The Case of AES AES Tietê Tietê and its Expansion Plant in BrazilLetter of Transmittal SUBMITTED TO: th
June 20 , 2016 d! Shehu" Bin #asan Assistant Professor, $epart%ent of &inan'e (ni)ersit* of $ha+a
$ear Sir,
d! Shehu" Bin #asan $epart%ent of &inan'e &a'ult* of Business Studies (ni)ersit* of $ha+a
COURSE NAME:
e are pleased to su"%it the report /n)est%ent *ou ha)e assi-ned to us! The report paper ai%s at Capital $e'ision preparin- the ter% paper on the 'ourse na%ed .Capital /n)est%ent $e'ision Course &303, Course no8 &:303 as a part of our a'ade%i' a'ti)ities! This stud* has -i)en us the opportunit* to learn the foundations of Capital /n)est%ent $e'isions and also -i)en us the pra'ti'al experien'e "* -oin- throu-h a relati)e 'ase stud*! The 'ase anal*sis that 4e ha)e studied throu-h Submitted by: this report 4ill help us in our future, indeed!
roup 7o8 19
e 4ould li+e to to 'on)e* our spe'ial than+s Se'tion8 B and -ratitude to *ou for patronizin- our effort $epart%ent of &inan'e 5 for -i)in- us proper -uidan'e and )alua"le ad)i'e! e ha)e tried our "est to (ni)ersit* of $ha+a 'o)er all the rele)ant fields! Please let us +no4 if *ou 4ant to su--est us so%ethin- %ore to i%pro)e this report! e 4ill "e -lad to -et *our )alua"le ad)i'e! e ha)e tried our "est to %a+e this report a fault free one and 4e hope that *ou 4ill ta+e an* unintentional %ista+e 4ith +ind 'onsideration!
Submission Date: !t" #une$ !%& Sin'erel* *ours,
1 | Pag e
Serial % . ) 2
ID NO' !(!) !(%!! !(%&/ !(! !(%
Name Mobassira *abi"a +a,ue Md' Ati-ur Ra"man Al(*aysal Bin Amin M'0'M' Siddi,ui 1ros"un 1arbon A3"ar4ee
Ta"le of Contents Exe'uti)e Su%%ar*!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!3 Situation Anal*sis8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9 Co%pan* ;)er)ie48!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!6 ;ur Tas+8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!< /ndustr* Anal*sis8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!= Bar-ainin- Po4er of Custo%ers8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!> Co%petiti)e ?i)alr*8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!> Threat of Su"stitutes8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!> Threat of Entr*8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!> Politi'al!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 E'ono%i'!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 So'ial!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 Te'hnolo-i'al!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 En)iron%ental!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 @e-al!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!10 &inan'ial Anal*sis8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11 ?e)enue Per ear8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 Capa'it* ?e)enue8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 ?e)enues Pass:throu-h8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 aria"le ?e)enue Pass:throu-h8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 ross ?e)enue8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 ?e)enue tax8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12 7et ?e)enue8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!13
2 | Pag e
aria"le Costs8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 aria"le as Costs8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 &ixed Cost8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 Personnel, aterials, Ser)i'es, and others8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 $epre'iation!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 Total &ixed Cost Per ear8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!13 7et Profit8!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!! 13 7et 4or+in- Capital8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!! 1 7et Capital Expenditure8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 B/$ Pri'e Cal'ulation!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!16 &indin-s!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1< ?e'o%%endation8!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1=
E5e3uti6e Summary AES Brasil is #ead:Duartered in the 'it* of Barueri in the state of So Paulo! /t is a di)ersified ener-* utilit* 'o%pan* 4ith operations in fi)e 'ontinents, six SB(sF one of 4hi'h is Brazil SB('
AES Tiet7 is one of its ener-* -eneration "usiness! AES holds 2G e'ono%i' interest in Tietê' /t is the third lar-est pri)ate -enerator in Brazil! /t has 12 #*dro:ele'tri' Po4er stations$ 269= of installed 'apa'it*$ Ph*si'al -uarantee of 12<= a)era-e!
AES Tiete is no4 plannin- to in)est B?@ 1!2 "illion for an expansion plant in Brazil! e did the /ndustrial Anal*sis and finan'ial anal*sis for @uiz Costa, 4ho is the ana-er of /n)est%ent Anal*sis roup of AES Brasil! #e has to %a+e a ri-orous anal*sis in three different s'enarios, Base Case for 4hi'h the "id pri'e is assu%ed to "e B?@ 9H4h, ;pti%isti' Case for 4hi'h the "id pri'e is assu%ed to "e B?@ 90Hh and Pessi%isti' Case 4ith a "id pri'e of B?@ 9Hh! #e has to re'o%%end to his "oard if the 'o%pan* should in)est or not! Also, a "id pri'e is 'al'ulated for hi% 4hi'h is suita"le for hi% to -et a 7et Present alue of Iero! After anal*zin- the 'ase, 4e sa4 that the 7P in all the three s'enarios are 7e-ati)e! /n the "ase 'ase the 7P is B?@ :61!29 %illion, in the opti%isti' s'enario, the 7P is B?@ :20!9 %illion and in the pessi%isti' 'ase the 7P is B?@ :10!3
3 | Pag e
#en'e, 4e re'o%%ended r! @uiz Costa to not in)est in this proe't! /n 'ase, if the* 4ant to expand, the* %ust "id a pri'e of B?@ 6Hh
Situation Analysis:
Com8any O6er6ie9: AES Brasil is #ead:Duartered in the 'it* of Barueri in the state of So Paulo! /t is a di)ersified ener-* utilit* 'o%pan* 4ith operations in fi)e 'ontinents, six SB(sF one of 4hi'h is Brazil SB(' Joined the Brazilian %ar+et in 1>><, throu-h a'Duisition of its utilities KAES S(@L!
4 | Pag e
T"e 3om8any "olds t9o lines of business: 1! Ener-* eneration 2! Ener-* $istri"ution
In total$ AES Brasil "as: 1! 2! 3! !
Thirteen -eneration fa'ilities Capa'it* is 32>= ross e-a4atts <600 people e%plo*ed T4ent* %illion 'usto%ers
AES Tiet7 is one of its ener-* -eneration "usiness! AES holds 2G e'ono%i' interest in Tietê ' /t is the third lar-est pri)ate -enerator in Brazil! /t has 1! 12 #*dro:ele'tri' Po4er stations 2! 269= of installed 'apa'it* 3! Ph*si'al -uarantee of 12<= a)era-e! /t Sells nearl* 100G of its 'apa'it* to Ele'tropaulo at B?@ 1>Hh! This 'ontra't 4ould expire in $e' 2019! Tietê is plannin- to 'ontra't and sell in spot %ar+et! AES de'ided to de)elop plans for a 900 natural -as ther%o ele'tri' proe't! The strate-* is to offset dependen'e on h*droele'tri' -eneration! Plannin- to start operation in 201>! A PPA "et4een AES and -o)ern%ent 4ould "e for 29 *ears! $epre'iation of the plant 4ould "e for 29 *ears! Total a%ount of 'apital expenditure 4ould "e BRL %' billion'
Our Tas-: E)aluate the situation in Brazil for AES Tietê and re'o%%end @uiz Costa if the* should -o for this proe't and 4hat 'ould "e the pro"a"le "id pri'e! Also, @uiz Costa has to "uild three different )aluations8
%' A base Case ' An O8timisti3 S3enario .' A 1essimisti3 S3enario All the )aluations ha)e to "e at the end of 2013!
/n order to "e 'o%petiti)e, AES 'ould not "id %ore than BRL 2!M;" in the au'tion!
5 | Pag e
Industry Analysis:
6 | Pag e
e used 1orter
1o9er of t"e Su88liers 8 The Brazilian ele'tri'it* is 'hara'terized "* stri't re-ulations s4a*ed in fa)or of the final 'onsu%er! A7EE@ di'tates tariffs in the re-ulated %ar+et and li%its parti'ipation in the se'tor! Therefore, suppliers ha)e lo4 to %oderate "ar-ainin- po4er! A'tuall* the* are prote'ted "* re-ulations!
Bar=ainin= 1o9er of Customers: As there are stri't re-ulations for the sa+e of 'onsu%ers set "* the -o)ern%ent, 'onsu%ers donMt a'tuall* need to "ar-ain 4ith the 'o%panies en-a-ed in suppl*in- ener-*! Therefore, the* also eno* a lo4 to %oderate "ar-ainin- po4er li+e suppliers do!
Com8etiti6e Ri6alry: &o'us on operational effi'ien'* and 'ost redu'tions has intensified ri)alr*! o)ern%ent in'enti)es to 'o%petitors %a* raise le)els of 'o%petition! @a'+ of differentiation and hi-her fixed 'ost also 'ontri"utes to ri)alr*!
T"reat of Substitutes: ithin BrazilMs ele'tri'it* industr*, alternati)e for%s of produ'in- ele'tri'it* pose a potential s4it'hin- 'ost if the alternati)e for%s e)entuall* "e'o%e operational nor%! ;f 'ourse, end 'onsu%ers 'ould turn self:suffi'ient "* use of solar po4er, thou-h this is unli+el* to happen 'onsiderin- the hi-h 'osts of solar panels!
T"reat of Entry: ;peratin- and o4nin- po4er -eneration fa'ilities reDuires lar-e finan'ial outla* and intensi)e
7 | Pag e
'apital to set up and operate hundreds of po4er plants! E)en thou-h utilit* 'o%panies lar-el* dra4 'usto%ers on pri'e, the 'o%petiti)e lands'ape in 4hi'h these 'o%panies operate is diffi'ult to penetrate!
;e also 3arried out a 1ESTEL analysis to di= dee8er:
8 | Pag e
1oliti3al
o)ern%ent is proa'ti)e and sta"le and there is no politi'al insta"ilit* in
E3onomi3
the 'ountr* at the %o%ent! Both do%esti' and forei-n enterprises are treated eDuall* and la"or 'osts are 'onsidera"l* lo4! &or i%port duties, a s *ste% is in position, 4hi'h -raduall* de'reases the tariff dependin- on the a%ount of su''essful i%portin- *ears!
So3ial
There is e'ono%i' ineDualit* 4ith the population as around 20G of the population li)es under the po)ert* line! @oo+in- at the 'lass distri"ution, there are a 'onsidera"le nu%"er of 4ealth* 'itizens and a hu-e se-%ent of people 4ith %ini%al in'o%es! The %iddle 'lass is -ro4in- as 4ell!
Te3"nolo=i3al
Co%pared to 'ountries li+e the (S and ?ussia, Brazil possesses a 4ea+er te'hnolo-i'al infrastru'ture and in)est%ent, "ut there are efforts to push the de)elop%ent of te'hnolo-*! #o4e)er, /T is a se'tor in 4hi'h Brazil has "een 'onstantl* i%pro)in- and it 'urrentl* ran+s 93rd in the 4orld!
En6ironmenta l
&or al%ost all the 'ountries, en)iron%ental 'onsiderations are a %aor issue for "usinesses runnin- in the 'ountr*! Brazil has not put a lot of i%portan'e on en)iron%ental fa'tors *et as there are so%e other aspe'ts to fo'us on! The rules are "ein- stri't 4ith the passa-e of ti%e!
Le=al
@a4 of a 'ountr* is a )er* i%portant fa'tor for "usinesses operatin- in the 'ountr*! ?estri'tions and stri't %onitorin- of ener-* pri'es "* -o)ern%ent so%eti%es affe't the "usiness! Brazil has a %oderate re-ulator* en)iron%ent! But for so%e 'ases, the rules are )er* stri't!
9 | Pag e
*inan3ial Analysis:
10 | P a g e
To anal*ze the 'ase finan'iall*, 4e ha)e to find the 7et Present alue of the Proe't in 2013 usin- three different S'enarios!
Bid 1ri3e: (sin- the infor%ation pro)ided, 4e ha)e to 'al'ulate the 7P of the proe't in three different 'onditions! As the %axi%u% Bid pri'e of the proe't is B?@ 90H h, hen'e that is the opti%isti' s'enario! As a result, eMre assu%in- the Base 'a se to "e B?@ 9Hh and the Pessi%isti' 'ase to "e B?@ 0Hh!
To 3al3ulate t"e total ener=y: Biddin= 1ri3e Installed Ca8a3ity No' of +ours Ca8a3ity *a3tor Dis8at3" Total Ener=y
9 900 =<60 >0G 90G %>?%!!
!
Re6enue 1er @ear: /n the Brazilian @a4, the ?e)enue Tax ?ate is >!29G Total Biddin= 1ri3e: KBiddin- pri'e per unit x Total unit of ener-* x K1NCP/LLH1000000
Ca8a3ity Re6enue: KBiddin- pri'e per unit x /nstalled Capa'it* x 7o! of #oursLH1000000
Re6enues 1ass(t"rou=": OTotal aria"le as Cost per *earN KTotal aria"le as Cost x 19GLH K1:>!29GL
ariable Re6enue 1ass(t"rou=": OTotal aria"le ;5 per *earN KTotal aria"le ;5 per *ear x 19GLH K1:>!29GL
ross Re6enue: Biddin- Pri'eN Capa'it* ?e)enueN ?e)enues Pass:throu-hN aria"le ?e)enue Pass:throu-h
Re6enue ta5: ross ?e)enue x ?e)enue Tax
11 | P a g e
Net Re6enue: ross ?e)enue: ?e)enue Tax
ariable Costs: ariable O8erations Maintenan3e Costs: Per (nit Cost8
BRL .'>M;" 5 %C1IF Annual Cost8
Installed Ca8a3ity 5 Number of +ours 5 1er Unit ariable CostF %!!!!!! ariable as Costs: Annual Cost: K/nstalled Capa'it* x 7u%"er of #ours x ?ate of as Consu%ption x Per (nit Cost x the ex'han-e rateLH1000000
Total ariable Cost 1er @ear: aria"le ;5 Cost N aria"le as Cost
*i5ed Cost: 1ersonnel$ Materials$ Ser6i3es$ and ot"ers: There 4ould "e a &ixed Cost of B?@ 6 illion per *ear es'alated "* the /nflation! #en'e, )& 5 %C1IF There is a ?e-ulator* Cost of B?@ 20 illion Per ear, this 4ill re%ain 'onstant throu-hout K7ot adusted to inflationL #en'e, it 9ill remain BRL ! Million t"rou="out'
De8re3iation 9ould be 3al3ulated in a strai="t line met"od' #en'e, 1200H 29Q =
Total *i5ed Cost 1er @ear: PS; 'ostN ?e-ulator* 'ostN $epre'iation
T"e Earnin= Before Ta5 is: ross Profit: Total &ixed Cost The Corporate Tax is 3G $ hen'e, the annual tax is :
Earnin=s Before Ta5 5 .)G
Net 1rofit: Earnin-s "efore Tax: Corporate Tax
12 | P a g e
Some Ot"er Information 9e used in our *inan3ial Analysis:
Details ;ACCBRLF ;ACCUSDF
G %%'2?G >'?G
Net 9or-in= Ca8ital: The or+in- Capital 7eeds for ea'h ear is ;ne:T4elfth of the 7et /n'o%e of that *ear!
Net Ca8ital E58enditure: The alue of the /n)est%ent is B?@ 1!2 Billion! Capital Expenditure Per 'enta-e for ea'h *ear is8
@ear !%2 !%& !%? !%/
Ca8ital E58enditure .!G .!G !G !G
T"e Cas" Outflo9s in3urred in t"e % st ) years 9"ere Ca8ital E58enditure too- 8la3e in =i6en 8er3enta=es 8er year'
Net Cas" *lo9: 7et /n'o%eN $epre'iation:7et Capital Expenditure:7et or+in- Capital Then, 4e need to find the 1resent alue of t"e Cas" *lo9s ea3" year in the Brazilian Curren'*' /t is found "*8
Net Cas" *lo9 %;ACC of BraHilF n 7ext, 4e ha)e to 'on)ert it in (S$ "* di6idin= t"e 1resent alue of Cas" flo9s in BRL by
t"e E53"an=e Rate' &inall*, 4e ha)e to 'al'ulate Net 1resent alue of the Proe't at 2013, "*8
Total Cas" *lo9s %;ACC of USAF Item Biddin= 8ri3e 13 | P a g e
n
!%> >3!30<1
Ca8a3ity Re6enue Re6enues(1ass T"rou=" AS COSTF Re6enues(1ass T"rou=" ross Re6enue Re6enue Ta5 Net Re6enue
1>3!=1 31!== =16!0> <9!> ?)!'&!
ariable 3osts as Cost ariable OM
3=>!6= 29!16
Total ariable 3osts ross 8rofit
1!=3 .2'??
*i5ed Costs 1ersonnel$ Materials$ Ser6i3es$ and ot"ers Re=ulatory 3osts De8re3iation Total *i5ed 3ost EBT Cor8orate Ta5
6!00 20 = 11!00 20>!3= <1!1>
13=!1> Net 1rofit Usin= t"e abo6e ste8s ;e 3an 3al3ulate t"e Net 1resent alue of Ea3" of t"e S3enarios'
Cal3ulation for !%>$ Base Case:
Item Net In3ome De8re3iation 14 | P a g e
!%> 13=!1=> =
Ca8ital E58enditure Net ;or-in= Ca8ital
0 11!919=
Net Cas" *lo9
1<!6<
Item Net In3ome De8re3iation Ca8ital E58enditure Net ;or-in= Ca8ital
!%> 13=!1=> = 0 11!919=
Net Cas" *lo9
1<!6<
1 of Cas" *lo9sBRLF 1 of C* J Total Cas" *lo9s
101!03>2 3!=3< :66!>29
N1 at !%.
:61!26>
BID 1ri3e Cal3ulation TO find a Bid 1ri3e for 9"i3" t"e N1 is Hero: ;ACCBraHil K %%'2?G Let$ N1 K ! ! K !'&&R1I*A2 @ears$ %%'2?G (&&'> 2'..2RK&&'> RK%2).&%?'%2 1ri3eK %2).&%?'%2%%>?%!! Bid 1ri3eK BRL &)M;"
15 | P a g e
*indin=s
Bid 1ri3eM;" N1 16 | P a g e
Base )2 (&%'2
O8timisti3 2! (!'2!
1essimisti3 )! (%!)'.)
After anal*zin- the 'ase &inan'iall*, 4e found out that8
Re3ommendation: &ro% the a"o)e ta"le, 4e 'an see that in all the three situations, the 7Ps of the proe't re%ains 7e-ati)e! Considerin- the &inan'ial aspe'ts, it 4ouldnMt "e 4ise for AES to "uild a ne4 po4er plant in Brazil! The Co%pan* needs to %a+e a "id pri'e of at least B?@ 6Hh in the ;pti%isti' Case S'enario to -et a 7P of Iero!
17 | P a g e
Inde5
18 | P a g e
19 | P a g e
