“Due diligence” is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for acquisition.
In the context of Eka Infra’s work for banks and lending institutions, due diligence more commonly applies to investigating the technical and commercial adequacy of an infrastructure project to meet its business targets, earn revenue and pay back loans. In this line of work, we need to watch out for:
- Risks – technical and commercial – short, medium, and long term
- Traffic forecasts
- Capacity assessments
- Cost estimates
- Quality workmanship
- Lower than forecast traffic, leading to low revenues and longer payback periods
- Connectivity and proximity to national and state highways, rail routes etc
- Environmental and HSE requirements.
We carry out focused reviews of the above parameters to ensure that the project as configured fulfils the requirements of the Concession Agreement, and also check for the following:
- All the necessary statutory approvals are in place
- The conditions of statutory approvals are being met
- If there are any design flaws
- The claimed project capacities are realistic
- The contracts placed are adequate
- The capex is increased
- The project is completed within the stipulated schedule
- The operations plan is realistic
- Any likely post-construction woes
Eka Infra has provided quality and timely assistance to corporate houses, financial and lending institutions to take a considered decision on their investment and acquisition plans.
Some selected assignments are described below:
- Evaluation of equipment procurement for KICT at Kutch, Gujarat
- Lenders/ Independent Engineer for JSW Mangalore Container Terminal Pvt Ltd., Mangalore