1. Capital investment process and kinds and classification of the project Prepared by: Khambholiya Manan (25) Submitted to :- K.K.P.I.M.S.-Amreli

2. Capital investment involves a cash outflow in the immediate future in anticipation of returns at a future date. Capital investment decisions are decisions about when and how to spend on capital facilities and other long- term projects.

3. 1. Search for Investment Opportunities 2. Screening the Alternatives 3.Analysis of Feasible Alternatives 4. Evolution of Alternatives 5. Authorization 6. Implementation and Control

4. Kinds of projects

5. Balancing projects:- when the capacity utilization of the plant and machinery is unbalanced due to utilized capacity in some units, the balancing equipment is installed to remove the bottlenecks and to increase the capacity utilization of total plant. by installing balancing equipment, there would be free flow in the process and continuous production is ensured and there will be more revenues through higher output and attendant value addition.

6. Modernization project:- due to technological development, wear and tear, the old plant and machinery that was installed several years back, would require modernization. The old plant may cause high cost of production, frequent interruption in plant running, high cost of maintenance, low quality products. In modernization, old machine are removed and new machines are installed in its place in order to cope with dynamic and competitive environment. The modernization of plant will reduce the cost of production, increase productivity and improve the morale of the employees. It will also improve the production method, increase the product quality.

7. Replacement project:- replacement does not imply a like for like substitution. Replacement of an existing assets wit more economic one. if any equipment is deteriorated due to obsolescence and its economic life is completed, it should be replaced with a new machine, which may be equivalent to old machine or it may also be more efficient than the old one. by such replacement, the cost, increase in capacity utilization. Replacement project similar to modernization project but replacement is taken at individual machine level.

8. Expansion project:- when the current production level of existing plant could not meet the growing demand for the product in the market, and such growth is of permanent nature, the mgt would decide to increase the capacity of the plant by installing additional equipment and facilities there by the total production is increased. Expansion project is undertaken to enlarge its plant capacity with a view to produce a large volume of outputs than the current level.

9. Diversification project:- it is an investment decision to set up an entirely new project which is not connected with existing line of business. The strategic consideration in going for diversification projects to minimize the risk by having a diversified portfolio of investments. The diversification will increase the assets bases, increase in turnover and profits, better utilization of managerial skills, use of latest technologies.

10. Classification of projects

11. 1.National and international projects 2.Industial and non-industrial projects 3.High technology project(for ex. NASA ) 4.Low technology project 5. Project based on size large projects medium projects small projects 6.Project based on ownership public sector projects privet sector projects Joint sector projects

12. 7.Projects according to purpose Balancing projects Modernization projects Expansion projects Diversification projects Up gradation projects Maintenance projects Merger and acquisition

13. Thank you