Internship Project

On
“Financial Modeling and Analysis of 50 Flats
Housing Project in Gurgaon, Haryana IN”

A Summer Internship Project Report submitted in partial fulfillment of the

requirements for the award of the degree of

Post Graduate Diploma in Management

Submitted by
Mrunalini Vanka
Roll No: 2201220

Under the Guidance of

Dr. B. Naresh
IPE, Hyderabad

Institute of Public Enterprise

Hyderabad, Telangana, India-500101
2022-2024

1
 Institute of Public Enterprise
Hyderabad, Telangana, India -500101

Declaration

" I hereby certify that the information offered in the project named "Financial Modeling
and Analysis of a 50-Flat Housing Project in Gurgaon, Haryana, India" is the result of my
Summer Internship Project. This report is submitted in partial satisfaction of the Post Graduate
Diploma in Management degree requirements. The research was carried out between June 15,
2023, and August 15, 2023, under the supervision of Dr. B. Naresh, my mentor and faculty
member at the Institute of Public Enterprise in Hyderabad.

I would like to point out that the content of this project has not previously been submitted for the
purpose of obtaining any other degree, whether from this institution or another."

Mrunalini Vanka
2201220

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3
4
 ACKNOWLEDGMENTS

"I am eternally grateful to Dr. B. Naresh, an Associate Professor at the Institute of IPE, for his
invaluable guidance and support." His vast expertise, innovative leadership, expert insights, and
constant support have all been critical in designing and nurturing the growth of this research
effort. I'd also like to thank Dr. Naresh for his thorough attention to detail in revising and
polishing the paper, which was critical in completing this task successfully.

My sincere thanks also go to Prof. S. Sreenivasa Murthy, the Director of IPE, and Dr. Y. Rama
Krishna, the Dean of Academic Affairs and Chairman of Placements at IPE. Their gift of critical
resources, ongoing support, and consistent encouragement have been critical in the success of this
endeavor.

I must express my heartfelt gratitude to my mother, Vanka Srilatha, for her unwavering moral
support, love, encouragement, and blessings, which have served as a continual source of
motivation during my journey.

Furthermore, I am truly grateful for the excellent assistance and support provided by my industry
mentor, Kritika Verma.

Professor A.S. Kalyan Kumar, a committed faculty member who acts as the SIP Coordinator at IPE,
as well as the entire team at IPE, Hyderabad, are also recognized for their timely help and collaborative
attitude throughout the Summer Internship Program.

Finally, I'd like to express my heartfelt appreciation to Higher Power for providing me with the strength
and guidance I needed to go on and successfully complete this journey."

Mrunalini Vanka
2201220

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 Executive summary

"The main goal of this report is to highlight the financial analysis and feasibility of a real estate project

in Gurugram, Haryana." I worked with Vardhan Counseling Architects (VCE) to evaluate the

feasibility of this land development project, as the real estate sector has been a big engine of economic

growth in the region. Over the years, India's real estate sector has emerged as a major contributor to

economic development, second only to agriculture in terms of job creation.

India's global competitiveness is hampered by a lack of critical infrastructure, which is critical for

increasing productivity across the economy. Obtaining the investment targets established in the 11th

Five-Year Plan, on the other hand, involves numerous distinct problems. These challenges are not

solely due to a shortage of financial resources but also arise from the government's difficulties in

implementing ambitious programs effectively.

The Indian government's economic resources are becoming increasingly stretched because of its

commitment to infrastructure projects. As a result, Public-Private Partnerships (PPP) have become

essential. The patterns in PPP funding indicate several difficulties that have ramifications for the Indian

government's ambitious PPP plans. Commercial banks have traditionally been important sources of

debt financing for PPPs, but the long-term viability of this reliance is dubious. Banks are exposed to

asset risk when they rely substantially on them for long-term finance. A strong securities market can

facilitate the movement of long-term capital and minimize reliance on banks.

Furthermore, the cost of comprehensive infrastructure regulation adds to the risks and uncertainties for

potential investors in India's public-private partnerships.

Haryana has identified several projects for private investment using the Public-Private Partnership
6
(PPP) model. Techvardhan Infra Pvt Ltd. is currently planning a private infrastructure project on

privately held property that would include residential apartments and office spaces. The proposed

project will take up about 4000 square feet of land.

"PROJECT COST: Cost of the proposed task would be Rs. 8 Cr.

I worked remotely as a 'Venture Finance - Presentation and Analysis' intern during my internship. My
internship assignment is titled 'Financial Modeling and Analysis of a 50-Unit Housing assignment in
Gurgaon, Haryana, India.' In this capacity, I created a complete financial model for the Gurgaon
housing project.

The primary goal of this project is to assess and evaluate the housing project's financial viability using
various financial metrics such as Revenue Modeling, Equity Internal Rate of Return (IRR), Minimum
Debt Service Coverage Ratio (DSCR), Average DSCR, Project IRR, and cash flow analysis. This
model serves as a valuable tool for the bank to make informed decisions regarding whether to
approve a loan for the client. It enables the bank to assess the client's creditworthiness and evaluate the
project's potential profitability.

7
 Table of Contents

Chapter No Contents Page No

I Introduction of Real 8
Estate

II Finance Project 14

III Description of The 23

Project

IV Interpretation of Data 30

V Analysis of Financial 38
Feasibility

VI Conclusion & 45
Bibliography

8
 Residential plotted building

Area (approx. 4000

sq. metre)

Map .1 Gurugram City Layout

9
 CHAPTER-1:
INTRODUCTION TO REAL ESTATE

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 1.1 Overview of real estate in India:
"The real estate industry holds a prominent position on a global scale, encompassing four key
subsectors: housing, retail, hospitality, and commercial real estate. The growth of this sector
is primarily driven by the expansion of the business environment, the need for office spaces,
as well as urban and semi-urban housing demands. When considering direct, indirect, and
induced impacts across various sectors of the economy, the construction industry ranks third
among the 14 key sectors. The Indian real estate sector is projected to reach a market size of
US$ 1 trillion by 2030, a substantial increase from US$ 120 billion in 2017, and is expected
to contribute 13% to the country's GDP by 2025. Retail, hospitality, and commercial real
estate are also witnessing rapid growth, providing essential infrastructure to meet India's
growing needs.

The Indian housing market has experienced significant expansion due to increased demand
for both commercial and residential spaces. This surge in demand can be attributed to the
ongoing urbanization process and the rise in household incomes. India stands among the top
ten fastest-growing housing markets globally, with residential properties accounting for a
significant 80% share of the real estate sector's recent growth."

fig. 1 Market Growth Forecast

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12
The construction industry in India is anticipated to experience a Compound Annual Growth
Rate (CAGR) of 6% from 2019 to 2024. The infrastructure sector plays a pivotal role in
driving the growth and progress of the Indian economy. Infrastructure services contribute
significantly, representing more than 9% of India's Gross Domestic Product (GDP). This
sector encompasses the construction of power plants, bridges, dams, highways, and urban
infrastructure development, serving as the fundamental framework and backbone that
supports various other service sectors.

Investments/Developments:
In the fiscal quarter ending in March 2019, both public and private enterprises in India
announced projects valued at $1.99 trillion. This figure represented a 16% decrease compared
to the previous quarter and a 46% decrease from the previous year.

 In 2016, the Indian infrastructure sector saw 33 deals, 17 of which amounted to a total
of $3.49 billion. This marked an increase from the 31 deals worth $2.98 billion
recorded between 2015 and 2016. Most of these deals were driven by investments in
the electricity, highways, and renewable energy sectors. Furthermore, in April 2017,
Indian and Malaysian businesses agreed to infrastructure projects in India valued at a
total of $3.86 billion.

 Looking ahead to 2022, India is projected to require $646 billion in infrastructure

investment, with 70% of this investment expected to be directed toward the power,
roads, and transportation sectors.

 The inaugural Real Estate Investment Trust (REIT) in India, established by global
investment giant Blackstone in collaboration with Embassy Group, successfully raised
Rs 4,750 crore (approximately $679.64 million).

 Notable transactions included Ascendas' acquisition of Chennai's Pallavaram IT Park

for $35.70 million in January 2019, and Godrej Properties' purchase of the iconic RK
Studios property in suburban Chembur.

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  In 2018, it was anticipated that new home deliveries in India's top seven cities would
witness a 32% year-on-year increase, totaling 193,600 units by year-end.

 Consulate Office Parks announced in September 2018 that it planned to raise

approximately Rs 52 billion (approximately $775.66 million) through India's historic
Real Estate Investment Trust (REIT) Initial Public Offering (IPO).
Government Initiatives:
The Government of India, in collaboration with state governments, has initiated several
measures to promote growth in the real estate industry. The Smart City Project, aimed at
developing 100 smart cities, presents significant opportunities for the real estate sector. Here
are some noteworthy government initiatives:

1. The Union Cabinet has approved the establishment of a Rs 25,000 crore (approximately
US$ 3.58 billion) alternative investment fund (AIF) to revive approximately 1,600 stalled
housing projects in key cities across the country.

2. Blackstone has made substantial investments totaling $12 billion in India.

3. Puravankara Ltd., a prominent real estate company, plans to invest approximately Rs 850
crore (approximately US$ 121.6 million) over the next four years in the development of three
ultra-luxurious residential projects in Bangalore, Chennai, and Mumbai.

4. Under the Pradhan Mantri Awas Yojana (Urban) [PMAY (U)], 1.12 crore homes have
been sanctioned in metropolitan areas, generating 1.20 crore jobs.

The real estate industry operates under a framework of various regulations and rules,
encompassing numerous ethical standards that address anti-competitive behavior, consumer
protection, unfair trade practices, and other regulatory challenges. The Central Government,
as per the Constitution's Central and Concurrent Lists, has enacted a range of laws directly or
indirectly related to the real estate sector. The report also examines regulations introduced by
the Central Government to identify any constraints or practices that may hinder competition
within the industry. Additionally, the report analyzes the Central Government's policies
aimed at promoting greater participation and investment in the real estate sector. "

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Central Policies, Laws, Draft Bills & Model Provisions:
● 2007 Public Metropolitan Lodging and Environment Strategy
● Proposed Public Rustic Lodging and Living space Strategy
● Association Rules for Reasonable Lodging Strategy
● Bring together Unfamiliar Direct Venture Strategy (Successful April 1, 2011). (Service of
Business and Industry)
● Money related Approach for Land Loaning and Bank Loaning to Home Purchasers
● Monetary Strategy (Administration Assessment - Money Act, 2010 and so on).
● Segment 35AD of the Annual Duty Demonstration of 1961 (as corrected by Money Act,
2011)
● Lease Control Regulation Model, 1992
● 2011 Model Private Tenure Bill
● 2011 Draft Land (Improvement Guideline) Bill

1.2 Real estate (infrastructure) in Gurugram

In 2010, according to an Assocham study, the real estate sector emerged as the most favored
industry for investors in Haryana, with robust business and residential development activities
taking place in Gurugram, Sonepat, Faridabad, and Panchkula.

Contrary to the nationwide trend, Gurugram's real estate market has witnessed a resurgence
in investor interest within the National Capital Region. Analysts attribute this renewed
enthusiasm to the strict enforcement of regulations, marking the end of a five-year slump.
This revival in investor sentiment may lead to a potential increase in residential and
commercial property values in Gurugram, estimated at 10% to 20%.

The implementation of the Real Estate (Regulation and Development) Act, 2016, commonly
known as RERA, has significantly impacted the Gurugram market. In the past two months
alone, Millennium City has commenced the construction of 20,000 new units, attracting
investments totaling Rs 3 lakh billion in the real estate sector. This marks a departure from
previous practices where developers would divert investor funds to other projects. Such

15
practices were common before 2014.

The upcoming years are expected to be even more promising for investors as developers face
pressure to complete projects within the next three years, aligning with Prime Minister
Narendra Modi's vision of 'housing for all’ by 2022.

With substantial progress in addressing the delays in the Dwarka Expressway development,
there is a strong anticipation of increased demand in the area. Prashant Solomon, the
Managing Director of Chintels India and a key figure in CREDAI, an association of
residential real estate developers, comments on the impact of these developments: "This is
indeed positive news for the sector as developers have invested over Rs 60,000 crore in
residential and commercial projects along the 150-kilometer road. However, they have faced
challenges in selling these projects due to inadequate connectivity." The prolonged delay has
inconvenienced approximately 1.5 lakh property buyers for over a decade. Given that the
National Highway Authority of India (NHAI) now possesses all the necessary land for the
road's completion, we are optimistic about its timely conclusion.

Investment opportunities in real estate are particularly promising in Gurugram, where the
Dwarka Expressway (also known as the Southern Peripheral Road) intersects with the
Northern Peripheral Road (covering sectors 99-112 and 37D, sectors 58-63, 68, 78-81, 84,
and 85-86) at NH-8.

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 CHAPTER-2
FINANCE PROJECT

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 2.1 Finance Project – A Primer

The financial analysis of a project's entire life cycle is known as project finance. A money
saving advantage examination is generally performed to inspect on the off chance that the
financial benefits of a task offset the monetary costs. The study is especially important for
CAPEX growth projects with a long duration. The primary stage in the review is to
characterize the monetary construction, which will be a blend of obligation and value to fund
the venture. Then, at that point, distinguish and evaluate the venture's monetary benefits, and
decide whether the advantages offset the costs.

Why do sponsors make use of project funding?

There are two ways to finance a new project for a sponsor, which is the company that needs
money to support projects:

 The new project receives support from the corporate balance sheet (corporate
funding).
 The new venture is integrated into a newly established financial entity, the Special
Purpose Vehicle (SPV), and is funded through its dedicated balance sheet (project
funding).

18
"2.2 Parties involved and transaction flow in project finance.

fig. 2 Parties involved in Project Finance

● SPONSORS

Supports are in many cases the parent organization's value share capital holders who need to
look for project funding. Additionally, two or more organizations can launch an SPV. This
peculiarity happens when two organizations produce cooperative energy for each other or are
supposed to acquire commonly from the fundamental SPV. They provide equity to the SPV.
Prior to sending off a SPV, they should get endorsement from the parent organization's
investors by means of an investor's understanding (SHA).

● MONETARY FOUNDATIONS/BANKS
A solitary bank or a gathering of monetary establishments may be involved. They have
priority over any loans provided by sponsors (if any) because they hold senior debt. The
credit is totally gotten by the SPV's incomes and resources. Accordingly, enough reasonable
level of effort is attempted preceding the giving of any credit.

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SPECIAL PURPOSE VEHICLE (SPV): "The project sponsors established this unique legal
entity, specifically for the purpose of obtaining project funding. The funding allocated to the
project is exclusively intended for this Special Purpose Vehicle (SPV). The SPV serves as a
legal barrier between the parent company and creditors, preventing the leakage of credit and
attachment of assets.

The government of the SPV's home country is referred to as the host government. The
formation of the SPV must adhere to the government's established rules and regulations.
Additionally, it often plays a supportive role by offering various tax incentives, subsidies, and
rebates."

● OFFERS TAKERS

An off-take agreement establishes a commitment for off-takers to purchase a specified

minimum quantity of goods from the selling party. Industries such as mining, construction,
and other large-scale sectors commonly employ off-take agreements. The seller, often
represented by the Special Purpose Vehicle (SPV), incurs significant capital investments. An
off-take agreement provides assurance to the seller that a market will exist when the
transaction is finalized.
2.3 Advantages and disadvantages of Project Finance

ADVANTAGES OF PROJECT FINANCE

o Effective obligation allotment

Project funding grants backers to get obligation in overabundance of the parent's capacity.
The sponsors' creditworthiness has no bearing on this borrowing, which can be evaluated on
its own. Because of this, lending terms that are more favorable and adaptable can be
established solely based on the project's potential and value.

o Risk The executives

As recently expressed, the detachment of the lawful personalities of the guardians and SPV
truly recognizes project finance. This gives critical variety and chance weakening. The parent
organization's investors are unaffected by changes in the task's destiny. The patrons' risk is

20
confined to how much stock is provided. Besides, the risk is limited when various
organizations are involved. A few organizations might make a joint dare to frame a solitary
SPV. Subsequently, spreading similar measures of hazard over a more noteworthy number of
members limits each party's openness.

o Economies of scale
When multiple parent companies collaborate to create an SPV, the potential for economies of
scale becomes highly feasible. Two existing businesses will only agree to work together
towards a common goal if they perceive substantial benefits from this collaboration. In
certain industries, such as construction and manufacturing, one company may gain significant
advantages at the expense of another. For instance, an extraction company and a mine owner
may decide to collaborate in selling extracted materials, leveraging vertical synergies. This
partnership enables both entities to achieve a scale and efficiency that would have been
difficult to attain individually. Furthermore, they can wield stronger negotiation power with
both suppliers and customers.

DISADVANTAGES OF PROJECT FINANCE

o Project financing differs significantly from traditional lending. It relies on a series of
agreements among multiple parties, each requiring extensive negotiations. Without careful
oversight, tracking the flow of funds among these involved parties can be challenging.
Moreover, an intermediary entity, often represented by the Special Purpose Vehicle (SPV),
handles all transactions. As a result, it becomes imperative to enlist specialized personnel for
continuous monitoring of transactional processes.

o Documentation and consistence

Establishing an SPV encounters resistance at every stage of the process. Banks and financial
institutions conduct thorough due diligence and screening before extending any credit. This
cautious approach is primarily due to the distinct legal status held by SPVs, where the bank's
recourse is limited to the assets and cash flows of the SPV. Consequently, they must have
absolute confidence in the prospects and viability of the operational plans. These assessments
are both time-consuming and costly. It's evident that the SPV and its sponsors bear the
burden of this arduous procedure.
The government's suspicions are also raised by a project finance endeavor. With regards to
supporting the arrangement of a SPV, the public authority is especially wary. This is because

21
of the way that different equal gatherings have been known to stay away from charges,
sidestep cash, and partake in outrageous disregard of regulation. Therefore, for a potential
SPV to gain its confidence, it must be patient and adhere to all specified requirements.

o Constant master support

Complex exchanges and different partners are engaged with project finance. As a result, it is
impossible to avoid employing specialists and experts. The cost of laying out a unique model
for getting credit and it is gigantic to lead business. Think of this expense as the extravagant
and exorbitant fees paid to investment bankers and other professionals who enable project
financing.

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 2.4 Real Estate Project
Finance
What is Land Venture Money?
Project finance involves the long-term funding of an independent capital investment, such as
a venture with predictable revenues and assets. A well-known example is real estate project
financing. Other instances of project financing include mining, oil and gas, and construction
and development.

Real estate project financing should generate adequate cash flow to service loan repayments
and cover operational costs. Typically, the financing consists of a combination of debt and
equity that aligns with the project's lifespan."
Terms and Definitions in the Land Task Money Industry

To make a monetary model, we should initially understand the critical ideas and wordings
utilized in land project finance:

LTV, or loan to value, is: How much obligation supporting given by a moneylender as an
extent of the property's estimated worth.
 Advance to cost (LTC): How much obligation finance given by a loan specialist as an
extent of the improvement's expense.
 Net functional pay (NOI) is the contrast between gross rental income and working
consumptions (local charges, protection, upkeep, and so on.).
 Rate of cap: Given as a percentage, NOI divided by property value.
 ✔Amortization period: The quantity of months or years it takes to reimburse a credit's
rule.
 Term refers to the length of time for which the interest rate on a mortgage loan is set.
 General accomplice (GP): An owner of an unlimited liability partnership who actively
participates in the company's operations.

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  A beginner investor whose investment in the project is all that matters is referred to as
a "confined accomplice" (RP).
 Land advance: Money used to purchase land without making any money from
speculating. The long-term value will be significantly lower than that of a property
that generates income.
 Floor space percentage (FSR): Used to determine the size of a building and set a limit
on how much improvement can be built up on a parcel of land.
 Gross structural region (GBA) is the total amount of space in a building from one wall
to the next.
 The total amount of the gross leasable area, or GLA, is the total amount of enclosed
space used for living.
 Gross site region: The two-dimensional measurements of a site based on the boundaries of its
properties.
 The deductions: a portion of the total gross site area that cannot be developed, such as
roads, lanes, and other public access areas.
 Net site region: The entire region less any derivations.
 Max GBA: The most extreme terrible structure region decided utilizing the FSR.
 Development GBA: From construction blueprints, calculated the gross building area.
 Saleable region: The total gross building area following construction, minus all shared
areas and other parts that cannot be sold.

2.5 Land Venture Money - Advancement Timetable

While fostering a land project supporting model, we really want to comprehend the
improvement interaction and plan. A land improvement project has different stages:
At each phase of the land project supporting life cycle, a few types of financing are used.

For instance, a partnership might pay for exchange costs with equity. This is since starting a
work involves a big gamble and makes building up bank reserves difficult.

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fig.3

Development timeline of Real Estate Project Finance

25
 CHAPTER-3
DESCRIPTION OF THE PROJECT

26
 3.1 Type and location of Project

PROJECT TYPE:
The planned project is the construction of a private skyscraper with a total area of about
90000 square feet. Moreover, a 45000 square foot constructed area in Gurugram, Haryana.
The structure is eight stories high. There are six condos on each level.

PLACE OF THE PROJECT:

The proposed project area is in the Pushpanjali Homesteads neighborhood, adjacent to the
Dwarka Freeway. The scope of the proposed venture is shown in Guide No. 1.
3.2 Selection of proposed site
Here are all the actual foundation offices, including the water supply trunk lines, seepage channels,
and tempest channels. All projected infrastructure facilities and city-level infrastructure facilities will
therefore be reachable.
3.3 Raw material Requirements
Bricks, cement, steel, wire, sand, aggregate, and other building supplies will all be purchased
from the local market in accordance with specifications. In the table below, approximate
quantities are listed:

Sr. No. Material Quantity (Approx.)

Cement 68512 bags (28 kg)

1
Steel 176535 kg
2
Sand 245890 CFT
3
Aggregate 107812 CFT
4
Aerated Concrete Blocks 6061090 NO.
5
Table no. 1 Raw material Requirement

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 3.4 Availability of water and power

• WATER NEED AND SOURCE: The GMC water supply is where most of the water
comes from. Treated water will be supplied by GMC water mains. Water provided to other
residents is of a similar quality to water used for drinking. GMC keeps the water's quality
high by applying the proper treatment. There is no need for additional water treatment
because GMC provides treated drinking water through the mains. Total water consumption
during construction was 8.0 KLD.

• POWER NECESSITIES AND SOURCE: The absolute power requirement during

development will be 500 KVA, with DHBVN as the supply. Pads, lifts, and siphons will
require 1250 KVA of total power during the functioning stage, with DHBVN serving as the
source.

3.5 Generation of waste and its treatment

Around 2.2 KLD of domestic wastewater will be produced during the construction phase,
released through GMC sewers, and treated at the closest sewage treatment facility. Strong
trash management is arguably the dominant viewpoint in the area. A robust system for house-
to-house rubbish collection exists in Gurugram. Additionally, this will be provided at the
movement site. Separating dry and wet waste will also be done.

3.6 Site analysis

 Project Description: The proposed project entails the construction of a high-rise

residential building covering an approximate total area of 90,000 square feet, with a
developed area of 45,000 square feet in Gurugram, Haryana.

 Road Connectivity: The project site is conveniently located approximately 3.0

kilometers southwest of State Highway-20, offering excellent road connectivity.

 Rail: The region is well-served by the railway, with Gurugram Railway Station
situated approximately 10.0 kilometers from the planned building location.

28
 Communication: The project site benefits from accessible mobile, internet, and
telephone connectivity.

 Land Ownership and Usage: The high-rise residential building will be constructed on
privately-owned land.

 Existing Land Use: The land is not currently utilized for agricultural purposes. There
are no National Parks or wildlife refuges within a 10-kilometer radius. The table
below provides details on the current land use.

 Soil Classification: Soil testing will be conducted for the proposed project, revealing
blackish salty clay with highly malleable sand particles at the ground level.

Sr.no. Particulars Distance

Around 10 km
Nearest river
1 (Badshahpur river)
Around 10 km
Nearest railway station
2 (Gurugram Railway Station)
Around 30 km
National Park or reserves forest
3 (Near New Delhi)
Indira Gandhi National
Nearest Airport Airport (IGI) 32.1 Km
4
North-East
Highway (SH-13) 0.1 Km
Nearest highway
5 East
Table 2: Details of existing land use

Sr. no. Particulars Distance

Hospitals
1
Colleges
2
Within 10 km
School
3
Temple
4
Table 3: Details of existing social infrastructure

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 3.7 Project planning brief

⮚ ARRANGING IDEA: The proposed project is a high-rise residential structure in

Gurugram, Haryana, with a total area of about 90000 square feet and a developed area of
45000 square feet.
⮚ PROJECTION OF POPULACE: 100 workers will be needed continuously while
the structure is being built. About 500 people (including visitors) will be permanently
stationed there once the construction is complete.
⮚ LAND USE: Working on the proposed project's street plan and plot line should be the
responsibility of the Green Belt region executives. Regarding the green belt development
plant, which is still in the early phases, a letter will shortly be sent out. A valuable link is
planned out step by step. The following table provides a detailed analysis of land use.

Sr. no. Particulars

Plot/ Land area
1
Built up area
2
FSI area
3
Parking area
4
Table 4: Details of land use breakup

3.8 Proposed infrastructure

Residential District: The proposed project is a high-rise residential structure in Gurugram,
Haryana, with a total area of about 90000 square feet and 45000 square feet of built space.

No of Tower Particulars
1 Basement b1 Parking
Ground floor Security office
1st floor 6 (3bhk)
2nd to 8th floor 42 (3bhk)
Total 50 (3bhk) flats
Table 5: Details of dwelling units

30
 ● Green belt: For the proposed project, a Green Belt area will be built along the plot's

edge and along the side of the road.

● Social arboriculture:

✔ ON-SITE FACILITIES

✔ A Plot in Common

✔ The provision of Water

✔ The availability of electricity

● Connectivity: The planned project's intended site is conveniently reachable by air,

rail, and road.

● Drinking water source: GMC is the primary source of water supply.

● Septic system:

 Sewage system type proposed: Internal roads within the constructed site will
have regular drainage lines made of R.C.C. pipes of class NP3. This will be
connected to the main sewer line, and the Sewage Treatment Plant will be
used to dispose of the sewage water.
 Sewage disposal point and its integration with the city level sewage
disposal system: The sewage treatment plant's septic system will handle the
disposal, according to GMC sewers.
 Solid waste management: Strong trash management is arguably the dominant
viewpoint in the area. A robust system for house-to-house rubbish collection
exists in Gurugram. Additionally, this will be provided at the movement site.
Separation of wet and dry garbage will also be carried out. Figure 4.

● Private lofts, NPNL units, EWS units, local area lobby, primary schools, nurseries,

retail areas, facilities, beauty salons, ATMs, public places, and nursing offices will all
produce waste during the working period. Most of the project's strong waste will be private
trash, with an average daily volume of 5000 kg.

31
 . fig. 4 solid waste management

● Electrical controls: For the plant to operate completely automatically, it must be

completely prewired, or site wired, and it must have all the connections for power and
control. A weatherproof cubicle-style panel board must contain all circuit breakers,
motors, starters, and timers. Electrical metallic cylinders should be utilized for all wiring.
The Public Electric Code should be followed when measuring any wire. In assistance
wires, joining is not permitted. As well as providing and installing the required wiring,
switching mechanisms, alarm or control conduit, and outside disconnects, the contractor is
also in charge of these tasks. The branch circuit should be protected against short circuits
with warm, appealing air circuit breakers. A single phase thermal magnetic air circuit
breaker is required to safeguard all control circuits. Every blower engine should have an
attractive across-the-line starter with overburden warmers in each stage and a usual outing
contact arrangement to ensure affirmative security against single staging. The motor must
have insulation of Class "B" and be designed to run at service factor load in a temperature
range of -5 at full load, 45 degrees Celsius. Anti-friction ball bearings with an average
lifespan of at least 100,000 hours under typical V-BELT loading conditions must be
installed in every motor. Temperatures between 0° C and 50° C should be resisted by the
mechanical/electrical structure.

● Vehicle leaving offices: More than adequate stopping will accommodate occupants at

the proposed project area. Guests should likewise have suitable stopping with the goal
that they don't upset traffic and may move openly around the scene. However, plot
owners will be able to park within their plot, as stipulated by the HUDA Building Bye
Laws.

● Power consumption: The power will be provided by Dakshin Haryana Bijli Vitran

Nigam (DHBVN).

Objective of the study

32
 The objective of the study is.

• Financial Analysis (IM), Detailed Project Report, and Feasibility Analysis.

• Being aware of the numerous costs related to this application and creating a project
costing model.

CHAPTER-4:
Interpretation of Data

33
34
 4.1 Interpretation of Data

The success of a task depends on it being completed within the allotted time frame.
Appropriate execution lowers costs like interest and administrative overheads while also
assisting in the achievement of predetermined goals. The coordination of several internal and
external operations at various corporate levels is necessary for project implementation. Here,
we give the following details on how the project will be carried out: The accomplishment of a
project depends heavily on how quickly it can be implemented. The attainment of pre-
established goals is aided by timely implementation, which lowers expenditures like interest
and administrative expenses. Project implementation calls for coordination of numerous
operations across the organization's various levels and with multiple external entities. The
following project implementation details are provided here:

Sr.
Particulars Duration of month
No.
1 Basement works 3
2 Ground floor works 1
3 1st to 8th floor 4
4 Outer plaster works 3
5 Plumbing and sanitation 2
6 Electrification 2
7 Color work 1
8 Drainage and water supply services 1
9 Streetlight and road services 1
10 Social infrastructure works 1
11 Allotment to beneficiaries 1
20 months (1 year &
Total
8 months)
Table 6: project implementation schedule

35
 4.2 Project cost Estimations

Industry Case Statement:

 Financial analysis of the 50-pad hotel project in Gurgaon, Haryana, IN

 "Home Engineers" has purchased a piece of land close to Gurugram HR and needs to
develop it as a private building with 50 900 square foot pads. They want to sell the
pads for Rs. 4000 per square foot. They are asking for a D/E ratio of 70:30, 12-year
non-recourse debt (project financing) loan from the top commercial banks in India.

Project Cost:
• An 8-crore rupee capex is anticipated.
• The project is expected to cost Rs. 50 million per year.

Assumptions:

⮚ Project details:

PROJECT DETAILS
Size in Sq. Ft 45000
Equity 30%
Debt 70%
Debt Service Resv (DSR) 1 yr
Table no. 7 Project Details

⮚ Project cost Estimates: Table no. 8 CAPEX cost Estimation

TOTAL SQ
FEET
Project Cost (CapEx) Rate 45000 % of project
(Rs. cost
/sq.ft)
Land 720 32400000 40.45%

36
 Flat construction cost 170 7650000 9.55%

Interior Decoration 130 5850000 7.30%

Furniture 180 8100000 10.11%
Fixtures 30 1350000 1.69%
Building Registration 10 450000 0.56%

Broker Fee 80 3600000 4.49%

Stamp Duty 230 10350000 12.92%
Fund Raising Fee 30 1350000 1.69%
Tranfer of Deed Fee 70 3150000 3.93%
Interest During Moratorium 60 2700000 3.37%
Loan and Documentation Fee 40 1800000 2.25%
CSR, HSE, Training 30 1350000 1.69%

Total Project Cost 80100000 100.00%

O & M Cost (Monthly Breakdown) (OpEx) RATE

*45000

Building Maintenance 2.8 126000

Utilities (Electric + Water + Internet) 1.7 76500
Salary (Maid + Accountant) 2.4 108000
Plumber + Electrician + Misc. etc 2.2 99000
Insurance 3 121500
Total O&M Cost (per year) 5035500

Table no. 9 OPEX cost Estimates

⮚ Revenue Parameters Assumptions:

Revenue Parameters UNITS(INR)

City
Gurgaon, Haryana
Size (Sq. ft) of one flat 900
Rate/sq.ft 4000
Sales price per flat 3600000
Avg. No of flats sold per year 5

37
 Sales price Appreciation 8%

Table no. 10 Revenue Parameters Estimates

⮚ Other Assumptions:

ASSUMPTIONS
Inflation 4.00% Debt rate 10.0% USD/INR 75.00
DDT 0.00% Moratorium 1 Yr Discount 10%
Tax 0 yrs Debt tenure 12 yrs Construction Time 1.8 yr
Holiday
Tax rate 25.00% Depreciation 7.00% MAT 18.5%

Table no. 11 Other Assumptions

All the assumptions are taken into consideration while preparing the
financial model.
Preparation of Financial Model 4.3
NET PROJECTED REVENUE:

YEAR 1 2 3 4 5 6 7 8 9 10
NO OF UNITS 5 5 5 5 5 5 5 5 5 5
SOLD PER
YEAR
RATE PER SQ. 40 400 400 400 400 400 400 400 400 400
FEET 00 0 0 0 0 0 0 0 0 0
AVG SALE 36 388 419 453 489 528 571 616 666 7196
PRICE PER 00 800 904 496 776 958 274 976 334 417
FLAT 00 0 0 3 0 1 8 7 9
0
GROSS SALES 18 19. 20. 22.6 24. 26.4 28.5 30.8 33.3 35.9
44 995 748 488 479 637 488 167 820
2 2 8 1 4 4 4 8
LESS 0. 0.8 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85
COMMISSION 85 5
FEES
NET 17 18. 20. 21.8 23. 25.5 27.7 29.9 32.4 35.1
PROJECTE .1 59 145 248 638 979 137 988 667 320
D 5 2 2 8 1 4 4 4 8
REVENUES
(MILLIONS
INR)

38
Table no. 13 Fin Flows statement

39
● Debt schedule or Repayment

Table no. 14 Debt repayment schedule

40
 CHAPTER-5
ANALYSIS OF FINANCIAL
FEASIBILITY

41
 5.1 Analysis of Financial Feasibility

Prior to going with a venture decision, it is imperative to inspect whether the proposed
speculation idea is common. To decide whether an investment should be made, several
factors need to be taken into consideration, including its feasibility. One of the main advances
is hence to do a plausibility examination.
Prior to setting up a business methodology, a monetary plausibility study ought to be finished
to lay out the financial feasibility of a proposed activity. It distinguishes starting costs, gauges
income and incomes, and computes the profit from venture.
To evaluate an investment's financial viability, relevant criteria must be used. Monetary
plausibility gauges should be performed with alert, and the intricacy of the not entirely settled
by the quantity of different elements that should be thought of. The presumptions utilized in
the estimations can and much of the time will change as the task keeps, requiring an update to
the review.
A monetary plausibility study, or FFS, ought to assess an undertaking's reasonability in view
of a key part: will the venture or business have an adequate number of assets to execute the
task? (what’s more, create a benefit). One of an organization's primary concerns is whether it
can keep up with itself, pay its representatives, and, obviously, procure a benefit. A monetary
examination can help with this assessment.
Consider the following elements:

⮚ Company Expenses

⮚ Revenues

⮚ Debt schedule/ repayment

⮚ Cash flow (money in, and money out).

⮚ DSCR

⮚ IRR

● Expenses:

42
All expenses incurred by the Expert in connection with the venture's activity are included in
the work costs, together with the Power's share of capital expenditures. Over the ten-year
period from FY2021 to Budget 2030, total operational costs are projected to increase by

roughly 5.03 million INR to 7.16 million INR due to an inflation rate of 4%. The entire cost
of capital is represented by the items in the following chart.

Fig. 5 Distribution of project cost (CAPEX)

● Revenue

43
 40
35.13
35 32.4
29.99
30 27.71
In the ten-year period from 2021 to 2030, total 25.59
25 23.63 functional revenues are projected to increase
21.82
from approximately 17.15 20.14
20 18.59 million Indian rupees to 35.13 million rupees, corresponding to a
17.15
compound
15 annual growth rate (CAGR) of roughly 7.43%. This increase is greatly aided by
increased10level costs and store interest.
5

0
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Revenue (million INR)

Fig. 6 Distribution of Operating Expenses

Fig. 8 Revenue growth (2023-2032)

● Debt/ Loan Repayment Schedule

44
Given that the project requires more venture capital, a specific justification component needs
to be developed to spread the risk. The Special Purpose Vehicle (SPV) or Special Purpose
Element (SPE) is arguably the most often employed system in foundation finance. Whether
the project is being worked on by a legislative association, a confidential partnership, or a
combined public and private endeavor has no bearing. For each framework project, specific
vehicles are frequently developed.
A Special Purpose Vehicle (SPV) is a company established exclusively for the purpose of
carrying out a project. This shows that the Special Purpose Vehicle (SPV) is legally separate
from any company or governmental body that might be lending it a hand. Its own financial
history and salary justification are available. Lenders are expected to make loans to these
Special Purpose Vehicles (SPV) based on their own assets and liabilities, not those of the
parent organization. The SPV Company often accepts non-recourse finance. This implies that
in the event of a default, financial supporters may gather the resources of the project rather
than those of the parent organization, which may be involved in the initiative. "Home
Developers" must create an SPV to protect themselves from recourse-based liability in this
project. In order to complete the project, they must obtain a business bank obligation credit
for Rs. 56,101 million, or 70% of the total capital expense. In order to determine the
appropriate assumptions for the credit/obligation reimbursement, such as the obligation
rate/advance rate, ban period, and credit length. Create a debt/loan repayment schedule to
precisely calculate the overall cash flow. In this venture, "Home Designers" should assemble
an SPV for non-response obligation. They would need to obtain a business bank obligation
credit for Rs. 56.01 million, or 70% of the total capital expense, in order to execute the
assignment. Required suspicions, such as obligation rate/advance rate, ban period, and
advance duration, should be considered for credit/obligation reimbursement. A schedule for
repaying the debt or loan must be made in order to calculate the overall cash flow
appropriately.
 Interest installment (IPMT) equation and rule installment (PPMT) recipe should be
used successfully to build up the schedule in the model.
 Interest Rate, Period, Payments, PV, [FV], [Type], and Interest Rate (Time) Interest
rate, duration, payments made, PV, [FV], [Type], and PPMT the 10% interest paid
over 12 years and 12 installments on a loan of Rs. Rs. 56.01 million. The profits from
the project will be used to create this installment.

● Cash flow

45
 The projected income includes the amount of startup capital needed and its source. It is
calculated how much value capital there is as well as how much cash and rent have been
gained overall.
 The ongoing financial stream definition clearly specifies that the compensation period is
twelve years. In twelve years, the partnership may use the proceeds from the sale of the
units to pay the premium and rules.
 Since building won't start until 2020, there won't be any income at that time, which will
leave the project with a negative cash flow in 2020. When development is concluded in
2021, income is positive. This demonstrates the project's financial viability by showing
the bank will have cash on hand starting in 2022.

46
● DSCR (Debt Service Coverage Ratio)

As networking compensation is divided by absolute duty administration, the obligation

administration inclusion proportion (DSCR) is defined. It refers to the amount of money that
is available to pay annual interest and head obligations, including sinking reserve
installments.

Min DSCR 1.30

Avg DSCR 1.88

Here’s how to interpret:

• DSCR 1: Your cash flow is negative. Your income is insufficient to pay off all of
your debt.
• DSCR = 1: You have no extra cash reserve but exactly enough money flowing in to
pay your debts.
• DSCR > 1: Your cash flow is positive. The more income you need to pay off your
debt, the higher your DSCR must be.

The net operational income (EBITDA less taxes) for this project in 2022 is 10.72, and the
total debt service (interest + principal) is 8.23. The DSCR for that year will be 1.30 in this
manner. According to this, the business will have 130% greater incoming cash flow in 2022
than will be needed to pay off its debt. Additionally, for the current year, the business has
approached income that is 141%, 152%, and 164% higher than predicted, respectively, to
cover the obligation installments for the years 2023, 2024, and 2025. The annual increase in
net operating income is paralleled by an increase in the DSCR.

● Internal Rate of Return

A guideline for assessing the value of an activity or endeavor is the inner pace of return rule.
According to the IRR declaration, a project or speculation is considered successful if the
internal rate of return is higher than the minimal needed rate of return, which is typically the
cost of capital.

47
An endeavor or activity should be embraced. If the IRR is higher than the cost of capital, on
the other hand, it can be wise to pass on a project or investment.
The rate of return that results in a negative net present value (NPV) is known as the IRR. The
task is feasible if the IRR exceeds the loan cost at which you can obtain it. The IRR
calculates a firm's actual cash usage.
The total of the present gains from the individual incomes (both coming in and going out) is
referred to as the Net Present Value (NPV) of a collection of incomes. Additionally, Current
Worth is defined as the ongoing value of a future sum of money or stream of income that is
restricted at a specific rate.
The IRR is the time-adjusted profit throughout the course of the project. The project's present
value of cash inflows and outflows is what allows for comparison due to this rate. In other
words, the cash flow NPV is equal to zero at the chosen discount rate.
There is a difference between Equity IRR and Project IRR when calculating IRR. The IRRs
for the undertaking and value, as their names imply, differ in terms of cash inflows. All
project financial sponsors share in the earnings according to the venture IRR. Income that
directly benefits the job would be included in the undertaking's IRR. After the debt has been
repaid, the value IRR estimates the returns for the organization's investors.

The outcome is a 20.95% value IRR. The project's IRR is 12.22%.

When computing IRR, there is a distinction between Equity IRR and Project IRR. As their
names imply, the IRRs for the undertaking and value are different in terms of cash inflows.
According to the venture IRR, all project financial supporters receive a portion of the profits.
The undertaking's IRR would include income that directly benefits the job. The value IRR
makes an estimation of the returns for the organization's investors once the loan has been
repaid.

48
 CHAPTER-6
Conclusion & Bibliography

49
Real estate development can offer both exciting opportunities and lucrative rewards, but it
can also be challenging and risky. Ultimately, the primary objectives of both a developer and
their financial institution are to minimize risk and maximize profitability. To achieve these
goals, it is crucial to have a clear and accurate understanding of the potential homebuyers and
the competition for those buyers, both now and in the future. Without this information, it's
impossible for any developer to identify the target market they should aim for and assess the
feasibility of a project.

Research indicates that predicting project feasibility is a complex task. To evaluate the
viability of such a project, it's essential to identify factors that project promoters have no
control over but significantly impact project revenues. Following an assessment of these
variables, a sensitivity analysis of the project can be conducted.

This paper includes a financial modeling and analysis of 50 residential units in Gurugram,
Haryana, India. Given the substantial investment required, non-response liability is beneficial
for the project. Using the provided data and assumptions, a financial model has been
developed. The income statement, Debt Service Coverage Ratio (DSCR), and Internal Rate
of Return (IRR) are used to outline the project's financial feasibility. The calculations are as
follows:

- Project Equity IRR: 20.95%

- Project Leveraged IRR: 12.22%
- DSCR for 2022, 2023, 2024, and 2025: 1.30, 1.41, 1.52, and 1.64, respectively.
- Minimum DSCR for the project: 1.30
- Average DSCR ratio: 1.88

Considering the DSCR and Project IRR, it can be concluded that the project development is
financially viable based on the available data. Given the project's feasibility, it is highly likely
that the bank will approve the loan application.

50
 Bibliography:
Websites
1. https://economictimes.indiatimes.com/wealth/personal-finance-
news/real-estate-gets- highest-investment-in-
haryana/articleshow/8445499.cms?
utm_source=contentofinterest&utm_medium=text&ut
campaign=cppst
2. http://plannersweb.com/2013/12/pro-forma-101-how-much-money/
3. http://plannersweb.com/2013/12/proforma-101-getting-
familiar-with-a-basic-tool-of-real- estate-analysis/
4. https://www.investopedia.com/terms/f/
financialmodeling.asp#:~:text=Investopedia%20%2F
%20Michela%20Buttignol-,What%20Is%20Financial
%20Modeling%3F,many%20uses%20for%20company
%20executives.

Books

1. Corporate Financial Analysis – Author (FRANCIS J CLAUSS)

2. Financial Modeling and Valuation -Author (PAUL

PIGNATARO)
3. Financial Modeling Fourth edition – Author (SIMON
BENNINGA)

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