POINTS TO PONDER 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) A 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?

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. 5 Ms MAN , MATERIAL , MARKET , MACHINE , MONEY

WHO IS AN ENTREPRENEUR?
EVALUATION OF THE CHARACTER , LIKE FRANKNESS, REASONABLENESS, PATIENCE, ATTITUDE TOWARDS RISK TAKING ETC.

OTHER QUALITIES :
INITIATIVE , DYNAMISM , LEADERSHIP AND RESOURCEFULLNESS.

SELECTION
LOCATION Proximity to the point of sale (or) supply. PREMISES Own (or) Leased. MACHINERY Manually operated (or) Computerised Numeric Control (CNC) machine. MANPOWER Unshilled , Semi-shilled , Shilled. MATERIAL Ferrous (or) Non Ferrous. MARGIN MONEY Source Father (or) Friends & Relatives Building 40 % Machinery 25 %

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 ? 1) Own investment 2) Borrowings Friends & Relatives Banks

BANK BORROWINGS
Lending is an Art and not a Science Expectation of the Bank Manager will be
1) Will he repay the Loan? Character, Competence and Capital. 2) Competence : can he repay the Loan? Managerial Competence. Technical Competence Capital Promoters Stake in the business.

A Project can be technically feasible but it may be Financially not viable.

Manufacturing Cost Administrative Cost Selling Expenses Net Profit

PRINCIPAL SECURITY
A good security should satisfy the principle of

MAST
(ie) it should possess four qualities , namely

Marketability Ascertainability of Value Stability of Value and Transferability of ownership.

COLLATERAL SECURITY
EM of Immovable property
1. Landed Property 2. Building Property
a) House b) Factory Building.

Personal Guarantee of a worthy Person.

FINANCIAL ASSISTANCE
TERM LOAN SHORT TERM LOAN
Presale Credit Limits. Postsale Credit Limits.

Building , Technical Know-how fees Machinery.

SMALL AND MEDIUM ENTERPRISES SCHEMES AND OPPOTUNITIES Investment in Plant and machinery does not exceed Rs. 1.00 crore It is as SSI Limit. In respect of certain specified items under hoisery, Hand Tools, Drugs and Pharmaceuticals, Stationery items and Sports Goods , this investment limit has been enhanced to Rs. 5.00 Crores.

SMALL AND MEDIUM ENTERPRISES SCHEMES AND OPPOTUNITIES

A Comprehensive legislation which would enable the paradigm shift from SSI to Small and Medium enterprises is under consideration of parliament. Units with investment in Plant and Machinery in excess of SSI limit and upto Rs.10.00 Crores may be treated as Medium Enterprises.

List of Service Sector activities covered under Medium Enterprises - Services

Call Centres BPOs Cybercafes DTPs Hotels and Restaurants Hospitals / Clinics Ancilliary agencies Cable TV Network Professionals like Doctors, Architects, Software Providers, Engineering concerns, Consultancy and Allied activities. Beauty Parlours Advertising Agencies Industrial Research and Development Labs.

List of Service Sector activities covered under Medium Enterprises - Services

Industrial Testing Labs Clinical Laboratories Industrial Photography Photographic Labs / Processing Labs. Cold Storage Services / Milk Chilling / Milk Processing. Washing and Laundry Services / Dry Cleaning. Motor Cycle Repairing. Super Markets. Shops , Offices , Show Rooms , Training Centres of Professionals. Resorts and Travel Agents.