources of information of steel plant.

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Analysis
In this analysis I used weighted average cost of capital (WACC) method to
measure overall cost of capital ,and also cost of debt & preference shares capital
and cost of retained earnings are considered and the proportion of each item is
amounted to WACC.
And I analyzed the proportion of cost of debt, equity, retained earnings and
preference share capital
and the overall proportion of rinl from 2020-2021 & 2021-2022 is 6.6836% and
6.166% respectively.According to the analysis ,RINL could have opted for
outside debt for better tax and maximum leverage.

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Findings of The Study
As per the data provided; I got the findings that RINL – VSP is
following the debt – equity of 1:1 but as per the norms for
the sector; the generally maintained ratio should be 2:1. As
of now, RINL is using its own funds for the project. For the
year 2021-22, the equity/ shareholder‘s funds are 6346.82cr.
And long-term borrowings are rs.1241.56 cr. So, presently
the project financing source is only the own funds of the
company

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Suggestions & Recommendation
As RINL is going for further expansion to 6.3Mt if in case any project financing
sources that would be better option are bonds, ECBs and bank loans. To a
company like RINL, it is suggested a separate section to cater various financing
option available to the company to take advantage of the best possible option
available in the market.

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Conclusion
We have evaluated various sources for financing the ongoing project and for further
expansion project. We suggested to avail rs.1500 crores long term borrowings by way of:
Bonds @ 8% - 8.3% - 500cr. /-
Indian currency loans @9% - 9.25% - 500cr. /-
ECBs @4.83%- 500cr. /- And as per graphs and figures, The overall cost of capital of the
two years i.e., 2020-21 and 2021-2022 is 6.3856 and 6.166% and the value of equity and
preference share capital are consistent for the two years and thus no change in the cost of
equity and preference and also the debt interest is also unchanged thus the cost of debt is
also unchanged. The overall cost of capital determines whether the company should proceed
with the project or not. And the WACC for RINL-VSP is determining the low debt and
unchanged equity.
These sources provide balance between Indian and foreign currency. And the actual cost of
capital is more than 10.00%.
In the present scenario, steel industry‘s cash flows are fluctuating market; for such a large
steel plant like RINL there is a need for external long term options .RINL has been financing
their project on its own funds since 2008. RINL should have gone for option of external
long-term sources.