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PIM Tirupati PDF
PIM Tirupati PDF
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NDDU
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August 2008
Project Advisor
TABLE OF CONTENTS
1. INTRODUCTION ................................................................................................... 2
1.1 PROJECT BACKGROUND ....................................................................................... 2
1.2 PROJECT ADVISORS AND CONSULTANTS .............................................................. 2
1.3 OBJECTIVES AND STRUCTURE OF THE PIM .......................................................... 2
2. PROJECT LOCATION ........................................................................................... 4
2.1 LOCATION............................................................................................................ 4
2.2 SITE CONNECTIVITY ............................................................................................ 5
2.3 SITE AND ITS SURROUNDINGS ............................................................................. 5
2.4 SITE LANDUSE & EXISTING FEATURES ................................................................ 6
3. PROJECT CONFIGURATION.............................................................................. 7
3.1 PROJECT COMPONENTS........................................................................................ 7
3.2 APPLICABLE DEVELOPMENT REGULATIONS ........................................................ 8
3.3 RECOMMENDED OPTION ..................................................................................... 8
4. MARKET POTENTIAL ASSESSMENT FOR DEVELOPMENT OF HOTEL
& CONVENTION FACILITY ....................................................................................... 9
4.1. BACKGROUND...................................................................................................... 9
4.2. DEMAND & SUPPLY ............................................................................................. 9
4.3. EXISTING HOSPITALITY SCENARIO .................................................................... 10
4.4. FUTURE SCENARIO ............................................................................................. 11
5. FINANCIAL ASSESSMENT ................................................................................ 12
5.1 GENERAL ........................................................................................................... 12
5.2 FINANCIAL ASSUMPTIONS FOR THE BASE CASE .................................................... 12
5.3 CONSTRUCTION COST ASSUMPTIONS:................................................................. 12
5.4 PROJECT COST ................................................................................................... 12
5.5 REVENUE STREAMS TO DEVELOPER .................................................................. 13
5.6 KEY FINANCIAL PARAMETERS............................................................................ 13
6. CLEARANCES AND SANCTIONS..................................................................... 15
6.1 BACKGROUND.................................................................................................... 15
6.2 LAND LEASE REGISTRATION .............................................................................. 15
6.3 OFFSITE INFRASTRUCTURE ................................................................................. 15
6.4 OTHER CLEARANCES & SANCTIONS REQUIRED ................................................. 15
6.5 FIRE FIGHTING .................................................................................................. 16
1. INTRODUCTION
The objective of the present document is to provide the broad market assessment,
project feasibility and the suggested project components. Accordingly, the PIM is
structured in the following sequence:
2. PROJECT LOCATION
2.1 LOCATION
The proposed Shilparamam site is located along the Tiruchanoor Main Road
connecting to National Highway No. 205 at Tiruchanoor in the outskirts of the city,
in the vicinity of famous Sri Padmavati Devi temple (temple of Goddess
Alamelumanga), the consort of Lord Venkateshwara. The proposed site is
strategically located within the cluster of function halls, Marriage Halls, hotels and
lodges.
Kadapa N
Railway
Station
Bus Stand
Airport
Railway
Station
Shilparamam
Ananthapur
Legend:
National Highway
Major Road
Railway Line
Tirupati City
Major Landmarks
Bangalore Chennai
Proposed Site
Upcoming IT SEZ
& Industrial Parks
Airport Expansion
The Project site is well connected with the road, railway station and the airport. The
site is strategically located along the National Highway 205, mid point to Airport and
the City, connecting the both. The proposed site has excellent connectivity with the
major landmarks nodes of Tirupati City as shown in the table below:
The surrounding areas are well developed with Hotels, Marriage Halls etc apart from
the Crafts Village.
The site is carved out of the 17.50 acres of Shilparamam, which is in the outskirts of
the city on Tiruchanoor Road. The site presently falls within the Tirupati Urban
Development Authority (TUDA).
TUDA has not exactly defined the land use of this area. SACCS conceived the
facilities of Hotel and Convention Facility as part of the total development.
3. PROJECT CONFIGURATION
3 Star or higher category Hotel with 100 lettable rooms with a superior level of
finish and modern amenities. Brief details on various facilities planned are
provided below.
Based on the market assessment, the Convention /Banquet hall is planned for
1,000 delegate capacity with a view that it may also be used for weddings,
banquets, social and cultural events. The main hall would be divisible and be
fitted with modern seating and the AV aids associated with modern day
convention facilities.
The minimum parking requirements for the Hotel & Convention Facility as
per development regulations or applicable guidelines.
Site falls within the jurisdiction of Tirupati Urban Development Authority (TUDA)
and all the Applicable Development Controls and Regulations shall be as per G.O.
Ms No 302, dated 15.04.2008, issued by Municipal Administration and Urban
Development Department, Government of Andhra Pradesh. As per the said G.O
Maximum height of buildings allowable is 18 meters in case of 12m abutting/
approach road.
i. Approach road of about 12.0 meter along the boundary wall within the site as
right of way to the Project site from the Main Road
ii. Alround setback of 7.0 meter (2.0 times the applicable Front set back)
iii. About 60 % Coverage of the Project Site
iv. Allowable total building height of 18.0 meter as per regulations (4 floors @3.5
floor height)
4.1. BACKGROUND
Tirupati, the Gate-way for Tirumala, adobe of the famed Lord Venkateswara,
attracts around 50,000 visitors (Domestic & International) everyday, i.e around 19-20
Million visitors per annum, with an annual increase of 2 5%. The numbers go up
exponentially as many as 90,000 to 100,000 visitors on peak festival days and
holidays. However, with the limited land & facilities available on the Tirumala hill,
most of the pilgrims will have to be accommodated in Tirupati, the down hill.
At present there are 13 hotels of different category in Tirupati, of these six are of 3-
star category and six budget category hotels facilitating domestic tourists and one
hotel of 4 star category serving both domestic and international visitors to Tirupati.
It is evident from the discussions with various hospitality providers of Tirupati that
the ratio of Tourist to Business class is about 70 and 30 respectively. Majority of the
visitors are domestic and originate from cities like Hyderabad, Chennai, Bangalore,
Bombay, Pune, etc.
All the categories of Hotels recorded an average occupancy rate of around 75% in
2007-08 according to the survey.
The room inventory of Star & Budget Hotels in Tirupati along with their average
rooms rents per day are as below:
Star Hotels
1 Fortune Kences Hotel 4 Star 128 Rs. 4200
2 Hotel Bliss 3 Star 117 Rs. 2500
3 The Bhimas Residency 3 Star 77 Rs. 2000
4 Kalyan Residency 3 Star 58 Rs. 1600
5 Hotel Sindhuri Park 3 Star 54 Rs. 1500
6 Tirumala Residency 3 Star 50 Rs. 1400
7 Sindhu International 3 Star 32 Rs. 1000
Budget Hotels
8 Hotel The Sai Inn 2 Star 24 Rs. 1200
9 Bhimas Deluxe 2 Star 69 Rs. 950
10 Annapurna Residency - 28 Rs. 750
11 Hotel Woodside - 19 Rs. 650
12 Hotel Vikram - 78 Rs. 500
13 Sri Rajamatha Residency - 43 Rs. 500
There are more than 100 small hotels with below Rs.500 per day rent hotels
operating in the city, but not considered in the study, as they are not the target group
for the proposed facilities.
Future Scenario for hospitality industry in Tirupati would be bright because of the
following reasons:
Due to increased purchase power, most of the devotees visiting Tirumala are
extending their visits to surrounding towns and looking for quality
accommodation & services. Average trip durations are increasing from 1-2
days to 2-3 days.
Increased Air Connectivity to the town has helped inflow of High Networth
Individuals/Families and creating demand for better facilities.
Keeping all the positive trends in view for hospitality industry, most of the Hotel Groups
are searching for the land for establishing Hotels and Convention facilities in Tirupati.
5. FINANCIAL ASSESSMENT
5.1 GENERAL
The financial analysis of the project has been carried out on a Public Private
Partnership (PPP) project implementation format and the financial viability has been
assessed with respect to key indicators such as Project Internal Rate of Return (IRR),
Equity IRR, and Debt Service Coverage Ratio (DSCR) for the viability of the project.
Project cost estimates are arrived at using inputs from similar projects under
implementation and the database of similar projects executed. The total project cost
under the Base Case works out to be about Rs. 30.0 crore. For calculating the
Project Cost, the Land Development costs, interest during construction, financing
cost and contingencies etc. have been assumed as per the industry standards and
Project Development expenses as incurred is also added to arrive at the landed
project cost. The funding of the project has been structured on 70% debt,
amounting to Rs. 21.0 crore; the balance funding is to be by way of equity, Rs. 9.0
crore.
To arrive at the project cost, various other components apart from construction cost
like approval & sanction cost, city level impact fee to be paid, landuse conversion
charges, project development cost, stamp duties and registration charges, lease rent
during construction, insurance cost to be paid by the developer, financing cost and
interest during construction have been considered. The Landed Project Cost is
estimated around Rs. 30 Crores (Rupees Thirty Crores only) Approx.
Average occupancy rate for Hotel rooms for the first two years of operation
period is assumed as 50%-60% and thereafter considered as 70%.
Average occupancy rate for the convention hall and conference rooms shall
be taken as 40% -50% for the initial 3 years of operation period thereafter as
60%-70%.
The key financial parameters computed are Project IRR (pre-tax and post-tax) and
Equity IRR and Debt Service Coverage Ratio (DSCR). The key financial indicators
have been calculated for 33 years and are given below:
It is observed that project is financially viable in PPP format since the Equity IRR is
working out to be 25 % with minimum DSCR of 1.50, which is quite acceptable with
the ongoing market trend/ industry norms.
6.1 BACKGROUND
In addition to the development controls, this chapter presents certain parameters and
guidelines for development. The developer may have to obtain the following
Clearances and Approvals prior to commencement of work.
SACCS would provide encumbrance free land with clear title to the Developer.
SACCS owns the 17.50 acres of land of which 2.0 acres of land is carved out and
demarcated for the Project purpose. The Land Lease Deed shall be signed with the
Developer/Authorisee at the time of signing of the Authorisation Agreement. The
Authorisee has to register the Lease deed with the concerned Authority as per the
existing law.
The offsite Infrastructure (Roads, Power and Water) are being provided by TUDA
and APSPDCL etc. The Authorisee is required to apply to the concerned Authorities
and obtain the necessary approvals on his own. The Grantor will extend all necessary
support to the Authorisee based on the written request of the Authorisee.
The following are the additional Clearances and Sanctions that the developer has to
take prior to the commencement of the project:
Since the buildings proposed are multi-storied, therefore, as per National Building
Code Amended up to date i.e. 2005, it is proposed to be provided with Fire Fighting
System, Fire Alarm System and scope of Standby D.G. Set etc. All the buildings
should have D.G. sets having automatic failure (AMF) panel, acoustic enclosure and
treatment to take care of sound and air pollution.
Annexure I
SITE PLAN
m
.1 6
97
131.05m
381.61m
93.41m
4m
166.12m
80.4
117.15m
SHILPARAMAM
130.4
15.55 Acres
9m
60.34m
m
. 42
56
103.23m
m
. 42
92
ED SITE
D TO PROPOS
49.40m
ROA
APPROACH
ENTRY
66.16m
28.08m 32.80m 36.12m
TIRUCHA
NOOR MAIN ROAD