na noW tonake a ngnt P

plan as it is sometimes called.

A2.1MEANING OF PROJECT REPORT

Webster New 20th Century Dictionary defines a project as a scheme, design, a proposal
ofsomething intendedor devised. In simple words, project report or business plan is a
Written statement of what an entrepreneur proposes to take up. It is a kind of guide frost
Or course of action what the entrepreneur hopes to achieve in his business and how is he
going to achieve it. In other words, project report serves like a kind of big road map tO
reach the destination determined by the entrepreneur. Thus, a project report can best be
defined as a wellevolved course of action devised to achieve the specified objective within
a specified period of time. So to say, it is an operating document.
12.2 SIGNIFICANCE OF PROJECT REPORT
An objective without a plan is a dream. The preparation of a project report is of great
significance for an entrepreneur. The project report serves the two essential functions:
First and most important, the project report is like a road map. It describes the direction
88
 ProjectFormulation 89

goingin, what its goals are,

the enterprise is where it wants to be, and how it is going
It also enables an entrepreneur know that he is proceeding inoperational
to the right
to get there. hold the view that
direction. Some without well spelled
methods/tactics, most businesses flounder on the rocks
goals and
out times.
of hard
Thesecond function of the project report is to attract lenders and investorS.
Although,
mandatoryfor thesmall yet it is useful and
itis not for them to prepare theenterprises to prepare project reports, The preparation of
beneficial project reports for various reasons.
beneficial for those small enterprises which apply for financial assistance
projectreport is
fromthe financial |institutions and the commercial banks. It is on the basis of project report
financial assistance
thatthefinancial institutions make appraisal if the enterprise requires
how much. Similarly, other organisations which provide various assistance
or not. Ifyes, interested in
such as work shed, raw material, seed/margin money, etc. are equally firm's
knowing the economic soundness of the proposal. In most cases, the quality of the
projeeteport weighs heavily in the decision to lend or invest funds.?
A
1230eÓNTENTS OFA PROJECT REPORT
is no
Having gone through the significance of project report, it is now clear that thereshort
substitute for a well-prepared business plan or project report and also there are no
more likely
cuts to preparing it. The more concrete and complete the business plan, the ernterprise.
itis to earn the respect of outsiders and their support in making and running an
great care and consideration. A
Therefore, the project report needs to be prepared with
good project report should contain the following contents:
1. General Information: Information on product profile and product details.
2. Promoter: His/her educational qualification, work experience, project related
experience. advantages.
3. Location: Exact location of the project, lease or freehold, locational
cost of
4. Land and Building: Land area, construction area, type of construction,
construction, detailed plan and estimate along with plant layout.
5. Plant and Machinery: Details of machinery required, capacity, suppliers, cost, various
alternatives available, cost of miscellaneous assets.
technical know
6. Production Process: Description of production process, process chart,
how, technology alternatives available, production programme.
cost estimates, sources
7.Utilities: Water, power, steam, compressed alr requirements,
of utilities.
b. Transport and Communication: Mode, possibility of getting,
costs.
quantity, sources of
9. Raw Material: List of raw material required by quality and procurement of raw
Procurement, cost of raw material, tie-up arrangements, if any, for
material, alternative raw material, if any.
10. Manpower: Manpower requirement byskilledland semi-skilled, sources of manpower
Supply, cost of procurement, requirement
for training and its cost.
11. Products: Producttmix, estimated sales, distribution channels, competitions and their
ratio, product substitute.
capacities,
12. Market:
product standard, input-output
sof product, distribution offmarket as local, national, international,
End-users
trade practices, sales promotion devices, proposed market research.

1. Dan Steinhoff and John E Burgess: Small Business Management Fundamentals, McGraw-Hill Book
Co., Singapore,
2. Thomas 1989, p. and37. Norman M. Scarborough: Essentials of Small Business Management,
W. Zimmerer
Macmil an College Publishing Company, New York, 1994, p. 246.
 90
Entrepreneurial Development
of workino
Working capital required, sources offered
13. Requirement of Working Capital:
nature and extent of credit facilities an
capital, need for collateral security,
available.
terms of costs of land, buildine
14. Requirementof Funds: Break-up of project cost incontingencies
machinery, miscellaneous assets, preliminary expenses, setting up and margin money
of
for working capital, arrangements for meeting the costyears. of the project.
15. Cost of Production and Profitability of first ten
16. Break-Even Analysis (Refer to 12.4).uettbenobetebasretno
17. Schedule of Implementation (Refer to 12.4).ortoeorahet tta
o Wosloon
12.4 FORMULATION OF A PROJECT REPORI
Normally, small-scale enterprises do not include sophisticated technique which is used
for preparing project reports of large-scale enterprises. Within the small-scale enterprises
too, all the information may not be homogeneous for all units. In fact, what and how much
information will be given in the project report depends upon the size of the unit as well
as nature of the production. A generalset of informationgiven in any project report is listed
by Vinod Gupta' in his study on "Formulation of a Project Report". We are reproducing it
here.
Project formulation devides the process of project development into eight distinct and
sequential stages. These stages are:abaneohuotobo mes6el
1. General Information.
2. Project Description.
3. Market Potential.og ubo o oUeRnl oitasolnl le9nsO
4. Capital Costs and Sources of Finance. noteabe oal otomusS
5. Assessment of Working Capital Requirements.
6. Other Financial Aspects.
7. Economic and Social Variables.o bo biiue bas ba
8. Project Implementation.
The nature of information to be collected under each one of these stages has been given
below.

General Information
The information of general nature given in the project report
include the following:
Bio-data of Promoter: Name and address of entrepreneur;the qualifications,
and other capabilities of the entrepreneur; if these are partners,state these experience
of all the partners individually. characteristics
Industry Profile: Areference of analysis of industry to which the project belongs, e.g
past performance; present status, its organisation, its problems etc.
Constitution and Organisation: The constitution and organisational structure of the
enterprise; in case of partnership firm, its
application for getting Registration Certificate registration
with the Registrar of Firms;
from the Directorate of Industries/District
Industry Centre.
Product Details: Product utility, product range; product design; advantages to be
offered by the product over its substitutes, if any.

3. Vinod Gupta: Formulation of a Project Report, National Institute for Entrepreneurship and Small
Business Development (NIESBUD), New Delhi.
should
ter-sales
service Stated Potential
heMarket with period welding etc.
of treatment area.
mentioned inCertiicate
Poposed should itshould required
Technology Capacity Machinery Production transport,
Other
Transport
System--Availability
Communication Pollution
of Utilities:
include:
These Phusical Description
re por
Site: t. ProjFormulation
brief ect Project
rrangements
Marketing
After-Sales product
preparing should (ii) (ii) (i) (i) ()
WDemand
Supply and wle a Kesearch the labourers
filled
inposition. be also of availability.
Water: Fuel:Power: Skilled ofRaw Location
inExpected supply
present be project
indicating conversion shops
Common report.jon raw
the the research be
plant Infrastructure: fromdescriptionof
should mentioned
and be of
FacilitiesRequirements distances ControlThe Requirement Material:
projectproject th e Process-A
and stated sourcesThe
Requirement Labour:
material the
ending Price-An up SelectedThe merntioned report. and should in the of
byDevelopmentA Plant-The project
be and Equipment-A their electrical various Municipal
enterprise;
report. report. project Facilities-Availability from in Requirement
Availability
to supply.
the stated development in be the be Availability the
expected size, mention report:
rmally be proposed unit.Position report, the in raw covered, project clearly aspects and
for for skills. project
in business the repair fuel Authorities owned
This the selectioninstalled type,material quality power,
project stated of of
complete should report.snA
bottlenecks items covering
upon
price should report the mention cost shops like skilled raw of
State activities for or
stated following plan. licensed
of and into of load the
of report. scope
in water such material, leasehold if
the made technology,
should
beetc.transport,
communication case sanctioned, labour following th e
the also the
sourcesfinishedlist made of the
in
nature for product total to should etc., of as
the be capacity of common ne of shouldbe
enterprisefollowing
expectedaspects be be for dumps, coal, in
whether
selling mentioned items shouldmode industries th e land;
project of undertakenmade
arrangements process
ofgoods. be items
the to of their availability
coke,
be of facilities
stated area, location
industrialaspects
product, the relating in th e be of
facilities, sewage clearly inland of
report. realised demand machinery
supply involved transport, stated producing arrangements
product how the plant oil infrastructure
in
project in
or or falls is
should much tofuture. along the like in e-g.,system stated of area; given
rovisions for market made should gas,
power. imported,
clearly
shouldbe in
report. businessplan.
the in
the report and
production machine potential
telephone,
emissions.
of with in state th e No in
beproduct for equipments be and fo r
the residential
should Objection the
mentioned the potentialregarding acquiring th e
enclosed
made gap sewage project of trainingsources project
shops, means
shifts and telex their 91
will and be
for of