After the feasibility studies are carried out, a detailed project report (DPR) is required to be drawn up based on the data and results obtained from the studies. The preparation of the DPR is the final and most important stage of pre-investment phase of project. It is on the basis of the DPR, the Project Investments Board and the Cabinet Committee of Economic Affairs give their clearance for the project.
A project report is a detailed plan of action and particulars about the proposed project.
The project report will be prepared for a plan of action to be undertaken which covers various aspects viz.,
iv. Management and
The company will submit the copies of the detailed project report to the banks and financial institutions for their participation in the scheme of finance and also for working capital requirements of the project. A project report consists of analytical study of the proposed project and conclusion can be drawn about its viability. The promoters capacity and competence will also reflect in the project report.
The preparation of DPR is undertaken only after the investment decision is made on the basis of the technical, economic, and financial feasibility studies, so that the expensive efforts involved in the preparation of DPR are not wasted. Process designs, layout drawings and construction data are absolutely necessary for the preparation of DPR.
Generally, completion of the DPR is expected to be completed within a year after the investment decision based on feasibility study. This will enable the early implementation of the project, without rendering the cost estimates to be affected by higher incidence of inflation.
The outline and the content of DPR is the same as the techno-economic feasibility report. All the vital aspects of location and site costs, process/technology, market demand, plant capacity, product revenue, production costs, profitability, economic benefits, etc. must be covered in much greater detail in the DPR. The basic difference between the feasibility study report and DPR is the level of accuracy and degree of detail.
To prepare the DPR from a techno-economic feasibility study report, we have to:
1. Breakdown all project components time-phase and schedule them with more detailed and accurate cost estimates deviations from the feasibility study report with explanations, giving the improved basis for assumptions and calculations.
2. Develop baselines for controlling time and cost during the implementation of the project.
3. Be prepared with all the technical and resource to requirements to implement the project.
The items to be covered in DPR are:
1. Deviations from the feasibility study
3. Physical topographical information
4. Rates and basis for various cost estimates
5. Water and power supply – guarantee from Power Boards/local authority
6. Estimates relating to land, site development, main part structures, auxiliary plant structures, administrative and other buildings, roads and paved areas, railway sidings, water supply, effluent disposal, storm water drainage, power supply, construction plant and equipment, compound wall/fencing, plant layout and equipment, machinery, spares, foundation, erection, electrification, material handling equipment etc.
7. General import duty rates, freight and handling, insurance and contingencies
8. Assessment of working capital requirements with due consideration of inventory and credit policies consistent with marketing network proposed.
Development of ancillary industries is an additional criterion meriting the clearance of DPR for new projects and expansion of existing facilities.
The requirements in this regard are:
a. All DPRs must indicate the parts, components etc. with approximate annual quantities proposed to be procured from ancillary industries around the project, for use in construction operation and maintenance.
b. When applying for industrial license or letter of intent, where applicable, the items proposed to be procured from ancillary industries around the project must be started.
c. Before finalizing foreign collaboration agreements, consideration should be given to items obtainable from ancillary industries.
Contents in Detailed Project Report:
A detailed project report, generally, contain the following information:
i. Introduction to Project and Industry:
1. Industry position in the world scenario
2. Industry position in the country
3. Value addition by the industry
4. Profile of the industry in the country
ii. Project Details:
2. Registered office
3. Location of the factory
4. Line of activity
5. Background of other directors
6. Scheme of project
7. Land and site development
8. Building and civil works
9. Plant and machinery
10. Contingencies to plant and machinery
12. Miscellaneous fixed assets
14. Quality control and testing equipment
15. Erection and commissioning
16. Technical knowhow fee
18. Preliminary and preoperative expenses
19. Working capital margin
20. Schedule of implementation
21. Management etc.
iii. Raw Materials Details:
1. Requirement of raw materials
2. Situation of raw material availability indigenously
3. Feasibility of import of raw materials
4. Areas from which raw material can be procured
5. Suppliers of raw materials
6. Annual requirement
7. Transportation of raw materials
8. Varieties and grades of raw material
9. Cost of raw materials and transportation cost to the factory
10. Linkages with suppliers of raw material.
iv. Utilities Details:
3. Compressed air
6. Chilled water
7. Effluent and waste disposal etc.
v. Manpower Details:
1. Manpower requirement
2. Organization chart
3. Availability of manpower
vi. Technical Details:
1. Plant capacity
2. Capacity utilization
3. Manufacturing process with flow chart
4. Plant layout
5. Product description and properties
6. Packing and its cost
7. Technical know-how
8. Plant and machinery details
9. Plant and machinery suppliers
vii. Financial Details:
1. Cost of project, with details to individual cost items
2. Means of finance
3. Assumptions made in financial projections
4. Estimates of production and sales
5. Estimated cost of production and profitability
6. Estimated funds flow statement
7. Projected balance sheet
8. Statement of debt service coverage ratio
9. Statement of computation of working capital
10. Statement of break-even analysis
11. IRR calculations
12. Payback period calculations
13. Return on investment calculations
14. Debt-equity ratio calculations
15. Promoters’ contribution to Cost of project
16. Promoter’s contribution to Total equity
17. Workings for financial projections
viii. Marketing Details:
1. Present state of the industry
2. Consumer preferences
3. Market requirements
4. Market segments
5. Distribution channels
6. Market characteristics of the product
7. Export prospects and international market
8. Marketing and selling arrangements
ix. Project Evaluation-Social Angle:
1. Analysis of critical factors
2. Socio Economic benefit
3. Labour availability
4. Impact on ecology
5. Foreign exchange earnings
6. Value addition
7. Import substitution
8. Technology absorption etc.