SMEs PROJECT FINANCING
PROF. MAYANK PATEL
PROF. RAVIRAJ GOHIL
This is to acknowledge all those without whom this project would not have been a reality. Firstly I would to convey my heartfelt thank to my Professors, Prof. Mayank Patel and Prof. Raviraj Gohil, who always help me by giving valuable suggestions and guidance for completion of this project.
I am also very thankful to my father Mr. Vimal Garg who provide me a unique platform to fulfillment of this project and provide practical exposure to earn knowledge in the field of sanctioning procedure of ...view middle of the document...
* This project also contains the practical concept of how to finance and what its financing procedure followed to finance a project of SME by a bank and various guidelines for banking sector issued by RBI.
Brief Description of Project:
This project has been divided into two parts and includes two case studies. The first part consists of general concepts and principles of Project Financing which are followed by the proprietor or firm to finance its project and it also includes the forecasting of all the financial conditions of a project.
The later part of this project contains the financial support provided by banks like ICICI, to finance a project of SMEs to run their units with fulfilling all the legal requirements and, necessary terms and conditions issued by RBI.
The Medisol Health India Pvt. Ltd. case deals with project financing as a dental private hospital open by a doctor and prepare a project report which consist of forecasted 7 years financial details of that hospital for appearing it to a bank for financing the hospital.
The M/s Krishna Minechem & Co. case involves with a SSI of mineral powder which is financed by ICICI bank and it mostly deal with all the requirements need by bank and provided the term loan and cc limit on WC facility and to sanction this loan the process followed by bank for financing a SSI of mineral powder.
As this project deals with two type of sector so there is a brief introduction on both the issues. As firstly introduction of project financing which consists what is project financing, its history and its methods, etc.
After that the introduction of Banking take place which involves definition of banking as per Banking Regulation Act,1949, function of commercial banks, banks in India and different product provided by a bank for financing and also loan procedure followed by bank in India to financing a SSI project or general project.
Introduction of Project Financing
What is Project Financing?
Project finance is the long term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors.
Project finance is finance for a particular project, such as a mine, toll road, railway, pipeline, power station, ship, hospital or prison, which is repaid from the cash-flow of that project. Project finance is different from traditional forms of finance because the financier principally looks to the assets and revenue of the project in order to secure and service the loan. In contrast to an ordinary borrowing situation, in a project financing the financier usually has little or no recourse to the non-project assets of the borrower or the sponsors of the project. In this situation, the credit risk associated with the borrower is not as important as in an ordinary loan transaction; what are most important are the identification, analysis, allocation and management of every risk associated with the...