ART OF PREPARATION AND PRESENTATION OF PROJECT FEASIBILITY
ART OF PREPARATION AND PRESENTATION OF PROJECT FEASIBILITY REPORTS
PROJECT FEASIBILITY REPORT GENERALLY A TECHNO COMMERCIAL DOCUMENT IN A STANDARD FORMAT q A LARGE & VARIED COVERAGE q LOT OF SUPPORT DATA & DOCUMENTS q ALL FUNCTIONAL AREAS OF BUSINESS VENTURES
MAJOR ITEMS COVERED IN A REPORT Ø PRODUCT DESCRIPTION, SPECIFICATION, RANGE, ENDUSE Ø DOMESTIC AND EXPORT MARKET PROSPECTS Ø PROPOSED MARKETING ARRANGEMENTS
Ø PROMOTERS & MANAGEMENT Ø TECHNICAL ASPECTS – PROCESS, EQUIPMENT, QUALITY, MATERIALS, UTILITIES, INFRASTRUCTURE & MANPOWER Ø PRODUCTION CAPACITY, PRODUCT MIX & OPERATIONAL PARAMETERS
Ø PROJECT COST ESTIMATION Ø SOURCES OF FINANCE Ø FUTURE FINANCIAL PERFORMANCE Ø FINANCIAL INDICATORS – IRR, BEP & DSCR Ø SENSITIVITY ANALYSIS
PROJECT REPORT PREPARATION (A) ACCOUNTANT’S APPRAOCH § MAINLY FINANCIAL AND ECONOMICS ORIENTED § HIGHLY ANALYTICAL IN NATURE § TECHNIQUES ORIENTED BASED ON PARAMETERS
(B) CONSULTANT’S APPROACH § INDEPENDENT DATA COLLECTION AND EVALUATION OF MARKET PROSPECTS § DETAILED EVALUATION OF TECHNICAL ASPECTS § APPRAISAL ON PROMOTERS & MANAGEMENT CAPABILITIES § TECHNO COMMERCIAL APPROACH IN STANDARD PATTERN
‘ART’ COMES INTO PICTURE, WHEN THE REPORT IS PREPARED & PRESENTED WITH SPECIFIC EMPHASIS ON v PURPOSE v END USER v NATURE OF SCHEME THIS IS IMPORTANT v v TO ACHIEVE END RESULTS TO SAVE TIME & EFFORTS
PURPOSE END USE MAY BE PRELIMINARY • PRE FEASIBILITY STUDY FOR MANAGEMENT • COMPARISON OF TWO OR MORE PROJECTS • PRELIMINARY CLEARANCE FROM AGENCIES (FIPB/POLLUTION CONTROL BOARD/SIA)
DETAILED • FUND MOBILISATION BY MANAGEMENT • TO FINALISE TECHNOLOGY TIE-UP ARRANGEMENTS • APPOINTMENT OF DETAILED ENGINEERING CONSULTANTS • TO FINALISE MARKET TIE-UP ARRANGEMENTS
END USERS MAY BE ü TOP MANAGEMENT ü FIs / BANKS ü GOVERNMENT AGENCIES ü SHARE HOLDERS/MF/INVESTING PUBLIC ü PROJECT IMPLEMENTATION AGENCIES
NATURE OF SCHEME • NEW PROJECT BY A NEW PROMOTER/COMPANY • NEW PROJECT (DIVERSIFICATION) FOR AN EXISTING COMPANY • MODERNISATION-CUM-EXPANSION PROJECT • EXPANSION PROJECT
PROJECT REPORT FOR TOP MANAGEMENT EMPHASIS TO BE ON Ø SPECIAL FEATURES OF THE PRODUCT Ø CRITICAL INPUT FACTORS (RM, POWER, ETC. ) Ø CONTRIBUTION ANALYSIS WITH EXISTING PRODUCTS/THOSE OF OTHER COMPANIES Ø KNOWHOW AVAILABILITY & ITS RELIABILITY
Ø INTERDIVISION BENEFITS & TRANSFER PRICING Ø EXPECTED MARKET SUCCESS FACTORS Ø PROJECT SIZE & PROMOTER’S CONTRIBUTION Ø SCOPE FOR ENHANCING CAPACITY Ø LEVEL OF AUTOMATION & MANPOWER NEEDS
Ø INNOVATIVE SOURCES OF FINANCE (SHARE PREMIUM / SUBSIDY / GRANT / DEFERRALS) Ø PROFITABILITY INDICATORS - IRR ON PROJECT - IRR ON EQUITY - BEP - PAYBACK PERIOD Ø RISK FACTORS AND SENSITIVITY ANALYSIS
PROJECT REPORT FOR FI/BANKS (TO AVAIL TERM LOAN/WORKING CAPITAL LOAN) EMPHASIS TO BE ON • SPECIAL FEATURES OF THE PROJECT (PROCESS, PROJECT COST/MT, INNOVATIVE PRODUCT, TECHNICAL/ FINANCIAL TIE UP ETC. ) • PROMOTERS – BACKGROUND, SUCCESS IN PROJECTS, FINANCIAL SOUNDNESS, ETC.
• MARKETING ARRANGEMENTS – BUYBACK FORMULA (IF ANY) • PRESENT STATUS – (LAND ALLOTTED, PROJECT TEAM, KNOWHOW TIE-UP ETC. ) • REASONABLENESS OF TECHNICAL KNOWHOW FEES - BASIS • STRENGTHS & SUCCESS FACTORS • DEBT EQUITY RATIO (FOR PROJECT & COMPANY AS A WHOLE)
• PROMOTERS’ CONTRIBUTION – SOURCES • PROFITABILITY INDICATORS – DSCR, IRR, BEP • PROFITABILITY RATIOS (INDUSTRY COMPARISONS) • CRITICAL FACTORS & SENSITIVITY ANALYSIS • ADDITIONAL/COLLATERAL SECURITY OFFERED FOR TL/WC LOANS
PROJECT REPORT FOR GOVERNMENT AGENCIES v. EMPLOYMENT POTENTIAL v. SUPPORT TO SMALL BUSINESSES/SUBCONTRACTORS v. CONTRIBUTION TO GOVT. REVENUES (EXCISE DUTY, ST, ETC. )
v. AREA DEVELOPMENT (SUGAR, CEMENT, ETC. ) v. EXPORT POTENTIAL/IMPORT SUBSTITUTION v. POLLUTION CONTROL MEASURES v. ECONOMIC BENEFITS OUT OF THE PROJECT
PROJECT REPORT FOR SHAREHOLDERS/INVESTING PUBLIC/MF EMPHASIS ON • • • PROFITS/INCREMENTAL PROFITS RETURN ON EQUITY DIVIDEND PROSPECTS
• TAX BENEFITS TO SHAREHOLDERS/COMPANY • GROWTH POTENTIAL IN THE PRODUCT LINE • PRESENT STATUS OF THE PROJECT • BUSINESS RISKS
PROJECT REPORTS FOR IMPLEMENTATION AGENCIES (DETAILED ENGG. FIRMS, ERECTION ENGINEERS, ETC. ) EMPHASIS ON • PROJECT LOCATION & FACTORY SITE • SITE CONDITIONS – SOIL TEST/WATER TEST • TECHNICAL SPECIFICATION FOR BUILDINGS & CIVIL WORKS
• PLANT & MACHINERY –SPECIFICATIONS, MAKE, MODELS, IMPORTED/INDIGENOUS, LOCAL FABRICATION NEEDS • SUBCONTRACT FACILITIES AVAILABILITY • UTILITIES & INFRASTRUCTURE • PROJECT IMPLEMENTATION SCHEDULE – STAGES FOR FUND ARRANGEMENTS/LOAN DRAWALS • SPECIFIC GOVERNMENT CLEARANCES/APPROVALS
PROJECT REPORTS FOR MODERNISATION CUM EXPANSION EMPHASIS TO BE ON COMPARISON OF EXISTING PARAMETERS WITH NEW PARAMETERS § PLANT CAPACITY § PLANT PRODUCTIVITY LEVELS § INPUT/OUTPUT RATIO
§ LINE REJECTION LEVELS § UTILITIES CONSUMED § LEVEL OF AUTOMOTION § MANPOWER § INCREASE IN PRODUCT RANGE
§ SHOP ENVIRONMENT § REDUCTION IN POLLUTION § SAFETY NORMS § REPAIRS & MAINTENANCE EXPENSES § PLANT DOWNTIME § SET UP TIME
TO HIGHLIGHT Ø INCREASE IN INTEREST & DEPRECIATION COST Ø SAVINGS IN COST Ø COST BENEFIT ANALYSS Ø IMPROVEMENT IN PRODUCT QUALITY/RANGE & MARKET SCOPE Ø PROMOTER’S CONTRIBUTION
ART OF PRESENTATION TO BE IN TERMS OF • CONTENT – TABLES, CHARTS, GRAPHS & SOURCES OF DATA • • • SIZE HIGHLIGHTS CRITICAL AREAS SELECTIVE INCLUSIONS STAGEWISE PRESENTATION
GENERAL PRESENTATION FOR FI/BANKS MAIN REPORT • AS PER FI NORMS AND IN APPLICATION FORMAT • WITH SUPPORT DOCUMENTS/ ADDITIONAL REPORTS • SENSITIVE/CRITICAL DATA OR DOCUMENTS TO BE FURNISHED FOR INSPECTION AS AND WHEN NECESSARY
ADDITIONAL REPORTS/DOCUMENTS WITH MAIN REPORT • TECHNICAL SPECIFICATIONS FOR BUILDINGS & CIVIL WORKS AND PLANT & MACHINERY • COMPARATIVE QUOTATIONS (3 SETS) FOR CIVIL WORKS AND ALL MAJOR MACHINERY & EQUIPMENT • MARKET SURVEY REPORT
• PROJECT SITE TEST REPORTS AND PRELIMINARY CLEARANCES OBTAINED • PROMOTERS’ BACKGROUND, GROUP COMPANY • ARRANGEMENTS ALREADY MADE IN THE PROJECT • FINANCIAL WORKINGS MODULE (IN FLOPPY)
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