For a developing country like Bangladesh a huge amount of capital investment is very much needed both in private and public sectors. In order to get maximum benefits from such capital investment the project appraisal is very important. Any error in appraisal will have an adverse impact on capital structure of the country.
Project appraisal means the examination of project before the project is undertaken. It refers to the evaluation of projects and selection between alternatives. Project appraisal report is prepared by Loan Operation Department. The project has been appraised by an appraisal team consisting of engineer, economist and financial analyst. This report critically evaluates the proposed project through technical analysis, economic analysis and financial evaluation. When the project is found to be technically feasible, financially rewarding and economically & commercially viable only then that project is financed by BSB. This study will make an attempt to the project Appraisal practice of BSB (a case study of M/S Ettde Plastic Ltd.)
A project is a proposal for an investment to create, expand and/or develops certain facilities in order to increase the productions of goods and/or services in a community during a certain period of time. For the purpose of BSB, project means a scheme for capital investment to develop facilities to provide goods m1d services. BSB's main function is to extend financial assistance to industrial project. It basically needs to be satisfied about the overall viability of a project to be financed. For this purpose, an objective assessment of the viability of the project is required to be examined by BSB from various points of view. Project appraisal coyer five different aspects of a project: Management and Organization, Technical, Market, Economic, and Financial.
An assessment of the promoters in respect of their integrity, experience and capabilities to implement and run the project is of prime importance before extending credit facilities to them. There are no set rules to find out if the borrowers or promoters are the men of integrity. It is to be done by direct and indirect investigation. The borrower's experience and capabilities can, on the other hand, be assessed in terms of his educational background, spatial qualifications, practical business experience, receptiveness to new ideas, or good advice, the general reputation and above all his potentiality to learn new things and adaptability to new and changing situation.
Closely related to the management is the type of organizational structure necessary to carry out and operate the project successfully. So far as organization is concerned, there are two basic queries; hat organization is needed to bring the project to the operating stage and what organization will be needed thereafter. In the operating phase, one of the most common questions is the extent to which responsibility and authority should be centralized or delegated. The answer depends on the scale of operation, its geographical dispersion, the degree of specialization of personnel, and the' number of persons to whom responsibility can be delegated. Internal controls should also be reviewed.
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