Financial Modeling and analysis of 50 flats housing project in gurgaon, in

Acknowledgement

I have taken efforts in the internship. First, I would like to express my gratitude to my mentor
to enabling me to complete this report on “Financial Modeling and Analysis of 50 flat
housing Project in Gurgaon, Haryana, In”. However, it would not have been possible
without the kind support and help of the individuals and organization. I would like to extend
my sincere thanks to all of them.

I am highly indebted to my mentor, for their guidance and constant supervision as well as for
providing necessary information regarding the project and also for their support in
completing the project.

I would like to express my gratitude toward my parents and member of Vardhan Consulting
Engineers for their kind co-operation and encouragement which help me in completion of
this project.

I would like to express my social gratitude and thanks to industry persons for giving me such
attention and time.
 Executive summary

The objective of this report is to highlight the financial analysis and feasibility of this
project. With the help of Yardman consulting Engineers (VCE), I have work on the
analysis and study of feasibility of the real Estate project in the Gurugram, Haryana as teal
estate has proved to be real engine growth. Over the years the real estate sector in India has
emerged zs a big engine for economic: growth, as it second largest employer next only to
agriculture. India's global competitiveness remains constrained and is adversely affected by
lack of infrastructure, which is critical for improved productivity across all sectors of the
economy. However, achieving the investment targeted for the eleventh Plan present many
distinct challenges. These relate not only lo scarcity of financial resources but also to lack
of capacity within the government to implement these ambitious programmers.

In India, government budgetary resources ate increasingly constrained in financing

infrastructure projects. In this scenario, Public Private Partnerships (PPP) has emerged
as a viable option for financing infrastructure needs. The trends in PPP financing highlight
several. issues with implications for financing the large-scale PPP program envisaged by
Indian government. PPPs have relied heavily on commercial banks for their debt financing,
and it is unclear how sustainable this dependence will be. Long-term financing exposes the
banks lo the risk of asset liability mismatch. An active bond market can increase the flow
of long-term funds and reduce reliance on bank. Public Private Partnerships in India face
barriers posed by the absence of a sufficiently sophisticated financial sector, fiscal barriers,
red and procedural inefficiencies have contributed to project delays and discouraged private
investors, and constraints arising from the absence of adequate infrastructure regulations
that aggravates risks: and uncertainties for investors. Haryana has lived up many projects
for private investment under the Public Private Partnership mode.

Techvardhan infra–Pvt Ltd. Company is planning to construct a project of Residential

Building. The Flats and offices will be constructed on the private land. Around 4W sq. feel
land will be utilized for the proposed project.

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

In this internship “Project finance — Modelling and Analysis”, I have worked from home
as physical internship is was not available. The project title of my internship is Financial
Modelling and Analysis of 50 Flats Housing Project in Gurgaon, Haryana IN. I have
prepared the financial model of 50 Flat Housing Project in, Gurgaon Haryana. The
objective of this study is to study and analyze the financial viability of the project by
Revenue model Equity IRR, Min HSCR, Avg DSCR, project IRR and process flow of this
venture.
By this model, bank can check the weather loan should be provided to client or not and
Bank also checks the credit worthiness and future benefit from it.
 INDEX Page No.
Cover Page I
Acknowledgment II
Executive Summary III
List Of Maps VI
List Of Figures VI
List Of Tables VI
Abbreviation VII
Chapter 1: Introduction to Real Estate 1
1.1 Overview of Real Estate in India 1-3
1.2 Infrastructure Development in Gurugram 4
Chapter 2: Project Financing 5
2.1 Project Finance – Primer and User 6
2.2 Parties Involved and Transaction Flow 6-7
2.3 Advantages and Disadvantages 8-9
2.4 Real Estate Project Finance – Definition and Industry terms 9-10
2.5 Real Estate development timeline 10-11
Chapter 3: Project Description 12
3.1 Type and Location of Project 13
3.2 Selection and Proposed Site 13
3.3 Raw Material Requirement 13
3.4 Availability of Water and Power 14
3.5 Generation of Waste and its treatment 14
3.6 Site Analysis 14-15
3.7 Project Planning Brief 15-16
3.8 Proposed Infrastructure 16-18
Chapter 4: Project Schedule and Financial Modeling 19
4.1 Project Schedule 20
4.2 Project Cost Assumptions 20-22
4.3 Preparation of Financial Model 23-26
Chapter 5: Results and Feasibility Model 27-33
Chapter 6: Conclusion 34-35
Bibliography 36
Last Page 37
LIST OF MAPS NAME
Map No. 1 Gurugram City Layout

LIST OF TABLES NAME

Table No. 1 Raw Material Requirement
Table No. 2 Details of Existing Land Use
Table No. 3 Details of existing social infrastructure
Table No. 4 Details of land use breakup
Table No. 5 Details Oof Dwelling Units
Table No. 6 Project Implementation Schedule
Table No. 7 Project Details
Table No. 8 CAPEX Cost Estimation
Table No. 9 OPEX Cost Estimates
Table No. 10 Revenue Parameters Estimates
Table No. 11 Other Assumptions
Table No. 12 Revenue (Net Projected)
Table No. 13 Finflow Statement
Table No. 14 Debt/Repayment Schedule

LIST OF FIGURES NAME

Figure No. 1 Market Growth Forecast
Figure No. 2 Parties Involved in Project Finance
Figure No. 3 Development timeline of Real Estate Project Finance
Figure No. 4 Solid Waste Management
Figure No. 5 Distribution of Project cost (CAPEX)
Figure No. 6 Distribution of Operating Expenses (OPEX)
Figure No. 7 Total Operating Expenses Growth (2023-2032)
Figure No. 8 Revenue Growth (2023-2032)
 ABBREVIATION

Abbreviation Name
GDP Gross Domestic Product
CAGR Compound Annual Growth Rate
REIT Real Estate Investment Trust
AIF Alternate Investment Fund
PMAY Pradhan Mantra Awas Yojna
DTCP The Director of Town and Country Planning
RERA Real Estate Regulation and Development Act
CREDAI The Confederation of Real Estate Developers Association of India
NCR National Capital Region
NH National Highway
CAPEX Capital Expenditure
SPV Special Purpose Vehicle
O&M Operation and Management
D&B Design And Building
GMC Gurugram Municipal Corporation
DHBVN Dakshin Haryana Bijli Vitran Nigam
IRR Internal Rate of Return
DSCR Debt Service Coverage Ratio
 1.1 Overview of Real Estate in India

The real estate sector is one of the most globally recognized sectors. Real estate
sector comprises four sub sectors - housing, retail, hospitality, and commercial.
The growth of this sector is well complemented by the growth of the corporate
environment and the demand for office space as well as urban and semi- urban
accommodations. The construction industry ranks third among the 14 major
sectors in terms of direct, indirect and induced effects in all sectors of the
economy. Read estate sects in India is expected to reach a market size of USA 1
trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the
country’s GDP by 2025. Retail, hospitality an'd commercial real estate are also
growing significantly, providing the much - needed infrastructure for India’s
growing needs.

The Indian read estate sector has witnessed high growth in recent times with. The
rise in demand for office as well as residential spaces. Demand for residential
properties has surged due to increased urbanization and rising household income.
India is among the top 10 price appreciating housing markets internationally.
Residential segment contributes -80 percent of the real estate sector.
 Fig 1: Market Growth Forecast

Government
Initiatives:

• The Government of India along with the governments of the respective states
has taken several initiatives to encourage the development in the sector. The
Smart city Project, where there is a plan to build 100 smart cities. is a prime
opportunity for the real estate companies. Below are some of the other major
Government Initiatives.
• In order to revive around 1,6tf) stalled housing projects across the top cities
in the country, the Union Cabinet has approved the setting up of Rs 25.000
crore (US$ 3.58 billion) alternative investment fund (AIF). • Blackstone
crosses US$ 12 billion investment milestone in India. • Puravankara Ltd, a
realty firm plans to invest around Rs 850 crore (US$ 12 L6 million) over the
next four years to develop three ulna-luxury residential prt›jec1s in
Bangalore, Chennai and Mumbai. • Under Pradhan Manlri Awas Yojana
(Urban) [PMAY (IJ)], 1.12 crore houses have been sanctioned in urban areas
creating 1.20 crore jobs.

The real estate sector is centered fin various laws and policies and attracts
numerous behavioral patterns, which reflect anti'-competitive practices
(Competition Policy and Competition Law), Anti-consumer practices, Unfair-trade
practices and Other regulatory Issues. Then• are spates of laws enacted by the
Central Government under the Central and the Concurrent Lis1 of the
Constitution, which are directly or indirectly associated lo the Real Estate Sector.
The study also like a ring side peek into the laws enacted by the Central
Environment, to identify provisions or pract1ces which negate competition in the
sector. The study also reviews the policies of the Centre and thereby creates an
environment for channelizing more participation and investment in the Real
Estate Sector.

Every real estate project prior to launch has lo seek almost 52 plus approvals,
and the time lag from conception to beginning of construction is anything
between 2 years to 3 years, differing from State to State. There is no single
window clearance system, the approval system is not time bound and could take
up lo two years, and there is no provision for online submission. These
circumstances together make the entire business proposition onerous and time
consuming for any prospective developer.

Real Estate sector subject and the role of the Central Riovemmen1 is vital along-
with r policy advisory in the form of Policia, Model Legislations, and Guidance
Notes, which have helped propel the momentum towards greater real estate
activity.

Central Policies, Law's, Draft Bills & Model Provisions:

I) National Urban housing & Habitat Policy, 2007

2) Draft National Rural Housing & Habitat Policy
3) Guidelines for Affordable Housing Policy in Partnership
4) Consolidate Foreign Direct Investment Policy (Effective from April 1, 2011 ),
(Ministry of Commerce and Industry)
5) Monetary Policy for Lending to the Real Estate sector & Leading by Bards
to home
buyers
6) Fiscal Policy t Service Tax - Finance Act, 2010).
7) Section 35AD under the Income Tax Act, 1961 (as améndcd by Finance
Acc 201 I )
8) Model Rent Control Legislation, 1992
9) Draft Model Residential Tenancy Bill, 2011
IO) Draft Real Estate (Regulation of Development) Bill, 201 I
 Real Estate 1.2

Wilt .fiunigmm, Sonepat, Farida6ad and Panchkula humming wilh commercial

and residential building activities, ltte real estate emerged as the most favourite
xector for investors in Haryana in 2010, an Assrcham Smdy xaid.

Bucking the trend in urban confers around the ooiintry. real estate in fiurugram
is leading a revival of investor sentiment in the fictional Capital Region. One of
the biggest reasons for this buoyancy, bleating a five-year dry spcil, is strict
implementation of the law, say experts:

The revival of confidence among buyers enuld lead to ptices of residential' and
commercial properties in Gurugram increasing by as much as I 0•Zo n 20%.

The market in Ciurugram is now witnessing the jx›s ‹ive effects of rhe
implementation of ReaJ Estate (Regulation and Development) Act, 2016
(RERA). in the last rwo months, coustcuction of 20,D00 new flats Fes
started in the M›tlennim City, bringing in investments of Rs 3 lakh crore intri
the real esjate business. "Earlier, developers reed to take investors'
money and divert it to other projects Such practices were widely prevalent
before 2014. The nat New years will be even mure ceiling for buyers sinee
buikters are under pressure to complete projects in the nat three ym, tn
line with PM Nar«ndra Modi's promise of 'housing for sJl by 2022'.

With the delays in the completion of the Dwarta Expressway almost tesnlved, the
demand will see a further txx›sf. Commenting on the effects of this. Mshanl
Solomon. managing director of Ciiiinelx india and treasurer, CREDAI, an apez
body of private real estate developer' associations, says: "It is good news for the
area as developers have invested over Rs 60,000 crote ir residential and
commercial projects along the 15(i-metre-wide road'n'ay, bui had been snuggling
to sell projects due to lack of proper connectivily. There are around
1.5 lakh home buyers who have suffered for more than a decade due to ltte
delay. As ltte enlire land required for cotapletirg the Dwarta Expressway now
vests with NHAI. we are hopeful of a quiet completion of the road project.“

In fiumgtam. the realty irrvestmenl hotspots are the areas where the Southern
Peripheral Road and Northern Peripheral Road (as the Owarka Expressway is
alxo known) meet at n'IFI-8 (sectors 99-112 and 37D, sectors 58-63, 68, 78-81.
84, and 85-86\ As pet data by Anarock Property Consultants, ltte weighted
average price for properties launched bctwemi Januarys lo May in 2019 is Rs
4,9(l6 per sq.fi. Approximately S,5W new units have been launched in fiunigram
from January to May 2019, comprising nearly 51 per cent of ltte total supply in
the enliie NCR.