Preparation of Project Report

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An insight on Preparation of Project Report for funding by lenders and investors.

Thought it is important to bring to light that with change in economic conditions, the way of putting proposal in front of investors should also change, by making it more thorough, reliable and complete.

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  • http://www.sezindia.nic.in/
  • Preparation of Project Report

    1. 1. PREPARATION OF PROJECT REPORT Oct 11, 2009 CA. SUNNY SABHARWAL
    2. 2. What is a Project Report <ul><li>First introduction to the Project </li></ul><ul><ul><li>Even before meeting the Promoters </li></ul></ul><ul><li>Deemed to contain all relevant & updated information </li></ul><ul><li>Matter or Format? </li></ul><ul><ul><li>But format is still indispensible </li></ul></ul><ul><li>Long or Short? </li></ul><ul><ul><li>Time has value </li></ul></ul><ul><li>Get a pro </li></ul><ul><ul><li>Did I hear Chartered Accountants? </li></ul></ul>Hisar Branch Preparation of Project Report
    3. 3. Purpose of Project Report <ul><li>Funding from LENDERS </li></ul><ul><li>Funding from INVESTORS </li></ul><ul><li>What’s the difference!!! </li></ul>Hisar Branch Preparation of Project Report
    4. 4. General Contents of a Project Report <ul><li>Background & Business Description </li></ul><ul><li>Market Study </li></ul><ul><li>The Project </li></ul><ul><li>Project Implementation </li></ul><ul><li>Project Financials </li></ul>A project will rarely score a 100 in all aspects. Right job is to identify the strong point and highlight it the most in the Project Report PROJECT REPORT <ul><ul><li>Background </li></ul></ul><ul><ul><li>Market Study </li></ul></ul><ul><ul><li>The Project </li></ul></ul><ul><ul><li>Project Implementation </li></ul></ul><ul><ul><li>Project Financials </li></ul></ul>
    5. 5. Project Report Hisar Branch Preparation of Project Report Background & Business Description Market Study The Project Project Implementation Project Financials
    6. 6. Background and business description <ul><li>Executive Summary* </li></ul><ul><li>Promoters : Promoters and their background, professional qualifications, experience, etc. </li></ul><ul><li>Existing Status of Business : existing activity, product line </li></ul><ul><li>Management : Directors, Managers – their professional background and expertise, arrangements for Human Resource Development, etc. </li></ul><ul><li>Infrastructure facilities : Property, Plant & Equipment </li></ul><ul><li>Clientele : Present and prospective clients </li></ul><ul><li>Strategic tie ups: Technical and/or Financial </li></ul><ul><li>What does a lender/investor see </li></ul><ul><li>Promoters : Sound experience with proven capabilities to expand and innovate </li></ul><ul><li>Existing Status of Business : Idea of Project team should be clear about where they are and what they want to achieve </li></ul><ul><li>Management : Strong, experienced team with qualified personnel </li></ul><ul><li>Infrastructure facilities : Quality (latest?) and useful life of PPE </li></ul><ul><li>Clientele : Clients with visibility (depict quality), government contracts (ensure revenues & clean status) preferred </li></ul><ul><li>Strategic tie ups: Technical and/or Financial </li></ul><ul><li>Hisar Branch </li></ul>Preparation of Project Report
    7. 7. Project Report Hisar Branch Preparation of Project Report Background & Business Description Market Study The Project Project Implementation Project Financials
    8. 8. Market Analysis <ul><li>What is the business : Product or Service </li></ul><ul><li>Industry – IT, Realty, Power, Automobiles, FMCG, etc. </li></ul><ul><li>B2B and/or B2C </li></ul><ul><li>Govt. regulations </li></ul><ul><li>Market size, competition </li></ul><ul><li>Sources of Information – </li></ul><ul><ul><li>Dedicated study by professional firms (like RE) </li></ul></ul><ul><ul><li>Industry media </li></ul></ul><ul><ul><li>Ministry’s /Department’s website </li></ul></ul>Hisar Branch Preparation of Project Report
    9. 9. Project Report Hisar Branch Preparation of Project Report Background & Business Description Market Study The Project Project Implementation Project Financials
    10. 10. <ul><li>What’s the vision of entrepreneur? </li></ul><ul><ul><li>What will he do and for how long </li></ul></ul><ul><li>Where is the value being added : USP? </li></ul><ul><ul><li>Is it location, target customer base, price strategy or something else </li></ul></ul><ul><li>How the competition is being evaluated? </li></ul><ul><ul><li>Direct and indirect </li></ul></ul>About the Project <ul><ul><li>for Dish DTV competition is not only DTH, but cable operators too </li></ul></ul>Hisar Branch Preparation of Project Report
    11. 11. Project Report Hisar Branch Preparation of Project Report Background & Business Description Market Study The Project Project Implementation Project Financials
    12. 12. Project Implementation <ul><li>Project SWOT analysis and strategy </li></ul><ul><ul><li>Why here and not in Introduction Section </li></ul></ul><ul><ul><ul><li>Better understanding at this stage </li></ul></ul></ul><ul><li>Project core team & resources </li></ul><ul><ul><li>Role and responsibilities of each should be clear </li></ul></ul><ul><li>Schedule of Activities </li></ul><ul><ul><li>With timelines </li></ul></ul><ul><li>Possible hiccups </li></ul><ul><ul><li>A GANTT CHART is useful </li></ul></ul>Hisar Branch Preparation of Project Report
    13. 13. Project Report Hisar Branch Preparation of Project Report Background & Business Description Market Study The Project Project Implementation Project Financials
    14. 14. Project Financials … 1 <ul><li>Project Costs </li></ul><ul><ul><li>To be included – </li></ul></ul><ul><ul><ul><li>Cost of land and land development </li></ul></ul></ul><ul><ul><ul><li>Cost of Building & Structures </li></ul></ul></ul><ul><ul><ul><li>Cost of Plant & Machinery </li></ul></ul></ul><ul><ul><ul><li>Permanent Working Capital </li></ul></ul></ul><ul><ul><ul><li>Preliminary Expenses – legal, traveling, brokerage </li></ul></ul></ul><ul><ul><li>Challenge is to estimate these reasonably </li></ul></ul><ul><ul><li>But how – </li></ul></ul><ul><ul><ul><li>Discussions with Client & Others (industry experience) </li></ul></ul></ul><ul><ul><ul><li>Industry / Company reports </li></ul></ul></ul>Hisar Branch Preparation of Project Report
    15. 15. Project Financials … 2 <ul><li>Project Revenues </li></ul><ul><ul><li>Find innovative Means </li></ul></ul><ul><ul><li>Better be realistic – market knows everything </li></ul></ul><ul><li>Funding </li></ul><ul><ul><li>Matching of Cash Flows principle </li></ul></ul><ul><ul><ul><li>Timing of Inflows and Outflows to coincide </li></ul></ul></ul><ul><ul><li>Lease model or capex model </li></ul></ul><ul><ul><li>Remember to maintain the balance </li></ul></ul>A well prepared FINANCIAL MODEL brings more clarity and is preferred by lenders/investors Hisar Branch Preparation of Project Report
    16. 16. Project Financial … 3 <ul><li>Some numbers lenders/investors are interested in – </li></ul><ul><ul><li>Project Cost </li></ul></ul><ul><ul><li>Break-even point/time </li></ul></ul><ul><ul><li>DSCR </li></ul></ul><ul><ul><li>Cash Flow Analysis – </li></ul></ul><ul><ul><ul><li>NPV; IRR </li></ul></ul></ul><ul><ul><ul><li>Profitability Index </li></ul></ul></ul><ul><ul><li>ROE </li></ul></ul><ul><ul><li>Debt-Equity Ratio </li></ul></ul>Hisar Branch Preparation of Project Report
    17. 17. Projects???
    18. 18. Checklist for preparation of a Project Report <ul><li>Clear and complete understanding of project </li></ul><ul><li>Reliable sources of information </li></ul><ul><li>Precise but presentable data </li></ul><ul><li>Command over numbers </li></ul><ul><li>Credible client and credible investor </li></ul><ul><li>Confidentiality </li></ul>Hisar Branch Preparation of Project Report
    19. 19. THANK YOU <ul><li>CA. Sunny Sabharwal </li></ul><ul><li>+91 99586 77766 </li></ul><ul><li>sabharwal.sunny@ yahoo.com </li></ul>

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