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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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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!!!
Hisar Branch Preparation of Project Report
• Background & Business Description
• Market Study
• The Project
• Project Implementation
• Project Financials
General Contents of a Project Report
PRO
JECT
RE
PORT Background
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 & Business Description
Market Study
The Project
Project Implementation
Project Financials
Hisar Branch Preparation of Project Report
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
Project Report
Background & Business Description
Market Study
The Project
Project Implementation
Project Financials
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
Hisar Branch Preparation of Project Report
Project Report
Background & Business Description
Market Study
The Project
Project Implementation
Project Financials
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
About the Project
for Dish DTV competition is not
only DTH, but cable operators too
for Dish DTV competition is not
only DTH, but cable operators too
Hisar Branch Preparation of Project Report
Project Report
Background & Business Description
Market Study
The Project
Project Implementation
Project Financials
Hisar Branch Preparation of Project Report
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
A GANTT CHART is useful
Hisar Branch Preparation of Project Report
Project Report
Background & Business Description
Market Study
The Project
Project Implementation
Project Financials
Hisar Branch Preparation of Project Report
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 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
Hisar Branch Preparation of Project Report
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
THANK YOU
CA. Sunny Sabharwal
+91 99586 77766
sabharwal.sunny@ yahoo.com
