General Information

The information of general nature given in the project report include the
following.
Bio-data of Promotr : Name and address of entrepreneur, the qualification,
experience and other capabilities of the entrepreneur: if these are partners,
state these characteristics of all the partners individually.
Industry Profile: A reference of analysis of industry to which the project belongs,
3 e.g. post performance, present status, its organization, itsproblems etc.
Constitution and Organizations: The constitution and organizational structure of
the enterprise, in case of partnership firm, its registration with the Registrar or
Firms: application for getting Registration Certificate from the Directorate of
Industries/District Industry Centre.
S Product Details: Product utility, product range: product design; advantages to
be offered by the product over its substitutes, if any.
Project Description
A
brief description of the project covering the following aspects is given in
the project report.
7Site:Location of enterprise: owned or leasehold land; industrial area; No
Objection Certificate from the Municipal Authorities if the enterprise location
falls in the residential area.
3 Physical Intrastructure: Availability of the following items of infrastructure should
be mentioned in the project report.
Raw Material: Requirement of raw material, whether inland or imported,
sources of raw material supply.
Skilled Labour: Availability of skilled labour in the area, arrangements for
training labourers in varioUS skills.
UHlities: These include
Power : Requirement for power, load sanctioned, availability of power.
12 i. Fuel: Requirement for fuel items such as coal, coke, oil or gas, state of
their availability.
Water: The sources and quality of water should be clearly stated in the
project report.

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 |4 Pollution Control: The aspects like scope of dumps, sewage system and sewage
treatment plant should be clearly stated in case of industries producing
emissions.

1Communication System: Availability of communication facilities, e.g.

telephone, telex etc. should be stated in the project report.
ll Transport Faciltes: Requirements for transport, mode of transport, potential
means of transport, distances to be covered, bottlenecks etc. should be stated
in the bUsiness plan.
1other Common Facilities: Availability of common facilities like machine shops,
welding shops endelectrical repair shop etc., should be stated in the report.
/6 Production Process: A mentioned should be made for process involved in
production and period of conversion from raw material into finished goods.
14 Machinery an Equipment: Acomplete list of items of machinery and equipments
required indicating their size, type, cost and sources of their supply should be
enclosed with the project report.
Capacity of the Plant: The instlled licensed capacity of the plant along with the
shifts should also be mentioned in the project report.
2) Technology Selected: The selection of technology, arangements made for
acquiring it should be mentioned in the business plan.
22 Research and Development: A mention should be made in the project report
regarding proposed research and development activities to be undertaken in
future.
2,Market Potential
While preparing a project report, the following aspects relating to market
potential of the product should be stated in the report.
24 i. Demand and Supply Position- State the total expected demand for the
product and present supply position. This should also be mentioned how
much of the gap will be filled up by the propOsed unit.
2) i. Expected Price- An exceptedprice of the product should be mentioned
in the project report.
O
Marketing Strategy- Arrangements made for selling the product should be
clearly stated in the project report.
After-Sales Service- Depending upon the nature of the product, provisions
made for after-sales service should normally be stated in the project report.
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 Q CapitalCosts and Sources of Finance
An estimate of the various components of capital items like land and
buildings, plant and machinery, installation costs, preliminary expenses, margin
for working capital should be given in the project report. The present probable
sOurces of finance shouldalso be stated in the project report. The sources should
indicate the owner's funds together with funds raised from financial institutions
and banks.

Assessment of Working Capital Requirements

The requirement for working capital and its sources of supply should be
Carefully and clearly mentioned in the project report. It is always better to
prepare working capital requirements in the prescribed formats designed by
limits of requirement. It willminimize objections from the banker'sside.
30 Other Financial Aspects
In order to adjudge the profitability of the project to be set up, a
projected profit and Loss Account indicating likely sales revenue, cost of
production, allied cost and profit should be prepared. A projected Balance
Sheet and Cash Flow Statement should also be prepared to indicate the
financial position and requirements at various stages of the project.
In addition to above, the Break-Even Analysis should also be presented in
the project report. Break-Even point is the level of production/sales where the
industrial enterprise shall earn neither profit nor incur loss. In fact, it willjust break
even. Break-even level indicates the gestation period and the likely moratorium
required for repayment of loans. Break-Even Point (BEP) is calculated as follows.
BEP=x 100
Where, F=Fixed Cost
S=Sales Projected
V= Variable Cost

Thus, the break-even point so calculated willindicate atwhat percentage of

sales, the enterprise will break even.
Economic and Social variables

Inview of the social responsibility of business, the abatement costs , i.e.

the costs for controlling the environmental damage should be stated in the

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 period. Arrangement made for treating the effluents and
bementioned in the report. emissions should also
Besides, the socio-economic benefits expected to
project should also be stated in the report itself. Following areaccrue from the
the examples of
socio-economic benefits
3 i. Employment,Generation
Import Substitution
34 . Ancillarisation
35 iv. Exports
3ev. Local Resource Utilization
3vi. Development of the Area
22Project Implementation
36 Last but no means the least, every entrepreneur should draw an
implementation scheme or atime table for hi9s project to ensure the timely
completion of all activities involved in setting up an enterprise. Timely
implementation is important because if there is adelay it causes, among other
things, a project cost overrun.In India, delays in project implementation has
become acommon feature. Delay in project implementation jopar4adises the
financial viability of the project, on the one hand, and props up the
entrepreneur to drop the idea to set up an enterprise, on the other. Hence.
there is a need to draW up an implementation schedule for the project and
then to adhere to it.

Following is asimplified implementation schedule for a small project.

An ilustrative Implementation Schedule
Task months 12 3 4 5 6 7 10 11 12 13
1 Formulation of
Project Report
2Application for
Term-Loan
3Term-Loan Sanction
4 Possession of Land
5 Construction
Building
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6 Getting power and
water
7 Placing order for
machinery
Receipt and
Installation of
machinery
9 Manpower
Recruitment
10 Trial Production
11|Commencement of
Commercial
production

The above schedule can be broken up into scores of specific tasks involved in
setting up the enterprise. Project evaluation and Review Technique (PERT) and
Critical Path Method (PCM) and also be used to get better insights into all
activities related to implementation of the project. PERT and CPM analyses are
discussed later in this chapter under Network analysis.
COMMONERROR IN PROJECT FORMULATION
1. Product selection -Without giing due attention to size of the product
market, its future demand, competitive position, life cycle availability of
required labour, raw materials and technology.
2. Capacity utilization estimates- Over -optimistic estimates of capacity
utilization
3. Market Study- Based on nebulous ideas and scanty and scattered
information on demand and supply of their proposed product, the
entrepreneurs conclude that market is just there waiting to tap it.
4. Technology selection- Swaged by the reported profit margins the
entrepreneurs sometime plan for technology not possible to set-upwithing
the limited financial resoUrces.
5. Location selection- The entrepreneur often make two types of errors while
selecting location for their enterprise.

First they are completely swaged by the Govt. offer of financial

incentives and concession to establish industries in a particular location.
This become their sole and overriding concern completely
other factors like nmarket proximity, availability of raw materials,disregarding
and infrastructural facilities. manpower

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