The following categories of people will definitely require project reports:
i. Entrepreneurs and promoters,
ii. Financiers (Business Associates, Financial Institutions and Banks),
iii. Chartered and Cost/Management Accountants,
iv. Financial Consultants and
v. Approving Authorities.
PREPARATION OF PROJECT REPORT
After the market survey and final selection of the products a project profile is to be prepared. This is a brief description of the project and would include the following details:
1. Introduction about the promoter, Full Bio-data(i.e. age, educational qualification, Past experience, Present activity ).
2. Manufacturing process. All operations, which are to be carried out from the right from the intial stage to the last stage or process of Mfg. are to be explained in detail.
3. . Installed capacity of the plant, capacity utilization, during initial 1-3years and Annual Sales.
4. Complete details about the land and building . These are to be supposed by documentary evidence and building plans prepared by an approved Architect.
6.Details of the Plant Machinery. To be supported with quotations from different suppliers (Three & Above). This should include expenses incurred on taxes, transportation, installation, accessories etc.
7.Details of the Annual requirement of Raw Material and consumables, also to be supported with quotations.
8. All annual expenses (e.g. Utilities, Administrative expenses, Repair and Maintenance, Salaries, Selling expenses, packing and forwarding expenses etc).
9.Working capital requirement. Items considered for working capital are:
a. Raw material stock
b. Finished Goods stock
c.Work in process
d.Bills receivable
e.Working expenses
f. Cost of the project : The items to be included in this area as follows:
(i)Land
(ii)Building
(iii)Plant and Machinery
(iv)Misc. Fixed Assets
(v)Contingencies
(vi)Pre-operative Expenses
(viii)Means Of finance
(ix)Term loan
(x)Promoters Contribution
(xi)Subsidy (if applicable)
(xii)Special Capital Assistance (if applicable) (or seed capital)
(10) Market Survey report that has been prepared, is to be included.
Following Annexures are to be attached in the Feasibility Report.
(a) calculation of interest and repayment of loan
(b) The repayment schedule is prepared in equal Annual installments according to the repayment period allowed by the financial institution. Along with this, the interest for each year is calculated at the rate applicable in the financial institution.
(e)This is calculated for the repayment period and would include all direct and indirectannual recurring expenses.
(f) Debt service c
The method for calculation the D.S.C.R. is given below:
Calculate the total (A), of
Profit after Tax
Interest on term loan
Depreciation
Then the total (B), of
Repayment of term loan and interest on term loan
Average D.S.C.R. is A/B
(h) Cash Flow
Sources of funds is calculated by adding up the following for the complete repayment period:
Profit before tax with interest added back
Depreciation
Increase in Bank Finance
Increase in Term Loan
Increase in Promoters Contribution
Then calculate disposition of funds by totalling
Increase in Fixed Assets
Decrease in Term Loan
Interest on Term Loan and Working Capital
Increase in Current Assets
Income Tax
Total of sources of funds - total of Disposition of funds = Surplus/Deficit Opening Balance + Surplus = Closing Balance (Starting from nil doing 1st year)
This is completed for the complete repayment period
Preparation of project balance sheet as follows:
Reserves and Surplus
Term Loan
Bank Borrowing (Bank Finance of working Capital)
Promoter's Contribution
Assets : Total of
Net Block Assets
Fixed assets- Depreciation (cumulate Depreciation over the operating years)
Cash and bank Balance
Current Assets
The total of liabilities and total Assets should tally for each operating year individually, for a correct Balance Sheet.>/p>
This is the level of production at which the unit is running at no profit no loss. Hence , it is essential to calculate the BEP to ascertain the level of production at which the units starts earning profits. It is calculated as follows:
BEP=( Fixed Cost * Percentage of optimum cap. Utilization) * 100/ contribution
Contribution = Sales - Variable Cost
This is calculated for the year during which the unit reaches optimum capacity utilization.
After preparation of the project Report the Entrepreneur is required to get the provisional Registration Certificate from the concerned
CHECK LIST OF DOCUMENTS TO BE SUBMITTED WITH LOAN APPLICATION
The number of documents shall depend upon product size, nature and location of project
- Prescribe application form in Duplicate
- Project Report in Duplicate
- Income Tax and Wealth Tax details of last three years, with copies of Assessment / Return if applicable.
- List of total movable and immovable Assets of the promoters.
- Memorandum of Articles of Association and Certificate of in corporation (in case of Company).
- Provisional Registration Certificate from the concerned District Industries Centre.
- Registration with the Tourism Department, and the licence for eating house in case of Hotel Industry.
- Certified copy of Registration Certificate issued by the Registrar of firms ( if partnership concern) if forms 'A' and 'C'.
- 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.
- Permission from Water Pollution Control Board.
- Details of power requirement and tie-up with State Electricity Board.
- Copy of instructions to your Bankers to give full information about the concern on request to State Financial Corporation.
- Approved Building plan from Competent Authority with cost estimates