Narahari H.S.

Projects Appraisal and Finance

Session 3

Narahari H.S.

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Market and Demand Analysis� Market Planning

� Current marketing situation� Market situation� Competitive situation� Distribution situation� Macro environment

� Opportunity and issue analysis (SWOT)� Opportunity and issue analysis (SWOT)� Objectives

� Financial, consumer and distribution targets� Marketing strategy

� Target segment, Positioning, Product line, Price, Distribution, Sales force, Sales promotion, Advertising etc.

� Action programme� To operationalise the strategywww.a2zmba.com

Technical Analysis� Need to choose between two or more technologies

� Choice of Technology� Plant capacity

� Principal inputs

� Investment outlay and production cost

� Use by other firms

� Product mix

� Latest developments

� Ease of absorption (training)

� Appropriateness of Technology� Suitable to local economic, social and cultural conditions

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Technical Analysis� Technical arrangements

� Arrangements to obtain needed technical know-how

� Details of collaborations (if any) must be chalked out

� Material Inputs and Utilities� Raw materials

� Agricultural, mineral, livestock & forest and marine products

� Processed industrial materials and components

� Auxiliary materials and factory supplies

� Utilities

� Product Mix� Based on market requirements

� Production facilities should have some flexibility so that mix can be changed

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Technical Analysis� Plant Capacity

� Technological requirement� Input constraints� Investment cost� Market conditions� Resources of the firm� Governmental policy � Governmental policy

� Location and Site� Location (broad) ; Site (specific)� Proximity to raw materials and markets� Availability of infrastructure� Labour situation (availability and productivity)� Governmental policies� Other factors

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Technical Analysis� Machineries and Equipment

� Estimate likely production levels over time

� Define various machining and other operations

� Calculate machine hours required for each operation

� Based on above, select equipment

� Structures and Civil Works� Site preparation and development

� Buildings and structures

� Outdoor works

� Environmental Aspects

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Technical Analysis� Project charts and layouts

� General functional layout� Material flow diagram� Production line diagram� Transport layout� Utility consumption layout� Communication layout� Communication layout� Organisational layout� Plant layout

� Consistency with production technology� Smooth flow of goods from one stage to another� Proper utilisation of space� Scope for expansion� Minimisation of production cost� Safety of personnel www.a2zmba.com

Technical Analysis� Schedule of project implementation

� List all possible activities from project planning to commencement of production

� Sequence of various activities

� Time required for performing various activities

� Resources normally required for various activities

� Implications of putting more resources or less resources than are normally � Implications of putting more resources or less resources than are normally required

� PERT / CPM usually used

� Draw up work Schedule

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Technical Analysis� Need for considering alternatives

� Nature of project

� Production process

� Product quality

� Scale of operation and time phasing

� Location

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Product / Service

Demand

Size

Technology

Technical AnalysisKey Project Interlinkages

Location

Production Costs

Financial

Requirements

Profitability

Investment

Outlay

Selling Price

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