Module 7 Project Appraisal, Planning and Control

Presented By: Abdul Faiz

Outline
Project financing
Means of project finance Norms & policies of financial institutions SEBI Guidelines Sample Financing Plans

Project Financing:
It refers to the raising of funds required to finance an economically separable capital investment proposal in which the lenders mainly rely on the estimated cash flow from the project to service their loans.

Means of project finance:

Preference shares Ordinary / equity shares

Debentures
Bonds Term Loans Internal Accruals

Cont.
Unsecured Loans Public Deposits Lease Financing Deferred Credits

Capital Investment Subsidy Area subsidy & product subsidy

Term Loan procedure:

Submission of loan application Initial Processing of Loan application Appraisal of the proposed project Issue of the letter of sanction Acceptance of terms & conditions by the

borrowing unit

Cont.
Execution of loan agreement Creation of security Disbursement of Loans Monitoring

Norms & policies of financial institutions

Raising of resources Exposure norms Lending operations Prudential & capital adequacy guidelines

SEBI Guidelines for mutual funds

MF shall be established in the form of trusts under the Indian trust Act and managed by separately formed AMC MMMF would be regulated by RBI and other MFs would be regulated by SEBI 50% members of the board of AMC must be independent director The directors should have at least 10 yrs experience in the field of portfolio management and financial administration

The AMC should have min net worth of Rs10 cr SEBI has the authority to withdraw the authorization of AMC AMC cannot act as the AMC for another MF The min amt to be raised with each close-end and open-end scheme should be 20cr and 50cr respectively All MFs must distribute a min of 90% of their profits in any given year

Sample Financing Plans

Project Cost Financial Plan Operation and financial projections Summary of financial viability and sensitivity scenarios