PROJECT FEASIBILITY STUDY

MARKET ANALYSIS
In order to identify the market for one’s product/service market analysis is a study of knowing who all comprise your customers, for this you require information on:
• Consumption trends.
• Past and present supply position
• Production possibilities and constraints
• Imports and Exports
• Competition
• Cost structure
• Elasticity of demand
• Consumer behavior, intentions, motivations, attitudes, preferences and requirements
• Distribution channels and marketing policies in use
• Administrative, technical and legal constraints impinging on the marketing of the product
FINANCIAL ANALYSIS
Financial analysis is to ascertain whether the proposed project will be financially viable .In a financial appraisal certain aspects has to be looked into:
• Investment outlay and cost of project
• Means of financing
• Projected profitability
• Break- even point
• Cash flows of the project
• Investment worthiness judged in terms of various criteria of merit
• Projected financial position
BUSINESS PLAN
• The business plan is a written document that serves as a road map in the entrepreneur’s journey from start-up to project implementation.
• It describes all the relevant elements involved in starting a new business enterprise.
• It is often an integration of functional plans such as marketing, finance, manufacturing and human resources.
• Potential investors and suppliers too are interested in a business plan, as it can prove helpful in taking decisions.
IMPORTANT OF BUSINESS PLAN
Business plan is important due to the following reasons:
• It helps the entrepreneur to decide where he wants to go.
• It helps him to determine the viability of the venture.
• It provides guidance to the entrepreneur in planning realistic goals and targets, in organizing and even in identifying possible roadblocks.
• It is a pre-requisite to obtain finance.
BUSINESS CONSTITUTION
Forms of Organization
• Sole Proprietor
• Partnership
• Company
• Co-operative
• Clearances and Approvals

BANK ASSITANCE
Small Industries Development Bank of India (SIDBI)

National Bank for Agriculture and Rural Development (NABARD)

All India Development Banks(IDBI,ICICI)

State-level Institutions(SFC)
REGISTRATION

Registration entitles you to avail of the privileges available for the small-scale industries and facilitates easy access to land, utilities and other facilities.

The registration of Small Scale units is done in two stages
(a) Provisional registration –This is made before the unit is set up.
(b) Permanent registration-This is given when the unit goes into production.

PROJECT PLANNING

WHO IS AN ENTREPRENEUR?
Evaluation of the character ,who is planning for an Enterprise ,like
· Frankness
· Reasonableness
· Patience
· Attitude towards Risk Taking
OTHER QUALITIES:
· INITIATIVE
· DYNAMISM
· LEADERSHIP
· RESOURCEFULLNESS
PROJECT
· SELECTION OF LINE OF ACTIVITY
· GETTING THOROUGH KNOWLEDGE ABOUT THE PROPOSED LINE OF ACTIVITY
· HOW TO MANUFACTURE AND MARKET THE PRODUCT?
· WHETHER THE PRODUCT PROPOSED TO BE MANUFACTURED IS A INNOVATIVE ONE (OR) IMPROVED VERSION OF THE ALREADY EXISTING PRODUCT?
· WHETHER YOU CAN FUNCTION AS AN ANCILLARY UNIT TO A MAJOR MANUFACTURER?
Lastly 5 M’s – MAN, MATERIAL, MARKET, MACHINE, MONEY
SELECTION PROCESS
LOCATION – Proximity to the point of sale (or) supply
PREMISES – Own (or) Leased.
MACHINERY – Manually operated (or) Computerized Numeric Control (CNC) machine.
MANPOWER – Unskilled, Semi-skilled, Skilled
MATERIAL – Type
MARGIN MONEY – Source – Self, Friends & Relatives
COST OF PROJECT
· Land Cost
· Building Cost
· Machinery Cost
· Working Capital Margin
All the above Costs have to be met out from Long Term Sources.
WORKING CAPITAL
For running a business (or) a factory Working Capital is very much required.
How to mobilize Working Capital?
Own investment
Borrowings
a) Friends & Relatives
b) Banks
BANK BORROWINGS
Expectation of the Bank Manager will be:
§ Will he repay the Loan? – Character, Competence and Capital.
§ Competence: can the loaner repay the Loan?
i. Managerial Competence
ii. Technical Competence
iii. Capital – Promoter’s Stake in the business.
A Project can be technically feasible but it may be financially not viable. Following things needs to be checked:
· Manufacturing Cost
· Administrative Cost
· Selling Expenses
· Net Profit
COLLATERAL SECURITY
From Immovable property
· Landed Property
· Building Property
· House
· Factory Building.
By means of Personal Guarantee of a worthy person
FINANCIAL ASSISTANCE
Term Loan like
· Short Term
· Long term
· Soft loan
Building, Technical Know-how fees, Machinery.
SHORT TERM LOAN
· Presale Credit Limits.
· Post -sale Credit Limits.
SCHEMES AND OPPOTUNITIES for SMALL AND MEDIUM ENTERPRISES
Investment in Plant and machinery does not exceed Rs. 1.00 crore – It is as SSI Limit.
In respect of certain specified items this investment limit has been enhanced to Rs. 5.00 Crores.
List of Service Sector activities covered under Medium Enterprises
· Call Centre
· BPOs
· Hotels and Restaurants
· Advertising Agencies
· Industrial Testing Labs
· Cold Storage Services / Milk Chilling / Milk Processing.
· Washing and Laundry Services / Dry Cleaning.
· Training Centre for Professionals.
· Resorts and Travel Agents.
FINANCIAL INSTITUTIONS OF INDIA
Specialized financial institutions may be divided into the following types:
(a) All India Development Banks
1. Industrial Development Bank of India (IDBI)
2. Small Industries Development Bank of India (SIDBI)
3. Industrial Finance Corporation of India (IFCI)
4. Industrial credit and Investment corporation of India (ICICI)
5. National Bank for Agriculture and Rural Development (NABARD)
6. Industrial Investment Bank of India Ltd. (previously, Industrial Reconstruction Bank of India)
(b) State-level Institutions
1. State Financial Corporations (SFCs)
2. State Industrial Development Corporations (SIDC)
3. State Industrial Investment Corporations (SIIC)
(c) Investment institutions
1. Unit Trust of India (UTI)
2. Life Insurance Corporation of India (LIC)
3. General Insurance Corporation (GIC)
IMPORTANCE OF FIS
The importance of FIs may be attributed to the following:
1. They constitute an important source of long-term finance to industry.
2. FIs have played an important role in the development of
(a) Small scale industry,
(b) Projects in backward areas.
3. They have helped new and small entrepreneurs in setting up industry.
4. These institutions have, aided in better use of the available resources for the economic development of the country.
6. FIs have been a source of technical and managerial advice to the industry.
7. They have also helped in identification, evaluation and execution of new investment projects.

Points to consider while preparing a project report seeking finance from bank
· WHAT IS PROJECT REPORT?
· HOW TO PREPARE A PROJECT REPORT?
· WHAT ARE ALL THE POINTS TO BE COVERED IN THE PROJECT REPORT?
· WHETHER ANY CONSULTANT (OR) AUDITOR HAS TO BE CONTRACTED TO PREPARE THE PROJECT REPORT?
· HOW TO EXPRESS TO THE BANK MANAGER ABOUT THE PROPOSED PROJECT FOR WHICH YOU REQUIRE FINANCIAL ASSISTANCE?