Techno Economic Viability

An entrepreneur/ industrialist desirous of setting up of his own industry has to perform multifarious activities in a logical sequence.
Setting up may be new or an addition to the existing unit.
He has to arrange finance for setting up of new industry or addition to existing unit.
He has to obtain finance from the Bank / FIs. or from the market.
Before obtaining finance from the Bank, the Bankers will conduct TEV study.
Setting up of unit involves the following :
1. Selection of a product
2. Market Study
3. Preparation of Project Feasibility Study
4. Technical Appraisal
5. Economic Appraisal
6. Preparation of Project Report
7. Selection / Location and Acquisition of Land
8. Registration formalities
9. Construction of factory building
10. Financial Appraisal
11. Assistance of Financial Requirement
12. Order for Plant and Machinery
13. Apply for power connection
14. Installation of Plant and Machinery and trial run.
15. Arrangement for raw-materials and manpower
16. Marketing of products
17. Sales Realisation
18. Selection/ Location and Acquisition of land

On the basis of policy of the Bank, the TEV Study limit has been fixed by the Bankers.
- TEV study is normally conducted for the loans for Rs.50.00 lacs and above, as insisted by majority of Banks.
- TEV study is mandatory for the loans above Rs.10.00 crores.

When proposal of loan is received from the customer/ borrower, the Branch Manager will have to appraise the project to know whether the project is technically and financially feasible and viable?
If the Bank lends the money, whether there will be regular repayment of loan out of the internal generation of funds?
Whether adequate securities are available against Bank’s exposure and what will be the FMV?
What is the position of financials of the Company ?

To collect the necessary information/ documents from the customer/ Bank.
To study the projections given in the project report,
To visit the site to verify the land, building, machinery etc as per the projections.
Submit the report on financials and technical aspects of the unit to the Bank with concluding remarks.