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Institutional Appraisal of Projects

Phiroze B. Medhora
Economic and Political Weekly
Vol. 3, No. 21 (May 25, 1968), pp. M11+M13+M15
Stable URL: http://www.jstor.org/stable/4358664
Page Count: 3
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Institutional Appraisal of Projects
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Abstract

Most medium and large industrial projects have now to take recourse to institutional finance. It is important, therefore, that entrepreneurs appreciate the considerations that influence a financial institution's decision to finance a project. This enables the industrialist to present his proposal effectively and to concentrate on the essential points in his dialogue with the institution. In examining a proposal, the financial institution, like the entrepreneur, is concerned primarily with the viability of the project. There is actually only a limited area of genuine conflict of interest between the industrialist and the institution. The objectives of both are the same: to participate in the setting up of a profitable project. But being an external body, a finance institution brings an independent approach to assessing the prospects of the project. It closely examines market prospects, location and capacity, availability of ancillary facilities and raw materials, project costs and fixed and working capital requirements, methods of financing and profitability and cash flow.

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