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Deck Roadmap

ASR Energy - Bhatinda 500 MW Project | EY Strategic Finance Case Championship 2026

Company & Case overview

Problem Statements:

PS 1 25-Year Forecasted P&L

Revenue, EBITDA, PAT trends over 25-year lifecycle

PS 2 Equity IRR & Project IRR

35.45% Equity IRR vs 16% hurdle; 14.41% Project IRR vs 9.34% WACC

PS 3 Interest Rate Sensitivity - Scenario 1 & Scenario 2

+1.50% step-rate hike from FY2033 - stress testing DSCR and IRR

PS 4 Strategic Viability in a Net-Zero Era

Coal investment case vs India 2070 net-zero commitment

PS 5 ESG Trade-off and Environmental Liabilities

Carbon pricing, social license and decommissioning risk

PS 6 Fuel Procurement and Market Entry Strategy

Multi-tiered coal sourcing and North India competitive positioning

PS 7 Market Entry Strategy

Navigating the North Indian Power Landscape.

Verdict INVEST

4-dimension strategic assessment with final recommendation

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Company & Case Overview

About ASR Energy

Privately held Indian energy firm, founded 1998. Known for best-in-class operational efficiency in thermal power generation.

Current portfolio of 4,200 MW across Jharkhand, Chhattisgarh and Maharashtra.

The Bhatinda 500 MW project marks ASR's first entry into the North Indian market, driven by Punjab's industrial-led power demand growth.

Project Snapshot

500 MW

Installed Capacity

CU 38,000 Mn

Total CapEx

75 : 25

Debt : Equity Ratio

FY2029

Commercial Operations

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Problem Statement -1

Prepare forecasted Profit & Loss Statement for 25 years of operation

ASR Energy – Bhatinda Project | 25-Year Operational Period (FY2029–FY2053)

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25-Year P&L at Glance (FY2029–FY2053)

The transition from a "Repayment Phase" to a "Debt Free Phase”

All figures in CU Million unless stated otherwise

•Revenue grows at CAGR ~5% , anchored by 3% p.a. tariff escalation and PLF increasing from from 55% to 85%.

•EBITDA margin increases from 35.7% (FY2029) to 45.7% (FY2053) as plant reaches optimal load.

•PAT turns positive in FY2031 following moratorium year losses due to interest burden.

Key Observations

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Revenue vs. Operating Cost Breakdown

Revenue grows at a 5% CAGR, with fuel cost comprising the largest expense (~55% of revenue)

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EBITDA & EBIT Performance Trend

Both EBITDA and EBIT grow steadily. EBIT converges with EBITDA as depreciation ends post FY2053

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Profitability Margin Analysis

EBITDA margin expands 10 ppts over 25 years. PAT margin turns positive in FY2031 post debt ramp-up.

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Profit Before Tax & Net Profit (PAT) Trend

PBT negative in FY2029 (moratorium). PAT positive from FY2031. Interest-free from FY2042 drives steep PAT growth

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Cost Structure – Cumulative 25-Year Breakdown

Fuel cost dominates at ~85% of operating expenses. Fixed + Variable O&M account for ~15%.

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1. Strong Revenue Foundation

Lifetime revenue of CU 738,996 Mn at ~5% CAGR. The 3% annual PPA tariff step-up is the structural backbone here — it's contractually locked in, not a projection.

2. EBITDA Margin Widens

EBITDA margins move from 35.7% to 45.7% over the lifecycle, as PLF scales to 85%, the fixed-cost base gets spread across more units, and each incremental kWh drops nearly straight to EBITDA.

3. The Profit Inflection

PAT goes green in FY2031. Once debt clears by FY2041, the interest line disappears entirely — that's when the PAT curve really steepens

4. Cost Watch: Fuel Risk

Coal/fuel cost at ~84.6% of OpEx key risk factor. O&M at 4% p.a. escalation is well within the revenue growth envelope.

5. Return Profile

At 35.45% Equity IRR against a 16% hurdle, this project clears the bar by more than two times — leaving real room for coal price shocks or commissioning delays without flipping the investment case.

Key takeaways from forecasted P&L

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Problem Statement -2

Calculate Equity IRR and Project IRR. The accepted rate of return for the equity investors is 16%.

ASR Energy – Bhatinda Project | Equity IRR and Project IRR (FY2029–FY2053)

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Investment Returns & Value Creation

Equity Returns Significantly Outperform 16% Hurdle across All Scenarios

1.High Equity Returns: 35.45% Equity IRR clears the 16% hurdle rate by 19.45 % points, nearly 2.2x the required return.

2.Robust Asset Performance: 14.41% Project IRR demonstrates high-quality underlying operational cash flows.

3.Substantial Alpha Generation: The project delivers a massive 19.45% spread over required equity returns.

4.WACC Outperformance: Project IRR of 14.41% comfortably stays above the 9.34% cost of capital.

5.Investment Verdict: Consistent "PASS" verdict maintained even under adverse interest rate sensitivity scenarios.

Note: Equity IRR (35.45%) is more than double the requested 16% return. This provides a significant "safety buffer" (Margin of Safety) for investors against potential coal price hikes or operational delays.

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Capital Structure: Demonstrates a highly leveraged but stable financing structure, utilizing a 34,200 CU Mn term loan to amplify equity returns.

Return Benchmark: Demonstrate that the project itself is solid (14.41%), the Equity IRR (35.45%) is more than double the required return, providing a massive margin of safety.

Revenue Utilization: Demonstrates that Fuel (Coal) is the primary cost driver, but the project still retains a healthy net profit margin even after accounting for significant operating costs and debt servicing.

Project Investment Dashboard

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Problem Statement -3

Scenario 1: % increase in interest rate from FY 2033 by 0.50%. Further increase in interest rate from FY 2035 by 1.00%

ASR Energy – Bhatinda Project | Interest Rate Sensitivity (FY2029–FY2053)

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Scenario 1 Analysis – Interest Rate Sensitivity

Base Interest Rate: 9.50% p.a.

Scenario 1 Adjustments:
Phase 1 (FY 2033): Increase of +0.50%, bringing the interest rate to 10.00%.
Phase 2 (FY 2035 onwards): Further increase of +1.00% (Total cumulative increase: +1.50%), bringing the final rate to 11.00%.

ANALYSIS

Cash Flow Buffer: At 85% PLF from FY2033 onwards, operating cash flows are high enough to absorb the additional interest cost without straining debt service.
Debt Service: Even with a 150-basis-point increase in interest rates, the project comfortably services its debt and maintains an Equity IRR significantly higher than the 16% hurdle rate.
Verdict: PASS. The project remains highly viable under the simulated interest rate stress

Key Financial Impact: Despite the increased interest burden during the repayment phase (FY 2033–FY 2041), the project demonstrates high financial stability. Revenue grows faster than the incremental debt cost.

Revenue (Total Project): 738,996 CU Mn EBITDA (Total Project): 312,938 CU Mn Net Profit (Total Project): 202,205 CU Mn

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Problem Statement – 3 contd.

Scenario 2: % increase in interest rate from year 2032 by 0.50%. Further increase in interest rate from year 2038 by 0.50%

ASR Energy – Bhatinda Project | Interest Rate Sensitivity (FY2029–FY2053)

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Scenario 2 Analysis – Interest Rate Sensitivity

Base Interest Rate: 9.50% p.a.

Scenario 2 Adjustments:
Phase 1 (FY 2032): Increase of +0.50%, bringing the interest rate to 10.00%.
Phase 2 (FY 2038 onwards): Further increase of +1.00% (Total cumulative increase: +.50%), bringing the final rate to 10.50%.

Key Financial Impact: Despite the staggered increase in interest rates reaching a peak of 10.50%, the project maintains a very high margin of safety.

Revenue (Total Project): 738,996 CU Mn EBITDA (Total Project): 312,938 CU Mn Net Profit (Total Project): 225,321.1 CU Mn

ANALYSIS

Staggered Impact: Interest rate caps at 10.50%. This results in a lower total interest burden than Scenario 1.
Debt Service: The Minimum DSCR drops slightly to 1.45x starting in FY 2032. This remains very healthy, indicating the project has a 45% cash buffer over its debt obligations.
Profitability: The cumulative impact on Net Profit (PAT) is a reduction of approximately 954 CU Mn over the repayment period (FY 2032–FY 2041), which is easily absorbed by the project's high EBITDA margins.
Resilience: The PASS status is maintained across all financial covenants, confirming that the Bhatinda Project is robust against moderate, multi-stage interest rate hikes.

Metric	Base Case	Scenario 1 (+1.50% max)	Comparison / Status
Equity IRR	35.45%	35.45%	No change to the rounded IRR
Project IRR	14.41%	14.41%	Consistent with Base Case
Hurdle Rate	16.00%	16.00%	Min threshold for equity
IRR Spread	19.45%	19.45%	PASS

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Financing Resilience & Strategic Stress Testing

Scenario 1: Aggressive +1.50% hike (up to 11.00%) starting FY 2033.

Scenario 2: Staggered +1.00% hike (up to 10.50%) starting FY 2032.

Assessing the Stability of Shareholder Returns Under Benchmark Rate Volatility

We applied two "stress-step" scenarios to the project’s floating-rate debt. These scenarios increase total interest outgo by up to 1,326 CU Mn,

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Comparative Financial Impact Matrix

Note: The consistent IRR is a result of the project's 3% annual tariff escalation, which outpaces the incremental cost of debt. This creates a "Natural Hedge" inherent in the Power Purchase Agreement (PPA).

Quantifying the "Cost of Risk" Across Evaluated Scenarios

Metric	Base Case (9.5% Flat)	Scenario 1 (+1.50% Step)	Scenario 2 (+1.00% Step)
Equity IRR	35.45%	35.45%	35.45%
Total Interest Outgo	24,367 CU Mn	25,694 CU Mn	25,321 CU Mn
Minimum DSCR	1.48x	1.42x	1.45x
Hurdle Rate Gap	19.45%	19.45%	19.45%
Verdict	Investment Grade	Stress Resilient	Stress Resilient

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Strategic Risk Mitigation Framework

Recommended Treasury Actions for Interest Rate Hedging

Refinancing Roadmap: We recommend a Post Commercial Operation Date refinancing strategy. Once the project achieves operational stability (6–12 months), the floating-rate term loan should be shifted into Fixed-Rate Green Bonds to lock in long-term financing costs.

Derivative Overlay: For the remaining floating exposure, utilize Interest Rate Swaps (IRS) or Interest Rate Caps. Given the current yield curve, securing a cap at 10.25% would provide absolute certainty on the DSCR floor.

Cash-Flow Sweep: Implement a dynamic cash sweep mechanism. In years where the Plant Load Factor (PLF) exceeds 85%, the surplus cash should be directed toward Principal Pre-payment, effectively reducing the interest-bearing base.

Covenant Management: Maintain the Debt Service Reserve Account (DSRA) at 1.1x of the next two quarters' obligations. This ensures that even during a "high interest, low production" black-swan event, the project remains solvent.

Both stress scenarios confirm the same thing: the financing structure holds. The staggered and aggressive interest rate hikes do not break the project's financial model or its ability to deliver premium returns to equity holders. We recommend proceeding with the current financing structure while keeping the refinancing roadmap as a secondary value-creation lever.

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Problem Statement -4

Given India's commitment to achieving net-zero emissions by 2070 and the rapidly growing investment in renewable energy, is it strategically viable for ASR Energy to invest in a 500 MW coal-based thermal power plant at this juncture?

ASR Energy – Bhatinda Project | strategic viability investment in coal based thermal power plant (FY2029–FY2053)

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The Business Case for Coal in a Net-Zero Era

Balancing Immediate Energy Security with Long-Term Decarbonization Goals

The 2070 Gap: Net-Zero is the destination, but the CEA’s own National Electricity Plan acknowledges thermal baseload stays in the mix until grid-scale, long-duration storage becomes commercially viable — and that’s not happening before the 2040s

Returns That Pay Back Fast: At 35.45% Equity IRR, capital is fully recovered by FY2037 a full decade before the net-zero clock even becomes relevant to this asset.

Strategic Window: Debt‑free phase (FY2042–2053) precedes 2070, enabling capture of Green Transition Capital.

Cleaner by Design: The CU 1.2 Bn investment in Supercritical Technology and FGD systems isn’t just regulatory compliance it puts this plant at the low end of India’s thermal emission intensity curve, which matters as carbon pricing approaches.

Think of It as a Funding Mechanism: This isn’t a forever asset it’s a 25-year cash generator that bankrolls ASR’s green pivot. The thermal profits buy the renewable future.

FGD: Flue Gas Desulphurization.

It is an environmental control technology used to remove sulfur dioxide ($SO_2$) from the exhaust (flue) gases of fossil-fuel power plants. Since coal contains varying amounts of sulfur, burning it releases $SO_2$, which is a primary contributor to acid rain and respiratory health issues.

Supercritical technology:

The thermodynamic state of the water used in the power plant’s boiler. In a standard (subcritical) plant, water is heated until it boils to create steam. In a supercritical plant, the water is heated to such a high pressure and temperature that it reaches its "critical point.

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Environmental Liabilities & ESG Risk Quantification

Proactive Management of Decommissioning and Compliance Obligations

The project maintains a +19.45% IRR spread over the hurdle rate.
Even if a carbon tax of CU 500/tonne is introduced in the 2030s, the project’s high margins ensure the IRR remains comfortably above the 16% threshold.

Carbon Pricing Stress Test:

Commitment to BRSR (Business Responsibility and Sustainability Reporting) to ensure continued access to international capital markets and lower financing costs.

ESG Disclosure:

Ash Management: 100% ash utilization via cement & brick manufacturing to eliminate land contamination risk.
Decommissioning Planning: EY‑recommended sinking fund, with EBITDA allocations from FY 2045 for plant dismantling and site restoration.

Life‑Cycle Liability Management:

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Strategic Roadmap – ASR Energy’s Path to 2053

From Thermal Reliability to Sustainable Energy Leadership

The Bhatinda project is strategically viable as a terminal thermal asset provided it serves as the financial foundation for ASR's green transformation.

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Problem Statement -5

How should ASR Energy weigh the long-term environmental liabilities (such as carbon pricing, stricter environmental norms, and social license to operate) against the current economic attractiveness of a thermal power project?

ASR Energy – Bhatinda Project | Balancing IRR with ESG Resilience (FY2029–FY2053)

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Strategic Trade-off – Balancing IRR with ESG Resilience

Quantifying the Tension Between 35% Equity IRR and 2070 Net-Zero Commitments

Economic Anchor: 35.45% Equity IRR creates a 19.45% alpha, providing a built‑in buffer for future environmental costs

Liability Clock: Environmental costs are back‑ended, while cash flows are front‑loaded.

Strategic Advantage: Debt‑free by FY2041, keeping the project unencumbered during peak carbon regulation years.

Stranded Asset Risk: The primary risk is not operational failure, but regulatory obsolescence.

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Environmental Liability Matrix & Mitigation Costs

From Compliance to Value Protection – Pricing the "Green" Transition

ASR should plan for a Phase-Out Transition starting 2045. Use the project’s massive cash flows to fund a Renewable Energy Expansion (REE), effectively using thermal profits to "buy" a green future.

The project is economically superior and provides enough margin to pay for its own environmental liabilities.

Risk Driver	Impact on Financials	Mitigation Strategy
Carbon Pricing	Potential tax of CU 400–800/tonne post-2030.	Use the 3% annual tariff escalation to create a Carbon Sinking Fund.
Stricter Norms	Increased O&M for FGD/Supercritical upkeep.	Budgeted 7% Auxiliary Consumption ensures compliance without technical "retrofit shocks."
Social License	Delays in land/water rights or local protests.	Allocate 1.5% of Capex (CU 570 Mn) specifically for community-led ESG and CSR programs.
Financing Access	Rising cost of "brown" capital (higher interest).	Refinance into Fixed-rate Infrastructure Bonds early to lock in costs before "Coal Divestment" trends accelerate.

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Problem Statement -6

In light the of India’s evolving coal supply challenges, fluctuating import costs, and geopolitical uncertainties, how should ASR Energy design a robust fuel procurement and risk mitigation strategy to ensure uninterrupted operations and cost predictability for the Bhatinda project?

ASR Energy – Bhatinda Project | Designing a Multi-Tiered Sourcing Strategy (FY2029–FY2053)

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Designing a Multi-Tiered Sourcing Strategy

Ensuring Uninterrupted Operations through Diversified Procurement

Primary Tier: Long-Term Fuel Supply Agreement (FSA):

Secure an FSA with Coal India Limited (CIL) or its subsidiaries (e.g., NCL/SECL) for at least 70% of the annual requirement (approx. 2.5 Million Tonnes).
Insight: Proximity to the rail-head is critical for the Bhatinda project to manage the "last-mile" logistics cost.

Secondary Tier: E-Auction & Private Linkages:

Allocate 15–20% of the requirement to spot market purchases and private miners to hedge against CIL production shortfalls.

Tertiary Tier: Strategic Imports (The Swing Factor):

Maintain a 10% "Import Buffer" of high-CV (Calorific Value) coal.
Optimization: Blending 10% imported coal with domestic coal can improve boiler heat-rate and reduce specific coal consumption (currently modeled at 1.05 kg/kWh).

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Mitigating Price Volatility – Financial & Operational Hedges

Achieving Cost Predictability in a Fluctuating Global Market

Cost predictability is achieved through Blending and Inventory Control.

ASR Energy should immediately initiate a Logistics Cost Audit. Given Bhatinda's distance from the coal belt, the "Freight" component will likely exceed the "Pithead" coal price. Optimizing the rail-freight contract is the single biggest lever for protecting the 35.45% Equity IRR.

Biomass Co-firing: Explore 5–10% biomass pellet co-firing (stubble from Punjab region).

Utilize washed coal to reduce ash content (Bhatinda being far from mines, transporting ash is economically inefficient).

The current model assumes a 2% annual coal price escalation. To protect the 42% EBITDA margin, ASR should negotiate "Cap-and-Collar" pricing with private suppliers to limit exposure to global price spikes.

Index-Linked Pricing & Escalation:

Increase on-site coal stockpiles from the standard 15 days to 30–45 days during the monsoon season or periods of geopolitical tension.
Impact: Protects against the "Rail-Rake" shortages frequently seen in Northern India.

Inventory as a Strategic Buffer:

For the imported coal component, utilize Forward Contracts to hedge USD/INR volatility, ensuring that "Imported Inflation" does not erode the Project IRR.

Currency Risk Management:

Invest in "Own Your Wagon" (OYW) schemes with Indian Railways to guarantee rake availability, reducing the reliance on general-purpose railway logistics.

Logistics Optimization:

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Problem Statement -7

Given ASR Energy’s operational strength in Central and Western India, what strategic considerations should guide its market entry into North India, specifically Punjab, and how can the company build a competitive advantage in a region dominated by both traditional players and rising renewable energy investments?

ASR Energy – Bhatinda Project | Market Entry Strategy (FY2029–FY2053)

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Market Entry Strategy – Navigating the North Indian Power Landscape.

Strategic Pivot to Punjab – Establishing a High-Yield Beachhead in a Deficit Region

Execution Advantage: Existing coal procurement capabilities convert logistics complexity into operational strength.

Punjab’s Seasonal Demand Problem: Paddy-season load spikes create exactly the kind of reliable, predictable baseload demand that thermal fits perfectly and that wind and solar, by nature, cannot guarantee.

Regional Power Deficit: Fixed CU 6.00/kWh Power Purchase Agreement (PPA) protects the state from volatile peak‑summer market prices, creating a win‑win partnership.

Technology Gap in the North: Most state-run plants in the region are aging subcritical units. ASR’s Supercritical & FGD-equipped plant offers a superior heat rate and emission profile, making it more resilient to the "Coal Phase-Out" narrative.

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Building Competitive Advantage – The "Thermal-Plus" Framework

Differentiating ASR Energy in a Region Dominated by Traditional & Renewable Players

Reliability Premium: 24/7 firm power differentiates ASR from variable renewables, supporting the CU 6.00/kWh tariff.

Cost Leadership via Efficiency: 42.3% lifetime EBITDA margin keeps ASR near the top of the dispatch stack — when grid operators need power, they call this plant first, even off-peak.

Fuel Flexibility Advantage: Biomass co‑firing converts an environmental challenge into a social‑license moat and builds community goodwill in the region

Refinancing Agility: High 35.45% IRR enables rapid deleveraging, creating a debt‑free, tariff‑competitive asset by FY2042

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Strategic Roadmap – ASR’s 3-Phase Entry Plan

From Market Entry to Regional Leadership (FY 2026 – FY 2053)

Punjab is not just a new market; it is a Strategic Hedge. The project's financial robustness (35.45% IRR) provides the "economic oxygen" to survive the higher logistics costs of North India.

Phase 1: Compliance & Community (Construction Phase)

Secure the "Social License" by investing in local water table management and FGD systems. Ensure the CU 2,000 Mn pre-operative budget includes deep stakeholder engagement in Punjab.

Phase 2: Operational Stabilization (FY 2029 – FY 2035)

Target a Minimum DSCR of 1.42x (as per your stress test) to build lender confidence in a new geography. Establish the coal-linkage corridor from mine-to-plant.

Phase 3: The Hybrid Evolution (Post-2040)

Use the CU 126,000 Mn+ cumulative free cash flow generated by this project to acquire or build solar-hybrid plants in the Rajasthan-Punjab corridor, transitioning ASR from a "Thermal Player" to a "Regional Energy Major."

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STRATEGIC ASSESSMENT | 4 Dimensions of Viability

1. Financial Viability

STRONG ✓

→ 35.45% Equity IRR vs 16% hurdle

→ EBITDA growing 5% CAGR

→ Debt-free by FY2042, full value harvest

→ Revenue hedge: 3% PPA escalation p.a.

2. ESG & Environmental Risk

MANAGEABLE ⚠

→ Carbon pricing risk post-2030: CU 400–800/tonne

→ Supercritical tech + FGD mitigates emission intensity

→ Decommissioning liability must be provisioned by 2045

→ Use cash flows to fund renewable energy pivot

3. Fuel & Operations Risk

MANAGEABLE ⚠

→ Coal at ~85% of OpEx key sensitivity

→ Bhatinda is 1,200+ km from coal belt (freight risk)

→ Logistics cost audit is highest-priority lever

→ Diversify: ECL/FSA split + biomass co-firing 5–10%

4. Market & Competitive Position

FAVOURABLE ✓

→ Punjab power deficit region baseload demand secured

→ CU 6.00/kWh PPA protects against spot price volatility

→ Supercritical plant has efficiency edge vs. aging rivals

→ First-mover advantage in North India for ASR Energy

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Final Verdict

✓ INVEST

The Bhatinda 500 MW project is financially superior, strategically sound, and structurally resilient.

Equity IRR of 35.45% is 2.2× the 16% hurdle — one of the strongest return profiles in regulated Indian thermal power. The margin of safety is real.

Interest rate stress testing confirms the PPA's built-in 3% escalation creates a structural hedge against floating debt costs.

Punjab's power deficit and the CU 6.00/kWh PPA provide demand and revenue certainty for the full 25-year lifecycle.

The project's debt-free phase (FY2042–2053) generates the capital runway needed to fund ASR's eventual green energy pivot.

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REFERENCES:

Project Data & Financial Modeling

ASR Energy. (2026). ASR_Energy_Model: Integrated Financial Model (FY2029–FY2053). Strategic Finance Case Championship.)
ASR Energy. (2026). Participant Input Sheet: Bhatinda 500 MW Project. Strategic Finance Case Championship.
EY. (2026). Case Study: ASR Energy – Evaluating Project Viability in a Transitioning Energy Economy. Capital Architects Program.

Regulatory & Environmental Frameworks (India)

Central Electricity Authority (CEA). (2023). National Electricity Plan (Vol. I): Generation. Ministry of Power, Government of India.
Ministry of Environment, Forest and Climate Change (MoEFCC). (2021). Emission Norms for Thermal Power Plants: Mandatory Installation of Flue Gas Desulphurization (FGD). Government of India Gazette.
Ministry of New and Renewable Energy (MNRE). (2022). India’s Path to Net-Zero: Updated Nationally Determined Contributions. Government of India.

Technical & Strategic Industry References

KPMG & EY Joint Research. (2025). Energy Transition in Emerging Markets: The Role of Baseload Thermal Power. Infrastructure Advisory Series.
World Bank. (2024). State and Trends of Carbon Pricing 2024. World Bank Group.