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SUMMER INTERNSHIP PROJECT

“Tittle of the project”

Study on Role of Project Financing

affiliated to Dr. Abdul Kalam Technical University, Lucknow

VISION GROUP OF INSTITUTIONS, HATHIPUR MAHARAJPUR KANPUR

Submitted To Submitted By
Ms. Akanksha Sharma Namrata
Roll no.
2205230700033
MBA 3 rd Sem
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ACKNOWLEDGEMENT

I would like to express my sincere gratitude to all those who contributed to the
completion of my MBA 3rd semester Summer Training Project on the topic "Financial
Analysis of Start-up Companies: Conducting a financial assessment of emerging start-
ups and analyzing their growth potential."

Special thanks to Ms. Akanksha Sharma for their invaluable guidance, support, and
expertise throughout this project. I am also thankful to the team members and
individuals who provided insights, feedback, and assistance during the research and
analysis phase.
Additionally, I extend my appreciation to the start-up companies that generously
participated in this study, providing access to their financial data and insights.

Finally, I would like to acknowledge the support of my family and friends whose
encouragement and understanding were instrumental in the successful completion of
this project.
Thank you all for your invaluable contributions.

Namrata
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Declaration

I, [Nmrata], hereby declare that the MBA 3rd semester Summer Training Project titled
"Financial Analysis of Start-up Companies: Conducting a financial assessment of
emerging start-ups and analyzing their growth potential" is the result of my original work
and has not been submitted for any other degree or diploma.

I confirm that all sources of information used in this project have been duly
acknowledged and referenced. The opinions, conclusions, and recommendations
presented in this report are based solely on my analysis and understanding of the subject
matter.

Furthermore, I take full responsibility for any errors or omissions that may be found in
this project.

Namrata
Roll no. 2205230700033
MBA 3rd sem
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Summary
The MBA 3rd semester Summer Training Project focuses on conducting a
comprehensive financial analysis of start-up companies, aiming to assess their
financial health and analyze their growth potential. Through meticulous
examination of financial statements, key performance indicators, and market
trends, this study provides valuable insights into the financial viability and
future prospects of emerging start-ups.

By evaluating factors such as profitability, liquidity, solvency, and efficiency, the

project identifies strengths and weaknesses within the financial structure of
start-up ventures. Moreover, it delves into the dynamics of the competitive
landscape, regulatory environment, and industry trends to contextualize the
financial performance of these companies.

The findings of this analysis serve as a valuable resource for stakeholders,

including investors, entrepreneurs, policymakers, and industry professionals,
enabling informed decision-making and strategic planning in the dynamic
realm of start-up investing and management.

INDEX (Table of contents)

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Topics Page number

1. Introduction 6
2. Company Profile 7
3. Terminologies 8-10
4. Objective of the Study 11
5. Scope of the study 12
6. Need of the study 13
7. Contribution during SIP 14
8. Limitations 15
9. Research Methodology 16-23
10. Findings 24-34
11. Conclusion 35-37
12. Bibliography 38

INTRODUCTION

Project finance refers to the funding of long-term projects, such as public infrastructure or

services, industrial projects and others through a specific financial structure. Finances can

consist of a mix of debt and equity. The cash flows from the project
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enable servicing of the debt and repayment.

Project finance risks are therefore highly specific and it is essential that participants such as

commercial bankers, investment bankers, general contractors, subcontractors, insurance

companies, suppliers and customers understand these risks since they will all be participating in

an interlocking structure of debt and equity.

Project finance is generally used to refer to a non-recourse or limited recourse financing

structure in which debt, equity and credit enhancement are combined for the

construction and operation, or the refinancing, of a particular facility in a capital-

intensive industry.

COMPANY
PR O F I L E
COMPANY PROFILE

Mulchandani Manish & Associates

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The company has a clear, logical mind with practical approach to problem solving

and a drive to see things through to competition. It has a great eye for detail. We

are eager to learn, enjoy overcoming challenges, and have a genuine interest in

sharing my thoughts with great leaders.

TERMINOLOGIES:

• Current Ratio:

Current Ratio = Current Assets ÷ Current Liabilities

The current ratio is a liquidity ratio that measures a company's ability to pay shortterm and

long-term obligations. To gauge this ability, the current ratio considers the current total

assets of a company (both liquid and illiquid) relative to that company’s

current total liabilities.

• QUICK RATIO:

Indicates the ability to meet short term payments using the most liquid assets. This ratio is

more conservative than the current ratio because it excludes inventory and other current

assets, which are more difficult to turn into cash.

• RETURN ON CAPITAL EMPLOYED:

This ratio complements the return on equity ratio by adding a company’s debt

liabilities, or funded debt, to equity to reflect a company’s total “capital employed”. This

measure narrows the focus to gain a better understanding of a company’s

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ability to generate returns from its available capital base

• GROSS PROFIT RATIO:

A company’s cost of goods sold represents the expense related to labor, raw materials and

manufacturing overhead involved in its production process. This expense is deducted from

the company’s net sales/revenue, which results in a company’s gross profit. The gross profit

margin is used to analyze how efficiently a company is using its raw materials, labor and

manufacturing-related fixed assets to

generate profits.

• OPERATING PROFIT:

By subtracting selling, general and administrative expenses from a company’s gross profit

number, we get operating income. Management has much more control over operating

expenses than its cost of sales outlays. It Measures the relative impact of operating

expenses.

• NET PROFIT RATIO:

This ratio measures the ultimate profitability.

• EQUITY RATIO:

This ratio measures the strength of the financial structure of the company
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• DEBT RATIO:

This compares a company’s total debt to its total assets, which is used to gain a general idea

as to the amount of leverage being used by a company. This is the measure of financial

strength that reflects the proportion of capital which has been funded by debt, including

preference shares.

• INTEREST COVERAGE RATIO:

This ratio measures the number of times a company can meet its interest expense.

• AVERAGE COLLECTION RATIO:

The average collection period measures the quality of debtors since it indicates the speed of

their collection.

• ACCOUNT PAYABLE TURNOVER RATIO:

The accounts payable turnover ratio is a liquidity ratio that shows a company's ability to pay

off its accounts payable by comparing net credit purchases to the average accounts payable

during a period.

OBJECTIVEOFSTUDY

1. To obtain an Accountant position by adding value through utilizing my superior

knowledge, prospecting and calculation abilities in the business.

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2. To develop and discover my vision into pragmatic action, as a performance-

oriented.

3. To build upon my existing corporate finance skill set in both analytics and

transaction execution, leading to increasingly responsible positions in treasury.

4. To employ my knowledge and experience with the intention of securing a

professional career with opportunity for challenges and career advancement,

while gaining knowledge of new skills and expertise.

5. To make a proper study of Documentation, verification,auditing and many more

accounting standards.

SCOPEOFSTUDY

1. Internship at Mulchandani Manish & Associates Company

was my first

experience. I learnt allot more new things in accounting/ Finance sector.

2. Initially I knew only about GST Accounting, The ITR process taxation. Here, I

learned more about Project Financing.

3. Then deeply I learned about, what is the main process of doing all these. My main focus

in these 45 days was on the filling the ITR and maintaining the balance

sheet.
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4. After getting detailed information about the service which is exactly given by a CA to the

clients, I started implementing the kinds of services.

5. I had gained knowledge to finalize the balance sheet in tally software.

6. And then the most important thing which i came to know was, if any of the clients wants

to open up a new factory so firstly they will come to A Chartered Accountant for making

a financial report, regarding the loan sanction if needed.

NEEDOFTHESTUDY

1. Helps in identifying need to determine its worth pursuing.

2. The decision-making process takes place to prioritize and select project with

greatest news

3. Project finance is used to build energy infrastructure in industrialized countries as

well as in emerging markets.

4. Project finance helps finance new investment by structuring the financing around the

project's own operating cash flow and assets, without additional sponsor

guarantees.

5. It primarily helps in financing the broad range of economic unit’sworldwide, which sets

many of the examples.

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CONTRIBUTIONDURINGSIP

DOCUMENTS AND INFORMATION DONE WHILE PREPARING Project Report:

1. Past 2 years Audited Financial statement.

2. Provisional Financial for the current year; in the absence of provisional financials,

details of the top line shall be essential.

3. Latest Sanction letter (in case of renewal).

4. Term Loan Repayment Schedule, if any

5. Details of proposed enhancement (if any) along with the terms and conditions

In the third week I learned how to make Project Report of different companies.

Following are the companies who’s Projects were drafted by me:

 SHIVAM CONSTRUCTION

 P R LOGISTICS

 SHREE BALAJI PETROLEOUM

 NARAYAN INDUSTRUES

LIMITATIONS

1. Complexity of the process due to the increase in the number of parties and the

transaction cost.
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2. Expensive as the project development and diligence process is a costly affair.

3. Complexity due to lengthy documentation.

4. Requires qualified people for performing the complicated procedures of project

finance.

5. Higher level of control which might be exercised by the banks, which might bring conflict

with the businesses or contracts.

RESEARCHMETHEDOLOGY

Data collection is the systematic approach to gather and measure information from variety of

sources to get a complete and accurate picture of an area of interest.

It mainly includes two types of data:

• Primary data

• Secondary data.

Primary data: -

Data used in research originally obtained it through the direct efforts of the researchers through

surveys,interviews and direct observations. For this report primary data is collected through

online survey, forms and interactions with the clients during internship.
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Secondary data: -

It refers to the data that was collected by someone other than the user. Secondary data can be

collected through references.

SWOTAnalysisforprojectFinanceApproval

Weakness:

 Regulatory restrictions - continuously evolving Government regulations may

impact operations.

 Uncertain economic and political environment.

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Opportunities:

 Demographic changes and under penetration.

 Large untapped rural and urban markets.

 Growth in Industrial Sector.

Threats:

 High cost of funds.

 Restrictions on deposit.

Project Financing:

Project finance is the financing of long-term infrastructure,

industrial projects and public services based upon a non-recourse or limited

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recourse financial structure, in whichproject debt and equity used

to finance the project are paid back from the cash flow generated by the project.

Financial model:

• A financial model is constructed by the sponsor as a tool to conduct negotiations with

the investor and prepare a project appraisal report. It is usually a computer

spreadsheetdesigned to process a comprehensive list of input assumptions and to

provide outputs that reflect the anticipated real-life

interaction between data and calculated values for a particular project.

• Properly designed, the financial model is capable of sensitivity analysis, i.e., calculating

new outputs based on a range of data variation

Contractual framework:

The typical project finance documentation can be recon ducted to four main types:

• Shareholder/sponsor documents

• Project documents

• Finance documents

• Security documents

• Other project documents

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• Director/promo tore Contribution

Engineering, procurement and construction contract:

The most common project finance construction contract is the engineering,

procurement and construction (EPC) contract. An EPC contract generally provides for the

obligation of the contractor to build and deliver the project facilities on a fixed price,

turnkey basis, i.e., at a certain pre-determined fixed price, by a certain date, in

accordance with certain specifications, and with certain performance warranties. The

EPC contract is quite complicated in terms of legal issue;therefore, the project company

and the EPC contractor need sufficient experience and knowledge of the nature of

project to avoid their faults and minimize the risks during contract execution.
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PROBLEMFACEDBYTHESECTORINGENERALANDTHECOMPANY:

In order to ensure lower levels of project risk, equity and debt provider perform a large

amount of due diligence so as to get a better idea about risks associated with a project.

One of the major risk elements in the project finance is Repayment Risk. The mitigation

process for this is to establish the preferential claim of investors to a project’s cash flows.

The higher the seniority, the lesser risk one has in a project. Debt holders mostly have

the primary claim on cash flows,

followed by tax equity investors, and then project sponsors.

Project finance life cycle is a long and complex one and it is but natural to have multiple

risk elements. Some of the other risk factors in project finance are (1) Construction Risk

(2) Currency Risk (3) Operational Risk and (4) Political Risk. Effective management of risk

is the crux of project finance and it is the

responsibility of the Project Finance Manager to look after this aspect.

Below is the example of planning and financing stage of a renewable energy project. At

this stage it is required to determine projected revenues, costs and returns and also to

quantify risks.

FUTUREPOTENTIALOFTHESECTOR:

Project finance is a rapidly expanding field, with almost USD 200bn lent to companies to

finance particular projects in 2004. While project finance has its origins in the natural

resource and infrastructure sectors, the current demand for infrastructure and capital

investments is primarily fueled by deregulation in the power, telecommunications, and

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transportation sectors; by the globalization of product; and by the privatization of

government Owned entities in developed and developing countries. The long-term

prospects are strong, as countries with limited government resources try to meet the

growing demand for infrastructure assets. Given the right applications and structures,

the benefits of project finance can more than offset the higher transaction costs,

increased time commitments, and higher debt rates typically associated with project

financings. However, project finance may result in unsustainable practices because banks

and project sponsors (bank clients) often do not carry out adequate environmental and

social impact assessments of the projects they are financing. In addition, financiers often

take inadequate steps to address the issue of sustainability, as environmental and social

regulations in some host countries can be weak. This is especially true in developing

countries. As a result of the adverse consequences big infrastructure projects may have,

civil society has increasingly targeted the financiers involved in the projects to act more

responsibly.

Mr. Nitin Gadkari, Minister of Road Transport and Highways, and Shipping, has

announced the government’s target of Rs 25 trillion investment in infrastructure over a

period of three years, which means the India will see lot of power, bridges, dams, roads

and urban development in years to come. Most of these will be funded by the Public or

PPP (Public Private Partnership) method. This clearly shows that Project finance will be

on major growth trajectory in future and the

economy stands to gain from it. Needless to say, highly qualified and experienced

professionals will be great demand to manage and analyse the

financing of such massive projects.

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F I N D IN G S

ACTUALWORKDONE:

WEEK WISE DETAILS:

1st Week Introduction of the Company

2nd Week Preparation of Net Worth Statements

3rd Week Introduction of Ratio Analysis and future projections.

4th Week Filling of ITR, Preparation of Financial Statements, and Brief

Introduction of Proposal Note.

5th Week Project Report

INTRODUCTIONOFTHECOMPANY:

Mulchandani Manish & Associates is a boutique SME Business Advisory firm focusing the

enterprises in Central India. They provide capacity building and support to Small, Medium and
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Large Industries across the region.It’s a firm of diversified professionals with excellence in their

individual areas of profession, all dedicated and strong in their domain knowledge.

Mulchandani Manish & Associates works in collaboration with the industry in

responsive strategies to support and facilitate sustainable development through debt and equity

raising, access to market programs, enterprise development, business linkages, feasibility

assessment, risk assessment, technology solutions and to set up investments in new and

innovative business services, specifically targets the niche

opportunities.

In the first week of internship Mulchandani Manish & Associates helped me to gain the

knowledge about the corporate life and it’s working. During these days sir gave me a project on

NATURE RICH FOOD to analyze it so that I can grasp the knowledge which

will help me to make such projects in future. I use to read different legal sections daily so that

next day sir could check my knowledge. It helped me to increase my experience

in the field of Project financing.

NETWORTHSTATEMENT:

A personal net worth statement is a snapshot of an individual's financial health, at one

particular point in time. It is a summary of what is owned (assets), less what is owed to

others (liabilities). The formula used is: assets - liabilities = net worth.

In second week of my SIP I was guided by my seniors about how to make network statements

and which helped me a lot due to which I was able to make such

statements of different companies it gave me a great exposure about the organization.

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CREDITMONITORINGARRANGEMENT:

CMA Data means Credit Monitoring Arrangement data. As per RBI guidelines, CMA data is

required for Project Loans, Term Loans and Working Capital Limits. This data is to be provided by

a company to bank for getting the loan from bank and every year, for renewing or enhancing

their existing Bank loan. CMA Data is a systematic analysis of working capital management of

the borrower and the purpose of this statement is to

ensure the use of funds effectively.

CMA data generally include 2 years Audited Financials and 3 future years Financial Projection of

company, Fund flow statement, Changes in Working Capital report, Ratio analysis and Maximum

Permissible Bank Finance (MPBF) report.

The banks rely very much on this report and carefully evaluate CMA data for eligibility of

funding. Our experts help to highlight the potential of your business in CMA data to be

submitted to the bankers at the time of sanction and renewal.

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It basically contains 7 statements which help Banker to understand the financial health of the

company:

1. Particulars about the present limit and the proposed limit. It will show both Fund and Non-

fund based limits of the borrower and usage limit or current balance.

2. Operating Statement/Profit and loss account statement, bank will know performance of

company. It also helpful to know earning cycle for paying the expenses.

3. Balance sheet, bank will know the financial position. Is it sound or not? Do company has own

assets or all assets on debt. So, to study balance sheet is must. CMA Data will have 2 years

Audited balance sheet and 3 years projected balance sheet. So, analyst can make

comparative balance sheet for knowing the changes in the balance sheet’s

position.

4. With fund flow statement, bank can know the flow of fund. Is company wasting their fund or

applying fund for growing.

5. Changes in working capital report – helps to understand the changes in current

assets and current liabilities. It will also helpful to know short term solvency of company. If it has

enough money to pay current liabilities, it cannot misuse its long term resources.

6. Banks ask the maximum permissible bank finance (MPBF) working. It should not more than

75% of working capital or 20% of Sales.

DOCUMENTS/INFORMATION REQUIRED PREPARING CMA:

1. Past 2 years Audited Financial.

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2.Provisional Financial for the current year; in the absence of provisional

financials, details of the top line shall be essential.

3.Latest Sanction letter (in case of renewal).

4. Term Loan Repayment Schedule, if any.

5. Details of proposed enhancement (if any) along with the terms and

conditions

In the third week I learned how to make CMA of different companies.

Following are the companies whose CMAwas drafted by me:

 SHIVAM CONSTRUCTION

 P R LOGISTICS

 SHREE BALAJI PETROLEOUM

 NARAYAN INDUSTRUES
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Income Tax Return:

The definition of an income tax return is a document you file with the Internal Revenue

Service or the state tax board reporting your income, profits and losses of your business and

other deductions as well as details about your tax refund or tax

liability.

Financial Statements:

Financial statement is a formal record of the financial activities and position of a business,

person or other entity.

Relevant financial information is presented in a structured manner and in a form easy to

understand. They typically include basic financial statements, accompanied by a

management discussion and analysis:

1. A balance sheet or statement of financial position, reportson

a

company's assets, liabilities, and owners’ at a given point in time.

2. An income statement or statement of comprehensive income,

statement of

revenue & expense, P&L or profit and loss report, reports on a

company's income, expenses, and profits over a period of time. A profit and loss

statement provides information on the operation of the enterprise. These include

sales and the various expenses incurred during the stated period.

3. A Statement of changes in equity or equity statement or statement of retained earnings,

reports on the changes in equity of the company during the stated period.
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4. A cash flow statement reports on a company's cash flow activities, particularly

its operating, investing and financing activities.

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Proposal Note:

A business proposal is a written document sent to a prospective client in order to obtain a

specific job. Proposals may be solicited or unsolicited. Solicited proposals, obviously, mean

that the client has already decided to make a purchase.

In the 4th Week of the internship company helped me to know the Filling of Income Tax

Return, Preparation of Financial Statements and gave me the brief introduction of Proposal

note.
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ProjectmadebymewasonanewupcomingindustryM/sNarayan
Industries

M/s. Narayan Industries is promoted by Mr. Nanak BherumalBhavnani for setting up a plastic

granule processing unit at Plot No. 240, Behind Vijaya Bank, CA Road, Satnami

Nagar, Nagpur. The firm intends to set up a manufacturing unit with latest

technology that will manufacture Plastic bags, Box Liners, Industrial Liners & Industrial LDPE

Bags.

The firm has approached Mulchandani Manish & Associatesfor structuring its business

model and

Appraising its fund requirement. It has also mandated Mulchandani Manish &

Associatesfor fund syndication for proposed project.

CONCLUSION

CONCLUSION
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To study at Mulchandani Manish & Associates gave a vast learning experience to me and has

helped to enhance my knowledge during the study. I learnt how the theoretical financial

analysis aspects are used in practice during the long termassessment. I have realized during

my project that a project financer must have multi-disciplinary talents like financial,

technical as well as legal know how.

The credit appraisal for business loans has been devised in a systematic way. It is a process of

appraising the credit worthiness of loan applicants. The project finance is a financing of a

particular economic unit in which a lender is satisfied to look initially to the cash flow and

earnings of that economic unit.

Thus, I have gained knowledge and learned all the aspects which are covered below

related to my project:-

1. Filling Income Tax Return

2. Financial Statement Analysis

3. ¬¬¬Working Capital and its Assessment Techniques

4. Documentation

5. Preparation of Net Worth Statement

6. Preparation of Credit Monitoring Arrangement

Mulchandani Manish & Associates is promoted by qualified professionals having strong

execution, capabilities in the entire Project Life Cycle, in sectors like Infrastructure,

Pharmacy, Energy and Natural Resources, Agro Processing, Real estate etc, through its

service offerings in Investment Banking & Management

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Consultancy.

Besides, we also represent CRISIL for their risk management services.

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BIBLIOGRAPHY

1. Information is collected from Director of Mulchandani Manish & Associates and team.

2. The information to be collected from Wikipedia.

https://www.investopedia.com https://www.sciencediret.com

3. Market survey.

4. Referred books such as :-

The Principles of Project Finance by ROD MORRISON(Published by Elsevier Inc.)

Principles of Project Finance by E.R. YESCOMB( Published by Taylor and Francis)