business plan analysis and investor presentation for hotel
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Sample Business Plan for students and professionals.TRANSCRIPT
Resorts Limited
5-Star Category Hotel in Ludhiana
FINCATALYST
1 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
2 TEV
Final Report – 02nd
January, 2014
EXECUTIVE SUMMARY ....................................................................................................................... 4
MAIN REPORT .................................................................................................................................. 15
SCOPE OF WORK .............................................................................................................................. 16
DATE OF INSPECTION& SITE VISIT ............................................................................................................... 16
TEAM OF CONSULTANTS ........................................................................................................................... 17
METHODOLOGY ............................................................................................................................... 18
PROJECT OVERVIEW......................................................................................................................... 19
COMPANY BACKGROUND ................................................................................................................ 23
[CLIENT NAME]................................................................................................................................... 23
SHARE HOLDING PATTERN......................................................................................................................... 23
BRIEF PROFILE OF PROMOTERS .................................................................................................................. 24
TECHNICAL CONSULTANTS& MANAGEMENT TIE UP ....................................................................................... 24
Management and Operation Tie Up ............................................................................................... 24
Other Consultants ........................................................................................................................... 25
PROJECT DETAILS ............................................................................................................................. 27
LAND DETAILS ......................................................................................................................................... 27
PROJECT LOCATION .................................................................................................................................. 27
PROJECT CONFIGURATION ......................................................................................................................... 29
TECHNICAL DETAILS AND ASSESSMENT......................................................................................................... 29
PROJECT AREA STATEMENT ....................................................................................................................... 30
MANPOWER REQUIREMENT ...................................................................................................................... 32
CURRENT STATUS AND STATUTORY APPROVALS ............................................................................................. 32
IMPLEMENTATION SCHEDULE ..................................................................................................................... 34
INDUSTRY ASSESSMENT ................................................................................................................... 35
LUDHIANA – OVERVIEW ........................................................................................................................... 39
LUDHIANA – HOTEL INDUSTRY TREND ......................................................................................................... 41
LIMITED PRIMARY SURVEY: SNAPSHOTS OF THE COMPETITION FOR LUDHIANA .................................................... 44
PROJECT COST .................................................................................................................................. 46
LAND AND LAND DEVELOPMENT COST ......................................................................................................... 46
BUILDING AND CIVIL WORKS COST.............................................................................................................. 46
PLANT AND MACHINERY COST ................................................................................................................... 48
MISCELLANEOUS FIXED ASSET .................................................................................................................... 49
PRELIMINARY AND PRE-OPERATIVE EXPENSES ............................................................................................... 50
INTEREST DURING CONSTRUCTION PERIOD ................................................................................................... 50
MARGIN MONEY FOR WORKING CAPITAL .................................................................................................... 50
CONTINGENCY ........................................................................................................................................ 51
MEANS OF FINANCE ......................................................................................................................... 52
5-Star Category Hotel in Ludhiana
3 TEV
Final Report – 02nd
January, 2014
PROMOTERS’ CONTRIBUTION..................................................................................................................... 52
TERM LOAN............................................................................................................................................ 52
REPAYMENT SCHEDULE ............................................................................................................................. 53
ECONOMIC VIABILITY ....................................................................................................................... 54
ROOMS AND OCCUPANCY LEVEL ................................................................................................................. 54
RENTALS AND REVENUES ........................................................................................................................... 54
DEPARTMENTAL/ VARIABLE EXPENSES ......................................................................................................... 57
FIXED EXPENSES ...................................................................................................................................... 58
WORKING CAPITAL REQUIREMENT .............................................................................................................. 59
DEPRECIATION ........................................................................................................................................ 59
INCOME TAX ........................................................................................................................................... 60
PROFITABILITY PROJECTIONS ...................................................................................................................... 61
FINANCIAL ANALYSIS ....................................................................................................................... 63
MARGIN ................................................................................................................................................ 63
DEBT EQUITY RATIO ................................................................................................................................. 63
DEBT SERVICE COVERAGE RATIO ................................................................................................................ 63
INTERNAL RATE OF RETURN ....................................................................................................................... 63
BREAK EVEN ANALYSIS ............................................................................................................................. 63
SENSITIVITY ANALYSIS ..................................................................................................................... 65
RISK ANALYSIS AND MITIGATION MEASURES .................................................................................. 66
SWOT ANALYSIS ............................................................................................................................... 69
CONCLUSION ................................................................................................................................... 70
ANNEXURE 1: PROJECTED PROFIT AND LOSS ACCOUNT ................................................................................... 73
ANNEXURE 2:PROJECTED CASH FLOW STATEMENT ........................................................................................ 75
ANNEXURE 3:DSCR, NPV & IRR CALCULATION ........................................................................................... 76
ANNEXURE 4: BALANCE SHEET ................................................................................................................... 78
ANNEXURE 5: INTEREST AND REPAYMENT SCHEDULE ...................................................................................... 80
ANNEXURE6: SITE VISIT/VISUAL ASSESSMENT OF THE CAPITAL EXPENDITURE ..................................................... 85
LIMITING CONDITIONS ..................................................................................................................... 91
TERMS RELATING TO USE OF THIS REPORT ......................................................................................... 93
5-Star Category Hotel in Ludhiana
4 TEV
Final Report – 02nd
January, 2014
Executive Summary
5-Star Category Hotel in Ludhiana
5 TEV
Final Report – 02nd
January, 2014
Project Background & Scope
Name of the Company
[Client Name] or ‘Company’
Date of incorporation 19th
June 2003
Constitution Limited Company
Industry Hospitality
Nature of activity
Constructing a 5-Star category Hotel property in
Ludhiana
Corporate Office [Address]
Promoters
[Promoters’s
Name]
Brief details on the project
[CLIENT NAME] proposes to develop a 5 star all
suites hotel in Ludhiana. The management
contract for the hotel is with Onyx Hospitality
Group operating under brand name [Client
Name]. The project was initially conceptualized a
decade ago as a housing project; however due to
multiple changes the project cost has escalated
from INR 68.67Crores to INR 118.52 Crores.
Location [Address]
Estimated project cost
The project cost for the proposed hotel is
estimated to be INR 118.52 Crores.
Proposed DE ratio 2.08 : 1
Promoters’ Contribution
- Equity
- INR 38.52 Crores
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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Land [Address]
Size 3.3 acres
Current status
The Company has completed 60 - 70% of the
civil and construction work at the site, the
banquet hall which is located in the basement is
also 95% complete with kitchen work left. The
Atrium area where the restaurants and coffee
shop are proposed is under construction. The
rooms are ready with civil work done and fixtures
attached.
Techno-Economic Viability
Yes
(Subject to Critical Success Factors and
mitigation of risk associated to the project &
others as mentioned in the report)
Promoters’ Profile
[Promoter’s Name] – is a post graduate in Commerce from Punjab University
having more than 18 years of experience. Mr. Singh is an entrepreneur and had
started his career with manufacturing of valves and cocks in 1983. He entered
into real estate in 1994 with his farm house project named “Garden Enclave” under
the banner of his firm Sardar Estates in Ludhiana. In the proposed project he is
responsible for the overall management and co-ordination of activities
[Promoter’s Name] – holds a master’s degree in Arts specializing in English
from Punjab University, Chandigarh. She has close to 20 years of experience in
handling business as she hails from a business family. In [CLIENT NAME], she is in
charge of Site and Co-ordination of activities
[Promoter’s Name] – holds a master’s degree in Business Administration and
has close to 6 years of experience as an entrepreneur. In [CLIENT NAME], he is in-
charge of Financial Management and Administrative responsibilities.
Project Cost & Means of Finance
The exhibit provided below summarizes the estimated capital expenditure for implementing
the project.
5-Star Category Hotel in Ludhiana
7 TEV
Final Report – 02nd
January, 2014
All Figures in INR Crores
Description 31-Mar-14 31-Mar-15 Total
Land and Land Development 0.55 - 0.55
Building and Civil Works 31.57 17.00 48.57
Plant and Machinery 7.26 7.26 14.52
Miscellaneous Fixed Assets 9.29 21.69 30.98
Preliminary and Pre-operative 1.75 1.75 3.51
Interest During Construction 7.56 7.55 15.10
Contingency 2.41 2.30 4.70
Margin Money 0.58 0.58
Total Project Cost 60.39 58.12 118.52
The proposed means of finance for the project has been provided in the exhibit below –
All Figures in INR Crores
Description 31-Mar-14 31-Mar-15 Total
Equity 19.63 18.89 38.52
Long Term Loan 40.77 39.23 80.00
Total Means of Finance 60.39 58.12 118.52
The broad terms for the old loan of INR 35.00 Crores have been provided below –
Nature of Borrowing
Rupee – Term Loan (Proposed)
Loan Amount
INR 35.00 Crores
Interest Rate
12.50% per annum
Completion Date 31st
March 2015
Repayment Starts
Q1 of FY 2017-18
Repayment
32 Accelerated Quarterly Installments.
The proposed repayment schedule for the old loan from SBI of INR 35.00 Crores has been
provided as exhibit below –
All Figures in INR Crores
Description 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25
Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
Annual Summary
Opening Balance
35.00
33.25
30.63
27.13
22.75
17.50
12.25
6.13
Addition - - - - - - - -
Repayment
1.75
2.63
3.50
4.38
5.25
5.25
6.13
6.13
Closing Balance
33.25
30.63
27.13
22.75
17.50
12.25
6.13
-
Interest for Period
4.27
3.99
3.61
3.12
2.52
1.86
1.15
0.38
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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The broad terms for the new loan of INR 45.00 Crores have been provided below –
Nature of Borrowing
Rupee – Term Loan (Proposed)
Loan Amount
INR 45.00 Crores
Interest Rate
12.50% per annum
Completion Date 31st
March 2015
Repayment Starts
Q1 of FY 2017-18
Repayment
40 Accelerated Quarterly Installments.
The repayment schedule for the new loan has been provided in the exhibit below –
All Figures in INR Crores
Description 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25
Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
Annual Summary
Opening Balance
45.00
42.75
40.50
37.13
32.63
28.13
22.50
16.88
Addition - - - - - - - -
Repayment
2.25
2.25
3.38
4.50
4.50
5.63
5.63
6.75
Closing Balance
42.75
40.50
37.13
32.63
28.13
22.50
16.88
10.13
Interest for Period
5.48
5.20
4.85
4.36
3.80
3.16
2.46
1.69
Financial Highlights
The financial highlights for the proposed project have been provided in the exhibit below –
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
January, 2014
All Figures in INR Crores
Description Unit 31-Mar-
16 31-Mar-
17 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25 31-Mar-
26 31-Mar-
27
Revenue INR
Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33
Total Operating Costs INR
Crores 17.50 20.14 22.04 26.67 28.78 31.76 33.89 37.41 39.98 42.76 45.77 49.02
Operating Profit INR
Crores 10.87 12.96 16.41 19.06 23.62 26.64 28.44 31.92 34.05 36.32 38.74 41.32
Operating Profit Margin % 38.31% 39.16% 42.67% 41.68% 45.07% 45.61% 45.63% 46.03% 45.99% 45.92% 45.84% 45.74%
Contribution INR
Crores 16.34 19.36 22.73 26.57 30.72 34.57 36.90 41.34 44.11 47.06 50.22 53.58
Contribution Margin % 57.59% 58.47% 59.13% 58.10% 58.62% 59.19% 59.20% 59.63% 59.58% 59.51% 59.42% 59.32%
BEP Sales INR
Crores 33.54 34.67 33.83 35.61 33.45 32.94 31.92 31.24 30.02 28.69 27.98 28.37
BEP Capacity Utilization
% 118.21
% 104.75
% 87.99% 77.87% 63.83% 56.40% 51.21% 45.05% 40.55% 36.28% 33.11% 31.41%
Cash Break Even INR
Crores 27.24 28.47 27.70 29.37 27.26 26.81 25.79 25.15 23.93 22.59 21.87 22.25
Cash Break Even Margin
% 96.00% 86.00% 72.03% 64.21% 52.02% 45.91% 41.38% 36.28% 32.33% 28.57% 25.88% 24.64%
Net Profit Margin % -10.49% -2.78% 5.61% 10.16% 16.76% 20.39% 22.83% 25.89% 27.99% 28.39% 26.39% 26.84%
Equity Share Capital INR
Crores 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52
Reserves and Surplus INR
Crores -2.98 -3.89 -1.74 2.91 11.69 23.60 37.83 55.79 76.51 98.96 121.26 145.50
Tangible Net Worth (TNW)
INR Crores
35.54 34.62 36.78 41.43 50.21 62.12 76.35 94.30 115.03 137.48 159.78 184.02
Term Loan INR
Crores 80.00 80.00 76.00 71.13 64.25 55.38 45.63 34.75 23.00 10.13 3.38 -
Debt Equity Ratio Ratio 2.25 2.31 2.07 1.72 1.28 0.89 0.60 0.37 0.20 0.07 0.02 -
Total Outside Liability (TOL)
INR
Crores 82.23 82.60 79.00 74.72 68.35 59.93 50.49 40.15 28.78 16.31 9.99 7.08
TOL/ TNW Ratio 2.31 2.39 2.15 1.80 1.36 0.96 0.66 0.43 0.25 0.12 0.06 0.04
Closing Cash Balance INR 0.65 3.27 4.93 8.17 13.55 20.09 28.11 38.68 51.18 64.27 83.33 107.69
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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Crores DSCR Ratio - - 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83
Minimum DSCR Ratio 1.13 Maximum DSCR Ratio 7.83 Average DSCR Ratio 1.79
NPV INR
Crores 18.57
IRR % 13.39% Cost of Capital % 10.93%
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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The average EBDITA margin for the proposed project is ~ 43.97%, while the net profit
margin is ~ 16.50%
The minimum DSCR for the project is 1.13, while the average DSCR is 1.79.
The IRR of the project is 13.39%, which is higher than the post-tax cost of capital at
10.93%.
Sensitivity Analysis
A sensitivity analysis was carried out to assess the impact of the following scenarios on the
major financial parameters.
The summary of sensitivity analysis is provided in the following exhibit –
Description NPV IRR Min. DSCR Avg. DSCR
INR Crores % Ratio Ratio
Base Case 18.57 13.39% 1.13 1.79
5% decrease in occupancy level 12.44 12.57% 1.09 1.75
5% decrease in revenue 13.81 12.75% 1.11 1.77
5% increase in departmental costs 12.93 12.64% 1.10 1.75
10% increase in hard cost 4.98 12.01% 1.13 1.80
1% increase in interest rates 11.17 12.92% 1.08 1.75
The minimum DSCR is 1.13 for the FY 2017-18, when the Company starts repayment of loan
to the Bank commences.
The sensitivity analysis shows that project IRR and DSCR are more sensitive to 10% increase
in hard cost and 1% increase in interest rates.
In the base case scenario, the average DSCR is 1.79. The average DSCR remain above 1.75
in all the sensitivity scenarios, hence the project can be said to be comfortable to these
changes.
Risk Analysis and Mitigation
The risk analysis, allocation and mitigation measures are shown in the following table –
Key Risk Risk Carrier Mitigation Measure
The promoters are well experienced in the
successful operations of various business
segments. Experience and
Capability [CLIENT NAME] However the promoters have not operated any
hotel projects, hence there is risk related to
experience and capability of successfully
operating hotel business.
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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To mitigate the above risk, the Company has
handed over the management, operations and
marketing of the hotel to Onyx Group.
Funding Risk
[CLIENT NAME]
The promoters’ contribution for the balance of
project works out to INR 38.52 Crores. The
promoters propose to bring in the same from
their own sources.
Time Over-run
[CLIENT NAME]
Hotel has already accomplished approximately
60 - 70% of the civil and construction related
work. The balance of the work could not be
completed due to shortage of funds. However
once the funds are tied up, the balance of the
project is expected to be completed by 31st
March 2015.
Cost Over-run
[CLIENT
NAME]
As discussed above, approximately 60 - 70% of
the hotel is already constructed. The Company
has received firm quotation for balance of the
work and has in fact issued most of the purchase
orders as well. Also the Company ensures to
take care of any cost overrun in future on its
own. Hence cost over-run is not envisaged for
the project.
Statutory Approvals
[CLIENT
NAME]
The hotel project is already operational and all
the critical approvals and clearances are already
in place and hence statutory approvals and
clearances related risk is not envisaged for the
project.
Occupancy Risk
[CLIENT
NAME]
Based on the market assessment, it is
understood that there is a significant demand for
quality hotels in Ludhiana.
Further, as the hotel is proposed to be operated
by a renowned hotel operator, the hotel will be
benefited by the operator’s wide marketing
network and the operator will leverage on its
international presence to support occupancy
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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levels for the hotel.
Hence market related risk is not envisaged for
the project.
Pricing Level
[CLIENT NAME]
[CLIENT NAME] has benchmarked its prices
against the prevailing level of prices in premium
segment hotels in Ludhiana.
While undertaking sensitivity analysis, it was
noted that the project is sensitive to increase in
hard cost
However, the same has been captured in terms
of sensitivity analysis where it can be seen that
even with a fall of 10% in revenues, the project
can meet its debt service obligations.
Competition Risk
[CLIENT NAME]
Based on the market assessment it is
understood that there is significant demand for
quality hotels in the region.
The project will face competition from the
existing 5-Star hotel and other 4-Star hotels to
some extent.
The Company will have to bank upon the
operator’s expertise in marketing of such
properties and will have to advertise
aggressively in the initial years of operations, to
increase its visibility and reduce the competition
risk.
Operating Risk [CLIENT NAME]
/ Hotel
Operator
The hotel is operated by a renowned
international hotel operator. Qualified personnel
are recruited and trained by operator for the
smooth operation of the hotel.
Force Majeure
[CLIENT NAME]
/Insurer
The Company has provided [Client Name]
with Copy of insurance undertaken by it to cover
the Force Majeure Risk.
Hence the Force Majeure risk is not envisaged
for the project as it has already been covered.
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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Strength
The proposed project is being operated by a reputed hotel operator.
There is buoyant demand for the quality hotels in and around Ludhiana City.
Management team is a good mix of experience and youth.
Experienced technical team.
Weakness
The Promoters of the Company do not have experience in operations of a star
category hotel.
However, to mitigate the risk, the Company has roped in [Client Name] under the
brand name of [Client Name]. Onyx also commands a reputed name in hospitality
industry in South East Asia and also provided technical consultancy beside operating
and management contract.
Opportunity
Significant demand for quality hotels in region of Ludhiana.
Threat
Generic threat of global economic slowdown.
Capacity (addition of rooms) enhancement by other established players in this
segment of business.
Conclusion
Please refer to page no. 70 for the conclusions of the study.
5-Star Category Hotel in Ludhiana
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Main Report
5-Star Category Hotel in Ludhiana
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Scope of Work
[Client Name] had appointed us for assessing the technical, commercial and financial viability
of the semi-operational 5 Star Hotel project proposed to be implemented at Ludhiana,
Punjab. The study would encompass assessing the techno economic viability of the project
and evaluation of the constraints and future potential.
The Scope of Work was finalized as under –
[Client Name]will physically visit the proposed location
[Client Name]will validate the cost of the proposed project, given the specifications
on civil works, building and plant and machinery & equipment
[Client Name]will validate the cost and revenue assumptions related to the project
[Client Name]will analyze the project by using various tools, such as debt service
coverage ratio, IRR, sensitivity analysis to arrive at a conclusion on the viability of the
project
Date of Inspection& Site Visit
The team from [Client Name]undertook a visit to the proposed project site on 16th
October
2013 with the view to have first-hand information of the site and to have a better
understanding of the project. The site for the project is located at [Address]. Below given
observations were made during the time of site visit –
The land is in possession of Clients
Close to 60 -70% of the building and civil work is completed
Rooms are partially ready with permanent furniture’s and fixtures in place
Hotel has 3 operational banquet halls which can be separated and divided into mini
halls via sound proof moving partitions but the kitchen for the same although
constructed is yet to be operational
The lobby area where the restaurants and coffee shop will come is yet to be
completed
The Client as discussed during the Management discussion will follow mark to market
strategy for room rentals
As suggested by the Client the project would be completed by 31st
March, 2015 and
would be operational by 1st
April, 2015
The photographs of the site visit have been provided as Annexure in this report.
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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Team of Consultants
The Team of Consultants who have worked on the project has been provided below
(alphabetical order) –
Mr.
Ms.
Mr.
5-Star Category Hotel in Ludhiana
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Methodology
The team from [Client Name]adopted the following methodology, while executing the said
assignment –
1. Secondary and limited primary market assessment to understand the industry and the
project.
2. Preparation of a detailed list of information required and dispatching the same to the
Company.
3. Verification of the information submitted by the Company, identification of the missing
information and resubmitting the revised list of information required.
4. Detailed secondary market assessment to gauge the demand supply scenario of the
study products and to understand the industry specific benchmarks.
5. Limited primary survey to verify the information collected through the secondary
market assessment.
6. A visit to the site was undertaken by team.
7. Assessment of the reasonableness of the project cost.
8. Estimation of the revenue and cost streams for the project.
9. Compilation of information collected and the analysis carried out in form of this report.
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
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Project Overview
[Client Name]was initially incorporated on 9th
June, 2003 under the name of [Client Name]
with Company Identification Number *************************.
[Client Name] is developing a five star hotel facility spread over 3.3 acres of land at
South City, Ludhiana. It is the first all-suites 5 star deluxe hotel in the Country and will
have 126 suites
The proposed hotel lies outside the limit of Municipal Corporation of Ludhiana as per
the document submitted to [Client Name]and hence according to the RBI guideline
for External Commercial Borrowing and the definition of sectors under Infrastructure,
the proposed hotel will be deemed as Infrastructure project
[CLIENT NAME] had originally tied up the hotel management and operations with
Choice Hospitality India Limited
The cost of the project was INR 68.67 Crores and had been sanctioned term loan
facility to the tune of INR 41.00 Crores by State Bank of India (SBI) SCB, Miller
Ludhiana on 25th
August, 2010
In 2011, [CLIENT NAME] had tied up the hotel management and operations with
[Client Name](Brand Name “[Client Name]”) based at Thailand
[Client Name] Hotels & Resorts Ltd is one of the leading & renowned names in the
hospitality industry having hotels at Thailand, China, Singapore, Maldives, Sri Lanka
etc.
After the tie up with [CLIENT NAME], the cost of the project was increased from INR
68.67 Crores to INR 90.24 Crores and the means of financing was as under:
o Equity Contribution INR 29.00 Crores
o Unsecured loans INR 07.24 Crores
o Term Loan SBI INR 41.00 Crores
o Additional Term Loan INR 13.00 Crores
Thereafter, [CLIENT NAME] got the principal sanction from United Bank of India
(UBI) for the additional term loan of INR 13.00 Crores.
The total loan amount availed from SBI as on date is approximately INR 35 Crores.
However as the revised project cost submitted to the bank was provisional as it was
submitted immediately after signing of the agreement with Onyx and were yet to get
detailed specifications and item-wise cost at micro level. Hence when [Client
5-Star Category Hotel in Ludhiana
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Final Report – 02nd
January, 2014
Name] had intimated some amendments in Public area, Interiors and Operating
equipment, the scope of the project changed and the overall project cost increased
to INR 118.52 Crores.
The Banquets of the hotel are 95% completed with Kitchen left and are operational
since 31st March 2013. Along with this, approximately 60% of the services of the
hotel are also completed.
As per the Management discussion with the Client, any further increase in project in
future will be borne by them.
Changes Suggested by [Client Name]
Building
One water bodies was replaced by four water bodies
Since Number of rooms were increased in addition to creation of presidential suit
and honeymoon suit ,the modification in civil work was involved
With the addition of fire escape ,the design of A type of room was changed
Conversion of room to suit has changed the cost of interior related to building.
Existing Restaurant height is increased from 10 to 20 feet by adding
display/transparent ceiling.
Parking space is reallocated and the space is converted into administrative offices
Plant and machinery
Capacity of Chiller increased from 6 TR to 6.6 TR as per new specification and
energy saving equipment e.g. VFD is added in the scheme.
Since operational scope is increased, many imported equipment related to coffee
shop, Display kitchen bar spa, security, fire and life safety, partition walls are added.
Back up load is increased to 100%.
Furniture and fixture
With the increase in furnishing area of interior the Furniture & fixture (FFE) have
increased proportionally
With the suit having drawing room ,the no of sofa is increased
Existing TV of 32 ‘’ LCD (China Make) one no per room is updated to 41’’LED 2 per
room.
Glass enclose are provided with patch fitting
5-Star Category Hotel in Ludhiana
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Media Hub is added in the room.
Bed design modified with richer specification of [Client Name].
Room carpet (Wall to wall) specification is improved.
Chandeliers are added in Banquet, atrium, Entrance, Banquet and main porch.
Arts and artifacts in atrium, atrium chandeliers, Porch ceiling & chandeliers, Banquet
chandeliers.
IT equipment
Due to updation of IT equipment & software, the cost has increased by approximately by INR
2 Crores. For example [Client Name] worldwide is now using the Opera software for Property
Management System which is the world best software in the hospitality industry which itself
costs INR 1 Crore. Also Integration of Building management services (BMS), communication,
and audio/video with Information Technology Equipment.
Operating Equipment
The specification of the operating equipment has now become richer and also certain
operating equipment has been added by [Client Name]. For example, the Sports bar, Coffee
shop, Gym, Spa, Saloon, Room Service equipment etc. This all has led to an increase in the
cost by INR 1.5 Crores approximately.
Critical Observation
Based on the above discussions, [Client Name] understands that the modifications as
provided by [Client Name] changed in the scope of the Project and hence increased the
project size from INR Cr to INR 118.52 Cr. Further it is understood that the entire process
has delayed the overall project implementation, there by pushing the Commercial Operations
Date to 1st
April 2015, which was originally set at 1st
April 2012. Under normal
circumstances, the change in the COD and repayment structure of a project would classify
the project as an NPA.
However during recent times there have been delays in implementation of infrastructure
project across the country on account of various reasons. The RBI Circular issued for
Infrastructure Project Lending states –
i. Any change in the repayment schedule of a project loan caused due to an increase in
the project outlay on account of increase in scope and size of the project, would not
be treated as restructuring if :
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Sr No
RBI Guideline
[CLIENT NAME] Opinion
a
The increase in scope and size of the
project takes place before
commencement of commercial
operations of the existing project.
The Project is yet to start commercial operations
b
The rise in cost excluding any cost-
overrun in respect of the original
project is 25% or more of the original
outlay.
The cost overrun because of size and scope is
more than 25% of the original outlay
c
The bank re-assesses the viability of
the project before approving the
enhancement of scope and fixing a
fresh DCCO.
The project is viable subject to achievement of
critical success factor and mitigation of risk
associated with the project & others as mentioned
in the report
d
On re-rating, (if already rated) the new
rating is not below the previous rating
by more than one notch.
Lenders to assess the rating
Hence, on the basis of above assessment and subject to assessment of rating by the bank
and it not falling below one notch of the previous rating, the account of the Company has
been treated as Standard Asset and not Debt Restructuring by [Client Name]while
undertaking the financial evaluation for the TEV Report.
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Company Background
[Client Name]
[Client Name] was initially incorporated on 9th June, 2003 under the name of [Client Name]
with Company Identification Number U*****************. The name was changed to [Client
Name] on 21st
October, 2011 with a fresh certificate of incorporation.
The Company details are depicted in the exhibit below –
Company Details
Name
[Client Name]
Date of Incorporation
9th June, 2003
Constitution
Public Limited Company
Sector
Hospitality
Corporate Office
[Address]
Project Site
[Address]
Source- [CLIENT NAME]
Share Holding Pattern
The current shareholding pattern of [CLIENT NAME] is indicated in the exhibit below (as on
31st
March 2013) –
Name Number of Shares Percentage Holding (%)
[Promoter’s Name] 227,692 28.56
[Promoter’s Name] 194,264 24.37
[Promoter’s Name] 165,00 2.07
Mrs. Swapneet Kaur Arneja 24,107 3.02
Mr. Sam Rakhra 5,000 0.63
Mr. Gagandeep Singh 22,225 2.79
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Mr. Kishan Dev Singh 17,500 2.19
Friends & Relative 98,827 12.40
Other Shareholders 191,175 23.98
Total 797,290 100.00
Source: [CLIENT NAME]
Brief Profile of Promoters
The brief profile of the promoters is mentioned below –
[Promoter’s Name] –is a post graduate in Commerce from Punjab University having more
than 18 years of experience. Mr. Singh is an entrepreneur and had started his career with
manufacturing of valves and cocks in 1983. He entered into real estate in 1994 with his
farm house project named “Garden Enclave” under the banner of his firm Sardar Estates
in Ludhiana. In the proposed project he is responsible for the overall management and co-
ordination of activities
[Promoter’s Name]– holds a master’s degree in Arts specializing in English from Punjab
University, Chandigarh. She has close to 20 years of experience in handling business as she
hails from business family. In [CLIENT NAME], she is in charge of Site and Co-ordination
of activities
[Promoter’s Name] – holds a master’s degree in Business Administration and has close to 6
years of experience as an entrepreneur. In [CLIENT NAME], he is in-charge of Financial
Management and Administrative responsibilities.
Technical Consultants& Management Tie Up
Management and Operation Tie Up
[CLIENT NAME] has management and operational tie up with [Client Name] Hotels and
Resorts Company Ltd’ (an [Client Name] brand) a Thailand based Company. The salient
features and synopsis of the tie up has been provided below –
The promoters have entered into the following agreements with [Client Name]
Hotels and Resorts Company Ltd. on 6th, January 2012 -
[CLIENT NAME] has entered into a License Agreement with [Client Name] for
the operation of the proposed Hotel
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[CLIENT NAME] has entered into a Management Agreement with [Client
Name]. for the management of the proposed hotel
The Operating Term of the agreement shall be for a period commencing on
the opening date and terminating at midnight, 15 years thereafter
Remuneration to [Client Name] of 1% of the total revenue excluding
Turnover Taxes and
Reimbursement of all travelling and subsistence expenses properly incurred
by representatives of the [Client Name] whether on property or centrally,
when performing work or services in accordance with the License Agreement
Background of the [Client Name]-
[Client Name] Hospitality is a Thailand based private group into Hospitality
in South East Asia
The Group has 33 operating properties, over 4,400 employees spread in
South East Asian countries like China, Japan, Qatar, Thailand, Malaysia and
others
[Client Name] also has 13 more projects under design and construction
stage at various location in South East Asia
In India, [Client Name] is entering with its first hotel in Ludhiana in the name
of [Client Name] Suites Ludhiana
Other Consultants
The list of other consultants have been provided below-
5-Star Category Hotel in Ludhiana
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Project Details
Land Details
The 5-star category hotel is situated on piece of land admeasuring 3.3 acres at [Address]
under the brand name of [Client Name] Suites of [Client Name] Group through
[Client Name]. The land was obtained by [CLIENT NAME] from Universal Development
Trust through a sales deal of INR 53,00,000 excluding stamp duty and registration on 3rd
July,
2003
Project Location
The 5-star category hotel is situated on a land of 3.3 acres at [Address] (‘Property’).
The distance of the key demand driver from the hotel have been provided in the exhibit below;
Description
Distance (in Km)
Nearest Highway
National Highway 95 (7.2 Km)
Nearest major city
Ludhiana (0 Km)
Nearest railway station
Ludhiana Railway Station (9.5 Km)
Nearest airport
Amritsar Airport ( 157 Km)
The location of the site has been provided as exhibit below –
Source- Google Earth
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The location of site with respect to nearby areas has been provided in the exhibit below –
Source- Google Earth
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Project Configuration
The project configuration as envisaged by the Company has been provided as exhibit below –
Source: [Client Name] Analysis
It is noted from the exhibit above that the proposed project will have the following
stakeholders –
Promoters
Banks/ Financial Institutions as lenders
Regulatory and statutory authorities
International and domestic tourists
Staff members
Hotel Operator
Technical Details and Assessment
The 5 –Star category “[Client Name] Suites” hotel by [CLIENT NAME] is providing the following services –
126 rooms including 96 single bedroom suites, 2 honeymoon suites, 28 family rooms
A lobby
Sports Bar
126 Rooms for Domestic and International Tourists along with Bar, 2 Restaurants, Coffee Shop,
Banquets and Conference Facilities
Lenders
[Client Name]
Regulatory and Statutory
Authorities
5-Star Category Hotel [Client
Name]
Ludhiana
Staff Members
Hotel Operator on
Contract
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Thai Restaurant
Multi-cuisine Restaurant
24/7 Coffee shop
3 Banquet facilities of total 1000 to 1200 capacity, which can be divided into smaller
halls for multiple gathering and conferences
Kitty halls
Meetings and conference room
Swimming Pool having a restaurant beside it
Parking below swimming pool and on the periphery of the boundary wall
Gymnasium
Separate Terrace Spa
The 5 star category hotel building is Ground + 7 Floor Structure
Project Area Statement
The project area statement has been provided with respect to the architectural plan as there
were changes made in the approved plan. [Client Name] notes that according to the new
architectural plan given by Client, the total permissible FAR that is 1:2 has been consumed by
the Client compared to the initial utilized FAR that is 1:1.60. The revised area sheet as per the
architectural plan has been given in the exhibit below –
Revised Area Sheet As Per Architectural Plan
List of Area Total Calculated Area In Ft²
Guard Room 960
Under Ground Tank for STP/excess water disposal 728
Planter Along Ramp 3,200
Covered Parking At Rear 9,185
Entry To Service Block 625
Porch At Ground Floor & Ramp 11,015
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Ground Floor Area Including B.O.H. 40,091
Service Block 4,295
First Floor Area Main (Building) 28,336
First Floor Pool Area & Toilets 8,770
First Floor Service Block Area 4,295
Connection Between Main Building & Pool 735
Second Floor Area (Including Double HT Area For
A.D.D.)
24,625
Area For 3rd, 4th, 5th & 6th Floor 106,420
Seventh Floor Area 27,500
Service Block Area 2nd, 3rd & 4th Floor 12,885
Terrace Floor Covered Area 4,395
Total Area 2,88,060
Source: [CLIENT NAME]
Features Area (Ft²)
Kitchen 11,940
Banquet 11,000
Parking 16,000
Lobby 3,239
Residential 17,669
Public Area 46,394
Office Area 4,890
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Guest Area 66,581
Porch 6,540
Main Pool 1,365
Children Pool 440
Service Block 18,000
Total Elevation Area 68,400
Area of Corridors (3rd
. 4th, 5
th, 6
th& 7
th floors) 15,375
TOTAL 2,88,373
Source: [CLIENT NAME]
Manpower Requirement
Since the hotel will be operational under third party management, the manpower requirement
is not applicable for the Company.
Current Status and Statutory Approvals
The current status of various approvals and clearances has been provided below –
The plot of land admeasuring 3.3 acres is in possession of Client and work has
already started with close to 60% work completed
The banquet facility of the hotel is 95% complete with only kitchen remaining
[CLIENT NAME] has assigned the third party operations and management contract to
[Client Name] India Ltd under the brand “[Client Name] Suites”. The management and
operation contract has validity period of 50 years. “[Client Name] Suites” is an [Client
Name] brand for which [Client Name] India has exclusive Indian rights.
[CLIENT NAME] has received approval to upgrade 3 star hotel category to 5 star
category hotel (on conditional bases) via letter number 5-TH-I(29)/2010 dated 13th
Feb 2011 from Ministry of Tourism, Government of India
[CLIENT NAME] has received Consent to Establish from pollution angle via NOC
letter number O13**************7 dated 4th
July, 2013 and is valid till 10th
February,
2014 from Punjab Pollution Control Board
The Company has received NOC from Ludhiana Forest Division in the name of
[Client Name]vide letter number 7792 dated 10th
December, 2010
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Fire NOC Certificate valid for one year via letter dated 25th
April, 2013 having letter
number 672/FB/D from the Fire Division Ludhiana
The Company received permission for change of land-use from residential as per
master plan Ludhiana to commercial use (Hotel cum Resort) from Department of
Housing and Urban Development Ludhiana via letter 325CTP(PB)/SP-432 dated 20th
January, 2006 in the name of [Client Name]
The Company has received notification from Ministry of Environment and Forest,
Northern Region via letter number 3 – 168/06 – RO(NZ) Vol. X.V/9139 dated 14th
June, 2011 stating that the proposed project does not require environmental
clearance
The Company has received approval from Ministry of Tourism for change of name
from [Client Name] to [Client Name] for the approved hotel project via letter number
5-TH-I(29)/10 dated 8th
February, 2012. The approval is valid for the period of five
years with effect from 13th
January, 2011. Also the
permission would be withdrawn incase the quarterly progress report is not submitted
to the Ministry of Tourism
The Company has received the permission for new power connection at 11 KV
supply voltage from the Punjab State Power Corporation Ltd vide letter number 2P3
dated 10th
January, 2012
The Company has received building plan sanction from the Department of Urban and
Rural Planning Punjab for its old project in the name of [Client Name] vide letter
number 592-Gen(L) M-2A dated 1st
March, 2006
Registration for various Taxes like Luxury Tax, Service Tax and others applicable for
the proposed project
Further Requirement
Consent to Operate from Punjab State Pollution Control Board
Approval of Chief Controller of Explosives for keeping the diesel in storage during
construction stage and operational phase
Construction Completion Certificate from local authorities
Sanction of new building plan from local authorities
Approval for Garbage disposal /Sewerage discharge from local authorities
Approval for D.G. sets from Electrical Inspector of State Government
Bar License from Excise department
License for swimming pool
Registration for Employee welfare with Employees Provident Fund Commissioner
Restaurant License
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Implementation Schedule
As discussed previously, the Company has completed approximately 60 - 70% of the civil and
construction work at the site, the banquet hall which is located in the basement is also 95%
complete with kitchen work left. The Atrium area where the restaurants and coffee shop are
proposed is under construction. The rooms are ready with civil work done and fixtures
attached.
Hence [Client Name] with its past experience estimates the project to achieve completion by
31st
March 2015 and the proposed hotel will be available for commercial use by 1st
April 2015.
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Industry Assessment
Indian Hotel Industry – An Overview
Indian hotel industry can be divided into organized and unorganized sectors. Unorganized
sector includes innumerous lodging & boarding facilities, resorts and restaurants present
across the Country. The organized hotel industry is further classified according to the ‘Star’
ratings such as 1 star, 2 star, 3 star, 4 star, 5 star and 5 star deluxe. Old properties converted
into hotels are also classified as Heritage Hotels.
The industry has grown from INR 120 billion in FY 2006-07 to INR 205 Bn in FY 2011-12,
registering a CAGR of about 11%. Indian hotel industry is facing shortage of rooms and
hence domestic as well as international players are announcing rapid expansion plans to
augment their room inventory.
The industry has grown from INR 876 Bn in FY 2009 to INR 1,150 Bn in FY 2012, registering
a CAGR of ~9.4%. The organize segment account for about 30% share in the total market
size.
The year 2010-12 was a period of consolidation for the Indian hotel industry. The preceding
years witnessed the effects of the global financial crisis as well as the impact of the terror
attacks in Mumbai that led to a dip in overall occupancies and average rates. However, FY
2010-11 witnessed slow but marginally improved performance levels for the industry with
overall occupancies growing from a nationwide average of 59.9% to 62.1%. Average rates
also grew by approximately 10.0% from INR 4,149 in FY 2009-10 to INR 4,567 in FY 2010-
11. Strong domestic demand, coupled with increased global confidence in the business
environment in India helped in improving occupancies and average rates. The improved
performance levels, however, did not translate into an overall improvement in profitability for
hotels across the industry. Rising inflation levels meant increased overhead costs for hotels
resulting in lower margins. An overall increase in departmental and fixed expenses as a
percentage of revenue led to a decline in net income percentage of approximately 4.0% in FY
2010-11 as compared to FY 2009-10. In the past five years, the hotel industry in India has
witnessed numerous ups and downs. While industry performance started to improve in 2005-
06 and reached its peak in FY 2007-08, the years FY 2008-09 and FY 2009-10 witnessed
turbulent times, given the international economic conditions and local disturbances.
The impact of the global economic crisis in FY 2009-10 resulted in the price-sensitive
domestic traveler settling for leisure trips within the Country leading to increased domestic
demand for hotels. This trend of strong domestic demand has continued to grow in FY 2010-
11 as well. There is an approximate increase of 8.1% in the Domestic FIT segment and an
approximate increase of 14.2% in the Domestic Groups segment over that of last year. Going
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further, the improvement of overall connectivity facilitated by additional destinations in the
portfolio of low-cost airline carriers like GoAir, Spicejet and Indigo, is further expected to
increase domestic tourist movement within the Country.
As the industry matures and witnesses increased competition from international hotel brands,
the hotel room has evolved from being only a place to sleep to trying to offer a space that the
guest can make their own and remember for future stays. Some trends that we have noticed
in the evolution of hotel rooms are highlighted below –
Use of simplified, modular design for rooms and spaces with a focus on straight lines,
pastel colors, and personalized, homely spaces.
Introduction of women-only floors and increased security measures for women
travelers such as video-phones.
Increased focus on in-room technology which includes having more plug-points
around the bed and the work/study area, availability of international adapters and
different plug-points, and including in-room amenities such as i-pod docking stations,
light controls near the bed, and individual temperature controls in rooms and
bathrooms.
Efficient manpower utilization continues to be an area of concern for the Indian Hotel Industry.
The all-India average of total employee to hotel room ratio stands at 1.6, much higher than
that in hotels across the globe. A major reason that can be attributed to this high ratio is the
performance of four and three-star hotels as far as manpower utilization is concerned. The all-
India ratio this year for the four-star category stands at 1.8 employees per hotel room while
that for the three star categories stands at 1.6. Midmarket and budget hotels in India offer
more expansive facilities especially with respect to the F&B offerings in a hotel and therefore
require a large number of personnel to manage operations as compared to hotels globally.
The figure below indicates the growth in the revenue and net income of the hotel industry in
India during the period FY 2006-11.
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Source: India Hotel Industry Survey 2010-11 by HVS Hospitality Services
The figure provided below indicates the performance of new hotels across major Indian Cities
-
Source: India Hotel Trends 2012 by HVS Hospitality Services
PRODUCT PROFILE
Indian hotel industry can be divided into organized and unorganized sectors. The
organized hotel industry is further classified according to the ‘Star’ ratings. Unorganized
sector includes innumerous lodging & boarding facilities, resorts and restaurants present
across the Country.
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According to Star category, hotels are classified as 1 star, 2 star, 3 star, 4 star and 5 star
hotels. The five star hotel categories can be further extended as 5 star deluxe.
Old havelis, palaces and mansions dating back to FY 1935 and earlier period which have
been converted into hotels are known as Heritage Hotels. According to Star ratings the
heritage hotels are further divided as :
1. Heritage Basic - 2 Star
2. Classic Heritage - 3 Star
3. Grand Heritage - 5 star and above
Hotels can be further classified on account of the clientele they serve:
1. Luxury Hotels: Occupied with world class infrastructure amenities, these hotels
cater to influential foreign as well as domestic tourists and the upper class
corporate executives. High priced business and leisure hotels can be considered
as a part of luxury hotels.
2. Budget hotels: Due to limited luxury and seasonal discounts, these hotels are
preferred by price conscious business travellers and tourists.
3. Resorts: These are located at hill stations and sea side tourist destinations.
For the hotel industry, room rent accounts for the highest share of revenues followed by
food and beverages. Banquets, conferences and other services also form a major
revenue stream for these hotels.
Government Initiatives
Source: [CLIENT NAME] Research
Government has categorized hotel and restaurant industry as high priority industry and
has allowed 100% FDI under automatic route.
The Government of India is giving tax concessions to encourage investment in new
hotels. E.g. in the budget of FY 2008-09, five year tax holiday was provided to two, three
Revenue Sources
14% Room Rent
26% 60%
Food and Beverages
Other Services
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and four-star hotels coming up in destinations having UNESCO declared World Heritage
Sites.
As per the earlier regulation, investment linked deduction was allowed under section
35AD only to those assess who are engaged in the business of building & operating hotel
business. However in hotel industry, many corporates follow the franchisee business
model wherein hotel owner get it operate through the outsourcing arrangement. Thus, a
new sub section 1A had been added to 35 AD (which will have a restrospective effect
from 1st
April 2011) where the assess who build the hotel of 2 Star and above, own it and
transfers its operation to another person will be entitled above link deduction.
In August 2009, new Foreign Trade Policy allowed duty-free imports of capital goods,
office equipment and consumables such as alcoholic beverages, food items etc. against
10% of the foreign exchange earned by hotels under the Served from India Scheme
(SFIS). The decision will help to increase imports for technological up gradation as well as
to improve the food offerings.
Reserve Bank of India’s decision to de-link credit for hotel projects from commercial real
estate exposure enabled hotel projects to avail credit at relaxed norms and reduced
interest rates. In addition, relaxed External Commercial Borrowing (ECB) norms also
helped capital intensive hotel projects to raise liquidity in international markets.
Launch of different campaigns such as 'Incredible India' and 'Atithi Devo Bhavah' to
attract foreign tourists are consequently expected to benefit the hotel industry also.
Government’ decision to encourage rural, adventure and wellness tourism augurs well for
new hotel projects at these locations.
The Government has also launched a new scheme for development of important
destinations and circuits (connects to nearby tourist destinations) through 29 Mega
Projects. These projects - expected to increase in tourisms - will subsequently benefit the
hotel industry.
The Government is proposing to grant financial assistance up to INR 50 Mn for
construction of one convention Centre at tourist destination in each state for promotion of
MICE (Meetings, Incentives, Conferences and Exhibitions) tourism. This decision will
encourage investment in convention centers by hotel industry.
Ludhiana – Overview
The city got its name from its founding dynasty; Lodhi Dynasty. It is one of the largest cities in
Punjab both in terms of area and population. Ludhiana spread on an area of 3,767 Km² is
known for its Hosiery Industry and is also called hub of Hosiery Industry in India and also
capital of small scale industry. The City also has a good education infrastructure with the
largest agriculture university in Asia; Punjab Agricultural University located in the city. The city
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has education infrastructure supporting all other faculties as well from engineering institutes,
medical institutes to management institutes.
Source: Maps of India
The city is centrally located on the National highway between Delhi and Amritsar. The
demography of the city is majorly affluent and the culture is traditional Punjabi. The city has a
traditional real estate model of bungalow system.
Demography
As of 2011 India census, Ludhiana district has a population of 3,498,739. Males constitute
53.3% of the population and females 46.6%. With a population density of 978 persons per
Km². Ludhiana has an average literacy rate of 82.2%, higher than the national average of
74%: male literacy is 85.98%, and female literacy is 77.88%.
Economy
It is one of the prime industrial centers of northern India. Presently, the city is commonly
known as the “Manchester of India”, the “hub of the Indian Hosiery Industry” and also as
Industrial Capital of small scales Industry in the Country. The city is famous for its hosiery
goods, woolen garments and leather items. Machine tools, dyes, cycle parts, mopeds, sewing
machines and motor parts are also included in the list of the items exported from Ludhiana.
Ludhiana is Asia's largest hub for bicycle manufacturing and produces more than 50% of
India's bicycle consumption of more than 10 million each year. Ludhiana produces 60% of
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India's tractor parts and a large portion of auto and two-wheeler parts. Many parts used in
German cars like BMW and Mercedes are exclusively produced in Ludhiana to satisfy the
world requirement. It is one of the largest manufacturers of sewing machines. Hand tools and
precision industrial equipment is another specialty. The apparel industry Ludhiana is famous
all over India for its woolen sweaters and cotton t-shirts; most of the top Indian woolen
apparel brands like Octave, Monte Carlo, Miss Grace & Duke are based in Ludhiana.
Ludhiana is known for Manufacturing Agricultural Implements and its Spare parts like
Rotavator, Till Seed Drill, Combine Harvesters and doing continuous R&D in same sector.
Besides industry, Ludhiana is a major agri-products producer. It is a big Centre for
dairy product packaging. Ludhiana is also a major trading hub for commodities for North India.
It is a major consumer shopping Centre with consumers coming from around parts of Punjab
to do their big-ticket shopping.
Connectivity
The city is very well connected in terms of roadways and railways.
Air
According the city development plan by JNNURM, the proposal to build an international
airport at Ludhiana has been floated. Currently, the people land at Amritsar airport situated at
a distance of close to 157 Km from the city.
Rail
Ludhiana lies on the main broad gauge line and is identified as a junction. The city is also well
connected by rail network to Delhi and other important cities of Punjab like Jalandhar,
Ferozpur and Bathinda.
Road
NHI-Grand Trunk road passes through the city, which connects it to Indian capital city Delhi
and to other important cities of Punjab like Jalandhar, Amritsar, Wagha Border etc. NH95
connects the city to Chandigarh in south-east direction and Ferozpur in south-west
direction. Other important State highways and major roads also connect the city to various
towns of Punjab.
Ludhiana – Hotel Industry Trend
Since past few years, Ludhiana witnessed a lot of development in industrial and commercial
sectors. The dense concentration of various industries like hosiery, woolen, machine tools,
dyes, cycle parts, mopeds, sewing machines and motor parts as explained in sections above.
The city has Asia’s largest agricultural university; Punjab Agricultural University. However,
Ludhiana is mainly perceived as a center for business activities rather than leisure. The well
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Connectivity of the city from the major cities like Delhi, NCR augur well for the
hospitality industry.
Thus to target the business sect, the development of leisure added hotels having luxury
facilities for the corporate customers is primarily required in the city. Also the Ludhiana
people’s social profile reflects a strong demand for social business dining at restaurants,
wedding and reception functions which are very beneficial for the hotel industry in Ludhiana. It
has been observed by [Client Name]during the primary research that there is large number
of Banquet halls in the city compared to the hotels. Also further the hotels in the City have
major revenue coming from the Food and Beverages segment including Banquets which
gives the majority business during seasons.
The exhibit below indicates the total room night availability at Ludhiana city across luxury and
budget category –
Hotel
Location
Operator
Category
Rooms
Restaurants
Bars
Banquets
Average Room
Rate
Occupancy (%)
Majestic Park
Plaza
Ferozepur
Road
Sarovar Hotels
and Resorts
5 Star
120
2
1
3
7000 - 7500
60%
Fortune
Klassic
Model Town
Welcome
Group
3 Star
95
2
-
3
5000 - 5500
50 %
Hotel A
Firozepur
Road
Garewal
Hotels Pvt.
Ltd.
3 Star
40
1
-
2
2500 – 3000
50%
Sarovar
Portico
Clock Tower
Sarovar Hotels
and Resorts
4 Star
49
1
1
2
4500 - 5000
70%
Keys Hotels
Shaheed
Bagat Singh
Nagar
Keys Hotel
Group
3 Star
95
1
1
1
2000 – 2500
30 – 40%
Radisson Blu
Firozepur
Road
Carlson Group
5 Star
80
3
1
1
6300
40%
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Limited Primary Survey: Snapshots of the Competition for Ludhiana
The team [Client Name]has carried out a limited primary survey around the project site to
assess and gauge market better for the TEV study and following observations were made –
The city hotels have a robust demand from the city dwellers as the banquets are used
for weddings, birthday celebrations, parties and other family functions
Sometimes, rooms are also booked for the guests coming from outside Ludhiana.
There are many farmhouses on the outskirts of the city which give competition for
large parties and functions to hotel banquets
With increasing demand of hotels for middle and higher business community many
national level brands are coming up with their setup with high end modern facilities
A large number of Non Residents Indians (NRIs) settled across the world, return
occasionally to India to meet their families and friends
As the facilities in normal Indian houses are not as good as the facilities these NRIs
are used to; most of them prefer to live in hotels during their stay
The peak season for hotels generally runs from October to February. However due to
growth in industrial and business activities at times it shows mix occupancy trends
Average Room Rents (ARR) in 3 to 5 category hotels ranges from INR 2500 - 6000
per night.
The 5 Star Deluxe category hotels offer ARR of INR 6000 to 7500 per night.
It is evident that the there is wide range of ARR in Ludhiana for hospitality sector
because of diverse demand drivers i.e. middle business class to NRIs.
Ludhiana, being a land of extravagant culture and diverse activities it develops a
culture of frequent parties, functions and events.
Ludhiana is centrally placed in Punjab and also an industrial hub for hosiery goods
and automobile parts and many other industries
Thus the conferences and exhibitions for the promotion of the existing economic
activities contribute in the hospitality industry
The average size of business meetings and conferences ranges between 30 to 50
covers
The average number of conferences and exhibitions in 3 and 4 Star hotels is 8 - 10
per month
45 TEV
Final Report – 02nd
January, 2014
The hotel supply is quite well spread between 3 to 5 star categories. Of the total
rooms available in Ludhiana;
o 5 star hotels constitutes of close to 248 rooms (Radisson Blu (80), Hyatt
Regency(168))
o 4 star hotels constitutes 247 keys rooms, (Park Plaza, Fortune Klassic)
o and 3 star hotels constitutes 39% (295 keys)
Most of the 3 star hotels in Ludhiana are owned and operated by local entrepreneurs
only
5 and 4 star categories are either owned or operated by reputed national hospitality
chains like Welcome Group, Sarovar Group and Hyatt
DLF Group is also setting up Galleria Commercial Complex comprising of retail,
commercial and food court under one room along Ferozepur Road.
46 TEV
Final Report – 02nd
January, 2014
Project Cost
The overall project cost for the proposed project is estimated at INR 118.52 Crores. The
exhibit provided below summarizes the estimated capital expenditure for implementing the
project.
It is to be noted that the copies of quotations and estimates by the vendors have been
provided to [Client Name] by [CLIENT NAME].
All Figures in INR Crores
Description 31-Mar-14 31-Mar-15 Total
Land and Land Development 0.55 - 0.55
Building and Civil Works 31.57 17.00 48.57
Plant and Machinery 7.26 7.26 14.52
Miscellaneous Fixed Assets 9.29 21.69 30.98
Preliminary and Pre-operative 1.75 1.75 3.51
Interest During Construction 7.56 7.55 15.10
Contingency 2.41 2.30 4.70
Margin Money 0.58 0.58
Total Project Cost 60.39 58.12 118.52
Source: [CLIENT NAME]& [Client Name]Estimates
Each of the sub-components of the project cost has been discussed in the subsequent
sections.
Land and Land Development Cost
The propose 5-star category hotel is situated on a land of 3.30 acres at [Address]. The land
was obtained by [CLIENT NAME] from Universal Development Trust through a sales deal of
INR 55 Lakhs including stamp duty and registration cost on 3rd
July, 2003
Building and Civil Works Cost
The building and civil works cost as given by [CLIENT NAME] is given below –
Particulars Amount
INR INR INR Crores
Building & other expenses forming integral part of buildings and civil work
1531,22,807.00 15.31
Brick Work in Cement Morter 8,00,000.00 0.08
Cement Plaster on Walls & Ceilings 5,00,000.00 0.05
Service Block Construction 205,18,054.00 Less : Amount spent so far 54,66,597.00 150,51,457.00 1.51
S.T.P. Tank 24,56,554.00 Less : Amount spent so far 9,57,896.00 14,98,658.00 0.15
Underground water tank 35,02,828.00
47 TEV
Final Report – 02nd
January, 2014
Less : Amount spent so far 32,03,037.00 2,99,791.00 0.03
Tiling of terrace and Water-proofing treatment to floor slabs, terrace, toilets, kitchens and water tanks
78,00,000.00
Less : Amount spent so far 4,29,194.00 73,70,806.00 0.74
painting and finishing’s (Both interior
& exterior) 40,00,000.00 0.40
Interiors forming integral part of the building
1790,28,844.10
Less : Amount spent so far - 1790,28,844.10 17.90
Electricals forming integral part of the building
114,88,412.95
Less : Amount spent so far 14,24,037.00 100,64,375.95 1.01
Plumbing forming integral part of the building
67,55,859.00
Less : Amount spent so far 36,35,524.00 31,20,335.00 0.31
HVAC forming integral part of the building 60,75,000.00 Less : Amount spent so far 29,93,333.00 30,81,667.00 0.31
Public Area - Civil Work 50,09,780.00 0.50
Land scaping 60,44,925.00 0.60
Swimming Pool 29,92,500.00 0.30
Personnel Expenses 26,00,000.00 0.26
Water & Electricity 45,00,000.00 0.45
Architect/ Interior Designer 110,00,000.00 1.10
Operator Consultancy Charges 30,00,000.00 0.30
Development of New car parking area 45,00,000.00 0.45
Steel Structure Work for Bridge & AHU Tower
15,00,000.00 0.15
Outside Marble Cladding 16,00,000.00 0.16
New Banquet Hall 50,00,000.00 0.50
Poll Side Restaurant and Linkage With GF 45,00,000.00 0.45
Additional Fire Stairs 80,00,000.00 0.80
Modification in Rooms Size (Increasing the No. of Rooms From 120 to 126) Earlier Rooms Spread over 6 Floors After Modifications 126 Rooms Spread over 5 Floors
200,00,000.00
2.00
Creation of New Facility of Sports Bar and Additional Kitty Halls And Advanced Spa at Floor No. 2 Earlier Meant for Rooms
50,00,000.00
0.50
Development of Area Adjoining Banquet and Water Bodies
25,00,000.00
0.25
Additional Water Bodies Created at the Front of Hotel
20,00,000.00
0.20
Development of Services Utilities Area due to Creation of New Facilities
180,00,000.00
1.80
Total Building and Civil Works 4856,85,946.05 48.57
Source: [CLIENT NAME]
48 TEV
Final Report – 02nd
January, 2014
Based on experience of undertaking similar assignments in recent past, [Client Name] finds
the Building and Civil works cost to be in line with the industry standards.
Plant and Machinery Cost
The total plant and machinery cost has been estimated at INR 14.52 Crores. The detailed
break-up of the plant and machinery cost has been provided in the exhibit below –
COST HEAD INR INR Crores
Details of Electrical works
Point Wiring, Conduit Wiring, Cable and cable trays
328,24,037.00
3.28
Sub Station - LT/ HT panels, transformers, main risers, distribution, earthing & lighting protection
37,55,467.00
0.38
D.G Sets with acoustic lining and AMF Panel 74,26,560.00 0.74
6 No. Elevators and their installation &up keeping
63,00,000.00
0.63
1 No. Elevator along with its erectioning for service block
25,10,000.00
0.25
EPABX System 14,84,797.00 0.15
Provision of Security System/ Electronic Locks/ CCTV's
50,00,000.00
0.50
Provision of LCD's in Guest Rooms 75,00,000.00 0.75
Provision of Refrigerators, Microwaves, Hot Plates etc. in suites
45,00,000.00
0.45
Hotel Equipment& Machinery & Installations etc.
325,00,000.00
3.25
Additional Equipment &Machinery For New Banquet , Kitty Hall, Gym Spa, All Day Dining , open coffee Shop
185,00,000.00
1.85
Operating Equipment For Different Departments
165,00,000.00
Sub-Total Electrical works 1388,00,861.00 12.23
less : Electricals forming integral part of buildings 114,88,412.95 1.15
Total Electrical Works 1273,12,448.05 11.08
HVAC works for Block C
Central Refrigeration plant 225 TR along with high side and low side equipment and 2 no. chiller plants
330,00,000.00
3.30
Additional Chiller and Ducting Required For Increased Capacity
75,00,000.00
Sub-Total HVAC Works 405,00,000.00 4.05
Less: HVAC work forming integral part of the building 60,75,000.00 0.61
Total HVAC Works 344,25,000.00 3.44
Source: [CLIENT NAME]
49 TEV
Final Report – 02nd
January, 2014
Based on the experience of executing similar assignments in recent past and site visit, the
team [Client Name]finds the plant and machinery cost reasonable.
Miscellaneous Fixed Asset
The detailed break-up of the miscellaneous fixed asset cost is given in the exhibit below –
Particulars
Amount
INR
INR INR
Crores
Interiors & Furnishing Works
Guestrooms
Flooring, Ceiling & Finishing Works 394,92,310.00
Fixtures 100,69,400.25
495,61,710.25 4.96
Public Area (Including Furnishing & Carpeting)
2063,96,400.00 20.64
Cost of Interiors in New Banquet 208,64,000.00 2.09
Additional Guest Rooms (NEW) 150,00,000.00 1.50
Interiors at New Kitty Halls, Sports Bar, Spa 535,50,000.00 5.36
Development of New Atrium For All Day Dining and open Coffee Shop
375,00,000.00 3.75
Furniture in Suites 400,00,000.00 4.00
Trap Doors in Suites 15,00,000.00 0.15
Suites POP Work/ Armstrong Ceiling 80,00,000.00 0.80
Woodwork for doors/ windows (Complete in all respects)
72,00,000.00 0.72
Polishing work with melamine & PU finish 22,00,000.00 0.22
Aluminum& UPVC Windows 28,00,000.00 0.28
Provision of Signage 30,00,000.00 0.30
Total for Interiors & Furnishing 4475,72,110.25 44.76
Less: Interiors forming integral part of the building (40% of the total cost)
1790,28,844.10 17.90
Total Interior Works 2685,43,266.15 26.85
Computers and Software
Servers/ Racks/ UPS/Storage 49,50,000.00 0.50
Service Running Messaging, Internet Circuit, Internet Gateway, BOH Network
17,60,000.00 0.18
Desktop/Laptops/Printers 22,00,000.00 0.22
Corporate Based Systems 43,01,000.00 0.43
Hotel Based Applications 115,28,000.00 1.15
Office Software 18,15,000.00 0.18
Total Computers and Software 265,54,000.00 2.66
Plumbing and Fire Safety
Water Supply 51,39,074.00 0.51
50 TEV
Final Report – 02nd
January, 2014
External Sewerage 11,17,695.00 0.11
External Water Supply 4,99,090.00 0.05
Fire Fighting System 88,52,810.00 0.89
Sub-Total Plumbing and Fire Safety 156,08,669.00 1.56
Less: Plumbing work forming integral part of the building
67,55,859.00 0.68
Total Cost of Plumbing and Fire Safety 88,52,810.00 0.89
Vehicles 58,53,362 0.59
Total Miscellaneous Fixed Assets 3098,03,438.15 30.98
Source: [CLIENT NAME]
The Based on the experience of executing similar assignments in recent past and site visit,
the team [Client Name] finds the Miscellaneous Fixed Assets cost reasonable.
Preliminary and Pre-operative Expenses
The total preliminary and pre-operative expenses have been estimated at INR 3.51 Crores.
The detailed cost break-up is given in the exhibit below –
Particulars Estimates
Establishment Cost 27,00,000
Site Vehicle & Transportation Expenses 25,00,000
Communication Expenses 9,00,000
Printing & Stationery 4,50,000
Travelling & Conveyance 22,00,000
Office & Other Expenses & Misc. 9,00,000
Taxes & Insurance 4,50,000
Sales and Marketing Exps 82,50,000
Payroll and Benefit Cost 92,00,000
Pre- Opening Training & Operating Cost 35,00,000
Preliminary Expenses 32,670
Bank Processing Charges 40,04,355
Total Preliminary and Pre-operative Cost 350,87,024.58
Source: [CLIENT NAME]
Interest During Construction Period
The Interest during construction period as estimated by [Client Name]is INR 15.10 Crores,
which is calculated considering that the last disbursal will take place in March 2013 and
construction will continue till 31st
March 2015.
Margin Money for Working Capital
The margin money requirement for working capital for the project has been estimated by
[Client Name] at INR 0.58 Crores. The detailed working of margin money for working capital
has been provided in the subsequent chapter on Economic Viability.
51 TEV
Final Report – 02nd
January, 2014
Contingency
While estimating the overall project cost, [Client Name]has considered contingency of 5% on
the hardware cost to take care of any escalation in project cost due to increase in
commodity prices like cement and steel. The overall contingency for the project has been
estimated at INR 4.70 Crores.
52 TEV
Final Report – 02nd
January, 2014
Means of Finance
The Project is proposed to be funded in a Debt-Equity Ratio of 2.02 : 1 considering the overall
scenario.
The proposed means of finance for the project has been provided in the exhibit below –
All Figures in INR Crores
Description 31-Mar-14 31-Mar-15 Total
Equity 19.63 18.89 38.52
Long Term Loan 40.77 39.23 80.00
Total Means of Finance 60.39 58.12 118.52
Source: [Client Name] Analysis
Promoters’ Contribution
The Promoters’ contribution works out to INR 38.52 Crores, which will be in form of equity or
internal accruals.
Term Loan
The broad terms for the old loan of INR 35.00 Crores have been provided below –
Nature of Borrowing
Rupee – Term Loan (Proposed)
Loan Amount
INR 35.00 Crores
Interest Rate
12.50% per annum
Completion Date 31st
March 2015
Repayment Starts
Q1 of FY 2017-18
Repayment
32 Accelerated Quarterly Installments.
The broad terms for the new loan of INR 45.00 Crores have been provided below –
Nature of Borrowing
Rupee – Term Loan (Proposed)
Loan Amount
INR 45.00 Crores
Interest Rate
12.50% per annum
Completion Date 31st
March 2015
Repayment Starts
Q1 of FY 2017-18
53 TEV
Final Report – 02nd
January, 2014
Repayment Schedule
The proposed repayment schedule for the old loan from SBI of INR 35.00 Crores has been
provided as exhibit below –
All Figures in INR Crores
Description 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25
Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
Annual Summary
Opening Balance
35.00
33.25
30.63
27.13
22.75
17.50
12.25
6.13
Addition - - - - - - - -
Repayment
1.75
2.63
3.50
4.38
5.25
5.25
6.13
6.13
Closing Balance
33.25
30.63
27.13
22.75
17.50
12.25
6.13
-
Interest for Period
4.27
3.99
3.61
3.12
2.52
1.86
1.15
0.38
The repayment schedule for the new loan has been provided in the exhibit below –
All Figures in INR Crores
Description 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25
Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
Annual Summary
Opening Balance
45.00
42.75
40.50
37.13
32.63
28.13
22.50
16.88
Addition - - - - - - - -
Repayment
2.25
2.25
3.38
4.50
4.50
5.63
5.63
6.75
Closing Balance
42.75
40.50
37.13
32.63
28.13
22.50
16.88
10.13
Interest for Period
5.48
5.20
4.85
4.36
3.80
3.16
2.46
1.69
Repayment
40 Accelerated Quarterly Installments.
54 TEV
Final Report – 02nd
January, 2014
Economic Viability
This chapter covers the economic viability of overall project.
Rooms and Occupancy Level
For the purpose of financial assessment [Client Name]has been conservative and has
considered the occupancy level as provided in the exhibit below –
Description
Unit 31-
Mar- 16
31- Mar-17
31- Mar-18
31- Mar-19
31- Mar-20
31- Mar-21
31- Mar-22
31- Mar-23
Onwar ds
Room Types Rooms Nos. 126 126 126 126 126 126 126 126 126
Days Operational
Days 365 365 365 365 365 365 365 365 365
Room Inventory
Rooms Nos. 45,990 45,990 45,990 45,990 45,990 45,990 45,990 45,990 45,990
Rooms Occupancy
Rooms % 45.00
% 50% 55% 60% 65% 70% 70%
75.00 %
75.00 %
Rooms Occupied
Nos. 20,696 22,995 25,295 27,594 29,894 32,193 32,193 34,493 34,493
Rooms Nos. 20,696 22,995 25,295 27,594 29,894 32,193 32,193 34,493 34,493
Source: [Client Name] Analysis
The occupancy levels are in line with the industry standards.
Rentals and Revenues
Rooms Rentals
For the purpose of financial assessment [Client Name] has considered the room rentals
as provided in the exhibit below –
All Figures in INR/ Day
Descript ion
31- Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Room Rental
Rooms 6,750 7,088 7,442 7,814 8,205 8,615 9,046 9,498 9,973 10,47
2 10,99
6 11,54
6
Annual Increase
0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Source: [Client Name] Analysis
55 TEV
Final Report – 02nd
January, 2014
The room rental considered is in line with the existing rates charged by 5 Star and 5 Star
Deluxe Hotel Category hotels in the region. The rental revenues as considered for proposed
project are found to be in line with the local industry standards.
Based occupancy rate considered and the room rate as discussed above, the room revenue
for the project as estimated has been provided below –
All Figures in INR Crores
Descript ion
31- Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Studio 13.97 16.30 18.82 21.56 24.53 27.73 29.12 32.76 34.40 36.12 37.93 39.83
Room Revenu e
13.97
16.30
18.82
21.56
24.53
27.73
29.12
32.76
34.40
36.12
37.93
39.83
Source: [Client Name]Estimates
Other Revenue Stream
Minor Operating Departments Revenue
The minor services include transport services provided to guest, revenue from business
Centre etc. The revenue from MOD has been considered at INR 250 per room per day for the
first year of operations and subsequently has been increase at 15% per annum for the
balance study duration.
Food and Beverage
The food and beverage revenue has been considered from two sources –
Guests staying at the hotel
Walk-in guests
The revenue from food and beverage services as considered have been provided in the
exhibit below –
Description
Unit 31- Mar -16
31- Mar -17
31- Mar -18
31- Mar -19
31- Mar -20
31- Mar -21
31- Mar -22
31- Mar -23
31- Mar -24
31- Mar -25
31- Mar -26
31- Mar -27
Food and Beverage Revenue
Food Revenue per Room
INR 800 896 986 106 5
115 0
124 2
134 1
144 8
156 4
168 9
182 4
197 0
Beverage Revenue per Room
INR
100
112
123
133
144
156
168
181
195
211
228
246
Annual Increase % 12% 10% 8% 8% 8% 8% 8% 8% 8% 8% 8%
Food Revenue INR Cror es
1.66
2.06
2.49
2.94
3.44
4.00
4.32
4.99
5.39
5.83
6.29
6.80
Beverage Revenue
INR Cror es
0.21
0.26
0.31
0.37
0.43
0.50
0.54
0.62
0.67
0.73
0.79
0.85
Food and Beverage
INR Cror
1.86 2.32 2.81 3.31 3.87 4.50 4.86 5.62 6.07 6.55 7.08 7.64
56 TEV
Final Report – 02nd
January, 2014
Revenue es
Walk-In Food and Beverage Revenue
Expected Walk- Ins Daily - Food
Nos. 75 80 80 80 80 80 80 80 80 80 80 80
Food Charge per Walk-In
INR 850 952 104 7
113 1
122 1
131 9
142 5
153 9
166 2
179 5
193 9
209 4
Expected Walk-
Ins Daily –
Beverage
Nos.
95
105
105
105
105
105
105
105
105
105
105
105
Beverage Charge per Walk-In
INR
350
392
431
465
502
542
585
632
683
738
797
861
Walk-In Food and Beverage Revenue
INR Cror es
3.54
4.28
4.71
5.08
5.49
5.93
6.40
6.92
7.47
8.07
8.72
9.41
Source: [Client Name]Estimates
Banquet Revenue
The banquet revenue as estimated for the project has been provided in the exhibit below –
Description
Unit 31- Mar -16
31- Mar -17
31- Mar -18
31- Mar -19
31- Mar -20
31- Mar -21
31- Mar -22
31- Mar -23
31- Mar -24
31- Mar -25
31- Mar -26
31- Mar -27
Banquet Revenue
Weekends Day s
3 3 3 3 3 3 3 3 3 3 3 3
Weekdays Day s
4 4 4 4 4 4 4 4 4 4 4 4
High season month (Dec-Feb) Week
Nos.
13
13
13
13
13
13
13
13
13
13
13
13
Banquet occupancy- weekend
%
75%
75%
75%
85%
95%
95%
95%
95%
95%
95%
95%
95%
Banquet occupancy- weekdays
%
30%
30%
30%
40%
45%
45%
45%
45%
45%
45%
45%
45%
Banquets Nos. 45 45 45 54 60 60 60 60 60 60 60 60
Covers per Banquet
Nos. 650 650 650 650 650 650 650 650 650 650 650 650
Total High Season Covers
Nos. 29,2 50
29,2 50
29,2 50
35,1 00
39,0 00
39,0 00
39,0 00
39,0 00
39,0 00
39,0 00
39,0 00
39,0 00
Shoulder Season Month (Sept-Nov) Week
Nos.
13
13
13
13
13
13
13
13
13
13
13
13
Banquet occupancy- weekend
%
55%
55%
60%
70%
70%
70%
70%
70%
70%
70%
70%
70%
Banquet occupancy- weekdays
%
15%
15%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
Banquets Nos. 29 29 36 40 40 40 40 40 40 40 40 40
Covers per Banquet
Nos. 500 500 500 500 500 500 500 500 500 500 500 500
Total Shoulder Season Covers
Nos. 14,5 00
14,5 00
18,0 00
20,0 00
20,0 00
20,0 00
20,0 00
20,0 00
20,0 00
20,0 00
20,0 00
20,0 00
57 TEV
Final Report – 02nd
January, 2014
Low Season Months (mar- Aug) Week
Nos.
26
26
26
26
26
26
26
26
26
26
26
26
Banquet occupancy- weekend
%
5%
5%
5%
15%
20%
20%
20%
20%
20%
20%
20%
20%
Banquet occupancy- weekdays
%
5%
5%
5%
8%
8%
8%
8%
8%
8%
8%
8%
8%
Banquets Nos. 9 9 9 20 24 24 24 24 24 24 24 24
Covers per Banquet
Nos. 260 270 270 270 270 270 270 270 270 270 270 270
Total Low Season Covers
Nos. 2,34
0 2,43
0 2,43
0 5,40
0 6,48
0 6,48
0 6,48
0 6,48
0 6,48
0 6,48
0 6,48
0 6,48
0
Total Cover Per Annum
Nos. 46,0 90
46,1 80
49,6 80
60,5 00
65,4 80
65,4 80
65,4 80
65,4 80
65,4 80
65,4 80
65,4 80
65,4 80
Banquet Food Per Cover
INR 1,35
0 1,51
2 1,66
3 1,79
6 1,94
0 2,09
5 2,26
3 2,44
4 2,64
0 2,85
1 3,07
9 3,32
5
Banquet Beverage Per cover
INR
400
448
493
532
575
621
671
725
783
846
914
987
Total Banquet Revenue
INR Cror es
8.07
9.05 10.7
1 14.0
8 16.4
7 17.7
8 19.2
1 20.7
5 22.4
1 24.2
1 26.1
5 28.2
3
Source: [Client Name] Estimates
Spa Revenue
The revenue from Spa services has been estimated at 3% of the room revenue for the entire
duration of the project.
Departmental/ Variable Expenses
The variable expenses in line with industry standards considered by [Client Name] for the
purpose of financial analysis have been provided below –
Description
Unit 31-
Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Departmental Expenses
Room Expenses
% of Room
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
15.0 0%
MOD Expenses
% of MOD
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
70.0 0%
F&B Expenses
% of F&B
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
Banquet Expenses
% of Banq uet
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
Spa Expenses
% of Spa
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
40.0 0%
Room Expenses
INR Crore s
2.10
2.44
2.82
3.23
3.68
4.16
4.37
4.91
5.16
5.42
5.69
5.97
MOD Expenses
INR Crore s
0.36
0.46
0.59
0.74
0.92
1.14
1.31
1.61
1.85
2.13
2.45
2.82
58 TEV
Final Report – 02nd
January, 2014
F&B Expenses
INR Crore s
2.16
2.64
3.01
3.36
3.74
4.17
4.50
5.01
5.42
5.85
6.32
6.82
Banquet Expenses
INR Crore s
3.23
3.62
4.28
5.63
6.59
7.11
7.68
8.30
8.97
9.68 10.4
6 11.2
9
Spa Expenses
INR Crore s
0.17
0.20
0.23
0.26
0.29
0.33
0.35
0.39
0.41
0.43
0.46
0.48
Total Departmenta l Expenses
INR Crore s
8.01
9.36 10.9
3 13.2
2 15.2
2 16.9
1 18.2
1 20.2
3 21.8
1 23.5
1 25.3
7 27.3
8
Source: [Client Name] Analysis
The other variable costs as considered for the project have been provided in the exhibit below
–
Description
Unit 31-
Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Other Variable Costs
Power Cost % of Sale s
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
8.00 %
Insurance Cost
% of NFA
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
0.50 %
Repairs and Maintenance Cost
% of GFA
1.00 %
1.00 %
1.00 %
1.50 %
1.50 %
1.50 %
1.50 %
1.50 %
1.50 %
1.50 %
1.50 %
1.50 %
Power Cost INR Cror es
2.27
2.65
3.08
3.66
4.19
4.67
4.99
5.55
5.92
6.33
6.76
7.23
Insurance Cost
INR Cror es
0.58
0.56
0.54
0.52
0.50
0.48
0.47
0.45
0.43
0.41
0.39
0.37
Repairs and Maintenance Cost
INR Cror es
1.19
1.19
1.19
1.78
1.78
1.78
1.78
1.78
1.78
1.78
1.78
1.78
Other Variable Costs
INR Cror es
4.04
4.40
4.81
5.96
6.48
6.94
7.24
7.78
8.14
8.52
8.94
9.38
Source: [Client Name] Analysis
Fixed Expenses
The operations expenses in line with industry standards as considered by [Client Name] for
the purpose of carrying out the financial analysis have been provided below –
Description Unit 31-
Mar-16 31-
Mar-17 31-
Mar-18 31-
Mar-19 31-
Mar-20 31-
Mar-21 31-
Mar-22 31-
Mar-23 31-
Mar-24 31-
Mar-25 31-
Mar-26 31-
Mar-27
Administrative Expenses
% of Sales
10.00 %
10.00 %
8.00% 8.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
Sales and Marketing Costs
% of Sales
6.00% 6.00% 5.00% 5.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Management Fee % of Sales
1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75%
Incentives to Operator
% of OP
4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Administrative INR 2.84 3.31 3.08 3.66 3.14 3.50 3.74 4.16 4.44 4.74 5.07 5.42
59 TEV
Final Report – 02nd
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Expenses Crores Sales and Marketing Costs
INR Crores
1.70 1.99 1.92 2.29 2.10 2.34 2.49 2.77 2.96 3.16 3.38 3.61
Management Fee INR Crores
0.50 0.58 0.67 0.80 0.92 1.02 1.09 1.21 1.30 1.38 1.48 1.58
Incentives to Operator
INR Crores
0.43 0.52 0.66 0.76 0.94 1.06 1.14 1.28 1.36 1.45 1.55 1.65
Source: [Client Name]Analysis
Working Capital Requirement
The calculations of working capital are based on experience of [Client Name] in executing
similar assignments. The following have been considered while estimating the working capital
requirement for the project –
Raw material inventory of 30 days for 5 star category Hotel
Spares and consumables of 7days for 5star category Hotel
Debtors of 30 days for 5 star category Hotel
Creditors have been ascertained at 30 days for 5 star category Hotel
The working capital requirement of [CLIENT NAME] has estimated is provided in the exhibit below –
All Figures in INR Crores
Description 31-
Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Raw Material 0.44 0.51 0.60 0.74 0.85 0.93 1.00 1.09 1.18 1.28 1.38 1.49
Stores and Consumables
0.03 0.04 0.04 0.05 0.06 0.06 0.07 0.07 0.08 0.08 0.09 0.10
Debtors 2.33 2.72 3.16 3.76 4.31 4.80 5.12 5.70 6.08 6.50 6.95 7.42
Current Assets
2.81 3.27 3.80 4.55 5.21 5.79 6.19 6.87 7.34 7.86 8.41 9.01
Creditors 0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31
Current Liabilities
0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31
Working Capital Gap
2.31 2.69 3.18 3.82 4.46 4.95 5.29 5.86 6.27 6.72 7.19 7.71
Margin Money
0.58 0.67 0.80 0.96 1.11 1.24 1.32 1.47 1.57 1.68 1.80 1.93
Bank Borrowing
1.73 2.02 2.39 2.87 3.34 3.71 3.97 4.40 4.71 5.04 5.39 5.78
Interest on Working Capital
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
12.5 0%
Interest for the Period
0.22 0.25 0.30 0.36 0.42 0.46 0.50 0.55 0.59 0.63 0.67 0.72
Source: [Client Name] Analysis
Depreciation
The following depreciation rate has been assumed while preparing the depreciation schedule
detailed below –
60 TEV
Final Report – 02nd
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Description Unit Value
Companies Act (WDV)
Land % 0.00%
Building and Civil Works % 1.63%
Plant and Machinery % 4.75%
Miscellaneous Fixed Assets % 4.75%
Income Tax Act (WDV)
Land % 0.00%
Building and Civil Works % 10.00%
Plant and Machinery % 15.00%
Miscellaneous Fixed Assets % 10.00%
Income Tax
Following assumption has been considered while estimating the income tax for the project –
Description
Unit
Value
Income Tax – Base Rate
%
30.00
Surcharge
%
10.00
Education Cess
%
3.00
Effective Income Tax
%
33.99
Minimum Alternate Tax (MAT)
%
18.50
Education Cess
%
3.00
Surcharge
%
10.00
Effective MAT
%
20.96
5-Star Category Hotel in Ludhiana
61 TEV
Final Report – 02nd
January, 2014
Profitability Projections
Statement of profit and loss account, cash flow statements and balance sheet and other financial ratio calculations are furnished as Annexure.
All Figures in INR Crores
Description Unit 31-Mar-
16 31-Mar-
17 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25 31-Mar-
26 31-Mar-
27
Revenue INR
Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33
Total Operating Costs INR
Crores 17.50 20.14 22.04 26.67 28.78 31.76 33.89 37.41 39.98 42.76 45.77 49.02
Operating Profit INR
Crores 10.87 12.96 16.41 19.06 23.62 26.64 28.44 31.92 34.05 36.32 38.74 41.32
Operating Profit Margin % 38.31% 39.16% 42.67% 41.68% 45.07% 45.61% 45.63% 46.03% 45.99% 45.92% 45.84% 45.74%
Contribution INR
Crores 16.34 19.36 22.73 26.57 30.72 34.57 36.90 41.34 44.11 47.06 50.22 53.58
Contribution Margin % 57.59% 58.47% 59.13% 58.10% 58.62% 59.19% 59.20% 59.63% 59.58% 59.51% 59.42% 59.32%
BEP Sales INR
Crores 33.54 34.67 33.83 35.61 33.45 32.94 31.92 31.24 30.02 28.69 27.98 28.37
BEP Capacity Utilization
% 118.21
% 104.75
% 87.99% 77.87% 63.83% 56.40% 51.21% 45.05% 40.55% 36.28% 33.11% 31.41%
Cash Break Even INR
Crores 27.24 28.47 27.70 29.37 27.26 26.81 25.79 25.15 23.93 22.59 21.87 22.25
Cash Break Even Margin
% 96.00% 86.00% 72.03% 64.21% 52.02% 45.91% 41.38% 36.28% 32.33% 28.57% 25.88% 24.64%
Net Profit Margin % -10.49% -2.78% 5.61% 10.16% 16.76% 20.39% 22.83% 25.89% 27.99% 28.39% 26.39% 26.84%
Equity Share Capital INR
Crores 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52
Reserves and Surplus INR
Crores -2.98 -3.89 -1.74 2.91 11.69 23.60 37.83 55.79 76.51 98.96 121.26 145.50
Tangible Net Worth (TNW)
INR
Crores 35.54 34.62 36.78 41.43 50.21 62.12 76.35 94.30 115.03 137.48 159.78 184.02
Term Loan INR
Crores 80.00 80.00 76.00 71.13 64.25 55.38 45.63 34.75 23.00 10.13 3.38 -
Debt Equity Ratio Ratio 2.25 2.31 2.07 1.72 1.28 0.89 0.60 0.37 0.20 0.07 0.02 -
5-Star Category Hotel in Ludhiana
62 TEV
Final Report – 02nd
January, 2014
Total Outside Liability (TOL)
INR Crores
82.23 82.60 79.00 74.72 68.35 59.93 50.49 40.15 28.78 16.31 9.99 7.08
TOL/ TNW Ratio 2.31 2.39 2.15 1.80 1.36 0.96 0.66 0.43 0.25 0.12 0.06 0.04
Closing Cash Balance INR
Crores 0.65 3.27 4.93 8.17 13.55 20.09 28.11 38.68 51.18 64.27 83.33 107.69
DSCR Ratio - - 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83
Minimum DSCR Ratio 1.13 Maximum DSCR Ratio 7.83 Average DSCR Ratio 1.79
NPV INR
Crores 18.57
IRR % 13.39% Cost of Capital % 10.93%
5-Star Category Hotel in Ludhiana
63 TEV
Final Report – 02nd
January, 2014
Financial Analysis
Note – Numbers in this chapter deals with overall project unless specified for the pending
work project cost.
Margin
The average EBDITA margin for the overall project is ~ 43.97%, while the net profit margin is
~ 16.50%
Debt Equity Ratio
As per [Client Name] estimates, the Debt-Equity Ratio of the project works out to 2.08:1 for
the proposed project.
Debt Service Coverage Ratio
As per [Client Name] assessment, the DSCR and Interest Coverage Ratio of the project
have been provided in the exhibit below –
Description
Unit 31-
Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
DSCR Ratio 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83
Average DSCR
Ratio 1.79
Interest Coverage Ratio
Ratio
1.59
1.90
2.47
3.08
3.83
5.30
7.75
13.60
31.73 133.1
2
Source: [Client Name] Analysis
The minimum DSCR for the project is 1.13, while the average DSCR is 1.79.
Internal Rate of Return
The IRR of the overall project is 13.39%, which is higher than the post-tax cost of capital at
10.93%. Hence the project is financially viable.
Break Even Analysis
The break even analysis of the project has been provided in the exhibit below –
All Figures in INR Crores
Description
Unit 31-
Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Contribution INR Cror es
16.3 4
19.3 6
22.7 3
26.5 7
30.7 2
34.5 7
36.9 0
41.3 4
44.1 1
47.0 6
50.2 2
53.5 8
Contribution Margin %
57.5 9%
58.4 7%
59.1 3%
58.1 0%
58.6 2%
59.1 9%
59.2 0%
59.6 3%
59.5 8%
59.5 1%
59.4 2%
59.3 2%
BEP Sales INR Cror
33.5 4
34.6 7
33.8 3
35.6 1
33.4 5
32.9 4
31.9 2
31.2 4
30.0 2
28.6 9
27.9 8
28.3 7
5-Star Category Hotel in Ludhiana
64 TEV
Final Report – 02nd
January, 2014
es BEP Capacity Utilization
% 118. 21%
104. 75%
87.9 9%
77.8 7%
63.8 3%
56.4 0%
51.2 1%
45.0 5%
40.5 5%
36.2 8%
33.1 1%
31.4 1%
Cash Break Even
INR Cror es
27.2 4
28.4 7
27.7 0
29.3 7
27.2 6
26.8 1
25.7 9
25.1 5
23.9 3
22.5 9
21.8 7
22.2 5
Cash Break Even Margin
% 96.0 0%
86.0 0%
72.0 3%
64.2 1%
52.0 2%
45.9 1%
41.3 8%
36.2 8%
32.3 3%
28.5 7%
25.8 8%
24.6 4%
Source: [Client Name]Analysis
5-Star Category Hotel in Ludhiana
65 TEV
Final Report – 02nd
January, 2014
Sensitivity Analysis
A sensitivity analysis was carried out to assess the impact of the following scenarios on the
major financial parameters.
The summary of sensitivity analysis is provided in the following exhibit –
Description NPV IRR Min. DSCR Avg. DSCR
INR Crores % Ratio Ratio
Base Case 18.57 13.39% 1.13 1.79
5% decrease in occupancy level 12.44 12.57% 1.09 1.75
5% decrease in revenue 13.81 12.75% 1.11 1.77
5% increase in departmental costs 12.93 12.64% 1.10 1.75
10% increase in hard cost 4.98 12.01% 1.13 1.80
1% increase in interest rates 11.17 12.92% 1.08 1.75
The minimum DSCR is 1.13 for the FY 2017-18, when the Company starts repayment of loan
to the Bank commences.
The sensitivity analysis shows that project IRR and DSCR are more sensitive to 10% increase
in hard cost and 1% increase in interest rates.
In the base case scenario, the average DSCR is 1.79. The average DSCR remain above 1.75
in all the sensitivity scenarios, hence the project can be said to be comfortable to these
changes.
5-Star Category Hotel in Ludhiana
66 TEV
Final Report – 02nd
January, 2014
Risk Analysis and Mitigation Measures
The risk analysis, allocation and mitigation measures are shown in the following table –
Key Risk Risk Carrier Mitigation Measure
Experience and
Capability
[CLIENT NAME]
The promoters are well experienced in the
successful operations of various business
segments.
However the promoters have not operated any
hotel projects, hence there is risk related to
experience and capability of successfully
operating hotel business.
To mitigate the above risk, the Company has
handed over the management, operations and
marketing of the hotel to [Client Name] Group.
Funding Risk
[CLIENT NAME]
The promoters’ contribution for the balance of
project works out to INR 38.52 Crores. The
promoters propose to bring in the same from
their own sources.
Time Over-run
[CLIENT NAME]
Hotel has already accomplished approximately
60 - 70% of the civil and construction related
work. The balance of the work could not be
completed due to shortage of funds. However
once the funds are tied up, the balance of the
project is expected to be completed by 31st
March 2015.
Cost Over-run
[CLIENT NAME]
As discussed above, approximately 60 - 70% of
the hotel is already constructed. The Company
has received firm quotation for balance of the
work and has in fact issued most of the purchase
orders as well. Also the Company ensures to
take care of any cost overrun in future on its
own. Hence cost over-run is not envisaged for
the project.
Statutory Approvals
[CLIENT NAME] The hotel project is already operational and all
the critical approvals and clearances are already
5-Star Category Hotel in Ludhiana
67 TEV
Final Report – 02nd
January, 2014
in place and hence statutory approvals and
clearances related risk is not envisaged for the
project.
Occupancy Risk
[CLIENT NAME]
Based on the market assessment, it is
understood that there is a significant demand for
quality hotels in Ludhiana.
Further, as the hotel is proposed to be operated
by a renowned hotel operator, the hotel will be
benefited by the operator’s wide marketing
network and the operator will leverage on its
international presence to support occupancy
levels for the hotel.
Hence market related risk is not envisaged for
the project.
Pricing Level
[CLIENT
NAME]
[CLIENT NAME] has benchmarked its prices
against the prevailing level of prices in premium
segment hotels in Ludhiana.
While undertaking sensitivity analysis, it was
noted that the project is sensitive to increase in
hard cost
However, the same has been captured in terms
of sensitivity analysis where it can be seen that
even with a fall of 10% in revenues, the project
can meet its debt service obligations.
Competition Risk
[CLIENT NAME]
Based on the market assessment it is
understood that there is significant demand for
quality hotels in the region.
The project will face competition from the
existing 5-Star hotel and other 4-Star hotels to
some extent.
The Company will have to bank upon the
operator’s expertise in marketing of such
properties and will have to advertise
aggressively in the initial years of operations, to
increase its visibility and reduce the competition
5-Star Category Hotel in Ludhiana
68 TEV
Final Report – 02nd
January, 2014
risk.
Operating Risk [CLIENT NAME]
/ Hotel
Operator
The hotel is operated by a renowned
international hotel operator. Qualified personnel
are recruited and trained by operator for the
smooth operation of the hotel.
Force Majeure
[CLIENT NAME] /Insurer
The Company has provided [Client Name]with
Copy of insurance undertaken by it to cover the
Force Majeure Risk.
Hence the Force Majeure risk is not envisaged
for the project as it has already been covered.
5-Star Category Hotel in Ludhiana
69 TEV
Final Report – 02nd
January, 2014
SWOT Analysis
Strength
The proposed project is being operated by a reputed hotel operator.
There is buoyant demand for the quality hotels in and around Ludhiana City.
Management team is a good mix of experience and youth.
Experienced technical team.
Weakness
The Promoters of the Company do not have experience in operations of a star
category hotel.
However, to mitigate the risk, the Company has roped in [Client Name] under the
brand name of [Client Name]. [Client Name] also commands a reputed name in
hospitality industry in South East Asia and also provided technical consultancy beside
operating and management contract.
Opportunity
Significant demand for quality hotels in region of Ludhiana.
Threat
Generic threat of global economic slowdown.
Capacity (addition of rooms) enhancement by other established players in this
segment of business.
5-Star Category Hotel in Ludhiana
70 TEV
Final Report – 02nd
January, 2014
Conclusion
The objective of the study is to assess techno economic viability of [CLIENT NAME]’s 5 –
Star category Hotel at Ludhiana and to evaluate the capability of the Company to repay the
term loan which it proposes to raise for the project.
[Client Name] has assessed the techno economic viability of the project based on the
data provided by the Company and other market information based on primary and
secondary research.
While assessing the viability of the project, [Client Name] considered the following major factors:
Project specific attributes, both positive and negative
Appropriate Average Room Rate and Lease Rentals based on primary survey &
secondary research
Appropriate Occupancy Levels based on the primary survey & secondary research
Reasonableness of the Project Cost
Technical Assessment Summary
Land
The 5-star category hotel is situated on a land of 3.3 acres at [Address] under the brand
name of [Client Name] Suites of [Client Name] Group through [Client Name] India Pvt Ltd.
The land was obtained by [CLIENT NAME] from Universal Development Trust through a
sales deal of INR 53, 00,000 excluding stamp duty and registration on 3rd
July, 2003
Services Offered
The 5 –Star category “[Client Name] Suites” hotel by [CLIENT NAME] is providing the following services –
126 rooms including 96 single bedroom suites, 2 honeymoon suites, 28 family rooms
A lobby
Sports Bar
Thai Restaurant
Multi-cuisine Restaurant
24/7 Coffee shop
3 Banquet facilities of total 1000 to 1200 capacity, which can be divided into smaller
halls for multiple gathering and conferences
Kitty halls
5-Star Category Hotel in Ludhiana
71 TEV
Final Report – 02nd
January, 2014
Meetings and conference room
Swimming Pool having a restaurant beside it
Parking below swimming pool and on the periphery of the boundary wall
Gymnasium
Separate Terrace Spa
Structure of the Project
The 5 star category hotel building is Ground + 7 Floor Structure
Utilities
Power
The required power for operations of the project will be supplied by Punjab Electricity Board
and the application for the connection has already been approved.
Built Up Area
The total built up area of the project is 2, 88,060 Ft².
Hotel Operations
[CLIENT NAME] has management and operational tie up with ‘[Client Name] (an [Client
Name] brand) a Thailand based Company. The management and operation contract has
validity period of 15 years.
Implementation Schedule
Based on the experience of undertaking similar assignments in recent past;
[Client Name] understands that the remaining work as discussed earlier will be
over by 31st
March 2015 to be on the conservative side.
Economic Viability
The project cost for the proposed project has been estimated at INR 118.52 Crores which
would be funded by promoters’ contribution of INR 38.52 Crores and Term Loan of INR 80.00
Crores.
As per [CLIENT NAME] India’s assessment, the IRR of the project works out to 13.39%,
which is higher than the post-tax cost of capital at 10.93%. The minimum DSCR of the
project is 1.13. The average DSCR of the project is 1.79, which provides adequate safety to
lenders.
Critical Success Factors
Early Disbursement of Funds
5-Star Category Hotel in Ludhiana
72 TEV
Final Report – 02nd
January, 2014
[Client Name] notes that the balance of the work pending like completion of the civil
work, interior, restaurants and others has reduced the level of profitability of the
project originally envisaged. An early completion of the balance of the work will result
in additional revenue for the project and hence increase profitability. Hence an
early disbursal of Funds from both the Promoters as well as the Banks will be in
overall interest of the project.
Operational Expenses
It is noted that [CLIENT NAME] has involved [Client Name] Group for handling of
day to day issues of the project. Further based on the sensitivity analysis it is
understood that the project is sensitive to increase in operational expenses. Hence
the Hotel Operations team from Hotel Operator will have to keep a check on the
operating costs of the hotel to keep the project viable.
Subject to the above assessment, [Client Name]is of the opinion that the project is
technically feasible and economically viable.
5-Star Category Hotel in Ludhiana
Annexure 1: Projected Profit and Loss Account
73 TEV
Final Report – 02nd
January, 2014
Description Unit 31-Mar-
16 31-Mar-
17 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25 31-Mar-
26 31-Mar-
27
Net Sales INR
Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33
Other Income INR
Crores
Total Revenue INR
Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33
Variable Costs
Room Expenses INR
Crores 2.10 2.44 2.82 3.23 3.68 4.16 4.37 4.91 5.16 5.42 5.69 5.97
MOD Expenses INR
Crores 0.36 0.46 0.59 0.74 0.92 1.14 1.31 1.61 1.85 2.13 2.45 2.82
F&B Expenses INR
Crores 2.16 2.64 3.01 3.36 3.74 4.17 4.50 5.01 5.42 5.85 6.32 6.82
Banquet Expenses INR
Crores 3.23 3.62 4.28 5.63 6.59 7.11 7.68 8.30 8.97 9.68 10.46 11.29
Spa Expenses INR
Crores 0.17 0.20 0.23 0.26 0.29 0.33 0.35 0.39 0.41 0.43 0.46 0.48
Power Cost INR
Crores 2.27 2.65 3.08 3.66 4.19 4.67 4.99 5.55 5.92 6.33 6.76 7.23
Insurance Cost INR
Crores 0.57 0.55 0.54 0.52 0.50 0.48 0.46 0.44 0.43 0.41 0.39 0.37
Repairs and Maintenance Cost
INR Crores
1.18 1.18 1.18 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77
Total Variable Costs INR
Crores 12.03 13.75 15.72 19.16 21.68 23.84 25.43 27.99 29.92 32.02 34.29 36.75
Fixed Costs
Administrative Expenses INR
Crores 2.84 3.31 3.08 3.66 3.14 3.50 3.74 4.16 4.44 4.74 5.07 5.42
Sales and Marketing Costs
INR Crores
1.70 1.99 1.92 2.29 2.10 2.34 2.49 2.77 2.96 3.16 3.38 3.61
Management Fee INR
Crores 0.50 0.58 0.67 0.80 0.92 1.02 1.09 1.21 1.30 1.38 1.48 1.58
74 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Incentives to Operator INR
Crores 0.43 0.52 0.66 0.76 0.94 1.07 1.14 1.28 1.36 1.45 1.55 1.65
Total Fixed Costs INR
Crores 5.47 6.39 6.33 7.51 7.10 7.93 8.46 9.42 10.06 10.74 11.48 12.27
Total Operating Costs INR
Crores 17.50 20.14 22.04 26.67 28.78 31.76 33.89 37.41 39.98 42.76 45.77 49.02
EBDITA INR
Crores 10.87 12.96 16.41 19.06 23.62 26.64 28.44 31.92 34.05 36.32 38.74 41.32
EBDITA Margin % 38.31% 39.16% 42.67% 41.68% 45.07% 45.61% 45.63% 46.03% 45.99% 45.92% 45.84% 45.74%
Depreciation INR
Crores 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63
Interest on Term Loan INR
Crores 10.00 10.00 9.75 9.20 8.46 7.48 6.31 5.02 3.61 2.07 0.84 0.21
Interest on Working Capital Loan
INR Crores
0.22 0.25 0.30 0.36 0.42 0.46 0.50 0.55 0.59 0.63 0.67 0.72
Non-Operating Expenses INR
Crores - - - - - - - - - - - -
Expenses Written Off INR
Crores - - - - - - - - - - - -
Total Expenditure INR
Crores 31.35 34.02 35.72 39.85 41.29 43.33 44.33 46.62 47.81 49.09 50.91 53.58
Profit Before tax INR
Crores -2.98 -0.92 2.73 5.88 11.11 15.07 18.00 22.71 26.22 29.99 33.59 36.75
Applicable Tax INR
Crores - - 0.57 1.23 2.33 3.16 3.77 4.76 5.50 7.54 11.29 12.51
Profit After Tax INR
Crores -2.98 -0.92 2.16 4.65 8.78 11.91 14.23 17.95 20.72 22.45 22.30 24.24
PAT Margin % -10.49% -2.78% 5.61% 10.16% 16.76% 20.39% 22.83% 25.89% 27.99% 28.39% 26.39% 26.84%
75 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Annexure 2: Projected Cash Flow Statement
Description
Unit 31-Mar-
14 31-Mar-
15 31-Mar-
16 31-Mar-
17 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25 31-Mar-
26 31-Mar-
27
Sources of Funds
PAT INR Crores
-
- -
2.98 -
0.92
2.16
4.65
8.78
11.91
14.23
17.95
20.72
22.45
22.30
24.24
Depreciation INR Crores
-
-
3.63
3.63
3.63
3.63
3.63
3.63
3.63
3.63
3.63
3.63
3.63
3.63
Expenses written off INR Crores
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity Investment INR Crores
19.63
18.89
-
-
-
-
-
-
-
-
-
-
-
-
Increase in Term loans INR Crores
40.77
39.23
-
-
-
-
-
-
-
-
-
-
-
-
Increase in Working Capital Loan
INR Crores
-
-
1.73
0.28
0.37
0.48
0.48
0.37
0.26
0.43
0.31
0.33
0.36
0.38
Increase in Unsecured Loan
INR Crores
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Sources INR Crores
60.39
58.12
2.39
2.99
6.16
8.76
12.89
15.91
18.12
22.01
24.66
26.41
26.28
28.25
Application of Funds
Increase Gross Fixed Assets
INR Crores
60.39
57.55
-
-
-
-
-
-
-
-
-
-
-
-
Increase in Working Capital
INR Crores
-
-
2.31
0.38
0.49
0.64
0.64
0.49
0.34
0.57
0.41
0.44
0.48
0.51
Other Payments INR Crores
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Repayment of loans INR Crores
-
-
-
-
4.00
4.88
6.88
8.88
9.75
10.88
11.75
12.88
6.75
3.38
Total Uses INR Crores
60.39
57.55
2.31
0.38
4.49
5.51
7.51
9.36
10.09
11.45
12.16
13.32
7.23
3.89
Net Cash Flow INR Crores
-
0.58
0.08
2.61
1.66
3.24
5.38
6.54
8.02
10.56
12.50
13.09
19.06
24.37
Opening Balance INR Crores
-
-
0.58
0.65
3.27
4.93
8.17
13.55
20.09
28.11
38.68
51.18
64.27
83.33
Closing Balance INR Crores
-
0.58
0.65
3.27
4.93
8.17
13.55
20.09
28.11
38.68
51.18
64.27
83.33
107.69
76 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Annexure 3: DSCR, NPV & IRR Calculation
Description Unit 31-
Mar-14 31-
Mar-15 31-
Mar-16 31-
Mar-17 31-
Mar-18 31-
Mar-19 31-
Mar-20 31-
Mar-21 31-
Mar-22 31-
Mar-23 31-
Mar-24 31-
Mar-25 31-
Mar-26 31-
Mar-27
Initial Cash Flow
Capital Investment INR
Crores -60.39 -57.55 - - - - - - - - - - - -
Margin Money INR
Crores - -0.58 - - - - - - - - - - - -
Total Initial Cash flow
INR Crores
-60.39 -58.12 - - - - - - - - - - - -
Operating Cash flow
PAT INR
Crores - - -2.98 -0.92 2.16 4.65 8.78 11.91 14.23 17.95 20.72 22.45 22.30 24.24
Depreciation INR
Crores - - 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63
Expenses Written Off INR
Crores - - - - - - - - - - - - - -
Interest Coverage INR
Crores - - 10.22 10.25 7.94 7.55 7.02 6.28 5.38 4.40 3.32 2.02 1.01 0.62
Total Operating Cash flow
INR Crores
- - 10.87 12.96 13.73 15.83 19.43 21.82 23.24 25.99 27.67 28.10 26.93 28.49
Terminal Cash flow
Salvage Value INR
Crores 74.40
Release Working Capital
INR Crores
7.71
Total Terminal Cash flow
INR Crores
- - - - - - - - - - - - - 82.10
Net Cash flow INR
Crores -60.39 -58.12 10.87 12.96 13.73 15.83 19.43 21.82 23.24 25.99 27.67 28.10 26.93 110.59
NPV INR
Crores 18.57
IRR % 13.39
%
77 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Post Tax Cost of Capital
% 10.93
%
Debt Service Coverage Ratio
PAT INR
Crores - - -2.98 -0.92 2.16 4.65 8.78 11.91 14.23 17.95 20.72 22.45 22.30 24.24
Depreciation INR
Crores - - 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63
Expenses Written Off INR
Crores - - - - - - - - - - - - - -
Interest on Term Loan
INR Crores
- - 10.00 10.00 9.75 9.20 8.46 7.48 6.31 5.02 3.61 2.07 0.84 0.21
Total INR
Crores - - 10.65 12.71 15.54 17.47 20.87 23.02 24.17 26.60 27.96 28.15 26.77 28.08
Interest on Term Loan
INR Crores
- - 10.00 10.00 9.75 9.20 8.46 7.48 6.31 5.02 3.61 2.07 0.84 0.21
Repayment of Loan INR
Crores - - - - 4.00 4.88 6.88 8.88 9.75 10.88 11.75 12.88 6.75 3.38
Total INR
Crores - - 10.00 10.00 13.75 14.07 15.34 16.35 16.06 15.90 15.36 14.95 7.59 3.59
DSCR Ratio - - - - 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83
Average DSCR Ratio 1.79 1.79
78 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Annexure 4: Balance Sheet
All Figures in INR Crores
Description 31-Mar-
16 31-Mar-
17 31-Mar-
18 31-Mar-
19 31-Mar-
20 31-Mar-
21 31-Mar-
22 31-Mar-
23 31-Mar-
24 31-Mar-
25 31-Mar-
26 31-Mar-
27
Sources of Funds
Shareholders Fund Capital 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52
Reserve and Capital -2.98 -3.89 -1.74 2.91 11.69 23.60 37.83 55.79 76.51 98.96 121.26 145.50
Sub Total 35.54 34.62 36.78 41.43 50.21 62.12 76.35 94.30 115.03 137.48 159.78 184.02
Loan Funds Term Loan 80.00 80.00 76.00 71.13 64.25 55.38 45.63 34.75 23.00 10.13 3.38 -
WC Loan 1.73 2.02 2.39 2.87 3.34 3.71 3.97 4.40 4.71 5.04 5.39 5.78
Unsecured Loans - - - - - - - - - - - -
Sub Total 81.73 82.02 78.39 73.99 67.59 59.08 49.59 39.15 27.71 15.16 8.77 5.78
Total Sources 117.27 116.64 115.17 115.42 117.80 121.20 125.94 133.45 142.73 152.64 168.55 189.80
Application of Funds
Net Fixed Assets 114.31 110.68 107.05 103.42 99.80 96.17 92.54 88.91 85.28 81.65 78.03 74.40
Gross Block 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94
Less: Cumulative Depreciation 3.63 7.26 10.89 14.51 18.14 21.77 25.40 29.03 32.66 36.28 39.91 43.54
Investments - - - - - - - - - - - -
Current Assets, Loans & Advances
3.46 6.54 8.73 12.72 18.76 25.88 34.30 45.54 58.52 72.13 91.74 116.71
Inventories 0.48 0.55 0.64 0.79 0.91 0.99 1.07 1.17 1.26 1.36 1.47 1.59
Debtors 2.33 2.72 3.16 3.76 4.31 4.80 5.12 5.70 6.08 6.50 6.95 7.42
Cash and Bank Balances 0.65 3.27 4.93 8.17 13.55 20.09 28.11 38.68 51.18 64.27 83.33 107.69
Less: Current Liabilities 0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31
Creditors 0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31
Net Current Assets 2.96 5.96 8.11 11.99 18.01 25.04 33.40 44.54 57.45 70.99 90.52 115.40
Miscellaneous Expenditure - - - - - - - - - - - -
79 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Total Uses 117.27 116.64 115.17 115.42 117.80 121.20 125.94 133.45 142.73 152.64 168.55 189.80
80 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Annexure 5: Interest and Repayment Schedule
Old Loan
All Figures in INR Crores
Description
Unit 31-
Mar- 14
31- Mar- 15
31- Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Interest Rate
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
%
Annual Summary
Opening Balance
INR Crores
- 35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - -
Addition INR
Crores 35.00 - - - - - - - - - - - - -
Repayment INR
Crores - - - - 1.75 2.63 3.50 4.38 5.25 5.25 6.13 6.13 - -
Closing Balance
INR Crores
35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - - -
Interest for Period
INR Crores
4.38 4.38 4.27 3.99 3.61 3.12 2.52 1.86 1.15 0.38 - -
Quarter 1 Opening Balance
INR Crores
- 35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - -
Addition INR
Crores 35.00
Repayment INR
Crores 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -
Closing Balance
INR Crores
35.00 35.00 35.00 35.00 34.56 32.59 29.75 26.03 21.44 16.19 10.72 4.59 - -
81 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Interest for Period
INR Crores
1.09 1.09 1.09 1.09 1.09 1.03 0.94 0.83 0.69 0.53 0.36 0.17 - -
Quarter 2 Opening Balance
INR Crores
35.00 35.00 35.00 35.00 34.56 32.59 29.75 26.03 21.44 16.19 10.72 4.59 - -
Addition INR
Crores -
Repayment INR
Crores - - 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -
Closing Balance
INR Crores
35.00 35.00 35.00 35.00 34.13 31.94 28.88 24.94 20.13 14.88 9.19 3.06 - -
Interest for Period
INR Crores
1.09 1.09 1.09 1.09 1.07 1.01 0.92 0.80 0.65 0.49 0.31 0.12 - -
Quarter 3 Opening Balance
INR
Crores 35.00 35.00 35.00 35.00 34.13 31.94 28.88 24.94 20.13 14.88 9.19 3.06 - -
Addition INR
Crores -
Repayment INR
Crores - - 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -
Closing Balance
INR Crores
35.00 35.00 35.00 35.00 33.69 31.28 28.00 23.84 18.81 13.56 7.66 1.53 - -
Interest for Period
INR Crores
1.09 1.09 1.09 1.09 1.06 0.99 0.89 0.76 0.61 0.44 0.26 0.07 - -
Quarter 4 Opening Balance
INR Crores
35.00 35.00 35.00 35.00 33.69 31.28 28.00 23.84 18.81 13.56 7.66 1.53 - -
Addition INR
Crores -
82 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Repayment INR
Crores - - 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -
Closing Balance
INR Crores
35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - - -
Interest for Period
INR Crores
1.09 1.09 1.09 1.09 1.05 0.97 0.86 0.73 0.57 0.40 0.22 0.02 - -
New Loan
All Figures in INR Crores
Description
Unit 31-
Mar- 14
31- Mar- 15
31- Mar- 16
31- Mar- 17
31- Mar- 18
31- Mar- 19
31- Mar- 20
31- Mar- 21
31- Mar- 22
31- Mar- 23
31- Mar- 24
31- Mar- 25
31- Mar- 26
31- Mar- 27
Interest Rate
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
% 12.50
%
Annual Summary
Opening Balance
INR Crores
- 5.77 45.00 45.00 45.00 42.75 40.50 37.13 32.63 28.13 22.50 16.88 10.13 3.38
Addition INR
Crores 5.77 39.23 - - - - - - - - - - - -
Repayment INR
Crores - - - - 2.25 2.25 3.38 4.50 4.50 5.63 5.63 6.75 6.75 3.38
Closing Balance
INR Crores
5.77 45.00 45.00 45.00 42.75 40.50 37.13 32.63 28.13 22.50 16.88 10.13 3.38 -
Interest for Period
INR Crores
5.63 5.63 5.48 5.20 4.85 4.36 3.80 3.16 2.46 1.69 0.84 0.21
Quarter 1 Opening Balance
INR Crores
- 5.77 45.00 45.00 45.00 42.75 40.50 37.13 32.63 28.13 22.50 16.88 10.13 3.38
Addition INR 9.81
83 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Crores
Repayment INR
Crores 0.56 0.56 0.84 1.13 1.13 1.41 1.41 1.69 1.69 0.84
Closing Balance
INR Crores
- 15.57 45.00 45.00 44.44 42.19 39.66 36.00 31.50 26.72 21.09 15.19 8.44 2.53
Interest for Period
INR
Crores - 0.33 1.41 1.41 1.40 1.33 1.25 1.14 1.00 0.86 0.68 0.50 0.29 0.09
Quarter 2 Opening Balance
INR Crores
- 15.57 45.00 45.00 44.44 42.19 39.66 36.00 31.50 26.72 21.09 15.19 8.44 2.53
Addition INR
Crores 9.81
Repayment INR
Crores - - 0.56 0.56 0.84 1.13 1.13 1.41 1.41 1.69 1.69 0.84
Closing Balance
INR Crores
- 25.38 45.00 45.00 43.88 41.63 38.81 34.88 30.38 25.31 19.69 13.50 6.75 1.69
Interest for Period
INR Crores
- 0.64 1.41 1.41 1.38 1.31 1.23 1.11 0.97 0.81 0.64 0.45 0.24 0.07
Quarter 3 Opening Balance
INR Crores
- 25.38 45.00 45.00 43.88 41.63 38.81 34.88 30.38 25.31 19.69 13.50 6.75 1.69
Addition INR
Crores 9.81
Repayment INR
Crores - - 0.56 0.56 0.84 1.13 1.13 1.41 1.41 1.69 1.69 0.84
Closing Balance
INR Crores
- 35.19 45.00 45.00 43.31 41.06 37.97 33.75 29.25 23.91 18.28 11.81 5.06 0.84
Interest for Period
INR
Crores - 0.95 1.41 1.41 1.36 1.29 1.20 1.07 0.93 0.77 0.59 0.40 0.18 0.04
Quarter 4 Opening Balance
INR Crores
-
35.19
45.00
45.00
43.31
41.06
37.97
33.75
29.25
23.91
18.28
11.81
5.06
0.84
Addition INR
84 TEV
Final Report – 02nd
January, 2014
5-Star Category Hotel in Ludhiana
Crores 5.77 9.81
Repayment INR Crores
-
-
0.56
0.56
0.84
1.13
1.13
1.41
1.41
1.69
1.69
0.84
Closing Balance
INR Crores
5.77
45.00
45.00
45.00
42.75
40.50
37.13
32.63
28.13
22.50
16.88
10.13
3.38
-
Interest for Period
INR
Crores
0.09
1.25
1.41
1.41
1.34
1.27
1.17
1.04
0.90
0.73
0.55
0.34
0.13
0.01
5-Star Category Hotel in Ludhiana
85 TEV
Final Report – 02nd
January, 2014
Annexure6: Site Visit/Visual Assessment of the Capital Expenditure
90% work complete of second entry which leads to Banquet
95% work complete for main entry
5-Star Category Hotel in Ludhiana
86 TEV
Final Report – 02nd
January, 2014
Banquet ready for use except for kitchen
Room with fixtures ready
5-Star Category Hotel in Ludhiana
87 TEV
Final Report – 02nd
January, 2014
Rooms with permanent furniture’s 70% complete
Lobby Area where restaurants and coffee shops will come
5-Star Category Hotel in Ludhiana
88 TEV
Final Report – 02nd
January, 2014
Plant and Staff building
Swimming Pool and Garden view
5-Star Category Hotel in Ludhiana
89 TEV
Final Report – 02nd
January, 2014
Power Room
Basement Parking
5-Star Category Hotel in Ludhiana
90 TEV
Final Report – 02nd
January, 2014
Diesel Line
5-Star Category Hotel in Ludhiana
91 TEV
Final Report – 02nd
January, 2014
Limiting Conditions
The revenue and cost estimates for the proposed project are given on the basis of assumptions and
not on the basis of actual calculations. The revenue and costs considered are based on the findings
from primary survey and secondary research, as detailed in the methodology section. There may be
changes in the revenue and cost estimates depending on the market conditions. The revenue and
costs are comparable to the industry benchmarks.
BASIS:
[CLIENT NAME]-India’s assumptions are based on the information obtained from owners, prevailing
rules and regulations of statutory authorities, prevailing site conditions on the date of inspection
and best judgment of the undersigned.
SOURCE OF INFORMATION:
[CLIENT NAME]-India presumes that complete and correct information is provided to it by the owners.
In case, if the information given to [CLIENT NAME]-India is incomplete or incorrect, [CLIENT
NAME]-India shall assume no liability or responsibility for the same, and [CLIENT NAME]-India may
modify the report to that extent if so required.
DOCUMENTATION:
[CLIENT NAME]-India does not normally read leases or documents of title. [CLIENT NAME]-India
assumes, unless informed to the contrary, that each Structure has good and marketable title, that all
documentation are satisfactorily drawn and that there are no encumbrances, restrictions, easements
or other outgoing of an onerous nature which would have a material effect on the value of interest
under consideration, nor material litigation pending. Where [CLIENT NAME]-India has been
provided with documentation, [CLIENT NAME]-India recommends that reliance should not be placed
on its interpretation without verification by legal advisors.
TOWN PLANNING AND OTHER STATUTORY REGULATIONS:
[CLIENT NAME]-India recommends that verification be obtained from legal advisors to
the effect that: i The position is correctly stated in the report:
ii The property is not adversely affected by any other decision made, or conditions prescribed
by public authorities.
iii There are no outstanding statutory notices.
iv. [CLIENT NAME]-India’s reports are prepared on the basis that the Owners comply with all
relevant statutory regulations, including enactment relating to fire regulations, safety and
environmental considerations and stipulation of respective statutory provisions.
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PHYSICAL SURVEYS:
[CLIENT NAME]-India has not carried out Physical Survey and leveling exercise of the Structures
and advice Owners to carry out actual Physical Survey of the site along with levels if desired. This
report is based on documents forwarded to [CLIENT NAME]-India by Owners, Government Records
made available to [CLIENT NAME]-India and on [CLIENT NAME]-India’s cursory inspection of site.
STRUCTURAL SURVEYS:
[CLIENT NAME]-India has not carried out a structural survey, nor has [CLIENT NAME] tested the
services of the Owners and [Client Name] therefore does not give any assurance that any Structure
or the immoveable assets are free from defects. In [CLIENT NAME]-India’s general observations, the
Structures are erected normally and appear to have been maintained properly. However, no
guarantee or opinion can be inferred about the conditions of Structure and Machinery about safe
working of the same.
DELETERIOUS MATERIALS:
[CLIENT NAME] does not normally carry out investigations on site to ascertain whether any
Structure was constructed or altered using deleterious materials or techniques (including, by way of
example high alumina cement concrete, wood wool as permanent shuttering, calcium chloride or
asbestos). Unless [CLIENT NAME] was otherwise informed, our report is on the basis that no such
materials or techniques have been used.
SITE CONDITIONS:
[CLIENT NAME] has not carried out investigations on site in order to determine the suitability of
ground conditions and services for the purposes for which they are, or are intended to be put, to
use, nor does [CLIENT NAME] undertake archaeological, ecological or environmental surveys.
Unless [CLIENT NAME] is otherwise informed, [CLIENT NAME] report is on the basis that these
aspects are satisfactory and that, where development is contemplated, no extraordinary expenses or
delays will be incurred during the construction period due to these or any other matters related to site.
ENVIRONMENTAL CONTAMINATION:
[Client Name] has not carried out physical site surveys or environmental assessments, or investigated
historical records, to establish whether any land or premises are, or have been, contaminated.
Therefore, unless advised to the contrary, [CLIENT NAME] report is carried out on the basis that
properties are not affected by environmental contamination.
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TERMS RELATING TO USE OF THIS REPORT
This Techno Economic Viability Report (hereinafter referred to as this “Report”) has been prepared by
[Client Name] (hereinafter referred to as “[CLIENT NAME] in respect of the hotel project
(hereinafter referred to as the “Transaction”) of M/s. [Client Name] (hereinafter referred to as the
“Customer”) for the internal use and reference of the Customer’s funding entity (hereinafter referred
to as the “Funding Entity”) subject to what is stated hereinafter and the same forms an integral
part of this Report.
The use of this Report or dissemination of contents hereof in part or full, is meant only for the
purposes of the Transaction or matters relating thereto as deemed necessary by the Funding Entity,
and not by any other party or for any other purpose.
[CLIENT NAME] follows ethical practices in the discharge of its professional services and amongst
others, as part of such ethical practices, it follows the general rules relating to honesty, competence
and confidentiality, and attempts to provide the most current, complete, and accurate
information as possible within the limitations of available finance, time constraint and other practical
difficulties relating thereto and arising as a consequence thereof.
This Report has been prepared keeping in view the scope of work and the methodology as stated in
this Report. Sources which form the basis of this Report could be broadly classified into two
categories: (i) the facts gathered by [CLIENT NAME] by way of a visit to the site of the project relating
to the Transaction, or the Government offices, to the extent possible, having regard to practical
constraints, and (ii) documents and information as furnished by the Customer or the Funding
Entity. [CLIENT NAME] has not carried out any independent verification for the accuracy or the
truthfulness of such information which is believed to be accurate, updated and complete based
on the information as furnished by the Customer, the Funding Entity and partly on its own
information as stated hereinabove. Accordingly, the said information is not warranted by [CLIENT
NAME] for its accuracy, completeness, or being up to date, and is subject to further verification.
This Report includes assessment and projections made by [CLIENT NAME] which are based on the
aforesaid sources and the methodology as adopted by [CLIENT NAME]. A variation in such
assessment and projections is possible due to changes in the obtaining facts and circumstances as
they existed at the point of time this Report was finalized by [CLIENT NAME] and the approach or
methodology adopted in respect thereof. Differences between projected and actual results are
possible as events and circumstances, as anticipated or contemplated, may or may not occur and
such differences may be material in nature. Under the circumstances, no assurance can be
provided or implied that these projections will actually materialize.
Therefore, such assessment and projections made, and views based thereon included in this Report
should not be treated as the sole decisive factor for any decision to be taken by the Funding Entity
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Relating to the Transaction and the Funding Entity has to draw its own conclusions on making
independent enquiries and verifications and [CLIENT NAME] cannot be held liable for any
financial loss incurred by anyone based on this Report.
No representation is made by [CLIENT NAME] that the information contained in this Report is
exhaustive or includes all such material information which may have a bearing on the future
performance of the Customer. In case the Funding Entity needs any such additional information,
documents, or analysis, which is not within the scope of work as included in this Report, [CLIENT
NAME] may, on the request of the Funding Entity, consider providing the same, subject to such
additional payment for the purpose as may be mutually agreed upon between [CLIENT NAME] and
the Funding Entity.
[CLIENT NAME] or its associates in any capacity; viz.; directors, employees, advisers, or other, do not
make any further express or implied representation or warranty, or assume any responsibility or
liability in respect thereof or arising in connection with or as a consequence of, any decision made
or action taken, by the Funding Entity or any other party, unless it could be directly attributed to
[CLIENT NAME] or associates for their act or omission.
The Report should be read as a whole so as to avoid any divergence with respect to the inferences
on account of a partial reading of this Report where such inferences may be based on the entirety of
this Report. Further, notwithstanding anything to the contrary, liability, if any, and the amount of claim
by the Funding Entity in relation thereto against [CLIENT NAME] or its associates for any
inaccuracies in this Report or any cause whatsoever, and regardless of the form of the action in
relation to this Report, will at all times be limited to the amount paid by the Customer to [CLIENT
NAME] for this Report.