TEV (Techno-Economic Viability) Study

Whenever a bank funds a project involving a substantial amount of Term Loan or whenever it involves new technology or sophisticated technology banks will be interested in understanding the viability of the project both technical viability and economic viability. For this, they will be engaging in technical consultancy whether in-house or external. They will study the project, understand the viability and then they go ahead with lending decisions. PROCEDURE- 1. First and foremost we have to gather information about the project, its promoters – their financial strength, business acumen, experience, key personnel in the organization; 2. We have to examine the product description, types, uses, application, etc. In several cases, it has been observed that the product has limited use and demand is fluctuating. 3. Study the current market scenario, both Indian and global, market forecast – demand/supply scenario, target market, barriers to entry and competition analysis; these are important parameters and must never be ignored in a study. TECHNICAL FEASIBILITY ? Assessment of the available land in use for the project. ? Assessment of suitability and availability of infrastructure available for the activity of the company. ? Available skilled manpower ? Assessment of existing capacity MARKET POTENTIAL ? Present and future market scenario. ? Assessment of marketing infrastructure available ? The demand-supply analysis ? Competition in field FINANCIAL VIABILITY ? Assessment of future cash flows and profitability of the project. ? Financial viability of the unit based on the financial projections, profitability (income and costs), cash flow, IRR, DSCR, DP, MPBF, etc. ? Conduct sensitivity analysis of the project.