Project

Project's General Information

A project is temporary in that it has a defined beginning and end in time, and therefore defined scope and resources that are ways of organizing resource. It is a group of individuals who are assembled to perform different tasks on a common set of objectives for a defined period of time. A project is refers to that a temporary group of activity designed to produce a unique product, service or a result. A project has defined by following aspects:

1) It is defined a beginning-end schedule and approach; 

2) Uses the resources to allocated works; 

3) Achieves the specific goals within an organized approach; 

4) Usually involves a team of workforce.

Cost Components of a Mill project (capital cost)

1. Cost of land and site development

- Cost Of Land

- Cost Of Leveling/Development

- Cost Of Approach Road

- Cost Of Compound Wall 

2. Cost of Building and Civil Work 

- Factory building

- Raw material go down

- Finished goods storage & packing

- Administrative building

- Conference hall

- Generator room & workshop

- Watchmen Cabin

- Electricity Chamber

3. Cost of plant & machinery

- Milling section

- Paddy bar-boiling/steaming plant

- Steam boiler

- Excuse Duty & Other Taxes

4. Others fixed assets costs 

- Office furniture & fixtures

- Computer

- Electrification & fire fighting equipment.

- Air compressor

- Vehicle (truck)

- Other machinery tools & tackles.

5. Preoperative Expenses

6. Margin Money For Working Capital 

- Raw material

- Electricity charges.

- Salary & wages

- Stores & spares

- Overhead & packing

- Stock of finished goods & goods in process

Project Appraisal

A Project appraisal is refers to the process of assessing, in a structured way, the case for proceeding with a project that is the effort of calculating a project's viability. The processes of a project appraisal are- Initial assessment, define problem and long-list, consult and short-list, develop options, compare and select project.

Factors are to be taken into consideration by a banker during appraisal of a project loan proposal.

The most important factors to be considered during appraisal of project loan proposal are as follows:

1. Professional profile: 

Evaluate the ability to manage the project that must have the experience, skills, determination and self-confidence necessary to successfully carry out the project.

2. Project's viability: 

It should have a business plan that is clear, structured and short, but also covers all the elements of business. It needs to present few years of financial projections as well as an analysis of market size, market potential and positioning.

3. Financial strength: 

It will have to know the personal and business net worth, so bank can judge the ability to meet financial obligations. Bank will also look at past credit history to gauge the future.

4. Collateral: 

Banks often also look for assets to secure a loan. The collateral ensures the safely lending to the customer in case of bad-debt arises in future.

5. Borrower Analysis: 

Share holding, reputation, education, experience – success history, net worth, age etc.

6. Industry Analysis: 

Position, prospect, Risk factors, share in the industry, strength, weakness etc.

7. Historical financial analysis Earning, cash flow, leverage, profitability, etc

- Salary & wages

- Stores & spares

- Overhead & packing

- Stock of finished goods & goods in process.

8. Supplier / Buyer Risk Analysis.

9. Demand Supply position.

10. Technical / Infrastructural feasibility.

11. Management Teams Competence.

12. Seasonality of demand.

13. Debt-Equity Ratio.

Project Management

Difference between Lending Risk Analysis (LRA) and Credit Risk Grading (CRG)

1.	Lending Risk Analysis (LRA)	Lending Risk Analysis (LRA) is a technique by which the loan risk is calculated by Credit department of a bank that need to analyze it when loan application is above 1 crore. The ranking of it is total 140, 120 is for total business risk and another 20 is for total security risk. In LRA, following aspects are analyzed: supplies risk, sales risk, performance risk, resilience risk, management ability, level of managerial teamwork, management competent risk, management integrity risk, security control risk, and security covers risk.
2.	Credit Risk Grading (CRG)	Credit Risk Grading (CRG) is a collective definition based on the pre-specified scale and reflects the underlying credit risk for a given exposure. It deploys a number/ symbol as a primary summary indicator of risks associated with a credit exposure. The proposed CRG scale consists of 8 categories are as: superior, good, acceptable, marginal, special mention, sub-standard, doubtful, and bad & loss.

Project Network

The Risks Factors can make an industry sick. How each factor accelerates the sickness? Or, Factor behind/responsible industrial sickness.

The two categories factors are listed behind that accelerate the industry sickness are discussed below:

A. Internal risk factors:

1. Lack of Finance: 

The weak equity, inefficient working capital, absence of costing & pricing and budgeting, and so on will accelerate the industry sick. 

2. Inefficient Production Policies: 

This includes wrong selection of site is related to production, lack of quality control and standard, research & development, etc. 

3. Marketing factors: 

Inefficient planning and product mix, weak market research and sales promotions are force to industry sickness. 

4. Improper Staffing: 

It includes bad wages and salary administration, bad labor relation, conflicts among the employees and workers. 

5. Ineffective Corporate Management: 

It includes improper corporate planning, lack of coordination, control and integrity in top management, etc. 

B. External risk factors: 

1. Personnel Constraint: 

Unskilled labor, wages disparity, general labor invested in the area will accelerate behind make a sickness. 

2. Marketing Issues: 

The sickness arrives due to liberal licensing policies, changes in global marketing, excessive tax policies by govt. and market recession. 

3. Production problem: 

This arises due to shortage of raw material and its high prices, shortage of power, import-export restrictions. 

4. Financial Issues: 

The sickness arises due to credit restrains policy, delay in loan disbursement, unfavorable investments, etc