1. The risk free rate of return is considered as 8.12%. However, the value to be used is 8.23%. PP is requested to clarify on such discrepancy.
2. The formula used for CAGR calculation is wrongly stated. The no. of years should be subtracted by 1 before taking its power. For e.g. if 9 years is considered for CAGR calculation, then the power to be used is 8. PP is requested to clarify and provide reference on the validity of the formula used for CAGR calculation.
3. PP is requested to clarify why companies like JP Hydro, BF Utilities, Adani Power, Power Corp. of India is not considered for the Beta Calculation.
4. PP (HCPL)has made a gross error in calculating the IRR of the project. Since, HCPL has taken a loan for the project, Project IRR should be calculated and not the Equity IRR. Project IRR should be compared with the benchmark. Equity for the project constitutes only 30% of the total project cost. Hence, how can PP make an investment decision based only on its euity portion. There will be cash outflaw from the PPs account on account of interest payment. Why the PP has not considered that in its financial computation.
4. Also, the benchmark considered for this project is completely wrong in case of HCPL. Because, the PP has considered return on equity and the loan component has not been taken into account for benchmark determination. The actual benchmark should be = 30% * Return on rquity + 70* (1- Corporate Tax) * Interest at which the loan is obtained.
5. It is also surprising to note that how two project participants have the same benchmark for their project.
6. PP are requested to elaborate on the stakeholder process.

PP is requested to disclose the value of PLF taken for ER calculation.
2. Is the insurance contract signed before the date of placing of purchase orders for the WTGs? How is the PP taking the insurance costs from the insurance document.

1)	Why has the Project Owner not considered WACC (Weighted Average Cost of Capital) for calculation of IRR since as per pg.18 of the PDD, one of the PO has taken “debt”, and WACC should have been taken for the calculation of Benchmark IRR.
2)	Why is the risk free rate based on the weighted average yield on market loans and not on the State government’s securities? Since as per the prevalent trade practices, the government securities rate is taken as the interest free rate for determing the CAPM. The Range of yield has been ranging between 7.84-8.90% and the weighted average yield on State Government Securities was 8.25%.

3)	The project owner has provided a detailed calculation of all the parameters in the equation for calculating the cost of equity, i.e. the Benchmark IRR, but has not indicated, the risk premium percentage?

4)	Why was BSE 500 index taken for computing the risk premium, instead of BSE power sector indices
a.	Why has the PO (Project Owner) not considered the other Indices like BSE 30, BSE 100? What is the effect of these indices on the risk premium?
b.	Why has the Project Owner not considered the NSE (National Stock Exchange) Indices, as that would have given a more robust and efficient face of the market as it would represent a wider face of the market?

5)	What is the basis for computing the Asset beta and the market capital? 
a.	Share price of which index has been considered for determining the market capitalisation (NSE, BSE) and for which period/ date these share prices have been considered. Can this be substantiated with the calculations and the proof of the date on which the market cap was considered?
b.	On what basis the companies have been selected for determining the asset beta, since there are lot of top performing and other companies in the sector, other than mentioned in the PDD?
c.	Will it be a proper comparison of benchmark when the Companies which generate revenue from thermal power are considered for beta calculation?

6)	The Project Owner has not indicated the date of board/management approval for the project.
It is surprising to see that the chronology begins from the day of “Offer from technology supplier” and not from the date of Investment decision.
The PDD thus does not indicate if real actions were taken to achieve CDM status for the project post Investment decision.

7)	Has the Project Owner considered tax holiday benefits while computing the IRR (10 year tax holiday in a gap of 15 years for generation or generation/distribution of power)?

8)	Has the Project Owner considered the incentives on account of Indirect tax like Concessional rates of Excide duty, Customs duty and lower VAT?

9)	What is the effect of revenue from CDM on the IRR? The project owner has not indicated if the revenue from CDM will be an additional revenue stream for the project activity or essential for the project activity, would the Project Owners have dropped the project without revenue from CDM? What was the basis of CER price for the calculation of IRR with CDM revenue?

10)	Are the POs achieving an IRR above the benchmark IRR (i.e. above 16.63%) with revenue from CDM? If “NO” then how did the respective Management of the Project Owners approve the project, at an IRR which was below benchmark IRR?

11)	“As per MNRE, accelerated depreciation on WEG is permissible upto 80 % for Income tax calculation, subject to a minimum utilization for 6 mths in the year in which the reduction is claimed”
a.	It is not clear from the financials in the PDD, if the project owner has considered 40% depreciation in the first year, since MNRE clearly states as above.
As per industry knowledge and common practice, generally 80% of the depreciation is claimed in the first year or second year in which the WGE’s are used for more than six months.