The Design Of Financing Plan Of500kv Power Transformer Project Of Da Cheng Electrical Equipment Company

The tremendous development of China’s electric power construction Since the "11th Five-Year Plan", especially the construction of the leading projects--the Three Gorges Hydropower Station and the West-to-east Power Transmission Program, and the implementation of interregional power grid networks has stirred up another climax of electric power construction. The prosperity of electricity markets has provided a broad market for the manufacture of electric power transmission and transformation equipments. During the period of the "Twelfth Five-Year Plan", the intended investment of the State Grid Corporation of China and China Southern Power Grid Co., Ltd. is expected to be3.05trillion yuan, the average annual investment being over600billion yuan. The huge fund for electric power construction has brought opportunities and challenges for the power transformer industry. The domestic demand for ehv and uhv power transformers takes on a rapidly rising trend. The current market and competition situation in this industry has provided an unprecedented development opportunity for Da Cheng Electrical Equipment Company. In order to upgrade the production of the company and strive for a further development in the new round of power construction climax, the company puts forward the construction project of500kv power transformers to meet the marker needs, expand the production scale of the enterprise, and improve the profits and popularity of the enterprise. And thus this thesis proposes the design of the financing plans for the project. This thesis, taking Da Cheng Electrical Equipment Company as the research object, based on the theories relating to project financing, using literature research methods, survey research methods and case analysis, and combining with the national macroeconomic environment and the industry environment of power transformers, analyzes and studies the market of500kv transformers. According to the investment estimation of the project and the actual conditions of the enterprise, the financing plan for this project is designed. The amount of financing for this project is303.33million yuan, including167.58million yuan for the fixed asset investment during the construction,124.84million yuan for the incremental working capital investment and10.91million yuan for the construction loan interest. In view of the financing amount mentioned above,4financing plans are proposed as follows:Plan No.1: Borrowing money from banks for the total financing amount, Plan No.2:issuing short-term financing bills to raise funds needed, Plan No.3:self-owned capital plus bank loans, Plan No.4:Financial leasing. The capital costs of the4plans are compared; and Plan No.3is adopted by the company as the best one.This thesis focuses on some aspects of this project, such as the investment estimation, the fundraising, the prediction for investment returns after its being put into production, the financial profitability and the analysis of the ability to repay. On the basis of the financing amount and the adopted financing plan, the capital resources are as follows:self-owned capital---86.51million yuan, long-term bank loans---130.00million yuan to be paid off within3years (with a6.996%annual interest rate and a construction loan interest up to10.91million yuan), borrowing money for the working capital---86.82million yuan. In the second year after the project being put into production, the company will repay the long-term loans79.79million yuan using the realized profits plus depreciation; the realized profits in the first year during the production and operation period will be applied to the repayment of the remaining sum of the loans---50.21million yuan; and the loan interest is to be paid off during the construction period. The annual net profit is expected to be91.58million yuan after the project being put into production. With quantitive analysis of the financial profitability and the ability to repay of this project, using the relevant financial statements drawn up for this project, this thesis draws a conclusion that this project is financially feasible and profitable.The contribution of this thesis is that it gives a systematical analysis and research on the core theme---the proposed project of the enterprise, using the theories and methods relating to project financing. It also presents an objective evaluation to the proposed project, integrating the subject knowledge, such as project management, financial management, enterprise strategies and operational research on management into the research of project financing, which provides a certain reference value for some larger transformer companies on whether to expand the scale of500kv transformer production.