1. Preparation of Project Report forPreparation of Project Report for
Bank Finance –Bank Finance –
Role of a Chartered AccountantsRole of a Chartered Accountants

2. INTRODUCTIONINTRODUCTION
 The project report is an essential buildingThe project report is an essential building
block for completion of a project.block for completion of a project.
 The project report must be preparedThe project report must be prepared
carefully and with sufficient details tocarefully and with sufficient details to
ensure approval, appraisal and finallyensure approval, appraisal and finally
funding from the financial institution.funding from the financial institution.
 The project report must be accompaniedThe project report must be accompanied
by executive summary.by executive summary.

3. POINTS TO BE KEPT IN MIND WHILEPOINTS TO BE KEPT IN MIND WHILE
PREPARING PROJECT REPORTPREPARING PROJECT REPORT
 What is Project Report?What is Project Report?
 How to prepare a Project Report?How to prepare a Project Report?
 What are all points to be covered in theWhat are all points to be covered in the
Project Report?Project Report?
 Whether any consultant or auditor has to beWhether any consultant or auditor has to be
contracted to prepare the Project Report?contracted to prepare the Project Report?
 How to express to the Bank Manager aboutHow to express to the Bank Manager about
the proposed project for which you requirethe proposed project for which you require
financial assistance?financial assistance?

4. POINTS TO BE COVERED IN THEPOINTS TO BE COVERED IN THE
PROJECT REPORTPROJECT REPORT
 Techno Feasibility ReportTechno Feasibility Report
 IntroductionIntroduction
 Executive SummaryExecutive Summary
 Complete details of all aspect ofComplete details of all aspect of
projectproject
 ConclusionConclusion

5. TECHNO FEASIBILITY REPORTTECHNO FEASIBILITY REPORT
 It is a summary of complete project, thatIt is a summary of complete project, that
provide information about the project inprovide information about the project in
a glance.a glance.
 It should cover all the major and vitalIt should cover all the major and vital
information of the project.information of the project.
 It should’nt cover more than 2 pages.It should’nt cover more than 2 pages.

6. INTRODUCTIONINTRODUCTION
The part of project constitutes of:The part of project constitutes of:
 PreamblePreamble
 Brief background of companyBrief background of company
 Background of entrepreneursBackground of entrepreneurs
 Location details of the projectLocation details of the project

7. EXECUTIVE SUMMARYEXECUTIVE SUMMARY
Executive summary is a important andExecutive summary is a important and
necessary part of a project report. Itnecessary part of a project report. It
includes all the details which will becomeincludes all the details which will become
part of a detailed project report but inpart of a detailed project report but in
summary form. It covers:summary form. It covers:
 LocationLocation
 Proposed capacityProposed capacity
 Product mixProduct mix
 Technological arrangementTechnological arrangement
 Layout of Factory / plantLayout of Factory / plant

8. EXECUTIVE SUMMARY…EXECUTIVE SUMMARY…
 Raw material requirement, storage andRaw material requirement, storage and
handlinghandling
 Present and Future demand of end productPresent and Future demand of end product
 Plant and MachineryPlant and Machinery
 Pollution Control equipmentsPollution Control equipments
 Power and water supplyPower and water supply
 Capital CostingCapital Costing
 Other subsidiary requirements and ancillaryOther subsidiary requirements and ancillary
facilitiesfacilities

9. ENTERPRENUER DETAILSENTERPRENUER DETAILS
 QualificationQualification
 Work experience in detailWork experience in detail

10. PRODUCT MIXPRODUCT MIX
Complete details ofComplete details of
 End productEnd product
 Proposed productionProposed production
are to be given.are to be given.

11. TECHNOLOGICAL CONSIDERATIONSTECHNOLOGICAL CONSIDERATIONS
 Technology used in domestic andTechnology used in domestic and
international market to produce the endinternational market to produce the end
productproduct
 Merits and demerits of variousMerits and demerits of various
technology usedtechnology used
 Technology proposed to be used in ourTechnology proposed to be used in our
project and reason for the sameproject and reason for the same
 Details of complete process cycle withDetails of complete process cycle with
process chartprocess chart

12. SITE DESCRIPTIONSITE DESCRIPTION
 Site DetailsSite Details
 LocationLocation
 Metrological datasMetrological datas
 Connectivity through road, train, air etc.Connectivity through road, train, air etc.
 Proximity of raw material sources and otherProximity of raw material sources and other
vital facilitiesvital facilities
 Reason to chosen the site.Reason to chosen the site.

13. PLANT LAYOUTPLANT LAYOUT
 The part of the project report will includeThe part of the project report will include
the complete layout, structure andthe complete layout, structure and
various facilities to cater with thevarious facilities to cater with the
production.production.
 The part must cover the layout map.The part must cover the layout map.

14. RAW MATERIALRAW MATERIAL
 Name and chemical configuration, if anyName and chemical configuration, if any
 Physical RequirementsPhysical Requirements
 Chemical RequirementsChemical Requirements
 Availability in the marketAvailability in the market

15. RECEIPT, STORAGE & HANDLING OFRECEIPT, STORAGE & HANDLING OF
RAW MATERIALRAW MATERIAL
 Handling systemHandling system
 Feed systemFeed system
 Storage arrangementsStorage arrangements
 At godownsAt godowns
 At plantAt plant
 Transportation arrangmentsTransportation arrangments

16. APPLICATION OF END PRODUCTAPPLICATION OF END PRODUCT
 Whether will be used in own plantWhether will be used in own plant
 Target marketTarget market
 DomesticDomestic
 ExportExport
 Industry details, where it is usedIndustry details, where it is used

17. ENVIRONMENTAL ASPECTSENVIRONMENTAL ASPECTS
 Whether all environmental clearanceWhether all environmental clearance
certificates required for the specificcertificates required for the specific
industry has been taken and details ofindustry has been taken and details of
the same.the same.
 Arrangements to avoid pollution from theArrangements to avoid pollution from the
government specified limits.government specified limits.

18. WATER, POWER AND AUXILLARYWATER, POWER AND AUXILLARY
SERVICESSERVICES
 RequirementRequirement
 Arrangement through government orArrangement through government or
private sourcesprivate sources
 Alternative arrangementsAlternative arrangements

19. QUALITY CONTROLQUALITY CONTROL
 SamplingSampling
 Laboratory setupLaboratory setup

20. SUPPLEMENTARY FACILITIESSUPPLEMENTARY FACILITIES
 Repairs and Maintenance facilitiesRepairs and Maintenance facilities
 Ventilation and air conditioning systemVentilation and air conditioning system
 Instrumentation & telecommunicationInstrumentation & telecommunication
 Automation and Computer ControlAutomation and Computer Control
 Safety and fire protection arrangementSafety and fire protection arrangement
 Hydrant SystemHydrant System

21. MARKET ARRANGEMNTSMARKET ARRANGEMNTS
This part of project report covers completeThis part of project report covers complete
market analysis of your end product.market analysis of your end product.
 in presentin present
 in futurein future
It also covers the marketing strategyIt also covers the marketing strategy
customer is going to adopt in future, to sellcustomer is going to adopt in future, to sell
its products.its products.

22. POLLUTION CONTROLPOLLUTION CONTROL
 Arrangements to avoidArrangements to avoid
 Air PollutionAir Pollution
 Water PollutionWater Pollution
 Noise PollutionNoise Pollution
 Arrangements for effluent disposalArrangements for effluent disposal

23. MANPOWER PALNNINGMANPOWER PALNNING
 Category wise break up needs to beCategory wise break up needs to be
given:given:
 Senior ManagementSenior Management
 Technical staffTechnical staff
 Marketing StaffMarketing Staff
 Maintenance StaffMaintenance Staff
 Production staffProduction staff
 Quality Control StaffQuality Control Staff

24. MANPOWER PALNNING…MANPOWER PALNNING…
 Estimated requirementEstimated requirement
 Cost InvolvedCost Involved
 Training arrangementTraining arrangement
 Employee welfare arrangementsEmployee welfare arrangements

25. CONSTRUCTION PLANNINGCONSTRUCTION PLANNING
Month wise target is to be given forMonth wise target is to be given for
 Each construction phaseEach construction phase
 Erection of plant and machineryErection of plant and machinery
 Commencement of commercial productionCommencement of commercial production

26. CAPITAL COSTCAPITAL COST
Estimated cost is to be given for each capitalEstimated cost is to be given for each capital
expenditure planned up.expenditure planned up.
 LandLand
Cost of landCost of land
Cost of site developmentCost of site development
 BuildingBuilding
construction costconstruction cost
Internal designing costInternal designing cost
 Plant and MachineryPlant and Machinery
Cost of purchaseCost of purchase
Erection and Commissioning chargesErection and Commissioning charges

27. CAPITAL COST…CAPITAL COST…
 Other costOther cost
Furniture and FixturesFurniture and Fixtures
Office EquipmentsOffice Equipments
Vehicles and Mobile equipmentsVehicles and Mobile equipments
Technical Know howTechnical Know how
Preoperative expenditurePreoperative expenditure
Interest during constructionInterest during construction
Margin for contingencies, etc.Margin for contingencies, etc.

28. MEANS OF FINANCEMEANS OF FINANCE
 Equity ContributionEquity Contribution
 ExistingExisting
 ProposedProposed
 Borrowed FundsBorrowed Funds
 ExistingExisting
 ProposedProposed

29. FINANCIAL APPRAISALFINANCIAL APPRAISAL
 Need to provide 8 years’Need to provide 8 years’
 Capacity UtilisationCapacity Utilisation
 Balance SheetBalance Sheet
 Profit and Loss AccountProfit and Loss Account
 Cash Flow StatementCash Flow Statement
 Break Even Point (BEP that means noBreak Even Point (BEP that means no
profit no loss)profit no loss)

30. FINANCIAL APPRAISAL…FINANCIAL APPRAISAL…
 Calculation of Internal Rate of ReturnCalculation of Internal Rate of Return
(IRR) on the basis of projected(IRR) on the basis of projected
profitabilityprofitability
 Calculation of Debt Service CoverageCalculation of Debt Service Coverage
Ratio (DSCR)Ratio (DSCR)
 Details of assumptions made to prepareDetails of assumptions made to prepare
projected financialsprojected financials
 Sensitivity Analysis – It is done to checkSensitivity Analysis – It is done to check
the profitability if any projected targetsthe profitability if any projected targets
not achieved.not achieved.

31. LIST OF DOCUMENTS NEED TO BELIST OF DOCUMENTS NEED TO BE
SUBMITTED WITH PROJECT REPORTSUBMITTED WITH PROJECT REPORT
 Prescribe application form in DuplicatePrescribe application form in Duplicate
 Project Report in DuplicateProject Report in Duplicate
 List of total movable and immovable Assets of theList of total movable and immovable Assets of the
promoters.promoters.
 Income Tax and Wealth Tax details of last three years,Income Tax and Wealth Tax details of last three years,
with copies of Assessment / Return if applicable.with copies of Assessment / Return if applicable.
 Provisional Registration Certificate from the concernedProvisional Registration Certificate from the concerned
District Industries Centre.District Industries Centre.
 Memorandum of Articles of Association and CertificateMemorandum of Articles of Association and Certificate
of in corporation (in case of Company).of in corporation (in case of Company).
 Certified copy of Registration Certificate issued by theCertified copy of Registration Certificate issued by the
Registrar of firms ( if partnership concern) if forms 'A'Registrar of firms ( if partnership concern) if forms 'A'
and 'C'.and 'C'.

32. LIST OF DOCUMENTS NEED TO BELIST OF DOCUMENTS NEED TO BE
SUBMITTED WITH PROJECT REPORT…SUBMITTED WITH PROJECT REPORT…
 Registration with the Tourism Department, and theRegistration with the Tourism Department, and the
licence for eating house in case of Hotel Industry.licence for eating house in case of Hotel Industry.
 Permission/licence from Competent Authority (in case ofPermission/licence from Competent Authority (in case of
Textile, Drugs, Foods etc.).Textile, Drugs, Foods etc.).
 Certified copy of sale deed in respect of land. (The landCertified copy of sale deed in respect of land. (The land
should be in the name of sole proprietor / partner /should be in the name of sole proprietor / partner /
company whichever applicablecompany whichever applicable
OROR
 Rent agreement in case of rented premises.Rent agreement in case of rented premises.
 Three quotation in respect of each item of plant andThree quotation in respect of each item of plant and
machinery and raw material, proposed to be purchased.machinery and raw material, proposed to be purchased.

33. LIST OF DOCUMENTS NEED TO BELIST OF DOCUMENTS NEED TO BE
SUBMITTED WITH PROJECT REPORT…SUBMITTED WITH PROJECT REPORT…
 Details of power requirement and tie-up with StateDetails of power requirement and tie-up with State
Electricity Board.Electricity Board.
 Copy of instructions to your Bankers to give fullCopy of instructions to your Bankers to give full
information about the concern on request to Stateinformation about the concern on request to State
Financial Corporation.Financial Corporation.
 Permission from Water Pollution Control Board.Permission from Water Pollution Control Board.
 Approved Building plan from Competent Authority withApproved Building plan from Competent Authority with
cost estimatescost estimates

34. SOME IMPORTANT FORMULASSOME IMPORTANT FORMULAS
Working CapitalWorking Capital
= Current assets – Current Liabilities= Current assets – Current Liabilities
Current Assets are Accounts Receivables,Current Assets are Accounts Receivables,
inventory and cash bank balancesinventory and cash bank balances
Current Liabilities are Account payablesCurrent Liabilities are Account payables

35. SOME IMPORTANT FORMULASSOME IMPORTANT FORMULAS
Internal Rate of Return (IRR)Internal Rate of Return (IRR)
It is an annualised rate of return that can beIt is an annualised rate of return that can be
earned on invested capital.earned on invested capital.
IRR is calculated on the basis ofIRR is calculated on the basis of
Discounted Cash Flow MethodDiscounted Cash Flow Method

36. SOME IMPORTANT FORMULASSOME IMPORTANT FORMULAS
Debt Service Coverage Ratio (DSCR)Debt Service Coverage Ratio (DSCR)
= (Profit before Tax + Interest)/ (Principal= (Profit before Tax + Interest)/ (Principal
repayment + interest)repayment + interest)
As a standard it should be two.As a standard it should be two.

37. SOME IMPORTANT FORMULASSOME IMPORTANT FORMULAS
Debt Equity RatioDebt Equity Ratio
= Debt / Equity= Debt / Equity
As a standard it should be between 1 to 2.As a standard it should be between 1 to 2.

38. ROLE OF A CHARTEREDROLE OF A CHARTERED
ACCOUNTANTACCOUNTANT
 A Chartered Accountant is valuableA Chartered Accountant is valuable
coordinator between entrepreneur andcoordinator between entrepreneur and
bank, in case of syndication of funds.bank, in case of syndication of funds.
 Chartered Accountants are having soundChartered Accountants are having sound
knowledge about preparation of financials.knowledge about preparation of financials.
 Bank needs actual, provisional andBank needs actual, provisional and
projected financials and also the basicprojected financials and also the basic
ratios to decide about funding, the sameratios to decide about funding, the same
can be easily prepared with the help of acan be easily prepared with the help of a
Chartered Accountant.Chartered Accountant.

39. ROLE OF A CHARTEREDROLE OF A CHARTERED
ACCOUNTANT…ACCOUNTANT…
 Chartered Accountants are capable toChartered Accountants are capable to
prepare feasibility report in case of greenprepare feasibility report in case of green
-field project.-field project.
 Chartered Accountants by virtue of theirChartered Accountants by virtue of their
rigorous experience and high amount ofrigorous experience and high amount of
patience can be able to preparepatience can be able to prepare
 Project ReportProject Report
 CMA (Credit Monitoring Analysis) dataCMA (Credit Monitoring Analysis) data
 Feasibility ReportFeasibility Report
 Credit Appraisal Memo (CAM)Credit Appraisal Memo (CAM)

40. ROLE OF A CHARTEREDROLE OF A CHARTERED
ACCOUNTANT…ACCOUNTANT…
 By virtue of their experience CharteredBy virtue of their experience Chartered
Accountant can easily convince to bankerAccountant can easily convince to banker
about feasibility of project as well asabout feasibility of project as well as
communicate the correct fundingcommunicate the correct funding
requirements, whether it is Term Loan (TL) ,requirements, whether it is Term Loan (TL) ,
Cash Credit (CC), Bank Guarantee (BG),Cash Credit (CC), Bank Guarantee (BG),
letter of Credit (LC) or any other facility.letter of Credit (LC) or any other facility.

41. TYPES OF FUNDING AVAILABLE INTYPES OF FUNDING AVAILABLE IN
THE MARKETTHE MARKET
 Trade FinanceTrade Finance
 Factoring – Debtors FundingFactoring – Debtors Funding
 Channel Finance – Creditors fundingChannel Finance – Creditors funding
 Export FinanceExport Finance
 Working Capital FinanceWorking Capital Finance