TIPS FOR PREPARATION OF PROJECT REPORT

INDEX
Opportunity in Project Finance Consultancy Phases of Project Financing Why Project Report ? Promoter Analysis (KYC) Analysis of Project Contents of Project Report Technical Details Market Analysis Assessment of Term Loan Assessment of Working Capital Types of Working Capital Facilities Ratio Analysis Security offered SWOT Analysis Excel Sheets Enclosures Other Factors
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OPPORTUNITY IN PROJECT FINANCE CONSULTANCY

Globalization of Economies Global Village Economic Development In India, particularly in Gujarat

PHASES OF PROJECT FINANCING

Appraisal of Client & project Preparation of project report Liaison Post sanction functions

WHY PROJECT REPORT?

Visual & virtual imagination of existing and /or proposed project. Project report explains in detail various aspects of project Helps marketing of the project: For amalgamation or foreign collaboration or to find partner. For sanction of loans For IPO etc. fund raising Obtaining technical permissions e.g. pollution permission, Government approval for foreign collaboration.
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PROMOTER ANALYSIS (KYC)

Interview Education & Experience knowledge about project Technical -1. Location 2. process 3. Know how capacity 4. products. 5. Market Commercial Financial requirement of the project Components of cost of project i.e. land, building, plant & machinery. Whether size & scale of the proposed project fits the client.
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CONTD
Reference: Quality of the reference via whom client has come. Find out reference from client and try to inquire. Market reputation

FURTHER VERIFICATION
Enquiry from present banker Verification of bank statements Conduct of A/C Reflection of existing business in the bank Discipline of exiting limits Frequent overdraw Verification of financials of last 3 years IT returns of promoters Financials of existing/ associate concerns Credit rating in case of existing units Shifting/Take over from other banks Eligibility for additional finance Eligibility for corporate loan etc. Verification of proofs of property Justify the capacity to raise the capital vis a vis net worth of promoters overall conclusion about client & Project

ANALYSIS OF PROJECT
Nature of Industry -Banks approach towards industrye.g. Building construction. - Present market Scenario vis a vis promoters capability.

CONTD
Types of project

A. Grass root or new project: a. Venture project b. Traditional Project c. Promoter with Existing industry.
B. Existing Project a. Going for Expansion -same Location - New Location b. Backward Integration- Captive consumption c. Forward Integration Captive consumption d. Diversification
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CONTENTS OF PROJECT REPORT

Title page Index Executive summary or Project in brief History of the Company Details of promoters Associate concerns Common promoters Nature of activity Bank details including Loans availed Financial summary

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TECHNICAL DETAILS
Details of products Uses of the products Manufacturing Process Others Raw Materials Requirements Power & fuel requirements Raw materials details Manpower analysis Quality control Pollution control Locational Advantages

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MARKET ANALYSIS
Industrial scenario Demand Supply Data Competition vis a vis Promoters Capabilities Prospective Customer Marketing Strategy

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ASSESSMENT OF TERM LOAN

Cost of Project Land Building Plant & machinery Utilities Preliminary & preoperative Exps Contingencies Margin for Working Capital

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CONTD
Means of Finance Promoters Equity Reserves & Surplus Term Loan Unsecured Loan Others Financials Requirements in brief Concession in processing charges Concession in Interest rate

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ASSESSMENT OF WORKING CAPITAL

Working capital cycle Holding periods of Inventory, Receivables, Creditors -Past Trends of the company -Industry Trends -Economic conditions -Growth trend in turnover -Projected Holding periods Fund based & Non fund based limits

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TYPES OF WORKING CAPITAL FACILITIES

Fund Based
Cash Credit Overdraft Bills Finance Export-Finance

Non-Fund Based
Letter of Credit Guarantees

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CONTD
Working Capital Computations:
1. CMA based 2. Cash Budgeting (especially for Seasonal business lines) 3. Turnover Method

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RATIO ANALYSIS
For Term Loan Debt service coverage Ratio Break Even Analysis Pay Back Period IRR For Working Capital Current Ratio Debt Equity Ratio Profitability Ratio Sensitivity Analysis
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SECURITIES OFFERED
Primary security Collateral security Adequacy of collateral security Description of Assets Title Clearance Valuation

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SWOT ANALYSIS
Strength Weakness Opportunity Threats

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EXCEL SHEETS
Assumption of Profitability Cost of Project & Means of Finance Projections of Profitability & Repayment Analysis of Balance sheet Assessment of Working Capital Workings of different ratio Workings of different components of Profitability e.g. Depreciation, Tax etc. Fund Flow Statement

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ENCLOSURES
Registrations Land Papers Building Plan with estimate Plant & Machineries quotations Income Tax Returns of last 3 years Financials of the company & Associates concerns Proofs of assets & Liability of Promoters Other details
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OTHERS FACTORS
Consortium Finance Technical Economic Viability External Credit rating Sanctioning Powers of the bank being approached Format & Presentation Charts & pictures Use of Internet Use of programs word, excel, Power point presentation
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THANK YOU

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