2. Feasibility Study
The feasibility study report contains only important
information from technical analysis, financial analysis, economic
analysis, social cost benefit analysis etc. it forms the basis for
investment appraisal and decision making.
Project Appraisal/ Feasibility Study:
Project appraisal is a critical appraisal of each and every
aspect of project. The project has to be appraised in relation to the
feasibility of the technical, economical, financial, commercial,
managerial, social and other aspects of the project.
the main objective of a project appraisal is to decide
whether to accept or reject an investment proposal
3. Elements of Project Appraisal
1. Technical Feasibility : it includes detailed estimates of the
goods and services needed for the project – land, machineries
and equipment, raw materials, trained labour etc.
2. Economic Viability : it is a study on capital cost, working
capital, operating cost, and revenue, marketing, profitability
etc. also includes anticipated demand and capacity utilization
3. Commercial Viability : it includes a study of the proposed
arrangements for the purchase of raw materials and sale of
finished products.
4. Financial feasibility : it includes cost of project, cost of
production and profitability, cash flow estimation and performa
balance sheet.
4. Elements of Project Appraisal
• Managerial Competence : Proper evaluation of managerial ability and
talent is an essential part of the project appraisal. Background of
entrepreneur, character and integrity, past record etc.
• Social Consideration : Social objective also keep in view of the interest
of the public like employment potential, located in backward area, SSI,
Ancillary industries etc.
• Ecological Analysis : it is to ensure that the project causes pollution,
disturbs the equilibrium of ecology and fit to environment.
• Project Risk Analysis : Project risk includes project completion risk,
resources risk, price risk, technology risk, political risk, technology risk,
political risk, interest rate risk etc.
5. Project Report
project report is like a road map. It is an operating
document, the information depends on size of the enterprise.
• project formulation report consists of seven stages namely,
1. General Information
2. Project Description
3. Market Potential
4. Capital Costs and Sources of Finance
5. Assessment of Working Capital requirements
6. Economical and Social variables
7. Project Implementation
6. 1. General Information
General information related to:
1. Bio-data of the promoter: name, address, qualifications,
experience, and other capabilities etc.
2. Industry Profile : Past performance, present status, organization,
problems etc.
3. Constitution and organization : organization structure,
partnership, registrations, certificate from directorate of
industries district industry centre
4. Product details : product utility, product range, product design,
advantages etc.
7. 2. Project Description
a brief description about the project as, site, location of the unit: owned, rented
or leasehold land, Industrial area, no objection certificate from municipal
authorities etc.
1. Raw material : raw material related to inland or imported, sources of raw
material supply
2. Skilled Labour : trained labour
3. Utilities : like Power- load sanction, availability of power, Fuel such as coal,
Coke, oil or Gas, water- sources of water, quality and quantity availability
4. Pollution control : like scope of dumps, sewage system, sewage treatment
plant, infiltration facility etc.
5. Communication & Transportation facility : telephone, fax, telex, internet etc.
Transport – mode of tansport, approximation distance etc.
8. 2. Project Description
6. Production Process : process involved in production and period of
the conversion from raw material into finished goods
7. Machinery & equipment : indicate size, type, cost and sources of
their supply.
8. Capacity of the Plant : installed licensed capacity of the plant
along with the shift.
9. Technology selected : selection of the technology, arrangement
made for acquiring it.
10. Other Common Facilities : common facilities like, machine
shops, welding shops, and electrical repair shops etc.
11. Research & Development : proposal research and development
activities undertaken in future.
9. 3. Market Potential
1. Demand & Supply Position : state the gap between demand and
supply and how much gap will fill up by the proposed unit.
2. Expected Price : expected price of the product to be realized
3. Marketing Strategy : arrangement made for selling the product
should be stated.
4. After sale service : depending on the nature of the product,
provisions made for after-sale should be stated.
10. 4. Capital Cost and Sources of Finance : Capital items like, land and
buildings, plant & Machinery, installation cost, preliminary expenses,
margin of working capital should be stated in the report.
5. Assessment of Working Capital : requirement of working capital and its
sources must be mentioned.
6. Economical and social variables : socio-economic benefits like,
employment generation, import substitution, ancillaration, Export, local
resource utilization, development of the area.
Project Implementation : entrepreneurs should draw an implementation
schemes, timely completion, delays must be mentioned.
11. Industrial Estates
Industrial estates is a place where the required facilities and factory
accommodation are provided by the govt to the entrepreneur to establish
their industries there.
Industrial estates is also termed as Industrial Parks, Industrial Zones,
Industrial areas, Industrial Township etc.
Objectives:
1. It is a tract of land subdivided and developed into factory plots or
sheds.
2. It is a planned clustering of industrial units
3. It may be developed in urban, semi-urban, or rural areas
4. It may be large, medium, or small
5. It may be setup by the Govt, or cooperatives or private agencies
6. It provide common infrastructures.
12. Features
1. Separate plots and sheds
2. Planned cluster units
3. Regional development
4. Common infrastructure
5. Promote industrialization
6. Different sizes
7. Developed in all areas
8. Promotion through any agency
13. Advantages
1. Economies of scale
2. External economies
3. Low investment
4. Less risks
5. Mutual cooperation
6. Balanced regional development
7. Saving of time and effort
8. Entrepreneurial development
14. KIADB (Karnataka Industrial Area
Development Board)
• KIADB is wholley owned by Govt of Karnataka setup under
Karnataka Industrial Area Development Act, 1966. this board
funtions as per statutory privisions, rules and regulations enacted
there under. This is the first organization obtain ISO 9001:2000
certification in the year 1997.
• The main functions of KIADB is Land Acquisition, Development and
Allotment in Bangalore urban and rural districts.
15. Objectives
1. Promote rapid growth and orgerly development of industries in
the state
2. Assist in implementation of policies of govt within the purview of
KIABD Act
3. Facilitate ion establishing infrastructure projects.
4. Function on “No Profit-No Loss” basis.
16. Functions of KIADB
• Acquire land and form industrial areas in the state
• Provide basic infrastructure in the industrial area
• Acquire land for single unit complexes
• Acquire land for govt agencies for their schemes and
• Infrastructure projects
17. TECSOK (Technical Consultancy Services
Organization of Karnataka)
• TECSOK is a professional industrial technical and management
consultancy organization promoted by govt of Karnataka.
• It handle with various activities like, investment advice, procedural
guidance, management consulting, mergers and acquisitions, process
reengineering, studies, valuation of assets for takeovers, impact
assessment of socio-economic schemes, critical infrastructure balancing
: IT related studies, detailed feasibility study and reports.
• TECSOK sharpens the project idea through feasibility studies, project
reports, market survey, and sources of finance, selection of machinery,
technology, costing also providing assistance.
• It also helps to identify sickness in the existing industry, avail
rehabilitation packages offerd by govt and financial institutions.
18. Functions
• Technical and market appraisal of projects
• Industrial potential surveys
• Fact-finding and opinion reports
• Corporate planning
• Collection and collation of information
• Impact assessment
• Evaluation of schemes and programs
• Asset evaluation
• Infrastructure development
• Event management and publicity campaigns
• Organizing seminars and workshops
19. District Industries Centre
• DIC’s started in the year 1978
• DIC’s are single window interacting agency at district level
providing service and support to SSI.
• DIC’s provide assistance to the entrepreneurs who are going to
start the business on their own and in their regional places.
• Registration of small industries in DIC’s are reistr under PMRY
(Pradhan Mantri Rojgar Yojana)
20. Functions of DIC’s
• Identification of Entrepreneurs
• Provisional registration
• Permanent registration
• Purchase of fixed assets
• Clearance from various departments
• Assistance to village Artisans and HandiCRafts
• Incentives and Subsidies