TEV is an appraisal of the project by a team of experts to help Banks/FI’s to take an informed decision on projects viability and mitigation of risks involved in the project.
A TEV study undertakes detailed holistic analysis of every aspect of a project including management, technology/ process, infrastructure, marketing, demand and supply, selling channel, competition and pricing, capital structuring, viability / profitability of investments. A critical evaluation of these parameters is essential for a useful TEV study.
- A TEV study/report aims to objectively and rationally understand the strengths and weaknesses of proposed venture, opportunities and threats present in the environment, the resources required to carry through, and ultimately the prospects for success.
- Assessment of financial requirement of both term loan and working capital and equity is made.
1. Technical Feasibility:
The Technical Feasibility of a project consists of an assessment of various requirements for its implementation, production technology, types of machinery to be used, optimum utilization of installed capacity, availability of utilities and inputs, quality of products etc.
2. Economic Viability:
The Economic Viability is to be examined with reference to market demand – supply scenario vis-à-vis the project’s production capacity, market price of the product vis-à-vis unit cost of production, etc.
3. Financial Feasibility:
The Financial Feasibility of a project is to be examined with reference to the projected profitability, cash flow, Internal Rate of Return (IRR), Debt Service Coverage Ratio (DSCR), Sensitivity to adverse scenario etc.
4. Managerial Competence:
The Managerial Competence is examined with reference to (i) business acumen and experience of the promoters, (ii) professional management team with defined work domain for implementation of the project, production, marketing, finance etc. (iii) competence of the promoters / management to mitigate implementation risk, funding risk, input risk, market risk, technology risk, regulatory risk etc.