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Market Appraisal
  • The reasonableness of the demand projections supplied by the promoters are verified by utilizing the findings of available reports/ surveys, industry association/ planning commission/ DGTD projections, and independent market surveys (sometimes commissioned with the expense borne by the promoters).
  • Assess the adequacy of the marketing infrastructure planned in terms of promotional effort, distribution network, transport facilities, stock levels, etc.
  • Judge the knowledge, experience and competence of the key marketing personnel.
In case of appraisal for projects of SMEs, the market appraisal generally tends to be accorded low importance. The localized/regional nature of these businesses often makes success in marketing more a function of the entrepreneur’s attributes or contacts rather than a fundamental demand-supply mismatch in the product (currently met by expensive imports or near substitutes). However, over the past few years most financial institutions, based on their experience of past lending drawn up categories of industries where new projects would be restricted / prohibited. These are clearly stated in the lending policies of the financial institutions.

When the lending policy of an FI categorises an industry in the prohibited category, it actually means that the risk of financing such projects (in its opinion) is high making such projects an unacceptable risk from the point of a lender. In the event of your project being classified under the Prohibited Category, it would be prudent to review its viability before taking it up for implementation. Also such projects might have to be completely self-financed.

Technical Appraisal
Financial Appraisal
Managerial Appraisal

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