final tev study - turf view

Executive Summary

Techno - Economic Vaibility Study for

Residential project located in Mahalaxmi

Mumbai

Prepared on behalf of –

DB Realty Limited

March 2013

Techno Economic Viability Study 1 Prepared on behalf of D B Realty Limited March 2013

TABLE OF CONTENTS

1. Instructions .................................................................................................................. 2

2. Currency & Measurement ........................................................................................... 2

3. Date of Inspection & Study ......................................................................................... 2

4. Methodology of Cash Flow Analysis ......................................................................... 2

5. Legal Characteristics .................................................................................................. 3

6. Assumptions ................................................................................................................ 3

7. TEV study of the Subject Property ............................................................................ 5

8. TEV Study Summary ................................................................................................... 6

9. Disclaimer ..................................................................................................................... 7

Annexure I ................................................................................................................................ 8


1. Instructions

On the instructions received from D B Realty Limited we have been appointed to conduct

Techno – Economic Viability study for the proposed residential development “Turf View’

spread over 5.7 acres of land parcel located in Mahalaxmi, Mumbai.

This executive summary is to be used in conjunction with the TEV study to which it forms a

part and is subject to the assumptions, caveats and bases of study stated herein and should

not be read in isolation.

The necessary information, estimates and opinions that have been expressed in this report

have been obtained from the sources that we consider reliable and believe to be true and

correct.

2. Currency & Measurement

The Currency used in the report for the study of the subject property is in Indian Rupees

(INR). This is the currency normally used for property transactions in India. All measurements

are in sq. ft. (1 sq.mt. = 10.764 sq. ft.) as this is the prevailing market practice in India.

3. Date of Inspection & Study

The date of inspection for the subject properties has been 22nd

March 2013 and the same has

been considered as the date of study.

4. Methodology of Cash Flow Analysis

There are three approaches used in real estate property:

i) Market Approach – Comparison Method

ii) Income Approach – Income Capitalisation Method, Discounted Cash Flow

Method

iii) Cost Approach – Land & Building Method, Summation Method

For the purpose of this study we have adopted the following method:

Discounted Cash Flow (DCF) Method – Income Approach

DCF method/analysis is a financial modelling technique based on explicit assumptions

regarding the prospective income arising out of the development to be carried out on the

subject land parcel. In case of a valuation of a large land parcel like the subject property,

where the development potential is realized over a period of time (i.e. time value of money

comes into the picture) and also where there are no or few immediate similar properties (i.e.

comparables) available for comparison, DCF method considering relevant potential

developments of the project is used.


The DCF method requires the entire development cash flows to be drawn up and

assumptions made about the market performance over the entire project time frame. This

requires an in-depth understanding of

- the demand / supply dynamics,

- transaction values and quantum,

- construction costs, quality and infrastructure requirements/constraints,

- time frame of the project,

- profit / returns,

and other analysis. All of this market data has to be compiled (as relevant to the subject site)

in order to create a financial model that captures all market drivers and value impacting

parameters.

5. Legal Characteristics

We have not gone through any legal documents. It is recommended that they be subjected to

formal legal inspection to ensure that there are no elements and restriction or charges

contained that are likely to have detrimental effect upon the study. Based on discussions with

the client, it was revealed that legal due diligence of all the properties has been carried out by

the legal experts.

6. Assumptions

We assume that information provided by company or its representative for this study for

all relevant projects is true and accurate. It includes details of measurements of land and

built up area, etc.

We have not gone through the legal aspects like documents of title deed, lease deed,

revenue records, court matters (if any), and documentation like joint development with

other companies. We also assume for this study that the title and development rights of

all the properties lies with the Company and is clear, marketable and free of all

encumbrances, restrictions, easements or charges which may have detrimental effect

upon the value of the property. It is also assumed that company has paid all property

related taxes.

We have neither carried out any soil testing nor structural surveys nor are we experts in

the field of structural survey. Therefore, we do not give any assurance that properties are

free from structural defect. If any investigation identifies any structural defect in the

property our report may require revision. Neither are we the experts in the town planning

to factor the town planning aspects in the project. Sewers, main services and the roads

giving access to the property have been provided.


We assumed that all the constructed structures and proposed construction is/will be free

from harmful materials and/or techniques. Our study are on the basis that no such

materials or techniques have been used.

Unless advised by the company or representative of the company, we do not normally

make allowance for any liability already incurred, but not yet discharged, in respect of

balance land cost, completed works, or obligations in favour of contractors,

subcontractors or any other professional.

We have assumed that demand, supply, pricing, fiscal and non-fiscal policies of

Government, taste of public will remain same as on date of study over the period of time

of development. All of these factors are in strong relation with the value of property. Any

radical change in any of the factor may affect value at large.

Unless advised by the company or representative of the company, no allowance is made

for any expense of realization or for taxation, which may arise in the event of a disposal.

The property is considered as if free and clear of all mortgages or other charges that may

be secured thereon.

For the purpose of this report we have assumed that the property is not subject to

environmental contamination. However, as we are not experts in this field, we

recommend that an appropriate consultant may be engaged to confirm our assumptions.

If the subsequent investigation identifies any environmental contamination on the site,

our report may require revision.


7. TEV study of the Subject Property

We have been appointed to conduct TEV study for the proposed residential development

“Turf View” located in Mahalaxmi, Mumbai.

Area Statement

Area of the properties is considered as provided by the client and have been tabulated below:

Area Statement

Plot Area Sq. mt. 19,158

FSI Permissible

4.00

FSI Permissible Sq. mt.

76,634

Comm tower area to Evergreen Indl estate Sq. mt. 8,604

Comm tower area to be given to Armstrong Sq. mt. 721

Residential area to be given to Armstrong Sq. mt. 1,706

Residential area to be given to Jony Estate Sq. mt.

10,000

Area for free sale for Developer Sq. mt.

55,603

Land Area under 33 (24) Sq. mt. 3,921

BUA with FSI 4 Sq. mt.

15,685.76

Setbacks Sq. mt. 506

Net Plot Area Sq. mt.

3,333

Base FSI permissible @ 1.33 FSI Sq. mt. 5105.94

Incentive FSI under 33(24) Sq. mt.

10,579.82

Comm tower area to Turf Estate building owners Sq. mt. 5909.46

Area for free sale for Developer Sq. mt. 9776.30

Free sale area for Developer for Tower 1,2&3 Sq. mt. 65379.04

Fungible FSI Sq. mt. 22882.66

Total Sale area Sq. mt. 88261.71

Saleable Area Sq. Ft.

1,475,933

Tower A Sq. Ft.

491,978

Tower B Sq. Ft.

491,978

Tower C Sq. Ft.

491,978

Components Built-up Area Loading Saleable Area Construction Area

Sq. ft.

Sq. ft. Sq. ft.

Residential 950,049 55% 1,475,933 1,900,098

Parking Area -

- 570,029


Cash Flow Assumptions & Workings

Cash Flow assumptions and summary workings are attached at Annexure I.

8. TEV Study Summary

On the basis of assumptions, methodology of study and on the belief that there are no

onerous restrictions, covenants or unusual outgoings, we are of the opinion that the fair

market value of the subject property is ` 10,261 Million (Indian Rupees Ten Thousand Two

Hundred Sixty One Million Only) is fair and reasonable.


9. Disclaimer

“The statements, information and opinions expressed or provided in this publication are

intended only as a guide to some of the important considerations that relate to property

investment. Although we believe they are correct and not misleading, with every effort having

been made to ensure that they are free from error, they should not be taken to represent, nor

are they intended to represent, investment advice or specific proposals, which must always

be reviewed in isolation due to the degree of uniqueness that will attach thereto”.

Neither Knight Frank nor any persons involved in the preparations of this publication give any

warranties as to the contents nor accept any contractual, tortuous or other form of liability for

any consequences, loss or damage which may arise as a result of any person acting upon or

using the statements, information or opinions in the publication. This publication is confidential

to the addressee and is not to be the subject of communication or reproduction wholly or in

part.”

Knight Frank (India) Private Limited

Paville House,

Near Twin Towers,

Off Veer Savarkar Marg,

Prabhadevi,

Mumbai – 400025

www.knightfrank.co.in

http://www.knightfrank.co.in/


Annexure I

Assumptions:

Assumptions

Cost Assumptions

1 Land Development Cost (INR/sq. ft.) (100)

2 Cost of Construction (COC) (INR/sq. ft.)

Residential (7,000)

Yearly growth in construction cost 7.5%

4 Cost of Construction for Car Park (INR/sq. ft.) (1,500)

Yearly growth in construction cost 7.5%

5 Other Costs

Marketing & Publicity (% of Revenues) 2.0%

Consultancy fees (% of COC) 1.0%

Administration Cost (% of COC) 1.0%

Overheads (% of COC) 1.0%

Contingency (% of COC) 5.0%

6 Brokerage

Sale through brokers 50%

for Sale (% of Revenue) 1.0%

7 Discount Rate 20.4%

Revenue Assumptions

1 Residential 38,383

2 Escalation in revenue

Residential 7.5%


Cash Outflow

Time Line Yr. 0 Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7

Year Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Construction

Development Schedule (%)

Land Development 0% 10% 40% 30% 20%

Residential

Tower A 10% 40% 30% 20%

Tower B 10% 40% 30% 20%

Tower C 10% 40% 30% 20%

Podium Car Parking 0% 60% 40% 0% 0% 0% 0% 0%

Constructed Area (sq. ft.)

Land Development

-

2,308

9,232

6,924

4,616

-

-

-

Residential

Tower A

-

63,337

253,346

190,010

126,673

-

-

-

Tower B

-

-

63,337

253,346

190,010

126,673

-

-

Tower C

-

-

-

63,337

253,346

190,010

126,673

-

Car Park

-

342,018

228,012

-

-

-

-

-

COC (INR/sq. ft.)

Land Development (100) (108) (116) (124) (134) (144) (154) (166)

Residential (7,000) (7,525) (8,089) (8,696) (9,348) (10,049) (10,803) (11,613)

Car Park (1,500) (1,613) (1,733) (1,863) (2,003) (2,153) (2,315) (2,489)

COC (INR mn)

Land Development 0 (0) (1) (1) (1) 0 0 0

Residential

Tower A 0 (477) (2,049) (1,652) (1,184) 0 0 0

Tower B 0 0 (512) (2,203) (1,776) (1,273) 0 0

Tower C 0 0 0 (551) (2,368) (1,909) (1,368) 0

Car Park - (552) (395) - - - - -

Total Construction Cost - (1,028) (2,958) (4,407) (5,329) (3,182) (1,368)

-

Redevelopment Cost

Construction Cost of MHADA Building (1,150) (500) (1,000) (2,865) (2,865)

Compensation to Tenants (1,440)

Construction Cost of MCGM PPL (285) (285)

MCGM Fee (2,310)

Other Costs (INR mn)

Consultancy fees (INR mn)

- (10) (30) (44) (53) (32) (14)

-

Administration Cost (INR mn)

- (10) (30) (44) (53) (32) (14)

-

Overheads (INR mn)

- (10) (30) (44) (53) (32) (14)

-

Contingency (INR mn)

- (51) (148) (220) (266) (159) (68)

-

Brokerage for sale (22) (19) (30) (57) (82) (113) 0

-

Marketing & Publicity (88) (76) (122) (229) (328) (454) 0

Total Cost (in INR mn) (5,011) (1,990) (4,632) (7,910) (9,031) (4,004) (1,478) 0


Cash Inflow:



Marketing Schedule (%)

Residential

Tower A 38% 20% 20% 22%

Tower B 10% 20% 30% 40%

Tower C 10% 40% 50%

Marketing Schedule (sq. ft.)

-

-

-

-

- -

- -

Tower A

185,000

98,396

98,396

110,187

- -

- -

Tower B

-

-

49,198

98,396

147,593

196,791

- -

Tower C

-

-

-

49,198

196,791

245,989

- -

Capital Rate (INR/sq. ft.)

Residential

23,847

38,383

41,261

44,356

47,683

51,259

55,103

59,236

Sales Revenue (INR Mn)

Residential

Tower A 4,412 3,777 4,060 4,887 - - - -

Tower B - - 2,030 4,364 7,038 0,087.26 - -

Tower C - - - 2,182 9,383 2,609.07

Total Sales Revenue 4,412 3,777 6,090 11,434 16,421 22,696 - -

Payment Schedule for Residential

Tower A 20% 9% 36% 24% 11%

Tower B 20% 9% 36% 24% 11%

Tower C 20% 33% 36% 11%

Installments for sale in

Tower A

Mar-13 882 397 1,588 1,059 485 - - -

Mar-14 1,095 1,360 906 415 - - -

Mar-15 2,639 974 447 - - -

Mar-16 4,350 538 - - -

882 1,492 5,587 7,289 1,885 - - -

Revenue from Tower A

Tower B

Mar-15 - - 406 183 731 487 223 -

Mar-16 1,266 1,571 1,047 480 -

Mar-17 4,574 1,689 774 -

Mar-18 8,978 1,110 -

- - 406 1,448 6,876 12,201 2,587 -

Revenue from Tower B

Tower C

Mar-16 436 720 786 240 -

Mar-17 4,973 3,378 1,032 -

Mar-18 11,222 1,387 -

Revenue from Tower C - - - 436 5,693 15,386 2,659 -

Total Revenue (INR Mn) 882 1,492 5,993 9,174 14,455 27,587 5,246 -


Net Present Value



Cost (INR Mn) (5,011) (1,990) (4,632) (7,910) (9,031) (4,004) (1,478) 0

Revenues (INR Mn) 882 1,492 5,993 9,174 14,455 27,587 5,246 0

Net Cash Flow (INR Mn) (4,128) (497) 1,361 1,264 5,424 23,583 3,768 0

Discount Rate % 20.4%

NPV (INR Mn) 10,261

final tev study - turf view

Documents

date of study

bases of study

date of inspection study

tev study summary

discounted cash flow

summation method

following method

subject property