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BANK FINANCE FOR CPP

Created by : Mohad Naseem Siddiqui., Ch. Manager ELECTRICAL., Bhramputra Crackers and Polymers Ltd ( 70% Stock holder of GAIL )  | 01 12 2011 16:21:48 +0000
Keywords : bank finance for cpp
Activity:  52 views;  last activity : 01 13 2011 05:50:48 +0000
 
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can a bank become promoter for small but profitable projects Vs No they simply finance after taking heavy security n lot of pap
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If a captive power plant operational on HEAVY Fuel oil is being set up with a capacity of around 10 MW with an estimated cost of say 50 Crore. And if the annual profit of the same is say 1.5 crore after meeting all expenses and even after all bank finance installment of say 4 to 5 crore per year.How much a bank can finance on this project with what interest n how many installments? ( The plant can be commissioned in six to seven month).Can become a partner or promoter for this kind of small but profitable projects ?
By Mohad Naseem Siddiqui., Ch. Manager ELECTRICAL., Bhramputra Crackers and Polymers Ltd ( 70% Stock holder of GAIL )  | 01 12 2011 16:21:48 +0000
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No. The Bank can not become a partner or promoter. The banks normally finance one-third of the cost of the project. Interest rate varies depending on various parameters and is anything between 11.5% to 13%. Repayment is normally 7 or 8 years with morotorium (coonstruction period) of one year. The company's financials, promoters' background, locational advantages, security offered, good business plan will all play a major role in the Bank deciding in your favour for giving a loan.
By Suryanarayan Murthy, Asst Vice President (Corporate Finance), A Hydro Power Project  | 01 13 2011 05:50:48 +0000
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