project appraisal

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					Project Appraisal
• It is a process of judging the viability of the project from technology, finance, market, managerial and economic point of view
– Technical Appraisal – Financial Appraisal – Market Appraisal – Managerial Appraisal – Economic Appraisal

Technical Appraisal
• Technical review is done by qualified person • In case of large and sophisticated project it is done by outside expert
– – – – – – – – Process of manufacturing Engineering know how Raw materials and consumable Location and site Building Plant and equipments Manpower requirements Break-even point

Financial Appraisal
• Estimation of capital cost
– Whether proper quotations are obtained from potential supplier? – Whether contingencies are provided? – Whether inflation factor is considered?

• Estimation of working results
– Whether price computation of input and output is proper? – Whether cost projections and distinction between fixed and variable cost is proper?

Financial Appraisal
• Adequacy of rate of return
– IRR and WACC

• Financing pattern
– Debt equity ratio – Promoters contribution should be in the range of 30 to 50 %

Market Appraisal
• Whether demand projections made for the output of the project is reasonable?
– Based on available survey – Based on industry association projection – Independent market survey

• Adequacy of marketing infrastructure
– Distribution network – Transport facilities – Warehousing and stock level

• Competency of marketing personnel

Managerial Appraisal
• Sound understanding and commitment of promoters towards the project • Prior experience of the promoters • Organization structure and staffing plan • Remuneration structure of key technical and managerial personnel

Economic Appraisal
• • • • Economic rate of return Social cost benefit analysis Employment generation Project’s contribution to the development of sector / economy • Industrial development of the region • Improvement in the socio-economic status of the people of the region

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