PRESENTATION

ON

Valuation of Building Project through

 OVERVIEW
•Higher Education Financing Agency (HEFA) is a joint venture of MHRD Government
of India and Canara Bank for financing creation of capital assets in premier
educational institutions in India as part of rising 2022 HEFA’s scope is greatly
expanded to cover school education, educational institutes under Ministry of MHRD
& Health etc.
 
•HEFA is registered under Section 8 [ Not-for-profit] under the Companies Act 2013
as a Union Govt company.
 
•HEFA incorporated on 31st May 2017, is a joint venture of Ministry of HRD, GOI and
Canara Bank with an agreed equity participation in the ratio of 91% and 9%
respectively.

•Ours is a journey towards developing India’s top-ranked institutions like IIT’s, IIIT’s,
NIT’s, IISCs, AIIMS into Globally top ranking institutions through improvement in
their academic and infrastructure quality. We are particularly interested in financing
the building of educational infrastructure, R&D infrastructure and thereby enabling
the institutions to reach top rankings globally.
 HEFA
VISION

To enable India’s premier educational institutions to excel and reach the top in
global rankings by financing building world class infrastructure including R&D
Infra.

MISSION

To provide timely finance at competitive interest rates for capital assets creation in
India’s educational institutions and supplement it with grants by channelizing
Corporate Social Responsibility (CSR) funds from the corporate and donations
from others.
 SCOPE

• India’s premier educational institutions with high level of intellectual

capital needs to be supported by adequate infrastructure.

• We need to channelize their capabilities into meaningful research and

innovation. Presently there is no Indian universities in global top 100
rankings.

• To revitalize infrastructure and systems in higher education, their needs to

be new investments in research and related infrastructure.

•  HEFA is established by GoI after taking note of all the above facts through
a Budget announcement in 2016-17 that “We have decided to set up a
Higher Education Financing Agency (HEFA). The HEFA will be a not-for-
profit organisation that will leverage funds from the market and
supplement them with donations and CSR funds. These funds will be used
to finance improvement in infrastructure in our top institutions and will be
maintained through internal accruals.”
 • HEFA would provide better internal resource generation and at the same time
allow substantial investments through market borrowings that can be repaid over
a longer period.
•  
• RISE 2022  “Revitalising Infrastructure and Systems in Education (RISE) by
2022”, is a major initiative launched by GOI in the FY 2018-19 budget.
 
• HEFA’s scope under RISE has been greatly expanded from initial objective of
financing infrastructural needs of select Higher Educational Institutions in India
to the extent of Rs. 20,000 crores. It is proposed to accelerate the investment in
these institutions to Rs.1,00,000 crores over the next 4 years.

HEFA’s role is hugely expanded to cover all educational institutions under higher education,
school education and institutions under Ministry of MHRD & Health etc.
 
The equity contribution is proposed to increase to Rs.10,000 crore and the balance
requirement of Rs. 90,000 crore will be raised by HEFA through market borrowings and
issue of bonds including government guaranteed/government serviced bonds.
 
In order to address the requirement of various categories of institutions to be financed,
there would be five financing windows as below:
Category of Institution for Repayment of Principal and Interest .
Payment of Payment of
Principal Amount Interest Amount
Technical Institutions/CU established
By By By By
Institution GOI Institution Govt

Before 2008 100% - - 100%

2008 to 2014 25% 75% - 100%

Central Universities(CU) before 2014 10% 90% - 100%

Newly Established CU after 2014. - 100% - 100%

Other institutions and grant-in-aid institutions

- 100% - 100%
of Ministry of Health
WHAT HEFA FINANCES
Construction of buildings or facilities therein, required for academic or
research purposes, including the requirements for accommodating
students/scholars/faculty/staff of the institution. Only the non-recurring
portion shall be financed.
Setting up laboratories/high performance computing (HPC)
facilities/libraries along with equipments, provided that the projects are
accompanied by detailed plans for utilisation of such facilities. Only the non-
recurring portion shall be financed.
Research projects that are sanctioned by Ministry of HRD or any other
Ministry of Government of India would meet only the cost of recurring portion
from the resources generated through such projects.
Setting up Centres of Excellence (CoE) sanctioned by the MHRD or other
Ministries of Government of India, provided that only cost of the non-recurring
portion of the coe project shall be financed through HEFA.
Campus common infrastructure/facilities including student facility centres.
Only the non-recurring portion shall be financed.
 Priority work in construction of Building Projects for CFIs
1.Construction of buildings
Sq. Mt. per student

Academic/admin/library/labs/workshops 30 (1)

Residential area-hostels+faculty+staff quarters 35

Sports facility & common facilities 10

Total 75

Note:(1). Only in case of the technical institutions. For non-technical institutions, this will be
limited.
2. Land Development:
To be done in modules of 50 Acres.
3. Connectivity:
At least 1 Gb speed internet facility, with fiber optic cable connecting all the buildings, LAN and
equipment, including Wi-Fi facility covering all hostels, academic blocks and administrative
building.
4. Smart classrooms:
All classroom shall be smart classroom as per the specifications of the Expert Committee.
5. Self sustained projects:
Projects which are able to mobilize funds for their maintenance, like research projects.
Negative list of works which would not be sanctioned from HEFA loan:

1. Any work in excess of the limits prescribed in the Priority list.

2. Swimming Pools.
3. Shopping Complexes.
4. Food Courts.
5. Stadium
6. Convention Halls with more than (500) capacity
7. Ring Road in the entire campus
8. Construction of Director/Faculty/Staff quarters in excess to the entitlement as per
CPWD norms.
9. Guest House with more than (20) Rooms.
10. Mega Mess.
WHOM HEFA FINANCES

HEFA’s role is hugely expanded under RISE 2022 to cover all educational
institutions under higher education, school education and institutions under
Ministry of Health/MHRD which is referred by the concerned ministry.

HOW HEFA FINANCES

Institutes need to take up the projects requiring financing from HEFA to their
concerned bureau for approval after due approval from Building
committee,Finance committee and E C/BOG of the institutes concerned.

Detailed Project Report (DPR) of institutions will be appraised and approved

by the concerned bureau/IFD/MOE/ Cabinet as the case may be and loan
quantum for each institution will be fixed by them.

On approval, Institutions can apply for loan online through the “Login”
button and the loan processing system is explained below.
HEFA LOAN PROCESSING SYSTEM
 LIST OF DOCUMENTS REQUIRED FOR LOAN PROCESSING

•  Statement of loan account with other banks (if any) for the past one year
 
•  Duly Filled Application form
 
•  Know Your Customer (KYC) Documents of signatories and institutes
  
•  Detailed Project Report Approved by the Ministry concerned.
 
•  The letter from the Ministry recommending the window in which the loan shall be considered;
and also committing adequate funds for servicing the HEFA loan through OH-31 / through the
Internal and Extra Budgetary Resources [ IEBR] of institution as the case maybe.
 
•  Balance Sheet for last 3 years, Current Year estimates & projections covering the proposed
repayment period.

•  Income and expenditure for last 3 years, Current Year estimates & projections covering the
proposed repayment period.

•  Cash flow statement for last 3 Years, Current Year estimates & projections covering the
proposed repayment period.
• Cash flow statement and calculation of IRR, projected cash flows for the life of the project

• Total project cost, amount so far spent and the balance cost certified by the chartered
accountant for ongoing projects

•  Details regarding the projects requiring funding from HEFA

 

• Details regarding steps to enhance existing capacity utilisation, revenue generation

strategies, revenue generation from the assets created
 

•  Brief details of the project including the area to be constructed, equipment to be procured
along with the broad specifications
 

•  Cost of the project as per administrative approval by the competent authority, along with
cost per sq.ft (in case of construction)
• a. Estimates and designs as per technical sanction by the competent authority.
b. Month-wise Loan Drawdown schedule for the projects.
c. Modalities for procurement and execution of the project.
d. Systems for Project Management and Monitoring of quality and progress.
e. Systems for maintenance of the project including resource generation.
f. The method and timelines for selection of Agency(ies) for execution,
g. Bank account particulars for release of funds directly to the concerned agency.
 

•  Copies of Office Notes placed before internal committees i.e. Building committee, Finance
committee etc.
• Copy of the project approval from the Board of Governors or Executive Council
INTERNAL RATE OF RETURN (IRR)
 DEFINITION

The internal rate of return (IRR) is a discounting cash flow technique which
gives a rate of return earned by a project. The internal rate of return is the
discounting rate where the total of initial cash outlay and discounted cash
inflows are equal to zero. In other words, it is the discounting rate at which the 
net present value(NPV) is equal to zero.
 ILLUSTRATION
 Let us say a institute has an option to replace its machinery. The cost
and return are as follows:
 Initial investment = Rs.5,00,000
 Incremental increase per year = Rs.2,00,000
 Replacement value = Rs.45,270
 Life of asset = 3 years
 If we assume IRR to be 13%, the computation will be as follows.

Year Cash flows Discounted cash flows

0 -500000 (500000)

1 200000 176991

(2,00,000 * [1/1.13])

2 200000 156229 (2,00,000 * [1/1.13]2

3 200000 138610

(2,00,000 * [1/1.13]3

4 45270 27765(45,270 * [1/1.13]4

Total 500000 (Approx.)

 PROJECT APPRAISAL FORMAT THROUGH PIB (PUBLIC
INVESTMENT BOARD)/DIB (DELEGATED INVESTMENT BOARD)
1. PROJECT OUTLINE
1.1 Title of the Project:
HEFA loan for creation of Capital Assets/ Capital Expenditure for Construction of …
(Projects)…... The details of projects/ activities are as under:
S. No. Name of Project Estimated Cost (lakhs)

1.2 Sponsoring Agency (Ministry/Department/Autonomous Body or Undertaking)

Higher Education Funding Agency (HEFA)
1.3 Total Cost of the proposed Scheme
Rs. ….. Crores
1.4 Proposed duration of the scheme
18 months from the date of receipt of loan.( depends on project)
1.5 Whether Project will be implemented as part of scheme or stand- alone basis?
Standalone basis ( depends on project)
1.6 Whether financial resources required for the project have been tied up? If yes,
details?
 ………………………………………………………………………………………………………………………...
1.7 Whether Feasibility report and/or Detailed Project report has been prepared?
 Yes, Annexure …...
BASIC DETAILS OF THE PROPOSED PROJECTS TO BE SANCTIONED FROM HEFA
S. NAME OF NECISSITY TYPE OF CAPACITY AREA ESTIMATE
no PROJECT OF PROJECT BUILDING STATEMENT D COST

1.8 Whether the proposal is an Original Cost Estimate or a Revised Cost Estimate?
 Original/Revised.
1.9 In case of Revised Cost Estimate, whether the meeting of Revised Cost
Committee has been held and its recommendation suitably addressed?
 Yes/NA.
 1.10 Whether land acquisition or pre – investment activity was under – taken or is
contemplated for this project? Whether the cost of such intervention has been
included in the Project Proposals?
 ………………………………………………………………………………………………………………………...

2. OUTCOMES AND DELIVERABLES.

2.1 Stated aims and objectives of the scheme
 The aim and objectives of the projects/scheme and their necessity for the growth of
the institution……………………………………………………………………………………………….
2.2 Indicate year-wise outputs/ deliverables in a tabular form.
S. No. Project Name F.Y. (2018-19) F.Y. (2019-20) F.Y. (2020-21) F.Y. (2021-22)
Physical Financial Physical Financial Physical Financial Physical Financial

2.3 Indicate Outcomes of the Scheme in the form of measurable indicators which can
be used to evaluate the proposal periodically. Baseline data or survey against
which such outcomes should be benchmarked should also be mentioned.

Sr. no. Project Name Outcomes

3. PROJECT COST
3.1 Cost estimates for the project along with schedule of duration (both year – wise,
activity-wise).).
The basis of Cost estimates is CPWD Plinth Area Rate -…………. .
Detailed Project Report constitutes the following :
 General Abstract of Cost
 Area Statement
 Plinth Area Statement
 Brief Report of the Project

GENERAL ABSTRACT OF COST

S. No. Description Civil Electrical Total

PLINTH AREA ESTIMATE (CIVIL)

S. No. Description Quantity Unit Rate Amount Remarks
BUILDING
PORTION
(CIVIL)

EXTRAS FOR

SERVICES
 AREA STATEMENT
Area Proposed in Total Area in Sq.
S. No. Item Description Quantity
Sq. Mtrs Mtrs

Brief Report Of the Project

Sl. No. Particulars Description
1 Name of the Project activity
2 Estimated cost of the project
3 Area of the project (new/ renovation of existing one) area Sqm
Whether the project is proposed in developed land in University campus or
4
not?
Necessity of the project (full justification of necessity of the project with little
5
background & how it will be benefited to student, staff & university, etc.)
6 Whether similar project exist or not or purpose could be served by existing one

7 Approval of the competent authority.

8 Project commencement & completion time

9 Method of execution machinery of execution
10 Add any supplementary information, if any, for favouring the project
Year-wise cost as per following table and all are non- recurring cost..

Sr. No. Project Name F.Y. (………..) F.Y.(………)

3.2 In case land is to be acquired, the details of land cost, including cost of
rehabilitation / resettlement needs to be provided.
 ………………………………………………………………………………………………………………………...
3.3 In case pre- investment activities are required, how much is proposed to be
spent on these, with details activity- wise.
 ………………………………………………………………………………………………………………………...
3.4 Whether price escalation during the project time cycle has been included in the
cost estimates and at what rate?
 ………………………………………………………………………………………………………………………...
3.5 Whether the project involves any foreign exchange element, the provision made
or likely impact of exchange rate risk?
 ………………………………………………………………………………………………………………………...
3.6 In case of the Revised Cost Estimate, a variation analysis along with a report of
the Revised Cost.
 ………………………………………………………………………………………………………………………...

4. PROJECT FINANCE
4.1 Indicate the source of project finance: budgetary support, internal and extra
budgetary sources, external aid, etc.
 ………………………………………………………………………………………………………………………...
4.2 Indicate the cost components, if any that will be shared by the state
governments, local bodies, user beneficiaries or private parties?
 ………………………………………………………………………………………………………………………...
4.3 In case of funding from internal and extra- budgetary resources, availability of
internal resources may be supported by projections and their deployment on other
projects?
 ………………………………………………………………………………………………………………………...
4.4 Please indicate funding tie-ups for the loan components, if any, both domestic
and foreign, along with terms and conditions of loan based on consent/comfort
letters
 …………………………………………………………………………………………………………………………
4.5 If the government support loan is intended, it may be indicated whether such
funds have been tied up?
………………………………………………………………………………………………………………………...

4.6 Please provide the leveraging details, including debt-equity and interest coverage
ratios, along with justification for the same.
 ………………………………………………………………………………………………………………………...
4.7 Mention the legacy arrangements after the project is complete, in particular,
arrangements for the maintenance and upkeep of assets that will be created?
 ………………………………………………………………………………………………………………………...

5. PROJECT VIABILITY
5.1 for projects which have identifiable stream of financial returns, the financial
internal rate of return may be calculated. The hurdle rate will be considered at 10
percent.
 ………………………………………………………………………………………………………………………...
5.2 In case of projects with identifiable economic returns, the economic rate of
return may be calculated. In such cases project viability will be determined by taking
both financial and economic returns together.
 ………………………………………………………………………………………………………………………...
5.3 In case of proposals where both financial and economic returns are not readily
quantifiable, the measurable benefits/outcomes simply may be indicated.
 ………………………………………………………………………………………………………………………...
Note: It may be noted that all projects, irrespective of whether financial and/or
economic returns can quantify or not, should be presented for PIB/DIB appraisal.

6. APPROVALS AND CLEARANCES

Requirement of mandatory approvals/clearances from various local, state and
national bodies and other availability may be indicated in tabular form( land
acquisition, environment, forestry, wildlife etc. In case land is required, it may be
clearly mentioned whether the land is in the possession of the agency free from
encroachement.
 ………………………………………………………………………………………………………………………...
7. HUMAN RESOURCES

7.1 Indicate the administrative structure for implementation the scheme:

 ………………………………………………………………………………………………………………………...

7.2 Manpower requirement, If any, In case posts, permanent or temporary, are

intended to be created.
 ………………………………………………………………………………………………………………………...

7.3 In case outsourcing of services or hiring of consultants is intended, brief details

of the same may be provided.
 ………………………………………………………………………………………………………………………...
8. MONITORING AND EVALUATION
8.1 Please Indicate the Monitoring framework for the Scheme and the arrangements
for statutory and social audit (if any).
 ………………………………………………………………………………………………………………………...
8.2 Mode of implementation of individual works:
Department/item-rate/Turnkey/EPC/Public-Private Partnership etc.
 ………………………………………………………………………………………………………………………...
8.3 Please indicate timelines of activities in PERT/CPM chat along with the critical
milestones.
 ………………………………………………………………………………………………………………………...
8.4 Please Indicate the arrangement for third party/ independent evaluation? Please
note that evaluation is necessary for extension of scheme from one period to
another.
 ………………………………………………………………………………………………………………………...
8.5 Please indicate what arrangements have been made for impact assessment after the project
is complete.

9. Comments of the Financial Advisor, NITI Aayog, Department of Expenditure and

other Ministries/ Departments may be summarized in tabular from.
 ………………………………………………………………………………………………………………………...
10 Approval sought:
 …………………………………………………………………………………………………………………………
THANK YOU!