 Hello friends, I am Professor P. R. Kulkarni working in Mechanical Engineering Department WIT, Solapur and we are going to discuss today about the preparation of project report for setting up of a small scale industry. At the end of this session you will be able to carry out the detailed analysis of the various aspects of setting up of a small scale industry. The detailed project report as you know is a consequence of the preliminary project report. We started with what is project report, the need is importance, we have gone through some details of the initial project report and now we are discussing about the detailed project report. After making the initial project report it is if it is decided to pursue the project then a detailed project report is necessary. This report contains an objective assessment of various aspects of the investment proposition of a project idea for determining its total impacts and its liability. The aspects include marketing analysis, infrastructure, input analysis, manufacturing or operation analysis, human resource management and financial analysis. Let us discuss this one by one. Let us start with what is market survey. Marketing, production, finance, HR, these are the four pillars of any business. Out of that market and marketing is the most important because unless you are able to market whatever service or product you do the entire business and cycle may not start at all. Now, one of the basic tool of marketing is to start with market survey for that we have to study what is the size of the market of a product or service, what is the pattern of demand, whether it is uniform, whether it is fluctuating, whether it is a seasonal demand, what are the variations in the demand, what are the buying habits of the consumers and customers. Each business, each service, each enterprise has a typical unique selling proposition that is the major point of any business and it is this USP which makes the product or service marketable. So we must identify and we must be well conversant with what is that unique selling proposition for my business, what is the competition for my business, what is the competitors data, generally we call it as benchmarking of the particular business area and what is the future trend, how the market will be moving about this particular product or service in the future, whether it is going to have a growth, whether it is coming down declining and you must know something if at all is possible, what is the product life cycle management of the particular product. Once you understand it and then once you are sure that the product is marketable, then you should start with what is the volume presently I can sell it and over a period of time what will be the expected sell. Generally, we consider a period of three years for doing this and once we know we are sure that within the three years we can reach a reasonable value in terms of the financial parameters which are going to discuss slightly afterwards, then probably the project makes it worth that unless I have full guarantee of what is the product and service I will able to market in spite of the competition. Now there are two areas in this, the competition is much more, it has got some advantages that it need not introduction to the market, if there is no competition we will have enjoy the monopoly but it needs slightly treating trouble when you are piercing into the market because first time somebody is trying that idea in the market. So both types of products and services will have their own unique features and they have got own their particular concept to go into the market. Once market is there and also has sure that marketing analysis we have done, we have calculated finally what are the volumes, how the volumes are steadily growing month by month and year by year. Then next is for example, we want to set up the complete plant. Now what is the infrastructure required? For setting a plant we need infrastructure and human resource. In the infrastructure we need what is the land, what is the plot size, what are the various permission necessary, building permissions, what are the utilities, how much power supply will be required, how much water supply required, what are the transportation facilities, what is the communication facility and what are the other community facilities nearby. All these facilities if those are available, if not available how we are going to make all those available for the plant. What are the various permissions required, what are the legal compliance required for starting up of the unit and after completion, what are the various government papers or government licenses we need to have using permissions and then we can start with our infrastructure completion. Once infrastructure is completed, we are talking about the project report perfection, we are talking about the infrastructure related project report completion. We are not actually building the particular building, you please remember this into the mind. Further analysis we'll start with what is the raw material or what is the input for the particular business and its availability, its cost, what is the inventory period we need to have. Inventory is nothing but it is the stock we need to have, we need to maintain it for the particular product. Inventory can be depending upon so many factors, what is our lead time for the particular process, what is the minimum order quantity required, what is the customer's demand in general in terms of batches. If there are some items which have expired dates, we generally call those items as shelf life items, what is the shelf life of the particular item, how much shall I particularly how much shall I storage it. There are some concepts called as EOQ, what is the economic order quantity unless that economic order quantity is find out. It is very difficult to have the financial availability for the particular inventory model. At the same time we have to consider the cost of inventory carrying cost, we have to consider other obsolescence and overhead costs, we have to consider the space available for the particular product. All these taken together we have to make how much raw material we should purchase, at what frequency, at what rate, how much what is the storage policy, what is the WIP time, what is the lead time, what is the financial impact of all this, how it is going to affect on the cash flow of the particular system. All these analyses we generally called as the input analysis and where we have to storage the particular material, what is the preservation care, what are the any special preservation conditions which are imposed by the customer, like antirust or some special preventives are to be applied for the particular preservation. What is the storage of the manufacturing and so on. Further we have got analysis or estimation of the building, we have gone for the raw material analysis. Now the next step is once raw material is there, what will be we are going to have, what are the manufacturing or operation analysis. It includes what are the stages of the manufacturing start from raw material or input to the final conversions, what are the various stages of the conversion. All those conversions may need some machinery or may need some technology, we have to list down all those, we have to find out their specifications, their costs, their total investment required. At the same time what are the associated accessories like tooling cost, the software cost, the maintenance cost and related measurement cost and so on. Unless you know I have seen some companies where the investment for the machinery is too big and then it requires for example CMM coordinate measuring machine for inspection. So, in that case the machining cost is slightly or the investment in the machinery may be smaller as compared to the measuring instrument itself. So, you have to think of what are the measurements involved, what are the metallurgy in the particular thing and so on. Once you understand this you should be having enough confidence of conversion of raw material into the finish stage at the various technological processes. Now you pause this video, you think for a moment and you have to think of the machining of a bush is to be done, write the various machining processes and time required for each of the process. Now after the manufacturing what are the quality requirement, what the setup time, what is the manufacturing cost, what is the economic batch quantity, we have to decide all these before you start it. The next part is HRM, human resource management, what is the total manpower required and what is the manpower analysis we are going to carry out, these are broadly into the technical, administrative and what are the performance measurement of these people we should have this. And finally, the main ultimate aim of doing a business is to have profit and profitability. So, you need to know how the financial analysis of a particular project is carried out and the financial analysis includes details of project finance, funds, sourcing of fund, capital cost, profits and profitability and finally, what is the return investment. Once you know all this, then you should be able to calculate reasonable, you should be able to find out whether the ROI is justifiable or not. Generally, a ROI of 3 to 5 years or 20 to 30 percent is taken as a very good analysis. Once if ROI is justifiable, all the banks or financial institutions will definitely help you to finance the project. So, with this probably we can now or we are now in a stage to prepare a project report in detail finally. I hope all of you will start with the activity and make a pilot project report for the practice purpose and get it, we will discuss it afterwards. Thank you.