Project Finance — DPR & Techno-Economic Study

A Detailed Project Report is a comprehensive techno-economic feasibility document that lenders use to appraise the viability of a capital project before sanctioning term loans. The Reserve Bank of India's Master Circular on Infrastructure Financing (RBI/2015-16/99) and guidelines under the Priority Sector Lending norms require banks to conduct credit appraisal based on a DPR for project loans above specified thresholds. The DPR must include a cost of project and means of finance schedule, projected financial statements, a break-even analysis, and a debt service coverage ratio (DSCR) calculation—typically minimum 1.25x for infrastructure projects. A CA-certified DPR carries higher credibility with lending institutions and development finance institutions such as NABARD, SIDBI, and NHB.

Lenders focus on the Debt Service Coverage Ratio (DSCR), Interest Coverage Ratio (ICR), and the project's Internal Rate of Return (IRR) versus the weighted average cost of capital. For infrastructure and manufacturing projects, RBI guidelines and individual bank credit policies generally require an average DSCR of at least 1.20–1.50x over the loan tenure. The Fixed Asset Coverage Ratio (FACR) is assessed to determine collateral adequacy, and the Loan-to-Value (LTV) ratio must conform to RBI's Prudential Norms on Income Recognition, Asset Classification and Provisioning (Master Circular DBR.No.BP.BC.2/21.04.048/2015-16). Promoter contribution requirements—minimum 25–30% of project cost for most sectors—must also be clearly demonstrated in the means of finance table.

Yes. Most central and state government scheme applications require a CA-certified DPR as a mandatory document. Under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme governed by MSME Ministry guidelines, the project cost and financial projections must be certified by a Chartered Accountant. For PM Gati Shakti projects routed through the National Infrastructure Pipeline, the DPR format prescribed by the Department for Promotion of Industry and Internal Trade (DPIIT) requires a cost-benefit analysis and financial closure certificate. Similarly, SIDBI's MSME loan products and NABARD's Rural Infrastructure Development Fund (RIDF) guidelines require CA-certified financial projections before project sanction.

The means of finance section must show total project cost broken into land, civil works, plant and machinery, preliminary and pre-operative expenses, and margin money for working capital, with each line item supported by quotations or valuations. The financing mix—term loan, promoter equity, and any subsidy or grant—must conform to the minimum equity contribution required by the lender's internal credit policy and RBI's Prudential Norms. Any capital subsidy (e.g., PMEGP subsidy under MSME Ministry guidelines or Technology Upgradation Fund Scheme (TUFS) subsidy for textiles) must be deducted from project cost net of subsidy for DSCR computation purposes as per standard lending practice. The CA certifying the DPR confirms that the means of finance is tied up and that there is no funding gap.

A DPR is prepared by the borrower/promoter and covers technical, financial, marketing, and implementation aspects of the project; a Techno-Economic Viability (TEV) study is independently commissioned by the lender from a third-party technical expert or consulting firm. RBI guidelines for large infrastructure loans (generally above ₹250 crore) and consortium lending under the Master Circular on Loans and Advances require an independent TEV study before sanction. The DPR forms the base document; the TEV study independently validates the technical assumptions, cost estimates, and market projections in the DPR. In practice, a CA prepares and certifies the financial model and projections embedded in the DPR, while a technical consultant validates the plant capacity, technology, and civil cost estimates for the TEV.