Preparation of Project Report

PREPARATION OF PROJECT REPORT Oct 11, 2009 CA. SUNNY SABHARWAL

What is a Project Report
First introduction to the Project
Even before meeting the Promoters
Deemed to contain all relevant & updated information
Matter or Format?
But format is still indispensible
Long or Short?
Time has value
Get a pro
Did I hear Chartered Accountants?
Hisar Branch Preparation of Project Report

Purpose of Project Report
Funding from LENDERS
Funding from INVESTORS
What’s the difference!!!

General Contents of a Project Report
Background & Business Description
Market Study
The Project
Project Implementation
Project Financials
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
Background
Market Study
The Project
Project Financials

Project Report Hisar Branch Preparation of Project Report Background & Business Description Market Study The Project Project Implementation Project Financials

Background and business description
Executive Summary*
Promoters : Promoters and their background, professional qualifications, experience, etc.
Existing Status of Business : existing activity, product line
Management : Directors, Managers – their professional background and expertise, arrangements for Human Resource Development, etc.
Infrastructure facilities : Property, Plant & Equipment
Clientele : Present and prospective clients
Strategic tie ups: Technical and/or Financial
What does a lender/investor see
Promoters : Sound experience with proven capabilities to expand and innovate
Existing Status of Business : Idea of Project team should be clear about where they are and what they want to achieve
Management : Strong, experienced team with qualified personnel
Infrastructure facilities : Quality (latest?) and useful life of PPE
Clientele : Clients with visibility (depict quality), government contracts (ensure revenues & clean status) preferred
Strategic tie ups: Technical and/or Financial
Hisar Branch
Preparation of Project Report

Market Analysis
What is the business : Product or Service
Industry – IT, Realty, Power, Automobiles, FMCG, etc.
B2B and/or B2C
Govt. regulations
Market size, competition
Sources of Information –
Dedicated study by professional firms (like RE)
Industry media
Ministry’s /Department’s website

What’s the vision of entrepreneur?
What will he do and for how long
Where is the value being added : USP?
Is it location, target customer base, price strategy or something else
How the competition is being evaluated?
Direct and indirect
About the Project
for Dish DTV competition is not only DTH, but cable operators too

Project SWOT analysis and strategy
Why here and not in Introduction Section
Better understanding at this stage
Project core team & resources
Role and responsibilities of each should be clear
Schedule of Activities
With timelines
Possible hiccups
A GANTT CHART is useful

Project Financials … 1
Project Costs
To be included –
Cost of land and land development
Cost of Building & Structures
Cost of Plant & Machinery
Permanent Working Capital
Preliminary Expenses – legal, traveling, brokerage
Challenge is to estimate these reasonably
But how –
Discussions with Client & Others (industry experience)
Industry / Company reports

Project Financials … 2
Project Revenues
Find innovative Means
Better be realistic – market knows everything
Funding
Matching of Cash Flows principle
Timing of Inflows and Outflows to coincide
Lease model or capex model
Remember to maintain the balance
A well prepared FINANCIAL MODEL brings more clarity and is preferred by lenders/investors Hisar Branch Preparation of Project Report

Project Financial … 3
Some numbers lenders/investors are interested in –
Project Cost
Break-even point/time
DSCR
Cash Flow Analysis –
NPV; IRR
Profitability Index
ROE
Debt-Equity Ratio

Projects???

Checklist for preparation of a Project Report
Clear and complete understanding of project
Reliable sources of information
Precise but presentable data
Command over numbers
Credible client and credible investor
Confidentiality

THANK YOU
CA. Sunny Sabharwal
+91 99586 77766
sabharwal.sunny@ yahoo.com

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Preparation of Project Report

by Sunny Sabharwal on Oct 12, 2009

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