Detailed Project Report (DPR)
Project Report Means:
The project report is a document, which gives an account of the project proposal to ascertain the prospects of the proposed plan/activity. The project report contains detailed information about: Land & building required , Manufacturing Capacity per annum, Manufacturing Process, Machinery & equipment along with their prices and specifications, Requirements of raw materials, Power & Water required., Manpower needs, Marketing, Cost of the project and production. Financial analyses & economic viability of the project.
Details required for preparation of Project Report:
Information in detail is required about the technical process, requirements of plant and machinery, raw materials, manpower requirement, market information and statutory representations (like pollution control and public safety) etc.
Detailed Project Reports (DPR) :
The DPR is intended specially for the banks and financial institutions, as also for various Government Departments, Boards and the organizations constituted by Central and State Governments as Implementing Agencies for the implementation of various schemes of funding through incentives, subsidies etc. Thus, with a view to seek financial assistance for any industrial, commercial or non-commercial project, a DPR is prepared covering more specific details of all the aspects (Technical, Legal, Financial, Marketing and Operational) of the proposed project. The DPR is prepared after deciding the broad contours of the proposed project wherein the focus is mainly on analysis and accuracy. This is also added with a CMA Data to make it a Complete Financial Proposal.
Guidelines for Preparing A Detailed Project Report
A project report for new business conducts a profound road map for effectual business venture. It discusses whether the business requires finance or not, the challenging risks, several problems en-route, etc. Hence it becomes vital for every new business to prepare a project report, to acquaint them on forewarning issues. Since the appraisal of the Project involves evaluation of the Project in the following areas, the following documents/information is required.
Management Evaluation
Memorandum and Articles of Association: Object, authorized and paid-up share capital, promoter’s contribution, borrowing powers, list of directors.
Company as the Promoter: Corporate plan of the Company, Bankers’ report on dealings and repayment of past loan assistance, details of group companies, operations, balance sheet and profit & loss account of the promoter company
New Promoters: Educational background, any industrial experience, family back ground, sources of income, personal properties, income tax/ wealth tax returns
Management and Organisation set up: Broad composition of the Board, details directors and their responsibilities, details of Chief executive and functional executives including qualification, experience, organisation set-up for existing company and during project implementation for new company.
Technical Feasibility:
Technology and manufacturing process: Proven/new technology, basis of selection of technology, performance data of plants based on the technology, details of licencor of technology, process flow chart and description.
Location of the Project: Location advantage, availability of raw material and other utilities, infrastructure facilities, availability of labour, environmental aspects
Plant and Machinery: List of machinery & equipment, details of suppliers, competitive quotations, technical & commercial evaluation of major equipment
Raw material, Utilities and Manpower: Details of raw materials and suppliers, electricity and water supply, basis of manpower estimates, details of manpower e.g. managerial, supervisory, skilled/unskilled, training needs
Contracts: Agreement with contractors detailing on know-how, engineering, procurement, construction, financial soundness and experience of contractors
Environmental Aspects: Air, Water and Soil Pollution, list of pollutants / Hazardous substances, their safety, handling and disposal arrangements, compliance with national and International Standards.
Commercial Viability: Existing and potential market demand and supply for the proposed product in respect of volume and pattern Share of the proposed product of the company in the total market through marketing strategy Selling price of the product and export potential, if any. Buy-back arrangements, if any.
Financial Appraisal
Cost of the Project: This includes the cost of land & site development, building, plant & machinery, technical know-how & misc fixed assets, preliminary & preoperative expenses, contingencies, margin money for working capital.
Means of Financing: Means of financing shall have to conform to proper mix of share capital and debt. This includes share capital, unsecured loans from Promoters/associates, internal accruals, term loans, Government subsidy/grant.
Profitability Projections: Past records of financial performance of the com- pany will be examined. the company needs to submit profitability estimates, cash flow and projected balance sheet for the project a whole. Based on the projections, various financial ratios such as Debt -Equity ratio, Current ratio, Fixed as- set coverage ratio, Gross profit, Operating profit, Net profit ratios, Internal rate of return(over the economic life of the project), Debt Service Coverage ratio, Earning per share, Dividend payable etc. would be worked out to ascertain financial soundness of your Project.
Background of the business
1.Customer’s profile, 2.Long and short term Corporate Objectives, 3.To perform a viability assessment of the proposed new business ideas in terms of market- ability, technical feasibility, financing and authorities, 4.To be able to prepare a relevant business plan, 5. To recognize fundamental start up issues, 6. Market Analysis.
Market approach: The first approach towards preparing business report should be developing and assisting powerful business strategy. The report should describe the economic trends, clients and players. It should also explain on how to per- form the chosen approach, the marketing of its products and functional competence.
Target Market: While making a new business project report it is significant to keep in mind the target market. For instance, which preparing a report on debt financing, the focus should be on the assurance that the debt can be reimbursed by the company.
Market Rivalry: An industrialist should recognize at what point of time the firm will perform similar activities and when it will do things another way, in order to identify its strength and drawbacks.
Documents to be submitted to Financial institutions while applying for a loan:
| A. Unit Details:
1.PAN Card of The Unit 2. GST Registration 3. Udyog Aadhar Registration (SSI) 4.Partnership Deed & Certificate 5.Company MOA, AOA & Certificate 6. KYC Norms of Company/Partners/Directors 7. Last 3 Years I.T. Returns |
C. Security Details:
1. Primary & Collateral Security Details 2. Municipal Taxes Paid on The Properties 3. Security Card Holder PAN & IT Returns 4. Legal Opinion 5. Valuation of Properties 6. Orders/ Enquiries In Hand 7. Agreement with Electricity Board for Power 8. Agreement with Technical Consultants, if Any |
| B. Details / Estimations of The Capital Expenditure:
1.Land Details & Conversion of Land 2.Civil Estimations With Blue Prints 3.Capital Expenditure Certificate By CA If Already Incurred 4.Machinery Purchase Quotations |
D. Promoters Details:
1.Bio-Data of The Promoters / Directors / Partners 2.Net Worth Statement of The Promoters / Directors 3.Passport Size Photos of The Promoters 4.IT Returns of The Promoters (Last 3 Years) 5.Associate Company Details 6.Details of Bank Loans if already taken |
The Following are some causes for business failure:
- Lack of a succession .
- Underestimating the Importance of Strategic Planning
- Inadequate Inventory
- Under-capitalization /Insufficient Capital
- Over-expansion / Out-of-control .
- High Debt Ratio
- Lack of Financial Analysis & System of Review
- Lack of Expertise in Critical Areas
- Lack of MIS or Website or online reviews
- Start business for the wrong
- Dysfunctional / Poor
- High level of mismanagement
- Unexpected resignation of key staff
- Selling products below cost price
- Consistent negative cash flow
- Incorrect Choice of Business Location