How much of its own money does a Vapi or Ahmedabad chemical unit put in under the Bureau of Energy Efficiency upgrade reports, and what does the lender see?
In seven Bureau of Energy Efficiency (BEE) reports for Vapi and Ahmedabad chemical units, the owner puts in 25% and borrows 75% at 10% a year, over 5 years after a 6 month wait. Own money runs from rupees (Rs) 0.80 lakh to Rs 3.90 lakh. The lender cover ratio runs from 1.44 to 4.05.
The seven plans in rupees
- Vapi boiler, 400 kilograms of steam an hour: cost Rs 5.10 lakh, own money Rs 1.28 lakh, loan Rs 3.83 lakh, cover ratio 1.44.
- Vapi boiler, 600 kilograms: Rs 6.13 lakh, own Rs 1.53 lakh, loan Rs 4.60 lakh, cover 1.54.
- Vapi hot air generator: Rs 6.78 lakh, own Rs 1.70 lakh, loan Rs 5.09 lakh, cover 2.61.
- Vapi wood gasifier, 400,000 kilocalories an hour: Rs 9.50 lakh, own Rs 2.38 lakh, loan Rs 7.13 lakh, cover 4.05.
- Vapi wood gasifier, 500,000 kilocalories an hour: Rs 15.60 lakh, own Rs 3.90 lakh, loan Rs 11.70 lakh, cover 1.46.
- Ahmedabad gas hot air generator, 60,000 kilocalories: Rs 3.19 lakh, own Rs 0.80 lakh, loan Rs 2.39 lakh, cover 1.71.
- Ahmedabad gas hot air generator, 120,000 kilocalories: Rs 3.96 lakh, own Rs 0.99 lakh, loan Rs 2.97 lakh, cover 3.99. A lakh is 100,000.
What the cover ratio is, in plain words
The cover ratio (the reports call it the debt service coverage ratio) compares the cash a project makes in a year with the loan payments due that year. It is like checking that your monthly earnings comfortably exceed your monthly instalment. Above 1 means the cash covers the payments, and below 1 means it does not. Many banks look for about 1.25 to 1.5, so 1.20 (the 60,000 Ahmedabad unit after a 5% fall) and 1.37 are thin. More on what banks look for is in the linked cover ratio page.
The reports print one figure for the whole loan: all the cash the project makes in the loan years divided by all the loan payments (18.36 / 7.03 = 2.61 for the hot air generator). In every report, a 5% fall in savings keeps the ratio above 1: 1.37 for the 400 kilogram boiler, 1.46 for the 600, 2.47 for the hot air generator, 3.85 and 1.39 for the two gasifiers, and 1.20 and 3.23 for the two Ahmedabad units.
The loan terms the reports assume
- Debt to equity 3 to 1, so 25% own money and 75% term loan.
- Interest 10% a year. The Vapi reports call it a normal rate for energy efficient projects. The Ahmedabad reports call it the rate of the Small Industries Development Bank of India (SIDBI) for such projects.
- Five years of repayment, not counting a first moratorium (a pause on repayments) of 6 months from the first payout.
- Each report says it was found eligible for a subsidy scheme of the Ministry of Micro, Small and Medium Enterprises, 'Technology and Quality Upgradation Support' under the National Manufacturing Competitiveness Programme. Five are from 2010 and two Vapi gasifier reports are from 2011. We have not checked whether that scheme is open today.
What the reports leave out
- Today's interest rate and your bank's own terms.
- Collateral. The gasifier report itself notes that owners fear the paperwork and the security a bank asks for.
- Your own hours of use. A saving built on 2,400 hours a year pays a loan faster than the same boiler on 1,620.
Year one of the hot air generator loan
- Cost Rs 6.78 lakh. Own money 25% = Rs 1.70 lakh. Loan 75% = Rs 5.09 lakh
- Year-one interest at 10%: 5.09 x 0.10 = Rs 0.51 lakh. Year-one repayment (printed): Rs 0.36 lakh
- Year-one cash: saving Rs 4.45 lakh less running cost Rs 0.34 lakh = Rs 4.11 lakh
- Year-one cover: 4.11 / (0.51 + 0.36) = 4.7. The report's figure for the loan years is 2.61
Inputs are the report's own annexure figures, at 2010 prices. Year-one cover is our division.
What Senseible does here
Senseible reads fuel invoices and electricity bills into monthly records, so twelve months of fuel and power bills give a lender the baseline the saving rests on. The free green loan check asks for an email before its checklist. It does not arrange a loan or set loan terms.
- Green loan readiness check
- What banks want in a term loan cover ratio
- MSME green loan schemes
- Coal boiler upgrade: green loan or not
- Vapi hot air generator report checked
Sources: BEE, Detailed project report: hot air generator, Vapi dyes and chemicals cluster (2010, SAMEEEKSHA), BEE, Detailed project report: energy efficient boiler 400 kg/hr, Vapi dyes and chemicals cluster (SAMEEEKSHA), BEE, Detailed project report: energy efficient boiler 600 kg/hr, Vapi dyes and chemicals cluster (SAMEEEKSHA), BEE, Detailed project report: bio mass gasifier 4,00,000 kCal/hr, Vapi chemicals and dyes cluster (SAMEEEKSHA), BEE, Detailed project report: bio mass gasifier 5,00,000 kCal/hr, Vapi chemicals and dyes cluster (SAMEEEKSHA)
Last reviewed 2026-11-07. Figures are from the report named above, written in 2010 and 2011; costs, fuel prices and paybacks are at that year's prices. Check today's prices and a current maker's quote before you rely on the payback. Loan terms and subsidy schemes change; ask your bank for today's terms.