2. Documenting the dream
Dreams are like vaporware – they evaporate over time
Dreams facilitate out of the box visualizations
E.g., Benzene Ring
Documenting them is the first step towards realization
Problem Design Document Validate
3. Configuring the Solution
Freeze the dream with ICE (Investor-Customer-
Enterprise) synergy → A win-win for all
Customer needs define the
configuration size
Customer Enterprise delivery defines the
Needs operations , logistics, and
efficiency
Dream
Solution Investor funding defines the
Investor Enterprise financial structure for capital
Financing Delivery
efficiency
4. Assess the EBITDA at time t0
Price the product/service competitively to arrive at the
annual revenue in t0 for the best of the solutions
Optimize the operations including logistics to arrive at
the annual costs in t0
Study the annual growth/escalation rates for revenue
& costs
Revenue - Costs = EBITDA
Tune the operations to reduce the divergence in the
escalation rates (harmonized is ideal)
5. Investment Decision
Study the investment for the best of the solutions –
include the working capital and initial cash needs
Determine the viability (DCF, IRR etc) of the
investment against the EBITDA and escalation rate –
arrive at the minimum window of operation
The Asset Life beyond the minimum window
influences the valuation
Design a finance structure to maximize the valuation
over the desired window of operation & the asset life
6. Designing the Finance Structure
Investment = Equity + Debt
Ordinary Preferred Debentures Term-Loan
High Cost Low Cost
Design the mix to:
1. Reach a cash position that would cover the replacement cost
2. Retire the debt and the preferred equity as early as possible
3. Expand or move to a new paradigm with the excess cash
7. The Financial Statements
Income Statement
EBITDA A good design should eliminate
Interest (Term-Loan/Debenture)
Depreciation/Amortization negative cash flow
Taxes
PAT
Cash Flow
PAT + Depreciation/Amortization
∆ Net Working Capital
Term-Loan/Debenture Repayment
Preferred Payment/Redemption
Capex (to remain the best)
Free Cash Generated
Balance Sheet
Liabilities Assets
Debt Cash
Reserves NWC & NFA
8. Communicate the Big Picture
Everyone needs to understand and believe in the Beast
9. Balance the 4Es
Ethics Emotions
Enterprise
Environment Economics
The eco-balance is the key for success & sustenance
