Business Plan Analysis and Investor Presentation for Hotel

Resorts Limited

5-Star Category Hotel in Ludhiana

FINCATALYST

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Final Report – 02nd

January, 2014


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January, 2014

EXECUTIVE SUMMARY ....................................................................................................................... 4

MAIN REPORT .................................................................................................................................. 15

SCOPE OF WORK .............................................................................................................................. 16

DATE OF INSPECTION& SITE VISIT ............................................................................................................... 16

TEAM OF CONSULTANTS ........................................................................................................................... 17

METHODOLOGY ............................................................................................................................... 18

PROJECT OVERVIEW......................................................................................................................... 19

COMPANY BACKGROUND ................................................................................................................ 23

[CLIENT NAME]................................................................................................................................... 23

SHARE HOLDING PATTERN......................................................................................................................... 23

BRIEF PROFILE OF PROMOTERS .................................................................................................................. 24

TECHNICAL CONSULTANTS& MANAGEMENT TIE UP ....................................................................................... 24

Management and Operation Tie Up ............................................................................................... 24

Other Consultants ........................................................................................................................... 25

PROJECT DETAILS ............................................................................................................................. 27

LAND DETAILS ......................................................................................................................................... 27

PROJECT LOCATION .................................................................................................................................. 27

PROJECT CONFIGURATION ......................................................................................................................... 29

TECHNICAL DETAILS AND ASSESSMENT......................................................................................................... 29

PROJECT AREA STATEMENT ....................................................................................................................... 30

MANPOWER REQUIREMENT ...................................................................................................................... 32

CURRENT STATUS AND STATUTORY APPROVALS ............................................................................................. 32

IMPLEMENTATION SCHEDULE ..................................................................................................................... 34

INDUSTRY ASSESSMENT ................................................................................................................... 35

LUDHIANA – OVERVIEW ........................................................................................................................... 39

LUDHIANA – HOTEL INDUSTRY TREND ......................................................................................................... 41

LIMITED PRIMARY SURVEY: SNAPSHOTS OF THE COMPETITION FOR LUDHIANA .................................................... 44

PROJECT COST .................................................................................................................................. 46

LAND AND LAND DEVELOPMENT COST ......................................................................................................... 46

BUILDING AND CIVIL WORKS COST.............................................................................................................. 46

PLANT AND MACHINERY COST ................................................................................................................... 48

MISCELLANEOUS FIXED ASSET .................................................................................................................... 49

PRELIMINARY AND PRE-OPERATIVE EXPENSES ............................................................................................... 50

INTEREST DURING CONSTRUCTION PERIOD ................................................................................................... 50

MARGIN MONEY FOR WORKING CAPITAL .................................................................................................... 50

CONTINGENCY ........................................................................................................................................ 51

MEANS OF FINANCE ......................................................................................................................... 52


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January, 2014

PROMOTERS’ CONTRIBUTION..................................................................................................................... 52

TERM LOAN............................................................................................................................................ 52

REPAYMENT SCHEDULE ............................................................................................................................. 53

ECONOMIC VIABILITY ....................................................................................................................... 54

ROOMS AND OCCUPANCY LEVEL ................................................................................................................. 54

RENTALS AND REVENUES ........................................................................................................................... 54

DEPARTMENTAL/ VARIABLE EXPENSES ......................................................................................................... 57

FIXED EXPENSES ...................................................................................................................................... 58

WORKING CAPITAL REQUIREMENT .............................................................................................................. 59

DEPRECIATION ........................................................................................................................................ 59

INCOME TAX ........................................................................................................................................... 60

PROFITABILITY PROJECTIONS ...................................................................................................................... 61

FINANCIAL ANALYSIS ....................................................................................................................... 63

MARGIN ................................................................................................................................................ 63

DEBT EQUITY RATIO ................................................................................................................................. 63

DEBT SERVICE COVERAGE RATIO ................................................................................................................ 63

INTERNAL RATE OF RETURN ....................................................................................................................... 63

BREAK EVEN ANALYSIS ............................................................................................................................. 63

SENSITIVITY ANALYSIS ..................................................................................................................... 65

RISK ANALYSIS AND MITIGATION MEASURES .................................................................................. 66

SWOT ANALYSIS ............................................................................................................................... 69

CONCLUSION ................................................................................................................................... 70

ANNEXURE 1: PROJECTED PROFIT AND LOSS ACCOUNT ................................................................................... 73

ANNEXURE 2:PROJECTED CASH FLOW STATEMENT ........................................................................................ 75

ANNEXURE 3:DSCR, NPV & IRR CALCULATION ........................................................................................... 76

ANNEXURE 4: BALANCE SHEET ................................................................................................................... 78

ANNEXURE 5: INTEREST AND REPAYMENT SCHEDULE ...................................................................................... 80

ANNEXURE6: SITE VISIT/VISUAL ASSESSMENT OF THE CAPITAL EXPENDITURE ..................................................... 85

LIMITING CONDITIONS ..................................................................................................................... 91

TERMS RELATING TO USE OF THIS REPORT ......................................................................................... 93


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Executive Summary


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January, 2014

Project Background & Scope

Name of the Company

[Client Name] or ‘Company’

Date of incorporation 19th

June 2003

Constitution Limited Company

Industry Hospitality

Nature of activity

Constructing a 5-Star category Hotel property in

Ludhiana

Corporate Office [Address]

Promoters

[Promoters’s

Name]

Brief details on the project

[CLIENT NAME] proposes to develop a 5 star all

suites hotel in Ludhiana. The management

contract for the hotel is with Onyx Hospitality

Group operating under brand name [Client

Name]. The project was initially conceptualized a

decade ago as a housing project; however due to

multiple changes the project cost has escalated

from INR 68.67Crores to INR 118.52 Crores.

Location [Address]

Estimated project cost

The project cost for the proposed hotel is

estimated to be INR 118.52 Crores.

Proposed DE ratio 2.08 : 1

Promoters’ Contribution

- Equity

- INR 38.52 Crores


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January, 2014

Land [Address]

Size 3.3 acres

Current status

The Company has completed 60 - 70% of the

civil and construction work at the site, the

banquet hall which is located in the basement is

also 95% complete with kitchen work left. The

Atrium area where the restaurants and coffee

shop are proposed is under construction. The

rooms are ready with civil work done and fixtures

attached.

Techno-Economic Viability

Yes

(Subject to Critical Success Factors and

mitigation of risk associated to the project &

others as mentioned in the report)

Promoters’ Profile

[Promoter’s Name] – is a post graduate in Commerce from Punjab University

having more than 18 years of experience. Mr. Singh is an entrepreneur and had

started his career with manufacturing of valves and cocks in 1983. He entered

into real estate in 1994 with his farm house project named “Garden Enclave” under

the banner of his firm Sardar Estates in Ludhiana. In the proposed project he is

responsible for the overall management and co-ordination of activities

[Promoter’s Name] – holds a master’s degree in Arts specializing in English

from Punjab University, Chandigarh. She has close to 20 years of experience in

handling business as she hails from a business family. In [CLIENT NAME], she is in

charge of Site and Co-ordination of activities

[Promoter’s Name] – holds a master’s degree in Business Administration and

has close to 6 years of experience as an entrepreneur. In [CLIENT NAME], he is in-

charge of Financial Management and Administrative responsibilities.

Project Cost & Means of Finance

The exhibit provided below summarizes the estimated capital expenditure for implementing

the project.


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January, 2014

All Figures in INR Crores

Description 31-Mar-14 31-Mar-15 Total

Land and Land Development 0.55 - 0.55

Building and Civil Works 31.57 17.00 48.57

Plant and Machinery 7.26 7.26 14.52

Miscellaneous Fixed Assets 9.29 21.69 30.98

Preliminary and Pre-operative 1.75 1.75 3.51

Interest During Construction 7.56 7.55 15.10

Contingency 2.41 2.30 4.70

Margin Money 0.58 0.58

Total Project Cost 60.39 58.12 118.52

The proposed means of finance for the project has been provided in the exhibit below –



Equity 19.63 18.89 38.52

Long Term Loan 40.77 39.23 80.00

Total Means of Finance 60.39 58.12 118.52

The broad terms for the old loan of INR 35.00 Crores have been provided below –

Nature of Borrowing

Rupee – Term Loan (Proposed)

Loan Amount

INR 35.00 Crores

Interest Rate

12.50% per annum

Completion Date 31st

March 2015

Repayment Starts

Q1 of FY 2017-18

Repayment

32 Accelerated Quarterly Installments.

The proposed repayment schedule for the old loan from SBI of INR 35.00 Crores has been

provided as exhibit below –


Description 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25

Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%

Annual Summary

Opening Balance

35.00

33.25

30.63

27.13

22.75

17.50

12.25

6.13

Addition - - - - - - - -

Repayment

1.75

2.63

3.50

4.38

5.25

5.25

6.13

6.13

Closing Balance

33.25

30.63

27.13

22.75

17.50

12.25

6.13

-

Interest for Period

4.27

3.99

3.61

3.12

2.52

1.86

1.15

0.38


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The broad terms for the new loan of INR 45.00 Crores have been provided below –

Nature of Borrowing


Loan Amount

INR 45.00 Crores

Interest Rate

12.50% per annum


March 2015

Repayment Starts

Q1 of FY 2017-18

Repayment


The repayment schedule for the new loan has been provided in the exhibit below –


Description 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25

Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%

Annual Summary

Opening Balance

45.00

42.75

40.50

37.13

32.63

28.13

22.50

16.88

Addition - - - - - - - -

Repayment

2.25

2.25

3.38

4.50

4.50

5.63

5.63

6.75

Closing Balance

42.75

40.50

37.13

32.63

28.13

22.50

16.88

10.13

Interest for Period

5.48

5.20

4.85

4.36

3.80

3.16

2.46

1.69

Financial Highlights

The financial highlights for the proposed project have been provided in the exhibit below –


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January, 2014


Description Unit 31-Mar-

16 31-Mar-

17 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25 31-Mar-

26 31-Mar-

27

Revenue INR

Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33

Total Operating Costs INR

Crores 17.50 20.14 22.04 26.67 28.78 31.76 33.89 37.41 39.98 42.76 45.77 49.02

Operating Profit INR

Crores 10.87 12.96 16.41 19.06 23.62 26.64 28.44 31.92 34.05 36.32 38.74 41.32

Operating Profit Margin % 38.31% 39.16% 42.67% 41.68% 45.07% 45.61% 45.63% 46.03% 45.99% 45.92% 45.84% 45.74%

Contribution INR

Crores 16.34 19.36 22.73 26.57 30.72 34.57 36.90 41.34 44.11 47.06 50.22 53.58

Contribution Margin % 57.59% 58.47% 59.13% 58.10% 58.62% 59.19% 59.20% 59.63% 59.58% 59.51% 59.42% 59.32%

BEP Sales INR

Crores 33.54 34.67 33.83 35.61 33.45 32.94 31.92 31.24 30.02 28.69 27.98 28.37

BEP Capacity Utilization

% 118.21

% 104.75

% 87.99% 77.87% 63.83% 56.40% 51.21% 45.05% 40.55% 36.28% 33.11% 31.41%

Cash Break Even INR

Crores 27.24 28.47 27.70 29.37 27.26 26.81 25.79 25.15 23.93 22.59 21.87 22.25

Cash Break Even Margin

% 96.00% 86.00% 72.03% 64.21% 52.02% 45.91% 41.38% 36.28% 32.33% 28.57% 25.88% 24.64%

Net Profit Margin % -10.49% -2.78% 5.61% 10.16% 16.76% 20.39% 22.83% 25.89% 27.99% 28.39% 26.39% 26.84%

Equity Share Capital INR

Crores 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52

Reserves and Surplus INR

Crores -2.98 -3.89 -1.74 2.91 11.69 23.60 37.83 55.79 76.51 98.96 121.26 145.50

Tangible Net Worth (TNW)

INR Crores

35.54 34.62 36.78 41.43 50.21 62.12 76.35 94.30 115.03 137.48 159.78 184.02

Term Loan INR

Crores 80.00 80.00 76.00 71.13 64.25 55.38 45.63 34.75 23.00 10.13 3.38 -

Debt Equity Ratio Ratio 2.25 2.31 2.07 1.72 1.28 0.89 0.60 0.37 0.20 0.07 0.02 -

Total Outside Liability (TOL)

INR

Crores 82.23 82.60 79.00 74.72 68.35 59.93 50.49 40.15 28.78 16.31 9.99 7.08

TOL/ TNW Ratio 2.31 2.39 2.15 1.80 1.36 0.96 0.66 0.43 0.25 0.12 0.06 0.04

Closing Cash Balance INR 0.65 3.27 4.93 8.17 13.55 20.09 28.11 38.68 51.18 64.27 83.33 107.69


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Crores DSCR Ratio - - 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83

Minimum DSCR Ratio 1.13 Maximum DSCR Ratio 7.83 Average DSCR Ratio 1.79

NPV INR

Crores 18.57

IRR % 13.39% Cost of Capital % 10.93%


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The average EBDITA margin for the proposed project is ~ 43.97%, while the net profit

margin is ~ 16.50%

The minimum DSCR for the project is 1.13, while the average DSCR is 1.79.

The IRR of the project is 13.39%, which is higher than the post-tax cost of capital at

10.93%.

Sensitivity Analysis

A sensitivity analysis was carried out to assess the impact of the following scenarios on the

major financial parameters.

The summary of sensitivity analysis is provided in the following exhibit –

Description NPV IRR Min. DSCR Avg. DSCR

INR Crores % Ratio Ratio

Base Case 18.57 13.39% 1.13 1.79

5% decrease in occupancy level 12.44 12.57% 1.09 1.75

5% decrease in revenue 13.81 12.75% 1.11 1.77

5% increase in departmental costs 12.93 12.64% 1.10 1.75

10% increase in hard cost 4.98 12.01% 1.13 1.80

1% increase in interest rates 11.17 12.92% 1.08 1.75

The minimum DSCR is 1.13 for the FY 2017-18, when the Company starts repayment of loan

to the Bank commences.

The sensitivity analysis shows that project IRR and DSCR are more sensitive to 10% increase

in hard cost and 1% increase in interest rates.

In the base case scenario, the average DSCR is 1.79. The average DSCR remain above 1.75

in all the sensitivity scenarios, hence the project can be said to be comfortable to these

changes.

Risk Analysis and Mitigation

The risk analysis, allocation and mitigation measures are shown in the following table –

Key Risk Risk Carrier Mitigation Measure

The promoters are well experienced in the

successful operations of various business

segments. Experience and

Capability [CLIENT NAME] However the promoters have not operated any

hotel projects, hence there is risk related to

experience and capability of successfully

operating hotel business.


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January, 2014

To mitigate the above risk, the Company has

handed over the management, operations and

marketing of the hotel to Onyx Group.

Funding Risk

[CLIENT NAME]

The promoters’ contribution for the balance of

project works out to INR 38.52 Crores. The

promoters propose to bring in the same from

their own sources.

Time Over-run

[CLIENT NAME]

Hotel has already accomplished approximately

60 - 70% of the civil and construction related

work. The balance of the work could not be

completed due to shortage of funds. However

once the funds are tied up, the balance of the

project is expected to be completed by 31st

March 2015.

Cost Over-run

[CLIENT

NAME]

As discussed above, approximately 60 - 70% of

the hotel is already constructed. The Company

has received firm quotation for balance of the

work and has in fact issued most of the purchase

orders as well. Also the Company ensures to

take care of any cost overrun in future on its

own. Hence cost over-run is not envisaged for

the project.

Statutory Approvals

[CLIENT

NAME]

The hotel project is already operational and all

the critical approvals and clearances are already

in place and hence statutory approvals and

clearances related risk is not envisaged for the

project.

Occupancy Risk

[CLIENT

NAME]

Based on the market assessment, it is

understood that there is a significant demand for

quality hotels in Ludhiana.

Further, as the hotel is proposed to be operated

by a renowned hotel operator, the hotel will be

benefited by the operator’s wide marketing

network and the operator will leverage on its

international presence to support occupancy


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January, 2014

levels for the hotel.

Hence market related risk is not envisaged for

the project.

Pricing Level

[CLIENT NAME]

[CLIENT NAME] has benchmarked its prices

against the prevailing level of prices in premium

segment hotels in Ludhiana.

While undertaking sensitivity analysis, it was

noted that the project is sensitive to increase in

hard cost

However, the same has been captured in terms

of sensitivity analysis where it can be seen that

even with a fall of 10% in revenues, the project

can meet its debt service obligations.

Competition Risk

[CLIENT NAME]

Based on the market assessment it is

understood that there is significant demand for

quality hotels in the region.

The project will face competition from the

existing 5-Star hotel and other 4-Star hotels to

some extent.

The Company will have to bank upon the

operator’s expertise in marketing of such

properties and will have to advertise

aggressively in the initial years of operations, to

increase its visibility and reduce the competition

risk.

Operating Risk [CLIENT NAME]

/ Hotel

Operator

The hotel is operated by a renowned

international hotel operator. Qualified personnel

are recruited and trained by operator for the

smooth operation of the hotel.

Force Majeure

[CLIENT NAME]

/Insurer

The Company has provided [Client Name]

with Copy of insurance undertaken by it to cover

the Force Majeure Risk.

Hence the Force Majeure risk is not envisaged

for the project as it has already been covered.


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January, 2014

Strength

The proposed project is being operated by a reputed hotel operator.

There is buoyant demand for the quality hotels in and around Ludhiana City.

Management team is a good mix of experience and youth.

Experienced technical team.

Weakness

The Promoters of the Company do not have experience in operations of a star

category hotel.

However, to mitigate the risk, the Company has roped in [Client Name] under the

brand name of [Client Name]. Onyx also commands a reputed name in hospitality

industry in South East Asia and also provided technical consultancy beside operating

and management contract.

Opportunity

Significant demand for quality hotels in region of Ludhiana.

Threat

Generic threat of global economic slowdown.

Capacity (addition of rooms) enhancement by other established players in this

segment of business.

Conclusion

Please refer to page no. 70 for the conclusions of the study.


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Main Report


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January, 2014

Scope of Work

[Client Name] had appointed us for assessing the technical, commercial and financial viability

of the semi-operational 5 Star Hotel project proposed to be implemented at Ludhiana,

Punjab. The study would encompass assessing the techno economic viability of the project

and evaluation of the constraints and future potential.

The Scope of Work was finalized as under –

[Client Name]will physically visit the proposed location

[Client Name]will validate the cost of the proposed project, given the specifications

on civil works, building and plant and machinery & equipment

[Client Name]will validate the cost and revenue assumptions related to the project

[Client Name]will analyze the project by using various tools, such as debt service

coverage ratio, IRR, sensitivity analysis to arrive at a conclusion on the viability of the

project

Date of Inspection& Site Visit

The team from [Client Name]undertook a visit to the proposed project site on 16th

October

2013 with the view to have first-hand information of the site and to have a better

understanding of the project. The site for the project is located at [Address]. Below given

observations were made during the time of site visit –

The land is in possession of Clients

Close to 60 -70% of the building and civil work is completed

Rooms are partially ready with permanent furniture’s and fixtures in place

Hotel has 3 operational banquet halls which can be separated and divided into mini

halls via sound proof moving partitions but the kitchen for the same although

constructed is yet to be operational

The lobby area where the restaurants and coffee shop will come is yet to be

completed

The Client as discussed during the Management discussion will follow mark to market

strategy for room rentals

As suggested by the Client the project would be completed by 31st

March, 2015 and

would be operational by 1st

April, 2015

The photographs of the site visit have been provided as Annexure in this report.


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January, 2014

Team of Consultants

The Team of Consultants who have worked on the project has been provided below

(alphabetical order) –

Mr.

Ms.

Mr.


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January, 2014

Methodology

The team from [Client Name]adopted the following methodology, while executing the said

assignment –

1. Secondary and limited primary market assessment to understand the industry and the

project.

2. Preparation of a detailed list of information required and dispatching the same to the

Company.

3. Verification of the information submitted by the Company, identification of the missing

information and resubmitting the revised list of information required.

4. Detailed secondary market assessment to gauge the demand supply scenario of the

study products and to understand the industry specific benchmarks.

5. Limited primary survey to verify the information collected through the secondary

market assessment.

6. A visit to the site was undertaken by team.

7. Assessment of the reasonableness of the project cost.

8. Estimation of the revenue and cost streams for the project.

9. Compilation of information collected and the analysis carried out in form of this report.


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Project Overview

[Client Name]was initially incorporated on 9th

June, 2003 under the name of [Client Name]

with Company Identification Number *************************.

[Client Name] is developing a five star hotel facility spread over 3.3 acres of land at

South City, Ludhiana. It is the first all-suites 5 star deluxe hotel in the Country and will

have 126 suites

The proposed hotel lies outside the limit of Municipal Corporation of Ludhiana as per

the document submitted to [Client Name]and hence according to the RBI guideline

for External Commercial Borrowing and the definition of sectors under Infrastructure,

the proposed hotel will be deemed as Infrastructure project

[CLIENT NAME] had originally tied up the hotel management and operations with

Choice Hospitality India Limited

The cost of the project was INR 68.67 Crores and had been sanctioned term loan

facility to the tune of INR 41.00 Crores by State Bank of India (SBI) SCB, Miller

Ludhiana on 25th

August, 2010

In 2011, [CLIENT NAME] had tied up the hotel management and operations with

[Client Name](Brand Name “[Client Name]”) based at Thailand

[Client Name] Hotels & Resorts Ltd is one of the leading & renowned names in the

hospitality industry having hotels at Thailand, China, Singapore, Maldives, Sri Lanka

etc.

After the tie up with [CLIENT NAME], the cost of the project was increased from INR

68.67 Crores to INR 90.24 Crores and the means of financing was as under:

o Equity Contribution INR 29.00 Crores

o Unsecured loans INR 07.24 Crores

o Term Loan SBI INR 41.00 Crores

o Additional Term Loan INR 13.00 Crores

Thereafter, [CLIENT NAME] got the principal sanction from United Bank of India

(UBI) for the additional term loan of INR 13.00 Crores.

The total loan amount availed from SBI as on date is approximately INR 35 Crores.

However as the revised project cost submitted to the bank was provisional as it was

submitted immediately after signing of the agreement with Onyx and were yet to get

detailed specifications and item-wise cost at micro level. Hence when [Client


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January, 2014

Name] had intimated some amendments in Public area, Interiors and Operating

equipment, the scope of the project changed and the overall project cost increased

to INR 118.52 Crores.

The Banquets of the hotel are 95% completed with Kitchen left and are operational

since 31st March 2013. Along with this, approximately 60% of the services of the

hotel are also completed.

As per the Management discussion with the Client, any further increase in project in

future will be borne by them.

Changes Suggested by [Client Name]

Building

One water bodies was replaced by four water bodies

Since Number of rooms were increased in addition to creation of presidential suit

and honeymoon suit ,the modification in civil work was involved

With the addition of fire escape ,the design of A type of room was changed

Conversion of room to suit has changed the cost of interior related to building.

Existing Restaurant height is increased from 10 to 20 feet by adding

display/transparent ceiling.

Parking space is reallocated and the space is converted into administrative offices

Plant and machinery

Capacity of Chiller increased from 6 TR to 6.6 TR as per new specification and

energy saving equipment e.g. VFD is added in the scheme.

Since operational scope is increased, many imported equipment related to coffee

shop, Display kitchen bar spa, security, fire and life safety, partition walls are added.

Back up load is increased to 100%.

Furniture and fixture

With the increase in furnishing area of interior the Furniture & fixture (FFE) have

increased proportionally

With the suit having drawing room ,the no of sofa is increased

Existing TV of 32 ‘’ LCD (China Make) one no per room is updated to 41’’LED 2 per

room.

Glass enclose are provided with patch fitting


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January, 2014

Media Hub is added in the room.

Bed design modified with richer specification of [Client Name].

Room carpet (Wall to wall) specification is improved.

Chandeliers are added in Banquet, atrium, Entrance, Banquet and main porch.

Arts and artifacts in atrium, atrium chandeliers, Porch ceiling & chandeliers, Banquet

chandeliers.

IT equipment

Due to updation of IT equipment & software, the cost has increased by approximately by INR

2 Crores. For example [Client Name] worldwide is now using the Opera software for Property

Management System which is the world best software in the hospitality industry which itself

costs INR 1 Crore. Also Integration of Building management services (BMS), communication,

and audio/video with Information Technology Equipment.

Operating Equipment

The specification of the operating equipment has now become richer and also certain

operating equipment has been added by [Client Name]. For example, the Sports bar, Coffee

shop, Gym, Spa, Saloon, Room Service equipment etc. This all has led to an increase in the

cost by INR 1.5 Crores approximately.

Critical Observation

Based on the above discussions, [Client Name] understands that the modifications as

provided by [Client Name] changed in the scope of the Project and hence increased the

project size from INR Cr to INR 118.52 Cr. Further it is understood that the entire process

has delayed the overall project implementation, there by pushing the Commercial Operations

Date to 1st

April 2015, which was originally set at 1st

April 2012. Under normal

circumstances, the change in the COD and repayment structure of a project would classify

the project as an NPA.

However during recent times there have been delays in implementation of infrastructure

project across the country on account of various reasons. The RBI Circular issued for

Infrastructure Project Lending states –

i. Any change in the repayment schedule of a project loan caused due to an increase in

the project outlay on account of increase in scope and size of the project, would not

be treated as restructuring if :


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January, 2014

Sr No

RBI Guideline

[CLIENT NAME] Opinion

a

The increase in scope and size of the

project takes place before

commencement of commercial

operations of the existing project.

The Project is yet to start commercial operations

b

The rise in cost excluding any cost-

overrun in respect of the original

project is 25% or more of the original

outlay.

The cost overrun because of size and scope is

more than 25% of the original outlay

c

The bank re-assesses the viability of

the project before approving the

enhancement of scope and fixing a

fresh DCCO.

The project is viable subject to achievement of

critical success factor and mitigation of risk

associated with the project & others as mentioned

in the report

d

On re-rating, (if already rated) the new

rating is not below the previous rating

by more than one notch.

Lenders to assess the rating

Hence, on the basis of above assessment and subject to assessment of rating by the bank

and it not falling below one notch of the previous rating, the account of the Company has

been treated as Standard Asset and not Debt Restructuring by [Client Name]while

undertaking the financial evaluation for the TEV Report.


23 TEV


January, 2014

Company Background

[Client Name]

[Client Name] was initially incorporated on 9th June, 2003 under the name of [Client Name]

with Company Identification Number U*****************. The name was changed to [Client

Name] on 21st

October, 2011 with a fresh certificate of incorporation.

The Company details are depicted in the exhibit below –

Company Details

Name

[Client Name]

Date of Incorporation

9th June, 2003

Constitution

Public Limited Company

Sector

Hospitality

Corporate Office

[Address]

Project Site

[Address]

Source- [CLIENT NAME]

Share Holding Pattern

The current shareholding pattern of [CLIENT NAME] is indicated in the exhibit below (as on

31st

March 2013) –

Name Number of Shares Percentage Holding (%)

[Promoter’s Name] 227,692 28.56



Mrs. Swapneet Kaur Arneja 24,107 3.02

Mr. Sam Rakhra 5,000 0.63

Mr. Gagandeep Singh 22,225 2.79


24 TEV


January, 2014

Mr. Kishan Dev Singh 17,500 2.19

Friends & Relative 98,827 12.40

Other Shareholders 191,175 23.98

Total 797,290 100.00

Source: [CLIENT NAME]

Brief Profile of Promoters

The brief profile of the promoters is mentioned below –

[Promoter’s Name] –is a post graduate in Commerce from Punjab University having more

than 18 years of experience. Mr. Singh is an entrepreneur and had started his career with

manufacturing of valves and cocks in 1983. He entered into real estate in 1994 with his

farm house project named “Garden Enclave” under the banner of his firm Sardar Estates

in Ludhiana. In the proposed project he is responsible for the overall management and co-

ordination of activities

[Promoter’s Name]– holds a master’s degree in Arts specializing in English from Punjab

University, Chandigarh. She has close to 20 years of experience in handling business as she

hails from business family. In [CLIENT NAME], she is in charge of Site and Co-ordination

of activities

[Promoter’s Name] – holds a master’s degree in Business Administration and has close to 6

years of experience as an entrepreneur. In [CLIENT NAME], he is in-charge of Financial

Management and Administrative responsibilities.

Technical Consultants& Management Tie Up

Management and Operation Tie Up

[CLIENT NAME] has management and operational tie up with [Client Name] Hotels and

Resorts Company Ltd’ (an [Client Name] brand) a Thailand based Company. The salient

features and synopsis of the tie up has been provided below –

The promoters have entered into the following agreements with [Client Name]

Hotels and Resorts Company Ltd. on 6th, January 2012 -

[CLIENT NAME] has entered into a License Agreement with [Client Name] for

the operation of the proposed Hotel


25 TEV


January, 2014

[CLIENT NAME] has entered into a Management Agreement with [Client

Name]. for the management of the proposed hotel

The Operating Term of the agreement shall be for a period commencing on

the opening date and terminating at midnight, 15 years thereafter

Remuneration to [Client Name] of 1% of the total revenue excluding

Turnover Taxes and

Reimbursement of all travelling and subsistence expenses properly incurred

by representatives of the [Client Name] whether on property or centrally,

when performing work or services in accordance with the License Agreement

Background of the [Client Name]-

[Client Name] Hospitality is a Thailand based private group into Hospitality

in South East Asia

The Group has 33 operating properties, over 4,400 employees spread in

South East Asian countries like China, Japan, Qatar, Thailand, Malaysia and

others

[Client Name] also has 13 more projects under design and construction

stage at various location in South East Asia

In India, [Client Name] is entering with its first hotel in Ludhiana in the name

of [Client Name] Suites Ludhiana

Other Consultants

The list of other consultants have been provided below-


26 TEV


January, 2014


27 TEV


January, 2014

Project Details

Land Details

The 5-star category hotel is situated on piece of land admeasuring 3.3 acres at [Address]

under the brand name of [Client Name] Suites of [Client Name] Group through

[Client Name]. The land was obtained by [CLIENT NAME] from Universal Development

Trust through a sales deal of INR 53,00,000 excluding stamp duty and registration on 3rd

July,

2003

Project Location

The 5-star category hotel is situated on a land of 3.3 acres at [Address] (‘Property’).

The distance of the key demand driver from the hotel have been provided in the exhibit below;

Description

Distance (in Km)

Nearest Highway

National Highway 95 (7.2 Km)

Nearest major city

Ludhiana (0 Km)

Nearest railway station

Ludhiana Railway Station (9.5 Km)

Nearest airport

Amritsar Airport ( 157 Km)

The location of the site has been provided as exhibit below –

Source- Google Earth


28 TEV


January, 2014

The location of site with respect to nearby areas has been provided in the exhibit below –

Source- Google Earth


29 TEV


January, 2014

Project Configuration

The project configuration as envisaged by the Company has been provided as exhibit below –

Source: [Client Name] Analysis

It is noted from the exhibit above that the proposed project will have the following

stakeholders –

Promoters

Banks/ Financial Institutions as lenders

Regulatory and statutory authorities

International and domestic tourists

Staff members

Hotel Operator

Technical Details and Assessment

The 5 –Star category “[Client Name] Suites” hotel by [CLIENT NAME] is providing the following services –

126 rooms including 96 single bedroom suites, 2 honeymoon suites, 28 family rooms

A lobby

Sports Bar

126 Rooms for Domestic and International Tourists along with Bar, 2 Restaurants, Coffee Shop,

Banquets and Conference Facilities

Lenders

[Client Name]

Regulatory and Statutory

Authorities

5-Star Category Hotel [Client

Name]

Ludhiana

Staff Members

Hotel Operator on

Contract


30 TEV


January, 2014

Thai Restaurant

Multi-cuisine Restaurant

24/7 Coffee shop

3 Banquet facilities of total 1000 to 1200 capacity, which can be divided into smaller

halls for multiple gathering and conferences

Kitty halls

Meetings and conference room

Swimming Pool having a restaurant beside it

Parking below swimming pool and on the periphery of the boundary wall

Gymnasium

Separate Terrace Spa

The 5 star category hotel building is Ground + 7 Floor Structure

Project Area Statement

The project area statement has been provided with respect to the architectural plan as there

were changes made in the approved plan. [Client Name] notes that according to the new

architectural plan given by Client, the total permissible FAR that is 1:2 has been consumed by

the Client compared to the initial utilized FAR that is 1:1.60. The revised area sheet as per the

architectural plan has been given in the exhibit below –

Revised Area Sheet As Per Architectural Plan

List of Area Total Calculated Area In Ft²

Guard Room 960

Under Ground Tank for STP/excess water disposal 728

Planter Along Ramp 3,200

Covered Parking At Rear 9,185

Entry To Service Block 625

Porch At Ground Floor & Ramp 11,015


31 TEV


January, 2014

Ground Floor Area Including B.O.H. 40,091

Service Block 4,295

First Floor Area Main (Building) 28,336

First Floor Pool Area & Toilets 8,770

First Floor Service Block Area 4,295

Connection Between Main Building & Pool 735

Second Floor Area (Including Double HT Area For

A.D.D.)

24,625

Area For 3rd, 4th, 5th & 6th Floor 106,420

Seventh Floor Area 27,500

Service Block Area 2nd, 3rd & 4th Floor 12,885

Terrace Floor Covered Area 4,395

Total Area 2,88,060


Features Area (Ft²)

Kitchen 11,940

Banquet 11,000

Parking 16,000

Lobby 3,239

Residential 17,669

Public Area 46,394

Office Area 4,890


32 TEV


January, 2014

Guest Area 66,581

Porch 6,540

Main Pool 1,365

Children Pool 440

Service Block 18,000

Total Elevation Area 68,400

Area of Corridors (3rd

. 4th, 5

th, 6

th& 7

th floors) 15,375

TOTAL 2,88,373


Manpower Requirement

Since the hotel will be operational under third party management, the manpower requirement

is not applicable for the Company.

Current Status and Statutory Approvals

The current status of various approvals and clearances has been provided below –

The plot of land admeasuring 3.3 acres is in possession of Client and work has

already started with close to 60% work completed

The banquet facility of the hotel is 95% complete with only kitchen remaining

[CLIENT NAME] has assigned the third party operations and management contract to

[Client Name] India Ltd under the brand “[Client Name] Suites”. The management and

operation contract has validity period of 50 years. “[Client Name] Suites” is an [Client

Name] brand for which [Client Name] India has exclusive Indian rights.

[CLIENT NAME] has received approval to upgrade 3 star hotel category to 5 star

category hotel (on conditional bases) via letter number 5-TH-I(29)/2010 dated 13th

Feb 2011 from Ministry of Tourism, Government of India

[CLIENT NAME] has received Consent to Establish from pollution angle via NOC

letter number O13**************7 dated 4th

July, 2013 and is valid till 10th

February,

2014 from Punjab Pollution Control Board

The Company has received NOC from Ludhiana Forest Division in the name of

[Client Name]vide letter number 7792 dated 10th

December, 2010


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January, 2014

Fire NOC Certificate valid for one year via letter dated 25th

April, 2013 having letter

number 672/FB/D from the Fire Division Ludhiana

The Company received permission for change of land-use from residential as per

master plan Ludhiana to commercial use (Hotel cum Resort) from Department of

Housing and Urban Development Ludhiana via letter 325CTP(PB)/SP-432 dated 20th

January, 2006 in the name of [Client Name]

The Company has received notification from Ministry of Environment and Forest,

Northern Region via letter number 3 – 168/06 – RO(NZ) Vol. X.V/9139 dated 14th

June, 2011 stating that the proposed project does not require environmental

clearance

The Company has received approval from Ministry of Tourism for change of name

from [Client Name] to [Client Name] for the approved hotel project via letter number

5-TH-I(29)/10 dated 8th

February, 2012. The approval is valid for the period of five

years with effect from 13th

January, 2011. Also the

permission would be withdrawn incase the quarterly progress report is not submitted

to the Ministry of Tourism

The Company has received the permission for new power connection at 11 KV

supply voltage from the Punjab State Power Corporation Ltd vide letter number 2P3

dated 10th

January, 2012

The Company has received building plan sanction from the Department of Urban and

Rural Planning Punjab for its old project in the name of [Client Name] vide letter

number 592-Gen(L) M-2A dated 1st

March, 2006

Registration for various Taxes like Luxury Tax, Service Tax and others applicable for

the proposed project

Further Requirement

Consent to Operate from Punjab State Pollution Control Board

Approval of Chief Controller of Explosives for keeping the diesel in storage during

construction stage and operational phase

Construction Completion Certificate from local authorities

Sanction of new building plan from local authorities

Approval for Garbage disposal /Sewerage discharge from local authorities

Approval for D.G. sets from Electrical Inspector of State Government

Bar License from Excise department

License for swimming pool

Registration for Employee welfare with Employees Provident Fund Commissioner

Restaurant License


34 TEV


January, 2014

Implementation Schedule

As discussed previously, the Company has completed approximately 60 - 70% of the civil and

construction work at the site, the banquet hall which is located in the basement is also 95%

complete with kitchen work left. The Atrium area where the restaurants and coffee shop are

proposed is under construction. The rooms are ready with civil work done and fixtures

attached.

Hence [Client Name] with its past experience estimates the project to achieve completion by

31st

March 2015 and the proposed hotel will be available for commercial use by 1st

April 2015.


35 TEV


January, 2014

Industry Assessment

Indian Hotel Industry – An Overview

Indian hotel industry can be divided into organized and unorganized sectors. Unorganized

sector includes innumerous lodging & boarding facilities, resorts and restaurants present

across the Country. The organized hotel industry is further classified according to the ‘Star’

ratings such as 1 star, 2 star, 3 star, 4 star, 5 star and 5 star deluxe. Old properties converted

into hotels are also classified as Heritage Hotels.

The industry has grown from INR 120 billion in FY 2006-07 to INR 205 Bn in FY 2011-12,

registering a CAGR of about 11%. Indian hotel industry is facing shortage of rooms and

hence domestic as well as international players are announcing rapid expansion plans to

augment their room inventory.

The industry has grown from INR 876 Bn in FY 2009 to INR 1,150 Bn in FY 2012, registering

a CAGR of ~9.4%. The organize segment account for about 30% share in the total market

size.

The year 2010-12 was a period of consolidation for the Indian hotel industry. The preceding

years witnessed the effects of the global financial crisis as well as the impact of the terror

attacks in Mumbai that led to a dip in overall occupancies and average rates. However, FY

2010-11 witnessed slow but marginally improved performance levels for the industry with

overall occupancies growing from a nationwide average of 59.9% to 62.1%. Average rates

also grew by approximately 10.0% from INR 4,149 in FY 2009-10 to INR 4,567 in FY 2010-

11. Strong domestic demand, coupled with increased global confidence in the business

environment in India helped in improving occupancies and average rates. The improved

performance levels, however, did not translate into an overall improvement in profitability for

hotels across the industry. Rising inflation levels meant increased overhead costs for hotels

resulting in lower margins. An overall increase in departmental and fixed expenses as a

percentage of revenue led to a decline in net income percentage of approximately 4.0% in FY

2010-11 as compared to FY 2009-10. In the past five years, the hotel industry in India has

witnessed numerous ups and downs. While industry performance started to improve in 2005-

06 and reached its peak in FY 2007-08, the years FY 2008-09 and FY 2009-10 witnessed

turbulent times, given the international economic conditions and local disturbances.

The impact of the global economic crisis in FY 2009-10 resulted in the price-sensitive

domestic traveler settling for leisure trips within the Country leading to increased domestic

demand for hotels. This trend of strong domestic demand has continued to grow in FY 2010-

11 as well. There is an approximate increase of 8.1% in the Domestic FIT segment and an

approximate increase of 14.2% in the Domestic Groups segment over that of last year. Going


36 TEV


January, 2014

further, the improvement of overall connectivity facilitated by additional destinations in the

portfolio of low-cost airline carriers like GoAir, Spicejet and Indigo, is further expected to

increase domestic tourist movement within the Country.

As the industry matures and witnesses increased competition from international hotel brands,

the hotel room has evolved from being only a place to sleep to trying to offer a space that the

guest can make their own and remember for future stays. Some trends that we have noticed

in the evolution of hotel rooms are highlighted below –

Use of simplified, modular design for rooms and spaces with a focus on straight lines,

pastel colors, and personalized, homely spaces.

Introduction of women-only floors and increased security measures for women

travelers such as video-phones.

Increased focus on in-room technology which includes having more plug-points

around the bed and the work/study area, availability of international adapters and

different plug-points, and including in-room amenities such as i-pod docking stations,

light controls near the bed, and individual temperature controls in rooms and

bathrooms.

Efficient manpower utilization continues to be an area of concern for the Indian Hotel Industry.

The all-India average of total employee to hotel room ratio stands at 1.6, much higher than

that in hotels across the globe. A major reason that can be attributed to this high ratio is the

performance of four and three-star hotels as far as manpower utilization is concerned. The all-

India ratio this year for the four-star category stands at 1.8 employees per hotel room while

that for the three star categories stands at 1.6. Midmarket and budget hotels in India offer

more expansive facilities especially with respect to the F&B offerings in a hotel and therefore

require a large number of personnel to manage operations as compared to hotels globally.

The figure below indicates the growth in the revenue and net income of the hotel industry in

India during the period FY 2006-11.


37 TEV


January, 2014

Source: India Hotel Industry Survey 2010-11 by HVS Hospitality Services

The figure provided below indicates the performance of new hotels across major Indian Cities

-

Source: India Hotel Trends 2012 by HVS Hospitality Services

PRODUCT PROFILE

Indian hotel industry can be divided into organized and unorganized sectors. The

organized hotel industry is further classified according to the ‘Star’ ratings. Unorganized

sector includes innumerous lodging & boarding facilities, resorts and restaurants present

across the Country.


38 TEV


January, 2014

According to Star category, hotels are classified as 1 star, 2 star, 3 star, 4 star and 5 star

hotels. The five star hotel categories can be further extended as 5 star deluxe.

Old havelis, palaces and mansions dating back to FY 1935 and earlier period which have

been converted into hotels are known as Heritage Hotels. According to Star ratings the

heritage hotels are further divided as :

1. Heritage Basic - 2 Star

2. Classic Heritage - 3 Star

3. Grand Heritage - 5 star and above

Hotels can be further classified on account of the clientele they serve:

1. Luxury Hotels: Occupied with world class infrastructure amenities, these hotels

cater to influential foreign as well as domestic tourists and the upper class

corporate executives. High priced business and leisure hotels can be considered

as a part of luxury hotels.

2. Budget hotels: Due to limited luxury and seasonal discounts, these hotels are

preferred by price conscious business travellers and tourists.

3. Resorts: These are located at hill stations and sea side tourist destinations.

For the hotel industry, room rent accounts for the highest share of revenues followed by

food and beverages. Banquets, conferences and other services also form a major

revenue stream for these hotels.

Government Initiatives

Source: [CLIENT NAME] Research

Government has categorized hotel and restaurant industry as high priority industry and

has allowed 100% FDI under automatic route.

The Government of India is giving tax concessions to encourage investment in new

hotels. E.g. in the budget of FY 2008-09, five year tax holiday was provided to two, three

Revenue Sources

14% Room Rent

26% 60%

Food and Beverages

Other Services

http://www.google.co.in/search?hl=en&rlz=1T4ADBF_enIN272IN272&ei=jhiNS5KGHoHGrAeri62WAg&sa=X&oi=spell&resnum=0&ct=result&cd=1&ved=0CBEQBSgA&q=Banquets&spell=1


39 TEV


January, 2014

and four-star hotels coming up in destinations having UNESCO declared World Heritage

Sites.

As per the earlier regulation, investment linked deduction was allowed under section

35AD only to those assess who are engaged in the business of building & operating hotel

business. However in hotel industry, many corporates follow the franchisee business

model wherein hotel owner get it operate through the outsourcing arrangement. Thus, a

new sub section 1A had been added to 35 AD (which will have a restrospective effect

from 1st

April 2011) where the assess who build the hotel of 2 Star and above, own it and

transfers its operation to another person will be entitled above link deduction.

In August 2009, new Foreign Trade Policy allowed duty-free imports of capital goods,

office equipment and consumables such as alcoholic beverages, food items etc. against

10% of the foreign exchange earned by hotels under the Served from India Scheme

(SFIS). The decision will help to increase imports for technological up gradation as well as

to improve the food offerings.

Reserve Bank of India’s decision to de-link credit for hotel projects from commercial real

estate exposure enabled hotel projects to avail credit at relaxed norms and reduced

interest rates. In addition, relaxed External Commercial Borrowing (ECB) norms also

helped capital intensive hotel projects to raise liquidity in international markets.

Launch of different campaigns such as 'Incredible India' and 'Atithi Devo Bhavah' to

attract foreign tourists are consequently expected to benefit the hotel industry also.

Government’ decision to encourage rural, adventure and wellness tourism augurs well for

new hotel projects at these locations.

The Government has also launched a new scheme for development of important

destinations and circuits (connects to nearby tourist destinations) through 29 Mega

Projects. These projects - expected to increase in tourisms - will subsequently benefit the

hotel industry.

The Government is proposing to grant financial assistance up to INR 50 Mn for

construction of one convention Centre at tourist destination in each state for promotion of

MICE (Meetings, Incentives, Conferences and Exhibitions) tourism. This decision will

encourage investment in convention centers by hotel industry.

Ludhiana – Overview

The city got its name from its founding dynasty; Lodhi Dynasty. It is one of the largest cities in

Punjab both in terms of area and population. Ludhiana spread on an area of 3,767 Km² is

known for its Hosiery Industry and is also called hub of Hosiery Industry in India and also

capital of small scale industry. The City also has a good education infrastructure with the

largest agriculture university in Asia; Punjab Agricultural University located in the city. The city


40 TEV


January, 2014

has education infrastructure supporting all other faculties as well from engineering institutes,

medical institutes to management institutes.

Source: Maps of India

The city is centrally located on the National highway between Delhi and Amritsar. The

demography of the city is majorly affluent and the culture is traditional Punjabi. The city has a

traditional real estate model of bungalow system.

Demography

As of 2011 India census, Ludhiana district has a population of 3,498,739. Males constitute

53.3% of the population and females 46.6%. With a population density of 978 persons per

Km². Ludhiana has an average literacy rate of 82.2%, higher than the national average of

74%: male literacy is 85.98%, and female literacy is 77.88%.

Economy

It is one of the prime industrial centers of northern India. Presently, the city is commonly

known as the “Manchester of India”, the “hub of the Indian Hosiery Industry” and also as

Industrial Capital of small scales Industry in the Country. The city is famous for its hosiery

goods, woolen garments and leather items. Machine tools, dyes, cycle parts, mopeds, sewing

machines and motor parts are also included in the list of the items exported from Ludhiana.

Ludhiana is Asia's largest hub for bicycle manufacturing and produces more than 50% of

India's bicycle consumption of more than 10 million each year. Ludhiana produces 60% of

http://en.wikipedia.org/wiki/Census


41 TEV


January, 2014

India's tractor parts and a large portion of auto and two-wheeler parts. Many parts used in

German cars like BMW and Mercedes are exclusively produced in Ludhiana to satisfy the

world requirement. It is one of the largest manufacturers of sewing machines. Hand tools and

precision industrial equipment is another specialty. The apparel industry Ludhiana is famous

all over India for its woolen sweaters and cotton t-shirts; most of the top Indian woolen

apparel brands like Octave, Monte Carlo, Miss Grace & Duke are based in Ludhiana.

Ludhiana is known for Manufacturing Agricultural Implements and its Spare parts like

Rotavator, Till Seed Drill, Combine Harvesters and doing continuous R&D in same sector.

Besides industry, Ludhiana is a major agri-products producer. It is a big Centre for

dairy product packaging. Ludhiana is also a major trading hub for commodities for North India.

It is a major consumer shopping Centre with consumers coming from around parts of Punjab

to do their big-ticket shopping.

Connectivity

The city is very well connected in terms of roadways and railways.

Air

According the city development plan by JNNURM, the proposal to build an international

airport at Ludhiana has been floated. Currently, the people land at Amritsar airport situated at

a distance of close to 157 Km from the city.

Rail

Ludhiana lies on the main broad gauge line and is identified as a junction. The city is also well

connected by rail network to Delhi and other important cities of Punjab like Jalandhar,

Ferozpur and Bathinda.

Road

NHI-Grand Trunk road passes through the city, which connects it to Indian capital city Delhi

and to other important cities of Punjab like Jalandhar, Amritsar, Wagha Border etc. NH95

connects the city to Chandigarh in south-east direction and Ferozpur in south-west

direction. Other important State highways and major roads also connect the city to various

towns of Punjab.

Ludhiana – Hotel Industry Trend

Since past few years, Ludhiana witnessed a lot of development in industrial and commercial

sectors. The dense concentration of various industries like hosiery, woolen, machine tools,

dyes, cycle parts, mopeds, sewing machines and motor parts as explained in sections above.

The city has Asia’s largest agricultural university; Punjab Agricultural University. However,

Ludhiana is mainly perceived as a center for business activities rather than leisure. The well


42 TEV


January, 2014

Connectivity of the city from the major cities like Delhi, NCR augur well for the

hospitality industry.

Thus to target the business sect, the development of leisure added hotels having luxury

facilities for the corporate customers is primarily required in the city. Also the Ludhiana

people’s social profile reflects a strong demand for social business dining at restaurants,

wedding and reception functions which are very beneficial for the hotel industry in Ludhiana. It

has been observed by [Client Name]during the primary research that there is large number

of Banquet halls in the city compared to the hotels. Also further the hotels in the City have

major revenue coming from the Food and Beverages segment including Banquets which

gives the majority business during seasons.

The exhibit below indicates the total room night availability at Ludhiana city across luxury and

budget category –

Hotel

Location

Operator

Category

Rooms

Restaurants

Bars

Banquets

Average Room

Rate

Occupancy (%)

Majestic Park

Plaza

Ferozepur

Road

Sarovar Hotels

and Resorts

5 Star

120

2

1

3

7000 - 7500

60%

Fortune

Klassic

Model Town

Welcome

Group

3 Star

95

2

-

3

5000 - 5500

50 %

Hotel A

Firozepur

Road

Garewal

Hotels Pvt.

Ltd.

3 Star

40

1

-

2

2500 – 3000

50%

Sarovar

Portico

Clock Tower

Sarovar Hotels

and Resorts

4 Star

49

1

1

2

4500 - 5000

70%

Keys Hotels

Shaheed

Bagat Singh

Nagar

Keys Hotel

Group

3 Star

95

1

1

1

2000 – 2500

30 – 40%

Radisson Blu

Firozepur

Road

Carlson Group

5 Star

80

3

1

1

6300

40%

43 TEV


January, 2014

44 TEV


January, 2014

Limited Primary Survey: Snapshots of the Competition for Ludhiana

The team [Client Name]has carried out a limited primary survey around the project site to

assess and gauge market better for the TEV study and following observations were made –

The city hotels have a robust demand from the city dwellers as the banquets are used

for weddings, birthday celebrations, parties and other family functions

Sometimes, rooms are also booked for the guests coming from outside Ludhiana.

There are many farmhouses on the outskirts of the city which give competition for

large parties and functions to hotel banquets

With increasing demand of hotels for middle and higher business community many

national level brands are coming up with their setup with high end modern facilities

A large number of Non Residents Indians (NRIs) settled across the world, return

occasionally to India to meet their families and friends

As the facilities in normal Indian houses are not as good as the facilities these NRIs

are used to; most of them prefer to live in hotels during their stay

The peak season for hotels generally runs from October to February. However due to

growth in industrial and business activities at times it shows mix occupancy trends

Average Room Rents (ARR) in 3 to 5 category hotels ranges from INR 2500 - 6000

per night.

The 5 Star Deluxe category hotels offer ARR of INR 6000 to 7500 per night.

It is evident that the there is wide range of ARR in Ludhiana for hospitality sector

because of diverse demand drivers i.e. middle business class to NRIs.

Ludhiana, being a land of extravagant culture and diverse activities it develops a

culture of frequent parties, functions and events.

Ludhiana is centrally placed in Punjab and also an industrial hub for hosiery goods

and automobile parts and many other industries

Thus the conferences and exhibitions for the promotion of the existing economic

activities contribute in the hospitality industry

The average size of business meetings and conferences ranges between 30 to 50

covers

The average number of conferences and exhibitions in 3 and 4 Star hotels is 8 - 10

per month

45 TEV


January, 2014

The hotel supply is quite well spread between 3 to 5 star categories. Of the total

rooms available in Ludhiana;

o 5 star hotels constitutes of close to 248 rooms (Radisson Blu (80), Hyatt

Regency(168))

o 4 star hotels constitutes 247 keys rooms, (Park Plaza, Fortune Klassic)

o and 3 star hotels constitutes 39% (295 keys)

Most of the 3 star hotels in Ludhiana are owned and operated by local entrepreneurs

only

5 and 4 star categories are either owned or operated by reputed national hospitality

chains like Welcome Group, Sarovar Group and Hyatt

DLF Group is also setting up Galleria Commercial Complex comprising of retail,

commercial and food court under one room along Ferozepur Road.

46 TEV


January, 2014

Project Cost

The overall project cost for the proposed project is estimated at INR 118.52 Crores. The

exhibit provided below summarizes the estimated capital expenditure for implementing the

project.

It is to be noted that the copies of quotations and estimates by the vendors have been

provided to [Client Name] by [CLIENT NAME].



Land and Land Development 0.55 - 0.55

Building and Civil Works 31.57 17.00 48.57

Plant and Machinery 7.26 7.26 14.52

Miscellaneous Fixed Assets 9.29 21.69 30.98

Preliminary and Pre-operative 1.75 1.75 3.51

Interest During Construction 7.56 7.55 15.10

Contingency 2.41 2.30 4.70

Margin Money 0.58 0.58

Total Project Cost 60.39 58.12 118.52

Source: [CLIENT NAME]& [Client Name]Estimates

Each of the sub-components of the project cost has been discussed in the subsequent

sections.

Land and Land Development Cost

The propose 5-star category hotel is situated on a land of 3.30 acres at [Address]. The land

was obtained by [CLIENT NAME] from Universal Development Trust through a sales deal of

INR 55 Lakhs including stamp duty and registration cost on 3rd

July, 2003

Building and Civil Works Cost

The building and civil works cost as given by [CLIENT NAME] is given below –

Particulars Amount

INR INR INR Crores

Building & other expenses forming integral part of buildings and civil work

1531,22,807.00 15.31

Brick Work in Cement Morter 8,00,000.00 0.08

Cement Plaster on Walls & Ceilings 5,00,000.00 0.05

Service Block Construction 205,18,054.00 Less : Amount spent so far 54,66,597.00 150,51,457.00 1.51

S.T.P. Tank 24,56,554.00 Less : Amount spent so far 9,57,896.00 14,98,658.00 0.15

Underground water tank 35,02,828.00

47 TEV


January, 2014

Less : Amount spent so far 32,03,037.00 2,99,791.00 0.03

Tiling of terrace and Water-proofing treatment to floor slabs, terrace, toilets, kitchens and water tanks

78,00,000.00


painting and finishing’s (Both interior

& exterior) 40,00,000.00 0.40

Interiors forming integral part of the building

1790,28,844.10

Less : Amount spent so far - 1790,28,844.10 17.90

Electricals forming integral part of the building

114,88,412.95


Plumbing forming integral part of the building

67,55,859.00


HVAC forming integral part of the building 60,75,000.00 Less : Amount spent so far 29,93,333.00 30,81,667.00 0.31

Public Area - Civil Work 50,09,780.00 0.50

Land scaping 60,44,925.00 0.60

Swimming Pool 29,92,500.00 0.30

Personnel Expenses 26,00,000.00 0.26

Water & Electricity 45,00,000.00 0.45

Architect/ Interior Designer 110,00,000.00 1.10

Operator Consultancy Charges 30,00,000.00 0.30

Development of New car parking area 45,00,000.00 0.45

Steel Structure Work for Bridge & AHU Tower

15,00,000.00 0.15

Outside Marble Cladding 16,00,000.00 0.16

New Banquet Hall 50,00,000.00 0.50

Poll Side Restaurant and Linkage With GF 45,00,000.00 0.45

Additional Fire Stairs 80,00,000.00 0.80

Modification in Rooms Size (Increasing the No. of Rooms From 120 to 126) Earlier Rooms Spread over 6 Floors After Modifications 126 Rooms Spread over 5 Floors

200,00,000.00

2.00

Creation of New Facility of Sports Bar and Additional Kitty Halls And Advanced Spa at Floor No. 2 Earlier Meant for Rooms

50,00,000.00

0.50

Development of Area Adjoining Banquet and Water Bodies

25,00,000.00

0.25

Additional Water Bodies Created at the Front of Hotel

20,00,000.00

0.20

Development of Services Utilities Area due to Creation of New Facilities

180,00,000.00

1.80

Total Building and Civil Works 4856,85,946.05 48.57


48 TEV


January, 2014

Based on experience of undertaking similar assignments in recent past, [Client Name] finds

the Building and Civil works cost to be in line with the industry standards.

Plant and Machinery Cost

The total plant and machinery cost has been estimated at INR 14.52 Crores. The detailed

break-up of the plant and machinery cost has been provided in the exhibit below –

COST HEAD INR INR Crores

Details of Electrical works

Point Wiring, Conduit Wiring, Cable and cable trays

328,24,037.00

3.28

Sub Station - LT/ HT panels, transformers, main risers, distribution, earthing & lighting protection

37,55,467.00

0.38

D.G Sets with acoustic lining and AMF Panel 74,26,560.00 0.74

6 No. Elevators and their installation &up keeping

63,00,000.00

0.63

1 No. Elevator along with its erectioning for service block

25,10,000.00

0.25

EPABX System 14,84,797.00 0.15

Provision of Security System/ Electronic Locks/ CCTV's

50,00,000.00

0.50

Provision of LCD's in Guest Rooms 75,00,000.00 0.75

Provision of Refrigerators, Microwaves, Hot Plates etc. in suites

45,00,000.00

0.45

Hotel Equipment& Machinery & Installations etc.

325,00,000.00

3.25

Additional Equipment &Machinery For New Banquet , Kitty Hall, Gym Spa, All Day Dining , open coffee Shop

185,00,000.00

1.85

Operating Equipment For Different Departments

165,00,000.00

Sub-Total Electrical works 1388,00,861.00 12.23

less : Electricals forming integral part of buildings 114,88,412.95 1.15

Total Electrical Works 1273,12,448.05 11.08

HVAC works for Block C

Central Refrigeration plant 225 TR along with high side and low side equipment and 2 no. chiller plants

330,00,000.00

3.30

Additional Chiller and Ducting Required For Increased Capacity

75,00,000.00

Sub-Total HVAC Works 405,00,000.00 4.05

Less: HVAC work forming integral part of the building 60,75,000.00 0.61

Total HVAC Works 344,25,000.00 3.44


49 TEV


January, 2014

Based on the experience of executing similar assignments in recent past and site visit, the

team [Client Name]finds the plant and machinery cost reasonable.

Miscellaneous Fixed Asset

The detailed break-up of the miscellaneous fixed asset cost is given in the exhibit below –

Particulars

Amount

INR

INR INR

Crores

Interiors & Furnishing Works

Guestrooms

Flooring, Ceiling & Finishing Works 394,92,310.00

Fixtures 100,69,400.25

495,61,710.25 4.96

Public Area (Including Furnishing & Carpeting)

2063,96,400.00 20.64

Cost of Interiors in New Banquet 208,64,000.00 2.09

Additional Guest Rooms (NEW) 150,00,000.00 1.50

Interiors at New Kitty Halls, Sports Bar, Spa 535,50,000.00 5.36

Development of New Atrium For All Day Dining and open Coffee Shop

375,00,000.00 3.75

Furniture in Suites 400,00,000.00 4.00

Trap Doors in Suites 15,00,000.00 0.15

Suites POP Work/ Armstrong Ceiling 80,00,000.00 0.80

Woodwork for doors/ windows (Complete in all respects)

72,00,000.00 0.72

Polishing work with melamine & PU finish 22,00,000.00 0.22

Aluminum& UPVC Windows 28,00,000.00 0.28

Provision of Signage 30,00,000.00 0.30

Total for Interiors & Furnishing 4475,72,110.25 44.76

Less: Interiors forming integral part of the building (40% of the total cost)

1790,28,844.10 17.90

Total Interior Works 2685,43,266.15 26.85

Computers and Software

Servers/ Racks/ UPS/Storage 49,50,000.00 0.50

Service Running Messaging, Internet Circuit, Internet Gateway, BOH Network

17,60,000.00 0.18

Desktop/Laptops/Printers 22,00,000.00 0.22

Corporate Based Systems 43,01,000.00 0.43

Hotel Based Applications 115,28,000.00 1.15

Office Software 18,15,000.00 0.18

Total Computers and Software 265,54,000.00 2.66

Plumbing and Fire Safety

Water Supply 51,39,074.00 0.51

50 TEV


January, 2014

External Sewerage 11,17,695.00 0.11

External Water Supply 4,99,090.00 0.05

Fire Fighting System 88,52,810.00 0.89

Sub-Total Plumbing and Fire Safety 156,08,669.00 1.56

Less: Plumbing work forming integral part of the building

67,55,859.00 0.68

Total Cost of Plumbing and Fire Safety 88,52,810.00 0.89

Vehicles 58,53,362 0.59

Total Miscellaneous Fixed Assets 3098,03,438.15 30.98


The Based on the experience of executing similar assignments in recent past and site visit,

the team [Client Name] finds the Miscellaneous Fixed Assets cost reasonable.

Preliminary and Pre-operative Expenses

The total preliminary and pre-operative expenses have been estimated at INR 3.51 Crores.

The detailed cost break-up is given in the exhibit below –

Particulars Estimates

Establishment Cost 27,00,000

Site Vehicle & Transportation Expenses 25,00,000

Communication Expenses 9,00,000

Printing & Stationery 4,50,000

Travelling & Conveyance 22,00,000

Office & Other Expenses & Misc. 9,00,000

Taxes & Insurance 4,50,000

Sales and Marketing Exps 82,50,000

Payroll and Benefit Cost 92,00,000

Pre- Opening Training & Operating Cost 35,00,000

Preliminary Expenses 32,670

Bank Processing Charges 40,04,355

Total Preliminary and Pre-operative Cost 350,87,024.58


Interest During Construction Period

The Interest during construction period as estimated by [Client Name]is INR 15.10 Crores,

which is calculated considering that the last disbursal will take place in March 2013 and

construction will continue till 31st

March 2015.

Margin Money for Working Capital

The margin money requirement for working capital for the project has been estimated by

[Client Name] at INR 0.58 Crores. The detailed working of margin money for working capital

has been provided in the subsequent chapter on Economic Viability.

51 TEV


January, 2014

Contingency

While estimating the overall project cost, [Client Name]has considered contingency of 5% on

the hardware cost to take care of any escalation in project cost due to increase in

commodity prices like cement and steel. The overall contingency for the project has been

estimated at INR 4.70 Crores.

52 TEV


January, 2014

Means of Finance

The Project is proposed to be funded in a Debt-Equity Ratio of 2.02 : 1 considering the overall

scenario.

The proposed means of finance for the project has been provided in the exhibit below –



Equity 19.63 18.89 38.52

Long Term Loan 40.77 39.23 80.00

Total Means of Finance 60.39 58.12 118.52


Promoters’ Contribution

The Promoters’ contribution works out to INR 38.52 Crores, which will be in form of equity or

internal accruals.

Term Loan

The broad terms for the old loan of INR 35.00 Crores have been provided below –

Nature of Borrowing


Loan Amount

INR 35.00 Crores

Interest Rate

12.50% per annum


March 2015

Repayment Starts

Q1 of FY 2017-18

Repayment


The broad terms for the new loan of INR 45.00 Crores have been provided below –

Nature of Borrowing


Loan Amount

INR 45.00 Crores

Interest Rate

12.50% per annum


March 2015

Repayment Starts

Q1 of FY 2017-18

53 TEV


January, 2014

Repayment Schedule

The proposed repayment schedule for the old loan from SBI of INR 35.00 Crores has been

provided as exhibit below –


Description 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25

Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%

Annual Summary

Opening Balance

35.00

33.25

30.63

27.13

22.75

17.50

12.25

6.13

Addition - - - - - - - -

Repayment

1.75

2.63

3.50

4.38

5.25

5.25

6.13

6.13

Closing Balance

33.25

30.63

27.13

22.75

17.50

12.25

6.13

-

Interest for Period

4.27

3.99

3.61

3.12

2.52

1.86

1.15

0.38

The repayment schedule for the new loan has been provided in the exhibit below –


Description 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25

Interest Rate 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%

Annual Summary

Opening Balance

45.00

42.75

40.50

37.13

32.63

28.13

22.50

16.88

Addition - - - - - - - -

Repayment

2.25

2.25

3.38

4.50

4.50

5.63

5.63

6.75

Closing Balance

42.75

40.50

37.13

32.63

28.13

22.50

16.88

10.13

Interest for Period

5.48

5.20

4.85

4.36

3.80

3.16

2.46

1.69

Repayment


54 TEV


January, 2014

Economic Viability

This chapter covers the economic viability of overall project.

Rooms and Occupancy Level

For the purpose of financial assessment [Client Name]has been conservative and has

considered the occupancy level as provided in the exhibit below –

Description

Unit 31-

Mar- 16

31- Mar-17

31- Mar-18

31- Mar-19

31- Mar-20

31- Mar-21

31- Mar-22

31- Mar-23

Onwar ds

Room Types Rooms Nos. 126 126 126 126 126 126 126 126 126

Days Operational

Days 365 365 365 365 365 365 365 365 365

Room Inventory

Rooms Nos. 45,990 45,990 45,990 45,990 45,990 45,990 45,990 45,990 45,990

Rooms Occupancy

Rooms % 45.00

% 50% 55% 60% 65% 70% 70%

75.00 %

75.00 %

Rooms Occupied

Nos. 20,696 22,995 25,295 27,594 29,894 32,193 32,193 34,493 34,493

Rooms Nos. 20,696 22,995 25,295 27,594 29,894 32,193 32,193 34,493 34,493


The occupancy levels are in line with the industry standards.

Rentals and Revenues

Rooms Rentals

For the purpose of financial assessment [Client Name] has considered the room rentals

as provided in the exhibit below –

All Figures in INR/ Day

Descript ion

31- Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Room Rental

Rooms 6,750 7,088 7,442 7,814 8,205 8,615 9,046 9,498 9,973 10,47

2 10,99

6 11,54

6

Annual Increase

0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%


55 TEV


January, 2014

The room rental considered is in line with the existing rates charged by 5 Star and 5 Star

Deluxe Hotel Category hotels in the region. The rental revenues as considered for proposed

project are found to be in line with the local industry standards.

Based occupancy rate considered and the room rate as discussed above, the room revenue

for the project as estimated has been provided below –


Descript ion

31- Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Studio 13.97 16.30 18.82 21.56 24.53 27.73 29.12 32.76 34.40 36.12 37.93 39.83

Room Revenu e

13.97

16.30

18.82

21.56

24.53

27.73

29.12

32.76

34.40

36.12

37.93

39.83

Source: [Client Name]Estimates

Other Revenue Stream

Minor Operating Departments Revenue

The minor services include transport services provided to guest, revenue from business

Centre etc. The revenue from MOD has been considered at INR 250 per room per day for the

first year of operations and subsequently has been increase at 15% per annum for the

balance study duration.

Food and Beverage

The food and beverage revenue has been considered from two sources –

Guests staying at the hotel

Walk-in guests

The revenue from food and beverage services as considered have been provided in the

exhibit below –

Description

Unit 31- Mar -16

31- Mar -17

31- Mar -18

31- Mar -19

31- Mar -20

31- Mar -21

31- Mar -22

31- Mar -23

31- Mar -24

31- Mar -25

31- Mar -26

31- Mar -27

Food and Beverage Revenue

Food Revenue per Room

INR 800 896 986 106 5

115 0

124 2

134 1

144 8

156 4

168 9

182 4

197 0

Beverage Revenue per Room

INR

100

112

123

133

144

156

168

181

195

211

228

246

Annual Increase % 12% 10% 8% 8% 8% 8% 8% 8% 8% 8% 8%

Food Revenue INR Cror es

1.66

2.06

2.49

2.94

3.44

4.00

4.32

4.99

5.39

5.83

6.29

6.80

Beverage Revenue

INR Cror es

0.21

0.26

0.31

0.37

0.43

0.50

0.54

0.62

0.67

0.73

0.79

0.85

Food and Beverage

INR Cror

1.86 2.32 2.81 3.31 3.87 4.50 4.86 5.62 6.07 6.55 7.08 7.64

56 TEV


January, 2014

Revenue es

Walk-In Food and Beverage Revenue

Expected Walk- Ins Daily - Food

Nos. 75 80 80 80 80 80 80 80 80 80 80 80

Food Charge per Walk-In

INR 850 952 104 7

113 1

122 1

131 9

142 5

153 9

166 2

179 5

193 9

209 4

Expected Walk-

Ins Daily –

Beverage

Nos.

95

105

105

105

105

105

105

105

105

105

105

105

Beverage Charge per Walk-In

INR

350

392

431

465

502

542

585

632

683

738

797

861

Walk-In Food and Beverage Revenue

INR Cror es

3.54

4.28

4.71

5.08

5.49

5.93

6.40

6.92

7.47

8.07

8.72

9.41

Source: [Client Name]Estimates

Banquet Revenue

The banquet revenue as estimated for the project has been provided in the exhibit below –

Description

Unit 31- Mar -16

31- Mar -17

31- Mar -18

31- Mar -19

31- Mar -20

31- Mar -21

31- Mar -22

31- Mar -23

31- Mar -24

31- Mar -25

31- Mar -26

31- Mar -27

Banquet Revenue

Weekends Day s

3 3 3 3 3 3 3 3 3 3 3 3

Weekdays Day s

4 4 4 4 4 4 4 4 4 4 4 4

High season month (Dec-Feb) Week

Nos.

13

13

13

13

13

13

13

13

13

13

13

13

Banquet occupancy- weekend

%

75%

75%

75%

85%

95%

95%

95%

95%

95%

95%

95%

95%

Banquet occupancy- weekdays

%

30%

30%

30%

40%

45%

45%

45%

45%

45%

45%

45%

45%

Banquets Nos. 45 45 45 54 60 60 60 60 60 60 60 60

Covers per Banquet

Nos. 650 650 650 650 650 650 650 650 650 650 650 650

Total High Season Covers

Nos. 29,2 50

29,2 50

29,2 50

35,1 00

39,0 00

39,0 00

39,0 00

39,0 00

39,0 00

39,0 00

39,0 00

39,0 00

Shoulder Season Month (Sept-Nov) Week

Nos.

13

13

13

13

13

13

13

13

13

13

13

13


%

55%

55%

60%

70%

70%

70%

70%

70%

70%

70%

70%

70%


%

15%

15%

25%

25%

25%

25%

25%

25%

25%

25%

25%

25%

Banquets Nos. 29 29 36 40 40 40 40 40 40 40 40 40

Covers per Banquet

Nos. 500 500 500 500 500 500 500 500 500 500 500 500

Total Shoulder Season Covers

Nos. 14,5 00

14,5 00

18,0 00

20,0 00

20,0 00

20,0 00

20,0 00

20,0 00

20,0 00

20,0 00

20,0 00

20,0 00

57 TEV


January, 2014

Low Season Months (mar- Aug) Week

Nos.

26

26

26

26

26

26

26

26

26

26

26

26


%

5%

5%

5%

15%

20%

20%

20%

20%

20%

20%

20%

20%


%

5%

5%

5%

8%

8%

8%

8%

8%

8%

8%

8%

8%

Banquets Nos. 9 9 9 20 24 24 24 24 24 24 24 24

Covers per Banquet

Nos. 260 270 270 270 270 270 270 270 270 270 270 270

Total Low Season Covers

Nos. 2,34

0 2,43

0 2,43

0 5,40

0 6,48

0 6,48

0 6,48

0 6,48

0 6,48

0 6,48

0 6,48

0 6,48

0

Total Cover Per Annum

Nos. 46,0 90

46,1 80

49,6 80

60,5 00

65,4 80

65,4 80

65,4 80

65,4 80

65,4 80

65,4 80

65,4 80

65,4 80

Banquet Food Per Cover

INR 1,35

0 1,51

2 1,66

3 1,79

6 1,94

0 2,09

5 2,26

3 2,44

4 2,64

0 2,85

1 3,07

9 3,32

5

Banquet Beverage Per cover

INR

400

448

493

532

575

621

671

725

783

846

914

987

Total Banquet Revenue

INR Cror es

8.07

9.05 10.7

1 14.0

8 16.4

7 17.7

8 19.2

1 20.7

5 22.4

1 24.2

1 26.1

5 28.2

3

Source: [Client Name] Estimates

Spa Revenue

The revenue from Spa services has been estimated at 3% of the room revenue for the entire

duration of the project.

Departmental/ Variable Expenses

The variable expenses in line with industry standards considered by [Client Name] for the

purpose of financial analysis have been provided below –

Description

Unit 31-

Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Departmental Expenses

Room Expenses

% of Room

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

15.0 0%

MOD Expenses

% of MOD

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

70.0 0%

F&B Expenses

% of F&B

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

Banquet Expenses

% of Banq uet

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

Spa Expenses

% of Spa

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

40.0 0%

Room Expenses

INR Crore s

2.10

2.44

2.82

3.23

3.68

4.16

4.37

4.91

5.16

5.42

5.69

5.97

MOD Expenses

INR Crore s

0.36

0.46

0.59

0.74

0.92

1.14

1.31

1.61

1.85

2.13

2.45

2.82

58 TEV


January, 2014

F&B Expenses

INR Crore s

2.16

2.64

3.01

3.36

3.74

4.17

4.50

5.01

5.42

5.85

6.32

6.82

Banquet Expenses

INR Crore s

3.23

3.62

4.28

5.63

6.59

7.11

7.68

8.30

8.97

9.68 10.4

6 11.2

9

Spa Expenses

INR Crore s

0.17

0.20

0.23

0.26

0.29

0.33

0.35

0.39

0.41

0.43

0.46

0.48

Total Departmenta l Expenses

INR Crore s

8.01

9.36 10.9

3 13.2

2 15.2

2 16.9

1 18.2

1 20.2

3 21.8

1 23.5

1 25.3

7 27.3

8


The other variable costs as considered for the project have been provided in the exhibit below

–

Description

Unit 31-

Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Other Variable Costs

Power Cost % of Sale s

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

8.00 %

Insurance Cost

% of NFA

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

0.50 %

Repairs and Maintenance Cost

% of GFA

1.00 %

1.00 %

1.00 %

1.50 %

1.50 %

1.50 %

1.50 %

1.50 %

1.50 %

1.50 %

1.50 %

1.50 %

Power Cost INR Cror es

2.27

2.65

3.08

3.66

4.19

4.67

4.99

5.55

5.92

6.33

6.76

7.23

Insurance Cost

INR Cror es

0.58

0.56

0.54

0.52

0.50

0.48

0.47

0.45

0.43

0.41

0.39

0.37


INR Cror es

1.19

1.19

1.19

1.78

1.78

1.78

1.78

1.78

1.78

1.78

1.78

1.78

Other Variable Costs

INR Cror es

4.04

4.40

4.81

5.96

6.48

6.94

7.24

7.78

8.14

8.52

8.94

9.38


Fixed Expenses

The operations expenses in line with industry standards as considered by [Client Name] for

the purpose of carrying out the financial analysis have been provided below –

Description Unit 31-

Mar-16 31-

Mar-17 31-

Mar-18 31-

Mar-19 31-

Mar-20 31-

Mar-21 31-

Mar-22 31-

Mar-23 31-

Mar-24 31-

Mar-25 31-

Mar-26 31-

Mar-27

Administrative Expenses

% of Sales

10.00 %

10.00 %

8.00% 8.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%

Sales and Marketing Costs

% of Sales

6.00% 6.00% 5.00% 5.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Management Fee % of Sales

1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75% 1.75%

Incentives to Operator

% of OP

4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Administrative INR 2.84 3.31 3.08 3.66 3.14 3.50 3.74 4.16 4.44 4.74 5.07 5.42

59 TEV


January, 2014

Expenses Crores Sales and Marketing Costs

INR Crores

1.70 1.99 1.92 2.29 2.10 2.34 2.49 2.77 2.96 3.16 3.38 3.61

Management Fee INR Crores

0.50 0.58 0.67 0.80 0.92 1.02 1.09 1.21 1.30 1.38 1.48 1.58

Incentives to Operator

INR Crores

0.43 0.52 0.66 0.76 0.94 1.06 1.14 1.28 1.36 1.45 1.55 1.65

Source: [Client Name]Analysis

Working Capital Requirement

The calculations of working capital are based on experience of [Client Name] in executing

similar assignments. The following have been considered while estimating the working capital

requirement for the project –

Raw material inventory of 30 days for 5 star category Hotel

Spares and consumables of 7days for 5star category Hotel

Debtors of 30 days for 5 star category Hotel

Creditors have been ascertained at 30 days for 5 star category Hotel

The working capital requirement of [CLIENT NAME] has estimated is provided in the exhibit below –


Description 31-

Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Raw Material 0.44 0.51 0.60 0.74 0.85 0.93 1.00 1.09 1.18 1.28 1.38 1.49

Stores and Consumables

0.03 0.04 0.04 0.05 0.06 0.06 0.07 0.07 0.08 0.08 0.09 0.10

Debtors 2.33 2.72 3.16 3.76 4.31 4.80 5.12 5.70 6.08 6.50 6.95 7.42

Current Assets

2.81 3.27 3.80 4.55 5.21 5.79 6.19 6.87 7.34 7.86 8.41 9.01

Creditors 0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31

Current Liabilities

0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31

Working Capital Gap

2.31 2.69 3.18 3.82 4.46 4.95 5.29 5.86 6.27 6.72 7.19 7.71

Margin Money

0.58 0.67 0.80 0.96 1.11 1.24 1.32 1.47 1.57 1.68 1.80 1.93

Bank Borrowing

1.73 2.02 2.39 2.87 3.34 3.71 3.97 4.40 4.71 5.04 5.39 5.78

Interest on Working Capital

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

12.5 0%

Interest for the Period

0.22 0.25 0.30 0.36 0.42 0.46 0.50 0.55 0.59 0.63 0.67 0.72


Depreciation

The following depreciation rate has been assumed while preparing the depreciation schedule

detailed below –

60 TEV


January, 2014

Description Unit Value

Companies Act (WDV)

Land % 0.00%

Building and Civil Works % 1.63%

Plant and Machinery % 4.75%

Miscellaneous Fixed Assets % 4.75%

Income Tax Act (WDV)

Land % 0.00%

Building and Civil Works % 10.00%

Plant and Machinery % 15.00%

Miscellaneous Fixed Assets % 10.00%

Income Tax

Following assumption has been considered while estimating the income tax for the project –

Description

Unit

Value

Income Tax – Base Rate

%

30.00

Surcharge

%

10.00

Education Cess

%

3.00

Effective Income Tax

%

33.99

Minimum Alternate Tax (MAT)

%

18.50

Education Cess

%

3.00

Surcharge

%

10.00

Effective MAT

%

20.96


61 TEV


January, 2014

Profitability Projections

Statement of profit and loss account, cash flow statements and balance sheet and other financial ratio calculations are furnished as Annexure.



16 31-Mar-

17 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25 31-Mar-

26 31-Mar-

27

Revenue INR

Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33


Crores 17.50 20.14 22.04 26.67 28.78 31.76 33.89 37.41 39.98 42.76 45.77 49.02

Operating Profit INR

Crores 10.87 12.96 16.41 19.06 23.62 26.64 28.44 31.92 34.05 36.32 38.74 41.32

Operating Profit Margin % 38.31% 39.16% 42.67% 41.68% 45.07% 45.61% 45.63% 46.03% 45.99% 45.92% 45.84% 45.74%

Contribution INR

Crores 16.34 19.36 22.73 26.57 30.72 34.57 36.90 41.34 44.11 47.06 50.22 53.58

Contribution Margin % 57.59% 58.47% 59.13% 58.10% 58.62% 59.19% 59.20% 59.63% 59.58% 59.51% 59.42% 59.32%

BEP Sales INR

Crores 33.54 34.67 33.83 35.61 33.45 32.94 31.92 31.24 30.02 28.69 27.98 28.37

BEP Capacity Utilization

% 118.21

% 104.75

% 87.99% 77.87% 63.83% 56.40% 51.21% 45.05% 40.55% 36.28% 33.11% 31.41%

Cash Break Even INR

Crores 27.24 28.47 27.70 29.37 27.26 26.81 25.79 25.15 23.93 22.59 21.87 22.25


% 96.00% 86.00% 72.03% 64.21% 52.02% 45.91% 41.38% 36.28% 32.33% 28.57% 25.88% 24.64%

Net Profit Margin % -10.49% -2.78% 5.61% 10.16% 16.76% 20.39% 22.83% 25.89% 27.99% 28.39% 26.39% 26.84%

Equity Share Capital INR

Crores 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52

Reserves and Surplus INR

Crores -2.98 -3.89 -1.74 2.91 11.69 23.60 37.83 55.79 76.51 98.96 121.26 145.50

Tangible Net Worth (TNW)

INR

Crores 35.54 34.62 36.78 41.43 50.21 62.12 76.35 94.30 115.03 137.48 159.78 184.02

Term Loan INR

Crores 80.00 80.00 76.00 71.13 64.25 55.38 45.63 34.75 23.00 10.13 3.38 -

Debt Equity Ratio Ratio 2.25 2.31 2.07 1.72 1.28 0.89 0.60 0.37 0.20 0.07 0.02 -


62 TEV


January, 2014

Total Outside Liability (TOL)

INR Crores

82.23 82.60 79.00 74.72 68.35 59.93 50.49 40.15 28.78 16.31 9.99 7.08

TOL/ TNW Ratio 2.31 2.39 2.15 1.80 1.36 0.96 0.66 0.43 0.25 0.12 0.06 0.04

Closing Cash Balance INR

Crores 0.65 3.27 4.93 8.17 13.55 20.09 28.11 38.68 51.18 64.27 83.33 107.69

DSCR Ratio - - 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83

Minimum DSCR Ratio 1.13 Maximum DSCR Ratio 7.83 Average DSCR Ratio 1.79

NPV INR

Crores 18.57

IRR % 13.39% Cost of Capital % 10.93%


63 TEV


January, 2014

Financial Analysis

Note – Numbers in this chapter deals with overall project unless specified for the pending

work project cost.

Margin

The average EBDITA margin for the overall project is ~ 43.97%, while the net profit margin is

~ 16.50%

Debt Equity Ratio

As per [Client Name] estimates, the Debt-Equity Ratio of the project works out to 2.08:1 for

the proposed project.

Debt Service Coverage Ratio

As per [Client Name] assessment, the DSCR and Interest Coverage Ratio of the project

have been provided in the exhibit below –

Description

Unit 31-

Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

DSCR Ratio 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83

Average DSCR

Ratio 1.79

Interest Coverage Ratio

Ratio

1.59

1.90

2.47

3.08

3.83

5.30

7.75

13.60

31.73 133.1

2


The minimum DSCR for the project is 1.13, while the average DSCR is 1.79.

Internal Rate of Return

The IRR of the overall project is 13.39%, which is higher than the post-tax cost of capital at

10.93%. Hence the project is financially viable.

Break Even Analysis

The break even analysis of the project has been provided in the exhibit below –


Description

Unit 31-

Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Contribution INR Cror es

16.3 4

19.3 6

22.7 3

26.5 7

30.7 2

34.5 7

36.9 0

41.3 4

44.1 1

47.0 6

50.2 2

53.5 8

Contribution Margin %

57.5 9%

58.4 7%

59.1 3%

58.1 0%

58.6 2%

59.1 9%

59.2 0%

59.6 3%

59.5 8%

59.5 1%

59.4 2%

59.3 2%

BEP Sales INR Cror

33.5 4

34.6 7

33.8 3

35.6 1

33.4 5

32.9 4

31.9 2

31.2 4

30.0 2

28.6 9

27.9 8

28.3 7


64 TEV


January, 2014

es BEP Capacity Utilization

% 118. 21%

104. 75%

87.9 9%

77.8 7%

63.8 3%

56.4 0%

51.2 1%

45.0 5%

40.5 5%

36.2 8%

33.1 1%

31.4 1%

Cash Break Even

INR Cror es

27.2 4

28.4 7

27.7 0

29.3 7

27.2 6

26.8 1

25.7 9

25.1 5

23.9 3

22.5 9

21.8 7

22.2 5


% 96.0 0%

86.0 0%

72.0 3%

64.2 1%

52.0 2%

45.9 1%

41.3 8%

36.2 8%

32.3 3%

28.5 7%

25.8 8%

24.6 4%

Source: [Client Name]Analysis


65 TEV


January, 2014

Sensitivity Analysis

A sensitivity analysis was carried out to assess the impact of the following scenarios on the

major financial parameters.

The summary of sensitivity analysis is provided in the following exhibit –

Description NPV IRR Min. DSCR Avg. DSCR

INR Crores % Ratio Ratio

Base Case 18.57 13.39% 1.13 1.79

5% decrease in occupancy level 12.44 12.57% 1.09 1.75

5% decrease in revenue 13.81 12.75% 1.11 1.77

5% increase in departmental costs 12.93 12.64% 1.10 1.75

10% increase in hard cost 4.98 12.01% 1.13 1.80

1% increase in interest rates 11.17 12.92% 1.08 1.75

The minimum DSCR is 1.13 for the FY 2017-18, when the Company starts repayment of loan

to the Bank commences.

The sensitivity analysis shows that project IRR and DSCR are more sensitive to 10% increase

in hard cost and 1% increase in interest rates.

In the base case scenario, the average DSCR is 1.79. The average DSCR remain above 1.75

in all the sensitivity scenarios, hence the project can be said to be comfortable to these

changes.


66 TEV


January, 2014

Risk Analysis and Mitigation Measures

The risk analysis, allocation and mitigation measures are shown in the following table –

Key Risk Risk Carrier Mitigation Measure

Experience and

Capability

[CLIENT NAME]

The promoters are well experienced in the

successful operations of various business

segments.

However the promoters have not operated any

hotel projects, hence there is risk related to

experience and capability of successfully

operating hotel business.

To mitigate the above risk, the Company has

handed over the management, operations and

marketing of the hotel to [Client Name] Group.

Funding Risk

[CLIENT NAME]

The promoters’ contribution for the balance of

project works out to INR 38.52 Crores. The

promoters propose to bring in the same from

their own sources.

Time Over-run

[CLIENT NAME]

Hotel has already accomplished approximately

60 - 70% of the civil and construction related

work. The balance of the work could not be

completed due to shortage of funds. However

once the funds are tied up, the balance of the

project is expected to be completed by 31st

March 2015.

Cost Over-run

[CLIENT NAME]

As discussed above, approximately 60 - 70% of

the hotel is already constructed. The Company

has received firm quotation for balance of the

work and has in fact issued most of the purchase

orders as well. Also the Company ensures to

take care of any cost overrun in future on its

own. Hence cost over-run is not envisaged for

the project.

Statutory Approvals

[CLIENT NAME] The hotel project is already operational and all

the critical approvals and clearances are already


67 TEV


January, 2014

in place and hence statutory approvals and

clearances related risk is not envisaged for the

project.

Occupancy Risk

[CLIENT NAME]

Based on the market assessment, it is

understood that there is a significant demand for

quality hotels in Ludhiana.

Further, as the hotel is proposed to be operated

by a renowned hotel operator, the hotel will be

benefited by the operator’s wide marketing

network and the operator will leverage on its

international presence to support occupancy

levels for the hotel.

Hence market related risk is not envisaged for

the project.

Pricing Level

[CLIENT

NAME]

[CLIENT NAME] has benchmarked its prices

against the prevailing level of prices in premium

segment hotels in Ludhiana.

While undertaking sensitivity analysis, it was

noted that the project is sensitive to increase in

hard cost

However, the same has been captured in terms

of sensitivity analysis where it can be seen that

even with a fall of 10% in revenues, the project

can meet its debt service obligations.

Competition Risk

[CLIENT NAME]

Based on the market assessment it is

understood that there is significant demand for

quality hotels in the region.

The project will face competition from the

existing 5-Star hotel and other 4-Star hotels to

some extent.

The Company will have to bank upon the

operator’s expertise in marketing of such

properties and will have to advertise

aggressively in the initial years of operations, to

increase its visibility and reduce the competition


68 TEV


January, 2014

risk.

Operating Risk [CLIENT NAME]

/ Hotel

Operator

The hotel is operated by a renowned

international hotel operator. Qualified personnel

are recruited and trained by operator for the

smooth operation of the hotel.

Force Majeure

[CLIENT NAME] /Insurer

The Company has provided [Client Name]with

Copy of insurance undertaken by it to cover the

Force Majeure Risk.

Hence the Force Majeure risk is not envisaged

for the project as it has already been covered.


69 TEV


January, 2014

SWOT Analysis

Strength

The proposed project is being operated by a reputed hotel operator.

There is buoyant demand for the quality hotels in and around Ludhiana City.

Management team is a good mix of experience and youth.

Experienced technical team.

Weakness

The Promoters of the Company do not have experience in operations of a star

category hotel.

However, to mitigate the risk, the Company has roped in [Client Name] under the

brand name of [Client Name]. [Client Name] also commands a reputed name in

hospitality industry in South East Asia and also provided technical consultancy beside

operating and management contract.

Opportunity

Significant demand for quality hotels in region of Ludhiana.

Threat

Generic threat of global economic slowdown.

Capacity (addition of rooms) enhancement by other established players in this

segment of business.


70 TEV


January, 2014

Conclusion

The objective of the study is to assess techno economic viability of [CLIENT NAME]’s 5 –

Star category Hotel at Ludhiana and to evaluate the capability of the Company to repay the

term loan which it proposes to raise for the project.

[Client Name] has assessed the techno economic viability of the project based on the

data provided by the Company and other market information based on primary and

secondary research.

While assessing the viability of the project, [Client Name] considered the following major factors:

Project specific attributes, both positive and negative

Appropriate Average Room Rate and Lease Rentals based on primary survey &

secondary research

Appropriate Occupancy Levels based on the primary survey & secondary research

Reasonableness of the Project Cost

Technical Assessment Summary

Land

The 5-star category hotel is situated on a land of 3.3 acres at [Address] under the brand

name of [Client Name] Suites of [Client Name] Group through [Client Name] India Pvt Ltd.

The land was obtained by [CLIENT NAME] from Universal Development Trust through a

sales deal of INR 53, 00,000 excluding stamp duty and registration on 3rd

July, 2003

Services Offered

The 5 –Star category “[Client Name] Suites” hotel by [CLIENT NAME] is providing the following services –

126 rooms including 96 single bedroom suites, 2 honeymoon suites, 28 family rooms

A lobby

Sports Bar

Thai Restaurant

Multi-cuisine Restaurant

24/7 Coffee shop

3 Banquet facilities of total 1000 to 1200 capacity, which can be divided into smaller

halls for multiple gathering and conferences

Kitty halls


71 TEV


January, 2014

Meetings and conference room

Swimming Pool having a restaurant beside it

Parking below swimming pool and on the periphery of the boundary wall

Gymnasium

Separate Terrace Spa

Structure of the Project

The 5 star category hotel building is Ground + 7 Floor Structure

Utilities

Power

The required power for operations of the project will be supplied by Punjab Electricity Board

and the application for the connection has already been approved.

Built Up Area

The total built up area of the project is 2, 88,060 Ft².

Hotel Operations

[CLIENT NAME] has management and operational tie up with ‘[Client Name] (an [Client

Name] brand) a Thailand based Company. The management and operation contract has

validity period of 15 years.

Implementation Schedule

Based on the experience of undertaking similar assignments in recent past;

[Client Name] understands that the remaining work as discussed earlier will be

over by 31st

March 2015 to be on the conservative side.

Economic Viability

The project cost for the proposed project has been estimated at INR 118.52 Crores which

would be funded by promoters’ contribution of INR 38.52 Crores and Term Loan of INR 80.00

Crores.

As per [CLIENT NAME] India’s assessment, the IRR of the project works out to 13.39%,

which is higher than the post-tax cost of capital at 10.93%. The minimum DSCR of the

project is 1.13. The average DSCR of the project is 1.79, which provides adequate safety to

lenders.

Critical Success Factors

Early Disbursement of Funds


72 TEV


January, 2014

[Client Name] notes that the balance of the work pending like completion of the civil

work, interior, restaurants and others has reduced the level of profitability of the

project originally envisaged. An early completion of the balance of the work will result

in additional revenue for the project and hence increase profitability. Hence an

early disbursal of Funds from both the Promoters as well as the Banks will be in

overall interest of the project.

Operational Expenses

It is noted that [CLIENT NAME] has involved [Client Name] Group for handling of

day to day issues of the project. Further based on the sensitivity analysis it is

understood that the project is sensitive to increase in operational expenses. Hence

the Hotel Operations team from Hotel Operator will have to keep a check on the

operating costs of the hotel to keep the project viable.

Subject to the above assessment, [Client Name]is of the opinion that the project is

technically feasible and economically viable.


Annexure 1: Projected Profit and Loss Account

73 TEV


January, 2014


16 31-Mar-

17 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25 31-Mar-

26 31-Mar-

27

Net Sales INR

Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33

Other Income INR

Crores

Total Revenue INR

Crores 28.37 33.10 38.45 45.73 52.40 58.40 62.34 69.33 74.03 79.08 84.50 90.33

Variable Costs

Room Expenses INR

Crores 2.10 2.44 2.82 3.23 3.68 4.16 4.37 4.91 5.16 5.42 5.69 5.97

MOD Expenses INR

Crores 0.36 0.46 0.59 0.74 0.92 1.14 1.31 1.61 1.85 2.13 2.45 2.82

F&B Expenses INR

Crores 2.16 2.64 3.01 3.36 3.74 4.17 4.50 5.01 5.42 5.85 6.32 6.82

Banquet Expenses INR

Crores 3.23 3.62 4.28 5.63 6.59 7.11 7.68 8.30 8.97 9.68 10.46 11.29

Spa Expenses INR

Crores 0.17 0.20 0.23 0.26 0.29 0.33 0.35 0.39 0.41 0.43 0.46 0.48

Power Cost INR

Crores 2.27 2.65 3.08 3.66 4.19 4.67 4.99 5.55 5.92 6.33 6.76 7.23

Insurance Cost INR

Crores 0.57 0.55 0.54 0.52 0.50 0.48 0.46 0.44 0.43 0.41 0.39 0.37


INR Crores

1.18 1.18 1.18 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77 1.77

Total Variable Costs INR

Crores 12.03 13.75 15.72 19.16 21.68 23.84 25.43 27.99 29.92 32.02 34.29 36.75

Fixed Costs

Administrative Expenses INR

Crores 2.84 3.31 3.08 3.66 3.14 3.50 3.74 4.16 4.44 4.74 5.07 5.42

Sales and Marketing Costs

INR Crores

1.70 1.99 1.92 2.29 2.10 2.34 2.49 2.77 2.96 3.16 3.38 3.61

Management Fee INR

Crores 0.50 0.58 0.67 0.80 0.92 1.02 1.09 1.21 1.30 1.38 1.48 1.58

74 TEV


January, 2014


Incentives to Operator INR

Crores 0.43 0.52 0.66 0.76 0.94 1.07 1.14 1.28 1.36 1.45 1.55 1.65

Total Fixed Costs INR

Crores 5.47 6.39 6.33 7.51 7.10 7.93 8.46 9.42 10.06 10.74 11.48 12.27


Crores 17.50 20.14 22.04 26.67 28.78 31.76 33.89 37.41 39.98 42.76 45.77 49.02

EBDITA INR

Crores 10.87 12.96 16.41 19.06 23.62 26.64 28.44 31.92 34.05 36.32 38.74 41.32

EBDITA Margin % 38.31% 39.16% 42.67% 41.68% 45.07% 45.61% 45.63% 46.03% 45.99% 45.92% 45.84% 45.74%

Depreciation INR

Crores 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63

Interest on Term Loan INR

Crores 10.00 10.00 9.75 9.20 8.46 7.48 6.31 5.02 3.61 2.07 0.84 0.21

Interest on Working Capital Loan

INR Crores

0.22 0.25 0.30 0.36 0.42 0.46 0.50 0.55 0.59 0.63 0.67 0.72

Non-Operating Expenses INR

Crores - - - - - - - - - - - -

Expenses Written Off INR

Crores - - - - - - - - - - - -

Total Expenditure INR

Crores 31.35 34.02 35.72 39.85 41.29 43.33 44.33 46.62 47.81 49.09 50.91 53.58

Profit Before tax INR

Crores -2.98 -0.92 2.73 5.88 11.11 15.07 18.00 22.71 26.22 29.99 33.59 36.75

Applicable Tax INR

Crores - - 0.57 1.23 2.33 3.16 3.77 4.76 5.50 7.54 11.29 12.51

Profit After Tax INR

Crores -2.98 -0.92 2.16 4.65 8.78 11.91 14.23 17.95 20.72 22.45 22.30 24.24

PAT Margin % -10.49% -2.78% 5.61% 10.16% 16.76% 20.39% 22.83% 25.89% 27.99% 28.39% 26.39% 26.84%

75 TEV


January, 2014


Annexure 2: Projected Cash Flow Statement

Description

Unit 31-Mar-

14 31-Mar-

15 31-Mar-

16 31-Mar-

17 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25 31-Mar-

26 31-Mar-

27

Sources of Funds

PAT INR Crores

-

- -

2.98 -

0.92

2.16

4.65

8.78

11.91

14.23

17.95

20.72

22.45

22.30

24.24

Depreciation INR Crores

-

-

3.63

3.63

3.63

3.63

3.63

3.63

3.63

3.63

3.63

3.63

3.63

3.63

Expenses written off INR Crores

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Equity Investment INR Crores

19.63

18.89

-

-

-

-

-

-

-

-

-

-

-

-

Increase in Term loans INR Crores

40.77

39.23

-

-

-

-

-

-

-

-

-

-

-

-

Increase in Working Capital Loan

INR Crores

-

-

1.73

0.28

0.37

0.48

0.48

0.37

0.26

0.43

0.31

0.33

0.36

0.38

Increase in Unsecured Loan

INR Crores

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total Sources INR Crores

60.39

58.12

2.39

2.99

6.16

8.76

12.89

15.91

18.12

22.01

24.66

26.41

26.28

28.25

Application of Funds

Increase Gross Fixed Assets

INR Crores

60.39

57.55

-

-

-

-

-

-

-

-

-

-

-

-

Increase in Working Capital

INR Crores

-

-

2.31

0.38

0.49

0.64

0.64

0.49

0.34

0.57

0.41

0.44

0.48

0.51

Other Payments INR Crores

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Repayment of loans INR Crores

-

-

-

-

4.00

4.88

6.88

8.88

9.75

10.88

11.75

12.88

6.75

3.38

Total Uses INR Crores

60.39

57.55

2.31

0.38

4.49

5.51

7.51

9.36

10.09

11.45

12.16

13.32

7.23

3.89

Net Cash Flow INR Crores

-

0.58

0.08

2.61

1.66

3.24

5.38

6.54

8.02

10.56

12.50

13.09

19.06

24.37

Opening Balance INR Crores

-

-

0.58

0.65

3.27

4.93

8.17

13.55

20.09

28.11

38.68

51.18

64.27

83.33

Closing Balance INR Crores

-

0.58

0.65

3.27

4.93

8.17

13.55

20.09

28.11

38.68

51.18

64.27

83.33

107.69

76 TEV


January, 2014


Annexure 3: DSCR, NPV & IRR Calculation

Description Unit 31-

Mar-14 31-

Mar-15 31-

Mar-16 31-

Mar-17 31-

Mar-18 31-

Mar-19 31-

Mar-20 31-

Mar-21 31-

Mar-22 31-

Mar-23 31-

Mar-24 31-

Mar-25 31-

Mar-26 31-

Mar-27

Initial Cash Flow

Capital Investment INR

Crores -60.39 -57.55 - - - - - - - - - - - -

Margin Money INR

Crores - -0.58 - - - - - - - - - - - -

Total Initial Cash flow

INR Crores

-60.39 -58.12 - - - - - - - - - - - -

Operating Cash flow

PAT INR

Crores - - -2.98 -0.92 2.16 4.65 8.78 11.91 14.23 17.95 20.72 22.45 22.30 24.24

Depreciation INR

Crores - - 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63


Crores - - - - - - - - - - - - - -

Interest Coverage INR

Crores - - 10.22 10.25 7.94 7.55 7.02 6.28 5.38 4.40 3.32 2.02 1.01 0.62

Total Operating Cash flow

INR Crores

- - 10.87 12.96 13.73 15.83 19.43 21.82 23.24 25.99 27.67 28.10 26.93 28.49

Terminal Cash flow

Salvage Value INR

Crores 74.40

Release Working Capital

INR Crores

7.71

Total Terminal Cash flow

INR Crores

- - - - - - - - - - - - - 82.10

Net Cash flow INR

Crores -60.39 -58.12 10.87 12.96 13.73 15.83 19.43 21.82 23.24 25.99 27.67 28.10 26.93 110.59

NPV INR

Crores 18.57

IRR % 13.39

%

77 TEV


January, 2014


Post Tax Cost of Capital

% 10.93

%

Debt Service Coverage Ratio

PAT INR

Crores - - -2.98 -0.92 2.16 4.65 8.78 11.91 14.23 17.95 20.72 22.45 22.30 24.24

Depreciation INR

Crores - - 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63 3.63


Crores - - - - - - - - - - - - - -

Interest on Term Loan

INR Crores

- - 10.00 10.00 9.75 9.20 8.46 7.48 6.31 5.02 3.61 2.07 0.84 0.21

Total INR

Crores - - 10.65 12.71 15.54 17.47 20.87 23.02 24.17 26.60 27.96 28.15 26.77 28.08

Interest on Term Loan

INR Crores

- - 10.00 10.00 9.75 9.20 8.46 7.48 6.31 5.02 3.61 2.07 0.84 0.21

Repayment of Loan INR

Crores - - - - 4.00 4.88 6.88 8.88 9.75 10.88 11.75 12.88 6.75 3.38

Total INR

Crores - - 10.00 10.00 13.75 14.07 15.34 16.35 16.06 15.90 15.36 14.95 7.59 3.59

DSCR Ratio - - - - 1.13 1.24 1.36 1.41 1.50 1.67 1.82 1.88 3.53 7.83

Average DSCR Ratio 1.79 1.79

78 TEV


January, 2014


Annexure 4: Balance Sheet


Description 31-Mar-

16 31-Mar-

17 31-Mar-

18 31-Mar-

19 31-Mar-

20 31-Mar-

21 31-Mar-

22 31-Mar-

23 31-Mar-

24 31-Mar-

25 31-Mar-

26 31-Mar-

27

Sources of Funds

Shareholders Fund Capital 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52 38.52

Reserve and Capital -2.98 -3.89 -1.74 2.91 11.69 23.60 37.83 55.79 76.51 98.96 121.26 145.50

Sub Total 35.54 34.62 36.78 41.43 50.21 62.12 76.35 94.30 115.03 137.48 159.78 184.02

Loan Funds Term Loan 80.00 80.00 76.00 71.13 64.25 55.38 45.63 34.75 23.00 10.13 3.38 -

WC Loan 1.73 2.02 2.39 2.87 3.34 3.71 3.97 4.40 4.71 5.04 5.39 5.78

Unsecured Loans - - - - - - - - - - - -

Sub Total 81.73 82.02 78.39 73.99 67.59 59.08 49.59 39.15 27.71 15.16 8.77 5.78

Total Sources 117.27 116.64 115.17 115.42 117.80 121.20 125.94 133.45 142.73 152.64 168.55 189.80

Application of Funds

Net Fixed Assets 114.31 110.68 107.05 103.42 99.80 96.17 92.54 88.91 85.28 81.65 78.03 74.40

Gross Block 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94 117.94

Less: Cumulative Depreciation 3.63 7.26 10.89 14.51 18.14 21.77 25.40 29.03 32.66 36.28 39.91 43.54

Investments - - - - - - - - - - - -

Current Assets, Loans & Advances

3.46 6.54 8.73 12.72 18.76 25.88 34.30 45.54 58.52 72.13 91.74 116.71

Inventories 0.48 0.55 0.64 0.79 0.91 0.99 1.07 1.17 1.26 1.36 1.47 1.59

Debtors 2.33 2.72 3.16 3.76 4.31 4.80 5.12 5.70 6.08 6.50 6.95 7.42

Cash and Bank Balances 0.65 3.27 4.93 8.17 13.55 20.09 28.11 38.68 51.18 64.27 83.33 107.69

Less: Current Liabilities 0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31

Creditors 0.50 0.58 0.61 0.73 0.76 0.84 0.90 1.00 1.07 1.14 1.22 1.31

Net Current Assets 2.96 5.96 8.11 11.99 18.01 25.04 33.40 44.54 57.45 70.99 90.52 115.40

Miscellaneous Expenditure - - - - - - - - - - - -

79 TEV


January, 2014


Total Uses 117.27 116.64 115.17 115.42 117.80 121.20 125.94 133.45 142.73 152.64 168.55 189.80

80 TEV


January, 2014


Annexure 5: Interest and Repayment Schedule

Old Loan


Description

Unit 31-

Mar- 14

31- Mar- 15

31- Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Interest Rate

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

%

Annual Summary

Opening Balance

INR Crores

- 35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - -

Addition INR

Crores 35.00 - - - - - - - - - - - - -

Repayment INR

Crores - - - - 1.75 2.63 3.50 4.38 5.25 5.25 6.13 6.13 - -

Closing Balance

INR Crores

35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - - -

Interest for Period

INR Crores

4.38 4.38 4.27 3.99 3.61 3.12 2.52 1.86 1.15 0.38 - -

Quarter 1 Opening Balance

INR Crores

- 35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - -

Addition INR

Crores 35.00

Repayment INR

Crores 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -

Closing Balance

INR Crores

35.00 35.00 35.00 35.00 34.56 32.59 29.75 26.03 21.44 16.19 10.72 4.59 - -

81 TEV


January, 2014


Interest for Period

INR Crores

1.09 1.09 1.09 1.09 1.09 1.03 0.94 0.83 0.69 0.53 0.36 0.17 - -


INR Crores

35.00 35.00 35.00 35.00 34.56 32.59 29.75 26.03 21.44 16.19 10.72 4.59 - -

Addition INR

Crores -

Repayment INR

Crores - - 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -

Closing Balance

INR Crores

35.00 35.00 35.00 35.00 34.13 31.94 28.88 24.94 20.13 14.88 9.19 3.06 - -

Interest for Period

INR Crores

1.09 1.09 1.09 1.09 1.07 1.01 0.92 0.80 0.65 0.49 0.31 0.12 - -


INR

Crores 35.00 35.00 35.00 35.00 34.13 31.94 28.88 24.94 20.13 14.88 9.19 3.06 - -

Addition INR

Crores -

Repayment INR

Crores - - 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -

Closing Balance

INR Crores

35.00 35.00 35.00 35.00 33.69 31.28 28.00 23.84 18.81 13.56 7.66 1.53 - -

Interest for Period

INR Crores

1.09 1.09 1.09 1.09 1.06 0.99 0.89 0.76 0.61 0.44 0.26 0.07 - -


INR Crores

35.00 35.00 35.00 35.00 33.69 31.28 28.00 23.84 18.81 13.56 7.66 1.53 - -

Addition INR

Crores -

82 TEV


January, 2014


Repayment INR

Crores - - 0.44 0.66 0.88 1.09 1.31 1.31 1.53 1.53 - -

Closing Balance

INR Crores

35.00 35.00 35.00 35.00 33.25 30.63 27.13 22.75 17.50 12.25 6.13 - - -

Interest for Period

INR Crores

1.09 1.09 1.09 1.09 1.05 0.97 0.86 0.73 0.57 0.40 0.22 0.02 - -

New Loan


Description

Unit 31-

Mar- 14

31- Mar- 15

31- Mar- 16

31- Mar- 17

31- Mar- 18

31- Mar- 19

31- Mar- 20

31- Mar- 21

31- Mar- 22

31- Mar- 23

31- Mar- 24

31- Mar- 25

31- Mar- 26

31- Mar- 27

Interest Rate

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

% 12.50

%

Annual Summary

Opening Balance

INR Crores

- 5.77 45.00 45.00 45.00 42.75 40.50 37.13 32.63 28.13 22.50 16.88 10.13 3.38

Addition INR

Crores 5.77 39.23 - - - - - - - - - - - -

Repayment INR

Crores - - - - 2.25 2.25 3.38 4.50 4.50 5.63 5.63 6.75 6.75 3.38

Closing Balance

INR Crores

5.77 45.00 45.00 45.00 42.75 40.50 37.13 32.63 28.13 22.50 16.88 10.13 3.38 -

Interest for Period

INR Crores

5.63 5.63 5.48 5.20 4.85 4.36 3.80 3.16 2.46 1.69 0.84 0.21


INR Crores

- 5.77 45.00 45.00 45.00 42.75 40.50 37.13 32.63 28.13 22.50 16.88 10.13 3.38

Addition INR 9.81

83 TEV


January, 2014


Crores

Repayment INR

Crores 0.56 0.56 0.84 1.13 1.13 1.41 1.41 1.69 1.69 0.84

Closing Balance

INR Crores

- 15.57 45.00 45.00 44.44 42.19 39.66 36.00 31.50 26.72 21.09 15.19 8.44 2.53

Interest for Period

INR

Crores - 0.33 1.41 1.41 1.40 1.33 1.25 1.14 1.00 0.86 0.68 0.50 0.29 0.09


INR Crores

- 15.57 45.00 45.00 44.44 42.19 39.66 36.00 31.50 26.72 21.09 15.19 8.44 2.53

Addition INR

Crores 9.81

Repayment INR

Crores - - 0.56 0.56 0.84 1.13 1.13 1.41 1.41 1.69 1.69 0.84

Closing Balance

INR Crores

- 25.38 45.00 45.00 43.88 41.63 38.81 34.88 30.38 25.31 19.69 13.50 6.75 1.69

Interest for Period

INR Crores

- 0.64 1.41 1.41 1.38 1.31 1.23 1.11 0.97 0.81 0.64 0.45 0.24 0.07


INR Crores

- 25.38 45.00 45.00 43.88 41.63 38.81 34.88 30.38 25.31 19.69 13.50 6.75 1.69

Addition INR

Crores 9.81

Repayment INR

Crores - - 0.56 0.56 0.84 1.13 1.13 1.41 1.41 1.69 1.69 0.84

Closing Balance

INR Crores

- 35.19 45.00 45.00 43.31 41.06 37.97 33.75 29.25 23.91 18.28 11.81 5.06 0.84

Interest for Period

INR

Crores - 0.95 1.41 1.41 1.36 1.29 1.20 1.07 0.93 0.77 0.59 0.40 0.18 0.04


INR Crores

-

35.19

45.00

45.00

43.31

41.06

37.97

33.75

29.25

23.91

18.28

11.81

5.06

0.84

Addition INR

84 TEV


January, 2014


Crores 5.77 9.81

Repayment INR Crores

-

-

0.56

0.56

0.84

1.13

1.13

1.41

1.41

1.69

1.69

0.84

Closing Balance

INR Crores

5.77

45.00

45.00

45.00

42.75

40.50

37.13

32.63

28.13

22.50

16.88

10.13

3.38

-

Interest for Period

INR

Crores

0.09

1.25

1.41

1.41

1.34

1.27

1.17

1.04

0.90

0.73

0.55

0.34

0.13

0.01


85 TEV


January, 2014

Annexure6: Site Visit/Visual Assessment of the Capital Expenditure

90% work complete of second entry which leads to Banquet

95% work complete for main entry


86 TEV


January, 2014

Banquet ready for use except for kitchen

Room with fixtures ready


87 TEV


January, 2014

Rooms with permanent furniture’s 70% complete

Lobby Area where restaurants and coffee shops will come


88 TEV


January, 2014

Plant and Staff building

Swimming Pool and Garden view


89 TEV


January, 2014

Power Room

Basement Parking


90 TEV


January, 2014

Diesel Line


91 TEV


January, 2014

Limiting Conditions

The revenue and cost estimates for the proposed project are given on the basis of assumptions and

not on the basis of actual calculations. The revenue and costs considered are based on the findings

from primary survey and secondary research, as detailed in the methodology section. There may be

changes in the revenue and cost estimates depending on the market conditions. The revenue and

costs are comparable to the industry benchmarks.

BASIS:

[CLIENT NAME]-India’s assumptions are based on the information obtained from owners, prevailing

rules and regulations of statutory authorities, prevailing site conditions on the date of inspection

and best judgment of the undersigned.

SOURCE OF INFORMATION:

[CLIENT NAME]-India presumes that complete and correct information is provided to it by the owners.

In case, if the information given to [CLIENT NAME]-India is incomplete or incorrect, [CLIENT

NAME]-India shall assume no liability or responsibility for the same, and [CLIENT NAME]-India may

modify the report to that extent if so required.

DOCUMENTATION:

[CLIENT NAME]-India does not normally read leases or documents of title. [CLIENT NAME]-India

assumes, unless informed to the contrary, that each Structure has good and marketable title, that all

documentation are satisfactorily drawn and that there are no encumbrances, restrictions, easements

or other outgoing of an onerous nature which would have a material effect on the value of interest

under consideration, nor material litigation pending. Where [CLIENT NAME]-India has been

provided with documentation, [CLIENT NAME]-India recommends that reliance should not be placed

on its interpretation without verification by legal advisors.

TOWN PLANNING AND OTHER STATUTORY REGULATIONS:

[CLIENT NAME]-India recommends that verification be obtained from legal advisors to

the effect that: i The position is correctly stated in the report:

ii The property is not adversely affected by any other decision made, or conditions prescribed

by public authorities.

iii There are no outstanding statutory notices.

iv. [CLIENT NAME]-India’s reports are prepared on the basis that the Owners comply with all

relevant statutory regulations, including enactment relating to fire regulations, safety and

environmental considerations and stipulation of respective statutory provisions.


92 TEV


January, 2014

PHYSICAL SURVEYS:

[CLIENT NAME]-India has not carried out Physical Survey and leveling exercise of the Structures

and advice Owners to carry out actual Physical Survey of the site along with levels if desired. This

report is based on documents forwarded to [CLIENT NAME]-India by Owners, Government Records

made available to [CLIENT NAME]-India and on [CLIENT NAME]-India’s cursory inspection of site.

STRUCTURAL SURVEYS:

[CLIENT NAME]-India has not carried out a structural survey, nor has [CLIENT NAME] tested the

services of the Owners and [Client Name] therefore does not give any assurance that any Structure

or the immoveable assets are free from defects. In [CLIENT NAME]-India’s general observations, the

Structures are erected normally and appear to have been maintained properly. However, no

guarantee or opinion can be inferred about the conditions of Structure and Machinery about safe

working of the same.

DELETERIOUS MATERIALS:

[CLIENT NAME] does not normally carry out investigations on site to ascertain whether any

Structure was constructed or altered using deleterious materials or techniques (including, by way of

example high alumina cement concrete, wood wool as permanent shuttering, calcium chloride or

asbestos). Unless [CLIENT NAME] was otherwise informed, our report is on the basis that no such

materials or techniques have been used.

SITE CONDITIONS:

[CLIENT NAME] has not carried out investigations on site in order to determine the suitability of

ground conditions and services for the purposes for which they are, or are intended to be put, to

use, nor does [CLIENT NAME] undertake archaeological, ecological or environmental surveys.

Unless [CLIENT NAME] is otherwise informed, [CLIENT NAME] report is on the basis that these

aspects are satisfactory and that, where development is contemplated, no extraordinary expenses or

delays will be incurred during the construction period due to these or any other matters related to site.

ENVIRONMENTAL CONTAMINATION:

[Client Name] has not carried out physical site surveys or environmental assessments, or investigated

historical records, to establish whether any land or premises are, or have been, contaminated.

Therefore, unless advised to the contrary, [CLIENT NAME] report is carried out on the basis that

properties are not affected by environmental contamination.


93 TEV


January, 2014

TERMS RELATING TO USE OF THIS REPORT

This Techno Economic Viability Report (hereinafter referred to as this “Report”) has been prepared by

[Client Name] (hereinafter referred to as “[CLIENT NAME] in respect of the hotel project

(hereinafter referred to as the “Transaction”) of M/s. [Client Name] (hereinafter referred to as the

“Customer”) for the internal use and reference of the Customer’s funding entity (hereinafter referred

to as the “Funding Entity”) subject to what is stated hereinafter and the same forms an integral

part of this Report.

The use of this Report or dissemination of contents hereof in part or full, is meant only for the

purposes of the Transaction or matters relating thereto as deemed necessary by the Funding Entity,

and not by any other party or for any other purpose.

[CLIENT NAME] follows ethical practices in the discharge of its professional services and amongst

others, as part of such ethical practices, it follows the general rules relating to honesty, competence

and confidentiality, and attempts to provide the most current, complete, and accurate

information as possible within the limitations of available finance, time constraint and other practical

difficulties relating thereto and arising as a consequence thereof.

This Report has been prepared keeping in view the scope of work and the methodology as stated in

this Report. Sources which form the basis of this Report could be broadly classified into two

categories: (i) the facts gathered by [CLIENT NAME] by way of a visit to the site of the project relating

to the Transaction, or the Government offices, to the extent possible, having regard to practical

constraints, and (ii) documents and information as furnished by the Customer or the Funding

Entity. [CLIENT NAME] has not carried out any independent verification for the accuracy or the

truthfulness of such information which is believed to be accurate, updated and complete based

on the information as furnished by the Customer, the Funding Entity and partly on its own

information as stated hereinabove. Accordingly, the said information is not warranted by [CLIENT

NAME] for its accuracy, completeness, or being up to date, and is subject to further verification.

This Report includes assessment and projections made by [CLIENT NAME] which are based on the

aforesaid sources and the methodology as adopted by [CLIENT NAME]. A variation in such

assessment and projections is possible due to changes in the obtaining facts and circumstances as

they existed at the point of time this Report was finalized by [CLIENT NAME] and the approach or

methodology adopted in respect thereof. Differences between projected and actual results are

possible as events and circumstances, as anticipated or contemplated, may or may not occur and

such differences may be material in nature. Under the circumstances, no assurance can be

provided or implied that these projections will actually materialize.

Therefore, such assessment and projections made, and views based thereon included in this Report

should not be treated as the sole decisive factor for any decision to be taken by the Funding Entity


94 TEV


January, 2014

Relating to the Transaction and the Funding Entity has to draw its own conclusions on making

independent enquiries and verifications and [CLIENT NAME] cannot be held liable for any

financial loss incurred by anyone based on this Report.

No representation is made by [CLIENT NAME] that the information contained in this Report is

exhaustive or includes all such material information which may have a bearing on the future

performance of the Customer. In case the Funding Entity needs any such additional information,

documents, or analysis, which is not within the scope of work as included in this Report, [CLIENT

NAME] may, on the request of the Funding Entity, consider providing the same, subject to such

additional payment for the purpose as may be mutually agreed upon between [CLIENT NAME] and

the Funding Entity.

[CLIENT NAME] or its associates in any capacity; viz.; directors, employees, advisers, or other, do not

make any further express or implied representation or warranty, or assume any responsibility or

liability in respect thereof or arising in connection with or as a consequence of, any decision made

or action taken, by the Funding Entity or any other party, unless it could be directly attributed to

[CLIENT NAME] or associates for their act or omission.

The Report should be read as a whole so as to avoid any divergence with respect to the inferences

on account of a partial reading of this Report where such inferences may be based on the entirety of

this Report. Further, notwithstanding anything to the contrary, liability, if any, and the amount of claim

by the Funding Entity in relation thereto against [CLIENT NAME] or its associates for any

inaccuracies in this Report or any cause whatsoever, and regardless of the form of the action in

relation to this Report, will at all times be limited to the amount paid by the Customer to [CLIENT

NAME] for this Report.

Business Plan Analysis and Investor Presentation for Hotel

Documents

project details

project overview

project location

project configuration

technical details

tev final report

project area statement

star category hotel