Techno Economic Viability (TEV) Study

What is TEV Study ?
An entrepreneur/ industrialist desirous of setting up of his own industry has to perform multifarious activities in a logical sequence.
Setting up may be new or an addition to the existing unit.
He has to arrange finance for setting up of new industry or addition to existing unit.
He has to obtain finance from the Bank / FIs. or from the market.
Before obtaining finance from the Bank, the Bankers will conduct TEV study.
Is TEV Study is mandatory for the Banks ?
On the basis of policy of the Bank, the TEV Study limit has been fixed by the Bankers.
TEV study is normally conducted for the loans for Rs.50.00 lacs and above, as insisted by majority of Banks.
TEV study is mandatory for the loans above Rs.10.00 crores.
Why TEV Study Report is required for the Bank / Lender ?
When proposal of loan is received from the customer/ borrower, the Branch Manager will have to appraise the project to know whether the project is technically and financially feasible and viable?
If the Bank lends the money, whether there will be regular repayment of loan out of the internal generation of funds?
Whether adequate securities are available against Bank’s exposure and what will be the FMV?
What is the position of financials of the Company ?
To collect the necessary information/ documents from the customer/ Bank.
To study the projections given in the project report,
To visit the site to verify the land, building, machinery etc as per the projections.
Submit the report on financials and technical aspects of the unit to the Bank with concluding remarks.


Who is Lender's Engineer (LIE) ?
After TEV study, the next step is appointment of LIE.
The LIE can be an individual for a small project and a group of engineers or a venture management firm for bigger projects.
They will act as representative of the lender/ banker and get involved with the construction project from the very inception and look after the interests of the lender.
The LIE will visit the site at periodical intervals (once in quarter) till completion of the project or at other short intervals (say monthly) given by the lender.