Amit Singla, GEC, Panipat

Amit Singla, GEC, Panipat

It represents the total of all items of outlay

associated with a project which are
supported by long-term funds. It is the sum
of outlays on the following:
Land and site development
Buildings and civil works
Plant and machinery
Technical know-how and engineering fees

Amit Singla, GEC, Panipat

Expenses on foreign technicians and training

of Indian technicians abroad
Miscellaneous fixed assets
Preliminary and capital issue expenses
Pre -operative expenses
Margin money for working capital
Initial cash losses

Amit Singla, GEC, Panipat

Balance Sheet
Cash Flow
Statement
Cost of Project
and Time Phasing

Depreciation
Cost of Production
Working Capital
Needs
Production Plan

Means of
Finance and
Time Phasing
Interest and Loan
Repayment
Estimate of
Working
Results
Working Capital
Advance

Projected Sales
Amit Singla, GEC, Panipat

Interest
on WCA
Tax Factor

Share capital
Term Loans
Debenture capital
Deferred Credit
Incentive sources
Seed

capital assistance
Capital subsidy
Tax deferment or exemption

Miscellaneous sources
Unsecured

loans
Public deposits
Amit Singla, GEC, Panipat

Norms of regulatory bodies and financial

institutions
Key business considerations : Cost
Risk
Control
Flexibility

Amit Singla, GEC, Panipat

Material cost
Cost of raw material
Chemicals
Components
consumables

Utilities cost

Power, water and fuel

Labour cost
Factory overhead cost
Repairs and maintenance
Rent, taxes, insurance on factory assets

Amit Singla, GEC, Panipat

The working capital requirement consists of

the following :

Raw materials and components

Stocks of goods-in-process
Stocks of finished goods
Debtors
Operating expenses
Consumable stores

Amit Singla, GEC, Panipat

The principal sources of finance are :

Working capital advances provided by

commercial banks
Trade credit
Accruals and provisions
Long term sources of financing

Amit Singla, GEC, Panipat

There are limits to obtaining working capital

advances from commercial banks. They are in two
forms:

The aggregate permissible bank finance is specified as per

the norms of lending.
Against each current asset a certain amount of margin
money has to be provided by the firm.

The Tandon committee has suggested methods for

determining the maximum permissible amount of
bank finance for working capital.

Current assets as per norms laid current Down by the Tandon committee (0.75)
--Non bank liabilities like trade credit and provisions

Amit Singla, GEC, Panipat

Cost of production
Total administrative expenses
Total sales expenses
Royalty and know-how payable
Total cost of production
Expected sales
Gross profit before interest
Total financial expenses
Depriciation

Amit Singla, GEC, Panipat

Operating profit
Other income
Preliminary expenses written off
profit / loss before taxation
Provision for taxation
Profit after tax
Retained profit
Net cash accrual

Amit Singla, GEC, Panipat

Amit Singla, GEC, Panipat