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April 28, 2012

A. V. Arolkar & Co., Chartered Accountants

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PROJECT FINANCE
AROLKAR ABHAY VASANT Partner, M/s A.V.Arolkar & Co., Chartered Accountants MUMBAI

INTRODUCTION
 With a view to harnessing advancements in

economic development, GoI laid emphasis on industrialisation through successive Five Year Plans.
 Rapid industrial development needed massive

investment.
 Prior

to independence, there were no institutional arrangements for term finance.
April 28, 2012
A. V. Arolkar & Co., Chartered Accountants

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INTRODUCTION
 GoI,

therefore, established financial institutions:

the

following

 Indl. Finance Corporation of India (1948)

 Indl. Credit & Inv. Corpn. of India (1955)
 Indl. Development Bank of India (1964) &

 Indl. Reconstruction Bank of India (1971)
 Similarly, State Governments also established

SFCs in April 28, 2012 their respective states.
A. V. Arolkar & Co., Chartered Accountants

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INTRODUCTION
 For long, commercial banks confined their

lendings to meet WC requirements only and they did not play any active role in extending term finance.
 However, with increasing proportion of Term

Deposits in their deposit portfolio and the paucity of resources in the country, it was felt that banks could enter the field of term finance, in a role complementary to that of Term Lending Institutions. April 28, 2012 4
A. V. Arolkar & Co., Chartered Accountants

PROJECT BACKGROUND
 The purpose of term assistance is to meet a

part of the capital expenditure of a project.
 A project can be defined as „A scheme of

things to be done during a specified period in future for deriving expected benefits under certain assumed conditions‟.
 A project may be in the nature of setting up a

new industrial unit, modernisation, expansion, diversification and promotion of R&D.
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A. V. Arolkar & Co., Chartered Accountants

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A. Chartered Accountants  Where promoters of a project are unable to .PROJECT BACKGROUND  To set up a project. P&M and other infrastructural facilities like roads. certain capital expenditure needs to be incurred in acquiring assets such as L&B. etc. in addition to the Preliminary / Pre-Operative Expenses and margin on WC Limits. 2012 6 contribution. V. Term Loans are sanctioned to supplement the promoters‟ April 28... water supply. railway sidings. Arolkar & Co. meet the entire capital expenditure out of their own resources.

Partnership. April 28. Co-operative Society & Joint Stock Company. 2012 A. Chartered Accountants  Our discussion of the subject would revolve 7 . V.. Arolkar & Co. JHF.PROJECT BACKGROUND  Promoters of an industrial project can constitute themselves into any of the following forms of business organisations to implement the project : Sole Proprietorship. around Joint Stock Company as promoter.

Arolkar & Co. 2012 A.PROJECT BACKGROUND  The Promotion Stage is a crucial stage in the entire life cycle of a project. Chartered Accountants 8 . Promotion in relation to a project will comprise broadly the following functions:  I] Identification of a project  II] Feasibility investigation  III] Assembling the proposition  IV] Financing the proposition April 28. V..

I] Identification of a Project  The first step in the project promotion is the identification of a project. V. Arolkar & Co. background and ability. on the basis of his experience.  The promoter. then considers the feasibility of manufacturing and marketing the product at a remunerative price.. Chartered Accountants 9 . 2012 A. April 28. An industrial project originates as an idea in a promoter when he observes the existence of a potential market for a certain product.

Chartered Accountants the 10 . therefore. specialising in market research.II] Feasibility Investigation  A detailed feasibility study is a costly exercise. A market study aims at assessing aggregate demand for a product. Arolkar & Co. before it is undertaken. April 28. 2012 A. Promoters may take advantage of their services. desirable that. which conduct such market studies.  There are agencies. marketability of the product to be manufactured is firmly established. V. It is..

II] Feasibility Investigation  The promoter will now undertake the detailed feasibility investigation proper. 2012 A. Arolkar & Co. comprising two feasibility studies:  i) The Technical Feasibility Study  ii) The Economic Feasibility Study April 28. V.. Chartered Accountants 11 .

II] Feasibility Investigation . Arolkar & Co. Chartered Accountants the 12 . V.. 2012  Infrastructural facilities A.Technical Feasibility  Technical Feasibility Study covers following aspects:  Location of the project  Lay-out of the Plant  Size of the Plant  Factory construction  Manufacturing process / Technology  Process Design  Product Design  Scale of Operation April 28.

April 28.  Economic Feasibility Study. therefore. Arolkar & Co.. concerns itself with matching of economic resources with the physical requirements of a project and determining the viability of investment therein. 2012 A.Economic Feasibility  The prime objective of setting up a project is to derive a fair return on the investment. V.II] Feasibility Investigation . Chartered Accountants 13 .

III] Assembling the Proposition . 2012 14 A. V. Arolkar & Co. (a) L&B (b) P&M (c) Misc. & Consultancy fees (e) Preliminary and Pre-operative expenses (f) Provision for contingencies (g) Margin on WC Limits April 28. the next task is to work out the Cost of the Project and the Means of financing it. Fixed Assets (d) Technical Know-how.CoP & MoF  When a promoter is satisfied about the technical feasibility and economic viability of a project. Chartered Accountants  The Cost of the Project would broadly include: . Engg..

Chartered Accountants  C/A go through the operating cycle of RM. WIP . 2012 15 A. 28.. Fixed Assets have a relatively longer life and are generally not meant for resale. This cycle is generally completed in a short period ofApril less than one year. V. Arolkar & Co. which when sold bring in cash.IV] Financing the Proposition  Setting up of a project involves acquisition of Fixed Assets which facilitate the process of production. They are required to be retained over a period of time to exploit their productive potential. and FG.

 As it takes a long time for the Fixed Assets to pay for themselves. Depreciation and other non-cash write-offs. 2012 A. V. while investment in Fixed Assets is long term in nature. Arolkar & Co. Chartered Accountants 16 . April 28. the promoter should raise suitable long term funds to finance a project.IV] Financing the Proposition  Thus.  It is realised through surplus generated in the form of Net Profits. investment in C/A is realised over a short term..

Chartered Accountants 17 . Arolkar & Co. 2012 A. V.IV] Financing the Proposition  Keeping the foregoing in view. the promoter will explore the financial feasibility of the project by examining  a) The possible long term sources of finance  b) The feasible financial leverage  c) The expected return on the investment April 28..

Arolkar & Co.. Preference 2012 A. Chartered Accountants 18 . V. DPGs Public Deposits EquityApril 28.IV] Financing the Proposition LONG TERM SOURCES OWNED CAPITAL Share Capital Retained Earnings Debentures BORROWED CAPITAL Term Loans.

 The other sources of long term funds are: (a) Capital Subsidy applicable to projects coming up in certain notified backward areas. 2012 A. Chartered Accountants 19 . April 28..Long Term Sources  The aggregate amount of finance raised for financing a project is referred to as Capital. V. and (b) Interest free sales tax loans offered by State Governments. comprising two components – (a) Owned Capital and (b) Borrowed Capital. Arolkar & Co.IV] Financing the Proposition .

 Few projects can be financed entirely by April 28. V. Owned Capital and Borrowed Capital. the promoter will decide about a suitable financial structure for the Company. Chartered Accountants 20 .IV] Financing the Proposition . Arolkar & Co. viz. 2012 A..Financial Leverage  After considering availability of long terms sources of finance.  It will depend upon the financial leverage envisaged in the combination of sources of finance under the two categories..

Arolkar & Co.IV] Financing the Proposition ..  For this purpose.Financial Leverage  The divergent interests of debt and equity are brought into alignment by the concept of Debt / Equity gearing which determines the level of debt that can be supported by a given quantum of equity. 2012 A. if available. V. Debt means Funded Debt including all term liabilities and equity will include Share Capital and retained earnings. Chartered Accountants 21 . April 28.

 The process which assists the management in such a task is collectively known as „Capital April 28.Return on Investment  The amount invested in a project can be recouped through annual cash flows. V.. Chartered Accountants 22 . vis-à-vis alternative sources of investment.IV] Financing the Proposition . over a period of time. a promoter will examine the attractiveness of the project. Arolkar & Co. 2012 A.  In arriving at a financial plan for the project.

V.IV] Financing the Proposition .Return on Investment  The most important and widely used Capital Investment Evaluation techniques are:  Pay-back Method  Net Terminal Surplus Method  Excess Present Value Method  Internal Rate of Return Method April 28. Chartered Accountants 23 . 2012 A.. Arolkar & Co.

Years to pay back would be: Total Investment April 28. 2012 A. Arolkar & Co. Chartered Accountants 24 ..Return on Investment  The object of Pay-back Method is to find out the period of time required for recovering the entire amount of investment made in a project.IV] Financing the Proposition . V.  The cash flows (Net Profit + Depreciation + Other non-cash write-offs) are compared with the outlay on the project to determine the pay-back period.

V.Return on Investment  Net Terminal Surplus Method employs the concept of compounding which involves re-investing the simple interest earned each year along with the principal so that the principal grows each year by the amount of interest earned during the previous year and interest being calculated on the increased principal also grows.  Future Value = Principal x (1+i) April 28.. Arolkar & Co.IV] Financing the Proposition . 2012 A. Chartered Accountants 25 .

future sum to which the original amount (which we want to find out). Arolkar & Co. we arrive at the Present value of a  PV = Future sum (1+i) April 28. Chartered Accountants 26 . invested at a particular compound rate of interest has grown.Return on Investment  Excess Present Value Method is based on the discounted cash flow technique and uses the concept of discounting which is just the opposite of compounding.  In discounting.. 2012 A. V.IV] Financing the Proposition .

IV] Financing the Proposition .. 2012 A. between the two NPVs. The object of this method is to find the rate of return which a project is likely to earn over its useful life. In other words. diff. Between the two discount rates x NPV at lower discount rate Abs. Chartered Accountants 27 .  IRR = Lower Discount Rate + Diff. April 28. V.Return on Investment  Internal Rate of Return Method – It is that rate at which the sum of the discounted cash flows is equal to the investment outlay. Arolkar & Co. IRR is the rate which makes the Present Value (PV) of benefits equal to the Present Value of costs or reduces the Net Present Value (NPV) to zero.

. Chartered Accountants 28 . Arolkar & Co. Forex Loans)  II] Deferred Payment Guarantees  III] Bill Discounting Facilities  IV] Underwriting of Shares / Debentures April 28.Types of Term Assistance  The types of term assistance extended by the Bank can be broadly classified into:  I] Term Loans (Incl. V. 2012 A.

Types of Term Assistance -Term Loan  A Term Loan is a loan granted for a fixed term of not less than one year. intended normally for financing fixed assets acquired / to be acquired. V. carrying interest at a specified rate. Chartered Accountants 29 . and scheduled for repayment in instalments. 2012 A.  Depending on the term for which the said terms loans are granted. Arolkar & Co. they could be classified into (a) Short Term Loans (b) Medium Term Loans and (c) Long Term Loans.. April 28.

Arolkar & Co. a substitute for a Term Loan and.Types of Term Assistance -DPG  Deferred Payment Guarantee (DPG) is a contract to pay to the supplier the price of machinery. supplied by him on deferred terms. it serves the same purposes as a Term Loan. in agreed instalments with stipulated interest on the respective due dates in case of default in payment thereof by the buyer. in many respects. V. 2012 A. Chartered Accountants 30 . April 28.. as far as the buyer of P&M is concerned.  A DPG is.  Standards of appraisal are the same as TL.

2012 A. Arolkar & Co. V. the funds of the seller get blocked for unduly long periods and the seller requires finance against such deferred receivables to replenish his Working Capital.Types of Term Assistance . Chartered Accountants 31 . April 28.. the balance remaining to be paid after the initial down – payment represents the deferred receivables of the seller.  Thus.Bills Discounting  Under a contract for sale of machinery on deferred payment basis.

Types of Term Assistance . V.Bills Discounting  To facilitate availment of finance against the deferred receivables. Chartered Accountants 32 .  The usance bills drawn by the seller will be accepted by the buyer before they are discounted by the seller‟s banker. the seller usually draws a series of usance bills with graded maturities to coincide with the due dates of payment of the relative instalments (including applicable interest). 2012 A. April 28.. Arolkar & Co.

agrees. in the event of the public not subscribing for them. to take up a specified number of shares or debentures or amount of debenture stock to be offered to the public. 2012 33 A. in consideration. Chartered Accountants  Underwriting is a contract whereby a person . a part of the Share Capital for part-financing a project.Types of Term Assistance . Arolkar & Co.Underwriting of Shares  The necessity for underwriting arrangement arises only in the case of a Public Limited Company resorting to raise through the capital issue market. April 28. V..

Underwriting of Shares  Underwriting as a business will come under the scope of „Investment Banking‟ as distinct from „Commercial Banking‟.. Chartered Accountants 34 . be exercised in undertaking  However. the business stemmed not so much from the point of view of earnings on the investment as from the consideration that no viable project enjoying national priority should suffer for want of underwriting support. Arolkar & Co. 2012 A.Types of Term Assistance . therefore. V. a high degree of selectivity should continue to underwriting business.  In view of this. April 28.

and design..Project Appraisal  The purpose of Project Appraisal is to ascertain whether the project will be sound – technically. appraisal of examination of: a project will involve the  The  a) Technical Feasibility : To determine the suitability of the technology selected and the adequacy of the technical investigation. 2012 A. Chartered Accountants 35 . economically. April 28. Arolkar & Co. financially and managerially – and ultimately viable as a commercial proposition. V.

suitability of the envisaged pattern of financing and general soundness of the capital structure. Arolkar & Co.  c) Financial Feasibility : To determine the accuracy  d) Commercial Viability : To ascertain the extent of profitability of the project and its sufficiency in relation to the repayment obligations pertaining to term finance.Project Appraisal  b) Economic Feasibility : To determine the conduciveness of economic parameters to setting up the project and their impact on the scale of operations. 2012 36 . A. Chartered Accountants April 28. of cost estimates. V..

forex earnings. wherever . etc. April 28. V.Project Appraisal  e) Managerial Competency : To ascertain that competent men are behind the project to ensure its successful implementation and efficient management after commencement of commercial production. Arolkar & Co. the quantum of import substitution. from the point of view of its value to the national economy in terms of socio-economic benefits like generation of employment opportunities. Chartered Accountants  A project should also be examined. appropriate.. 2012 37 A.

Chartered Accountants 38 . laid down by the Government. if any.. 2012 A. April 28. Arolkar & Co.Project Appraisal  The first step in Project Appraisal is to find out whether the project is prima facie acceptable by examining salient features such as:  The background and experience of the applicants. V. utilities and other infrastructural facilities  Whether the project is in keeping with the priorities. particularly in the proposed line of activity  The potential demand for the product  The availability of the required inputs.

. the Bankers will call for an prescribed „Application‟.Project Appraisal  The original application may not contain all the basic data / information. V. Chartered Accountants  After 39 . containing the following essential data / information. Arolkar & Co. it may be necessary to provide all the necessary data / information with a view to give an overall idea about the general feasibility of the project at the time of interview by the bankers. 2012 A. satisfying itself about the prima facie acceptability of the project. In such cases. such as: April 28.

inclusive of Preliminary / Pre-operative Expenses and WC margin requirements. manufacturing process. availability of construction / production facilities. Chartered Accountants 40 .Project Appraisal  a) Particulars of the project along with a copy of the Project Report furnishing details of the technology. 2012 A..  b) Estimates of cost of the project detailing the itemised assets acquired / to be acquired. V. etc. April 28. Arolkar & Co.

level of Gross Current Assets is at the peak) during the first year of operations after the commencement of commercial production and the banking arrangements to be made for financing the WC requirements.Project Appraisal  c) Details of the proposed means of financing indicating the extent of promoters‟ contribution. etc. the composition of the borrowed capital portion with particulars of Term Loans. 2012 A.e. DPGs. Arolkar & Co. Chartered Accountants  d) WC requirements at the peak level (i. Foreign Currency Loans. V.. April 28. when the 41 .. the quantum of Share Capital to be raised by public issue.

experience and competence of (i) The key personnel to be in charge of implementation of the project during the construction period and (ii) The executives to be in charge of the functional areas of purchase. Chartered Accountants . A. Arolkar & Co.Project Appraisal  e) Project Implementation Schedule.. 2012 42 production. production. marketing and finance after commencement of commercial April 28. V.  f) Organisational set up along with a list of Board of Directors and indicating the qualifications.

43 A. Chartered Accountants  j) . 2012 repayment programme. Proposed amortisation April 28.  i) Projected P&L Account and B/S for the operating years during the currency of the Bank‟s term assistance. i.. schedule.e. CoP and profitability. Arolkar & Co..  h) Estimates of sales.Project Appraisal  g) Demand projection based on the overall market prospects together with a copy of the market survey report. V.

2012 any other relevant 44 A. V. the the  l) Details of the nature and value of the  m) Consents from the Government / other authorities and information..Project Appraisal  k) Projected Funds Flow Statement covering both the construction period and subsequent operating years during currency of the Term Loan. securities offered. Arolkar & Co. April 28. Chartered Accountants .

2012 A.  The „Application‟ completed in all respects and duly signed by the authorised signatories of the Company will form the basis for the detailed appraisal of the project.. Chartered Accountants 45 . Arolkar & Co. April 28.Project Appraisal  In respect of existing concerns. V.. should also be called for. particulars regarding the history of the concern. etc. present financial position. in addition to this information. its past performance.

Arolkar & Co. size and scope.  Each project has to be examined in proper perspective having due regard to its nature. the basic techniques employed for appraising the viability of various projects are more or less the same.  Although April 28.. V. there could be no standard or uniform approach for appraising all projects. Chartered Accountants 46 . 2012 A.Project Appraisal  An inspection of the project site (or factory in the case of existing units) will be done by the bankers.

April 28. Arolkar & Co. the proposed term assistance as the prospects of its repayment that weighs with the bankers while appraising a project.. V. it is not so much the quantum of 47 . 2012 A.Project Appraisal  The ultimate objective of the appraisal exercise is to ascertain the viability of a project with a view to ensuring the repayment of the borrower‟s obligations under the Bank‟s term assistance. Chartered Accountants  Therefore.

wherever possible. V. nothing is assumed or taken for granted. 2012 A. Chartered Accountants 48 . so be truthful and give facts  All the data / information would be checked and.. counter-checked through interfirm and inter-industry comparisons.” April 28. Arolkar & Co.Project Appraisal  In project appraisal.  It should be borne in mind that bankers believe “Healthy scepticism is a cardinal virtue in project appraisal.

address. Sales & profitability. Dividend policy. operating profit and Net Profit for the past 3 years. Line of activities. Purpose : New project. Revaluation of F/A. of Associate Concerns. Pending suits. diversification or for any other approved purpose 2. Regd. expansion. modernisation.Project Appraisal Memorandum PROJECT APPRAISAL MEMORANDUM 1. PAST PERFORMANCE Summary of Company's past performance in terms of licensed / installed / operating capacities. Qualifications. sales. Capital expenditure programmes implemented by the Company during the past 3 years and how they were financed. etc. BRIEF HISTORY Brief account of corporate history. Contingent 49 Liabilities. experience and background. MA & AA. PROPOSAL Nature of proposal. Financial position. Record of major defaults. Present organisational set up with BoD. Company's management-labour relations 4.. Summarise conclusions of financial analysis. Overall structure of inter-corporate investments 3. Method of depreciation. PRESENT FINANCIAL POSITION Company's audited Balance Sheets & P/L Accounts for the past 3 years with analysis. Company's Capital structure. Capacity utilisation. Qualifications / Adverse remarks by auditors . Position of Company's tax assessment.

commencement of commercial production is reasonable & acceptable 7. start-up / trial run. water. (b) Raw Materials . (c) Utilities & Essential Services . other staff required 8. financing of additional WC requirments in case of existing companies 50 . WORKING CAPITAL REQUIREMENTS Assessment of total WC requirements at the peak level (GCA) during the first year of operations after commencement of commercial production. experience and reliability of outside agency who prepared the Project Report.Basis of selection & justification. PRODUCTION FACTORS (a) Mfg. size & location of plant.Project Appraisal Memorandum PROJECT APPRAISAL MEMORANDUM 5. PROJECT IMPLEMENTATION SCHEDULE With reference to Bar Chart or PERT / CPM Chart and in the light of actual implementation. fuel. sharing of business among member banks. Main stages in the project implementation and whether the time schedule for construction. Standing. transport. expansion.Imported / Indigenous. (c) Technical Feasibility covering suitability of technology. erection / installation of P&M. treatment and disposal of effluents. diversification or a new venture) .Experience and expertise of Managerial / Technical personnel.Requirements of power. Pattern of unit prices & fluctuation. Process . Names of main suppliers. (b) Collaboration Arrangement (Technical or Financial). process (d) Financial Feasibility covering Cost of Project & Means of Finance 6. technical arrangements & mfg. (d) Operating Organisation . railway siding with comments on adequacy of arrangements. PROJECT (a) Description of the project (Modernisation.

total supply position. (c) Propsects for exports ... (e) Depreciation . repayment obligations. (c) Cost-Volume-Price (CVP) or Senstivity Analysis .. demand projections on the basis of past consumption.. Essential expenditure on F/A. (d) Marketing Organisation . (i) Royalty & Know-how. general condition of industry (b) Selling Price . COMMERCIAL VIABILITY . (g) Financial Exp. (d) Repayment Programme based on the above factors and initial moratorium (start-up) period 12. remuneration. etc. would indicate Long Term Surplus or Deficit / Movements in C/A & OCL leading to increase or decrease in WCG.SLM / WDV. Cash generation would be adequate to meet 51 all commitments during the entire repayment period. Exp. (b) Break-Even Analysis .Adequacy.DSCR & REPAYMENT PROGRAMME (a) DSCR (Gross) and (Net) ['Core Test' Ratio]. Concerns .(a) Matls. Govt. (b) Utilities (PW&F).Project Appraisal Memorandum PROJECT APPRAISAL MEMORANDUM 9. Distributors / Selling Agents. competence. FUNDS FLOW ANALYSIS Funds Flows to be divided into Long Term Funds Flows and Short Term Funds Flows . (c) Capacity utilisation.. .Export obligations. Terms of arrangement. COMMERCIAL VIABILITY .Consistency.(a) Volume.Dif. consumed.Siphoning of profits 10. of working days.Trend to see whether stable. (h) Admn.CoP & PROFITABILITY (A) Sales Volume / Value . (c) Wages & Salaries (d) Factory Overheads. Margin of safety and extent of risk coverage. quota systems. price controls.For first full year of production and the year of maximum capacity utilisation. (f) Selling Exp. (k) Taxation (C) Profitability (CMA Data and ratios) (D) Inter-firm comparison 11. MARKETING (a) Sales prospects and underlying assumptions. (j) Preliminary / Pre-operative Exp. taxes and dividends are fully provided for. Asso.For the year with operating profit nearest to the average operating profit to determine 'Span of Resiliency' of the project. (d) Value (B) CoP . (b) No.

(c) Restriction with regard to (i) Repayment of deposits from F&R without the permission of the Bank (ii) Rate of interest payable on such deposits to be lower than the rate of interest charged by the Bank. (f) Comparison of total earnings thus arrived at with total earnings that 52 would accrue to the Bank if the amount (Value of shares devolving) is lent by way of Term Loans for the same period . (d) Restriction with regard to transfer of controlling interest in the Co. SPECIAL TERMS & CONDITIONS (a) Right of examination of borrower's books. (e) Comparative Earnings Analysis . (b) Detailed Opinion Report on guarantors. ECONOMICS OF UNDERWRITING In case of composite proposal. 14. (c) Market response to the proposed public issue. 16. (b) Capital Market trends. (b) Restriction with regard to change in Capital Structure. PROJECTED BALANCE SHEETS (a) Projected B/S covering the entire period of repayment to be scrutinised. Dividends.Underwriting Commission. (a) Underwriting tie-up. Funds Flow projections and projected B/S are all inter-related (c) Projected B/S to be scrutinised analytically with reference to all other related essential data to ensure that all the projections. (b) CoP.Project Appraisal Memorandum PROJECT APPRAISAL MEMORANDUM 13. Capital Gains after Tax. (c) Security Margin Coverage Ratio. (d) Whether security offered and the margin available are adequate and satisfactory (e) Credit Rating to be done and interest rate (Pricing) to be in line with this rating. (e) Other standard T&C. MoF. unless market forces demand otherwise 15. (d) Lock-up of funds. made realistically and accurately. have been woven into well co-ordinated financial statements. SECURITY & MARGIN AND RATE OF INTEREST (a) Complete details of security to be offered for the Term Loan. or drastic change in the Company's management set-up without Bank's prior permission. Profitability estimates.

OTHERS AND RECOMMENDATIONS (a) Verify RBI's List of Defaulters / Wilful Defaulters / Suit Filed Accounts. all considered. (e) Detail the value of the Company / Group's connections to the Bank. (e) Consent from Controller of Capital Issues (f) Various approvals / No Objection Certificates from CG / SG / Local Authorities.Project Appraisal Memorandum PROJECT APPRAISAL MEMORANDUM 17. MANAGERIAL COMPETENCY (a) Company's management set-up. . etc. (b) Approval for collaboration agreement and technical know-how arrangement. (g) Present position 18. the proposal is a fair banking risk. (b) Company's liability in respect of partly paid shares in subsidiary companies 19. inter alia. (g) Recommendations for sanction of Term Loan. (c) CEO in charge of day-to-day affairs of the Company. (d) Indicate the importance of the project in terms of national priority and impact thereon. CONSENTS FROM GOVERNMENT AND OTHERS These will relate. (b) Composition of the BoD. (c) Indicate the IRR for the project and comments on comparison with the IRRs for similar projects in the same industry. (d) Quality of the Company's management and the level of managerial expertise built-up within the Group. (c) Clearance for import of P&M. GROUP COMPANIES (a) Brief resume of Group Companies indicating the extent to which they are dependent on the parent company / other companies in the Group. (e) Whether all departments are well served by professionals 20. (b) Verify ECGC's Specific Approval List. (f) Whether. to (a) Industrial Licence. (d) Approval for making payments for imported P&M on deferred terms and specific clearance for tax exemption on interest.

2012 A. Arolkar & Co.. Chartered Accountants 54 .THANK YOU April 28. V.