TEV: A Critical Evaluation

No project is absolutely risk free; and thus, it is important to assess the bankability of the project before lending. Banks and other financial institutions have to study the viability of projects before investing in them. It is absolutely imperative to undertake a risk mitigation exercise that thoroughly studies the project to provide the appraisal of the technical aspects, and its effect on its financial feasibility and economic viability. This is what is known as Techno Economic Viability (TEV) – an evaluation of a project with respect to its technological feasibility and economic viability.

Why Is TEV Important for Banks?

Obviously, it is most important for banks to opt for TEV study before taking credit decision for financing of any project. This metric looks at the holistic worth of the project to help understand it from a technical, economic and financial perspective. Through TEV, banks get to know about the risks inherent in investing in the project, and accordingly make the investment decisions. 

How Is TEV Useful for Banks?

TEV is extremely useful for banks as it helps to understand the risk involved in financing a particular project. It takes into consideration technological risk, financial risk, regulatory risk, and market risk. Not only does it enlighten banks about the risks associated with the project, but also enumerates imminent actions that are required for risk mitigation. It gives an idea about the success of a project as well as gives confidence to the banks that the project is technically feasible and financially viable.

TEV study 

TEV study varies depending upon the requirements of the particular project, but broadly it involves data collection and data analysis. Various aspects are considered during the analysis, such as availability of inputs, product quality, production capacity, cost of production, cash flow, profitability, SWOT, DSCR, etc. Based on the overall analysis, the final report is submitted to the banks for taking credit decision for financing of the particular project. 

Resurgent India 

The banks entrust this extremely important task to an independent agency having requisite expertise. Resurgent India has competent experts with the right skill sets to provide an all-inclusive TEV report to assist banks and other financial institutions to understand the degree of risk involved in any project. Resurgent India helps banks make an informed decision on whether to select or reject a project based on the comprehensive TEV study.