Project Funding Assessment

Bankability due diligence is the rigorous process lenders and investors use to assess whether a project is fit for financing. It’s not just about a compelling business case—it’s about risk containment, legal enforceability, and repayment certainty. A truly bankable project demonstrates strong fundamentals across four following key dimensions. Revenue Predictability: (i) Are revenues contractually secured to cover O&M and debt service? (ii) Is there a take-or-pay, availability-based, or tariff-stable structure? (iii) Can the project absorb cost shocks from regulatory changes? Contract Resilience: (i) Are termination events narrowly scoped and clearly defined? (ii) Do cure periods protect both Developer and Lenders? (iii) Is the revenue contract (e.g., PPA) termination-proof under stress? Government Risk: (i) What happens if the Government defaults? (ii) In many jurisdictions, stranded assets are a real risk—can power be sold elsewhere? (iii) Are there Government buy-out obligations to ensure full debt recovery? Execution & Enforcement: (i) Can the project be delivered on time and within budget? (ii) Are there legal shields against permit delays or changes in law? (iii) Can lenders step in and enforce security without triggering cross-defaults? Understanding what lenders care about—and structuring accordingly—can dramatically improve your project’s chances of securing financing.

Post 24 Funding EPC Contractors: What We Bankers Look For?? EPC (Engineering, Procurement & Construction) contractors operate in a unique, project-driven ecosystem that demands a very different lens for credit assessment. Unlike traditional businesses with steady revenue streams, EPC contractors face fluctuating cash flows, dependency on milestone-based payments, and high exposure to project risks. Here’s a deep-dive into what we assess while evaluating funding proposals from EPC players: 1. Project Pipeline & Order Book Strength: A healthy pipeline not only assures cash flow continuity but also reflects market competitiveness. We also check the nature of orders—whether from government bodies, PSUs, or private clients—and the concentration risk across clients and locations. 2. Client Profile & Contracting Authority: The credibility of the counterparty matters. Contracts from Central/State Governments or PSUs inspire more comfort than those from less-known private players. We also look for past payment behavior, escalation clause protection, and any history of litigation. 3. Mobilisation Advance & BG Requirements: We assess whether mobilisation advances are there, as these can ease initial cash burdens. Equally important is evaluating the Bank Guarantee (BG) exposure—performance BGs, EMDs, and financial BGs often take up significant non-fund-based limits and reflect on contingent liabilities. 4. Execution Capability & Technical Credentials: We look into the past project track record, average project size, technical pre-qualification credentials, and management bandwidth. Is the EPC player executing projects on time? Are they capable of handling such projects? 5. Cash Flow Gaps & Receivables: Project billing is not the same as cash realization. We track ageing of receivables, and amount locked in retention money or withheld payments. Cash flow mismatches are often bridged through working capital limits. GST refunds pending with authorities also impact working capital liquidity. Each of these factors helps us not only determine the quantum of funding but also its structure—whether it’s a mix of fund-based, non-fund-based, or project-specific credit. #MSME #MSMELending #CreditUnderwriting #BankingInsights #WorkingCapital #FinancialDiscipline #SujoyTalksCredit

Key Questions for Mine Developers in Investor Evaluation Securing investment for mining projects requires clear communication and a comprehensive understanding between developers and investors. To ensure alignment, mine developers should ask specific questions that cover the investor’s preferences, financial readiness, and terms of engagement. Key areas to explore include the investor’s commodity focus, preferred project stage, and funding capacity, along with the terms of financing, timeline, and proof of funds. Additionally, understanding the source of funds and evaluating the expertise of the investment team can further guide decision-making. A structured approach to these critical aspects fosters strong, transparent partnerships, enabling successful project development and long-term sustainability. 1️⃣ Understanding the Investor’s Mandate Commodity Focus: Which minerals or metals is the investor interested in (e.g., lithium, copper, gold)? Project Stage: Is their focus on exploration, development, or production projects? Investment Range: Clarify the minimum and maximum amount they are willing to commit. 2️⃣ Capital Availability Is the required capital available for the specific mining project? What is the timeline for fund disbursement? Confirm the total amount the investor plans to allocate. 3️⃣ Proof of Funds Can the investor provide verified proof of funds (e.g., a bank-issued letter)? This step is essential, particularly when working with lesser-known financial sources. 4️⃣ Source of Funds Where is the funding originating from? Ensure the source aligns with project goals and complies with regulatory standards. 5️⃣ Funding Terms For debt financing: • Interest rate and repayment terms. • Required securities or collateral. For equity financing: • Percentage of shareholding or equity stake in the project. Request a draft term sheet to review the proposed conditions. 6️⃣ Timeline for Financing How long will the investor take to complete due diligence? When can financial closure be expected? Align the timeline with key project milestones to avoid delays. 7️⃣ Investment Team and Expertise Who are the key individuals behind the capital? • Names, qualifications, and technical expertise. • Previous experience and track record in mining investments. Why These Questions Matter Asking these questions ensures that both mine developers and investors have clarity on mutual expectations. It builds a foundation for trust, aligns funding with project timelines, and helps avoid financial and operational risks. Strategic partnerships begin with clear communication and mutual understanding. #Geology #MiningFinance #MineDevelopment #ResourceInvestment #MineralExploration #ProjectFunding #SustainableMining #MiningProjects

Unlocking Precision and Value: The Power of Parametric Estimation in Government-Funded Infrastructure Projects. Parametric estimation techniques are crucial in government-funded infrastructure projects, particularly during the initial design stages. These techniques offer a systematic, data-driven approach that draws upon historical project data and establishes relationships between project parameters and costs. These techniques are essential for accurate cost estimation, risk mitigation, value-for-money assessment, transparency, accountability, consistency, informed early decision-making, enhanced project planning, and effective stakeholder communication. Parametric estimation techniques bridge the gap between uncertainty and precision by analysing past projects and establishing correlations between project parameters and associated costs based on historical data. This data-driven approach yields a more accurate estimate of potential expenses, providing stakeholders with a solid foundation for budgeting, funding allocation, and cost containment efforts. Risk mitigation strategies are devised by recognising potential challenges and their financial impacts, ensuring the project remains financially viable even when facing unforeseen obstacles. Value-for-money assessment is essential in government-funded projects, as it facilitates systematically comparing project options by quantifying costs, benefits, and risks. Transparency and accountability are infused into the estimation process, fostering stakeholder trust and reinforcing a commitment to prudent resource management. Consistency and standardisation are introduced through empirical data and standardised relationships between parameters and costs, reducing discrepancies and fostering a uniform platform for decision-making. In conclusion, parametric estimation techniques are essential in government-funded infrastructure projects, where costs, uncertainties, and societal expectations converge. By offering a systematic, evidence-based approach to cost estimation, risk management, and value-for-money assessment, these techniques empower decision-makers to navigate the early design stages with confidence and clarity. #InfrastructureProjects #CostEstimation #ParametricTechniques #ValueForMoney #GovernmentFunding #DataDrivenApproach #RiskMitigation #Transparency #Accountability #DecisionMaking #StakeholderCommunication #ProjectPlanning #PublicResources #EarlyDesignStages #Empowerment #SustainableDevelopment