A Techno-Economic Viability (TEV) Report is a detailed assessment used by banks and financial institutions to evaluate whether a proposed project is technically feasible, commercially viable and financially sustainable. The report helps the lender understand the project’s technology, machinery, project cost, market assumptions, financial projections and ability to service the proposed debt.
A TEV Report for bank loan may be requested as part of project finance or credit appraisal, particularly for projects involving substantial investment, technical complexity or higher project risk. However, there is no single loan amount at which every bank in India automatically requires a TEV Report. The requirement can vary according to the lender, project, industry, financing structure and internal credit policy. Borrowers should therefore confirm the specific requirement with their lending institution before preparing the report.
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What Is a TEV Report?
TEV stands for Techno-Economic Viability. A TEV Report examines a proposed project from technical, commercial and financial perspectives to determine whether the project can realistically be established and operate as planned.
The technical part of the assessment considers factors such as the proposed technology, manufacturing or operating process, plant capacity, machinery, raw materials, utilities, location and implementation schedule. The economic and financial assessment looks at the project’s market opportunity, project cost, revenue assumptions, operating expenses, profitability, cash flows and debt-servicing capacity.
A TEV Report therefore goes beyond simply describing a business idea. It examines whether the assumptions behind the project are reasonable and whether the proposed investment is supported by adequate technical and financial analysis.
Depending on the nature of the project, the assessment may also consider DSCR, break-even analysis, IRR, NPV, sensitivity analysis and project risks.
The exact scope of a TEV study varies according to the project and the requirements of the lending institution.
When Does a Bank Require a TEV Report?
Banks may ask for a TEV Report when they require an independent or detailed assessment of the technical and economic viability of a proposed project before taking a financing decision. This is particularly relevant where the project involves significant capital expenditure, specialised technology, complex implementation or substantial project-finance exposure.
The requirement is not determined only by the loan amount. A lender may consider the total project cost, proposed financing, industry, technology, project structure, risk profile, whether the project is new or an expansion, and its own internal credit policy.
For this reason, a fixed statement such as “TEV is mandatory for every loan above ₹2 crore” should be avoided. Different lenders can have different criteria, and some may require a TEV study for reasons other than a specific loan threshold.
Before commissioning a TEV Report, the borrower should confirm the bank’s requirements, particularly:
- Whether a TEV Report is required
- Whether the consultant must be empanelled
- Whether the bank has a prescribed format
- Whether a site visit is required
- What technical and financial documents must be submitted
Confirming these requirements first can prevent the borrower from preparing a report that later needs significant modification or replacement.
Who Prepares a TEV Report?
A TEV Report is generally prepared by a qualified professional or consultancy with appropriate technical, financial and project-assessment expertise. The exact professional requirement depends on the project and the lender.
A Chartered Accountant or financial consultant may be involved in the economic and financial assessment, while technical or engineering professionals may be required for projects involving manufacturing processes, specialised machinery, infrastructure or other technical components. Some banks may also specify that the TEV study must be conducted by an approved or empanelled consultant.
Therefore, there is no single professional category that should automatically be described as the “TEV consultant” for every project. The bank’s requirements should take precedence.
If the lender has specified an empanelled consultant or a particular qualification, the borrower should follow that requirement before commissioning the study.
What Does a TEV Report Include?
The contents of a TEV Report vary depending on the project, industry and lender, but a comprehensive study generally examines the project from several connected perspectives.
Promoter and Project Background
The report generally begins by understanding the promoter and the proposed project. It may discuss the promoter’s relevant experience, existing business activities, management capability, project objectives, proposed location and implementation plan.
Promoter capability is relevant because the successful implementation and operation of a project can depend heavily on the management team’s technical, operational and financial experience.
Industry and Market Assessment
A TEV study also examines whether the project’s proposed products or services have a reasonable market opportunity. The assessment may consider industry conditions, demand, competition, pricing, target customers, supply conditions and major market risks.
The purpose is not simply to state that demand exists. The market assumptions used in the financial projections should have a reasonable basis.
Technical Feasibility
Technical feasibility is one of the central components of a TEV study. The consultant evaluates whether the proposed technology, production process, machinery and capacity are appropriate for the project.
The assessment may also consider the availability of raw materials, electricity, water and other utilities, as well as the suitability of the proposed location and the project’s implementation schedule.
For manufacturing projects, machinery specifications, supplier quotations and proposed production capacity may be reviewed to determine whether the technical configuration is practical.
Project Cost and Means of Finance
The TEV Report may examine the estimated cost of land, building, plant and machinery, electrical installations, pre-operative expenses, working capital and other project components.
The proposed financing structure is also assessed. This may include promoter contribution, equity, term loan, working capital facilities and other sources of finance. The project cost and means of finance should be internally consistent and supported by appropriate information.
Financial Viability
The financial section evaluates whether the proposed project can generate sufficient revenue and cash flow to remain financially sustainable.
This can involve analysis of projected sales, operating expenses, profitability, working capital, cash flow and debt repayment. Depending on the project, the report may also include DSCR, break-even analysis, IRR and NPV.
Financial projections should be based on reasonable assumptions rather than simply presenting optimistic revenue and profitability figures.
Risk and Sensitivity Analysis
Every project contains uncertainties. A TEV assessment may therefore examine the effect of changes in important assumptions, such as lower sales, reduced capacity utilisation, higher raw material costs, increased project cost or implementation delays.
This helps the lender understand which factors could materially affect the project’s financial performance and debt-servicing capacity.
Documents Required for a TEV Report
The exact document requirements depend on the project and lending institution. However, the consultant may commonly request the following information.
Project Documents
- Detailed Project Report or business plan
- Land or lease documents
- Machinery quotations
- Technical specifications
- Production process details
- Capacity information
- Raw material details
- Utility requirements
- Project implementation schedule
Promoter Documents
- KYC documents
- Promoter profile
- Relevant experience details
- Net-worth information
- Existing business details
Financial Documents
For an existing business, the lender or consultant may request:
- Income Tax Returns
- Audited financial statements
- GST information, where applicable
- Bank statements
- Existing loan details
- Repayment schedules
- CMA data
- Other relevant financial records
Depending on the industry, additional licences, approvals, environmental documents, technical studies or regulatory information may also be required.
TEV Report Preparation Process
The preparation of a TEV Report normally begins by understanding the bank’s requirements and collecting the technical, financial and project information necessary for the assessment.
1. Confirm the Lender’s Requirements
The first step is to establish whether the bank requires a TEV Report and whether it has specific requirements regarding format, consultant qualification, empanelment or site inspection.
2. Collect Project Information
The consultant reviews the project report, promoter information, machinery details, project cost, financial projections, market information and other supporting documents.
3. Conduct Technical and Market Assessment
The proposed technology, machinery, capacity, location, raw materials and operating process are reviewed along with the market assumptions supporting projected sales.
4. Conduct Financial Assessment
The project cost, means of finance, revenue, expenses, profitability, cash flow and debt-servicing position are analysed. Relevant financial indicators are calculated where appropriate.
5. Assess Risks
The consultant evaluates major technical, market, financial and implementation risks and may conduct sensitivity analysis to understand their potential impact.
6. Prepare and Submit the Report
The findings are compiled into the TEV Report and submitted according to the lender’s requirements. The bank may subsequently ask for clarifications, additional documents or revisions during its credit appraisal.
TEV Report Cost in India
There is no fixed TEV Report cost applicable to every project. The professional fee depends on the scope and complexity of the assignment.
A project involving a single facility and straightforward technical requirements may require considerably less assessment than a large manufacturing, infrastructure or expansion project involving multiple technical components and a detailed site assessment.
The cost can therefore depend on factors such as project size, industry, technical complexity, location, site-visit requirements, financial modelling, number of facilities and the specific requirements of the lender.
Rather than relying on a universal price, borrowers should obtain a fee quotation after the consultant has reviewed the project scope and bank requirements.
TEV vs DPR vs CMA vs Feasibility Report
TEV, DPR, CMA and Feasibility Reports are often used together during business-finance processes, but they serve different purposes.
|
Report |
Primary Purpose |
|
TEV Report |
Assesses the technical and economic viability of a proposed project |
|
DPR / Project Report |
Presents the project’s business plan, operations, investment and financial projections |
|
CMA Report |
Provides financial analysis for credit assessment and working-capital requirements |
|
Feasibility Report |
Evaluates whether a proposed project is technically, commercially and financially feasible |
TEV vs DPR
A Detailed Project Report (DPR) explains how the proposed project will be established and operated. It generally covers the business model, products, market, technical setup, investment requirements and projected financial performance.
A TEV Report, on the other hand, focuses on assessing the project’s technical and economic viability based on the scope required by the lender or investor. There can be some overlap between a DPR and TEV, but they are not automatically the same document.
TEV vs CMA
A CMA Report primarily presents historical and projected financial information used for credit assessment, particularly in relation to working capital and banking facilities.
A TEV Report has a broader project-assessment role, combining technical, market, economic and financial considerations.
TEV vs Feasibility Report
A Feasibility Report evaluates whether a proposed project is feasible from relevant technical, commercial and financial perspectives.
A TEV study also assesses viability, but it is commonly prepared as a more detailed technical and economic assessment for lender or investor evaluation. The exact scope can vary according to the assignment.
Does TEV Guarantee Bank Loan Approval?
No. A TEV Report does not guarantee bank loan approval.
The lender considers the complete credit proposal rather than relying on the TEV Report alone. The final decision may also depend on the promoter’s profile, credit history, existing liabilities, banking conduct, security or collateral, financial strength, regulatory compliance, debt-servicing capacity and the bank’s internal lending policy.
A favourable TEV assessment can support the lender’s project appraisal, but the final sanction decision remains with the bank or financial institution.
Conclusion
A TEV Report for Bank Loan in India provides a structured assessment of a project’s technical feasibility, market assumptions, economic viability, financial performance and key risks. It can help a lender understand whether the proposed project is realistically capable of being implemented and financed.
However, TEV requirements vary between banks and projects. Borrowers should therefore confirm the lender’s requirements, consultant eligibility, report format and scope before commissioning the study.
The TEV Report should also remain consistent with the project’s DPR, CMA data, financial projections and loan application. Accurate and realistic project assumptions are more important than simply preparing a longer report.
If you need assistance with project documentation for bank finance, Sharda Associates provides project reports and related financial documentation based on the requirements of the project and lending institution.
Frequently Asked Questions
Q1. What does TEV stand for in banking?
TEV stands for Techno-Economic Viability. A TEV study evaluates the technical feasibility and economic viability of a proposed project, particularly where a lender or investor requires a detailed project assessment.
Q2. Is a TEV Report mandatory for every bank loan?
No. The requirement depends on the lender, project characteristics, financing structure, industry and internal credit policy. The borrower should confirm the requirement with the lending institution.
Q3. Is a TEV Report mandatory for loans above ₹2 crore?
There is no universal ₹2 crore rule applicable to every Indian bank. Individual lenders can have different criteria for determining when a TEV study is required.
Q4. Who prepares a TEV Report?
A TEV Report can involve qualified technical, engineering, financial or project-advisory professionals depending on the project’s requirements. If the bank specifies an empanelled consultant, that requirement should be followed.
Q5. What documents are required for a TEV Report?
The consultant may require the project report, land details, machinery quotations, technical information, project-cost estimates, promoter information and financial records. Additional documents may be required depending on the industry and lender.
Q6. What is the difference between TEV and DPR?
A DPR presents the proposed project’s business, operational, technical and financial plan. A TEV Report focuses on assessing the project’s technical and economic viability for lender or investor evaluation.
Q7. What is the difference between TEV and CMA?
CMA primarily focuses on financial information and credit requirements, particularly working capital. TEV includes technical and economic assessment along with financial viability analysis.
Q8. How much does a TEV Report cost in India?
There is no standard price. The cost depends on the project’s size, industry, technical complexity, site requirements, financial analysis and lender-specific requirements.
Q9. How long does it take to prepare a TEV Report?
The timeline depends on project complexity, document availability, technical assessment requirements, site visits and the lender’s requirements. A consultant can provide a more accurate timeline after reviewing the project.
Q10. Does a TEV Report guarantee bank loan approval?
No. A TEV Report supports the lender’s project and credit appraisal but does not guarantee loan sanction.