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Managerial Appraisal
Managerial competence and integrity is an extremely important pre-requisite to translate a project viable on paper into a real life success. Capital markets across the world (and even Indian investors in recent times) factor in the company management in company valuations (in other words share prices).

The following criteria tend to be looked at by the FIs to form a judgement regarding the managerial competence and resourcefulness.
 

  • Track record in earlier projects
  • Resourcefulness of the promoter
  • Understanding of the business
  • Commitment to the project and
  • Integrity
Sanction
In the event of the project being assessed as viable, Sanction is accorded for financing to the proposal.  The Sanction is an in-principle decision for financing the project and is generally subject to fulfillment of certain terms and conditions. Some of these conditions could be standard ones such as:
  • In-principle approval from a bank for working capital
  • No Objection certificate from the Pollution Control Board
  • Sanction for power from the Electricity Board
  • Completion of all documentation formalities creating a charge in favour of the financial institution on all the relevant assets.
  • Disbursement shall commence only when the First Investment Clause has been satisfied. First Investment Clause requires the entrepreneur to invest his contribution before approaching the Financial Institutions for disbursement.
Additionally in the event of the Financial Institution being dissatisfied with any particular aspect of the project, then a condition stipulating the fulfillment of the desired change maybe made for disbursement to commence.
 
 

Market Appraisal
Technical Appraisal
Financial Appraisal

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