Gudiyattam Gudiyattam Town - Municipal

Chapter ñ14 Final Report: Gudiyattam Municipality
14.8 SCENARIO I -ESTIMATION OF INVESTMENT CAPACITY ON AS IS WHERE BASIS
We carried out the exercise of arriving at the Investment and Borrowing Capacity on
as is where basis without any financial reforms being carried out and no new
projects taken in to consideration. The borrowing capacity has been arrived by
taking the NPV over the next 20 years on the minimum of the following :
30% of revenue projections
Primary Operating Surplus (Surplus before Interest & Depreciation)
The investment capacity has been arrived @ of 4 times the borrowing capacity
assuming that loans constitute 25% of total investment requirement.
In such a scenario, the Investment and Borrowing Capacity works out as below :
Summary of Borrowing and Investment Capacity
Borrowing Capacity Rs. 993.35 lacs
Investment Capacity (BC x 4 times) Rs. 3973.40 lacs
14.9 SCENARIO I I-ESTIMATION OF BORROWING AND INVESTMENT CAPACITY WITH
METTUR CWSS
In Scenario II, the financial projections have been worked out for the next 30 years,
by taking all projects in to consideration including Metur CWSS. It has been assumed
that Metur CWSS would be funded by way of 100% Grant and executed in VI & VII
years. The operation & maintenance of Metur CWSS would be fully borne by the
Municipality. The financial projections for the next 20 years have been taken to
arrive at the Borrowing and Investment capacity. We have arrived at the borrowing
capacity of Gudiyatham Municipality on the minimum of the following :
30% of revenue projections
50% of Primary Operating Surplus less Debt Service
The overall financing mix has been arrived to include 26% Loans, 65% Grants and 9%
own funds. The repayment period of loans has been taken at 5+15 years for
Sewerage and Water Supply Loans and 2+8 years for other project loans. The above
factors have been taken in to account for arriving at the Annuity Factor, which has
been applied on the lowest of the above to arrive at the overall borrowing capacity
and investment capacity.
Summary of Borrowing and Investment Capacity
Borrowing Capacity -
Investment Capacity (BC/0.26) -
- 163 -
Voyants Solutions Private Limited