Project LoanProject finance or project loan is the financing of long-term infrastructure, industrial projects and public services using a non-recourse or limited recourse financial structure. The debt used to finance the project are paid back from the cash flow generated by the project. Its project loan structure relies primarily on the project's cash flow for repayment, with the project's assets, rights and interests held as secondary collateral. Project finance is especially attractive to the private sector because companies can fund major projects off-balance-sheet.
Every company, in its evolution faces challenges regarding project loan, which need to be addressed proactively. These challenges can stem from:
- Constraint in manufacturing capacity
- Technology up-gradation for manufacturing of new product range (same category)
- Technology up-gradation to address cost advantages
- Surplus reserves and a unique opportunity
Existing capacity utilisation & optimisation
Many a times, capacity expansion decisions are taken without knowing the process bottlenecks that create the difference between the rated and utilised capacity. Cashcow Consulting’s capability to understand the process required to link, seamlessly communicate and data capture between production planning, order size, runtime of machines, layover time, consumption pattern for line manufacturing facility enables process based debottlenecking that addresses the difference between rated and utilised capacity to a large extent.
Capacity enhancement or Technological up-gradation and Budgeting
Budgeting and long term forecasting defines the challenge that the company is bound to face regarding project loan. Whether it merits capacity enhancement or technology up-gradation or both is the question which requires thorough analysis. Cashcow consulting provides the management team with valuable reports that act as input for product pricing, finance requirement for project execution and necessitated capacity utilisation for break-even. The team has done Techno Economic Viability (TEV) study for numerous industries and that forms the backbone for recommendations.
The size of a project determines whether the existing reserves are sufficient or would it require raising project loan or long-term debt. Cashcow Consulting is equipped with professional team with almost 25 years of experience in debt-raising. The team has raised domestic and foreign currency term loans as well as External Commercial Borrowing (ECB) from abroad. Basis fund flow analysis and long term forecasting the required structuring of the debt is undertaken to ensure better risk management for repayment. Term debt is always accompanied by enhancement in working capital.
Read more about working capital finance here.