Key aspects of project appraisal for sme financing cii fincon 02 09 06
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Rs $ £. Key Aspects of Project Appraisal for SME Financing CII FINcon 02.09.06. Dr Rajesh Khajuria, Director TEAMPro Ltd, London TEAM Projects & Consultants, Vadodara. Rs $ £. A Warm Welcome to all of You!. CII Organisers and Members SME Owners and Managers Chief Guests Speakers.

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Key Aspects of Project Appraisal for SME Financing CII FINcon 02.09.06

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Key aspects of project appraisal for sme financing cii fincon 02 09 06

Rs $ £

Key Aspects of Project Appraisal for SME FinancingCII FINcon 02.09.06

Dr Rajesh Khajuria, Director

TEAMPro Ltd, London

TEAM Projects & Consultants, Vadodara


A warm welcome to all of you

Rs $ £

A Warm Welcome to all of You!

  • CII Organisers and Members

  • SME Owners and Managers

  • Chief Guests

  • Speakers

Dr R Khajuria @ TEAM


Presentation plan

Presentation Plan

  • Indian SME Overview.

  • Project Appraisal Methods.

  • Project Appraisal: Key Aspects.

  • Case Study @ Asahi Songwon Colors Ltd with Korean Technology for TL, WCL and Public Issue.

  • Questions?

Rs $ £

Dr R Khajuria @ TEAM


Indian sme overview

Indian SME Overview

Rs $ £

Part I


Welcome to indian smes

Welcome to Indian SMEs!

  • 95% of Industrial Units are SMEs

  • 40% of Value Added in Manufacturing Sector

  • 35% of National Exports

  • 7,500 Products Manufactured

  • Employs 20 million people

  • But, contribute only 7% of GDP ?

  • 40% of Bank Finances to Priority Sector

    • SMEs and Agriculture

Rs $ £

Dr R Khajuria @ TEAM


Welcome to 3 5m indian smes

Welcome to 3.5m Indian SMEs!

Rs $ £

Dr R Khajuria @ TEAM


Smes achieve rs 8000 billion sales

SMEs achieve Rs 8000 billion Sales

Rs $ £

Dr R Khajuria @ TEAM


Smes have rs 1000 billion investment

SMEs have Rs 1000 billion Investment

Rs $ £

Dr R Khajuria @ TEAM


Smes export rs 800 billion g s

SMEs Export Rs 800 billion G & S

Rs $ £

Dr R Khajuria @ TEAM


Smes provide 20 million employment

SMEs provide 20 million Employment

Rs $ £

Dr R Khajuria @ TEAM


The world depends on smes

The World depends on SMEs

  • UK: 98% of all Businesses are SMEs

  • Japan: 99% are SMEs

  • USA: 96% are SMEs

  • Africa’s 29 nations: 99.5% are SMEs

  • The world depends on SMEs

  • India depends on SMEs for economic success of its 1 billion people

Rs $ £

Dr R Khajuria @ TEAM


Project appraisal methods

Project Appraisal Methods

Rs $ £

Part II


Project appraisal methods1

Project Appraisal Methods

  • Today we discuss…

  • Bank Appraisal for Loans.

  • Appraisal for Public Issue of Equity.

  • Other Methods:

    • FI Appraisal for Loans

    • World Bank Project Appraisal

    • UNIDO, Social Project Appraisal

Rs $ £

Dr R Khajuria @ TEAM


Project appraisal key aspects

Project Appraisal : Key Aspects

Rs $ £

Part III


Project appraisal key aspects1

Project Appraisal: Key Aspects

  • The Objectives

  • The Project

  • Methodology of Appraisal

  • Corporate Analysis

  • The Promoters Team

  • Marketability Assessment

  • Technical Feasibility

  • Economic Viability & Financial Structuring

  • Environmental Impact Assessment

  • Conclusion & Recommendation

Rs $ £

Dr R Khajuria @ TEAM


Case study @ asahi songwon colors ltd

Case Study @ Asahi Songwon Colors Ltd

Rs $ £

Part IV


The objectives @ case study

The Objectives @ Case Study

  • Asahi Songwon Colors Ltd, Ahmedabad (Padra Plant)

    • Phase I: 2005 – Operating.

    • Phase II & III: Expansion proposed with Term Loan, Working Capital Loan and Public Issue.

      • Total Investment Rs 71 Crore.

    • State Bank of India referred the Project Appraisal assignment to TEAM.

Rs $ £

Dr R Khajuria @ TEAM


Methodology of appraisal

Methodology of Appraisal

  • Project Report of the company as a base.

  • Site visit to the Factory.

  • Market & Competition Analysis.

  • Discussions with the Bankers and Co.’s top executives on all aspects.

  • Raising 35 Queries.

  • Balance Sheet Analysis.

  • Independent & unbiased Appraisal & Judgement

  • Confidential Report with Specific Conclusions and Recommendations.

Rs $ £

Dr R Khajuria @ TEAM


The project @ colors

The Project @ Colors

  • Asahi Songwon Colors Ltd has already invested Rs 25 Crore in a new Medium Scale Plant at Padra (Baroda) to manufacture basic Colors for export and domestic markets.

  • Collaboration with Songwon Colors Ltd, Korea (taken over by Clariant of Europe).

  • Colors are used in all walks of life: Textiles to everything we see, touch and feel.

Rs $ £

Dr R Khajuria @ TEAM


Vision

Vision

  • Songwon, Korea:

    • ‘Better Colour for A More BeautifulLife’.

  • Asahi, India:

    • “To be a global leader in its field of Pigments by supplying quality and environment friendly products to MNCsworldwide.”

  • Can you analyse both Visions?

Rs $ £

Dr R Khajuria @ TEAM


Corporate analysis

Corporate Analysis

  • Past Performance

  • Corporate Emergence

  • Promoters Team – Most Important

  • SWOT Analysis

Rs $ £

Dr R Khajuria @ TEAM


The promoters team

The Promoters Team

  • Highly qualified and experienced with up to 15 years experience in the same line.

  • MBA (USA), Technologists, CA.

  • Exporting, Profit-making existing business.

  • Demonstrated Performance in Manufacturing, Management and Export.

  • Politically well-known, but not spared by State Bank of India from Project Appraisal!

Rs $ £

Dr R Khajuria @ TEAM


Marketability assessment

Marketability Assessment

  • Product & Applications

  • Demand assessment based on end-user method

    • Global Consumption estimates

  • Competition and Supply Assessment

    • Export – Import Data analysis

    • International and domestic prices

  • Demand-Supply Gap and Customers

  • Scope for the Company to tap the ‘Gap’

Rs $ £

Dr R Khajuria @ TEAM


Technical feasibility

Technical Feasibility

  • Capacity Assessment & Projected Utilisation

  • Manufacturing Process

  • Land & Building Requirements

  • Plant & Machinery & Layout proposed

  • Inputs: Raw Materials, Power, Fuel, Water, sources, quantities, prices, suppliers

Rs $ £

Dr R Khajuria @ TEAM


Technical feasibility1

Technical Feasibility

  • Technology source and cost

  • Manpower Requirements & Costs

  • Pollution Control Measures

  • ISO Certification: 9000 / 14000

Rs $ £

Dr R Khajuria @ TEAM


Economic viability

Economic Viability

  • Project Cost

    • Appraisal resulted in Additionof Rs 6 Crore to original estimate of Project Cost – Rs 71.5 Crore to Rs 77.55 Crore

    • Rise in Equipment costs and increased Working Capital, detectedfrom TEAM’s ‘Appraisal process’

    • Hell lot of efforts to convince the Company about raising Sources of Finance by Rs 6 Crore!

Rs $ £

Dr R Khajuria @ TEAM


Sources financial re structuring

Sources: Financial Re-structuring

Rs Crore

  • Term Loan SBI (FCNR/Rs)13.82

  • Equity Share Capital43.84

  • Unsecured Loan07.98

  • Reserves & Surplus11.25

  • Deferred Tax Liability00.66

  • TOTAL Sources of Finance 77.55

  • Add: Working Capital Loan24.00

Rs $ £

Dr R Khajuria @ TEAM


Environmental impact assessment

Environmental Impact Assessment

  • Water pollution quantity

  • Treatment methods and equipments

  • Disposal to ETP Channel as per GPCB Rules

  • Membership of ETP Channel

  • Sources of Fresh Water

  • Ministry of Environment & Forest’s clearance needed for large Projects

Rs $ £

Dr R Khajuria @ TEAM


Conclusion recommendation

Conclusion & Recommendation

  • The project is assessed by TEAM at the behest of State Bank of India.

  • The Project is Technically Feasible and Economically Viable.

  • SBI may grant Term Loan and Working Capital Loan recommended.

  • The Appraisal may be ‘quoted’ in Prospectus for SEBI permission for Public Issue.

Rs $ £

Dr R Khajuria @ TEAM


Learning today

Learning Today

  • Proven Appraisal Process. Reliability.

    • Based on PhD Research of Dr Rajesh Khajuria

  • Independent & Unbiased Appraisal.

  • Appointment by a Bank or Financial Institute.

  • Consultant’s Track Record. Credibility.

    • TEAM has 95% Success rate and 99% Recovery of Loans recommended for 200 Projects in 23 years (1983-2006).

  • Quick Turnaround.

  • Ethics for Long Term Success.

Rs $ £

Dr R Khajuria @ TEAM


Key aspects of project appraisal for sme financing cii fincon

Rs $ £

Questions?

Dr Rajesh Khajuria, Director

TEAMPro Limited www.TeamPro.org

[email protected] M: 94260 75402

Data and Image Courtesy: SSI Annual Report 2003, Ministry of Small Scale Industries, Government of India

Dr R Khajuria @ TEAM


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