POINTS TO PONDER WHILE PREPARING A PROJECT REPORT SEEKING FINANCE FROM BANK

• WHAT IS PROJECT REPORT?

• HOW TO PREPARE A PROJECT REPORT?

• WHAT ARE ALL THE POINTS TO BE COVERED IN THE PROJECT REPORT?

• WHETHER ANY CONSULTANT (OR) A AUDITOR HAS TO BE CONTRACTED TO PREPARE THE PROJECT REPORT?

• HOW TO EXPRESS TO THE BANK MANAGER ABOUT THE PROPOSED PROJECT FOR WHICH YOU REQUIRE FINANCIAL ASSISTANCE?

PROJECT

• • • • • •

SELECTION OF LINE OF ACTIVITY GETTING THOROUGH KNOWLEDGE ABOUT THE PROPOSED LINE OF ACTIVITY HOW TO MANUFACTURE AND MARKET THE PRODUCT?

WHETHER THE PRODUCT PROPOSED TO BE MANUFACTURED IS A INNOVATIVE ONE (OR) IMPROVED VERSION OF THE ALREADY EXISTING PRODUCT?

WHETHER YOU CAN FUNCTION AS AN ANCILLARY UNIT TO A MAJOR MANUFACTURER.

5 M’s – MAN , MATERIAL , MARKET , MACHINE , MONEY

WHO IS AN ENTREPRENEUR?

• • EVALUATION OF THE CHARACTER , LIKE FRANKNESS, REASONABLENESS, PATIENCE, ATTITUDE TOWARDS RISK TAKING ETC.

OTHER QUALITIES :

–

INITIATIVE , DYNAMISM , LEADERSHIP AND RESOURCEFULLNESS.

SELECTION

• LOCATION – Proximity to the point of sale (or) supply.

• PREMISES – Own (or) Leased.

• MACHINERY – Manually operated (or) Computerised Numeric Control (CNC) machine.

• MANPOWER – Unshilled , Semi-shilled , Shilled.

• MATERIAL – Ferrous (or) Non – Ferrous.

• MARGIN MONEY – Source – Father (or) Friends & Relatives Building – 40 % Machinery – 25 %

COST OF PROJECT



Land Cost



Building Cost



Machinery Cost



Working Capital Margin

All the above Costs have to be met out from Long Term Sources.

WORKING CAPITAL

For running a business (or) a factory Working Capital is very much required.

How to mobilize Working Capital ?

1) Own investment 2) Borrowings Friends & Relatives Banks

BANK BORROWINGS

• Lending is an Art and not a Science • Expectation of the Bank Manager will be 1) Will he repay the Loan? – Character, Competence and Capital.

2) Competence : can he repay the Loan?

Managerial Competence.

Technical Competence Capital – Promoter’s Stake in the business.

A Project can be technically feasible but it may be Financially not viable.

Manufacturing Cost Administrative Cost Selling Expenses Net Profit

PRINCIPAL SECURITY

• A good security should satisfy the principle of

‘MAST’

(ie) it should possess four qualities , namely • •

Marketability Ascertainability of Value

•

Stability of Value and

•

Transferability of ownership.

COLLATERAL SECURITY

EM of Immovable property

1. Landed Property 2. Building Property a) House b) Factory Building.

Personal Guarantee of a worthy Person.

FINANCIAL ASSISTANCE

•

TERM LOAN

•

SHORT TERM LOAN

 Building , Technical Know-how fees  Machinery.

 Presale Credit Limits.

 Postsale Credit Limits.

SMALL AND MEDIUM ENTERPRISES SCHEMES AND OPPOTUNITIES



Investment in Plant and machinery does not exceed Rs. 1.00 crore – It is as SSI Limit.



In respect of certain specified items under hoisery, Hand Tools, Drugs and Pharmaceuticals, Stationery items and Sports Goods , this investment limit has been enhanced to Rs. 5.00 Crores.

SMALL AND MEDIUM ENTERPRISES SCHEMES AND OPPOTUNITIES

• •

A Comprehensive legislation which would enable the paradigm shift from SSI to Small and Medium enterprises is under consideration of parliament.

Units with investment in Plant and Machinery in excess of SSI limit and upto Rs.10.00 Crores may be treated as Medium Enterprises.

List of Service Sector activities covered under Medium

  

Enterprises - Services

Call Centres  Professionals like Doctors, Architects, Software BPOs Providers, Engineering Cybercafes concerns, Consultancy and  DTPs Allied activities.

 Hotels and Restaurants  Beauty Parlours  Hospitals / Clinics  Advertising Agencies  Ancilliary agencies  Industrial Research and Development Labs.

 Cable TV Network

List of Service Sector activities covered under Medium Enterprises - Services

 Industrial Testing Labs  Clinical Laboratories  Industrial Photography  Photographic Labs / Processing Labs.

 Cold Storage Services / Milk Chilling / Milk Processing.

 Washing and Laundry Services / Dry Cleaning.

 Motor Cycle Repairing.

 Super Markets.

 Shops , Offices , Show Rooms , Training Centres of Professionals.

 Resorts and Travel Agents.