Project appraisal 5

Project appraisal 5 tài liệu, giáo án, bài giảng , luận văn, luận án, đồ án, bài tập lớn về tất cả các lĩnh vực kinh tế,...

Project Appraisal Dr.S Sreenivasa Murthy What is a Project ? • A Project is a proposal for Capital Investment to develop facilities to provide goods and services – UN, Manual for Evaluation of Industrial Projects, New York, 1980 • A Project is a specific, finite task to be accomplished in order to generate cash flows • A Project is unique in nature • A Project is a multistage relay marathon race Stages in Project Appraisal Commercial / Market Appraisal Technical Appraisal Financial Appraisal Economic Appraisal / SCBA Environmental Appraisal Financial Appraisal of Projects • Capital Cost of Projects and sources of finance • Financial Projectins – Projected Profitability Statements – Projected Balance Sheets – Projected Cash Flow Statements • Ratio Analysis • Break Even Point • Discounted Cash Flow Techniques – NPV – IRR – PI Details of Capital Cost of the Project • • • • • • • • Land and site development Buildings Plants and Machinery Engineering and Consultancy fees Miscellaneous Preliminary and Preoperative expenses Provision for contingencies Margin money for working capital Sources of Finance • • • • • • • • • Issue of Ordinary / Preference Shares Issue of Secured Debentures Issue of Convertible Debentures and Bonds Term Loans from Financial Institutions and Banks Deferred credits from equipment suppliers including those under bills rediscounting scheme Leasing Finance Unsecured Loans and Deposits Capital Subsidy or development loans/sales tax loans Internal accruals for existing undertakings Details of Capital Cost of the Project and Methods of Appraisal Items to be Documents to be included scrutinised A Land Cost of Land Ascertain from plant and Site Legal layout and proposed Develop Charges for construction of ment registration buildings that land is Cost of sufficient for the levelling project and possible Cost of future expansion laying roads Agreement for Cost of purchase of land fencing Rates of legal Cost of gates charges Items to included be Documents to be scrutinised Total area of roads and cost per square metre Total area of fencing and the basis on which provision has been made B Main factory Design of buildings BuilBuildings Different types of ding Ancillary factory construction and area buildings under each type of Administrative construction buildings Items to included Cont Building be Documents scrutinised Godowns Canteen, Guest houses etc Quarters for essential staff Soils, tanks, wells, etc Garages Cost of seweres, drainages, etc 10 Architects’ fee to be Ascertain from plant layout whether proposed construction of buildings is sufficient and also no unnecessary construction is done Rate per square metre of each construction Agreement with building contractor, if any A note on past record of building contractor and Architect Items to be included C (a) Imported Plants Plants F.O.B value of plant and to be imported achinery Shipping, freight and insurance Import duty Clearing, loading, unloading and transportation charges Documents to be scrutinised Ensure that proposed import of plant is necessary Ensure that necessary stock and spares are also imported Quotations of plant to be imported Orders, if already placed, of plant to be imported Items to be included Documents scrutinised to be D (b) Indigenous plants List of main items genous Main plant and other machinery to be Plants machineries purchased-ensure that Machinery stores and all items are included spares and they have proper Sales-tax balance of capacity Transportation charges Quotations received Foundation and from various machinery installation charges suppliers Cross-check with some reputable potential suppliers from whom the promoters could have asked, but have not asked to bid or quote Items to be included Documents scrutinised to be Selection should be done from various quotations on the basis of not only price but also technical sophistication, reputation of suppliers, delivery dates, credit terms, etc Orders for machinery, if placed Contract entered between the company and machinery suppliers Items to be included D 1.Expenses of foreign gineering technicians consultancy2.Expenses of training for fees Indian technicians 3.Technical know-how fees 4.Expenses on drawings 5.Consultancy fees for preparing project report Documents scrutinised to be 1.Contract between the company and foreign collaborators 2.Contract between the company and consultants 3.A note on past record of consultants 4.Relationship, if any, between promoters of a project and consultants Items to be included Documents to be scrutinised E Furniture Miscellaneous2 Office machinery and Fixed equipment Asseets Vehicles-cars, trucks etc Cost of electric installation Equipment and pipes for distribution of water, air and steam Laboratory equipment Workshop equipment Fire fighting equipment Effluent collection, treatment and disposal arrangements 10 Miscellaneous fixed assets Details of various items of furniture, office machinery, equipment etc and cost thereof Ascertain whether it is necessary to invest in vehicles for the project Estimate sost of maintaining vehicle(s) and compare with transportation charges to be paid, if outside vehicles are hired Contract regarding, electric installation, piping, etc Price list of laboratory equipment, workshop equipment, etc Items to be included Brokerage & Commission s on capital issue Other capital issue expenses Commitment charges Interest on term loans during construction period Mortgage expenses Miscellaneous expenses during construction period Cash losses, if any Documents to be scrutinised Find the total amount of capital issue and calculate charges hereon Find the construction period and calculate interest for that period Calculate the amount of mortgage expenses Calculate the other expenses during construction period Items to be included Documents to be scrutinised ion for Probable increase in cost Divide total cost estimates into ies due to new additions two groups-considered firm and Probable increase in cost non-firm due to rise in prices, sales- Make provision for tax, excise duty, contingencies on non-firm items transportation charges, of cost at the rate of 5% to 15% fluctuation in foreign depending on inflationary trend exchange rates etc and period of project implementation Longer the implementation period, higher the contingencies required Items to be included ing1.Indigenous raw materials 2.Imported raw materials 3.Consumable stores 4.Stock of goods-in-process 5.Stock of finished goods 6.Outstanding debtors Documents to be scrutinised 1.Calculate total requirement of working capital on the basis of expected production in first year However, if profitability estimates of first year indicate cash loss, take working capital requirement on the basis of the production for second or third year when the project is likely to generate profit 2.The level of raw material, consumable stores, goods-in process, finished goods and debtors Sources of Finance • • • • • • • • • Issue of Ordinary / Preference Shares Issue of Secured Debentures Issue of Convertible Debentures and Bonds Term Loans from Financial Institutions and Banks Deferred credits from equipment suppliers including those under bills rediscounting scheme Leasing Finance Unsecured Loans and Deposits Capital Subsidy or development loans/sales tax loans Internal accruals for existing undertakings ... • A Project is unique in nature • A Project is a multistage relay marathon race Stages in Project Appraisal Commercial / Market Appraisal Technical Appraisal Financial Appraisal Economic Appraisal. .. Environmental Appraisal Financial Appraisal of Projects • Capital Cost of Projects and sources of finance • Financial Projectins – Projected Profitability Statements – Projected Balance Sheets – Projected... is a Project ? • A Project is a proposal for Capital Investment to develop facilities to provide goods and services – UN, Manual for Evaluation of Industrial Projects, New York, 1980 • A Project