01 Why the DPR matters to you
A DPR is your business plan written in numbers. The bank uses it to decide the loan; schemes such as PMEGP use it to decide the subsidy. But it is also your own map: if the numbers in it are wrong, your business will feel it first.
Never sign a DPR that someone else wrote without reading it. You are the one who must repay the loan.
02 The sections, one by one
Most DPRs follow the same order. Here is what each part should tell the reader.
- Promoter profile: who you are, your education, experience and own contribution.
- Project description: what you will make or sell, where, and in what quantity.
- Market: who will buy, at what price, and who else sells the same thing.
- Technical details: process, machinery, capacity, raw material, power, water and staff.
- Project cost: land, building or shed, machinery, pre-operative expenses, contingency and margin money for working capital.
- Means of finance: how much comes from you, the term loan, the working-capital loan and any subsidy.
- Cost of production and profitability: sales, costs and profit for each of the next 5 to 7 years.
- Cash flow and projected balance sheet: whether cash covers loan repayments every year.
- Break-even and DSCR (debt service coverage ratio): how safe the loan is.
- Repayment schedule: the instalments, moratorium and interest.
03 Check that the cost and the finance add up
The total project cost must equal the total means of finance, to the rupee. Then check that your own share is money you really have.
Example (hypothetical numbers, not data): project cost ₹25 lakh = machinery ₹15 lakh + shed ₹5 lakh + working-capital margin ₹3 lakh + pre-operative and contingency ₹2 lakh. Means of finance ₹25 lakh = your contribution ₹2.5 lakh (10%) + bank loan ₹22.5 lakh. Both sides equal ₹25 lakh, so the table balances.
04 Red flags to look for
Optimistic numbers make a DPR easy to approve and a business hard to run. Look for these signs.
- Full capacity use in year 1. New units usually start much lower.
- A selling price above what buyers pay in your market today.
- No working-capital margin, or a tiny one.
- Raw material prices taken from an old quotation.
- No named buyers or market survey.
- A machinery quotation from only one supplier.
- Profit that jumps every year with no reason given.