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

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?

Purpose of Project Report Funding from LENDERS Funding from INVESTORS What’s the difference!!! Hisar Branch Preparation 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 Implementation Project Financials

Background & Business Description

Market Study

The Project

Project Implementation

Project Financials

Background

Market Study

The Project

Project Implementation

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

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

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

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 Hisar Branch Preparation of Project Report

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

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

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 Hisar Branch Preparation of Project Report

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

for Dish DTV competition is not only DTH, but cable operators too

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

Project Implementation 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 Hisar Branch Preparation of Project Report

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

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 Hisar Branch Preparation of Project Report

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 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

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 Hisar Branch Preparation of Project Report

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 Hisar Branch Preparation of 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

CA. Sunny Sabharwal

+91 99586 77766

sabharwal.sunny@ yahoo.com