1.

EXECUTIVE SUMMARY

1. EXECUTIVE SUMMARY
1.1 INTRODUCTION OF THE PROJECT :

Project entirely deals with company set up and financial feasibility report of the Paramahance Public Information Center Pvt Ltd. Project report mainly includes the company profile, objectives, feasibility report, data analysis, projected financial statements for current financial year and next five financial years, and interpretation as well as the work which I was assigned to be fulfilled regarding analyzing the financial position of the company.

In my brief stay at Paramahance Public Information Center Pvt Ltd., I was able to understand the various aspects relating to accounting and finance which were being undertaken by the company in an efficient manner. They also helped to make me associated with their day to day activities i.e. about the working of the companys finance as well as accounting departments.

During the my project I was assigned the work regarding the estimate and prepare projected financial statements of the company i.e. the profit and loss account as well as the balance sheets of the company for current financial year and next five financial years as the base of the present year upon which company estimate its business position for next six years. I also done some work related to accounting and financing of the company.

Later on I learnt various new aspects regarding accounting. For the requirement of the finance for this project company will be use its 30% own funds and remaining 70 % finance will take from bank as a long term loan to set up the project. The project on Company Set up and Financial Feasibility Report. Paramahance Public Information Center Pvt Ltd. Is a newly set up company in this year. And is a very well known company in the field of providing required information to public in short period of time. The duration of the project was two months i.e. 1st June 2012 to 31st July 2012.

1.2

ABOUT THE PROJECT : Start Date- 15th dec., 2011 Project feasibility is a test by which an investment is evaluated. There are three types

of feasibility evaluated for project viz1) Market feasibility 2) Technical feasibility and 3) Financial feasibility. For project evaluated by government, economic and social feasibility is also considered. This project only deals with financial feasibility of the company.

Paramhansa public information center Pvt. Ltd., a company committed towards welfare of masses, envisions a mechanism that delivers the mainstream government services through the E-governance platform with the effectual utilization of Information communication and technology (ICT) across entire state of Maharashtra. Company doing service providing and earning revenue. I complete this project for above company. PROJECT TITLE :

Company set up and financial feasibility report

REASON FOR CHOSE THIS PROJECT & THIS COMPANY? The union government of India as well as the state government of Maharashtra have implemented plethora of social schemes for the welfare of masses. However such schemes are unable to reach the lowest rungs of the social structure thanks to the corrupt governance and the illiteracy and apathy of the masses towards political innovations.

Above company is starting to prove services to public and its indicators are prove that it will spread in short period. Company believe in quality of service, friendly service and

providing services in short time as possible. LOCATION : PARMHANSA PUBLIC INFORMATION CENTER PVT.LTD." 104, SWAROOP COMPLEX, OPP.KALMADI HOUSE, KARVE ROAD,PUNE-04

 DURATION OF THE PROJECT: Duration- One current financial year and next 5 estimated financial years. HOW THIS PROJECT CARRIED OUT : This project was carried out in the company. I completed this project in guidance to company officer. The period of two months I personally visited every day in company to gathering information, observe the procedure, involved in daily work and study about structure of the company. I also collect the information about the past expenses and all the information about the financial aspects. For completion of the project I also gather the information about market and external environment which can affect the company.

1.3

RESULT (OUTPUT) IN SHORT CONCLUSION:Result of the project in short conclusion is company set up the branches in District

places and then after its successful working company set up its branches in Taluka places. For successful this project company must improve and continuously observe its management. Management plays very important role in every entity. If managements fails the company cant be succeeds in its objectives thats why company strictly and periodically observe its management system. The Company shall start providing its services on internet. Internet helps the company to spread in short period and in small investment. Internet is very good medium through which company achieve its objective in short period. Doing the business of the internet company should strictly observe the payment system, security of payment, security of the data and user friendliness of the system.

2.

COMPANY PROFILE

2. COMPANY PROFILE

2.1

NAME OF THE COMPANY: Paramhansa Public Information Center Pvt Ltd

2.2

ABOUT THE PPICPL:

Paramhansa group is a group of young, dynamic, socially oriented people from different walks of life. The group has set a mission to carry on the business to establish and set-up information centers and database facilities to provide information regarding various governmental schemes introduced at Central and State level so as to enable entrepreneurship and youth enablement programs and to engage in consultancy and training services in the field of entrepreneurship and to provide advisory services to set up, operate, market and develop business plans and models relating to various industries and to arrange various events, seminars, conferences to educate and publicize the government schemes and also to provide services related to planning, execution, operation, financing, advertising, manpower and technology supply, consumer and product analysis and human resource development and to facilitate access to information by providing advisory services for RTI applicants through Paramhansa Public Information Center Private Limited, a company incorporated and registered under the provisions of The Companies Act, 1956. VISION : To co-ordinate with the state government to transform entire Maharashtra state into an economically vibrant and sustainable region with myriad opportunities and affluent culture, where each and every citizen relishes in a secure and conducive environment with excellent connectivity MISSION : Allegiance towards being a catalyst in E-governance through nonpareil dedication for achieving excellence in civic services along with a receptive, accountable, up-to-date, undemanding, and crystal-clear Administration.

PPICPL believes that e-Governance is a majestic opportunity for the upliftment of masses by committing to be citizen-centric, proffering cost-effective services and enhancing governance through a superlative access to accurate and impeccable information. Thus, eGovernance is no more an experiment in administrative reforms but an eternal part of the governing process in its entirety. And, for both the government organizations and the citizens, the benefits of E-governance far outmatch the total outlays incurred in establishing the e-governance modules. LOCATIONS PRODUCT RANGE AND VARIETY : PPICPL E-governance citizen facilitation centers (CFC) would be set up across all the 35 Districts and 395 Talukas of Maharashtra state.

Each CFC would have 6 personnel

District Information Control Officer ( DICO) Taluka Information Control Officer (TICO) Assistant Information Control Officer (AICO) Lessoning Officer (LO) Clerk(CK) Peon (PN)

The CFC would be responsible for giving information regarding government to citizen (G2C) and Business to Citizen (B2C).

The various G2C services would be- Central and state Government schemes - Right to Information (RTI) - Intellectual property Right (IPR) - Free Legal Aid - Govt. Affidavit and certificates

The various B2C services would beA) E-Billing:-Electricity Billing -Mobile Recharge, -DTH Recharge, -Tax payment B) E-Booking:-Train Booking -Bus-Booking -Tours and Travelling -Flight booking C) GPS-Direction and places BRANCHES AND OFFICES :The central office of PPICPL is located at104, swaroop complex, Opp. Kalmadi house, Karve Road, Pune-04

PPICPL E-Governance citizen facilitation centers (CFC) would be set up across all the 35 Districts and 395 Talukas of Maharashtra state. HISTORICAT DEVELOPMENT OF THE COMPANY : PPICPL is the part of the Paramhansa Group of the companiesOther company include in Paramhansa group-

Paramhansa cybernetic Pvt.Ltd. Paramhansa Hotels paramhansa Properties paramhansa Tours and Travel

 SOME OF THE IDEAL ASPECTS OF PPICPL INCLUDE : Quick redresses of public grievances Common registry of letters for all sections of the offices Online pendency monitoring of all the services To provide services after hours as well as on holidays in order to save time, money and energy of the citizens A unique, all-inclusive, fully secure software with central Database SMS alert system for status of the applicant Automatic weekly and monthly reporting system A separate counter for senior citizens ORGANIZATION CHART:

Paramhansa Group
Paramhans a Cybernetic s Pvt. Ltd. Paramhans a Hotels Paramhansa Public Information Pvt. Ltd. (PPICPL) Paramhans a Tours and Travels Paramhans a Properties

DIRECTO R

CEO

PROJ. MGR.

CENTRAL ADMIN TEAM

DICO

TICO

AICO

LO

CK

PN

 LOGO OF THE COMPANY :

2.3

S.W.O.T ANALYSIS OF E-GOVERNANCE :

Strengths

Weaknesses

Simplify administrative routines and Illiteracy about Man-Machine improve services interface Saving expensive labor cost by Achieving an effective E-Government replacing it with computers. can distance public administratorsfrom the general public Reducing citizens dependence on civil because many services will be servants provided through telephone, fax, e Making public administration more mail or the Internet as in the case of transparent and open the banks' ATMs. Assisting in establishing bilateral and Evoking demand for E-governance global relations among people and training people to use them is a enables local and regional communities tiresome mission. to increase their involvement in People differ significantly by their governance approach and use of advanced Removal of Red-tapism computerized systems. Superlative way to build a knowledge E-Governance society

Opportunities
An Administrative channel for meeting the regular and routine demands of the general public, A designated channel for servicing particular needs of individuals and groups.

Threats Society could be differentiated into 3 sectionsYoung who entirely believe on ICT, middle aged who partially believe on ICT and aged who are totally sceptical about ICT Such a divided society encourages the young and able to proceed fast whileits other parts, the older and the less competent, will stay behind Civil servants incline to alienate themselves from common citizens who find it necessary to feel that they, as taxpayer citizens, should get a personal treatment from civil servants Transformingbureaucrats from service providers into service supervisors E-Government Performance should be evaluated

3.

OBJECTIVE & SCOPE OF PROJECT

3. OBJECTIVES & SCOPE OF THE PROJECT

3.1

TITLE OF THE PROJECT: ''COMPANY SET UP AND FINANCIAL FISIBILITY REPORT

3.2

DIFFEERENT OBJECTIVES BEHIND CONDUCTING THIS PROJECT:

A) PRIMARY OBJECTIVES
Look out the whole company project Understanding The financial Requirement Of Company Getting Familiar With The Companys financial Process Cost analysis of the specific requirements & providing a feasibility report to the company. Estimate the company financial position in current financial year and next 5 years. Estimate financial feasibility of the company for current financial year and next 5 years. B) SECONDERY OBJECTIVE : Analysis about the cost affairs: Company registration charges advertising cost data entry cost cost for arranging Interviews Cost of setting up centers across Maharashtra salary structuring Profit and loss statements Cash flow statement Loan repayments statement Balance sheet

3.3

SCOPE OF THE PROJECT : The process of setting up a business is preceded by the decision to choose

entrepreneurship as a career and identification of promising business ideas upon a careful examination of the entrepreneurial opportunities. Generation of ideas is not enough; the business ideas must stand the scrutiny from techno-economic, financial and legal perspectives. That is, after the initial screening of the ideas that do not seem promising prima facie, you should conduct an in-depth examination of the chosen three-four before settling for the one where you would like to exert your time, money and energies. You should prepare a business plan that will serve as the road map for effective venturing, whether you may require institutional funding (in which case it is necessary to do so) or not. Setting up of new business enterprises is a very challenging task; you are likely to encounter many problems en route. Its advisable to be aware of these problems as to forewarn means to fore arm Analysis of the cost affairs-

4.

THEROTICAL BACKGROUND

4.
4.1

THEROTICAL BACKGROUND-

INTRODUCTIONS : Before an investment decision is made it is necessary to determine whether or not

the planned investment idea is feasible. The feasibility of an investment has to be considered with respect to several different aspects in order to determine whether the investment should be realized or not. Carrying out a feasibility analysis is therefore one of the most critical steps in the decision-making process. A feasibility analysis is an effective analytical tool that can be used to evaluate investments from various perspectives, e.g. finance, technical, social, legal, financial,

market, and organizational. Financial feasibility is often a predominant factor in feasibility analysis, as most investments are not realized if they do not generate profit for the project owners. The focus of this thesis is on financial feasibility analysis and its application in the decision-making process. Precision and reliability of financial feasibility analysis relies on the accuracy of information used in the analysis. The appropriate level of detail has to be decided with respect to what stage the investment is on. On early stages the level of uncertainty is often high, but as the investment opportunity evolves information become more detailed and reliable. As uncertainty can highly affect the results of the analysis, the level of detail has to be taken into account when basing decisions on the results. To assess the financial feasibility of investments relevant criteria have to be chosen. Financial feasibility calculations need to be done with care and the complexity of the calculations depends on the number of different aspects that need to be considered. The assumptions used in the calculations can, and often will, change as the project progresses and then the analysis needs to be updated. Using mathematical models for the calculations makes it easier and less time consuming to update the analysis. It also makes it easier to conduct sensitivity analysis on key parameters, which makes it possible for investors to envision different scenarios and possibly mitigate risk associated with these parameters.

The objectives of this thesis are summarized in the following four research questions: How should the financial feasibility of an investment project be measured and calculated? How should a financial feasibility assessment model be constructed? How should risk associated with investment project be analyzed?

 How can an investor predict if and when it will be optimal to sell an investment project?

The purpose of feasibility report is to estimates and properly utilization of resources. To Estimates about sources of funds and application of funds is helpful for direction as well as to success our business.

In every entity starting point is estimates about the business. Estimates plays important role in business formation as well as to success the business.

4.2

FEASIBILITY REPORT : Project feasibility is a test by which an investment is evaluated. There are Three

types of feasibility evaluated for project viz. 1) Market feasibility 2) Technical feasibility and 3) Financial feasibility. For project evaluated by government, economic and social feasibility is also considered. This project deals with Financial feasibility of the company.

4.3

FINANCIAL FEASIBILITY : Demand and price estimates are determined from the market feasibility study.

Project costs along with operating costs are derived from technical feasibility study. The estimates have to be made from a) tax implications of the prevailing tax law, b) financial costs involved from financing alternatives for the project. Financial feasibility study requires detailed financial analysis based on certain assumptions, workings and calculations such as: 1) Projections for prices of services cost of various resources for providing services, capacity utilization. The actual data of comparable projects are included in the estimates. 2) Period of estimation is determined on the basis of product life cycle; business cycle, period of debt funds etc. and the value of the project at the terminal period of estimation are forecasted. 3) Financing alternatives are considered and a choice of financing mix made with regard to cost of funds and repayment schedules.

4) Basic working in different schedules like Interest and repayment schedule, working capital schedule, working capital loan, interest and repayment schedule, depreciation schedule for income tax purposes, depreciation schedule for the purpose of reporting under Companies Act, 1956 (if policy is different from income tax rules.) 5) Financial indicators calculated from data available in various financial statements. Basic financial parameters used for judging the viability of the project are Interest Coverage Ration, Debt-Service Coverage Ratio (DSCR), Net Present Value or internal rate of return (IRR). Some firms use payback period interest coverage ratio, Net present value (NPV), as alternate additional tools. 6) Financial statements prepared in the project feasibility report viz. profit and loss account, balance sheet and cash flow statement for the proposed project. ASSESMENT RISK :Basic indicator of financial viability use profit and cash flow estimates subject to risk or uncertainty. Evaluation of risk is necessary through the adoption of various analysis. FINANCIAL PROJECTIONS :In assessing the financial viability of a project it is necessary to look at the forecasts of financial condition and flows viz. Projected Balance Sheet Projected cash flow statement

4.4

OBJECTIVES OF FEASIBILITY REPORT: This is formal document for management use, briefly enough and sufficiently non

technical to be understandable by high level management. There is no standard or formal format for the preparation of feasibility report. Analyst usually decide on a format that suits particular user and system.

The primary objectives of this report is to inform about the following matters. What the proposed system will achieve. Who will be involved in operating the proposed system in the organization. The benefits that system will give. The organizational changes needs for its successful implementation. The estimated cost of the system.

4.5

PURPOSE OF FINANCIAL FEASIBILITY ANALYSIS : For investors to engage in a new investment project, the project has to be financially

viable. Invested capital must show the potential to generate an economic return to investors at least equal to that available from other similarly risky investments, i.e. the return on investment needs to be equal or higher. For example, an investor expects a manufacturing facility to generate sufficient cash flows from operation to pay for the construction of the facility and ongoing operating expenses and, additionally, have an attractive interest rate of return. Estimates of the cost of operating and maintaining a manufacturing plant, as well as expected income generated, are therefore essential in determining the financial feasibility of the facility. Financial feasibility analysis is an analytical tool used to evaluate the economical viability of an investment. It consists of evaluating the financial condition and operating performance of the investment and forecasting its future condition and performance. A financial decision is dependent on two specific factors, expected return and expected risk, and a financial feasibility analysis is a means for examining those two factors RISK ANALYSIS : The results from the financial feasibility assessment model presented above assume complete certainty in data, and therefore also the projected cash flows. Even though the results can provide reasonable decision basis, the decision maker should not disregard the possible effects of uncertainty on the financial feasibility of the project. The term project risk is used to refer to variability in a projects financial feasibility, and greater risk means greater potential of loss. The reliability of the assessment depends on the accuracy of the cash flow calculations, i.e. the projected cash flows and their timings. Each input parameter is affected by many risks and uncertainties, which may have a significant impact on the outcome of the financial feasibility analysis, and therefore needs to be accurately captured in the decision-making process.When using a spreadsheet model, like the model introduced in this thesis, both input parameters and outputs derived from the input parameters have singular values. Hence, the results only represent a single scenario contingent on the assumptions made on the input parameters. Even though the results from the model can aid investors in decision-making, it does not give the investors an insight into other possible outcomes and the effect of a change in the input parameters.

5.

INTERPRITATION OF THE DATA

5.
5.1

INTERPRITATION OF THE DATA-

BALANCE SHEET :

The balance sheet summarizes the financial position of a project at a given point in time. It shows the projects balances, i.e. its assets, ownership equity and liabilities. It is a statement of the projects investments and the value of the claims to the payoffs from those investments . Assets are divided into fixed assets, such as buildings and equipment, and current assets, which consist mainly of the cash account, inventory and accounts receivables. The balance sheet shows the assets of the project at the end of each fiscal year, and the changes in assets between years, which can be due to e.g. new investments (increase in assets) or depreciation (decrease in assets). BALANCE SHEET FORECAST ( SCHEDULE A) Of the Paramhansa Public Information Center LTD. As on the the date of..

Estimated Financial Years Particulars Current F.Y. (2011-12) Sources of Funds Own Funds Capital Reserve and Surplus (Carried forward from Schedule B) Add : Net Profit (Schedule B) 14464525 16902628 24183040 33321597 44139269 57912973 7788591 9101415 13021637 17942399 23767299 31183909 2915325 25168441 51172484 88377160 139641156 207547724 1 2 3 4 5

25168441 51172484 88377160 139641156 207547724 296644605

Loan Funds Bank Term Loan 5668688 4534950 3401213 2267475 1133738 566869

Total 30837128 55707434 91778373 141908631 208681461 297211474 Application of Funds Fixed Assets Gross Block Less : Depreciation (Anne. 6) Net Block Investments (Sche.C) Current Assets Cash & Bank balances (Sche.C) 12057427 21560844 37020894 62880532 105072803 162207811 2557975 6722275 1370985 5351290 854393 4496897 611192 3885705 481899 3403806 402130 3001676 9280250 6722275 5351290 4496897 3885705 3403806

12057427 28795300 50260582

75142394 100204852 132001986

Total 30837128 55707434 91778373 141908631 208681461 297211474

Ownership equity is divided into capital stock and retained earnings. Capital stock is the equity put forth by the owners of the project. Retained earnings are the accumulated net profits of the project, i.e. earnings after dividends have been paid. Liabilities are divided into long term liabilities and current liabilities. Long term liabilities are the long term loans taken to finance the project, i.e. all loan repayments that are not due in the next year. Current liabilities are mainly next years loan repayments and taxes, as well as accounts payable or dividends. By definition the assets of the project are equal to the total liabilities and owners equity of the project. This is checked in the balance sheet of the model to make sure that the financial statements are correctly constructed. Above projected balance sheet show a very strong position of the company in all aspect. So this project if do under properly control then it Is very good project field. So company strictly control its management and after some time it will be fruits of success.

LIABILITY : In above balance sheet all figures coming from another schedule or annexure. Company initially invested 30 % its own fund to finance this project. Reserve and surplus amount comes from schedule B. Company took a loan for finance this project. Outstanding loan amount shows in every year balance sheet liability side. Loan is repaid after 6 financial year.

ASSETS: Fixed Assets purchased by company in first year and respective amount after deducting depreciations is given in respective balance sheet. Investment and closing balance of cash &Bank amount comes from cash flow statement. Investment amount will increase over the year.

5.2

ESTIMATED COST OF SERVICE PROVIDING AND PROFITABILITY STATEMENT :

Estimated cost means a cost in cost accounting estimated in advance of production or construction. An expenses that has been forecast and which pertains to a given business purpose, product or project. A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement". Following profitability statement deals with the current financial year and next five financial year. Profit and Loss Account For the year ended on
(Schedule B) Estimated Financial Years
Annex . Gross Service Revenue Overheads and Expenses Interview Cost Advertisement cost Data entry cost Salary exp. Govt. fees Rent Exp. Electricity Repairs & Maintenance Printing and Stationery Exp. News paper Exp. Tea and Snaks Exp. Sundry Exp. Postage Exp. A. Total Cost 5 Current F.Y. 2011-12 85750000 1 94325000 2 117906250 3 147382813 4 184228516 5 230285645

416000 40000 73000 25434000 17150000 5040000 483000 352800

62400 6000 83950 27977400 18865000 5443200 531300 388080

49920 4800 96543 30775140 23581250 5878656 584430 426888

45760 4400 111024 33852654 29476563 6348948 642873 469577

54080 5200 127677 38930552 36845703 6856864 707160 516534

66560 6400 146829 44770135 46057129 7405414 777876 568188

315000 130200 567000 514500 48300 50563800

352800 143220 635040 576240 51681 55116311

395136 157542 711245 645389 55299 63362237

442552 173296 796594 722835 59170 73146246

495659 190626 892185 809576 63311 86495129

555138 209688 999248 906725 67743 102537072

B. Net Receipt (Gross Revenue Cost) C. EBIDT D.Financial Expenses Interest on term loan F. EBDT G. Depreciation H. Operating profit ( PBT ) I. Provision for Taxiation J. Profit after tax - (PAT) K. Transfer to Reserves L. Net profit

35186200 35186200

39208689 39208689

54544013 54544013

74236566 74236566

97733387 97733387

127748572 127748572

838059 34348141

689071 38519618 1370985

540083 54003931 854393

391094 73845472 611192

242106 97491281 481899

65182 127683390 402130

2557975

31790166

37148633

53149538

73234280

97009382

127281260

9537050 22253116 7788591 14464525

11144590 26004043 9101415 16902628

15944861 37204676 13021637 24183040

21970284 51263996 17942399 33321597

29102815 67906567 23767299 44139269

38184378 89096882 31183909 57912973

ANALYSIS / ASSUMPTIONS: It is assumed that 350 working days in a year and revenue and cost is ascertained for 35 branches of the company including hear office at Pune. It is assumed that Rs. 7000/- is revenue from all its services provided in one branch per day. And its calculated for 35 branches and 350 days in a one year. It is assumed that revenue of the company will increased by 10% in 2nd year. And 25% p.a. in remaining years as compare to respective previous year. Interview cost and advertisement cost is actually incurred in first year and it will be increased by 15%,12%11%,13% and 16 % in respective years. Data entry cost is actually incurred in first financial year and it will increased by 10% p.a. Fir salary expenses details given annexure no. 5. Salary will be increased by 15 every year. Govt. fees is payable @ 20 % of the revenue as per govt. rule. It is assumed that rent expenses are for 35 branches and one branch have Rs. 12000 /- p.m. and it will increase by 8 % p.a. It is assumed that electricity expenses, rapier and maintenance expenses and news paper expenses will increase by 10 % p.a. and printing and stationery expenses, Tea and snakes and sundry expenses will increase by 12% p.a.

 It is assumed that postage expenses will increase by 7% p.a. For Interest and Depreciation details given annex. No 6 and no. 7 respectively. Provision for taxation is done as per the rates applicable to assessment year 2012-13. i.e. 40 % It is assumed that company transfer 35% of the profit to reserve every year. The following chart shows/explain three main aspects of the company i.e. PAT, Transfer to reserves and Net profit.
100000000 90000000 80000000 70000000 60000000 PAT 50000000 40000000 30000000 20000000 10000000 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Tr. To Reserves Net Profit

INTERPRITATIONS : Above chart shows that companies all three main aspects i.e. PAT, Transfer to reserves and Net profit. It is good sign for the company that its growth will increased over the year. From the second year PAT and transfer to reserves amount highly grown as compare to Net profit amount.

Net Profit
70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 Current year Year 2 Year 3 Year 4 Year 5 Year 6 Net Profit

Net profit of the company is increased over the year. It is more beneficial to

company that its profit will increase year after year.

Net profit is calculated after amount transfer to reserve.

5.3

DEBT SERVICE COVERAGE RATIO- (SCHEDULE C) In corporate finance, it is the amount of cash flow available to meet annual interest

and principal payments on debt, including sinking fund payments.

In government finance, it is the amount of export earnings needed to meet annual interest and principal payments on a country's external debts.

In personal finance, it is a ratio used by bank loan officers in determining income property loans. This ratio should ideally be over 1. That would mean the property is generating enough income to pay its debt obligations. DEBT SERVICE COVERAGE RATIO- (SCHEDULE C) Particulars Current F.Y. 2011-12 Profit After Tax Depreciation Interest on Term Loan Own contribution Bank Loan Total Inflow Estimated Financial Years

4 67906567 481899 242106 0 0 68630572

5 89096882 402130 65182 0 0 89564194

22253116 26004043 37204676 51263996 2557975 1370985 854393 611192 838059 2915325 6802425 689071 0 0 540083 0 0 391094 0 0

35366900 28064099 38599152 52266282

Interest on Term Loan 838059 689071 540083 391094 Installment of Term Loan 1133738 1133738 1133738 1133738 Investments 12057427 16737874 21465282 24881812 Project capital exp. and working capital 9717750 0 0 0 Total Outflow 23746973 18560682 23139102 26406644 Annual DSCR

242106 1133738 25062458

65182 566869 31797134

0 26438302

0 32429185

1.49

1.51

1.67

1.98

2.60

2.76

Average DSCR ( for 5 years) Maximum DSCR Minimum DSCR

1.85 2.76 1.49

DSCR
3 2.5 2 1.5 1 0.5 0 Current year Year 2 Year 3 Year 4 Year 5 Year 6 DSCR

DSCR is increased over the year. It is favorable to company that its DSCR is increased year after year. Company has maximan DSCR in six year is 2.76, minimum DSCR is 1.49 and average DSCR in five year is 1.85.

INTERPRETATION : A DSCR of less than 1 would mean a negative cash flow. A DSCR of less than 1, say 0.95, would mean that there is only enough net operating income to cover 95% of annual debt payments. For example, in the context of personal finance, this would mean that the borrower would have to delve into his or her personal funds every month to keep the project afloat. Generally, lenders frown on a negative cash flow, but some allow it if the borrower has strong outside income. DSCR is increased over the year. It is favorable to company that its DSCR is increased year after year. In common practice DSCR should not be more than 3 and not be . Therefore our companies DSCR of all year has favorable DSCR. This is good sign for the company to do project. DSCR is more favorable thats why company gets loan easily

from banks and financial institutions. Banks and financial institution first see the DSCR of the projected business and our DSCR show more good position of the project.

5.4) CASH FLOW STATEMENT

The cash flow statement shows the actual cash flows of the project, i.e. the flow of cash and cash equivalents to and from the project. It shows how cash is generated and used during each period. The statement shows the cash flow related to operating, investing and financing activities. The cash flow statement can be used to analyze the following: The source of financing for business operations internal or external sources of funds; The companys ability to meet debt obligations; The companys ability to finance expansion through operating cash flow; The companys ability to pay dividends to shareholders; The companys flexibility in financing its operations.

The cash flow statement is divided into three segments. Cash flow from operating activities consists of the net profit (adjusted for depreciation, since it involves no cash outlay) and changes in current assets and liabilities. Cash flow from investing activities consists of the purchase or selling of fixed assets. The cash flow is negative when new assets are purchased and positive when assets are sold. Cash flow from financing activities consists of changes in debt or equity, i.e. new loans taken, repayments of loans and new equity. Figure 5 shows a typical cash flow in a production company. It illustrates how within the company cash flows to production and investment and from sales and outstanding bills. There is an outflow of cash in the form of dividends, interests, taxes, changes in liabilities and changes in equity, but the last two also generate inflow of cash.

A record of a company's cash inflows and cash outflows over a specific period of time, typically a year. It reports funds on hand at the beginning of the period, funds received, funds spent, and funds remaining at the end of the period. Cash flows are divided into three categories: cash from operations; cash investment activities; and cash-financing activities. Companies with holdings in foreign currencies use a fourth classification: effects of changes in currency rates on cash.

CASH FLOW STATEMENT (SCHEDULE - D) OF PARAMHANSA PUBLIC INFORMATION CENTER PVT. LTD FOR THE YEAR ENDED ON ..
Particulars Current F.Y. 2011-12 Sources of Funds 1 2 3 EBIT (Sche. B) Depreciation
(Annex.6 )

Estimated Financial Years

1 2 3 4 5

32628225 2557975 2915325.00 6802425.00

37837704 1370985

53689620 854393

73625374 611192

97251488 481899

127346442 402130

Increase in a) Capital b) Term Loan

Total Sources of Funds Disposition of Funds 1 Project Capital expenditure 2 Decrease in Term loan 3 4 5 Total Interest Tax Investments Total Disposition of Funds Opening Cash balance Accrual Closing Cash balance

44903950

39208689

54544013

74236566.1

97733386.75

127748572

9280250 1133738 838059 9537050 12057427 1133738 689071 11144590 16737874 1133738 540083 15944861 21465282 1133738 391094 21970284 24881812 1133738 242106 29102815 25062458 566869 65182 38184378 31797134

32846523 0 12057427 12057427

29705272 12057427 9503417 21560844

39083963 21560844 15460050 37020894

48376928 37020894 25859638 62880532

55541116 62880532 42192271 105072803

70613563 105072803 57135009 162207811

INTERPRETATION : The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period. Company generate lot of money from this project. It invest the money in proper manner. Company transfer 50 % cash in 1st & 2nd year , and 40%,30%20% and 18 % in remaining year of closing cash before transfer to investment account to investment account in every

year. Companies cash inflow and cash closing balance is incising every year. So it is more favorable for the company to doing this project. In only first year capital contrubution and term loan is collected for the setting up this project and it applies to project capital expenditure. So this item comes only in first year.

180000000 160000000 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 Current yrs Year 2 Year 3 Year 4 Year 5 Year 6 Opening cash bal Accrual Closing cash bal.

Above chart shows that companies cash is increased year by year. Closing cash balance is high in every year. Company should do properly investment.

5.4

ANNEXURE :

5.4.1) COST OF PROJECT :- (Annexure 1) Cost of the project means cost required for the project or Finance required for the project. For the doing the business some cost or expenses incurred for it. In starting stage capital cost is incurred in a huge amount. Cost of the project means whole project cost.

COST OF PROJECT :Sr. No. 1 2 Capital Cost Working Capital Total Cost of Projects Particulars

(Annexure 1)
Rs 9280250.00 437500.00 9717750.00

Rs.
10000000 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 Capital cost Working capital Rs.

Analysis: For Capital cost Details please see annexure-2 Working Capital requirement is for 35 branches, We are assuming that one branch requires Rs. 12000 p.a.

5.4.2) MEANS OF FINANCE: Means of finance means how company collect required cost or finance. From which sources company receive or stand money for the project.

MEANS OF FINANCE Sr. No. 1 3 Particulars Own Contributions Bank Term Loan 30% 70% Rs 2915325.00 6802425.00

Total

9717750.00

Rs.

7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 Own Contributions Bank loans Rs.

ANALYSIS : The fulfillment of cost of the project is done by company as follows Proprietor contribution 30% of cost of the project as his own capital. And he taken 70% of cost of the project as loan from scheduled bank @13% p.a. For the taking loan interest benefits as tax shield company decided to taking 70 % loan from financial institutions or from nationalize bank.

5.4.3) CAPITAL COST OR ASSETS REQUIREMENT FOR THE PROJECT: Capital cost is required for setting up the project. Company start the doing business in 35 district offices so it will incurred the huge capital cost. Following table shows that the capital cost requirement for the 35 branches or offices.

CAPITAL COST OR ASSETS REQUIREMENT FOR THE PROJECT (Annexure 2) Material Size(inch) Model Quantity Price per piece Total

Capital cost Computer Printer Scanner Furniture Router Headphones A/c Inverter Fan 1.5 tone 1400W 36 port velrack plantronic LG microtek Dell Hp Hp 175 35 35 LS 35 175 35 35 70 2000 3000 25000 32000 1200 13000 2500 2700 2275000.00 87500.00 94500.00 4149250.00 70000.00 525000.00 875000.00 1120000.00 84000.00

Total

9280250.00

ANALYSIS/ASSUMPTIONS : We are assuming that above assets are required for 35 branches/offices of the company for its operation. Including head office in Pune. One branch requires 5 computers, 5 headphones, 2 Fans and each of the remaining other than furniture. We are assume that One branch requires furniture worth Rs. 118550/- and above working capital calculation for 35 branches.

5.4.4) COST ANALYSIS FOT THE PROJECT : Formation cost / preliminary expenses Incurred in 1st year Particulars 1 Registration fee (Company reg.) 2 3 Legal Charges/fee Rent Exp. (For 4 Months) 4 Stationery Exp. 2400.00 14500.00 48000.00 Rs. 500.00

Total

65400.00

ANALYSIS / ASSUMPTIONS: Company registration fee Rs. 500/- is requires as per Company ACT 1956. Legal Charges and Stationery expenses are requires for registration. Company requires minimum 4 months for starting and doing its operations. Rent expenses is requires for this months.

5.4.5) Recruitment cost :

Particulars 1 Interview cost - Rent - Traveling expenses (Total k. m.* hourly rate) 2 Accommodation cost- Lodging Exp. 3 4 Sundry Exp. Advertising expenses ( 2 times in Lokamat) 5 Sms expenses For 100000 sms (5000 k. m.*24)

(annexure 4)
Rs.

105000.00

120000.00

122500.00 55500.00

40000.00 13000.00

Total

456000.00

ANALYSIS / ASSUMPTIONS: Interview cost is incurred in first year for recruitment of the employee for the district offices. In interview cost company doing interview in 35 district. For this interview companys employee will go and stay there and conduct this interview. Company incurred rent cost for the taking place or office for interview., Traveling cost is for reaching in respective locations of interview. Accommodation cost is for providing accommodation to employee who carries respective interview. We are assuming that sundry expenses are incurred during interview. Advertising expenses is incurred for advertise the interview in respective local news paper (Lokamat news paper). Sms expenses are incurred for sending sms regarding interview.

5.4.6) REQUIREMENTS OF DIRECT LABOUR AND CALCULATION OF WAGES :

Estimated Financial Years Current Salary No. p.m./ F. Y. (2011-12) 1 2 3 4 5

Workers/ Employee CEO HOD Managers DICO TICO AICO LO CK PN 1 2 3 35 35 35 35 35 35 32000 25000 20000 14000 12000 8000 8000 7500 7000 384000 600000 720000 5880000 5040000 3360000 3360000 3150000 2940000 422400 660000 792000 6468000 5544000 3696000 3696000 3465000 3234000 464640 726000 871200 7114800 6098400 4065600 4065600 3811500 3557400 511104 798600 958320 7826280 6708240 4472160 4472160 4192650 3913140 587769.6 918390 1102068 9000222 7714476 5142984 5142984 4821548 4500111 675935 1056149 1267378 10350255 8871647 5914432 5914432 5544780 5175128

Total 210

25434000 27977400 30775140

33852654 38930552

44770135

ANALYSIS / ASSUMPTIONS: We are assuming that 350 days in a year. Employee getting salary on monthly basis. There will be increment of 10% in every year till 4th year and 15% onward years in relation to respective previous years. Employee getting his salary in next months of working months but salary due at the end of respective months. Company employed 210 employees in its working operation. CEO, HOD and managers is appointed in head office and remaining each employee is appointed in district offices.

5.4.7) CALCULATION OF DEPRECIATION

Estimated Financial Years
Current

(annexure 6)

Particulars

F.Y. (2011-12)

Written Down Value Method

Computers other equipments Cost of purchase WDV at beginning Depreciation @ 60% p.a. WDV at the end 1831200 1220800 732480 488320 292992 195328 117197 78131 46879 31252 18751 12501 3052000 1220800 488320 195328 78131 31252

Furniture and Fixture Cost of purchase WDV at beginning Depreciation @ 10% p.a. WDV at the end 414925 3734325 373433 3360893 336089 3024803 302480 2722323 272232 2450091 245009 2205082 4149250 3734325 3360893 3024803 2722323 2450091

Air conditioners Cost of purchase WDV at beginning Depreciation @ 15% p.a. WDV at the end 131250 743750 111563 632188 94828 537359 80604 456755 68513 388242 58236 330006 875000 743750 632188 537359 456755 388242

Inverter and fans Cost of purchase WDV at beginning Depreciation @ 15% p.a. WDV at the end 180600 1023400 153510 869890 130484 739407 110911 628496 94274 534221 80133 454088 1204000 1023400 869890 739407 628496 534221

Gross Block Cost of purchase Opening Less : Depreciation Closing Assets 9280250 0 2557975 6722275 6722275 1370985 5351290 5351290 854393 4496897 4496897 611192 3885705 3885705 481899 3403806 3403806 402130 3001676

ANALYSIS / ASSUMPTIONS:

Company purchase all the capital cost in first financial year from the setting up cost of the company. Depreciation is calculated on written down value method which is accepted by Company Act-1956 as well as Income Tax Act.

5.4.8) LOAN REPAYMENT SCHEDULE :

Loan repayment schedule shows how company repaid the amount of loan with its interest and also shows the position of the loan in each months as well as year. With help of this schedule company and others will know the condition of loan taken by company at any point of time. With the help of this statement company will plans its financial decisions.

LOAN REPAYMENT SCHEDULE

LOAN AMOUNT INSTALLMENT(EMI) INSTALLMENTS (Quarterly) INTREST RATE Months Year 1 1 2 3 4 5 6 7 8 9 10 11 12 Total Year 2 1 2 3 4 5 6 7 8 5668688 5730098 5792174 5385253 5443593 5502566 5101819 5157088 61411 5730098 62076 5792174 62749 5854923 58340 5443593 58972 5502566 59611 5562177 55270 5157088 55868 5212957 283434 176924 283434 186235 Opening Monthly Total balance 6802425 6876118 6950609 6518991 6589613 6661000 6235556 6303108 6371392 5952122 6016603 6081783 Interest 73693 6876118 74491 6950609 75298 7025907 70622 6589613 71387 6661000 72161 6733161 67552 6303108 68284 6371392 69023 6440415 64481 6016603 65180 6081783 65886 6147669 283434 195547 838059 283434 204859 283434 214171 283434 223482 ::::Quarterly

(annexure 7)
6802425.00 283434 24 13.00% Quarterly Total Closing

Installment Interest

repayment balance 6876118 6950609 506917 6518991 6589613 6661000 497605 6235556 6303108 6371392 488293 5952122 6016603 6081783 478982 5668688

5730098 5792174 469670 5385253 5443593 5502566 460358 5101819 5157088 5212957

9 10 11 12 Total Year 3 1 Months Year 2 3 4 5 6 7 8 9 10 11 12 Total Year 4 1 2 3 4 5 6 7 8 9 10 11 12 Total Year 5 1

5212957 4818384 4870584 4923348

56474 5269431 52199 4870584 52765 4923348 53336 4976684

283434

167612

451046

4818384 4870584 4923348

283434 1133738

158300 689071

441734

4534950

4534950

49129 4584079 Quarterly Quarterly Total

4584079 Closing

Opening Monthly Total balance 4584079 4633739 4251516 4297574 4344131 3968081 4011069 4054522 3684647 3724564 3764913 Interest 49661 4633739 50199 4683938 46058 4297574 46557 4344131 47061 4391192 42988 4011069 43453 4054522 43924 4098446 39917 3724564 40349 3764913 40787 3805700

Installment Interest

repayment balance 4633739

283434

148988

432423

4251516 4297574 4344131

283434

139677

423111

3968081 4011069 4054522

283434

130365

413799

3684647 3724564 3764913

283434 1133738

121053 540083

404487

3401213

3401213 3438059 3475305 3117778 3151554 3185696 2834344 2865049 2896087 2550909 2578544 2606478

36846 3438059 37246 3475305 37649 3512954 33776 3151554 34142 3185696 34512 3220208 30705 2865049 31038 2896087 31374 2927461 27635 2578544 27934 2606478 28237 2634715 283434 1133738 283434 283434 283434

3438059 3475305 111741 395176 3117778 3151554 3185696 102429 385864 2834344 2865049 2896087 93118 376552 2550909 2578544 2606478 83806 391094 367240 2267475

2267475

24564 2292039

2292039

2 3 4 5 6 7 8 Months Year 9 10 11 12 Total Year 6 1 2 3 4 5 6 7 8 9 10 11 12 Total

2292039 2316870 1984041 2005534 2027261 1700606 1719029

24830 2316870 25099 2341969 21494 2005534 21727 2027261 21962 2049223 18423 1719029 18623 1737652 Quarterly Quarterly Total 283434 65182 348617 283434 74494 357929

2316870 1984041 2005534 2027261 1700606 1719029 1737652 Closing

Opening Monthly Total balance 1737652 1417172 1432525 1448044 Interest 18825 1756477 15353 1432525 15519 1448044 15687 1463731

Installment Interest 283434 55871

repayment balance 339305 1417172 1432525 1448044

283434 1133738

46559 242106

329993

1133738

1133738 1146020 1158435 850303 859515 868826 566869 573010 579217 283434 286505 289609

12282 1146020 12415 1158435 12550 1170985 9212 9311 9412 6141 6208 6275 3071 3104 3137 859515 868826 878238 573010 579217 585492 286505 289609 292746 283434 566869 9312 65182 292746 283434 18624 302058 283434 27935 311370 283434 37247 320681

1146020 1158435 850303 859515 868826 566869 573010 579217 283434 286505 289609 0

ANALYSIS / ASSUMPTIONS:
Company will take a loan of Rs. 6802425/- for procuring funds from scheduled bank. Interest rate is 13.00% will apply for this corporate loan. Company will pay quarterly installments of Rs. 283434/- to the bank on the due date of the installments. Company will take the advantages of loan interest tax shield. Loan is for six year including current financial year. Therefore company fully repaid this loan after 6 year.

 Company will paying Installment of rs.283434 in one time after 3 months i.e. company paying the installment quarterly. At the time of the paying installment company also pays quarterly interest i.e. company repay the loan amount and loan interest quarterly. Company pays the interest and load in 24 installment in 6 financial year.

6.

DISCUSSION, CONCLUSION

6.

SUGGESTION, CONCLUSION

DISCUSSION / SUGGESTION : As stated in the introduction, feasibility analysis should evaluate all aspects of

investment projects, not just the financial aspect. The feasibility of the project needs to be assed from e.g. technical, social, legal, market, and organizational perspectives before a decision is taken to enter into the project. Most decisions are based on multiple attributes, which not all can be measured quantitatively. Therefore, multi-criteria assessment methods are often needed to attain a complete evaluation of the projects feasibility. When multiple investment alternatives are available it is necessary to consider the overall feasibility of all alternatives before choosing among them. One way to compare projects with respect to multiple objectives is using a Pareto solutions presentation, and by that finding which projects are the most efficient with respect to these objectives. Solutions can be plotted on a chart with the objectives on the axes, and then the alternatives that should be considered will line up on the efficient frontier. As stated before, the reliability of the financial feasibility analysis depends on the assumptions and estimates used as inputs for the analysis. It is therefore very important that they are as reliable and accurate as possible. However, there is always some data that is not easily obtained, and then simplifications have to be made for the purpose of the analysis. One assumption made in the analysis presented above involves a simplification of a more complex estimate. This is the assumption that the minimum attractive rate of return used for the NPV calculations is the same as the rate of return of the best alternative investment available to the investor. By assuming this, no regard is given to the difference in risk between the best alternative investment and the investment project. In order to make the analysis as close to reality and as reliable as possible, the MARR should be estimated with respect to the risk involved in the investment.

List the following considerations that are used to decide the appropriate MARR: 1. The amount of money available for investment, and the source and cost of these funds (i.e. equity funds or borrowed funds); 2. The number of good projects available for investment and their purpose 3. The amount of perceived risk associated with investment opportunities available to the firm and the estimated cost of administering projects overshort planning horizons versus long planning horizons;

4. The type of organization involved (i.e. government, public utility, or private industry). Deciding the appropriate MARR is not always straightforward and there are no simple ways to quantify the level of risk associated with investments. If the best alternative investment is e.g. depositing the money into a bank account, the extra risk involved in the investment project needs to be assessed and a risk premium added to the return of the best alternative investment. The risk premium has to be decided by the investor and the choice between investments will likely depend on the investors attitude towards risk, i.e. whether he is risk-averse or risk-seeking. Another issue is deciding the length of the planning horizon for the analysis. No concrete theory is available on deciding planning horizons for different types of investment projects.

CONCLUSION :
In this thesis the role of financial feasibility analysis in the decision-making process has been discussed, and ways to conduct financial feasibility analysis have been studied. A general model, which can be used to assess the financial feasibility of investment projects, was presented and effective model-building techniques were introduced. Also, a new approach of using optimization to find the financing requirements of investment projects was presented. QUESTIONS :

Question 1: How should the financial feasibility of an investment project be measured and calculated? The best criteria for analyzing financial feasibility are the NPV, IRR and MIRR. The cash flows of the prospective investment project should be projected and these criteria should be used to assess the projects financial feasibility.

Question 2: How should a financial feasibility assessment model be constructed? User requirements and expectations need to be clear and the model should be built to fulfill these. The model should be built using modular architecture, separating inputs, calculations, and outputs. Using modular architecture makes testing and improving the model easier, and results in a more user-friendly model, thus minimizing risk of error.

Question 3: How should risk associated with investment project be analyzed?

Through three risk analysis methods that is sensitivity analysis, scenario analysis, and simulation. Using these methods gives the investor a deeper understanding of the risk associated with the investment project, which is beneficial in the decision-making process. Using all three methods for risk assessment in investment projects can be very useful. Sensitivity analysis can be used to identify key input parameters, which then are used in the scenario analysis to examine several possible scenarios, e.g. best and worst case. Simulation is used to generate all possible outcomes between the best and worst case, which can for example be used to analyze the probability of the project not meeting the return requirements of the investor.

BIBLIOGRAPHY
Websites :1. http://www.publicinfocenters.com/ 2. http://www.scribd.com/ 3. http://www.wikipedia.org/