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)

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