Feasibility study which at least incorporate the following issues (Review points)

1.1. Executive summary

 Explanation of the business idea (description of the project, product quality,
feature etc.;
 Reason and rationale for selecting the particular business in terms location,
environment, proximity to source of raw material and market and other
reasons
 Competitive advantage of the product;
 Social benefit (employment creation, tax generation, market for local raw
material, foreign exchange gains and benefit to consumers;
 Cost benefit analysis, if the product of the project is mainly for the
substitution of import (comparing importing complete set versus local
production);

1.2. Promoter/shareholders and Key Management Review.

 promoters/shareholders detail like names, education qualification and
business experiences,
 Type of business they involved in or owned (supported by MoA and AoA),
trade licenses, business performance report supplemented by financial
statements,
 In case of project expansion, review of their existing business fixed
investment and production (operating capacity) and financial performance
substantiated with financial statements
 Financial strength and personal net worth/ source of equity, evidenced by
statement of bank accounts and capacity of raising the equity, or any other
legal source including remittance
 Share capital (paid up capital) investment proposal and the so far outlay
 Project Manager profile including education qualification, capability and
experiences,
 Current status of project under establishment, if project is already
commencing the investment and lay out of the share/paid up capital
 Additional document required under annexed business plan format
1.3. Product description

1
  Clear description of the product in general, (the physical as well chemical
nature of the product) the product mixes, basis of products variation and
mix selection,
 Product differentiation from other similar product producers or substitute
products (competitive advantage).
 If expansion, if new product is proposed to be introduced, clear description
of the new product and variation from the existing one or augmentation of
quality or change in brand.
1.4. Market Analysis
 Profile of investors in particular business field (investors at pre-
implementation stage, at implementation and operational stage based on
the information from Ministry of Investment, or from other source which
provide data evidencing the size and composition of market.
 Details of Existing suppliers in the market Profile of the operational
ones, list of names of producers, brand of their product, current operating
capacity, attainable/full capacity and identified major reasons for variation
based on the information obtained from Ministry of Industry, ministry of
Trade, Central Statistic Authority or from any other concerned
governmental or non-governmental organizations,
 Data of import and export from Revenue and Customs Authority
 Trends of local production in volume and value at least for the latest five
years
 Trends of import in volume and value at least for the latest five years
 Trends of total present supply in volume and value at least for the latest
five years
 Trends of Local production and import of near substitute at least for five
years
 Trends of Local production and import of complimentary products at least
for five years
 Trends of export of the project’s product by volume and value
 Factors affecting and key growth driver of demand of the products
 Trends of demand in volume and value at least for latest five years.
 Projection of demand based on realistic and grounded estimates using
logical method of projection at least up to the end of project life

2
 Projection of supply based on realistic and grounded estimates using
logical method at least up to the end of project life (considering the
attainable full capacity and investment on pipe lines as potential supply)
 General economic indicator and government policy in relating to the
product demand
 Target market of the project, contract at hand or any privilege granted by
the government
 Demand supply gap/potential market at least up to the end of project life
Marketing strategy
 Marketing mix based on other competitor experience (product, place,
promotion and price)
 Distribution strategy and any other arrangements, availability of out lets or
contract basis
 Determination of cost related to marketing
Prices
 Price analysis, selling price of locally produced similar products and
imported similar good price, prices of substitute goods
 Proposed selling price per unit for each product type
1.6. Technical Analysis
6.6.1 Location and civil work
 Justification for selection of location of the project, proximity to raw
materials and market, availability of infrastructure (power, water,
transportation, communication and other),
 Project space requirement, civil work layout, and appropriateness of
the civil work, and construction period
 Accommodating capacity of building, availability of sufficient store,
laboratory or any arrangement the project demands
 Suitability of the area climatically, soil type, and others factors,
vulnerability to natural calamities, diseases and other factors for
agricultural project,
 Developed land and area to be developed (estimated by bank
engineer), for the agricultural projects
 Estimated cost of building by bank engineers

3
 If the request is expansion of project, adequacy and suitability of
site of the project for expansion of the project
6.6.2. Machinery
 Type, purpose and number of machinery to be purchased, pro
forma invoices for each machinery
 Reason for selection of the specific Supplier and machinery
 Plant layout and basic engineering
 Description, catalogue and specification of the machinery like
capacity, power and other utility consumption
 If the request is expansion of project, check whether the expansion
requires new and independent line of process or share some from
the existing one
 If the project produces different products, check whether the same
machinery or different machinery produce the products, are the
machinery works batch by batch or simultaneously
 The expected delivery schedule of the machinery and preferred
payment terms
 If the machinery already imported by the promoter, the
chamberized and commercial invoice of machinery and related cost
expended
 If the applicant already enters contracts for the purchase of the
machinery, the contract with detailed terms and conditions has to
be presented
 Turnkey agreement is expected to be presented, if not, the
arrangement for installation, erecting, commissioning and training
should be clearly described

6.2. Furniture and Equipment

 Breakdown of furniture and equipment both in type and number
(including generator and transformer) and the corresponding pro
forma invoices
6.6.3. Vehicles
 Number, type and purposes of vehicles to be purchased should be
explained, and pro forma for each vehicle must be presented

4
  Clear justification on number of vehicles required based on
transportation lay out (for instance if dry cargos are proposed to be
purchased for transportation raw material and/or finished goods,
the number is expected to be determined based on reasonable
assumption like on distribution areas/loading area, distance to be
travelled, frequency of travel per month, production volume versus
loading capacity of truck. (refer to annex sample format).
6.6.4. Related issues
 Pro forma for any fixed asset proposed to be purchased and with
respective purpose
 CIF and related charge for all items to be imported, if
possible substantiated with supported documents
 Letter from the concerned Governmental organ for installation of
power, water and other required infrastructure with respective
costs
 List of Pre-operating expenses (like investment studies, company
formation costs, project organization and management cost,
contracting and negotiation costs, pre-production supplies,
marketing, plant commissioning, trial run) supported by documents
 Finally, revised project implementation schedule (which at least
include construction of building, importing of machinery and
equipment, installation power and water, erection of machinery,
commissioning, training personnel, trial run, commercial production
and other relevant activities;
 Will there be scrap (Left over) and how is the factory going handle
scrap?
 Operational safety mechanism with related costs and;
 Environmental impacts report from concerned government organ
6.6.5. Materials & Utilities
 Types of Principal raw material employed, source of raw materials
and pro form invoices for all raw materials
 Readily availability of raw materials and cost of raw materials
 Extraction rate of major raw material (input-output analysis)

5
  Mix of raw material required for production of unit of a product in
terms type, volume and cost
 List of Auxiliary raw materials corresponding pro form invoices
 Regular supply of required ores/minerals, if applicable, based on the
geological survey and approved concerned governmental body
 Geological survey regarding availability of adequate water source,
if bore water is used
 Packaging materials, if applicable
 Transportation facility for raw materials
 Available facilities and storing
 Cost (cost of production) – selling price Analysis for a unit of
product
 Define the required utility (like power, water, furnace oil and other)
source, type and quantity at peak and annual demand,
 Power and other utility installation arrangement and the respective
cost (substantiated with letter from the concerned organ
 check potential power to be granted by EEPCo versus the machines’
power requirement and sustainable availability of required utility
sufficiently
 check water treatment mechanism is required or not
 availability of skilled, semi-skilled and unskilled manpower as
demanded
Technology and Process
 Description about the selected technology, acquisition and transfer
 Appropriateness (ecologically, socially and culturally) and
adaptability of technology
 The price of technology in terms of one time licensing and periodic
royalty fee
 Period of franchise agreement, if any
 Plant capacity versus production plan
 Minimum economic size or break-even production level, if
applicable
 Description of Process and flow chart
Product Mix and Plant Capacity

6
  The basis for product mix and flexibility of change with market
condition
 The arrangement in the product mix in the production program per
shift as well for each of the project life,
 Description the basis for selected capacity utilization mainly related
with market potential, similar product producers or any other
factors
 Production program in terms of product mix and plant capacity
utilization (production volume) for each year of the project life,
 If the request is expansion of project,
 indicate the existing operation capacity and the capacity to be
reached by making expansion
 profile of the existing project including list of fixed asset and
financing, brand of existing product with respective selling price,
capacity of operation, cost and revenue projection, working capital
requirement, cash flow delineated from the expansion project (if
possible substantiated with recently invoices for raw material
purchase, cost of utilities, pay roll sheet of the employee, and
invoices for other expenses)
 proposal on investment on fixed asset, capacity of operation, cost
and revenue projection, working capital requirement, cash flow
separately
Organizational structure and human resource analysis
 Organizational set up with full description of function of various
department and relationships
 Human resources requirement in category, number per each
category and salary and benefits
 Profile all the key management, educational qualification and
experience
 Plan for recruitment and training scheme
 External consultancy service, if applicable
Financial Appraisal
 Exhaustive and realistic assumption (like project life, annual
working days, production capacity, depreciation and amortization,

7
 salvage value fixed asset, working capital recovery, tax holiday
incentive granted by the government for the specific investment
line., income tax, discount rate, repair and maintenance,
insurance, advertisement and promotion) and others
 Project investment per category with respective source of fund
and implementation phase
 Project cost, classified in terms of investment type and
financing plan (equity capital, bank finance, supplier credit,
government, unsecured loan from promoters, internal accruals
and other source if any
 Detailed element of operating Cost and estimate (direct and
indirect material cost, direct and indirect material labour costs,
utility cost, factory overhead (repair and maintenance, insurance,
rent), administrative as well selling expenses and others) and
detailed revenue components and estimates (based on capacity
of operation production volume and prices)
 Projection Cost and revenue based on production program
 Determination of initial working capital including break down
of direct and indirect material need, factory overhead cost and
other component of working capital per the business’s policy (in
terms of volume, cost, coverage period, depending of capacity of
utilization)
 If the request is expansion Break down of additional working
capital which will emanate from the expansion of the business and
separately from the existing ones
 If the request is expansion Breakdown of raw material and
finished products available in store in terms of type, volume and
value, breakdown of receivable and payable by age.
 Schedule of debt servicing
 Cash flow for planning (application of fund statement) with
content of source cash flows (sales, working capital recovery,
salvage value of fixed asset and others) and outflows (operational
cost and expenses, profit tax, principal and interest payment,

8
 replacement of fixed asset, increment of working capital and
others)
 cash flow for discounting with NPV and IRR (using the
prevailing cost of capital)
 break even analysis
 sensitivity analysis
 SWOT analysis