Solution:

What is the formulation of a Project Report?

• A project is a report which provides all the necessary information about the unit proposed to be set up.

• It is required by various developmental agencies that help, the setting-up of the unit and particularly by financial institutions and banks to provide financial assistance.

• The report should be prepared in such a way that it can provide complete information that may be required by financial institutions for appraising the project.

• A well-prepared project report will not only save the time and energy of the banker but also help the entrepreneur, who will not face any objections and queries from the banker.

• A general set of information given in any project report is listed by Vinod Gupta in his study on “Formulation of a Project Report”, which is reproduced, below, the following are broadheads under which complete information on relevant aspects should be included in the project report:

1. General Information.

2. Project Description.

3. Market Potential.

4. Capital Costs and Sources of Finance.

5. Assessment of Working Capital Requirements.

6. Other Financial Aspects.

7. Economic and Social Variables.

(2). Project Description:

• A brief description of the project covering the The following aspects should be given in the project report.

(a) Site:

Location (town, street, number, etc.) whether owned or leasehold land; whether the site is in an approved industrial area? Is it suitable for the type of enterprise being planned? The open/covered area availability needed should be mentioned.

If the location is in a residential area then a copy of the No Objection Certificate from the Municipal authorities should be attached.

(b) Physical Infrastructure:

Availability of physical infrastructure consisting of the following items :

(i) Raw Material:

Whether imported raw material also required? If so whether the license has been obtained. Which are the sources of raw material and what is the probability of getting it continuously at fair prices?

(ii) Skilled Labour:

Whether skilled labor is available in that area? If not, what arrangements have been made to train the labor in various skills?

(c) Utilities:

(i) Power:

Inadequate supply of electricity or its high unit cost in an area may become a major constraint in running a project.

The project report should contain the information regarding the power requirements, the load sanctioned, stability of supply of power, and the price at different consumption levels.

(ii) Fuel:

Whether other fuel items like coal, coke, oil, or gas, are required and if yes, then state their availability position.

(iii) Water:

Water is an important factor for projects like a brewery, tannery, ice plant, soft drinks, and chemicals. The source and the quality of water in such cases should be clearly stated.

(d) Pollution Control:

Most industrial plants produce waste material or emissions that may create significant problems. The emission may be of various types like,

(i) gaseous (smoke, fumes, etc.)

(ii) physical (noise, heat, vibration, etc.), or

(iii) liquid or solid discharge through pumps and sewers. State the aspects like the scope of dumps, sewage system, and sewage treatment plant.

(e) Communication System:

Availability of communication facilities, e.g., telephone, telex, etc. should be stated in. the report.

(f) Transport Facilities:

The distances over which the basic material inputs will have to be transported and the available as well as potential means of transportation should be stated together with expected bottlenecks, if any.

(g) Other Common Facilities:

Availability of facilities like machine shops, welding shops, electrical repair shops, etc.

(h) Manufacturing Process:

The details of production and the process involved should be clearly stated. Also, state the period of conversion from the raw material into finished goods. A process flow chart should be presented.

(i) List of machinery and Equipment:

A complete list of items of machinery and other equipment indicating their type, size and cost should be furnished.

Sources of supply of capital equipment and construction services should also be given. Check machinery/equipment for each of the above-stated processes is ensured.

If not, explain how such processes will be get done.

(j) Capacity of the Plant:

The installed licensed capacity should be stated. Also state whether the unit will run on a single, double, or triple shift basis.

(k) Technology Selected:

Is it up-to-date and appropriate? Which other units are using the same technology and with what results? How is the required did know-how propose to be arranged?

(l) Balancing of Plant:

While stating the stages of production, also state whether the capacity of various plants at different stages of production is sufficient.

Balancing equipment required at a later stage and the the consequent increase in capacity should be assessed.

(m) Quality Control/Testing and Inspection:

Whether some system has been designed to check the quality of products continuously? Obtaining quality marks like ISI, and Agarak help in creating confidence among consumers, if there is a probability of getting them for the products, the fact should be included in the project report.