Why TEV Study Is Important For A New Business Venture/Expansion Project?

 Techno-Economic Viability (TEV) Study provides an appraisal of technological parameters of projects and their impact on the financial viability of projects. A TEV study is a risk mitigation exercise undertaken by banks and financial institutions prior to a decision taken by a bank or financial institutions on its lending decisions for projects.

No project can be absolutely riskless and hence the analysis of the degree of technical risk and associated financial viability, through a Techno-Economic Viability Study (TEVS) is to assist lenders to take a view on the acceptability of the degree of risk involved in a project.
 
A TEV study takes into account an analysis of technological risk, market risk, regulatory risk, financial risk. A critical evaluation of these parameters is essential for a meaningful TEV study. The TEV study is a continuous process, carried out from the development phase till the execution of the project.

Resurgent India, with the right skill sets to deliver, assists banks and financial institutions perform TEV studies.

Aim of TEV study 

• Reveal the strengths and weaknesses of an existing business.
• Analyze the threats and opportunities in the current environment.
• Streamline all the resources required to make it a success.
• Understand the prospects of the project.
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This study is required by banks, asset reconstruction companies (ARCs), engineering firms, and other institutions for the following purposes:

• Project loans appraisal
• Project financing (that includes term loans)
• Revitalizing distress assets
• Sharpen leadership skills to manage your team
• Cut expenses without compromising on quality
• Automate your business

The key objective of this study is to get a detailed insight into the project descriptions, accounting statements, resource allocations, legal requirements, financial data, tax obligations, etc.

This study is mandatory before technical development and project execution to identify if the project is profitable or not.

Benefits 

• Acquire a crystal-clear idea of whether the project is likely to be successful even before you decide on the human resources, time, and effort.
• Improve the project team’s focus and efficiency.
• Allow you to detect and capitalize on new opportunities.
• Help you to understand the how’s and why’s of the project before even starting it.
• Give you time to streamline your business alternatives.
• Detect problems beforehand and aid in troubleshooting it.
• Enables risk mitigation.
• Get valuable insights to the team members and stakeholders about all the possibilities of the project.

 

The TEV Study encompasses of all the elements required to conclude at an informed judgment to accept a project for lending or investment purpose. Rakesh Narula & Co. provides you with a TEV Report that projects a realistic view of both the positive and negative aspects of a project.

 

Critical Areas of TEV Study

Given below is all the knowledge you need while getting a TEV study report prepared.

• Evaluating the project's sponsors- Getting funds for a business venture also depends on the profile of the sponsors. Hence a TEV report must include the personal and financial profile of the promoters. Their record is also an important factor in determining if you will get the requisite funding for your project.
• Choosing a skilled team for handling the project- A project's success also depends on its people. It is recommended that the project members have expertise from different fields such as HR, Finance, Project implementation, etc.
• Technical evaluation- It is important to assess the project's technical components to reap good results in the future. One must conduct in-depth research on the latest technological equipment and other important resources in advance.
• Financial feasibility- One of the most vital aspects of a TEV study is that the project must be financially viable. It means that the project when executed, must bring good returns, or generate appropriate cash flows to clear the debt. While determining its financial workability, many factors are kept in mind, such as the requirement of the term loan, capital requirement, ratio analysis, etc.
• Market Evaluation- The project idea should be such that it meets the demands of the future market. The demand and supply for future needs must be enough to meet the marketing trends. Hence one must keep in mind this factor while preparing a feasibility study.
•  Simulation analysis/Sensitivity analysis– In this method, you carry out infinite calculations to obtain possible outcomes and probabilities for any choice of action. This financial model is commonly used to predict the outcome of a decision using certain variables In this case, you analyse the impact of variation in key assumptions like selling and raw material prices to know the financial viability of the project.
• SWOT Analysis- SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a strategic planning tool that includes identifying internal and external factors or highlighting the objectives of the project to find the favorable and unfavorable elements to achieve the desired goal.
• Risk Analysis- Last but definitely not least, risk analysis is mandatory. It is conducted by identifying operational risk, market risk, financial risk, and risk in resource mobilization, project execution, regulatory and political risk. The simple reason to include this study is to mitigate the identified risk and come up with preventive measures to overcome issues in the near future.

Conclusion.

TEV is an integral component of project management, such as starting a new business venture or an expansion project. A reliable TEV study will assist you in reducing the risks associated with the project and help you get an unbiased view of the pros and cons of your project. Eliminating the flaws of your project before executing to bring huge returns, and you can obtain more funding to turn your dreams into reality.

Hence always choose experts from the investment banking field while preparing your TEV study. The experts from Resurgent India will guide you step by step for the feasibility report and make you achieve your business goals. For more information visit our website.

Original Source: Why TEV Study Is Important For A New Business Venture/Expansion Project?

Critical Aspects of Techno Economic Viability Study

Every business entity yearns to enlarge its operations and scale up. This is achieved when the present processes are optimized to its maximum monetizing capabilities and newer projects are taken up. However, what are the parameters that would be utilized to benchmark the feasibility for the project? How would an investor perhaps gain trust on investing for the same? True, the promoters' business acumen would be gauged, but what if the project is in a space of a perceived risk sector?

No project is devoid of risks. TEV Studies produces an analysis on the degree of risk in the technical and financial aspects of the project. This encompasses various other factors as well, such as:

• Product description, usage and applications. That would help us gauge the risk in terms of demand fluctuations and product sustainability.
• Prior experience, acumen and funding status of the key management personnel. This would be assisting us regarding the sustainability of the project and in turn, the risks associated with it.
• The prevailing market scenario surrounding the project in total. We would be taking into account both the national as well as international environments. This would enable us to gauge competition, external forces and limitations of the product.
• The technology that would be used for the production of the target product.
• Ease of doing business in the geographic area where the product would be catered to.

Apart from these, we would be deep diving into the technical and financial aspects, with all the relevant ratios, comparisons and perceptions. Prevailing statutory obligations, market forces and the technological ease would be assisting us regarding the feasibility of the project. These in totality would help us analyses the viability of the project.

We, at Resurgent India have successfully are impaneled with 20+ public/private sector banks as consultants, and have executed more than 250+ TEV study till date. Do write to us about your project at corporate@resurgentindia.com for the feasibility of your next strategic project.

Cheers!

Impact on Private Equity Funding From Demonetization to the GST Tax

From demonetization to the GST tax regime, our Indian economy has seen a lot in the previous 5 years! Consequently, the large institutional investors from around the glove have not started considering this new found economy as a wonderful pasture for the private equity. Any of the small investors in our country can join this bandwagon of these large investors, and mint money in this market that is brimming with opportunities.

United States in 1920 & India in 2020

India’s real estate sector almost collapsed after demonetization! Most firms dealing with private equity declared this economy as a cash-starving industry! Indeed it is! There is definitely no denial to the fact that black market deals were happening in the unorganized real estate sector in the country. Maybe, this was the very reason for serious private equity related firms not been keen on this particular sector. However, the budget came as a respite when the RBI said about bringing down the ROIs; so now the ball is in the court of the banks for them to translate this into some serious business. In 1920, USA economists had also supported such type of a move where the Government was told to bring forth massive infrastructure-based project(s) there. In India’s current development, institutional private equity players are displaying a keen interest again in this real estate sector. 

Let Resurgent Be Your Private Equity Partner

At Resurgent India, the experts constantly watch the moves of these big sharks, and as per that, formulate some of the scenarios, which can facilitate the clients’ interests in this market that is ready to take a great leap.

ESOP Valuation Can Be the Modern-Day Lottery for Employees Working in Promising Start-ups

In the year 1971, Carolyn Davidson, a student of Graphic designing, sketched the mark of the right tick on a paper. At that point, she was not aware of the fact that the same mark will make her a billionaire one day. We all know this mark as the iconic logo for Nike. The founder of the company Phil Knight offered a 3 percent of ESOP (Employee stock ownership plan) to her she was not aware of the fact that fifteen years down the line the ESOP Valuation of these shares will first make her a millionaire and then a billionaire (Nike Logo Evolution – The $35 Swoosh, 2018). 

Top Ten Start-Up Companies of India Are Buying Back ESOP’s 

Those who are keen to invest in the start-up companies would definitely show some interest when we will tell them that the top ten start-up companies listed by linked in have already started the process ESOP evaluation. The recent example of ESOP Valuation belongs to OYO. OYO has finally started to implement its ESOP Valuation program, and in the first year, they will buy back shares worth fifty crores (Bansal, 2019).

ESOP Valuation Does Make a Difference!

Almost a year ago when Wall Mart purchased stakes in Flipkart India the valuation of the employees of this company increased. Within no time the share of Flipcart also saw a boom. According to an estimate ESOP Valuation of Flipkart added 1.5 Billion dollars in their kitty prior to the deal with the Wallmart (Rathore, 2019). In general ESOP Valuation based shares act as a dormant share for any company. However, when they sense that after making some moves in the market the share prices will shoot up then they prefer to purchase the shares of ESOP Valuation back. First Wallmart followed by OYO, the trend of buying back the ESOP Valuation based shares is catching up.

As an investor, you can treat it as an indicator and if you wish to explore the details then executives working under the umbrella of RESURGENT INDIA can clear the picture for you. 

Will India Get a “Corporate Pleasing Mandate” on 23 May 2019?

If you are looking for best corporate funding options, then most of the rookies in the matters of the corporate affairs will tell you to wait until 23rd May 2019. On face value, it sounds sensible; a change in the government policy may occur in accordance with the results of the election. However, the experts in the field of corporate funding will tell you that nothing will change. They will tell you that this is the right time to choose your options because there is stagnancy in the market and movers can dictate their terms more precisely and demand better deals. Here we need to understand the fact that unlike the share market, the market for corporate funding moves slowly. Most of the available investment options in the market of corporate funding are slow moving options. Drastic changes in the policies hardly affect them. However, the trustworthiness of these players moving in the market can be a big question. Most of the dealers working in the market of corporate funding are now seeking professional advice. They have strong reasons behind it. After the arrival of the dot.com boom, the intellectual capital associated with a venture has taken the front seat. In the recent past, some "rag to riches" stories shook the market pundits dealing in the business of the corporate funding trends.

RESURGENT INDIA 

Owing to the reasons mentioned above, anyone seeking to route his money in the market with the help of corporate funding wants to explore new avenues. Here the players like RESURGENT INDIA can help them a great deal. As a keen observer of the market trends of corporate funding, the experts working in this organization have the potential to give you some valuable tips. Apart from it, they can also manage your corporate funding portfolio for the best results.

HOW TO CONTROL INCREASING NPA

The Indian banking system, badly fighting with non-performing assets (NPAs) and these are not coming out of crisis despite support from the Ministry of Finance and the Reserve Bank of India. There are many reasons for increase in NPAs like delays in project execution, lower visionary of promoters, unavailability of adequate promoters’ contribution, loss of raw material/supply linkage, high real interest rates, slowdown economic, uncertain clement, political interference and many more. NPAs not only affecting profitability of the bank but also weakening the capital structure and degrading its rating. As a result, we observe stagnation in credit expansion.

Types of defaulters:

Either there could only be two reasons for NPA, the willful defaulters who do not want to pay the loan dues or the borrower is not able to pay the dues.

Willful Defaulters are those who default even when they have the ability to pay the dues. There could be several reasons for this like ‘Weak legal and contract enforcement’ and ‘Deteriorating credit discipline’. To identify such defaulters the process of identification is objective and rule-based rather than discretionary.

Where as in case non-willful defaulters, the macro-economic determinants and bank-specific determinants must be analyzed and redressed promptly.

Role of Credit Management :

The basic reasons for increase in NPA are degradation of quality of credit assets due to poor assessment, project evaluation, deficiencies in credit rating management, due diligence, improper post-sanction compliance, and irregular inspection of activity & monitoring of progress.

Guidelines for consortium discipline need to be redefined to improve the individual & joint credit appraisal, monitoring the implementation, progress after execution and health of account on regular basis.

Besides, Banks may take help of external agencies engaged in Market Survey, Debt Management, TEV study and Credit rating, to have a second opinion on bigger size of project besides appraisal by their internal division for project evaluation.

End use of bank’s funds and promoters’ margin must be verified in view of Debt Equity Ratio by regular inspection and not merely focus on papers and books.

Stock Auditors, besides calculation of drawing power, must also check the holding levels of inventory, debtors & creditors, proportionate projected sales, purchases, whether these are in line with sanction note.

There is need to develop more tools to check early signs of incipient sickness to correct at the earliest, as no unit can be sick overnight.

Role of Credit Appraisal Team:

Most banks have centralized the loan processing, the latest innovation being the applicants submitting loan applications online. It helps in improving transparency and in expeditious disposal of proposals, but the process provides for quantitative information but qualitative aspects do not find a place. Inputs from the branch, on the borrowers’ background and other relevant ground realities, which are crucial in assessing the risks, are not given due weightage. The central processing team should also investigate & crosscheck all key information before credit appraisal.