emerald park

8/6/2019 Emerald Park

http://slidepdf.com/reader/full/emerald-park 1/60

Techno Commercial Feasibility Mott MacDonald India

For Residential Township Radhe Infrastructure & Projects (India) Ltd.

Project - Emerald Park

247925/01/AA - 22 May 2008/ D:\Emerald Park.doc/Z.K

Radhe Infrastructure & Projects (India) Ltd.

Chunibhai Chambers

Behind City Gold Cinema,

Ashram Road

Ahmedabad 380 006

Techno Commercial Feasibility

For Residential Township


May 2008

Mott MacDonald India501, Sakar - II, Near Ellisbridge

Ahmedabad - Gujarat

380 006

India

0091 (079) 2657 5550

0091 (079) 2657 5558

[email protected]






3247925/01/AA - 22 May 2008/of 59D:\Emerald Park.doc/Z.K

Techno Commercial Feasibility

For Residential Township


This document has been prepared for the titled project or named part thereof and should not be relied upon or used for any

other project without an independent check being carried out as to its suitability and prior written authority of Mott

MacDonald being obtained. Mott MacDonald accepts no responsibility or liability for the consequence of this document

being used for a purpose other than the purposes for which it was commissioned. Any person using or relying on thedocument for such other purpose agrees, and will by such use or reliance be taken to confirm his agreement to indemnify

Mott MacDonald for all loss or damage resulting therefrom. Mott MacDonald accepts no responsibility or liability for this

document to any party other than the person by whom it was commissioned.

To the extent that this report is based on information supplied by other parties, Mott MacDonald accepts no liability for any

loss or damage suffered by the client, whether contractual or tortious, stemming from any conclusions based on data

supplied by parties other than Mott MacDonald and used by Mott MacDonald in preparing this report.







List of Contents Page

Chapters and Appendices

1 Introduction 6 1.1 The Project 6

1.2 Scope of Work 7

1.3 Approach & Methodology 9

2 Brief Profile 11

2.1 About the Client 11

2.1.1 Projects 11

2.2 About the Consultant 16

3 Industry Analysis 19

3.1 Indian Real Estate Market Overview 19

3.1.1 Growth Drivers 20

3.2 Indian Housing Sector Overview 21

3.2.1 Growth Drivers 22

3.2.2 Demand Supply Analysis 26

3.3 Government Initiatives 30

4 Ahmedabad Market Assessment 31

4.1 City Overview 31

4.2 Residential Realty in Ahmedabad 32 4.2.1 Major Growth Drivers 33

4.3 Major Players in Ahmedabad 34

4.4 Luxury Homes 47

5 Emerald Park 49

6 Financial Aspects 51

6.1 Introduction 51

6.2 Basis and Assumptions 51

6.2.1 Sales Distribution Pattern 51

6.3 Project Cost 51

6.3.1 Land and Land Development 52

6.3.2 Utilities 52

6.3.3 Preliminary and Pre – Operative Expenses 53

6.3.4 Provisions for Contingences 53

6.3.5 Summary of Fixed Capital Cost 54

6.4 Sources of Finance 54







6.5 Project Profitability 54

7 Strategic Analysis 55

7.1 SWOT 55

7.2 Five Forces Model 56

8 Conclusions and Recommendations 57

8.1 Conclusions 57

8.2 Recommendations 57

List of Figures

Figure 1.1: Emerald Park Layout 7 Figure 1.2: Project Approach 10 Figure 2.1: Takshshila Apartments 12 Figure 2.2: Mandar Bungalows 13

Figure 2.3: Tirthbhumi 13 Figure 2.4: Tulsi 14 Figure 2.5: Ganesh Plaza 14 Figure 2.6: Abhinav Arcade 15 Figure 3.1: Population Growth Comparison 22 Figure 3.2: Major Contributors in World GDP 23 Figure 3.3: Rising Urbanization in India 25 Figure 3.4: Increasing shortage of housing in India 26 Figure 3.5: Housing Finance Growth Rates for past 5 years 27 Figure 3.6: Demand Drivers and Constraints 29 Figure 5.1: Emerald Park Location 49

List of Tables

Table 2.1: Radhe’s Prominent Projects 12 Table 4.1: On going major residential projects in Ahmedabad 45 Table 6.1: Sales distribution Pattern of Units 51 Table 6.2: Sales Distribution Pattern of Plots 51 Table 6.3: Land and Land Development Cost Estimates 52 Table 6.4: Utilities 53 Table 6.5: Preliminary & Pre-operative Expenses 53 Table 6.6: Provisions for Contingencies 53

Table 6.7: Summary of Fixed Cost Estimates 54 Table 6.8: Means of Finance 54







1 Introduction

Radhe Infrastructure and Projects (India) Ltd., hereafter referred to as RIPL or the Client,

is an Ahmedabad based construction and development company established by Mr.

Chunibhai C. Patel, an industry veteran of over 50 years. RIPL aimed at providing

impeccable services in the field of construction and development of both residential

properties and commercial complexes.

In keeping with its objectives and business goals, RIPL is coming up a residential township

in Ahmedabad and has approached Mott MacDonald to conduct the techno-commercial

feasibility for the same. The report will not only serve as a bankable document for the

purpose of procuring loan, but it will also enable RIPL to attain a better understanding of

the current national and local real estate scenario.

1.1 The Project

Emerald Park is the latest offering from Radhe in the residential segment. It is a new age

residential township on the outskirts of Ahmedabad. Since the client has already acquired

land for the project and also begun preliminary construction on the site, it is apparent

they are quite confident about the feasibility of the project. They however, would like to

have a well articulated and more concrete assessment of the market as well as the

financials of the project. With regards to this they have approached Mott Macdonald to

carry out a detailed techno-economic and market assessment of the township project to

validate their views on it.

Emerald Park – as the name suggests is designed to be a lush green township with

designer landscaping in each plot surrounded by trees to give the residents the feel of

living in the lap of nature. It also offers all modern amenities and luxuries that one can

desire. In all it will be an enrich experience to live in such this township.







Figure 1.1: Emerald Park Layout

1.2 Scope of Work

The basic objective of this study is to validate and if possible to strengthen / consolidate

the various premises, assumptions and basis considered in the proposed Township Project.

The study would encompass a macro view of the housing market and its key components

like the raw materials market, housing demand and the competitive scenario. It will be

followed by a detailed analysis of the micro market and supported by strategic analysissuch as the Five Force Model. Study would also attempt to look broadly at various techno-

commercial aspects of the proposed venture like appropriateness of technology

machineries and various facilities considered for the project, appropriateness of project

cost and financial projections.

Based on the brief discussions with client, consultants have devised following scope of

work:

(i) Assessment of proposed Township from the Market Angle

The assessment of housing market, various markets related factors and assumptions / basis

considered for market projections would be carried out primarily through desk research

and limited field research. Information collated through secondary research would be







reviewed and analyzed to assess the overall market attractiveness (i.e. Potential Market

and Competition Analysis). Information will be accumulated from diverse sources, such as

books, newspapers, trade journals, white papers, industry portals, government agencies,

real estate brokers, industry news and developments. Subsequently consultants would

carry out a SWOT analysis with a view to conclude overall prospects for the proposed

Township projects.

(ii) Assessment of Appropriateness of facilities proposed to be acquired / built

Consultants shall evaluate the appropriateness of the project from technical angle, i.e.

contemporariness of the technology to be used for construction & facilities proposed to be

built, credentials of the suppliers / contractors, appropriateness in terms of operating &maintenance ease, appropriateness in terms of capital cost and operating costs.

(iii) Assessment of Risk-Return profile

The assessment of risk-return profile of the proposed township project basically involves

assessment of overall financial viability of the project followed by assessment of sensitivity

/ vulnerability / sustainability of the project under adverse circumstance, i.e. Decline in

Housing demand, Construction cost escalation, Competition, etc.

The financial viability exercise by consultants would include: Assessment of

appropriateness of Project Cost, Occupancy Levels, Revenue estimates, Financial Analysis.

Consultants would assess / appraise the all projections considering:

Realistic Occupancy Pattern

Realistic price realization estimated on the basis of current housing scenario and

realty prices.

The financial analysis carried out by consultants would include following analysis /

statement as desired by most of the financial Institutions:

Detailed Project Cost







Means of Finance

Estimated Revenue

Profitability analysis

Projected cash flow and balance sheet

Suggested means of finance

Estimates of base indicators for: ROI, ROE, BEP, IRR, DSCR Etc.

1.3 Approach & Methodology

The consultants have adopted a research based approach during the course of the

assignment. The IMM team undertook extensive secondary research to collect

information. The sources used in the secondary research were primarily:

Information available with the Company

Published information from Government Agencies

Sector Reports

Trade Information from Associations

In house database of Consultants

Interaction with technology suppliers

Interaction with end users

Along with the secondary research a local level primary survey was also undertaken,

wherein the major builders and developers of Ahmedabad were contacted. The findings of

the primary survey were used as indicative of the Ahmedabad market.

A team from IMM also interacted with the key Management, Manufacturing & Project

personnel. The following report is based on the information collected from various

sources indicated above and Client meetings. The approach followed by IMM in preparing

the following report is as depicted in the following figure.







FINANCIAL ANALYSIS

Revenue Cost Stream Investments

Financial Feasibility

&

Sensitivity Analysis

Figure 1.2: Project Approach

MARKET ASSESSMENT

Indian Real Estate Market

Indian Housing Market Ahmedabad Housing

Luxury Homes actors Considered Growth drivers & constraints

Supply demand scenario

Price Trends Factors Considered

Segment Growth Target Segment







2 Brief Profile

2.1 About the Client

The journey for RIPL began in 1974 when M/s Jash Development Corporation wasfounded in partnership with Mr. Praful C. Patel who has 37 years of industry experience

behind him. This was followed by the formation of a string of other establishments; M/s

Radhe Construction in 1990, M/s Radhe Organizers, M/s Radhe Real Estate Developers,

M/s Radhe Associates, M/s Radhe Consultancy and M/s Radhe Developers India Ltd.,

culminating in the formation of RIPL.

RIPL has since its inception strived to provide innovative and elegant residential

properties and urbane yet utilitarian commercial buildings. Leading and guiding RIPL in

its endeavour is Mr. Praful Patel, the founder and chairman of the group and the dynamic

Managing Director of the company, Mr. Ashish Patel. With more than 17 years of

construction experience and his vision, Mr Ashish Patel plans to take RIPL to greater

heights.

Mr. Alok Vaidya, Mr. Nirav Desai and Mr. Prakash Shah are the other competent

members of the Board of Directors of RIPL and have made substantial contributions in the

success of RIPL. The group also boasts of a pool of young and self-driven professionals

who uphold the ideals of RIPL and ensure that RIPL is synonymous with quality

craftsmanship and expertise.

2.1.1 Projects

Radhe has completed a variety of residential and commercial projects in Ahmedabad.

Each project has been a thoughtfully conceived venture providing the best of amenities

and facilities. The execution of each project has been meticulous with a constant

endeavour to ensure that the edifice fulfils every possible requirement and goes beyond it.







(i) Completed Projects

As mentioned before Radhe has completed projects of both residential and commercial

nature and have achieved remarkable successful in both their endeavours. Each completed

project is a milestone in Radhe’s journey towards excellence and establishing it as a one of

the leading developers of the city. The most prominent projects of Radhe so far have been:

Table 2.1: Radhe’s Prominent Projects

Residential Projects Commercial Projects

Takshshila Apartments Tulsi Complex

Mandar Bungalows Ganesh Plaza

Tirthbhumi Apartments Abhinav Arcade

On Going Projects New Projects

Emerald Park Olympus Mall

Tirthdham Apartments

Figure 2.1: Takshshila Apartments

The Takshshila Apartments are high rise flats located in one of the most happening places

of Ahmedabad – Vastrapur. Its spacious construction and proximity to Vastrapur Lake and

other amenities around make it an ideal place to live in.







Figure 2.2: Mandar Bungalows

Mandar bungalows are high end luxurious bungalows spread over sprawling plots in the

Thaltej area of Ahmedabad. Thaltej touches the latest high street of Ahmedabad the S.G

Road, it is a prime location for residential and commercial properties.

Figure 2.3: Tirthbhumi

Tirthbhumi like Takshshila are high rise deluxe flats with all the modern facilities. Again

the location of the flats is also immaculate, it is located near the thriving Law Garden ,

Ellisbridge area and within great proximity to the commercial hub of the city; Ashram

Road.







Figure 2.4: Tulsi

The Tulsi Complex is located near the Mithakali six roads, a point of convergence of

various commercial areas of repute. Mithakali six roads lead to areas such as Ashram Road,

Laws Garden, C.G. Road and Navrangpura.

Figure 2.5: Ganesh Plaza

Ganesh Plaza is another remarkable structure constructed by Radhe. It is located in the

Navrangpura area of the city and is a prominent business building with esteemed business

houses setting up offices in it.







Figure 2.6: Abhinav Arcade

The other major commercial building developed by Radhe is the Abhinav Arcade. All the

projects mentioned here are testimonial to Radhe’s commitment to building structures of

quality and durability. Customer satisfaction in all of Radhe’s projects has been

outstanding and a fact of pride for Radhe.

(ii) On Going Projects (Other than Emerald Park)

Tirthdham

Another residential apartment scheme from Radhe - ‘Tirthdham’ stands for luxury and

tranquillity for the dwellers. The various facilities being offered in Tirthdham include -

Landscaped garden

Well designed entrance foyer in each block

Tarred internal roads with street lights

Fully furnished club house

Health club

Children’s play area

Master antenna with closed circuit video channel

Bore wells with submersible pump set







Generator set

Emergency light point in each foyer

Two lifts in each block

Limited allotted covered parking

(iii) Future

Radhe is poised to take a big leap in the future and spread its wings across the nation. It is

now giving birth to a new facet of modernism by blending material with technology and

constructing an exciting landscape on the firm foundation of experience by combining

progress with prosperity.

The company has great future plans in terms of projects, both residential and commercial.

It is coming up with a revolutionary concept of a mall in the city of Ahmedabad. It is also

in the process of having tie-up with those of the most renowned and top-notch architects

of India for its forthcoming projects.

Radhe is determined to give a new dimension to the construction industry of India and is

committed to deliver the most advanced and avant garde constructions

2.2 About the Consultant

Mott MacDonald Private Limited (IMM) is a leading multi-disciplinary management and

engineering consultancy based in India, with offices nationwide.

As part of the global Mott MacDonald Group headquartered in U.K., IMM is able to draw

on world-class technical and managerial resources comprising over 13000 staff in more

than 50 strategic centres world-wide. IMM is engaged in planning and development

touching many aspects of everyday life – from water, energy, industry, environment and

transport to building, healthcare, tourism and social development.







Across these sectors IMM works for national and local governments, public and private

utilities, industrial and commercial companies, investors, developers, banks and financial

institutions, international and bilateral funding agencies and private entrepreneurs. IMM’s

strengths enable our clients to realize their projects optimally from concept to

commissioning.

(i) Management Consultancy Division

IMM provides business planning and project management for a wide spectrum of clients

in industry, infrastructure and social development, including international development

banks and funding agencies. IMM also helps clients such as accountancy firms, financial

institutions and industrial companies in making a realistic appraisal of their fixed assets,

and in preparing for disinvestment, mergers or de-mergers, acquisitions, takeovers,

insurance or liquidation, collaborations and joint ventures.

(ii) Social Solutions

IMM has undertaken numerous studies and advisory roles for leading development banks

and funding agencies. Projects range from implementing vital AIDS eradication

programmes and pro-poor initiatives to studies for institutional strengthening, sector

reform and impact evaluation. IMM also offers specialist expertise in assisting with public

consultation.

(iii) Engineering Services

IMM’s range of engineering services enables clients to realize optimal implementation of

projects. IMM takes care of every stage – site evaluation, basic and detailed engineering,

contract preparation, project management, procurement, equipment inspection and

testing, site supervision and commissioning.







(iv) Infrastructure

One of the key strengths of IMM lies in large-scale integrated urban infrastructure

development, encompassing water supply, drainage, solid waste, roads, sanitation and

community buildings etc. Here our services range from planning and advisory assistance

to detailed engineering and construction management.

(v) Industry

IMM skills and experience have earned it a leading reputation – especially in chemicals,

textiles, oil and gas, food processing and life sciences, as well as bulk drugs,

pharmaceuticals and biotechnology. IMM is known particularly for its expertise in process

engineering and licensing for specialty chemical production based on laboratory/pilot

plant know-how developed by R&D centres.

(vi) Buildings

IMM’s business covers all sectors from commercial and leisure to industry, education and

healthcare. IMM provides the full range of architectural, structural, mechanical and

electrical design skills, along with planning and project management expertise. Buildingservices are a special capability, notably building management systems, vertical

transportation, telecommunications and security.

(vii) HVAC

Providing turnkey packages in heating, ventilation, air-conditioning and refrigeration is

also IMM’s’ forte – IMM’s’ track record includes systems for auditoriums, public buildings,

industrial facilities, hospitals and research laboratories.







3 Industry Analysis

3.1 Indian Real Estate Market Overview

The Indian Real estate industry today is emerging as one of the most attractive sectors for

investment for both domestic as well as foreign investors. It is growing at an annual

compounded growth rate of approximately 30% every fiscal. In monetary terms, the

Indian real estate is estimated to be worth US $ 16 billion and is predicted to be worth US

$ 90 billion by 2015.

The Indian real estate industry is the second largest employment providing sector in the

country and more than 250 other industries are directly or indirectly related to it, such as

cement, steel and brick. Thus, any investment made in this sector has a multiplier effect

and generates more income. It is estimated that every rupee spent in real estate generates

.78 paisa in the Indian economy and accounts for around 5% of the country’s Gross

Domestic Product (GDP).

Even foreign investors are keenly eyeing this sector and have lined up about US$ 10

billion worth of investment for it. Along with the global players also come global level

architects and planners who will be dotting the Indian real estate with world class

buildings.

The Indian real estate sector can be broadly divided into three segments:

1. Commercial

2. Residential

3. Retail

And there exists a demand supply gap across all the three segments with the demand far

out stripping the supply. Indian real estate is also segregated into Tier – I, Tier –II and Tier

– III cities, and rural India which still accounts for more than 65% of India.







Tier – I cities comprise of the most developed agglomerations which have become the

commercial, political and outsourcing hubs of the country such Mumbai and Delhi. These

are followed by the Tier – II and Tier – III cities. The difference however between these

two is diminishing as Tier – III cities such as Ahmedabad, Indore Chandigarh are fast

catching up with Tier – II cities such as Hyderabad and Pune.

3.1.1 Growth Drivers

The major growth drivers of the Indian Real Estate Industry are:

Infrastructure is the basis of all economic activity and the Government’s increasing

focus on Infrastructure is bound to have a positive effect on the real estate of the

country. Areas with better roads and amenities immediately show appreciation in

their prices, besides which the economic benefits of infrastructure development can

be easily gauged by the fact that India’s GDP could be 2% higher were it not for the

lack of appropriate infrastructure.

The economic reforms that have taken place in the past few years have greatly

benefited the real estate sector. The opening up of the economy and allowance of 10

% FDI investment in 200the sector has provided us with the funds required to

develop the sector which would not have been possible by only domestic

investment.

One of the most preferred avenues of investment in the country, the capital markets

have not been performing well in the past 6 months due to global volatility. This in

inducing many prospective investors to invest in real estate instead.







3.2 Indian Housing Sector Overview

Housing is one of the basic necessities of man and assumes great importance in an

individual’s scheme of things, which is why the housing sector, which comprises of

approximately 80% of the real estate, is one of the most important sectors in the country

and ranks third with respect to inter linkage and impact on other sectors of the economy.

According to an IBEF (India Brand Equity Foundation) report, the housing sector is

estimated to grow by a Compounded Average Growth Rate (CAGR) of 18 to 20% till 2010

and presents major investment opportunities. A Merrill Lynch report suggests that the

housing sector in India will require investments worth more than US$25 million over the

next five years. The housing sector is also the fourth highest income multiplier in the

country ahead of agriculture. It is a major contributor of employment and income

generation in the country.

The supply demand gap of housing units in India is estimated to be around 33 million

units with an addition of an annual deficit of around 5 million units each year. These

figures have been arrived at only taking first time home owners into account. If second

home owners are also taken into consideration the figures could be much higher.

The housing sector can be said to comprise of mainly of three segments, which are

1. Low Cost

2. Affordable Housing

3. Luxury Homes

It can also be divided into urban and rural housing and as per a recent study by the

research firm, Indicus Analytics, the demand for urban housing in India will be over 24.3

million by 2015.







3.2.1 Growth Drivers

The major demand drivers of the housing sector in India are:

Population:

- India is the second most populous country in the world, with a population of

approximately 1.1 billion people and accounts for around 17% of the world’s

population.

- There is a high concentration of population in India, almost every one in six

people in the world lives in India.

Figure 3.1: Population Growth Comparison

0

500

1000

1500

2000

1950 1970 1990 2010 2030 2050

Years

Mio

India China Europe

This indicates the large and inherent demand for housing that exists in India.

Economic Growth: India is the middle of a high growth phase.

- The Indian economy is blazing ahead with an average GDP of 8% for the past 3

years.







- India today is not only the fastest growing economy in the world; it is also the

fifth largest economy in the world, accounting for more than 4% of the global

GDP as can be seen in the graph below.

Figure 3.2: Major Contributors in World GDP

23%

10%7% 5% 4%

51%

0%

10%

20%

30%

40%

50%

60%

Pna

US China Japan Germany India ROF

Countries

- In monetary terms, the Indian economy has crossed the US $ 1.30 trillion mark

and counting.

Of the many effects of the rapid economic growth of the country, the most obvious

one is the appreciation in the real estate of the country as the demand for land

increases, and as 80% of the Indian real estate comprises of the residential segment,

the subsequent appreciation in the housing sector is only logical.

Favourable Demographics: One of the major growth drivers of the Indian economy

are the very favourable demographics that India currently boasts of.

- More than 50% of the Indian population is below the age of 25 years, that is

more than 50 million Indians are youngsters who are the workers and

consumers that will drive the growth of the nation’s economy.

- India is said to posses a middle class of over 900 million by 2015 and the

world’s largest population of workers and consumers by the year 2020.

- Salary levels have increased by an average of 13.5% in past 5 years.







This large proportion of the young middle class with increasing employment

opportunities due to the improving employment rate in country will collectively

have huge earning potential and present the major drivers of domestic consumption.

Increase in Youth Earning Levels: With the increase in the earning power of the

youth the disposable incomes have also increased consequently.

- This has allowed for a shift in consumer attitudes towards home ownership and

spending behaviour; from the earlier “save and buy” attitude to the present one

of “buy and pay”.

- The average age of a new homeowner has come down from 45 in 1996 to 32 in

2006.

- The nuclearization of Indian households is also a direct consequence of young

people beginning to earn early in life and moving out for jobs and making their

own homes.

- This is clearly reflected in the reduction of the average size of the Indian

household from 5.7 in the 1970’s to 5.1 in 2001.

The confluence of all these factors is one of the major growth drivers for housing in

the country.

Urbanization: Another one of the major drivers of the housing sector is the steady

urbanization of India.

- Though in comparison to the more than 40% urbanization in countries like

China, the extent of urbanization in India, which is around 25% to 30% is still

much below par, there is no denying the fact that it is on the rise.







- The United Nations Development Programme (UNDP) expects the degree of

urbanization in India to grow to 40% by 2030, with the population growing at

2.5 % per annum for the next 25 years.

- The top ten cities in the country have grown on an average at a growth rate of

7%.

- The number of Urban Agglomerations with a population of more than a million

has increased from 27 in 2001 to 44 housing more than 150 million people in

total.

Figure 3.3: Rising Urbanization in India

0

10

20

30

40

50

60

70

80

1971 1981 1991 2001 2006 2011

Year

P e r c e n t a g e

Urban Population Contribution to National Income Cities w ith population greater than 1 million

Indian cities must thus brace themselves for rapid expansion and the drastic increase

in demand for housing capacities in the near future.

The credit market and in particular the housing finance sector of any country plays a

huge hand in shaping the demand for housing in that country. .

- India has one of the most under developed credit markets in the world.







- The Mortgage to GDP ratio in India is a meagre 6% compared to rates of 60%

and 70% in countries like the U.K and U.S.

- Even in more comparable Asian economies, the mortgage to GDP ratio is

around 20% to 30%.

This signifies how far behind India is in this regard and the potential that exists in the

increasing penetration of the housing finance sector in India.

3.2.2 Demand Supply Analysis

The demand for housing in India far outstrips the supply present in the country. India’s

housing shortage has increased from 19.4mn units in 2004 to 22.4mn units in 2005-2006.

The Housing and Urban Poverty Alleviation Ministry estimates a shortage of 24.7 million

houses in the country at the end of the 10th Five Year Plan. During the 11th Plan, the

Group has estimated the total housing requirement (including the backlog) to 26.53

million units for 75.01 million households. The number is likely to grow exponentially.

99% of the shortage is for affordable housing stemming from the Middle and Low Income

Groups. The shortage in past 4 years is given in the following graph.

Figure 3.4: Increasing shortage of housing in India

19.422.4

24.726.3

05

10

15

20

25

30

Mio

2004 2005 2006 2007

Years







On account of the increasing demand of housing, the residential sector is expected to

continue to demonstrate robust growth over the next five years. Spending on new middle

and higher income housing at Rs .17mn in fiscal 2005 and expects further growth at a

CAGR of 18.6% over the next five years.

(i) Demand Constraints

The factors critical to the continued growth and success of the housing sector are:

Sustainable economic growth. The rapid economic growth that India has witnessed

in the past 5 years is one of the primary growth drivers of the real estate sector. This

growth should needs to be sustained for a medium to long period of time, for the real

estate sector to realize its full potential. Any slowdown in the economy could

directly have a negating effect on the growth of the industry.

Controlling inflation and rising interest rates. The rising inflation and ensuing

increase interest rates are already starting to affect the industry, and if not brought

under control could spell a lot of trouble for the real estate sector. The rise interest

rates have caused buyers to become cautious and stall their buying decisions.

Figure 3.5: Housing Finance Growth Rates for past 5 years

26.629.1

49.5

73.9

48.6

01020304050607080

Pna

2006-07 2005-06 2004-05 2003-04 2002-03

Years







Recent data reveals that on account of the increasing home loan rates, the sector has

witnessed a massive fall of 26.6 per cent in 2006-07 from 29.1 per cent in 2005-06

and is expected to slow down further to touch between 17 and 20 per cent in the

current fiscal. Prior to fiscal 2005-06, the preceding three fiscals had seen the

housing sector record a year-on-year rise of 49.5 per cent, 73.9 per cent and 48.6 per

cent respectively. The interest rates on home loans rose from 7 percent in 2002 to

12-14 per cent in 2007. This rate has made both lending and borrowing largely

unaffordable.

Speculative interest. The buying done by speculators can have both negative and

positive effect on the industry. Heavy buying can bring the prices up, but it can also

lead to over heating resulting in a fall in buyer demand.

Many builders come out with schemes with very unrealistic prices, which cannot be

accounted for in any manner. The demand for housing is not completely inelastic.

The real estate market like every other marketing in India is subject to price

sensitivity, though not to the extent as others. That is if the demand may continue if

the prices increase within a reasonable range, but an unrealistic increase in prices

may result in decrease in demand and sales. A recent report on housing sector

estimated that an increase in house price by 10%, results in a 4.6% decrease in

housing demand as affordability comes down.

Improved regulatory frame work – Stamp duty amongst the highest in the world in

India. A very important aspect of the industry is the regulatory framework that it

works within. The Indian real estate in many cities is heavily regulated by zoning

and building restrictions, high property taxes and transaction costs. These need to be

addressed and improved to facilitate the industry growth.







(ii) Supply Constraints

The notable supply constraints of the housing sector in India are:

Increasing interest rates. With the rise in crude prices and the inflation, the RBI is

taking strong measures to tighten the liquidity in the market and has increased the

CRR and SLR ratios. This in turn has resulted in the banks increasing their interest

rates, which may be a dampener on the growing real estate market.

Cascading effect of US Sub prime crisis – The sub prime crisis is in the US has had far

reaching effects globally with the real estate industry in various countries being

adversely affected by it. Though India has remained relatively unaffected by it so far

there are concerns of the effects coming to surface in the near future. Many foreign

banks present in the country have encountered huge losses in the sub-prime crisis

which could cause them to cut down on their lending.

Pressure on agricultural land. As more and more land is being used for commercial,

residential and retail purposes, there is increasing pressure to use agricultural land

for non-agri purposes

Figure 3.6: Demand Drivers and Constraints

Demand

Population

Economic Growth

Favourable

Demographics

Increased Earning Potential

Rising Inflation and

Interest Rates

Unrealistic Pricing

Possible Slowdown in

Economic Growth

Highly restrictive

regulatory framework

Steady Urbanization

Increased Nuclearization

Drivers Constraints







3.3 Government Initiatives

The Government has introduced many progressive reform measures to unlock the

potential of the sector, some of which are as follows:

100 per cent FDI allowed in realty projects through the automatic route.

In case of integrated townships, the minimum area to be developed has been brought

down to 25 acres from 100 acres.

Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by increasingly

larger number of states.

Enactment of Special Economic Zones Act.

Minimum capital investment for wholly-owned subsidiaries and joint ventures

stands at US$ 10 million and US$ 5 million, respectively.

Full repatriation of original investment after three years.

51 per cent FDI allowed in single brand retail outlets and 100 per cent in cash and

carry through the automatic route.







4 Ahmedabad Market Assessment

4.1 City Overview

Ahmedabad is the largest city and the commercial capital of the state of Gujarat, which is

the western most state of India. It is also one of the most prosperous states in the country

whose residents are well known for the entrepreneurial skills and purchasing power. It is

also home to the largest investor base in the country contributing 14 % of the total stock

exchanges of India. It is one of the leading industrialized and urbanized states of the

country and has the highest number of SEZs setting up operations there.

Ahmedabad has a population of roughly 5.6 million and is expected to reach 10 million by

2025. In a state which ranks third in the country, around 37%, in terms of urbanization,

Ahmedabad accounts for 80% of the urban population of the state. It has a strong

expatriate connection, with many NRIs hailing from the city, popularly referred to as

NRGs – Non Residential Gujaratis. Ahmedabad is also the only 'AA' graded city of Gujarat

having 30.97 per cent share of total MPV (Market Potential Value) of the state of Gujarat

and ranked seventh highest among 784 cities in India. The total market potential value of

the city is 220.63 with Greater Mumbai, the city with maximum market potential,indexed at 1000. Ahmedabad enjoys an uninterrupted power supply that is a unique

experience among Indian cities including those in tier I

The major industries driving the growth of the city are textiles, chemicals, Pharma,

engineering ancillaries and recently IT/ITES. The big industries based out of Ahmedabad

include Pharma firms such as Zydus Cadila, Torrent Pharma, Core Healthcare; Chemical

firms such as the Nirma Group; the Adani Group, a leading trading and infrastructure

development; textile companies such as Arvind Mills, Reliance Textiles and Ashima

Industries. Ahmedabad is widely known as the denim capital of the country and produces

more than 230 million metres each year.







Ahmedabad has also been making its presence felt on the IT/ITES scene of late. Recently

NASSCOM ranked it as the fifth most competitive city in its survey of the “Super Nine

Indian Destinations” for IT and IT-enabled services.

The city is also the academic epicentre of the state with various world class institutes

bringing students from all over the country to the city. The foremost among them is the

Indian Institute of Management (IIM – A), along with other renowned management

institutes such as the Nirma Institute of Management (NIM), the Mudra Institute of

Communication and Advertising (MICA). The Centre of Environment and Planning

(CEPT), National Institute of Design (NID), the Entrepreneurship Development Institute

(EDI), the Nirma University, the Gujarat University are the other notable institutes of

academic excellence which draws thousands of students towards the city.

Ahmedabad enjoys a very strategic location which has contributed greatly to its growth. It

is located within great proximity of the two ports of Surat and Mundra in Kutch. Surat is

the textile and jewellery hub of the country and is also growing at a scorching pace which

indirectly benefits Ahmedabad too. The proximity to Mumbai, the financial capital of the

country is also of significant importance to Ahmedabad.

4.2 Residential Realty in Ahmedabad

Residential realty in Ahmedabad has been on the upswing for the past 2-3 years now,

after long period of stagnation. Even the recent slight slowdown in the residential sector

across India has not been able to dent the optimistic sentiments regarding Ahmedabad.

Housing in Ahmedabad still offers a 20% to 30% cost benefit to those in the metros and

Tier – II cities. The current demand for residential property in the city is at much more

than the supply which accounts for the 15-20% a year growth in the prices of residential

property in the city. The major reasons for the growth of the residential sector in

Ahmedabad are explained in detail in the following section.







4.2.1 Major Growth Drivers

Ahmedabad – A Mega City: The Government’s announcement of Ahmedabad as a

Mega city and plans to invest in Ahmedabad along with the other six cities from a

corpus of Rs. 5,500 crores has sent the real estate market in Ahmedabad has gone

into over drive. Land prices in Ahmedabad have risen in some areas by as much as

50%, and an average 20% price hike has been seen across most areas of western

Ahmedabad.

The infrastructure in Ahmedabad is in accordance with the size of the city, and is

being constantly upgraded to keep pace with its growth. The Government of

Gujarat has a vision of developing Ahmedabad into a one of the premier cities of

the country through comprehensive infrastructure development and the Gujarat

Infrastructure Development Board’s move to invite private participation in

building roads, ports, power, railways, airports, urban infrastructure, water supply,

information infrastructure and industrial parks is a step in that direction.

The governing bodies of Ahmedabad’s infrastructure and housing namely the

Ahmedabad Municipal Corporation (AMC) and the Ahmedabad Urban

Development Authority (AUDA) have spent Rs 2,000 crore on the development of

the city over the past five years, besides the Rs 412 crore that is being spent on

infrastructure development such as the construction of the ring roads, Ahmedabad

already has 3 ring roads and a fourth is being planned to keep the city congestion

free as it grows bigger. Further proofs of Ahmedabad’s developing infrastructure

are the various projects under progress in the city at present; the 155 Kms arterial

road network for the Rs. 950 crore Bus Rapid Transit System (BRTS), the various

flyovers, the Rs 1,179 crore Sabarmati River Front Development Project.







The proposed projects also boast of an impressive line-up; the Gujarat International

Financial Tech City (GIFT) at Gandhinagar, the Rs 3,200 crore Ahmedabad Metro

Rail Project, the new international airport and modernization of the Ahmedabad

Railway Station. Besides all these projects, another Rs 10,000 crores have been

committed to Ahmedabad for strategic planning under the Jawaharlal Nehru

National Urban Renewal Mission (JNNURM) scheme.

All of these factors coupled with the state government’s whole hearted

endorsement of various kinds of townships such as Technology Park, education

based townships, medical and healthcare townships, tourism-related townships,

logistics Park and residential townships make Ahmedabad an ideal place to reside

in. Many national real estate players have foreseen this prospect and are queuing

up to buy prime land in and around Ahmedabad.

4.3 Major Players in Ahmedabad

Ahmedabad has a large number of local realty players who have done substantial work in

the city. The major local realty players in the city are:

(i) Saumya Constructions

Saumya construction Pvt Ltd. is a well known builder and developer in Ahmedabad. The

major projects of Saumya Construction are in residential and commercial development.

Till now Saumya Construction has undertaken projects summing up to Rs.5000 million.

Saumya Construction was the first to conceive and develop the concept of farm house

type bungalows with rustic ambience and modern facilities, a combination which took off

well in 1980s. Since then Saumya Construction has undertaken several such projects and

there are others as well in the pipeline.

Saumya Construction has also developed some of well known commercial projects like 10

Acres - Ahmedabad City Mall and Abhijeet I-VI. Saumya Construction has never

publicised its projects on media, and their entire promotion of projects is achieved







through word of mouth publicity only. Strategic location, excellent design, quality

construction, clear titles as well as adequate infrastructure facilities and utilities are the

hallmark of each and every project of Saumya. And this makes Saumya to be selective of

the clientele.

Projects:

Saumya’s first project was the Ankur Orchards (1984), a combination of farm

house concept with modern facilities, which was a runaway success and was a

harbinger for others to come. This project was also featured in the international

magazine – Time . Arjun Orchards (1987) followed the suite with greater grandeur.

Amaltas (1991) was the first scheme of residential bungalows near IIM for high

standards of living with excellent design, construction and finish.

Ashima towers (1992) were built giving luxurious residential apartments meant for

the executives in the Vastrapur area.

Akashneem (1993) located in Vastrapur area giving all the amenities, is a luxurious

residential bungalows scheme.

Amrakadamb (1996) is a luxurious residential scheme of bungalows (1996), located

in posh locality of Satellite and developed in a peaceful environment. Exquisitely

designed Club house with Swimming pool, self contained utility infrastructure,

security arrangement, Tree lined roads are the extra facilities that are provided.

Amrashagun (1997) is a luxury bungalows scheme with a basement, ground floor

and a first floor, with all the modern amenities and a built up area of 339 sq yd.

Asopalav (2000) is another residential bungalow scheme executed near Thaltej,

having 330 sq yd built up area comprising a basement, ground floor and a first

floor .

Amrapalash (2005) is a residential bungalow scheme in the peaceful and

aristocratic area of Satellite; the scheme combines elegant designing with quality







construction, earth-quake proof design and offering the best in contemporary

living.

Amrashirish (2006) is also a luxury residential project having 378 sq yd of

construction, having all the modern amenities and constructed with a basement,

ground floor and first floor.

(ii) Sterling Greenwoods Ltd.:

Sterling Greenwoods is one of Ahmedabad’s leading real estate developers. Established in

1965, group is credited with 100% delivery record in it’s over 40 years of operation. It has

established numerous projects for diversified customer groups – apartments, commercial

complexes, bungalows, row-houses, tenaments, residential plots, clubs & resorts, etc.

Some of its successful projects include bungalow plot schemes like Sterling Park, Sunrise

Park, and Vishrut, Greenwoods residential plots, Greenwoods farm plots, Greenwoods

Sarovar I and Greenwoods Farms, Thol.

Projects:

Greenwoods, Thol is a scheme of plots nearby the famous Thol Lake, which is

famous for its scenic beauty and a calm atmosphere away from the hustle bustle of the city. It is just 15 minutes drive from S.G. highway, 10 minutes from 200’ wide

Sardar Patel Ring Road and only 3 Kms from Khatraj Chokdi (Arvind mills) which

makes this heavenly place a well connected site to the city. Plots of around 1200

sq. yds are being offered on first come first basis at a very reasonable price near this

famous bird sanctuary.

(iii) Shivalik Projects:

Shivalik Projects is a prominent player and among the top five in the city in terms of

development of residential townships as well as commercial buildings and complexes. It

has around 19 projects under its name currently in the city. It has been certified as an ISO

9001:2000 company by Bureau Veritas. It envisages expansion in the cities of state and







pan-India starting from Rajkot. Its clientele includes Pallazio, Reebok, Samsung, Axis

(UTI) Bank Ltd, Reliance Retail, Hero Honda, IDBI Bank Ltd, ICFAI,, ICICI Prudential,

Essar Group, D Mart, etc.

Projects:

In the category of luxurious flats and apartments, it has under its hood the

following projects – Sanjay Tower, Sachin Tower, Kirtisagar Apartment, and Yash

Tower.

In the category of luxurious bungalows and other related schemes, it has under its

hood the following projects – Shivalik-Shivam bungalows,, Navnidhi Bungalows,

Shaswat Bungalows, Samarth Bungalows, Shalin Bungalows, Shalin Bungalows,

Swagat bungalows etc.

In the category of showrooms and commercial complexes it has executed the

following projects – Parth, Shivalik Arcade, Shivalik Plaza, Swagat Plaza I & II,

Amar complex, Bhikubhai chambers etc.

(iv) Bakeri Engineering & Infrastructure Ltd.

Bakeri is a major player in making residential complexes in Ahmedabad. It has completed

several projects under over the years like Suvidhinath, Saujanya, Sujal, Sabar, Sakansh,

Sujata, Samet, Sukruti, Sukit, Sulabh, Sumeya, Kherwanagar, Shrinand Nagar-I,Shilpa,

Shrinand Nagar-II Shubh sonal, Suhavan, Kotharinagar, Shri Ram Nagar, Sankalp, Samay,

Samta, Satej, Saket-II, Shrinand Nagar-IV, Saket, Saket-III, Sakal, Shantanu.

Projects:

Bakeri’s current residential complex project is Shrinand Nagar V near Vejalpur (on

Makarba Road) comprising of 980 – 1150 sq ft. two/three bedroom apartments

with parking and lift.

Another project ongoing is on row houses and bungalows named Shukan Villas

and Sulay row houses both on Makarba Road off Shrinand Nagar.

Its forthcoming projects on residential complexes are nearby the aforesaid, named

Shrinand nagar VI, VII and VIII on Makarba Road, Vejalpur.







(v) Agarwal Group of Companies:

Agarwal group of companies was established three decades back and today is among the

reputed Building and Developer Company in Mumbai. Agarwal group is a professionally

managed company with its operations and group companies in Hyderabad, Mumbai andAhmedabad. The company uses high quality construction materials, ensures timely

completion of projects, bears clear titles, and follows transparent documentation. This

makes it a professionally driven company.

Projects:

Kadambari – 1 at Rancharda near Saumya 2 and Tulip, has a farm house concept

and is providing a guest house for the customers, which is fully furnished and

having all the facilities. The location of the residential project is such that there is a

school, a hospital and a dental college nearby. It offers the facilities like club house,

road side and inside plantations, common overhead tank and water supply facility

till the plot. The project is approved by two banks namely ICICI bank and IDBI

bank for providing loans to the customers.

Kanakdhara Villas near the AUDA ring road, Nandol, is a residential villas project.

It is quite near to S.G.Highway (2.5 km) and there are many facilities in the

vicinity like school, shopping centres, bank, temple etc. Common facilities

provided include RCC Road, Street Light, 24 Hours Water, 24 Hours Electricity,

Drainage, Children Park, Senior Citizen Corner, Lush Green Garden with Fountain

& Landscaping and Multifunction Club House. Kanakdhara Villas is also approved

by the above said two banks for providing loans to the customers.

(vi) N G Group (N G Developers Pvt Ltd)

N G Group’s Gallops mall was the first mall in Ahmedabad, which caught great attention.

Others joined the rally and the city is now witnessing more and more malls coming up. N

G Group’s projects include Gallops mall, Ashwavilla, Ashwaraj – II and Hi City.







(vii) Safal Group

Safal Group was established in 1995, focussing on innovations, quality, and closeness to

nature. It has constructed commercial, residential, plotted lands, homes on over 16.28

million sq feet of land in and around Ahmedabad. Its commercial projects total to 14 with1.9 million sq feet, residential projects total up to 13 with 2.16 million sq feet, plotted

development total 6 with 4.60 million sq ft, and the upcoming projects are 4 in number

adding up 7.6 million sq feet.

Their first project was launched in 1995, which was a residential project name

“Sakanksh”. Later they started estate maintenance services for creating industry

differentiation. First of its kind for children centric design residential project was

launched by Safal by the name of Safal Parivesh. Safal group is diverse in executing the

types of projects. Safal has also built a school for the TATA group in Kutch during the

earth quake. It has also constructed a business park for the corporate.

Projects:

The current project of Safal Group is the Safal Vihaan near Eklavya School,

Sanathal, constructed over 1,00,000 sq yds and comprising 91 units. All internal

RCC roads, power back-up for common amenities, Mangalore ties on slopping

roofs, 3 phase power supply, etc.

(viii) Ganesh Housing Corporation Ltd.:

Ganesh Housing Corporation was established four decades back and since then it has been

in the development of residential property only. The group has constructed over 16

million sq feet of residential space till now. The company is an ISO 9001:2000 certified by

Intertek, USA. The total assets owned by the group are about Rs. 33000 million.

Projects:

Ganesh Housing has built several projects namely Ratnam – an apartment of 216

flats with super built-up area of over 1, 96,000 sq feet.







Maniratnam – another residential project of 51 bungalows with construction area

of over 80,000 sq feet, Maniratnam – II – a scheme of 92 bungalows with

construction area of 1,20,000 sq feet

Mahalaya which is a project comprising 70 bungalows covering 1, 38,595 sq feet.

Its current projects include Maple County which encompasses latest concepts in

modern living offering 2100 – 2800 sq feet of super built up area.

Suyojan is 3 storey apartment schemes with 3 BHK homes of 265 sq yard super

built up.

Mahalaya-II is a bungalow scheme that offers 2475 sq feet of super built up and has

all the essential and innovative features.

Shangrila and Shangrila – II a luxurious bungalow scheme of 255 sq yards onwards

of super built up. The last one also provides a big balcony, utility and store room,

specially designed dress areas and large covered parking space. The kitchen has a

concealed gas pipeline, and the bathroom has anti-skid and leak-proof flooring.

Other facilities include hi-tech security system, RO water purification system,

inverter for emergency supply, anti-termite treatment guaranteed for 10 years and

a solar water heater.

(ix) J P Infrastructures Ltd:

JPIL has been in realty business with the name of ISCON group, from residential complex

to shopping malls, from mega malls to townships, IT parks and hotels because of which

they have rich and varied track record as a premier construction and real estate company.

JPIL has completed more than 2.5 million sq ft of residential, office and commercial

development in the state. The company is an ISO 9001:2000 certified company and has

also won an award for the successful and timely completion of Star India Bazaar. They

have properties worth 16 million sq ft in total at prime locations over the country, which

will be used for the construction of multiplexes, new generation malls, offices, hotels, and

IT parks.

Projects:







ISCON group has completed 3 major projects in residential apartment schemes,

namely ISCON Residency in Navrangpura,

ISCON Park on Satellite Road, and

ISCON Park on Gurukul Road in Ahmedabad.

Its current project in residential scheme is ISCON Greens which is coming up at

Bopal-Ghuma road, offering twin bungalows and row houses. The project will

offer the customers various amenities like amphitheatre, table tennis, billiards,

basket ball all in club house. Library, jogging track, swimming pool, multipurpose

community hall and gymnasium are the common facilities that ISCON greens will

offer. The total area is spread over 12.5 acres of rich land.

(x) Maruti Group:

Maruti Group is the outcome of three young inspired entrepreneurs who aspired to

deliver quality construction work which would be based on careful planning, meticulous

time bound execution, keeping in mind the customer requirements and affordability. The

projects undertaken by the company are situated in highly post and developed areas of

Ahmedabad like Satellite, Shivranjani Junction, Prahladnagar, Bodakdev, Science City,

Koba and Gurukul.

Projects:

Maruti Hills, located in Prahladnagar, Satellite, is a scheme of ten individual

bungalows with decorative main gate and full security systems. Maurya bungalows

are similar bungalow scheme residential units with a bore well for anytime water

supply, intercom facility in every bungalow and a generator facility for power

backup. The latter one is located in Satyam Complex, Science City main road.

The upcoming project of Maruti Group is a 3 BHL luxurious flat scheme apartment

at Motera, Ahmedabad.







(xi) Navratna Group:

Gulmohar bungalows, Aniket building, Ankur and Arjun farm houses, Amaltas

bungalows, akashneem bungalows and Upvan apartments are the ones that are built by

the Navratna Group via initially undertaking contracts and by which the group startedoperations in Ahmedabad. Thereafter it ventured into developing its own residential

schemes by launching Kaivalya comprising 16 luxurious flats. This was followed by

Kadamb, Kanishka, Kaushambi, Karma, and Kaivanna.

Projects:

Kalhaar is the recent project of Navratna Group which is a scheme of 181

bungalows near Thaltej area. It spreads over 250,000 sq yards and the work is

already in progress. 50 bungalows of it have already been booked and this gives an

approximation of the worth of project to be 4500 lakh rupees.

(xii) Shaligram Buildcon Pvt. Ltd.:

Shaligram Buildcon Pvt. Ltd has completed years of operation in constructing luxurious

residential bungalows and other residential properties. It has almost 10000 satisfied

customers in the market. Shaligram too has pursued the policy of no media publicity and

promotes each project by invitation only. Shaligram has been selective about the clienteleas they prohibit bringing and eating of non-vegetarian items inside the premises of all

their schemes. They are developing residential schemes of independent luxurious and

twin bungalows in the areas of Thaltej and New Bopal. Shaligram-I and Shaligram-II in

Thaltej and Shyam Villa-I and Shyam Villa-II in Bopal are the examples of fastest booking

record. Currently there are no ongoing projects of Shaligram Buildcon.

(xiii)

Shree Ami Infrastructure:Shree Ami Infrastructure was established in the early 1960s. Its name is taken amongst the

first organised builders of modern Ahmedabad like first high rise building – Royal

Apartments (Khanpur), introduction of first twin bungalow concept in the city by







Vaibhav Bungalows (Bhuyandev). The company has expertise in real estate for over 45

years and has completed more than 50 projects in 21 areas of the city.

Projects:

Vaibhav Homes at Adalaj was the pioneering project which heralded the concept

of twin bungalows. It’s in proximity to the capital city – Gandhinagar and the 200

ft Sardar Patel Ring Road. It offers the two types of units – 12 units of 3 BHK and

65 units of 4 BHK with a total development area of 2, 70,000 sq ft. Some of the

features include intercom facility, multiple gates for easy access, club house, video

security system, and RO system.

(xiv)

Siddhi Developers:Siddhi Developers began its operations in 1990. It started with Ganesh Park, Aarohi Villa,

Aarohi Vihar, and Aarohi homes and its recent offerings are Aarohi residency, Aarohi

Royal, Shree Kabir Enclave and Aarohi Greens at Chekala on Sanand-Thor road. The

company has developed over 5, 00,000 sq yards of land and constructed properties which

include residential bungalows and plots and commercial complexes.

Projects:

Aarohi Greens is situated at the Chekala village on Sanand-Thor road, which offers

plots having areas starting from 520 sq yards going up to more than 5000 sq yards.

Aarohi Residency is situated approximately 4.5 km from Iskon temple and nearby

by Aarohi homes. The scheme offers plot areas starting from approximately 170 sq

yards. All amenities like schools, shops, petrol pump, hospital, stationary,

vegetables etc are in the vicinity of the township.

Aarohi Royale is a similar kind of residential project offering similar kind of units

as Aarohi Residency.

(xv) Sun Builders Pvt Ltd.

Sun Builders is a 26 year old company with more than 27 successful projects under its

name. It has completed several residential projects since 1994. The recent projects are Sun







Divine-2, Sun-Divine 3, Surya – Shreeji, Sun House 1, and Suryarang Cottages and

Sunspace Apartments.

Projects:

Sun Divine 2 is a scheme of 3 and 4 BHK low rise high end apartments located

behind Star India Bazaar, Satellite. It uses innovative water harvesting and

recycling technology. The scheme has 40 units and there are 2 units per floor.

Sun Divine 3 is also in the same vicinity and is offering 3 BHK high end

apartments n a high rise building. This also has employed innovative water

harvesting and recycling technology.

Surya Shreeji is a scheme of tenaments, twin bungalows and row houses, located

near Bopal village.

Sun House 1 is located 1 km away from Vijay Cross roads, and offers 15 fully

furnished service apartments.

(xvi) Vishwanath Group:

Vishwanath Group began as Vishwanath constructions and over the years has executed

projects with quality construction and use of state-of-the-art technology. Sharnam offers

daily amenities to the moderate income group; Ishan caters to the high income group and

Shaligram to the premium segment. The lifestyle and standard of living separates all the

three projects, but the quality of construction remains the same of all the three.

Projects:

Sharnam County is located on the landscapes of South Bopal. It is 10 minutes away

from S.G. Highway and 15 min from Prahladnagar. It offers Twin and Row

bungalows.

Sharnam 12 provides quality and improved standard of living at an affordable

price. It is offering 2 and 3 BHK plans.







(xvii) Shree Parshwanath Corporation:

Shree Parshwanath Corporation has been in the realty business since past 40 years and has

completed 120 projects, with 1, 07, 00,000 sq ft of built up spaces and 2,60,00,000 sq ft of

land development. Its projects include integrated townships, utilitarian homes, and giantinfrastructure. Parshwanath has completed residential projects like New Amar Park and

Parshwanath Raj Villas.

Projects:

Parshwanath Metrocity, located near New C.G. Road in Chandkheda is in the

vicinity of the international cricket stadium and engineering college.

Their upcoming projects are Parshwanath Mega City, Parshwanath Homes, and

Parshwanath Smruti.

Table 4.1: On going major residential projects in Ahmedabad

Builder Current Project Project typeScheme

typesArea

Saumya

Construction Pvt

Ltd

Sterling

Greenwoods Ltd

Greenwoods,

Thol

Residential

Property

Plot Schemeapprox 1200

sq yardsShivalik Projects

Shrinand Nagar

V, Vejalpur

Residential

complex 2-3 BHK

980-1150 sq

ft

Shukan Villas,

Makarba Road

Luxurious

residencyVillas

Bakeri Engineering

& Infrastructure

Ltd. Sulay Row

houses, Makarba

Road

Luxurious

residencyRow houses

Kadambari - 1 Residential Units Farm HouseAgarwal Group of

CompaniesKanakdhara Residential Units Villas

N G Group

Safal GroupSafal Vihaan,

SanathalResidential Units

91 units

over 1 Lakh

sq ft







Maple CountyLuxurious

residency

2100 - 2800

sq ft / unit

Suyojan Residential Appt 3 BHK

265 sq yd

super built-

up

Mahalaya - II Bungalow scheme

2475 sq ft

super built-

up

Ganesh HousingCorp Ltd

Shangrila &

Shangrila - II

Luxurious

residency

from 255 sq

yards super

built-up

J P Infrastructure

Projects

ISCON Greens,

Bopal Ghuma

road

Twin Bungalow &

Row Houses

total area

12.5 acres

Maruti Hills,

Prahladnagar Bungalow scheme

Maurya, Science

city main roadBungalow schemeMaruti Group

Name Unknown,

MoteraLuxurious Appt 3 BHK

Navratna Group Kalhaar, Thaltej Bungalow scheme

181 units

over 2.5

lakh sq

yards

Shaligram-I and

Shaligram-II,

Thaltej

luxurious and twinbungalows

Shaligram Buildcon

Pvt. Ltd. Shyam Villa-I

and Shyam Villa-

II, Bopal

luxurious and twin

bungalows

Shree Ami

Infrastructure

Aarohi Greens,

ChekalaResidential Plots

520 sq yards

- 5000 sq

yards

AarohiResidency

Residentialtownship

170 sq yardsSiddhi Developers

Aarohi Royale Bungalow scheme

Sun Divine 2low rise high end

appt3-4 BHK

Sun Divine 3 high rise appt 3 BHK

Sun Builders Pvt

ltd

Surya Shreeji Tenements







Sun House 1 Appt 15 flats

Sharnam CountyTwin and Row

bungalowsVishwanath Group

Sharnam 12 2 - 3 BHK

Parshwanath

Metrocity

Shree Parshwanath

Corporation

upcoming

projects:

Parshwanath

Mega City,

Parshwanath

Homes,

Parshwanath

Smruti

Satyam Developers SentossaGreenland

Luxurious

residency / farm

house

11 lakh sqfeet

4.4 Luxury Homes

Luxury Homes refer to the segment of real estate which consists of sprawling plots, large

bungalows, villas, penthouses, condominiums etc and state of the art amenities. These are

generally the second homes of the buyers and are ideally weekend homes far way from

the city. The target segments for premium housing are generally high Net worth

individuals and non residential individuals who have surfeit balances to invest. These

segments are relatively unaffected by the interest rate regimes as they do need to procure

loans to make their payments, thus the demand in this segment is more or less consistent.

The premium housing segment though only 10% of the housing segment, it has been

growing at a rapid CAGR of 20% -30%. Inspite of the recent slowdown in the overall

growth of the real estate industry that has taken place on the back of rising inflation

concerns, lower than expected GDP figure and the volatile and weak capitals, the market

for luxury home has continued in its growth path and is estimated to be worth around

Rs.2,000 crore.







The luxury homes segment in Ahmedabad too has been consistently on the rise with most

of the local players offering a variety of schemes in the segment. In particular the farm

house and high end township schemes are highly in vogue with the elite class in the city.

The township model has particularly received a boost due to the Favourable township

policy and ambitious plans by regional and national real-estate developers. The new

township policy announced by the state has made the land acquisition process easy its

talks about providing trunk infrastructure, developing green channel for fast track

clearance, rating of developers and a lot more. The government has also stressed on rating

of developers, which will examine the developer’s track record, organisational risk and

financial risk. This rating will decide the benefits that will be offered in terms of support

and flexibility in the township.

The major township projects coming up in the city are

1. The IL&FS and GUDC joint venture.

2. The Adani group’s 500 acres township Shantigram on the outskirts of the city with

an investment of over Rs 2500 crore.

3. Sahara Group’s Sahara city on S.G Highway near Nirma University.

4. Savvy Infrastructure’s township project at its 700-acre land around Nalsarovar.

5. Ganesh Housing Corporation Limited’s township at Godavi with an investment of

around Rs 2000 crore.

6. Siddhi Developer’s 170 sq. yard Aarohi Residency

7.

Sterling Greenwods residential township at Thol.

It is evident from the number of luxurious townships under progress in the city that there

is a huge demand for them amongst the prosperous residents of Ahmedabad. Many Non

Residential Gujaratis and Non Gujarati Top Executive of the various organizations in India

also form a substantial part of the demand generators.







5 Emerald Park

The project consists of 6 different types of units of

1000 sq. yards, 2500 sq. yards and 5000 sq. yards. The

project is a reflection of the most contemporary and

comforting lifestyle. It offers a total of 328 farm

houses in different categories.

In addition to offering the most luxurious farm houses the project offers all the desired

and deserved amenities like Garden in each plot, Lighting, 24 hours professional security

agency, Children Park, Jogging Track, Ponds / Fountains, Power back up facility for street

lights & 3 club houses, which include facilities like Coffee Shop ,Health Club, Volley Ball

Court, Restaurant, Swimming Pool, Artificial Lake, Home Theatre, Tennis Court, Lake

Restaurant, Library, Card Room, Basket Ball Court, Discotheque, Table Tennis etc.

Figure 5.1: Emerald Park Location







It is located on the outskirts of the city, behind the Thor Lake on the Sanand - Kadi

Highway, where another residential township Sterling Greenwoods is also being

constructed. The location is 30 minutes from the city and provides an ideal gateway from

the city life.

The target segment for the project are Upper and Elite Class who have surplus income to

invest and are desirous of a weekend get away or farm house to relax at. This segment is in

abundance in the city of Ahmedabad and bookings for the project have already begun.







6 Financial Aspects

6.1 Introduction

This chapter deals with the economic viability of the proposed project. A spreadsheet model has

been developed for financial analysis with a view to assess impact of changes in project parameters

like project cost, input costs and other parameters.

6.2 Basis and Assumptions

The important basis & assumptions, which are considered for the analysis, are enlisted below:

6.2.1 Sales Distribution Pattern

Table 6.1: Sales distribution Pattern of Units

Platinum Gold Silver

Units to be constructed over 3 Years 100% 100% 50%

Table 6.2: Sales Distribution Pattern of Plots

Year 2007-08 2008-09 2009-10

Months

Apr-

June July-Sept

Oct -

Dec

Jan-

Mar

Apr-

June

July-

Sept

Oct -

Dec

Jan-

Mar

Apr-

June July-Sept

Oct -

Dec Jan-Mar

Distribution 33.34% 33.33% 33.33%

6.3 Project Cost

The Financial requirement for the proposed project is estimated in this section. It primarily looks

into the Capital Expenditure to be incurred for the project. Capex estimates will include estimates

for its various components such as land and land development, common area construction work,

utilities, other fixed assets, preliminary and pre-operative expenses and finally the provision of

Year 2008-09 2009-10 2010-11

Distribution

Pattern Platinum Gold Silver Platinum Gold Silver Platinum Gold Silver

proportion of

total

respective

units 33.33% 33.33% 25.00% 33.33% 33.33% 25.00% 33.33% 33.33% 0.00%

Corresponding

number of

units 15.33 41.00 39.75 15.33 41.00 39.75 15.33 41.00 0.00

minimum

land area 275.00 175.00 155.00 275.00 175.00 155.00 275.00 175.00 155.00







contingency for the proposed project to cover modification, alteration as well as unforeseen

expenses for various project components.

On the basis of fixed cost estimates the Block capital cost of project will be worked out. This will

be total cost of project, and to meet this cost, means of finance will also be estimated. Means of

finance will include promoters’ contribution in terms of equity, internal accruals and unsecured

deposits As there is no debt or term loan to be taken to finance the project, it will be done from

the equity poured in by the promoters and the booking advances paid by the members of the

project.

6.3.1 Land and Land Development

Radhe has purchased 752223 sq. yard of land on the Kadi – Sanand highway, behind the

Thor Lake on the outskirts of Ahmedabad.

Table 6.3: Land and Land Development Cost Estimates

Sr. No Description Cost In Rs Crores

1Cost of Land (752223 sq. Yard @ 100 Rs/sq.

yard) 7.52

2 Cost of Land Development 38.47

Total Estimated Cost 45.99

The land development cost includes the cost of construction of common facilities such as

roads, compound walls, landscaping as well the clubhouses. The civil cost of utilities such

as borewell and electricity has also been taken into account under the same head.

6.3.2 Utilities

Radhe plans to set up 3 D.G. Sets of 50 KV each to fulfil it’s power requirements during the

construction phase of the project, the residents of the project will be obtain power for their

respective plots from GEB at their own cost and thus is not a relevant component in utilities cost

of the project.







Table 6.4: Utilities

Sr. No Utilities Cost Quantity Rate/Unit Amount

4 DG sets 3 500000 Per each of 50 KV 0.15

5 HVAC 0.50

Total 0.65

6.3.3 Preliminary and Pre – Operative Expenses

There are several expenses associated with starting of project, which is clubbed under preliminary

expenses. There are some expenses which are incurred prior to start of commercial production in

the plant and these are classified under pre operative expenses. Preliminary and pre operative

expenses are taken together in the cost estimates. Total estimate for preliminary and preoperative

expenses is Rs. 8.08 Crores.

Table 6.5: Preliminary & Pre-operative Expenses

Sr. No Preliminary Expenses

Percentage

Per Sq. Yard Rs Per Sq. Yd Amount

3 Overhead Expenses 0.1 51.141 3.85

4 Office Expenses 0.05 25.5705 1.92

5 Marketing Expenses 0.02 10.2282 0.77

6

Architect/ Structural &

Landscape 0.04 20.4564 1.54

Total 8.08

6.3.4 Provisions for Contingences

NTIL will have to make provisions of contingencies which will be appropriated in the respective

heads where there is a cost escalation and requirement of contingency. Due to such appropriation

of contingencies there is also increase in respective cost estimates in fixed assets. The total

provision of contingencies to be made for the project is Rs.4.41 Crores.

Table 6.6: Provisions for Contingencies

Sr. NoDescription Amount in Crores

1 Land and Land Development Cost 3.85

2 Other Costs 0.57

Total Contingency 4.41







6.3.5 Summary of Fixed Capital Cost

In the previous paragraphs cost estimates for main fixed asset heads have been described. To give

an overview of the project investment, a summary of the Project Cost is given in the following

table

Table 6.7: Summary of Fixed Cost Estimates

Sr. No Description Rs. Crores

1 Land Cost 7.52

2 Land Development Cost 38.47

3 Plant and Machinery 0.00

4 Furniture, Fixtures & Clubhouse Equipment 5.00

5 Common Utilities 0.65

6 Preliminary expenses 8.08

7 Contingency 4.41

Total Project cost 64.13

As observed from the above table total fixed cost estimates for the proposed project is Rs. 64.13

Crores. Preliminary and preoperative expenses and contingencies are also included here, since

they would be appropriated to the fixed costs.

6.4 Sources of Finance

Proposed sources of finance for the project are summarised in following table

Table 6.8: Means of Finance

Sr. No Particulars Rs. Crores

1 Booking Advances 20.31

2 Equity 43.82

Total Means of finance 64.13

6.5 Project Profitability

The various indicators of Project Feasibility are given in the following tables attached at the end of

the Report:







7 Strategic Analysis

7.1 SWOT

Strengths

• Location

• Western style club houses and amenities, lush green premises and surroundings

• Close to industries

• Scheme of Luxurious farm houses

• Proximity to Nal Sarovar and holiday spots

• Demand for holiday homes• Well established and prominent player in realty

• Availability of cheap land

• Equity financing only

Weakness

• Municipal drinking water not available

• Close to industries

• Limited public transportation

Opportunities

• Industrial development around the city

• Growing NRI investments in the country and particularly in Ahmedabad.

• Growing Elite Class

• Growth in realty sector and particularly housing

Threats

• Sterling Greenwoods a similar kind of city offering is coming up in the same area

• Other townships and schemes from Ahmedabad competitors

• Adverse effects of fluctuations on the cost of raw materials







7.2 Five Forces Model







8 Conclusions and Recommendations

8.1 Conclusions

8.2 Recommendations







Profit and Loss Statement

Year

Particulars 2007-

08

2008-

09

2009-

10

2010-

11

Sales / Revenues

Plots 0.00 27.08 33.85 0.00

Unit

Platinum 0.00 4.22 4.22 4.22

Gold 0.00 7.18 7.18 7.18

Silver 0.00 6.16 6.16 0.00

Total Construction Revenue 0.00 17.55 17.55 11.39

Interest on Maintainance Deposit 0.15 0.31 0.93 1.43

Booking Advance 13.54 6.77

Total Revenue 13.69 51.71 52.33 12.82

Expenses

Write-Off 8.02 32.07 24.05 0.00

Construction Cost all inclusive 0.00 14.04 14.04 9.11

Overheads 0.14 0.52 0.52 0.13

Total Cost of Construction 8.15 46.63 38.62 9.24

Gross Profit 5.540 5.089 13.712 3.578

Net Profit Before Taxes 5.54 5.09 13.71 3.58

Tax on Profit 1.88 1.73 4.66 1.22

Profit After Tax 3.66 3.36 9.05 2.36

Net Cash Accruals 3.66 3.36 9.05 2.36







Cash Flow Statement

Years of OperationParticulars

2007-08 2008-09 2009-10 2010-11Sources of Funds :

Promoter's Contribution 10.00 10.00 23.82 0.00

Maintainance Deposits 3.76 7.52 5.64 0.00

Written off 8.02 32.07 24.05 0.00

Net Profit Before Tax & Interest 5.54 5.09 13.71 3.58

Sub- Total (A) 27.32 54.68 67.22 3.58

Disposition of Funds :

Capital Expenditure 9.34 38.35 16.44 0.00

Transfer of Maintainance Deposit 0.00 0.00 0.00 16.93

Income-Tax 1.88 1.73 4.66 1.22

Sub-Total (B) 11.22 40.08 21.10 18.14

A-B 16.09 14.60 46.12 -14.56

Opening Cash Balance 0.00 16.09 30.69 76.81

Closing Cash Balance 16.09 30.69 76.81 62.25






Balance Sheet

Year Particulars

2007-08 2008-09 2009-10 2010-11

Liabilities

Share Capital 10.00 20.00 43.82 43.82

Reserves 3.66 7.02 16.07 18.43

Long term loan 0.00 0.00 0.00 0.00

Maintenance Deposit 3.76 11.28 16.93 0.00

Total Liabilities 17.42 38.30 76.81 62.25

Assets

Capital Work In Progress 9.34 39.68 24.05 0.00

Less: written off 8.02 32.07 24.05 0.00

Net fixed assets 1.33 7.61 0.00 0.00

Debtors and other assets

Cash and Bank balance 16.09 30.69 76.81 62.25

Total Assets 17.42 38.30 76.81 62.25

emerald park

Documents