Sumanta Das Gupta (Accountant) (310 Points)
07 December 2012Can someone please explain the methodsof preparing documents for a project report for bank financing ? I have the audited accounts of a Private Limited Company for the y/e 31.03.2012 and projections are tobemade for the years 2012-2013 & 2013-2014. Please help me as soon as possible.
Thanks & regards.
Naresh Kr. Mundhra
(Direct Tax consultants )
(32 Points)
Replied 07 December 2012
The attached word file have your answer.
CA D R P
(Chartered Accountant)
(313 Points)
Replied 07 December 2012
MINIMUM FOLLOWING DATATO BE ATTACHED:
1. PROJECT'S COSTING ESTIMATES/BUDGETS, CMA REPORT
2. EXPECTATIONS AND SWOT ANALYSIS OF PROJECT
3. PAST 3 YEAR'S I TAX RETURNS, AUDITED FINANCIALS, FUND FLOW STATEMENTS
4. BIO DATA OF COMPANY , IT'S DIRECTORS, QUALIFICATIONS , DEVELOPER'S DETAILS
PLUS OTHER ATTACHMENTS THAT DEPENDS ON THE TYPE OF PROJECT AND REQUIRED AMOUNT FOR FUNDING...
Vinod
(CA in Practice)
(445 Points)
Replied 08 December 2012
Dear Mr. Naresh,
There is no attachment.. Can you please share the file with me ?
Thanks in advance..
Sumanta Das Gupta
(Accountant)
(310 Points)
Replied 08 December 2012
Dear Mr. Mundhra,
Can you please attach the word file you have mentioned ?
Regards,
Sumanta
ABHINANDAN JAIN
(CA Student)
(886 Points)
Replied 08 December 2012
@ Naresh
I think u hv forgot to attach the format ..pls attach..i also need it..
Naresh Kr. Mundhra
(Direct Tax consultants )
(32 Points)
Replied 08 December 2012
I would like to inform that am not the onwer of this file. For support m going to share this file.
PREPARATION OF PROJECT REPORT
After the market survey and final selection of the products a project profile is to be prepared. This is a brief descriptttion of the project and would include the following details:
<!--[if !supportLists]-->1. <!--[endif]-->Introduction about the promoter, giving his complete Bio-data(i.e. age, educational and professional qualification, Past experience, Present activity and relationship with each other in case of partnership concerns).
<!--[if !supportLists]-->2. <!--[endif]-->Manufacturing process. All operations, which are to be carried out from the Raw Material stage to be finished stage, are to be explained in detail.
<!--[if !supportLists]-->3. <!--[endif]-->Market Survey report (considering Market demand, market supply, competitors, our market share) is to be included.
<!--[if !supportLists]-->4. <!--[endif]-->Installed capacity of the plant, capacity utilization, during initial 1-3years and Annual Sales.
<!--[if !supportLists]-->5. <!--[endif]-->Complete details about the land and building (e.g. cost, area etc.). These are to be supposed by documentary evidence and building plans prepared by an approved Architect.
<!--[if !supportLists]-->6. <!--[endif]-->Details of the Plant Machinery. To be supported with quotations from three different suppliers. This should include expenses incurred on taxes, transportation, installation, accessories etc.
<!--[if !supportLists]-->7. <!--[endif]-->Details of the Annual requirement of Raw Material and consumables, also to be supported with quotations.
<!--[if !supportLists]-->8. <!--[endif]-->All annual expenses (e.g. Utilities, Administrative expenses, Repair and Maintenance, Salaries, Selling expenses, packing and forwarding expenses etc).
<!--[if !supportLists]-->9. <!--[endif]-->Working capital requirement, showing the margin on working capital and Bank finance required. Items considered for working capital are:
<!--[if !supportLists]-->o <!--[endif]-->Raw material stock
<!--[if !supportLists]-->o <!--[endif]-->Finished Goods stock
<!--[if !supportLists]-->o <!--[endif]-->Work in process
<!--[if !supportLists]-->o <!--[endif]-->Bills receivable
<!--[if !supportLists]-->o <!--[endif]-->Working expenses
<!--[if !supportLists]-->10. <!--[endif]-->Cost of the project : The items to be included in this area as follows:
<!--[if !supportLists]-->o <!--[endif]-->Land
<!--[if !supportLists]-->o <!--[endif]-->Building
<!--[if !supportLists]-->o <!--[endif]-->Plant and Machinery
<!--[if !supportLists]-->o <!--[endif]-->Misc. Fixed Assets
<!--[if !supportLists]-->o <!--[endif]-->Contingencies
<!--[if !supportLists]-->o <!--[endif]-->Pre-operative Expenses
<!--[if !supportLists]-->o <!--[endif]-->Margin on Working Capital
Means of Finance
<!--[if !supportLists]-->o <!--[endif]-->Term loan
<!--[if !supportLists]-->o <!--[endif]-->Promoters Contribution
<!--[if !supportLists]-->o <!--[endif]-->Subsidy (if applicable)
<!--[if !supportLists]-->o <!--[endif]-->Special Capital Assistance (if applicable) (or seed capital)
Following Annexures are to be included in the Feasibility Report.
<!--[if !supportLists]-->11. <!--[endif]-->Calculation of Interest and Repayment of Term Loan:
The repayment schedule is prepared in equal Annual installments according to the repayment period allowed by the financial institution. Along with this, the interest for each year is calculated at the rate applicable in the financial institution.
<!--[if !supportLists]-->12. <!--[endif]-->Calculation of Depreciation:
The depreciation of Building, Machinery and miscellaneous fixed assets is calculated for the complete repayment period
<!--[if !supportLists]-->13. <!--[endif]-->The cost of production and profitability:
This is calculated for the repayment period and would include all direct and indirect annual recurring expenses.
<!--[if !supportLists]-->14. <!--[endif]-->Debt Service Coverage Ratio:
the method for calculation the D.S.C.R. is given below:
Calculate the total (A), of
<!--[if !supportLists]-->o <!--[endif]-->Profit after Tax
<!--[if !supportLists]-->o <!--[endif]-->Depreciation
<!--[if !supportLists]-->o <!--[endif]-->Interest on term loan
Then the total (B), of
<!--[if !supportLists]-->o <!--[endif]-->Repayment of term loan and interest on term loan
Average D.S.C.R. is A/B
<!--[if !supportLists]-->15. <!--[endif]-->Cash Flow Statement:
Sources of funds is calculated by adding up the following for the complete repayment period:
<!--[if !supportLists]-->o <!--[endif]-->Profit before tax with interest added back
<!--[if !supportLists]-->o <!--[endif]-->Depreciation
<!--[if !supportLists]-->o <!--[endif]-->Increase in Term Loan
<!--[if !supportLists]-->o <!--[endif]-->Increase in Bank Finance
<!--[if !supportLists]-->o <!--[endif]-->Increase in Promoters Contribution
Then calculate disposition of funds by totalling
<!--[if !supportLists]-->o <!--[endif]-->Increase in Fixed Assets
<!--[if !supportLists]-->o <!--[endif]-->Decrease in Term Loan
<!--[if !supportLists]-->o <!--[endif]-->Increase in Current Assets
<!--[if !supportLists]-->o <!--[endif]-->Interest on Term Loan and Working Capital
<!--[if !supportLists]-->o <!--[endif]-->Income Tax
Total of sources of funds - total of Disposition of funds = Surplus/Deficit Opening Balance + Surplus = Closing Balance (Starting from nil doing 1st year)
This is completed for the complete repayment period
<!--[if !supportLists]-->16. <!--[endif]-->Projected Balance Sheet:
Preparation of project balance sheet as follows:
<!--[if !supportLists]-->o <!--[endif]-->Reserves and Surplus
<!--[if !supportLists]-->o <!--[endif]-->Term Loan
<!--[if !supportLists]-->o <!--[endif]-->Promoter's Contribution
<!--[if !supportLists]-->o <!--[endif]-->Bank Borrowing (Bank Finance of working Capital)
Assets : Total of
<!--[if !supportLists]-->o <!--[endif]-->Net Block Assets
<!--[if !supportLists]-->o <!--[endif]-->Fixed assets- Depreciation (cumulate Depreciation over the operating years)
<!--[if !supportLists]-->o <!--[endif]-->Current Assets
<!--[if !supportLists]-->o <!--[endif]-->Cash and bank Balance
The total of liabilities and total Assets should tally for each operating year individually, for a correct Balance Sheet.>/p>
<!--[if !supportLists]-->17. <!--[endif]-->Break Even Point:
This is the level of production at which the unit is running at no profit no loss. Hence , it is essential to calculate the BEP to ascertain the level of production at which the units starts earning profits. It is calculated as follows:
BEP=( Fixed Cost * Percentage of optimum cap. Utilization) * 100/ contribution
Contribution = Sales - Variable Cost
This is calculated for the year during which the unit reaches optimum capacity utilization.
After preparation of the project Report the Entrepreneur is required to get the provisional Registration Certificate from the concerned District Industries Center, and the Application for the Term loan and Working Capital with the Financial Institution/ Bank Depending upon the scheme under which he wishes to apply.
Check List of Document to be submitted alongwith the loan application
The number of documents shall depend upon product size, nature and location of project
<!--[if !supportLists]-->1. <!--[endif]-->Prescribe application form in Duplicate
<!--[if !supportLists]-->2. <!--[endif]-->Project Report in Duplicate
<!--[if !supportLists]-->3. <!--[endif]-->List of total movable and immovable Assets of the promoters.
<!--[if !supportLists]-->4. <!--[endif]-->Income Tax and Wealth Tax details of last three years, with copies of Assessment / Return if applicable.
<!--[if !supportLists]-->5. <!--[endif]-->Provisional Registration Certificate from the concerned District Industries Centre.
<!--[if !supportLists]-->6. <!--[endif]-->Memorandum of Articles of Association and Certificate of in corporation (in case of Company).
<!--[if !supportLists]-->7. <!--[endif]-->Certified copy of Registration Certificate issued by the Registrar of firms ( if partnership concern) if forms 'A' and 'C'.
<!--[if !supportLists]-->8. <!--[endif]-->Registration with the Tourism Department, and the licence for eating house in case of Hotel Industry.
<!--[if !supportLists]-->9. <!--[endif]-->Permission/licence from Competent Authority (in case of Textile, Drugs, Foods etc.).
<!--[if !supportLists]-->10. <!--[endif]-->Certified copy of sale deed in respect of land. (The land should be in the name of sole proprietor/partner/company whichever applicable
OR
Rent agreement in case of rented premises.
<!--[if !supportLists]-->11. <!--[endif]-->Three quotation in respect of each item of plant and machinery and raw material, proposed to be purchased.
<!--[if !supportLists]-->12. <!--[endif]-->Details of power requirement and tie-up with State Electricity Board.
<!--[if !supportLists]-->13. <!--[endif]-->Copy of instructions to your Bankers to give full information about the concern on request to State Financial Corporation.
<!--[if !supportLists]-->14. <!--[endif]-->Permission from Water Pollution Control Board.
ABHINANDAN JAIN
(CA Student)
(886 Points)
Replied 09 December 2012
@ Naresh
Thanks for pasting here but its format is not clear..
can u pls mail that original file at my id: hereforeducation @ rediffmail.com..
Thanks..
CAclubindia
