Comprehensive Guide to Project Feasibility Reports

1. ART OF PREPARATION AND PRESENTATION OF PROJECT FEASIBILITYREPORTS

2. PROJECT FEASIBILITY REPORT GENERALLY A TECHNO COMMERCIAL DOCUMENT IN A STANDARD FORMAT • A LARGE & VARIED COVERAGE • LOT OF SUPPORT DATA & DOCUMENTS • ALL FUNCTIONAL AREAS OF BUSINESS VENTURES

3. MAJOR ITEMS COVERED IN A REPORT • PRODUCT DESCRIPTION, SPECIFICATION, RANGE, ENDUSE • DOMESTIC AND EXPORT MARKET PROSPECTS • PROPOSED MARKETING ARRANGEMENTS

4. PROMOTERS & MANAGEMENT • TECHNICAL ASPECTS – PROCESS, EQUIPMENT, QUALITY, MATERIALS, UTILITIES, INFRASTRUCTURE & MANPOWER • PRODUCTION CAPACITY, PRODUCT MIX & OPERATIONAL PARAMETERS

5. PROJECT COST ESTIMATION • SOURCES OF FINANCE • FUTURE FINANCIAL PERFORMANCE • FINANCIAL INDICATORS – IRR, BEP & DSCR • SENSITIVITY ANALYSIS

6. PROJECT REPORT PREPARATION • ACCOUNTANT’S APPRAOCH • MAINLY FINANCIAL AND ECONOMICS ORIENTED • HIGHLY ANALYTICAL IN NATURE • TECHNIQUES ORIENTED BASED ON PARAMETERS

7. 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

8. ‘ART’ COMES INTO PICTURE, WHEN THE REPORT IS PREPARED & PRESENTED WITH SPECIFIC EMPHASIS ON • PURPOSE • END USER • NATURE OF SCHEME THIS IS IMPORTANT • TO ACHIEVE END RESULTS • TO SAVE TIME & EFFORTS

9. 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)

10. DETAILED • FUND MOBILISATION BY MANAGEMENT • TO FINALISE TECHNOLOGY TIE-UP ARRANGEMENTS • APPOINTMENT OF DETAILED ENGINEERING CONSULTANTS • TO FINALISE MARKET TIE-UP ARRANGEMENTS

11. END USER USERS MAY BE • TOP MANAGEMENT • FIs / BANKS • GOVERNMENT AGENCIES • SHARE HOLDERS/MF/INVESTING PUBLIC • PROJECT IMPLEMENTATION AGENCIES

12. NATURE OF SCHEME • NEW PROJECT BY A NEW PROMOTER/COMPANY • NEW PROJECT (DIVERSIFICATION) FOR AN EXISTING COMPANY • MODERNISATION-CUM-EXPANSION PROJECT • EXPANSION PROJECT

13. PROJECT REPORT FOR TOP MANAGEMENT EMPHASIS TO BE ON • SPECIAL FEATURES OF THE PRODUCT • CRITICAL INPUT FACTORS (RM, POWER, ETC.) • CONTRIBUTION ANALYSIS WITH EXISTING PRODUCTS/THOSE OF OTHER COMPANIES • KNOWHOW AVAILABILITY & ITS RELIABILITY

14. INTERDIVISION BENEFITS & TRANSFER PRICING • EXPECTED MARKET SUCCESS FACTORS • PROJECT SIZE & PROMOTER’S CONTRIBUTION • SCOPE FOR ENHANCING CAPACITY • LEVEL OF AUTOMATION & MANPOWER NEEDS

15. INNOVATIVE SOURCES OF FINANCE (SHARE PREMIUM / SUBSIDY / GRANT / DEFERRALS) • PROFITABILITY INDICATORS - IRR ON PROJECT - IRR ON EQUITY - BEP - PAYBACK PERIOD • RISK FACTORS AND SENSITIVITY ANALYSIS

16. 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.

17. 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)

18. PROMOTERS’ CONTRIBUTION – SOURCES • PROFITABILITY INDICATORS – DSCR, IRR, BEP • PROFITABILITY RATIOS (INDUSTRY COMPARISONS) • CRITICAL FACTORS & SENSITIVITY ANALYSIS • ADDITIONAL/COLLATERAL SECURITY OFFERED FOR TL/WC LOANS

19. PROJECT REPORT FOR GOVERNMENT AGENCIES • EMPLOYMENT POTENTIAL • SUPPORT TO SMALL BUSINESSES/SUBCONTRACTORS • CONTRIBUTION TO GOVT. REVENUES (EXCISE DUTY, ST, ETC.)

20. AREA DEVELOPMENT (SUGAR, CEMENT, ETC.) • EXPORT POTENTIAL/IMPORT SUBSTITUTION • POLLUTION CONTROL MEASURES • ECONOMIC BENEFITS OUT OF THE PROJECT

21. PROJECT REPORT FOR SHAREHOLDERS/INVESTING PUBLIC/MF EMPHASIS ON • PROFITS/INCREMENTAL PROFITS • RETURN ON EQUITY • DIVIDEND PROSPECTS

22. TAX BENEFITS TO SHAREHOLDERS/COMPANY • GROWTH POTENTIAL IN THE PRODUCT LINE • PRESENT STATUS OF THE PROJECT • BUSINESS RISKS

23. 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

24. 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

25. 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

26. LINE REJECTION LEVELS • UTILITIES CONSUMED • LEVEL OF AUTOMOTION • MANPOWER • INCREASE IN PRODUCT RANGE

27. SHOP ENVIRONMENT • REDUCTION IN POLLUTION • SAFETY NORMS • REPAIRS & MAINTENANCE EXPENSES • PLANT DOWNTIME • SET UP TIME

28. TO HIGHLIGHT • INCREASE IN INTEREST & DEPRECIATION COST • SAVINGS IN COST • COST BENEFIT ANALYSS • IMPROVEMENT IN PRODUCT QUALITY/RANGE & MARKET SCOPE • PROMOTER’S CONTRIBUTION

29. ART OF PRESENTATION PRESENTATION TO BE IN TERMS OF • CONTENT – TABLES, CHARTS, GRAPHS & SOURCES OF DATA • SIZE • HIGHLIGHTS • CRITICAL AREAS • SELECTIVE INCLUSIONS • STAGEWISE PRESENTATION

30. 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

31. 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

32. PROJECT SITE TEST REPORTS AND PRELIMINARY CLEARANCES OBTAINED • PROMOTERS’ BACKGROUND, GROUP COMPANY • ARRANGEMENTS ALREADY MADE IN THE PROJECT • FINANCIAL WORKINGS MODULE (IN FLOPPY)

33. Thank you!