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Due Diligence of a parcel cargo player
A private equity player interested in buying stakes in a large road transport company appointed Crisil Infrastructure Advisory (CRIS) to do a comprehensive commercial due diligence of a leading South India-based logistics player with significant market share in parcel cargo. The objective of the assignment was to assess the dynamics of the business, performance on key operational parameters, sustainability of growth and margins, and risk assessments. CRIS also reviewed the industry structure, identified trends and emerging changes, assessed the demand-supply scenario and carried out a benchmarking exercise to provide a comprehensive coverage of current and emerging business issues to help the private equity player in its investment decision process.
Advising the Ministry of Civil Aviation, GoI on the determination of Development Fees (DF) and User Development Fees (UDF) at selected non-metro airports
CRISIL Infrastructure Advisory (CRIS) was given the mandate to assist the Airport Authority of India (AAI) in determining the DF for three airports (Bhubaneswar, Khajuraho and Vadodara) and UDF for twelve non-metro airports (Aurangabad, Bhopal, Coimbatore, Chandigarh, Dehradun, Indore, Lucknow, Madurai, Raipur, Ranchi, Srinagar, and Surat). As a part of the assignment, the proposals for DF and UDF made by AAI were scrutinized, based on existing guidelines and policies. Also, the Airport Economic Regulatory Authority (AERA) guidelines for the determination of UDF for major airports were examined and similar charges levied at other airports were assessed. Information obtained from AAI pertaining to traffic, and financial, commercial and operational activities at the fifteen airports was verified and a robust financial model prepared for the determination of DF and UDF for these airports. The aircraft traffic estimates by AAI were also validated using an analysis of passenger volumes and sizes of aircrafts. The assignment required the team to work closely with the Ministry of Civil Aviation (MoCA) on the overall coordination of various aspects of the assignment.
Container and fertilizer traffic assessment and financial feasibility study for a minor port in Andhra Pradesh
As part of the brownfield expansion, at one of the key non-major ports in the state of Andhra Pradesh, CRISIL Infrastructure Advisory was appointed to undertake a traffic study for two proposed berths - one each for handling fertilizer and containers, and also to conduct a financial viability study for the fertilizer berth. CRIS developed a unique methodology to assess the traffic potential of the commodities as these commodities have a vast spread hinterland and also because of fertilizers still being operated under a regulated environment. Extensive interactions were made with fertilizers importers to assess their needs and preferences and these were incorporated and recommended as a part of the study. CRISIL used a combination of top-down and bottom-up approaches to map the most probable cargo potential for both fertilizers and containers. Projections for the short, medium, and long term were made taking into consideration the competitive landscape and the overall developments in infrastructure and user industries. CRIS also undertook a viability assessment of the fertilizer berth and recommended the most suitable funding pattern and also the project performance under different possible scenarios.
Viability Study for Fourcee Infrastructure Equipments Pvt. Ltd.
Fourcee Infrastructure Equipments Pvt. Ltd, a fast-growing logistics company mandated CRISIL Infrastructure Advisory to conduct a viability study for the study of its future business. As a part of the assignment, CRISIL Infrastructure Advisory prepared an overview of the commodity profile that could be handled by liquid tank containers along with a high-level view on the volume of major commodities. A qualitative assessment of the potential for increase in business was conducted, and based on the potential market for Fourcee, an assessment of the infrastructure requirements was done. Fourcee intends to purchase/lease more containers under the current CTO policy and had also applied for the Special Freight Train Operator (SFTO) licence. CRISIL Infrastructure Advisory therefore studied the SFTO policy document and validated the project plan of Fourcee.
Traffic Study and Tariff Assessment for Subarnarekha Port
CRISIL Infrastructure Advisory was given a mandate to assist the client in studying the traffic potential as well as the assessment of suitable tariff at the Subarnarekha Port. The port has an overlapping hinterland with the two major ports of Haldia and Paradip and two non-major ports of Dhamra and Gopalpur and is well positioned to cater to various types of cargo especially bulk cargo. The traffic was forecasted for the concession period and the tariff was appropriated by conducting a hinterland and competitive analysis of the port. Potential cargo commodities that could be catered by the port were identified and an Integrated Logistics Cost (ILC) analysis was undertaken. This cost was compared against competing ports in the area and the savings provided in terms of the ILC with respect to the port of Subarnarekha was ascertained. This analysis was subsequently used to design a pricing/tariff structure for the port.
Bid Process Management Services for Proposed Kigamboni Bridge Project to be Implemented under PPP
National Social Security Fund (The United Republic of Tanzania) awarded a mandate to CRISIL Infrastructure Advisory to assist it in Bid Process Management advisory services for the Kigamboni Bridge in Dar-es-Salaam, Tanzania project. This assignment was carried on in two phases
In the first phase, the existing project preparation was reviewed and the feasibility of the project was studied. To clarify the role of a PPP partner, the proposed business model was updated and the best PPP structure evaluated. A comprehensive risk matrix for the PPP was also developed and cost estimates and draft designs were reviewed.
In second phase, a project procurement schedule with activities and a definitive and realistic time line for the procurement was drawn up in the form of a Gantt chart. A detailed RFP, draft PPP agreement and the final RFP following consultations with the prospective bidders were prepared.
Implementation Review of Short-Term Action Plan of NEPAD
CRISIL Infrastructure Advisory reviewed the progress and implementation issues in the New Partnership for Africa's Development (NEPAD) Short Term Action Plan (STAP) involving 120 key infrastructure projects spread across Africa. The STAP project portfolio consisted of four types of projects: capacity-building, investments, studies, and facilitation. The major infrastructure sectors adopted by the NEPAD Infrastructure program were transport, energy, ICT and trans-boundary water resources management. The review exercise included examination of the main issues arising out of the last STAP implementation as well as review and analysis of projects implementation status by type, sector and seven regional economic communities. Recommendations were provided for prioritizing the projects/programs. The areas of STAP, where the subsequent program i.e. Program for Infrastructure Development in Africa (PIDA) can intervene and take projects forward were indentified and future growth plan was recommended.
India Ports and Imports Study
CRISIL Infrastructure Advisory undertook a strategic study to review the potential for investing in Indian ports and potential of Indian energy coal imports till 2030 for a leading global mining, oil and gas company. The client engaged CRISIL Infrastructure Advisory because of its specialized experience in power, fuels and ports sector in India. The main objectives of the consultancy services were to identify the potential hot spots for energy coal imports in India; to find out potential port locations for investment for the client and to forecast the potential of Indian energy coal imports by 2030.
Feasibility for Ennore Container Terminal - Traffic Potential Study
CRISIL Infrastructure Advisory was mandated by a global transportation and logistics company to assess the container traffic potential for the proposed terminal at Ennore Port. For this purpose, a hinterland assessment for the port (including industrial developments and port connectivity) was conducted. Container traffic was also assessed based on primary surveys as well as secondary data. A competing port assessment involving the evaluation of container facilities in competing ports-existing and proposed and their impact on Ennore traffic was also conducted. Based on this assessment, 15-year projections for container traffic were developed. The projections for the first five years were based on projects under implementation in the hinterland while the projections for subsequent years were based on extrapolation based on macroeconomic growth parameters.
Strategy-level advisory for transport roads and buildings (TR&B) department, Andhra Pradesh
The Government of Andhra Pradesh wanted strategic assistance in taking forward the development of the road sector in the state. The TR&B department thereby appointed CRISIL Infrastructure Advisory for the required services. CRISIL Infrastructure Advisory had assisted the client in providing a holistic framework for the state to conceptualise, develop, implement, and supervise road projects on a PPP basis. CRISIL Infrastructure Advisory had also assisted in preparing model performance contracts, PPP options, and assistance in finalisation of road policy.
Advisory assistance to Maharashtra State Road Development Corporation on capacity expansion of roads in Pune City
CRISIL Infrastructure Advisory was appointed as an independent agency on behalf of the Maharashtra State Road Development Corporation to carry out the study and establish the concession period for the project that would provide adequate post tax return to MSRDC for its investment in the project. The study included the methodology for calculation of the concession period and the basis for building the financial model, commercial and financial assumptions, and the concession period as computed by the model for different inputs of cost of capital, cost of project, and traffic projections.
Development of Build-Own-Operate-Transfer Principles (BOOT) and design a model concession agreement for the privatisation of green field ports in Gujarat
In a significant step towards private sector participation in the new ports in Gujarat, CRISIL Infrastructure Advisory assisted the Gujarat Maritime Board by developing the BOOT Policy. CRISIL Infrastructure Advisory was instrumental in developing the BOOT policy and the model concession agreement for PPP in the port sector in Gujarat. The BOOT policy detailed the state's interests, provided incentives to attract developers, formulated risk-sharing principles for bankability, and addressed issues relating to safety and the environment. It also outlined the timeliness of infrastructure creation and planning, extent of operational autonomy to the private sector, synchronisation with hinterland development and government role in development along with developing a model agreement and guidelines.
Advisory Assistance on Mormugao Port Corporatisation
CRISIL Infrastructure Advisory provided a road map for the corporatisation of the Mormugao Port Trust following the Government of India's decision to corporatise the major ports. The study involved a diagnostic assessment of industry dynamics and review of business strategy, advise on the desired business structure that ensures competitiveness and viability, advise on legal, regulatory and institutional framework for the new corporate entity, assessment of the future financial viability, and resource-raising capability of the new entity, and advise on financial, accounting, and organisational aspects of the corporate entity.
Significant policy-level studies and recommendations for tariff authority for major ports
As a major step towards rationalising the charges at major ports in India, CRISIL Infrastructure Advisory has helped the tariff regulator for the major ports (TAMP) by conducting studies on assessment of cross subsidisation in major port tariffs and allowable return on investment in major port tariffs. These studies led to identification of the areas of cross subsidisation across user groups and quantifying the extent of cross subsidisation being practiced and suggested measures to optimise the same. Further, the study on allowable returns included analysis of existing methods for computation of returns by evaluating ROCE and ROE methods and related risk-return measures the concluded in defining the rate base for calculating returns and recommend of benchmark rates of return that was adopted by TAMP.
Advisory assistance to various major and minor ports in India towards capacity expansion; selection of private sector participants; tariff rationalisation; benchmarking studies
CRISIL Infrastructure Advisory has assisted several major and minor ports including, Ennore Port, Mormugoa Port, Mundra Port, Kakinada Port, Gangavaram Port, and Dhamra Port, in expansion activities through PPP advisory by developing detailed feasibility reports, project development plans, project structuring, bid process management, risk-sharing principles, and selecting appropriate developers; feasibility studies and benchmarking studies; tariff structure rationalisation studies across various traffic categories, including POL, container traffic, coal, and FRM. Each of the assignments had a definitive impact on augmenting private sector interest in investments into the ports sector translating into a broader
Transport economic study on three national waterways
CRISIL Infrastructure Advisory , along with the National Council of Applied Economic Research, assisted the Inland Waterways Authority of India in undertaking a detailed techno-economic feasibility assessment of the potential of each of the waterways for identified cargo commodities, reviewing the existing policy framework, scope and mode for private sector participation, risk allocation principles, and the preparation of requisite project documents.
Advisory assistance to Ennore Port Ltd (EPL) for development of a coal terminal and a marine liquid terminal, EPL
As part of its phased development initiative, EPL intends to develop a coal terminal and a marine liquid terminal on a BOT basis and has mandated CRISIL Infrastructure Advisory to assist them in selection of a suitable developer for the same. CRISIL Infrastructure Advisory undertook the following activities:
- Preparation of a Detailed Project Development plan
- Structuring of the Project,
- Bid Process Management,
- Finalisation of Risk-Sharing Principles,
- Preparation of Concession Agreement and negotiations
Negotiating Railway Concession Agreement
The Government of Malawi granted a railway concession to a private developer in the late 90s. Disagreements between the Government of Malawi and the private developer, however, cropped up due to the terms of the concession agreement. The Government of Malawi, through the SADC-Banking Association, appointed CRISIL Infrastructure Advisory to identify the lacuna in the existing concession agreement arising from technical, financial, commercial, legal, and drafting issues. Thereafter, CRISIL Infrastructure Advisory drafted a new concession agreement based on the changes agreed between the government and the developer. CRISIL Infrastructure Advisory then assisted the government in renegotiating concession agreement. The Government of Malawi and the developer are now on the verge of signing the revised concession agreement and the developer is now looking to develop additional projects in Malawi.
Techno-economic feasibility study of new international airport at Chennai
In a key step to enhance the existing airport infrastructure as well as to capture a larger percentage of the total air traffic in the country, the Government of Tamil Nadu initiated the development of a new international airport in Chennai. Appointed by TIDCO, in association with leading technical consultants, assessed the capacity of the existing airport, examined the feasibility of construction of a new international airport, and evaluated potential sites for the same. The study included air traffic analysis, analysis of historic traffic trends for Chennai Airport, development of the Air Traffic Forecast Model and the Traffic Distribution Model and to assess the impact of the proposed development on competing neighbouring airports.
Advisory assistance for development of New Hyderabad International Airport
CRISIL Infrastructure Advisory advised the Government of Andhra Pradesh (GoAP) in the entire project development process of the first green field airport in India, including assessment of financial feasibility, developer selection, state support finalisation and contract finalisation. The key amongst the advisory assistance provided by us was the formulation of a policy package for development of green field airports, which was thereafter approved by GoI in its Union Budget 2002-03. Being the first green field airport project in India, there were considerable legal, policy and bankability issues that required to be resolved. GoAP selected the preferred bidder in 2001-02. Thereafter, various contractual documents, including the concession agreement, state-support agreement, and shareholders agreement were signed in 2003-04. The project achieved financial closure in 2005 and, currently, the project is operating successfully.
Feasibility study for Haridaspur Paradip Railway Project
Essel Mining & Industries Ltd (Aditya Birla Group) mandated CRISIL Infrastructure Advisory to evaluate whether making a strategic investment in a rail SPV to construct and operate the Haridaspur-Paradip railway link would be of strategic advantage to EMIL. The scope of work involved the preparation of projections for rail traffic for the Haridaspur-Paradip rail link, assessment of the strategic advantages to EMIL emanating from investment in the rail SPV, and assistance in negotiation of various agreements with Rail Vikas Nigam Ltd for participation in the SPV, including the shareholder's agreement, traffic guarantee agreement, and the O&M agreement.
Feasibility study and selection of joint venture partner for rail terminal at Nagpur
The Maharashtra Airport Development Company Ltd (MADC) proposed the development of a Multi-modal International Hub Airport at Nagpur (MIHAN) project that would cater to both domestic and international traffic. As part of its planned development, MADC is interested in obtaining a project study for a rail terminal at MIHAN. CRISIL Infrastructure Advisory was mandated to prepare traffic projections and project cost estimation, undertake feasibility assessment for the project, assist in project structuring, and manage the bid process involving development of bid documentation, contractual agreements, and evaluation of the same.
Management consulting services to Indian Railways on behalf of ADB
CRISIL Infrastructure Advisory was mandated by ADB to carry out periodic business performance assessment of Indian Railways to identify key problems and propose remedies for them. The scope of work included periodic monitoring of the extent of reforms and providing feedback to ADB and MoR on the main reform issues vis-a-vis implementation of the reform programme. The feedback would be on the basis of the interactions during annual interview programmes with various IR stakeholders. While suggesting the remedies, CRISIL Infrastructure Advisory shall draw upon international experiences and customise them for IR. The assignment was carried out over a period of four years from 2004 to 2007. To execute this prestigious assignment, CRISIL Infrastructure Advisory has assembled a highly competent team of experts comprising an international rail expert having worked at World Bank, British Rail among others; ex chairman, Railway Board; corporate strategy and transportation experts.
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