Projects Appraisal and Finance

Session 3

Narahari H.S.

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Market and Demand Analysis

Market Planning

Current marketing situation

Market situation
Competitive situation
Distribution situation
Macro environment

Opportunity and issue analysis (SWOT)

Objectives

Financial, consumer and distribution targets

Marketing strategy

Target segment, Positioning, Product line, Price, Distribution, Sales

force, Sales promotion, Advertising etc.

Action programme

To operationalise the strategy
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Technical Analysis

Need to choose between two or more technologies

Choice of Technology

Plant capacity

Principal inputs

Investment outlay and production cost

Use by other firms

Product mix

Latest developments

Ease of absorption (training)

Appropriateness of Technology

Suitable to local economic, social and cultural conditions
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Technical Analysis

Technical arrangements

Arrangements to obtain needed technical know-how

Details of collaborations (if any) must be chalked out

Material Inputs and Utilities

Raw materials

Agricultural, mineral, livestock & forest and marine products

Processed industrial materials and components

Auxiliary materials and factory supplies

Utilities

Product Mix

Based on market requirements

Production facilities should have some flexibility so that mix can be
changed
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Technical Analysis

Plant Capacity

Technological requirement

Input constraints

Investment cost

Market conditions

Resources of the firm

Governmental policy

Location and Site

Location (broad) ; Site (specific)

Proximity to raw materials and markets

Availability of infrastructure

Labour situation (availability and productivity)

Governmental policies

Other factors
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Technical Analysis

Machineries and Equipment

Estimate likely production levels over time

Define various machining and other operations

Calculate machine hours required for each operation

Based on above, select equipment

Structures and Civil Works

Site preparation and development

Buildings and structures

Outdoor works

Environmental Aspects

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Technical Analysis

Project charts and layouts

General functional layout

Material flow diagram

Production line diagram

Transport layout

Utility consumption layout

Communication layout

Organisational layout

Plant layout

Consistency with production technology

Smooth flow of goods from one stage to another

Proper utilisation of space

Scope for expansion

Minimisation of production cost

Safety of personnel
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Technical Analysis

Schedule of project implementation

List all possible activities from project planning to commencement of
production

Sequence of various activities

Time required for performing various activities

Resources normally required for various activities

Implications of putting more resources or less resources than are normally
required

PERT / CPM usually used

Draw up work Schedule

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Technical Analysis

Need for considering alternatives

Nature of project

Production process

Product quality

Scale of operation and time phasing

Location

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Technical Analysis
Key Project Interlinkages
Product / Service
Demand
Size
Technology
Location
Selling Price

Production Costs
Financial
Requirements
Profitability

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Investment
Outlay