What is Appraisal?
- A structured analytical aid to take a decision.
- A record of the aspects considered in taking a decision (including deficiencies).
- Measurement of risk – Avoidance of NPA
- Examining the past performance and future prospects.
- Examining the short term as well as long term survival.
- A SWOT analysis.
- Examining the ability to service the debt.
- Examining safety of funds.
Managerial Aspects
- Background/ integrity
- Competence/ Experience/ ability
- Commitment/ passion / meticulousness
- Congruence/ Unity
- Vision
- Discipline/ organized/ professionalism.
Technical aspects
- Technical Competence.
- Dependence on skills of one individual.
- Obsolescence – product life – relevance.
- Right quality – right quantity.
- Tested machinery.
- Logistics.
- Legal aspects.
Marketing aspects
- Industrial / consumer
- Consumer product
– Growth slow
– Market segment to be well defined
– Strong distribution network.
– Large selling expenses.
– Creation of market – risky.
- Industrial product
– Dependence on few customers.
– Collection of bills – tardy.
– Product change quite often.
– Ability to meet supply targets.
– Large outlays but no resources.
– Exports help the unit to widen base.
Financial Aspects (New)
- Project costs
– All costs to be considered.
– Necessity and sufficiency ensured.
– Back ground papers.
Sources
– All loose ends to be tied.
Financials (Existing)
- Compare performance with what was estimated.
- Growth pattern
- Efficiency
-RM content in sales
-GP ratio
-PBDIT/ Sales
-Cash accruals/ Sales.
- Liquidity
-current ratio
-CA/Sales ratio.
- Long term survival – TOL/TNW
- Quality of assets. Fund flow. Pressing liabilities.
Safety aspects
- Verify all aspects.
- Ensure routing of transactions.
- Adequate collaterals. Especially in trading accounts.
- Inspect / Review professionally.
- Pucca documentation.
- Take cognizance of unusual happenings.
- Keep record of follow up.
Approach
- A positive, unbiased approach.
- Problem solving, supportive approach.
- If we do not give what we have, others will give.
- Convenience approach.
- Transparent approach.
- Holistic approach.
Disclaimer: Writer of this article Prof. Vipin Saboo is BMS- N M College (University Rank Holder), PGDBM- Sydenham College, M Com- College topper, Professor at various institutes for BMS subjects.
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