Project Planning & Finance

Industry Identification:

• Existing organisation's Core Competence
• Demand/Supply Equation
• International Scenario
• Key financial Ratio
• Duty Structure
• Public Sector Role
• Value Addition for EOUs
• Backwad/Forward Integration
• Skills of Business
• Flocking Mentality
• GreenField/Acquisition

Investment Vehicle:

• Group Control/ Promotor Funding
• Depreciation as Tax shield
• Sales Tax /Excise Implications
• Trade Union/Wage Structure
• Joint Venture/Foreign Equity
• Backward/Forward Integration
• Nature of Business
• Size/Risk of New Project
• Terms of Funding

Factors Influencing Plant Location:

• Nature of Raw Material/Finished Goods
• Level of Industrialisation in the Area
• Incentive from local Govt.
  1. Sales tax
  2. Power
  3. Octroi
  4. Subsidy
  5. Infrasturcture
• Political Stability
• Environmental Factors
• Infrastrctural Requirements
  1. Land
  2. Water
  3. Power
  4. Raw Materials
  5. School/Colleges
• backward Area Benefits

Project Cost Components:

• Land
• Building
• Plant & Machineries
  1. Imported
  2. Duty + Clearance
  3. Indegenous
• Misc. Fixed Assets
• Erection & Commissioning
• Technical knowhow
• Preliminary & Preoperative Expenses
• Contingencies
• Margin for Working Capital

Steps in Project Appraisal:

• Firming up of Project
• Non Financial Factors Influencing Projects
• Financial Projections
• Structuring Means of Financing
• Cost of Capital
• Net Present Value & Internal Rate of Returns
• Sensivity Analysis
• Sanction/Predisbursement Conditions
• Security/Documentation
• Disbursement
• Servicing of Capital

Project Report Format:

Part I :Introduction
• Promoters' Background
• Sister Concerns/Group Activities
• Group Financial Strengths
  Part II:The Project
• Technical Aspects
  1. Proposed Activity
  2. Product
  3. Statistics on Other Exixting Products
  4. Site Details
  5. Technology & Process
  6. Raw Materials
  7. Infrastctural Requirments
  8. Licence/Permit/Clearances
  9. Major Suppliers of Machineries
  10. Implementation Schedule
  11. Present Status
• Financial Aspects
  1. Cost of Project
  2. Means of Financing
  3. Working Capital Requirements
  4. Cash Flow Planning during Implementation
  5. Assumption of Profitability
  6. Projections
  7. Ratios
  8. Sensitivity Analysis
  Part III:Business Prospects
  • Demand /Supply Postion
  • Competition
  • Marketing Strategy
  • Export Potential

Financial Institutions Help:

• Rupee Term Loans
• Forex Loans
• Underwriting of Instruments
• Direct SUbscription to Equity
• Issuing Guarentees
• Bill Discounting
• Seed Capital
• Deferred Paymant Guarantee
• Loan Syndication
• Over Run Financing
• Financial Restructuring
• Leasing
• Advisory Services

Key Ratios:

• Break even Point a) Cash b)Quantity
• Debt Service Coverage Ratio (Ideal = 1.8 Times)
• Internal Rate of Return
• Gross Profit Margin
• Operating Profit Margin
• Return on Capital Employed
• Earning per Share
• Fixed Asset Coverage
• Debt/Equity Ratio (Ideal = 1.5 /1.7 : 1)
• Interest Coverage Ratio
• Promotors Contribution (Ideal = 15 to 20 %)
• Current Ratio (Ideal = 1.33 times)

Finance Considerations and Guidelines:

• Stock Exchange Guidelines
• SEBI Guidelines
• Financial Institutions Norms
• Ministry of Finance
• RBI/FERA Guidelines

Causes of Project Cost Overrun:

• Price Increase in Capital Equipments
• Time Overruns
• Change in project Scope
• Underestimate of Project Cost at Conception Stage
• Rectification Stage
• Management Failure

Financial Instruments

• Debt
• Equity
• External Commercial Borrowings
• Global Depository Receipts
• Multiple Option Debentures
• American Depository Receipts
• Secured promissory Notes
• Deep Discount Bonds
• Flaoting Rate Notes
• Comercial Paper
• Zero Coupen Bonds
• Structured Financial Products
• Non Convertible Debentures with Warrants

There are many other aspects of Project Finance/Management , if U need further information contact us.

For further information email us.

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