Download Investment requirements, project financing and returns

Preparation and
Analysis of Project
Report
What is a Project
Report?
A Project Report is a detailed
description of the Project
The Project Report must be prepared
carefully to ensure approval,
appraisal and funding from the
Financial Institution
Contents of a Project Report
• Description of the project
• Promoters, Management and Technical Assistance:
– Detailed Bio-data of promoters including financial
information
– Proposed management arrangements
– Description of technical arrangements (management,
production, marketing, finance etc.)
Market and Sales
- Basic market orientation: local, national, regional,
or export
- Projected production volumes, unit prices, sales
objectives, and market share of proposed venture
- Potential users of products and distribution channels to be
used
- Present sources of supply for products
- Future competition and possibility that market may be
satisfied by substitute products
- Tariff protection or import restrictions affecting products
- Critical factors that determine market potential
Contents (Contd.)
• Technical feasibility, manpower, raw material resources,
and environment
- Brief description of manufacturing process
- Comments on special technical complexities and need for
know-how and special skills
- Possible suppliers of equipment (Ideally three competitive
quotations to be enclosed)
- Availability of manpower and of infrastructure facilities
(transport and communications, power, water, etc.).
- Breakdown of projected operating costs by major categories
of expenditures
- Source, cost, and quality of raw material supply and
relations with support industries
- Import restrictions on required raw materials
- Proposed plant location in relation to suppliers, markets,
infrastructure and manpower
- Proposed plant size in comparison with other known plants
- Potential environmental issues and how these issues are
addressed
Contents (Contd.)
• Investment requirements, project financing and returns
-Estimate of total project cost, broken down into land,
construction of buildings and civil works, plant and
machinery, miscellaneous fixed assets, preliminary and
preoperative expenses and working capital
- Proposed financial structure of venture, indicating
expected sources and terms of equity and debt financing
- Type financing (loan, equity, quasi-equity, a combination
of financial products, etc.) and amount
- Projected financial statement, information on profitability
and return on investment
- Critical factors determining profitability
Contents (Contd.)
Government support and regulations
- Project in context of government economic
development and investment program
- Specific government incentives and support
available to project
- Expected contribution of project to economic
development
- Outline of government regulations on exchange
controls and conditions of capital entry and
repatriation
• Timetable envisaged for project preparation and
completion
Annexures of the Project Report
Construction Planning:
Month wise target is to be given for
• Each construction phase
• Erection of plant and machinery
• Commencement of commercial
production
Annexures (Contd.)
 Means of Finance
 Equity Contribution
Existing
Proposed
 Borrowed Funds
Existing
Proposed
Annexures (Contd.)
Capacity Utilisation
Break Even Point
Calculation of Internal Rate of Return (IRR)
on the basis of projected profitability
(Benchmark: atleast equal to the interest
rate on term loan)
Calculation of Debt Service Coverage Ratio
(DSCR) (Benchmark:2)
Details of assumptions made to prepare
projected financials
Sensitivity Analysis – It is done to check the
profitability if any projected targets are
not achieved
Enclosures
 Annual Accounts of last three years
Prescribe application form in Duplicate
Project Report in Duplicate
List of total movable and immovable Assets of the promoters
Income Tax and Wealth Tax details of last three years, with
copies of Assessment / Return if applicable
 Provisional Registration Certificate from the concerned
District Industries Centre
 Memorandum and Articles of Association and Certificate of
in corporation (in case of Company)
 Certified copy of Registration Certificate issued by the
Registrar of firms ( if partnership concern)
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Enclosures (Contd.)
 Registration with the Tourism Department, and the licence
for eating house in case of Hotel Industry
 Permission/licence from Competent Authority (in case of
Textile, Drugs, Foods etc.)
 Certified copy of sale deed in respect of land (The land
should be in the name of sole proprietor / partner /
company whichever applicable
OR
 Rent agreement in case of rented premises
 Three quotation in respect of each item of plant and
machinery and raw material proposed to be purchased
Enclosures (Contd.)
Details of power requirement and
tie-up with State Electricity Board
Permission from Water Pollution
Control Board
Approved Building plan from
Competent Authority with cost
estimates