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5/22/2018 Report on Project appraisal
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1.INTRODUCTION1.1.IMPORTANCE OF THE STUDYThe object and, therefore, the importance of a project appraisal is making an analysis to see
whether the project is viable. It is vital to know whether a project is technically feasible andwhether it is going to be an economic liability or not.
A project appraisal is an important part of any project and should be taken seriously because
a lot rests on it. The effects of a project appraisal are long reaching and have very definite
long term effects because of the capital investment that is always required in any project.
Once a decision has been made to go ahead with a project, it is irreversible. Even if, through
some catastrophic event, the project has to come to an unpredicted halt, the investment has
been made so all could be lost. These high expenditures can be critical, not just for that
particular project but for the health and survival of the entire business.
Making an effective project appraisal is no easy task because there are can often be
unforeseen circumstances (though a good project manager should be able to cover as many
eventualities as possible). It is also not easy to measure all costs and the potential benefits
of a project. This high degree of uncertainty could undermine the confidence of a project
so it is vital that the appraisal is as thorough as it possibly can be.
It is also important when it comes to a project appraisal to be realistic about the amount of
capital that is going to be tied up, and the length of time that the project is going to take. If
this is not done, it is possible that the business may suffer real hardship because it was
unprepared for the financial constraints placed upon it.
1.2.OBJECTIVE OF THE STUDYEvery work has some specific objective. The main objective of this report is dividing in
two categories:-
Broad Objective
Specific Objective
Firstly to identify the overall scenario of the project appraisal and management at IDBI. Secondly to develop an analysis on the process of project appraisal, analysis of the
projects & its success trend.
1.3.LIMITATION OF THE STUDYThe following limitations are apparent in collecting data and prepare the report-
Time is the first limitation, because the given time is not sufficient to prepare an
assignment covering all the fact to develop a thriving critical analysis on project
appraisal & management.
Another limitation of this report is the lacking information.
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2 BANKING INDUSTRY IN INDIAThe story of Indian coinage itself is very vast and fascinating, and also throw stremendous light
on the various aspects of life during different periods. The Rig Veda speaks only gold, silver
copper and bronze and the later Vedic texts also mention tin, lead, iron and silver. Recentlyiron coins were found in very early levels at Attranji Kheri (U.P.) and Pandu Rajar Dhibi
(Bengal). A money economy existed in India since the days of Buddha.
In ancient India during the Maurya dynasty (321 to 185 BC), an instrument called adesha was
in use, which was an order on a banker desiring him to pay the money of the note to a third
person, which corresponds to the definition of a bill of exchange as we understand it today.
During the Buddhist period, there was considerable use of these instruments. Merchants in
large towns gave letters of credit to one another.
Trade guilds acted as bankers, both receiving deposits and issuing loans. The larger temples
served as bankers and in the south the village communities economically advanced loans to
peasants. There were many professional bankers and moneylenders like the sethi, the word
literally means chief. It has survived in the North India as seth. Small purchases were
regularly paid for in cowry shells (varataka), which remained the chief currency of the poor in
many parts of India. Indigenous banking grew up in the form of rural money lending with
certain individuals using their private funds for this purpose. The scriptures singled out the
vaishyas as the principal bankers. The earliest form of Indian Bill of Exchange was called
Hundi. Exports and import were regulated by barter system.
Kautilyas Arthasastra mentions about a currency known as panas and even fines paid to courts
were made by panas. E. B. Havell in his work: The History of Aryas Rule in India says that
Muhammad Tughlaq issued copper coin as counters and by an imperial decree made them passat the value of gold and silver. The people paid their tribute in copper instead of gold, and they
bought all the necessaries and luxuries they desired in the same coin.
However, the Sultans tokens were not accepted in counties in which his decree did not run.
Soon the whole external trade of Hindustan come to a standstill. When as last the copper tankas
had become more worthless than clods, the Sultan in a rage repealed his edict and proclaimed
that the treasury would exchange gold coin for his copper ones. As a result of this thousands
of men from various quarters who possessed thousands of these copper coins bought them to
the treasury and received in exchange gold tankas. The origin of the word "rupee" is found in
theSanskrit rpya "shaped; stamped, impressed; coin" and also from the Sanskrit word "rupa"meaning silver. The standardisation of currency unit as Rupee in largely due to Sher Shah in
1542.
The English traders that came to India in the 17th century could not make much use of the
indigenous bankers, owing to their ignorance of the language as well the inexperience
indigenous people of the European trade. Therefore, the English Agency Houses in Calcutta
and Bombay began to conduct banking business, besides their commercial business, based on
unlimited liability. The Europeans with aptitude of commercial pursuit, who resigned from
civil and military services, organized these agency houses.
A type of business organization recognizable as managing agency took form in a period from
1834 to 1847. The primary concern of these agency houses was trade, but they branched out
into banking as aside line to facilitate the operations of their main business. The English agency
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houses, that began to serve as bankers to the East India Company had no capital of their own,
and depended on deposits for their funds. They financed movements of crops, issued paper
money and established joint stock banks. Earliest of these was Hindusthan Bank, established
by one of the agency houses in Calcutta in 1770.
Banking in India originated in the last decades of the 18th century. The first banks were TheGeneral Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;
both are now defunct. The oldest bank in existence in India is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank
of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay
and the Bank of Madras, all three of which were established under charters from the British
East India Company. For many years the Presidency banks acted as quasi-central banks, as did
their successors. The three banks merged in 1921 to form the Imperial Bank of India, which,
upon India's independence, became the State Bank of India.
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and
still functioning today, is the oldest Joint Stock bank in India.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;
branches in Madras and Pondicherry, then a French colony, followed. HSBC established itself
in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade
of the British Empire, and so became a banking centre.
The next was the Punjab National Bank, established in Lahore in 1895, which has survived to
the present and is now one of the largest banks in India. The presidency banks dominated
banking in India but there were also some exchange banks and a number of Indian joint stockbanks. All these banks operated in different segments of the economy. The exchange banks,
mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks
were generally undercapitalized and lacked the experience and maturity to compete with the
presidency and exchange banks.
The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi
movement. The Swadeshi movement inspired local businessmen and political figures to found
banks of and for the Indian community. A number of banks established then have survived to
the present such asBank of India,Corporation Bank, Indian Bank,Bank of Baroda,Canara
Bank andCentral Bank of India.
The fervour of Swadeshi movement lead to establishing of many private banks inDakshina
Kannada andUdupi district which were unified earlier and known by the name South Canara(
South Kanara ) district. Four nationalised banks started in this district and also a leading private
sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian
Banking".
During theFirst World War (19141918) through the end of theSecond World War (1939
1945), and two years thereafter until the independence of India were challenging for Indian
banking. The years of the First World War were turbulent, and it took its toll with banks simply
collapsing despite the Indian economy gaining indirect boost due to war-related economic
http://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independencehttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Indian_independencehttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Bank_of_India5/22/2018 Report on Project appraisal
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activities. At least 94 banks in India failed between 1913 and 1918 as indicated in the following
table:
YearsNumber of banks
that failed
Authorised Capital
( Lakhs)
Paid-up Capital
( Lakhs)
1913 12 274 35
1914 42 710 109
1915 11 56 5
1916 13 231 4
1917 9 76 25
1918 7 209 1
Table No. 1
2.1POST-INDEPENDENCEThepartition of India in 1947 adversely impacted the economies ofPunjab andWest Bengal,
paralysing banking activities for months. India'sindependence marked the end of a regime of
theLaissez-faire for the Indian banking. TheGovernment of India initiated measures to play
an active role in the economic life of the nation, and the Industrial Policy Resolution adopted
by the government in 1948 envisaged amixed economy.This resulted into greater involvementof the state in different segments of the economy including banking and finance. The major
steps to regulate banking included:
The Reserve Bank of India, India's central banking authority, was established in April1935, but was nationalised on 1 January 1949 under the terms of the Reserve Bank of India
(Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[6]
In 1949, the Banking Regulation Act was enacted which empowered theReserve Bank ofIndia (RBI) "to regulate, control, and inspect the banks in India".
The Banking Regulation Act also provided that no new bank or branch of an existing bankcould be opened without a license from the RBI, and no two banks could have commondirectors.
2.2NATIONALIZATION PROCESSNationalization of banks in India was an important phenomenon. Despite the provisions,
control and regulations of Reserve Bank of India, banks in India except the State Bank of India
or SBI, continued to be owned and operated by private persons. By the 1960s, the Indian
banking industry had become an important tool to facilitate the development of the Indian
economy. At the same time, it had emerged as a large employer, and a debate had ensued about
the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India,
expressed the intention of the Government of India in the annual conference of the All India
http://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Indian_independencehttp://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Banking_in_India#cite_note-6http://en.wikipedia.org/wiki/Banking_in_India#cite_note-6http://en.wikipedia.org/wiki/Banking_in_India#cite_note-6http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Banking_in_India#cite_note-6http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/wiki/Indian_independencehttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/Partition_of_India5/22/2018 Report on Project appraisal
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Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The meeting
received the paper with enthusiasm.
Thereafter, her move was swift and sudden. The Government of India issued an ordinance and
nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969.
Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies(Acquisition and Transfer of
Undertaking) Bill, and it received the presidential approval on 9 August 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery. With
the second dose of nationalization, the Government of India controlled around 91% of the
banking business of India. Later on, in the year 1993, the government merged New Bank of
India with Punjab National Bank. It was the only merger between nationalized banks and
resulted in the reduction of the number of nationalized banks from 20 to 19. Currently there
are 27 nationalized commercial banks.
2.3LIBERALIZATIONIn the early 1990s, the then government embarked on a policy of liberalization, licensing a
small number of private banks. These came to be known asNew Generation tech-savvy banks,
and included Global Trust Bank (the first of such new generation banks to be set up), which
later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis
Bank),ICICI Bank andHDFC Bank.This move, along with the rapid growth in theeconomy
of India, revitalised the banking sector in India, which has seen rapid growth with strong
contribution from all the three sectors of banks, namely, government banks, private banks and
foreign banks.
The next stage for the Indian banking has been set up with the proposed relaxation in the norms
for foreign direct investment, where all foreign investors in banks may be given voting rights
which could exceed the present cap of 10% at present. It has gone up to 74% with some
restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time, were used
to the 464 method (borrow at 4%; lend at 6%; go home at 4) of functioning. The new wave
ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this
led to the retail boom in India. People demanded more from their banks and received more.
http://en.wikipedia.org/wiki/Economic_liberalisation_in_Indiahttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/Economic_liberalisation_in_India5/22/2018 Report on Project appraisal
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MAJOR PLAYERS:-
The major players in the public sector according to market capitalization are
(As on 18THJUNE, 2014)
NAME Last Price % Chg52 wk
High
52 wk
Low
Market Cap
(Rs. cr)
SBI 2,638.15 -0.61 2,833.85 1,452.90 196,957.18
Bank of Baroda 858.05 -2.05 1,009.00 429.25 36,954.41
PNB 977.20 -0.33 1,068.00 402.20 35,381.47
Bank of India 290.75 -3.10 356.75 126.95 23,081.48
Canara Bank 441.30 -2.30 498.00 189.90 20,355.35
IDBI Bank 105.15 -2.32 116.50 52.30 16,865.42
Union Bank 230.85 -2.47 259.60 97.10 14,550.62
Central Bank 77.90 -1.70 88.85 43.05 10,519.92
UCO Bank 102.40 -2.98 115.75 46.00 10,390.62
Syndicate Bank 159.20 -1.49 177.85 61.05 9,943.39
IOB 79.80 -3.51 89.90 37.15 9,858.08
Oriental Bank 315.90 -3.56 377.30 121.40 9,472.22
Indian Bank 177.05 0.91 198.90 60.50 8,230.14
Allahabad Bank 133.20 -4.28 148.45 64.90 7,254.20
Corporation Bk 400.00 0.16 417.50 220.10 6,701.68
Andhra Bank 97.35 -2.99 110.00 47.30 5,739.90
Vijaya Bank 53.35 -2.91 58.80 33.40 4,583.40
Dena Bank 84.05 -0.65 94.40 41.85 4,520.35
Bank of Mah 47.85 -2.05 58.00 29.10 4,015.07
State B Bikaner 546.40 -0.66 595.90 281.90 3,824.80
State Bk Travan 611.00 0.02 650.00 364.50 3,620.39
State Bk Mysore 565.00 -0.49 604.80 368.00 2,712.76
United Bank 45.70 -1.40 55.15 23.40 2,535.20
Punjab & Sind 72.20 -1.57 83.90 36.75 1,987.55
UTI - Gold 2530.17 0.00 3050.00 2375.00 351.24
Table No. 2
Sources:http://www.moneycontrol.com/stocks/top-companies-in-india/total-assets-bse/banks-
public-sector.html
http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankindia/SBIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofbaroda/BOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabnationalbank/PNB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofindia/BOIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/canarabank/CB06http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/idbibank/IDB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unionbankindia/UBI01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/centralbankindia/CBO01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/ucobank/UCOhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/syndicatebank/SB9http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianoverseasbank/IOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/orientalbankcommerce/OBChttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianbank/IB04http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/allahabadbank/AB15http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/corporationbank/CBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/andhrabank/AB14http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/vijayabank/VB03http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/denabank/DBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankmaharashtra/BM05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankbikanerjaipur/SBB02http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebanktravancore/SBThttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankmysore/SBMhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unitedbankindia/UBOhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabsindbank/PSBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabsindbank/PSBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unitedbankindia/UBOhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankmysore/SBMhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebanktravancore/SBThttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankbikanerjaipur/SBB02http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankmaharashtra/BM05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/denabank/DBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/vijayabank/VB03http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/andhrabank/AB14http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/corporationbank/CBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/allahabadbank/AB15http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianbank/IB04http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/orientalbankcommerce/OBChttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianoverseasbank/IOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/syndicatebank/SB9http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/ucobank/UCOhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/centralbankindia/CBO01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unionbankindia/UBI01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/idbibank/IDB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/canarabank/CB06http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofindia/BOIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabnationalbank/PNB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofbaroda/BOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankindia/SBI5/22/2018 Report on Project appraisal
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The major players in the Private Sector along with Foreign Banks according to market
Capitalization is
(As on 18THJUNE, 2014)
NAME Last Price % Chg 52 wkHigh
52 wkLow
Market Cap(Rs. cr)
HDFC Bank 834.00 -1.47 856.00 528.00 200,801.87
ICICI Bank 1,420.40 -1.98 1,590.35 758.80 164,237.73
Axis Bank 1,847.20 0.42 1,990.00 764.00 87,050.22
Kotak Mahindra 960.00 2.19 960.00 588.00 73,964.85
IndusInd Bank 541.30 -2.04 585.00 318.00 28,499.22
Yes Bank 543.00 -1.60 588.00 216.10 22,518.77ING Vysya Bank 635.20 -0.51 723.15 405.50 12,050.88
Federal Bank 126.35 1.00 130.00 44.25 10,806.90
JK Bank 1,599.85 -2.02 1,995.00 995.00 7,755.72
Karur Vysya 458.05 -1.80 501.00 297.65 4,914.28
City Union Bank 73.70 0.48 78.95 37.95 4,007.79
South Ind Bk 28.25 0.71 30.05 18.95 3,802.60
Karnataka Bank 133.75 -2.23 150.75 69.10 2,520.07DCB Bank 75.45 4.00 77.90 38.05 1,889.80
Stan Chart IDR 121.50 -0.08 133.00 108.00 1,458.00
Lakshmi Vilas 103.00 -1.53 109.20 57.50 1,004.88
Dhanlaxmi Bank 53.20 -4.23 61.00 24.20 669.97
Table No. 3
Sources:http://www.moneycontrol.com/stocks/top-companies-in-india/total-assets-bse/banks-
private-sector.html
http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/hdfcbank/HDF01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/icicibank/ICI02http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/axisbank/AB16http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/kotakmahindrabank/KMBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/indusindbank/IIBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/yesbank/YBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/ingvysyabank/INGhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/federalbank/FBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/jammukashmirbank/JKBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/karurvysyabank/KVBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/cityunionbank/CUBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/southindianbank/SIBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/karnatakabank/KB04http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/developmentcreditbank/DCB01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/standardcharteredplc/SCB01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/lakshmivilasbank/LVBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/dhanlaxmibank/DB01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/dhanlaxmibank/DB01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/lakshmivilasbank/LVBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/standardcharteredplc/SCB01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/developmentcreditbank/DCB01http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/karnatakabank/KB04http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/southindianbank/SIBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/cityunionbank/CUBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/karurvysyabank/KVBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/jammukashmirbank/JKBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/federalbank/FBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/ingvysyabank/INGhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/yesbank/YBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/indusindbank/IIBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/kotakmahindrabank/KMBhttp://www.moneycontrol.com/india/stockpricequote/banksprivatesector/axisbank/AB16http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/icicibank/ICI02http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/hdfcbank/HDF015/22/2018 Report on Project appraisal
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IDBI RANKING AND PROFIT UNDER DIFFERENT HEADS
RANK CRITERIA NET PROFIT (Rs. Cr)
6 MARKET CAPITALIZATION 16921.56
6 NET SALES 26597.51
12 NET PROFIT 1121.40
5 TOTAL ASSETS 295005.31
5 0THER INCOME 171.08
14 EMPLOYEE COST 5.61
6 PBDIT 21810.61
6 INTEREST 20576.04
5 TAX 619.73
19 EPS 6.99
5 INVESTMENT 103733.50
7 CASH/BANK 16817.91
6 DEBT 295919.92
6 CONTIGENT LIABILITIES 196540.68
Table No. 4
Sources:http://www.moneycontrol.com/stocks/top-companies-in-india/banks-private-
sector.html
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Return on Assets and Return on Equity of SCBsBank Group-wise
(Per cent)
Sr.no. Bank group/year Return on Assets Return on Equity
2011- 12 2012- 13 2011- 12 2012- 13
1 Public sector banks 0.88 0.78 15.33 13.24
1.1 Nationalised banks 0.88 0.74 15.05 12.34
1.2 SBI Group 0.89 0.88 16.00 15.29
2 Private sector banks 1.53 1.63 15.25 16.46
2.1 Old private sector banks 1.20 1.26 15.18 16.22
2.2 New private sector banks 1.63 1.74 15.27 16.51
3 Foreign banks 1.76 1.94 10.79 11.52
All SCBs 1.08 1.03 14.60 13.84
Table No. 5
Notes:
1. Return on Assets = Net profit/Average total assets.2. Return on Equity = Net profit/Average total equity.3. * Nationalised banks include IDBI Bank Ltd.
Source: RBI
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3 COMPANY PROFILE3.1HISTORYThe Industrial Development Bank of India (IDBI) was established in 1964 under an Act of
Parliament as a wholly owned subsidiary of the Reserve Bank of India. In 1976, the ownership
of IDBI was transferred to the Government of India and it was made the principal financial
institution for coordinating the activities of institutions engaged in financing, promoting and
developing industry in India. IDBI provided financial assistance, both in rupee and foreign
currencies, for green-field projects as also for expansion, modernization and diversification
purposes. In the wake of financial sector reforms unveiled by the government since 1992, IDBI
also provided indirect financial assistance by way of refinancing of loans extended by State-
level financial institutions and banks and by way of rediscounting of bills of exchange arising
out of sale of indigenous machinery on deferred payment terms.
After the public issue of IDBI in July 1995, the Government shareholding in the Bank came
down from 100% to 75%. IDBI played a pioneering role, particularly in the pre-reform era
(196491), in catalyzing broad based industrial development in India in keeping with its
Government-ordained development banking charter. Some of the institutions built with the
support of IDBI are the Securities and Exchange Board of India (SEBI), National Stock
Exchange of India (NSE), the National Securities Depository Limited (NSDL), the Stock
Holding Corporation of India Limited (SHCIL), theCredit Analysis & Research Ltd,theExim
Bank (India), the Small Industries Development Bank of India (SIDBI) and
theEntrepreneurship Development Institute of India.
Industrial Development Bank of India (IDBI Bank) is today one of Indias largest commercialBanks. For over 40 years, IDBI Bank has essayed a key nation-building role, first as the apex
Development Financial Institution (DFI) (July 1, 1964 to September 30, 2004) in the realm of
industry and thereafter as a full-service commercial Bank (October 1, 2004 onwards). As a
DFI, the erstwhile IDBI stretched its canvas beyond mere project financing to cover an array
of services that contributed towards balanced geographical spread of industries, development
of identified backward areas, emergence of a new spirit of enterprise and evolution of a deep
and vibrant capital market.
On October 1, 2004, the erstwhile IDBI converted into a Banking company (as Industrial
Development Bank of India Limited) to undertake the entire gamut of Banking activities whilecontinuing to play its secular DFI role. Post the mergers of the erstwhile the bank with its parent
company (IDBI Ltd.) on April 2, 2005 (appointed date: October 1, 2004) and the subsequent
merger of the erstwhile United Western Bank with IDBI Bank on October 3, 2006, the tech-
savvy, new generation Bank with majority Government shareholding today touches the lives
of millions of Indians through an array of corporate, retail, SME and Agri products and
services.
As on March 31, 2011, the Bank had a network of 598 centers, 833 Branches and 1455 ATMs.
Headquartered in Mumbai, IDBI Bank today rides on the back of a robust business strategy, a
highly competent and dedicated workforce and a state-of-the-art information technology
http://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_Indiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/Stock_Holding_Corporation_of_India_Limitedhttp://en.wikipedia.org/wiki/Stock_Holding_Corporation_of_India_Limitedhttp://en.wikipedia.org/w/index.php?title=Credit_Analysis_%26_Research_Ltd&action=edit&redlink=1http://en.wikipedia.org/wiki/Exim_Bank_(India)http://en.wikipedia.org/wiki/Exim_Bank_(India)http://en.wikipedia.org/wiki/Small_Industries_Development_Bank_of_Indiahttp://en.wikipedia.org/wiki/Entrepreneurship_Development_Institute_of_Indiahttp://en.wikipedia.org/wiki/Entrepreneurship_Development_Institute_of_Indiahttp://en.wikipedia.org/wiki/Small_Industries_Development_Bank_of_Indiahttp://en.wikipedia.org/wiki/Exim_Bank_(India)http://en.wikipedia.org/wiki/Exim_Bank_(India)http://en.wikipedia.org/w/index.php?title=Credit_Analysis_%26_Research_Ltd&action=edit&redlink=1http://en.wikipedia.org/wiki/Stock_Holding_Corporation_of_India_Limitedhttp://en.wikipedia.org/wiki/Stock_Holding_Corporation_of_India_Limitedhttp://en.wikipedia.org/wiki/National_Securities_Depository_Limitedhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India5/22/2018 Report on Project appraisal
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platform, to structure and deliver personalized and innovative Banking services and customized
financial solutions to its clients across various delivery channels.
3.2VISIONTo be the most preferred and trusted bank enhancing value for all stakeholders.
3.3MISSIONo Delighting customers with our excellent service and comprehensive suite of best-in-class
financial solutions
o Touching more people's lives with our expanding retail footprint while maintaining ourexcellence on corporate and infrastructure financing
o Continuing to act in an ethical, transparent and responsible manner, becoming the rolemodel for corporate governance
o Deploying world class technology, systems and processes to improve business efficiencyand exceed customers expectations
o Encouraging a positive, dynamic and performance-driven work culture to nurtureemployees grow them and build a passionate and committed work force
o Expanding our global presenceo Relentlessly striving to become a greener bank.3.4MERGERSIndustrial Development Bank of India Limited
In response to the felt need and on commercial prudence, it was decided to transform IDBI into
a Bank. For the purpose, Industrial Development bank (transfer of undertaking and Repeal)
Act, 2003 [Repeal Act] was passed repealing the Industrial Development Bank of India Act,
1964. In terms of the provisions of the Repeal Act, a new company under the name of Industrial
Development Bank of India Limited (IDBI Ltd.) was incorporated as a Govt. Company under
the Companies Act, 1956 on September 27, 2004. Thereafter, the undertaking of IDBI was
transferred to and vested in IDBI Ltd. with effect from the effective date of October 01, 2004.
In terms of the provisions of the Repeal Act, IDBI Ltd. has been functioning as a Bank in
addition to its earlier role of a Financial Institution.
Merger of IDBI Bank Ltd. With IDBI Ltd.
Towards achieving the faster inorganic growth of the bank Ltd., a wholly owned subsidiary of
IDBI Ltd, was amalgamated with IDBI Ltd. In terms of the provisions of Section 44A of the
Banking Regulation Act, 1949 providing for voluntary amalgamation of two banking
companies. The merger became effective from April 02, 2005.
Merger of United Western Bank with IDBI Ltd.
The United Western Bank Ltd. (UWB), a Satara based private sector bank was placed under
moratorium by RBI. Upon IDBI Ltd. Showing interest to take over the said bank towards its
further inorganic growth, RBI and Govt. of India amalgamated UWB with IDBI Ltd. In terms
of the provisions of Section 45 of the Banking Regulation Act, 1949. The merger came into
effect on October 03, 2006.
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Change of name of IDBI Ltd. toIDBI Bank Ltd.
In order that the name of the Bank truly reflects the functions it is carrying on, the name of the
Bank was changed to IDBI Bank Limited and the new name became effective from 07 May,
2008 upon issue of the Fresh Certificate of Incorporation by Registrar of Companies,
Maharashtra. The Bank has been accordingly functioning in its present name of IDBI BankLtd.
3.5BANKS PROFILEIDBI Bank Ltd. is today one of India's largest commercial Banks. For over 40 years, IDBI Bank
has essayed a key nation-building role, first as the apex Development Financial Institution
(DFI) (July 1, 1964 to September 30, 2004) in the realm of industry and thereafter as a full-
service commercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched
its canvas beyond mere project financing to cover an array of services that contributed towards
balanced geographical spread of industries, development of identified backward areas,
emergence of a new spirit of enterprise and evolution of a deep and vibrant capital market. On
October 1, 2004, the erstwhile IDBI Bank converted into a Banking company (as Industrial
Development Bank of India Limited) to undertake the entire gamut of Banking activities while
continuing to play its secular DFI role. Post the mergers of the erstwhile IDBI Bank with its
parent company (IDBI Ltd.) on April 2, 2005 (appointed date: October 1, 2004) and the
subsequent merger of the erstwhile United Western Bank Ltd. with IDBI Bank on October 3,
2006, the tech-savvy, new generation Bank with majority Government shareholding today
touches the lives of millions of Indians through an array of corporate, retail, SME and Agri
products and services.
Headquartered in Mumbai, IDBI Bank today rides on the back of a robust business strategy, ahighly competent and dedicated workforce and a state-of-the-art information technology
platform, to structure and deliver personalised and innovative Banking services and customised
financial solutions to its clients across various delivery channels.
As on March 31, 2013 IDBI Bank has a balance sheet of Rs. 3,22,769 crore and business size
(deposits plus advances) of Rs 4,23,423 crore. As an Universal Bank, IDBI Bank, besides its
core banking and project finance domain, has an established presence in associated financial
sector businesses like Capital Market, Investment Banking and Mutual Fund Business. Going
forward, IDBI Bank is strongly committed to work towards emerging as the 'Bank of choice'
and 'the most valued financial conglomerate', besides generating wealth and value to all its
stakeholders.
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3.6ORGANISATIONAL STRUCTURE
Fig No. 1
KEY EXECUTIVES
S.No Name Designation
1 M S Raghavan Chairman
3 M S Raghavan Managing Director
2 Pawan Agrawal Company Secretary
4 Snehlata Shrivastava Non-Executive Director5 BK Batra Deputy Managing Director
6 Melwyn Rego Deputy Managing Director
7 Subhash Tuli Independent Director
8 P S Shenoy Independent Director
9 S Ravi Independent Director
10 Ninad Karpe Independent Director
11 Pankaj Vats Independent Director
Table No. 6
IDBI BANK LTD
CORPORATE BANKING
LARGE CORPORATE GROUP (LCG)
MID CORPORATE GROUP (MCG)
INFRASTRUCTURE CORPORATE GROUP(ICG)
RETAIL BANKING
PERSONAL BANKING
MSME
AGRI BUSINESS GROUP
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3.7PRODUCTS & SERVICES1. Deposits: Different types of deposits areo Savings Accounto Flexi Current Accounto Flexi Depositso Capital Gains Account2. Loans:Different types of loan services available areo Home Loano Home Loan Interest Savero Loan against Propertyo Loan against Property - Overdrafto Loan against PropertyInterest Savero Loan for commercial Property Purchaseo Loan for Rent Receivableso Education Loano Personal Loano Auto Loan Loans Against Securitieso Reverse Mortgage Loano Corporate Loan3. Cards:Different types of cards & their services available areo Revision Debit Card Loyalty Pointso Cash at POS facility on Debit Cardso Online Payment through Debit Cardso Being ME Debit Cardo International Debit cum ATM cardo
Gold Debit cum ATM cardo IDBI Bank Cash cardo IDBI Bank Gift Cardo Kids Debit Cardo Platinum Cardo World/Global Currency Cardo Womens Debit Cardo Debit Card Offerso Magic Card4. 24 Hours Banking:o Phone Bankingo Mobile Bankingo Account Alerto Internet Bankingo Mobile Payment Service5. Corporate Banking:Corporate Banking products includeo Project Appraisalo Debt Syndicationo Advisory Serviceso Environmental Serviceso Secured and Structured Product Serviceso Film Financing Schemeo Carbon Credit
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o Cash Management Serviceso Trade Financeo Tax Payments6. Investment Advisory:Service includeso Mutual Fundo Life Insuranceo General Insuranceo New Pension Scheme7. SME Finance8. Agri Business9. Lockers10.Foreign Currency Products11.Treasury12.NRI Services
3.8CUSTOMERSFollowing table consists of a partial list of customers of IDBI Bank
Infrastructure FinancingDebt Syndication and
Advisory ServicesSecuritization
Bharti Shipyard Ltd. Videocon Industries Shriram City Union Finance
Suzlon Energy Ltd. Pipavav Shipyard Standard Chartered Bank
GMR Power Corporation
Pvt. LtdXL Telecom and Energy Tata Motors Finance Ltd.
KMC Construction Ltd. JSW Cement Muthoot Fincorp Ltd.
Table No. 7
3.9COMPETITORSFollowing table gives a partial list of competitors of IDBI Bank Ltd.
Public Sector Bank Private Sector Bank Foreign Bank
SBI HDFC Bank ABN AmroPNB ICICI Bank BNP Paribas
Bank OF Baroda Axis Bank Deutsche Bank
Canara Bank Kotak Mahindra Bank Citibank
Bank of India Federal Bank HSBC
Union Bank of India Yes Bank Standard Chartered Bank
Table No. 8
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3.10 BASIC FINANCIAL ANALYSISRatio Analysis:
Ratios Mar12 Mar13 Mar14
Liquidity Ratio
Current Ratio CA/CL .02 0.03 0.03
Quick Ratio QA/CL 27.11 24.82 23.11
Profitability Ratio
ROA PAT/Assets 137.47 159.33 147.38
Return on Net Worth (%) PAT/Net Worth 11.56 8.86 4.74
Profit Margin PAT/Sales 7.99 6.65 3.79
Solvency Ratios
Debt Ratio Debt/Equity 13.5872
Equity Multiplier Total Assets/ Total Equity 14.9701
Activity Ratios
Debtors Turnover Sales/ Avg Debtors 0.0961
Total Asset turnover Sales/Total Assets 0.09 0.08 0.08
Market Value Ratios
P/E Ratio Price per Share/EPS 5.48
Market to Book Ratio MV per Share/ BV per Share 0.65
Table No. 9
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4.PROJECT APPRAISALS4.1 INTRODUCTION OF PROJECTA Project is defined as a collection of linked activities, carried out in an organized manner with
a clearly defined start point and finish point, to achieve some specific results that satisfy theneeds of an organization as derived from the current business plans.
Creativity and idea generation are not the exclusive territory of the management. It is the people
who do the day-to-day operational work and often have the best ideas to improve organizational
performance. Continuous improvement is not an initiative or campaign but should be part of
everyday work and a way of life for everyone, seeking always to find better ways to do the job
to make organization more effective and more efficient. Sometimes good ideas that come from
continuous improvement activity in one part of the organization may have benefits to other
functions.
4.1.1 THE DYNAMIC LIFECYCLE OF A PROJECT:There are four phases of Project Lifecycle:
1. Definition: The start of the project once needs have been clearly identified and theproject can be defined with the agreement of those people with an interest in the
outcomes.
2. Planning:The process of planning the project to derive a realistic schedule taking intoaccount the constraints imposed on the project.
3. Execution: Launching the project work ensuring everyone understand the plan isalways up to date with changes that occur.
4. Closure:Preparing your customer for acceptance and handover to ensure the projecthas delivered the agreed outcomes, any follow-on activities are identified and assigned
and the project evaluation process is completed.
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REDIFINE
REPLAN
Fig: The four Phases and the dynamic action cycle
4.1.2
PHASES OF PROJECT:Project Identification
Project Selection
Preparation of Project Report
Appraisal of Project
Sanction of Financial
Documentation & Disbursement
Supervision & Follow up
Recovery of Loan Sanction
PHASE
1
PHASE
4PHASE
3
CONCEPTION & DEFINITION
PLANNING
&SCHEDULING
HAND-OVER&CLOSURE
EXECUTING THE PROJECT WORK
DEFINEOBJECT
IVES
COMMUNIC
ATE
THE
MONITOR
PROGR
ESS
PLAN THE
WORK
REVIEW &
EVALU
ATE
MONITOR
PROGR
ESS
PROBLEMPROBLEM
PHASE
2
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4.1.3 PROJECTS COMING TO BANKS FOR FINANCING:1 NEW PROJECTS For setting up new units.
2 EXPANSION PROJECTS For increasing the capacity of existing units.
3DIVERSIFICATION OF
PROJECTS
For manufacturing new products by existing
units.
4BACKWARD INTEGRATION
PROJECTS
For manufacturing certain products which are
being used as raw materials by the existing
unit.
5FORWARD INTEGRATION
PROJECTS
For manufacturing certain products which
require the products of existing unit as raw
materials.
6 MODERNISATION PROJECTS
It can be any one or more than one of the
following objects
a) Changing obsolete machinery.b) Enlarging the product mix/product
range to meet changing requirements of
the market.
c) Reducing the manufacturing cost or forimproving the quality of the product.
d) Changing the requirement of rawmaterial.
7REHABILITATION
PROGRAMME
For reviving sick units and making them viable
to complete with normal/health units.
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4.2 PROJECT APPRAISALProject appraisal is the structured process of assessing the viability of a project or proposal. It
involves calculating the feasibility of the project before committing resources to it. It is a tool
that companys use for choosing the best project that would help them to attain their goal.
Project appraisal often involves making comparison between various options and this done by
making use of any decision technique or economic appraisal technique.
Project appraisal is a tool which is also used by companies to review the projects completed by
it. This is done to know the effect of each project on the company. This means that the project
appraisal is done to know, how much the company has invested on the project and in return
how much it is gaining from it.
The process of project appraisal consists of five steps and they areinitial assessment, defining
problem and long-list, consulting and short-list, developing options, and comparing and
selecting project. The process of appraisal generally starts from the initial phase of the project.
If the appraisal process starts from an early stage, then the company will be in a better position
to decide how capital should be spend in the project and also it will help them to make the
decision of not spending too much or stopping a project that is not economically viable.
Project appraisal is the process of assessing and questioning proposals before resources are
committed. It is an essential tool for effective action in community renewal. Its a means by
which partnerships can choose the best projects to help them achieve what they want for their
community.
But appraisal has been a source of confusion and difficulty for projects in the past. Audits of
the operation of Single Project Budget schemes have highlighted concerns about the design
and operation of project appraisal systems, including:
Mechanistic, inflexible systems A lack of independence and objectivity A lack of clear definition of the stages of appraisal and of responsibility for these stages A lack of documentary evidence after carrying out the appraisalIts no surprise that audits or inspections arent impressed with the quality of appraisals, and
are specifically found with problems like;
Individual appraisals which do not cover the necessary information or provide only asuperficial analysis of the project
Particular problems in dealing with risks, options and value for money Appraisals which are considered too onerous/burdensome for smaller projects Rushed appraisalsProject appraisal is a requirement before funding of programs is done. But tackling problems
like those outlined above is about more than getting the systems right on paper. Experience in
projects emphasizes the importance of developing an appraisal culture which involves
developing the right system for local circumstances and ensuring that everyone involved
recognizes the value of project appraisal and has the knowledge and skills necessary to play
their part in it.
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Project appraisal helps project initiators and designers to;
Be consistent and objective in choosing projects Make sure their program benefits all sections of the community, including those fromethnic groups who have been left out in the past
Provide documentation to meet financial and audit requirements and to explaindecisions to local people.Appraisal justif ies spending money on a project.
Appraisal asks fundamental questions about whether funding is required and whether a project
offers good value for money. It can give confidence that public money is being put to good
use, and help identify other funding to support a project. Getting it right may help a community
make its resources go further in meeting local need
Appraisal is an important decision making tool.
Appraisal involves the comprehensive analysis of a wide range of data, judgments and
assumptions, all of which need adequate evidence. This helps ensure that projects selected forfunding:
o Will help a partnership achieve its objectives for its areao Are deliverableo Involve local people and take proper account of the needs of people from ethnic minorities
and other minority groups
o Are sustainableo Have sensible ways of managing risk.Appraisal lays the foundations for delivery.
Appraisal helps ensure that projects will be properly managed, by ensuring appropriatefinancial and monitoring systems are in place, that there are contingency plans to deal with
risks and setting milestones against which progress can be judged.
Getting the system right .
The process of project development, appraisal and delivery is complex and partnerships need
systems, which suit local circumstances and organization. Good appraisal systems should
ensure that:
o Project application, appraisal and approval functions are separate. All the necessaryinformation is gathered for appraisal, often as part of project development in which projects
will need support.o Race/tribal equality and other equality issues are given proper consideration.o Those involved in appraisal have appropriate information and training and make
appropriate use of technical and other expertise.
o There are realistic allowances for time involved in project development and appraisal.o Decisions are within a implementers powers.o There are appropriate arrangements for very small projects.o There are appropriate arrangements for dealing with novel, contentious or particularly risky
projects.
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4.2.1 ROLE OF PROJECT APPRAISAL:Project appraisal helps a partnerships management to: -
Be consistent and objective in choosing projects Make sure its program benefits all sections of the community, including those from
ethnic groups who have been left out in the past
Provide documentation to meet financial and audit requirements and to explaindecisions to local people.
Appraisal justifies spending money on a project
Appraisal asks fundamental questions about whether funding is required and whether a
project offers good value for money. It can give confidence that public money is being
put to good use, and help identify other funding to support a project. Getting it right may
help a partnership make its resources go further in meeting local need.
Appraisal is an important decision making toolAppraisal involves the comprehensive analysis of a wide range of data, judgments and
assumptions, all of which need adequate evidence. This helps ensure that projects
selected for funding:
Will help a partnership achieve its objectives for its area
Are deliverable
Involve local people and take proper account of the needs of people from ethnic
minorities and other minority groups
Are sustainable
Have sensible ways of managing risk.
Appraisal lays the foundations for delivery
Appraisal helps ensure that projects will be properly managed, by ensuring appropriate
financial and monitoring systems are in place, that there are contingency plans to deal
with risks and setting milestones against which progress can be judged.
4.2.2 METHODOLOGY OF PROJECT APPRAISAL:Appraisal involves a careful checking of the basic data, assumptions and methodology used
in project preparation, an in-depth review of the work plan, cost estimates and proposed
financing, an assessment of the projects organizational and management aspects, and
finally the viability of project.
It is mandatory for the Project Authorities to undertake project appraisal or at least give
details of financial, economic and social benefits and suitably. These projects are examined
in the Planning and Development Division from the technical,
institutional/organizational/managerial, financial and economic point of view depending
on nature of the project. On the basis of such an assessment, a judgment is reached as to
whether the project is technically sound, financially justified and viable from the point of
view of the economy as a whole.
In the Planning and Development Division, there is a division of labor in the appraisal ofprojects prepared by the concerned Executing Agencies. The concerned Technical Section
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in consultation with other technical sections i.e.; Physical Planning & Housing, Manpower,
Governance and Environment sections undertake the technical appraisal, wherever
necessary. This covers engineering, commercial, organizational and managerial aspects,
while the Economic Appraisal Section carries out the pre-sanction appraisal of the
development projects from the financial and economic points of view. Economic appraisalof a project is concerned with the desirability of carrying out the project from the standpoint
of its contribution to the development of the national economy. Whereas financial analysis
deals with only costs and returns to project participants, economic analysis deals with costs
and returns to society as a whole. The rationale behind the project appraisal is to provide
the decision-makers with financial and economic yardsticks for the selection/rejection of
projects from among competing alternative proposals for investment.
Necessary to Conduct Project Management Appraisal (PMA): -
A project management appraisal should be viewed as a useful, constructive and necessary
diagnostic tool available for augmenting the capability of the sponsoring organization'sproject management team.
It can be used to provide information ranging from an informal enquiry to an extensive
analysis of the effectiveness of every aspect of the project management process. In the latter
context it can be conducted to ferret out common failings of many project management
arrangements. Some of these common failings include:
Management on the project may be unable to see the forest for the trees.
Decisions may be being unduly biased by contractual commitments already in existence,
rather than being made in the best interests of the final project results
Decisions may be similarly biased unduly by corporate policy
Short term political expediency may be overwhelming (Crisis management)
Key individuals on the project may be under the influence of some form of illegal pressure
Management on the project may simply be naive, inexperienced, lack sufficient training in
project management skills, or otherwise ill prepared for the difficult tasks at hand
Use of Project Management Appraisal (PMA): -
Identify the strengths of current practices in a project management organization, or on an
existing project
Establish how various groups within the organization perceive the organization's
effectiveness in managing projects
Examine the effectiveness of project communication and documentation, and clarify the
relationships between project scope, quality, time and cost
Identify barriers to better performance, or critical skills needed by project managers or their
supporting teams to increase their effectiveness
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Identify sooner specific aspects which require improvement and hence speed the
achievement of results
Provide for an exchange of ideas, information, problems, solutions and strategies with
project team members, and thus develop a plan of action for carrying out improvements
Help to create a supportive environment focusing on project success, and the professional
growth of project team members
Thus, by conducting a PMA in a timely and favorable manner, potential difficulties can be
identified and brought out into the open for appropriate corrective action. Better still,
potential problems may be circumvented altogether, if the concept and timing of a PMA is
built into the project plan from the outset.
4.2.3 STRUCTURAL APPROACH AND TYPICAL ISSUES OFPROJECT MANAGEMENT APPRAISAL:
Modern project management is generally considered to be encompassed by the integration
of eight functional areas. These include the four core or constraint functions of scope,
quality, time and cost, and four integrative and interactive functions of risk, human
resources, contract/procurement and information/communications management.
Each function tends to require a separate skill set, so that on a larger project, or in the larger
project management organization, responsibilities naturally tend to be grouped accordingly
for their proper conduct. Consequently, the investigative format of a project management
appraisal also more readily follows these functional descriptions.
The sequence in which these functions are listed above is significant because of their
dynamic relationship. The sequence parallels both the progressive flow of information as
well as the flow of work through the project management process. The information flow
represents what is managed, while the process flow reflects how it is managed. Since
projects should be planned moving progressively down the list, projects in the planning
phases might well have the first four functional areas examined first. For projects in the
implementation phases, on the other hand, the latter four functions might be given priority,
and in the reverse order.
The content of the questions to be raised will also be highly dependent upon the particular
phase of the project in which the PMA is being conducted, and therefore should be
structured accordingly.
For example, the content of technological questions under a Project Management Appraisal
(PMA) conducted early in the implementation phase of a construction project would focus
on the availability and adequacy of information to carry out detailed design efficiently, or
to commence construction activities productively. Similarly, technological issues to be
raised just prior to commissioning would likely cover quality assurance records, validation
of equipment and system check-off, dry-runs and so on.
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The following discussion is intended to give an indication of the issues that might be looked
at, both in terms of the function under consideration, and the phase that the particular
project has reached.
4.2.4 PROJECT MANAGEMENT CORE FUNCTIONS:As noted earlier, the first four functions: scope, quality, time and cost, are generally
considered to be the basic functions of project management. From the sponsor's point of
view, these four functions embody the project's basic management objectives, while for
those providing services to the project, i.e. designer construction, they constitute
constraints. They therefore represent a set of core parameters which are used to control the
project.
Scope and Quality
If specific technological aspects of the project such as engineering, manufacturing or
constructability, are to be reviewed, such an investigation must clearly be conducted bythose thoroughly conversant with the project's technology. In addition, most projects today
have some degree of recognizable environmental, social or safety impacts. If these have
not already been analyzed and arrangements made for monitoring and mitigation, then
persons with corresponding knowledge and experience must undertake such review.
Even so, certain general management questions can be formulated with regard to the
technical scope and quality of the project. In the case of quality: has the project's executive
given priority to building the required quality standards into the project planning and
execution process right from the outset? Is this standard consistent with production,
operation, maintenance, safety and social acceptability expectations, so that the facility willperform economically during its life time? Indeed will the facility last for its required life
time? Have the members of the project team been selected on the basis of their
qualifications for their respective roles, and likewise will similar considerations be given
to those providing detailed design and/or construction services during project execution?
Are meeting the end-user's requirements seen as being at least as important as, if not more
important than, meeting cost and schedule targets, and will a post project review include a
critique of the project's quality attainment?
Schedule and Cost
Similarly, specific questions can be posed regarding schedule and cost. For example: Do
project plan include a milestone schedule indicating major pieces of work to be
accomplished, and who will be responsible for each?
Are project schedule time estimates and logic developed using input from members of the
project team, in order to build in commitment? Are they prepared using a structured
breakdown consistent with the work breakdown structure, such that cost and schedule can
be correlated?
Are project schedules allowing sufficient time to get the work done right the first time, and
without causing overruns? And when changes are made during project implementation, are
corresponding changes made to the schedule to accommodate these changes?
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The cost situation should be similarly examined, and the direct impacts on the cost situation
of any changes in the schedule also recognized. Thus typical cost questions should include:
Is the estimate realistic, including both direct and indirect costs of all required resources,
or have any changes taken place since, in terms of the project's parameters or the external
environment, which might require its reevaluation?Project Management Integrative Functions
As indicated earlier, the issues under scope, quality, time and cost only really question the
status of the project's relatively static objectives. If the answers are found to be
unsatisfactory, then it will be necessary to examine the means to influence them within the
remaining time left for the project to run.
The next set of questions therefore investigate the supporting integrative and more dynamic
functions of project management, which consist of the management of risk, human
resources, contract/procurement and information/communication management.
Each of these functions influences the success of the project through the performance of
people. They involve as much art as science, and, suitably managed can affect the course
of the project and consequent outcome. Unlike scope, quality, time and cost, which deal
with project outputs and deliverables, these four functions impact the activities, i.e. the
work involved in achieving those outputs and deliverables. Often, these areas of review
provide a much more illuminating area of investigation.
Project Risk
Questions under this heading should include: Has the project planning included a program
or study of risk identification and analysis with recommendations for mitigate actions?
Does the project's management effectively anticipate potential obstacles at each stage in a
way that avoids future hindrance?
Have adequate contingency planning and allowances been incorporated into the project
parameters to provide for major risk factors which may adversely affect project success?
Human Resources
Questions which address the issues of people and their motivations are frequently the most
significant, since essentially projects and the degree of their success are achieved through
the project's human resource element. Therefore, this area of the PMA may be quite
intensive.
For example: Does the project team enjoy the active and visible support of the project's
sponsor, and is the focus consistently on the project's stated objectives?
Has the sponsor assigned the leadership of the project the necessary level of authority for
it to execute its responsibilities, and is it held accountable accordingly? Is this process
visible and effective?
Are people resources available when needed? And do they have the required levels of
technical skills, or if not, are they encouraged or provided with suitable training? Are they
rewarded for exceptional effort?
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Is conflict handled and used constructively, in order to sustain a highly motivated team?
Will the final project evaluation include a critique of the project team's collective
performance?
Contract/Procurement
The manner in which the project is to be facilitated or procured is an issue which should be
dealt with very early in the project planning phase, since it will have a significant effect on
the way in which the project parameters are expressed. For instance, construction which is
to be accelerated, or "fast-tracked", should require a shorter schedule but will carry
significantly higher risks. Conversely, the more time taken to improve the definition of the
project's scope, the lower should be the project risks. In each case, the form of contracting
must be tailored to suit.
Information/Communications
Information is best viewed as the data upon which the project is configured and upon whichdecisions are based, while communication is the oil and grease which keeps the whole
project progressing smoothly. Questions in this area might therefore include: Does the
project sponsor keep the project manager informed on matters affecting the project, and in
turn does the project manager keep the members of his team similarly informed? Are
project team members free to voice their opinions and concerns for the project? In other
words, is information flowing satisfactorily through the organizational structure, and in
doing so, is its quality and integrity maintained?
Similarly, are the necessary mechanisms in place to inform those who are outside of the
project organization, and inform them according to their respective interests? For example,an external stakeholders' public relations program could be very necessary where the
construction and completion of the project is politically sensitive, since adverse reaction
could have a damaging effect on the ultimate success of the project.
4.2.5 APPRAISING A PROJECTKey issues in appraising projects include the following.
Need, targeting and objectivesThe starting point for appraisal: applicants should provide a detailed description of the
project, identifying the local need it aims to meet. Appraisal helps show if the project
is the right response, and highlight what the project is supposed to do and for whom.
Context and connectionsAppraisal should help show that a project is consistent with the objectives of the
relevant funding program and with the aims of the local partnership. Are there links
between the project and other local programs and projectsdoes it add something, or
compete?
ConsultationLocal consultation may help determine priorities and secure community consent and
ownership. More targeted consultation, with potential project users, may help ensure
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that project plans are viable. A key question in appraisal will be whether there has been
appropriate consultation and how it has shaped the project
OptionsOptions analysis is concerned with establishing whether there are different ways of
achieving objectives. This is a particularly complex part of project appraisal, and onewhere guidance varies. It is vital though to review different ways of meeting local need
and key objectives.
InputsIts important to ensure that all the necessary people and resources are in place to deliver
the project. This may mean thinking about funding from various sources and other
inputs, such as volunteer help or premises. Appraisal should include the examination
of appropriately detailed budgets.
Outputs and outcomesDetailed consideration must be given in appraisal to what a project does and achieves:
its outputs and more importantly its longer-term outcomes. Benefits to neighborhoods
and their residents are reflected in the improved quality of life outcomes (jobs, better
housing, safety, health and so on), and appraisals consider if these are realistic. But
projects also produce outputs, and we need a more realistic view of output forecasts
than in the past.
Value for moneyThis is one of the key criteria against which projects are appraised. A major concern
for government, it is also important for local partnerships and it may be necessary totake local factors, which may affect costs, into account.
ImplementationAppraisal will need to scrutinize the practical plans for delivering the project, asking
whether staffing will be adequate, the timetable for the work is a realistic one and if the
organization delivering the project seems capable of doing so.
Risk and uncertaintyYou cant avoid riskbut you need to make sure you identify risk (is there a risk and
if so what is it?), estimate the scale of risk (if there is a risk, is it a big one?) and evaluate
the risk (how much does the risk matter to the project.) There should also be
contingency plans in place to minimize the risk of project failure or of a major gap
between whats promised and whats delivered.
Forward strategiesThe appraisal of forward strategies can be particularly difficult, given inevitable
uncertainties about how projects will develop. But is never too soon to start thinking
about whether a project should have a fixed life span or, if it is to continue beyond a
period of regeneration funding, what support it will need to do so. This is often thought
about in terms of other funding but, with an increasing emphasis on mainstream
services in neighborhood renewal, appraisal should also consider mainstream links and
implications from the first.
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SustainabilityIn regeneration, sustainability has often been talked about simply in terms of whether a
project can be sustained once regeneration funding stops but sustainability has a wider
meaning and, under this heading, appraisal should include an assessment of a projects
environmental, social and economic impact, its positive and negative effects.While appraisal will focus detailed attention on each of these areas, none of them can
be considered in isolation. Some of them must be clearly linked for example, a
realistic assessment of outputs may be essential to a calculation of value for money. No
project will score highly against all these tests and considerations. The final judgment
must depend on a balanced consideration of all these important factors.
4.2.6 CHECKLIST FOR PROJECT APPRAISALWhether you are involved in a partnership with an appraisal system in place, or starting to
design one from scratch, these questions are worth asking.
Are appraisals systematic and disciplined with a clear sequence of activities andoperating rules?
Is there an independent assessment of the project by someone who has not beeninvolved with the development of the project?
Does the appraisal process culminate in clear recommendations that informapproval (or rejection) of the project?
Is the approval stage clearly separate? Is the appraisal process well documented, with key documents signed, showing
ownership and agreement, and allowing the appraisal documentation to act as a
basis for future management, monitoring and evaluation? Does the appraisal system comply with any relevant government guidance Are the right people involved at various stages of the process and, if necessary, how
can you widen involvement?
4.2.7 TYPES OF PROJECT APPRAISAL:I. MANAGEMENT APPRAISAL:Here the capacity and commitment of the owners and core promoters along with the top
management is judged.
o Ability to plan clearly and set realistic goals and objectives.o Ability to organize projects.o Ability to recruit the right kind of people.o Ability to negotiate with different kinds of people under different conditions.o Problem solving ability.o Communication and human relations skills.o Financial strength.o Perception of market opportunities.
II. TECHNICAL APPRAISAL:It is the study of manufacturing process, technical arrangements, size of the plant, product
mix, selection and procurement of plant & machine, plant layout, schedule of project
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implementation and location of project with reference to availability of various inputs
required for production.
VARIOUS POINTS TO BE EXAMINED UNDER TECHNI CAL APPRAISAL CAN
BE SUMMARIZED AS UNDER:-
1. MANUFACTURING PROCESS / TECHNOLOGY:-Selection of process depends on quality of the product required, its end use, availability of
particular raw material and cost of the process. A process should not be implemented
unless it is tested in required & available condition. It is necessary to study the backup
condition in case of failure.
2. Arrangement of TechnicalKnow-how:-It may be ensured that satisfactory arrangements have been made to obtain necessary
technological know-how required for the proposed manufacturing process. The technical
know-how can be procured from the following sources:-
a) Foreign Collaboratorsb) Consultancy Organizationsc) Machinery suppliersd) Promoters knowledge and experiencee) Recruitment of suitable technical personnel3. Size of the plant:-Size of the plant or its capacity can be expressed in one of the following terms
i. With respect to output : Pulp and paper, Cement, Mini-Steel.(Quantity of finished product) Plant etc
ii. With respect to input : Sugar mill, Cotton-seed expeller unit,(Quantity of main raw material) Solvent extraction plant etc.
iii. With respect to number of machines : Power Loom, Spinning mill, Textilemill, etc.
4. Product Mix/ Product Range:-According to market conditions product mix/product range should be decided as it will
help to grow sales. The product should be modified with the changing trends happening
in the environment and it should be eco-friendly as it will help to build brand image.
5. Selection of Plant & Machinery:-The selection of plant & machinery should be in such a way that all the process should
give more or less same output otherwise there will be more wastage or total output will be
less than desired output thus we wont be able to reduce the cost of final output.
Example:
Stages I II III IV
Raw Material
Capacity90 80 60 80
Here all the Stages are capable of producing 80 output except III Stage so it is better to
increase the output of Stage III to 80 so that we can have a final output of 80.
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6. Procurement of Plant & Machinery:-The act of obtaining or buying goods & services.
The process includes preparation and processing of a demand as well as the
endreceipt andapproval ofpayment.It often involves
i.
Purchaseplanning,ii. standards determination,iii. specifications development,iv. supplier research and selection,v. value analysis,
vi. financing,vii. price negotiation,
viii. making the purchase,ix. supply contract administration,x. inventory control and stores and
xi. Disposals and other related functions.The process of procurement is often part of acompany's strategybecause theability to
purchase certainmaterials will determine ifoperations will continue. Abusiness will not
be able to survive if it's price of procurement is more than the profit it makes
on selling the actual product. Before sending Engineer to test the equipment while
importing second hand machine you should pass the loan from the bank otherwise the cost
of sending him will go waste if the loan is not passed. The best time to send an Engineer
should be after sanction but before the disbursement of loan. For uninterrupted production,
arrangements for repairs & spare parts should be made.
7. Plant Layout:-a) Line Layout: Machines required for series of operation are arranged in sequence in
which they are used.
b) Functional Layout: Various machines are grouped together according to the operationthey perform. It is also called as Process Layout.
c) Group Layout: Machines are grouped to produce a part or family of parts also calledas Product Layout.
8. Location of Project:-i. Land: It should be easily accessible by road, railway & airport.
ii. Raw Material: if bulky difficult to transport, quality likely to deteriorate intransportation, raw material should be near the source.Imported Raw Material are
those which are imported from some other place whereas Indigenous Raw Material
are the ones which are occurring naturally in a particular place.
iii. Market: The market should be in boom when the product is out for sale.iv. Labor: Labor are the most important factor of any firm. The firm has to decide
whether to recruit from local or outside. If they hire from local they need to give
training to make them efficient or if they are hiring skilled labor than housing
facilities should be provided.
v. Utilities: the various facilities should be provided like Power, water, fuel etc.
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vi. Effluent Disposal: Waste from sump pit pumped to a drainage system. The outflowof disposal should be in such a way that it should be not harmful to anyone and
mostly eco-friendly.
vii. Transport Facilities: It should be well connected to roads, railways and airways. Ifthe company is not connected to highways than the road should be constructed. Thedecision to buy or hire vehicle should be made depend on the transport conditions.
viii. Location of Industries: The location of the industries should be either in backwardareas, Growth Centres, Small Enterprise Financial centers etc.
ix. Schedule of Project Implementation: CPM & PERTIII. MARKET APPRAISAL:Many Entrepreneurs dont have an idea about the market of particular product. There is
high possibility that the future cannot be in favor of product and the bank could be in
trouble if the firm is not able to pay back.
Hence the Bank asks the firm information about the market under five headings
1. Demand:Product, Uses, the consumers, actual consumption, likely consumption infuture & export prospects
2. Supply: Production Capacity, Actual Production, Capacity Utilization, Imports &likely future capacity.
3. Distribution: Channels of distribution involved, cost of distribution & mode oftransport.
4. Pricing:Domestic & International price trends, control on prices, duties & taxes.5. External Forces: Government Policies regarding industrialization, export, imports,
foreign collaboration plan outlay.
TECHNIQUES FOR DEMAND FORECASTING USED BY TERM LENDING
INSTITUTES TO CHECK
1. Import Substitution:2. Past Trend Methods:3. End Use Methods:4. Correlation & Regression:Dependence of Supply & Demand5. Export Market:CHECK LIST FOR VERIFICATION OF VARIOUS ASPECTS OF
MARKETING
1. Market Structure in respect of Consumer Goods2. Market Structure in respect of Industrial Goods3. Dept of Competition4. Pricing Policy5. Life Cycle of the Product6. Brand Name of Product7. Packaging & Transportation8. Salesman: Personal Selling. Salesman need advertising support, Drawings, Marketing,
Data, Technical Expertise, audiovisual aids, demonstration, offers of installments
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CIGARATE,TOOTHPASTE
9. Advertising & Sales Promotion: Techniques should be decided in view of the size offirm, competition in market, distribution channels & other relevant matters
10.Distribution Channels
Fig. Distribution Channels
IV. FINANCIAL APPRAISAL:It is an evaluation of profitability and financial strength of any business concern. This is
the process of making an in-depth study of the financial and operative data contained in
the profit and loss account and balance sheet. The important aspec