Financial Modeling and

Analysis of 50 flats housing

Project in Gurgaon,
Haryana, IN

i
 Acknowledgement

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

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

I would like to express my gratitude towards my parents & member of Vardhan consulting
engineers for their kind co-operation and encouragement which help me in completion of
this project.

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

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 Executive summary

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

In India, government budgetary resources are increasingly constrained in financing

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

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

Building. The Flats and offices will be constructed on the private land. Around 4000 sq. feet
land will be utilized for the proposed project.

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

In this internship “Project finance – Modelling and Analysis”, I have worked from home as
physical internship is not possible due to pandemic COVID-19 lockdown. The project title of
my internship is Financial Modelling and Analysis of 50 Flats Housing Project in Gurgaon,
Haryana IN. I have prepared the financial model of 50 Flats Housing Project in Gurgaon,
Haryana.
The objective of this is to study and analyze the financial viability of the project by Revenue
model, Equity IRR, Min DSCR, Avg DSCR, project IRR and process flow of this venture.
By this model, bank can check the weather loan should be provided or not to Client. Bank
also checks the credit worthiness and future benefit from it.

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 Residential plotted building

Area (approx. 4000 sq.

metre)

Map .1 Gurugram city layout

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 Table of contents

INDEX Page no.

Cover page i
Acknowledgement ii
Executive summary iii
List of maps vi
List of figures vi
List of tables vi
Abbreviation vii
Chapter 1: Introduction to Real Estate 1
1.1 Overview of Real Estate in India 1-3
1.2 Infrastructure development in Gurugram 4
Chapter 2: project financing 5
2.1 Project finance – primer and uses 6
2.2 Parties involved and transaction flow 6-7
2.3 Advantages and Disadvantages 8-9
2.4 Real estate project finance- definition and industry terms 9-10
2.5 Real estate development timeline 10-11
Chapter 3: Project description 12
3.1 type and location of project 13
3.2 selection of proposed site 13
3.3 Raw material Requirements 13
3.4 Availability of water and power 14
3.5 generation of waste and its treatment 14
3.6 site analysis 14-15
3.7 project planning brief 15-16
3.8 proposed infrastructure 16-18
Chapter 4: Project schedule and financial model 19
4.1 Project schedule 20
4.2 Project cost assumptions 20-22
4.3 preparation of financial model 23-26
Chapter 5: Results and feasibility study 27-33
Chapter 6: conclusion 34-35
bibliography 36
Last page 37

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List of maps Name Page no.
Map no. 1 Gurugram city layout

List of tables Name Page no.

Table no. 1 Raw material Requirement
Table no. 2 Details of existing land use
Table no. 3 Details of existing social infrastructure
Table no. 4 Details of land use breakup
Table no. 5 Details of dwelling units
Table no. 6 Project implementation schedule
Table no. 7 Project details
Table no. 8 CAPEX cost Estimation
Table no. 9 OPEX cost Estimates
Table no. 10 Revenue parameters estimates
Table no. 11 Other assumptions
Table no. 12 Revenue (net projected)
Table no. 13 Finflow statement
Table no. 14 Debt/ repayment schedule

List of figures Name Page no.

Figure no. 1 Market growth forecast
Figure no. 2 Parties involved in Project Finance
Figure no. 3 Development timeline of Real Estate Project
Finance
Figure no. 4 Solid waste management
Figure no. 5 Distribution of project cost (CAPEX
Figure no. 6 Distribution of Operating Expenses (OPEX
Figure no. 7 Total operating expenses growth (2023-2032)
Figure no. 8 Revenue growth (2023-2032)

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 Abbreviation

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

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

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

FIG. 1 Market Growth Forecast

The Indian construction market is expected to register a CAGR of 6% over the forecast period,
2019 – 2024. Infrastructure sector plays and vital role in the growth and development of the Indian
economy. Nearly, 9% of India’s GDP is spent on Infrastructure services. It comprises of
construction of power, bridges, dams, roads and urban infrastructure development which also forms
the base and supporting factor for other services sectors.

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Investments/Developments:

 Indian companies, both public and private sectors, announced projects worth 1.99
trillion in the quarter ending March 2019, 16% lower than what was announced in the
quarter ending December 2018, and 46% lower than the year-ago period.

 The infrastructure sector in India witnessed 33 deals in 2016- 17 involving USD3.49

billion as against USD 2.98 billion raised across 31 deals in 2015-16, with the majority
of deals led by the power, roads and renewable sectors. Also, in April 2017, companies
in Malaysia and India signed deals for infrastructure projects worth USD 3.86 to be
implemented in India.

 India has a requirement of investment worth USD 646 billion in the infrastructure sector
by 2022; 70 percent of which will be required in the power, roads and urban
infrastructure sectors.

 First REIT raised Rs 4,750 crore (US$ 679.64 million) and was launched earlier in 2019
by the global investment firm Blackstone and realty firm Embassy group.

 In January 2019, Ascendas acquired Chennai's Pallavaram IT Park for US$ 35.70
million. • Iconic RK Studios property which is located in suburban Chembur, acquired
by Godrej Properties

 New housing launches across top seven cities in India are expected to increase 32 per
cent year-on-year by 2018 end to 193,600 units.

 In September 2018, Embassy Office Parks announced that it would raise around Rs 52
billion (US$ 775.66 million) through India’s first Real Estate Investment Trust (REIT)
listing.

Government Initiatives:

 The Government of India along with the governments of the respective states has taken
several initiatives to encourage the development in the sector. The Smart City Project,
where there is a plan to build 100 smart cities, is a prime opportunity for the real estate
companies. Below are some of the other major Government Initiatives:
 In order to revive around 1,600 stalled housing projects across the top cities in the
country, the Union Cabinet has approved the setting up of Rs 25,000 crore (US$ 3.58
billion) alternative investment fund (AIF). • Blackstone crosses US$ 12 billion
investment milestone in India. • Puravankara Ltd, a realty firm plans to invest around
Rs 850 crore (US$ 121.6 million) over the next four years to develop three ultra-luxury

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 residential projects in Bangalore, Chennai and Mumbai. • Under Pradhan Mantri Awas
Yojana (Urban) [PMAY (U)], 1.12 crore houses have been sanctioned in urban areas
creating 1.20 crore jobs.

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

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

Real Estate is a State subject and the role of the Central Government is vital along-with
relentless policy advisory in the form of Policies, Model Legislations, and Guidance Notes,
which have helped propel the momentum towards greater real estate activity.

Central Policies, Laws, Draft Bills & Model Provisions:

1) National Urban Housing & Habitat Policy, 2007

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

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 1.2 Real estate (infrastructure) in Gurugram

With Gurugram, Sonepat, Faridabad and Panchkula humming with commercial and
residential building activities, the real estate emerged as the most favourite sector for
investors in Haryana in 2010, an Assocham Study said.

Bucking the trend in urban centers around the country, real estate in Gurugram is leading a
revival of investor sentiment in the National Capital Region. One of the biggest reasons for
this buoyancy, breaking a five-year dry spell, is strict implementation of the law, say experts.

The revival of confidence among buyers could lead to prices of residential and commercial
properties in Gurugram increasing by as much as 10% to 20%.

The market in Gurugram is now witnessing the positive effects of the implementation of Real
Estate (Regulation and Development) Act, 2016 (RERA). In the last two months,
construction of 20,000 new flats has started in the Millennium City, bringing in investments
of Rs 3 lakh crore into the real estate business. "Earlier, developers used to take investors'
money and divert it to other projects. Such practices were widely prevalent before 2014. The
next few years will be even more exciting for buyers since builders are under pressure to
complete projects in the next three years, in line with PM Narendra Modi's promise of
'housing for all by 2022'.

With the delays in the completion of the Dwarka Expressway almost resolved, the demand
will see a further boost. Commenting on the effects of this, Prashant Solomon, managing
director of Chintels India and treasurer, CREDAI, an apex body of private real estate
developers' associations, says: "It is good news for the area as developers have invested over
Rs 60,000 crore in residential and commercial projects along the 150-metre-wide roadway,
but had been struggling to sell projects due to lack of proper connectivity. There are around
1.5 lakh home buyers who have suffered for more than a decade due to the delay. As the
entire land required for completing the Dwarka Expressway now vests with NHAI, we are
hopeful of a quick completion of the road project."

In Gurugram, the realty investment hotspots are the areas where the Southern Peripheral
Road and Northern Peripheral Road (as the Dwarka Expressway is also known) meet at NH-8
(sectors 99-112 and 37D, sectors 58-63, 68, 78-81, 84, and 85-86). As per data by Anarock
Property Consultants, the weighted average price for properties launched between Januarys to
May in 2019 is Rs 4,900 per sq.ft. Approximately 8,500 new units have been launched in
Gurugram from January to May 2019, comprising nearly 51 per cent of the total supply in the
entire NCR.

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 2.1 Project Finance – A Primer
Project finance is the financial analysis of the complete life-cycle of a project. Typically, a
cost-benefit analysis is used to determine if the economic benefits of a project are larger than
the economic costs. The analysis is particularly important for long-term projects of growth
CAPEX. The first step of the analysis is to determine the financial structure, a mixture of debt
and equity that will be used to finance the project. Then, identify and value the economic
benefits of the project and determine if the benefits outweigh the costs.

Why Do Sponsors Use Project Finance?

A sponsor (the entity requiring finance to fund projects) can choose to finance a new project using
two alternatives:

 The new initiative is financed on the balance sheet (corporate financing)

 The new project is incorporated into a newly created economic entity, the SPV, and financed
off-balance sheet (project financing)

2.2 PARTIES INVOLVED AND TRANSACTION FLOW IN PROJECT FINANCE

FIG. 2 Parties involved in Project Finance

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 1) SPONSORS

Sponsors are usually the equity share capital holders of the parent company who wish to seek
project finance. Two or more entities may also join hands to float an SPV. Instances of this
phenomenon occur when two organizations create synergy for one another or are likely to
mutually benefit from the underlying SPV. They are the equity providers of the SPV. Before
floating an SPV, they must obtain authorization from the shareholders of the parent company
via a shareholder’s agreement (SHA).

2) BANKS/FINANCIAL INSTITUTIONS

It may be a single lender or a consortium of financial institutions. They are the providers of
senior debt and hold precedence over debt extended (if any) by the sponsors. The loan is
secured strictly against the cash flows and assets of the SPV only. Therefore, sufficient due
diligence is performed before the grant of any credit.

3) SPECIAL PURPOSE VEHICLE (SPV)

It is a separate legal entity floated by the sponsors of the project. The project finance obtained
is directed exclusively only towards this SPV. The SPV acts as a corporate veil between the
lenders and the parent company preventing seepage of credit and attachment of property
between the two parties.

4) HOST GOVERNMENT

Refers to the government of the home country where the SPV is located. The SPV must be
incorporated in accordance with the government’s rules and regulations. It also often acts as a
guardian angel in providing various tax concessions, subsidies, and rebates.

5) OFF TAKERS

Off-takers are bound via an off-take agreement to mandatorily purchase a certain minimum
quantity of produce from the selling party. An off-take agreement is a frequently resorted to
in mining, construction and other industry of mass significance. The vendor (SPV) incurs a
huge amount of capital expenditure. An off-take agreement ensures the seller of the existence
of a market upon completion.

6) SUPPLIERS & CONTRACTORS

As in any construction job, suppliers and contractors are necessary for the execution of a
contract. They are the key suppliers of raw material. They also perform crucial functions such
as design and build (D&B), operations and maintenance (O&M), etc.

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 2.3 Advantages and disadvantages of Project Finance

 ADVANTAGES OF PROJECT FINANCE

 EFFECTIVE DEBT ALLOCATION

Project finance enables the sponsors to raise debt over and above the capacity of the parent.
This borrowing can be viewed in an individual capacity and is not impacted by the credit
reputation of its sponsors. Therefore, more beneficial and flexible terms of credit can be
negotiated depending solely on the merit and potential of the project under review.

 RISK MANAGEMENT

As already discussed, what makes project finance truly special is the separation of the legal
identity of the parents and SPV. This provides enormous diversification and dilution of the
risk element. The shareholders of the parent company are immune against the fluctuations in
the fate of the project. The liability is limited to the amount of equity contributed by the
sponsors. Additionally, the risk is also reduced upon involve of multiple entities. More than
one company may often form a joint venture to form a single SPV. Thus, the same amount of
risk when distributed among a larger number of participants reduces each party’s exposure.

 ECONOMIES OF SCALE
An SPV, when floated by more than one parent, is very likely to demonstrate economies of
scale. Two contemporary organizations will only agree to come together for a common goal
when they see a significant benefit flowing from the association. Especially in the case of
manufacturing and construction industries, one entity can hugely benefit at the expense of
another and vice-a-versa. For example, an extraction company and a mine owner may agree
to combine for the sale of extracted material. Vertical synergies will come into play. Both
entities will be able to achieve the scale and profits they could not have achieved in their
individual capacity. Also, they will also hold better bargaining power with vendors as well as
buyers.

 DISADVANTAGES OF PROJECT FINANCE

 COMPLEXITY

Project finance is a notch above a simple transaction of credit. It is based upon several
contracts between multiple parties, each of them involving complex negotiations. It may be
difficult to maintain a record of the flow of funds among the parties involved if proper
discretion is not exercised. Also, an imaginary entity (SPV) is used to route all transactions.
Therefore, it becomes important to have dedicated resources that monitor the flow of
exchanges at all times.

 COMPLIANCE AND DOCUMENTATION

At all stops, setting up an SPV faces resistance. Banks and financial institutions perform
extreme due diligence and checks before extending even a penny of credit. This is mainly for
the reason that an SPV holds separate legal status. The bank can make recoveries only against
the asset and cash flows of the SPV. Therefore, they must be doubly sure of the future

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prospects and soundness of the operating plans. All these checks are time-consuming and
expensive. Obviously, the SPV and its sponsors have to bear the brunt of this excruciating
process.
Also, a project finance venture sets off the radars of the government. The government is
extremely vigilant when it comes to sanctioning the creation of an SPV. This is because
several parallel organizations that come into being have been known to evade taxes,
circumvent money and indulgence is gross negligence of regulations. A potential SPV must,
therefore, be patient and comply with all conditions imposed to win over its trust.

 CONSTANT EXPERT ASSISTANCE

Project finance involves complex transactions and multiple parties. Therefore, availing the
services of professionals and experts is inevitable. Setting up a dynamic model for availing
credit and conducting business involves huge cost. Think of this cost as the fancy and
outrageous fees paid to investment bankers and other professionals who make the project
finance happen.

2.4 Real Estate Project Finance

What is Real Estate Project Finance?

Project finance is long-term financing of an independent capital investment, which are

projects with cash flows and assets that can be distinctly identified. Real estate project
finance is a classic example. Other examples of project finance include mining, oil and gas,
and buildings and constructions.

Real estate project finance cash flows should be sufficient to cover operating expenses and to
fund the financing repayment requirements. Typically, the financing is made up of debt and
equity matched to the lifespan of the asset.

Real Estate Project Finance Industry Terms and Definitions

To build a financial model, we need to understand the important terms and definitions
frequently used in real estate project finance:

1) Loan to value (LTV): The amount of debt financing a lender will provide as a percentage
of the market value of the real estate.
2) Loan to cost (LTC): The amount of debt financing a lender will provide as a percentage
of the cost of a development.
3) Net operating income (NOI): Gross rental revenue less operating expenses (property
taxes, insurance, maintenance, etc.).
4) Cap rate: NOI divided by the value of the property, expressed as a percentage.
5) Amortization period: The number of periods (months or years) the principal repayments
of a loan take to be completed.

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6) Term: The length of time that the interest rate on a mortgage loan is agreed for.
7) General partner (GP): An owner of a partnership with unlimited liability – usually a
manager who actively participates in the operations.
8) Limited partner (LP): A passive investor who has limited ability, based on the amount
they have invested in the project.
9) Land loan: Financing used to acquire a piece of land with no NOI. The long-term value
will be much lower than that of an income-producing property.
10) Floor space ratio (FSR): Used to determine the size of a building and control the density
of development on a parcel of land.
11) Gross building area (GBA): The sum of all building spaces from wall to wall.
12) Gross leasable area (GLA): The sum of all enclosed livable space.
13) Gross site area: The two-dimensional measures of a site based on its property lines.
14) Deductions: A portion of the gross site area that cannot be built on, such as public access
areas, roads, lanes, etc.
15) Net site area: The gross site area, less any deductions.
16) Max GBA: The gross building area, calculated based on the FSR.
17) Construction GBA: The gross building area, based on construction plans.
18) Saleable area: The gross building area based on construction, less all common spaces or
other non-salable areas.

2.5 Real Estate Project Finance – Development Timeline

FIG.3 Development timeline of Real Estate Project Finance

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Understanding the development process and timeline helps us get a clear map when building
a real estate project finance model. There are several stages in a real estate development
project:
Different types of funding are used at each stage of the life cycle of real estate project
finance. For example, a company may use equity to finance the sourcing of deals. This is
because there is high risk in the early stages of a project and, therefore, it may be hard to
obtain bank loans. In the later stages, such as rezoning and pre-development, the projects are
usually financed with both loans and equity.

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 3.1 Type and location of Project
 TYPE OF PROJECT:
Proposed project is the construction project of High Rise Residential Building having total
area is around 90000 sq. ft with 45000 sq. ft of built up area in Gurugram, Haryana. The
building has 8 floors. Each floor has 6 flats.

 LOCATION OF THE PROJECT:

Proposed project site is located near Dwarka Expressway in the area of Pushpanjali farms.
General location of the proposed project is shown in the below mentioned Map no. 1.

3.2 Selection of proposed site

All the physical infrastructure facilities like trunk main of water supply, Drainage & storm
drain are planned in this area. So all proposed infrastructure facilities will be available and
city level infrastructure facilities will also be available.

3.3 Raw material Requirements

Construction materials i.e. cement, steel, wire, sand, aggregate, bricks etc. will be procured
from the local market as per requirements. Approximate Quantities are mentioned below
table:

Sr. No. Material Quantity(Approx.)

Cement 68512 bags (28 kg)
1
Steel 176535 kg
2
Sand 245890 CFT
3
Aggregate 107812 CFT
4
Aerated Concrete Blocks 6061090 NO.
5

Table no. 1 Raw material Requirement

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 3.4 Availability of water and power

 WATER REQUIREMENT AND ITS SOURCE: The main source of water is GMC water supply.
Treated Water will be supplied from GMC water mains. Drinking water quality is as per with the
quality of water supplied to other citizens. The water quality is through necessary treatment
maintained by GMC. As GMC is supplying treated drinking water in water mains, there is no
need for further treatment of water to make it potable. During Construction, total water
requirement is 8.0 KLD.

 POWER REQUIREMENT AND ITS SOURCE: During Construction total power requirement will be
500 KVA and source will be DHBVN. During Operational Phase total power requirement will be
1250 KVA for flats, Lifts and pumps, source will be DHBVN.

3.5 Generation of waste and its treatment

During Construction Phase Domestic waste water of around 2.2 KLD shall be generated
which will be disposed off through GMC drains and treated at nearest Sewage Treatment
Plant. The solid waste management is one of the key considerations in the area. Door to Door
solid waste collection system is existing in whole Gurugram city. That will be provided at
relocation site also. The segregation of wet and dry waste will also be adopted.

3.6 Site analysis

1) CONNECTIVITY: Proposed project is the construction project of High Rise

Residential Building having total area is around with 90000 sq. ft with 45000 sq. ft of
built up area in Gurugram, Haryana
2) Road Connectivity State Highway – 20 km is around 3.0 km from the proposed project
site in SW direction.
3) Rail: The Area is well connected by Railway. Gurugram Railway Station is around 10.0
Km from the proposed project site.
4) Communication: The site has access of telephone, internet and mobile connectivity.
5) LAND USE AND LAND OWNERSHIP: The Residential Building will be constructed
on the Private Land.
6) EXISTING LAND USE PATTERN: Land is non agriculture. There is no National Park;
Wild life sanctuary within a radius of 10 Km. Details of existing land use is given in the
following table:
7) SOIL CLASSIFICATION: For the proposed project, soil testing shall be carried out. At
Ground level Blackish salty clay of high plasticity with sand particles

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 Particulars Distance
Sr.no.
Nearest river Around 10 km
1 (Badshahpur river)
Nearest railway station Around 10 km
2 (Gurugram Railway Station)
National park or reserves forest Around 30 km
3 (near new delhi)
Nearest Airport Indira Gandhi National
4 Airport (IGI) 32.1 Km
North-East
Nearest highway Highway (SH-13) 0.1 Km
5 East

TABLE 2: DETAILS OF EXISTING LAND USE

Sr. no. Particulars Distance

Hospitals Within 10 km
1
Colleges
2
School
3
Temple
4

TABLE 3: DETAILS OF EXISITNG SOCIAL INFRASTRUCTURE

3.7 Project planning brief

1) PLANNING CONCEPT: Proposed project is the construction project of High Rise

Residential Building having total area is around with 90000 sq. ft with 45000 sq. ft of
built up area in Gurugram, Haryana
2) POPULATION PROJECTION During construction period 100 Man power will
required per day. After construction completion, approx. total 500 people will be there
permanent (including visitors)
3) LAND USE PLANNING For the proposed project Green Belt area shall be developed at
plot boundary, road. Green belt development plant is in initial stage which will be
submitted letter on. Detailed plan layout is attached as additional attachment. Detailed
land use breakup mentioned in the below table:

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 Sr. no. Particulars Area in sq. m
Plot/ Land area 90000
1
Built up area 45000
2
FSI area
3
Parking area 11000
4
Common Plot area
5

TABLE 4: DETAILS OF LAND USE BREAKUP

3.8 Proposed infrastructure

1) RESIDENTIAL Area: Proposed project is the construction project of High Rise

Residential Building having total area is around 90000 sq. ft with 45000 sq. ft of built up
area in Gurugram, Haryana.

No of Tower Particulars
Tower 1 Basement b1 Parking
Ground floor Security office
1st floor 6 (3bhk)
2nd to 8th floor 42 (3bhk)
Total 50 ( 3bhk) flats
TABLE 5: DETAILS OF DWELLING UNITS

2) GREEN BELT: For the proposed project Green Belt area shall be developed at plot
boundary, road side.
3) SOCIAL INFRASTRUCTURE:
i) FACILITIES WITHIN SITE
1. Common Plot
2. Water Supply
3. Electricity Supply
4) CONNECTIVITY: The proposed project site is well connected with the road, railway
and air.
5) DRINKING WATER SOURCE: The main source of water supply is GMC.
6) SEWERAGE SYSTEM:
i) TYPE OF SEWAGE SYSTEM PROPOSED:
Regular drainage line of NP3 class R.C.C. pipes will be laid on the internal roads of
the developed site. This will be connected with regular sewer line, disposing the
sewage water in Sewage Treatment Plant.

16
ii) SEWAGE DISPOSAL POINT AND ITS INTEGRATION WITH CITY LEVEL
SEWAGE DISPOSAL SYSTEM :
The disposal point is through GMC drains will be at Sewage treatment plant.
7) SOLID WASTE MANAGEMENT: The solid waste management is one of the key
considerations in the area. Door to Door solid waste collection system is existing in whole
Gurugram city. That will be provided at relocation site also. The segregation of wet and
dry waste will also be adopted. See fig. 3
8) ELECTRICAL CONTROLS: The plant shall be completely pre wired / site wired and
shall include all the power and control cabling required for the fully automatic operation
of the plant. The control system shall include circuit breakers, motor, starters and timers
all housed in a weather proof cubicle type panel board. All wiring shall run through
electrical metallic tubing. All wiring shall be sized according to the National Electric
Code Standards. No splice shall be permitted in the service wires. It shall also be the
responsibility of the contractor to furnish and install all required exterior disconnects,
switching mechanisms, alarm or control conduit and wiring. The branch circuit shall be
short circuit protected by thermal magnetic air circuit breakers. All control circuits shall
be protected by a single phase thermal magnetic air circuit breaker. A magnetic across the
line starter with overload heaters in each phase and a common trip contact set shall be
provided for each blower motor to give positive protection against single phasing. Motor
insulation shall be class `B’ insulation and the design shall be such that the maximum
permissible temperature for the insulation is not exceeding when the motor operates at
service factor load in a -5 to 45° C ambient on full load condition. All motors shall have
anti-friction; ball-bearings sized an average life of at least 100,000 hours under normal V-
BELT loading conditions. The mechanical/electrical system shall be designed to
withstand ambient temperature range of 0°C - 50° C.
9) VEHICLE PARKING FACILITIES: Adequate provision will be made for resident’s
parking at the proposed project site. There shall also be adequate parking provisions for
visitors so as not to disturb the traffic and allow smooth movement at the site. However
the Parking for plot owners will be within their plot as per HUDA Building Bye Laws.
10) POWER REQUIREMENT: The power shall be supplied by Dakshin Haryana Bijli
Vitran Nigam (DHBVN).

Fig. 4 Solid Waste Management

17
During the operation phase, waste will generate from Residential apartment, NPNL units,
EWS units, Community hall, Primary School, Nursery School, Retail area, Clinic, Beauty
parlor, ATM, Community Centre and Nursing home. The solid waste generated from the
project shall be mainly domestic waste and estimated quantity will be 5000 kg/day
approximately.

18
19
 4.1 Project Schedule
Implementation of Project within a pre-determined time frame is an important factor for the
success of a project. Timely implementation saves on various costs like interest,
administrative overheads and helps to realize the goals as per pre-determined objectives.
Implementation of Project involves co-ordination of different activities at various levels of
the firm and amongst different outside agencies. We are giving here under the details of the
Project Implementation:

Sr. No. Particulars Duration of month

1 Basement works 3
2 Ground floor works 1
3 1st to 8th floor 4
4 Outer plaster works 3
5 Plumbing and sanitation 2
6 Electrification 2
7 Colour work 1
8 Drainage and water supply services 1
9 Street light and road services 1
10 Social infrastructure works 1
11 Allotment to beneficiaries 1
Total 20 months ( 1 year & 8 months)
TABLE 6: PROJECT IMPLEMENTATION SCHEDULE

4.2 Project cost Estimations

 Industry Case Statement:

Financial modelling and analysis of 50 flats housing project in Gurgaon, Haryana IN

“Home Developers” has acquired a piece of land near Gurugram HR and wants to develop it as
a residential building having 50 flats of 900 sq. ft each. They are expecting to sell the flats at a
rate of Rs. 4000 / sq.ft. They are seeking a non-recourse debt (project financing) with 70:30 as
D/E ratio from leading commercial banks in India as a 12 years term loan.

 Project Cost The expected CapEx is Rs. 8 Crore.

 The expected OpEx is Rs. 50 Lacs / per annum for the whole project.

 Assumptions:
1) Project details:

PROJECT DETAILS
Size in Sq. Ft 45000 80.10
Equity 30% 24.03
Debt 70% 56.07
Debt Service Resv (DSR) 1 yr
Table no. 7 Project Details

20
 2) Project cost Estimates: Table no. 8 CAPEX cost Estimation

Project Cost (CapEx) TOTAL SQ FEET

Rate 45000 % of project cost
(Rs./sq.ft)
Land 720 32400000 40.45%

Flat construction cost 170 7650000 9.55%

Interior Decoration 130 5850000 7.30%

Furniture 180 8100000 10.11%
Fixtures 30 1350000 1.69%
Building Registration 10 450000 0.56%

Broker Fee 80 3600000 4.49%

Stamp Duty 230 10350000 12.92%
Fund Raising Fee 30 1350000 1.69%
Tranfer of Deed Fee 70 3150000 3.93%
Interest During Moratorium 60 2700000 3.37%
Loan and Documentation Fee 40 1800000 2.25%
CSR, HSE, Training 30 1350000 1.69%

Total Project Cost 80100000 100.00%

O & M Cost (Monthly Breakdown) (OpEx) RATE *45000

Building Maintainence 2.8 126000

Utilities (Electric + Water + Internet) 1.7 76500
Salary (Maid + Acountant) 2.4 108000
Plumber + Electrician + Misc etc 2.2 99000
Insurance 3 121500
Total O&M Cost (per year) 5035500

Table no. 9 OPEX cost Estimates

3) Revenue Parameters Assumption:

Revenue Parameters UNITS(INR)

City Gurgaon,
Haryana
Size (Sq. ft) of one flat 900
rate/sq.ft 4000
sales price per flat 3600000
Avg. No of flats sold per year 5
Sales price Appreciation 8%
Table no. 10 Revenue Parameters Estimates

21
 4) Other Assumptions

ASSUMPTIONS
Inflation 4.00% Debt rate 10.0% USD/INR 75.00
DDT 0.00% Moratorium 1 Yr Discount 10%
Tax 0 yrs Debt tenure 12 yrs Construction Time 1.8 yr
Holiday
Tax rate 25.00% Depreciation 7.00% MAT 18.5%
Table no. 11 Other Assumptions

Above assumptions are taken into consideration while preparing financial

model

22
 4.3 Preparation of Financial Model
1) NET PROJECTED REVENUE:

year -> 1 2 3 4 5 6 7 8 9 10
no of units sold per year 5 5 5 5 5 5 5 5 5 5
rate per sq. Feet 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
avg sale price per flat 3600000 3888000 4199040 4534963 4897760 5289581 5712748 6169767 6663349 7196417
gross sales 18 19.44 20.9952 22.67482 24.4888 26.44791 28.56374 30.84884 33.31674 35.98208
less commission fees 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85
net projected revenues( millions 17.15 18.59 20.1452 21.82482 23.6388 25.59791 27.71374 29.99884 32.46674 35.13208
INR)

Table no. 12 Revenue (net projected)

2) Fin flows

year -> Today cod 1 2 3 4 5 6 7 8 9 10

revenue collection 05-07- 02-07- 31-07- 31-07- 31-07- 31-07- 31-07- 31-07- 31-07- 31-07- 31-07- 31-07-
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

no of units sold per year 5 5 5 5 5 5 5 5 5 5

rate per sq. Feet 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
Avg sale price per flat 360000 388800 419904 4534963. 489776 528958 571274 616976 666334 719641
0 0 0 2 0.3 1.1 7.6 7.4 8.8 6.7
gross sales 18 19.44 20.9952 22.67481 24.4888 26.4479 28.5637 30.8488 33.3167 35.9820
6 01 05 38 37 44 83
less commission fees 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85

23
net projected revenues( 17.15 18.59 20.1452 21.82481 23.6388 25.5979 27.7137 29.9988 32.4667 35.1320
millions INR) 6 01 05 38 37 44 83

operating expenses
Building Maintenance 0.126 0.13104 0.13628 0.141732 0.14740 0.15329 0.15943 0.16580 0.17243 0.17933
16 864 22 83 02 74 97 73
Utilities (Electric + Water 0.0765 0.07956 0.08274 0.086052 0.08949 0.09307 0.09679 0.10066 0.10469 0.10888
+ Internet) 24 096 42 39 69 88 55 34
Salary (Maid + 0.108 0.11232 0.11681 0.121485 0.12634 0.13139 0.13665 0.14212 0.14780 0.15371
Accountant) 28 312 47 85 45 06 55 77
Plumber + Electrician + 0.099 0.10296 0.10707 0.111361 0.11581 0.12044 0.12526 0.13027 0.13548 0.14090
Misc etc 84 536 6 86 66 72 83 79
Insurance 0.1215 0.12636 0.13141 0.136670 0.14213 0.14782 0.15373 0.15988 0.16628 0.17293
44 976 78 33 63 57 11 24
Total O&M Cost (per year) 5.0355 5.23692 5.44639 5.664252 5.89082 6.12645 6.37151 6.62637 6.89142 7.16708
68 672 28 57 39 45 95 66

EBITDA 12.1145 13.3530 14.6988 16.16056 17.7479 19.4714 21.3422 23.3724 25.5753 27.9649
8 03 333 79 5 24 62 14 97

Non operating
expenses
Interest payment -5.61 -5.34 -5.06 -4.74 -4.39 -4.01 -3.58 -3.12 -2.61 -2.05

depreciation -0.5355 - - - - - - - - -
0.49801 0.46315 0.430733 0.40058 0.37254 0.34646 0.32221 0.29965 0.27868
5 4 174 19 11 32 08 61 01
total non operating -6.14 -5.84 -5.52 -5.17 -4.79 -4.38 -3.93 -3.44 -2.91 -2.33
expenses

24
income before taxes 5.97 7.51 9.18 10.99 12.96 15.09 17.41 19.93 22.67 25.64
tax -1.49 -1.88 -2.29 -2.75 -3.24 -3.77 -4.35 -4.98 -5.67 -6.41
net income 4.48 5.63 6.88 8.24 9.72 11.32 13.06 14.95 17.00 19.23

Cash flow
Equity -24.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Net Income 6.27 7.57 8.98 10.50 12.16 13.96 15.91 18.02 20.32 22.82
Add back depreciation 0.5355 0.49801 0.46315 0.430733 0.40058 0.37254 0.34646 0.32221 0.29965 0.27868
5 4 174 19 11 32 08 61 01
Principal Payment (-) -2.62 -2.88 -3.17 -3.49 -3.84 -4.22 -4.65 -5.11 -5.62 -6.18
CSR (0.50 % of Net -0.34 -0.40 -0.47 -0.55 -0.63 -0.72 -0.81 -0.92 -1.03 -1.15
Income) (-)
Final Project Cashflow -24.03 3.85 4.78 5.80 6.90 8.09 9.39 10.79 12.32 13.97 15.76
(Equity)

DSCR 1.29 1.39 1.51 1.63 1.76 1.91 2.06 2.23 2.42 2.62

Final Project Cashflow -80.10 12.07 13.01 14.02 15.13 16.32 17.62 19.02 20.55 22.20 23.99

Table no. 13 Fin Flows statement

25
 3) Debt schedule or Repayment

Debt /Loan Repayment Schedule

PARTICULARS VALUES UNITS

debt amount 56.07 million
(LOAN) INR
debt rate 10%
moratorium 1 Yr years
payment periods 12 years
one period for one YEAR
COD 44651
First quarter 31-03-
end 2023
DATE (EOQ) 02-07- 02-07- 01-07- 01-07- 01-07- 01-07- 30-06- 30-06- 30-06- 30-06- 29-06- 29-06-
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
PERIODS NO. - 1 2 3 4 5 6 7 8 9 10 11 12
->
opening 56.07 53.45 50.56 47.39 43.90 40.06 35.84 31.19 26.08 20.46 14.28 7.48
balance
total payment -8.23 -8.23 -8.23 -8.23 -8.23 -8.23 -8.23 -8.23 -8.23 -8.23 -8.23 -8.23
interest -5.61 -5.34 -5.06 -4.74 -4.39 -4.01 -3.58 -3.12 -2.61 -2.05 -1.43 -0.75
payment
principle -2.62 -2.88 -3.17 -3.49 -3.84 -4.22 -4.65 -5.11 -5.62 -6.18 -6.80 -7.48
payment
closing 53.45 50.56 47.39 43.90 40.06 35.84 31.19 26.08 20.46 14.28 7.48 0.00
balance

Table no. 14 debt repayment schedule

26
24
5.1 financial feasibility analyses
Before an investment decision is made it is necessary to determine whether or not the planned
investment idea is feasible. The feasibility of an investment has to be considered with respect
to several different aspects in order to determine whether the investment should be realized or
not. Carrying out a feasibility analysis is therefore one of the most critical step.

A financial feasibility study should be conducted at the onset to determine the economic
viability of a proposed venture before proceeding to the preparation of a business plan. It
identifies the startup costs, makes projections of profits and cash flows and determines the
return of the investment.

To assess the financial feasibility of investments relevant criteria, have to be chosen.

Financial feasibility calculations need to be done with care and the complexity of the
calculations depends on the number of different aspects that need to be considered. The
assumptions used in the calculations can, and often will, change as the project progresses and
then the analysis needs to be updated.

A financial feasibility study, or FFS, should assess the viability of a project based on major
pivotal component: will the project or business have enough cash to complete the project (and
generate a profit). One of the bottom lines of any business is whether a company can sustain
itself, pay its employees and of course make a profit. A financial study can help in this
assessment. Components to consider include:

1. Company Expenses

2. Revenues

3. Debt schedule/ repayment

4. Cash flow (money in, and money out).

5. DSCR

6. IRR

28
1) Expenses:
Operating expenses include all expenses incurred by the Authority associated with
operating the project as well as its share of capital expenditures. Total operating expenses
for ten-year period from FY2021 – Budget 2030 are projected to increase from
approximately 5.03 mn INR to 7.16 mn INR due to inflation rate which is 4%. Total
capital expense includes the items which shown in below chart.

Company expenses
2% 2%
Land

2% 3% Flat construction cost

4%
Interior Decoration
Furniture
13% 40% Fixtures
Building Registration
4% Broker Fee
1% Stamp Duty
2% 10% Fund Raising Fee
7% 10% Tranfer of Deed Fee
Interest During Moratorium

Fig. 5 Distribution of project cost (CAPEX)

Operating Expenses
2%

Building Maintainence

24% 30% Utilities (Electric + Water +

Internet)
Salary (Maid + Acountant)

Plumber + Electrician + Misc etc

26% 18% Insurance

Fig. 6 Distribution of Operating Expenses (OPEX)

29
 8
7.16
6.89
7
6.37 6.26
6.12
5.89
6 5.66
5.23 5.44
5.03
5

0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2032

Total Operating Expenses in millions INR

Fig. 7 total operating expenses growth (2023-2032)

2) Revenue
Total operating revenues for the Ten-year period from Year 2021 to Year 2030 are projected
to increase from approximately 17.15 million INR to 35.13 million INR, resulting in a
compound annual growth rate (CAGR) of approximately 7.43 percent. Increased price of flats
and interest of deposit contribute significantly to this growth. You can look table no. 13 for
yearly revenue.

40
35.13
35 32.4
29.99
30 27.71
25.59
25 23.63
21.82
20.14
20 18.59
17.15
15

10

0
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Revenue (million INR)

Fig. 8 Revenue growth (2023-2032)

30
 3) Debt/ Loan Repayment Schedule

As the project need larger amount of investment capital and this one need to develop special
purpose vehicle to divide the risk. The Special Purpose Vehicle (SPV) or Special Purpose
Entity (SPE) is one of the most used tools in infrastructure financing. It doesn’t matter
whether the project is being constructed by a private company, a public entity, or in a public-
private partnership. In most cases, special purpose vehicles are created for every
infrastructure project.

A Special Purpose Vehicle (SPV) is an entity created only for the purpose of execution of the
project. This means that for legal purposes, the Special Purpose Vehicle (SPV) is different
from the private company or the government body, which may be sponsoring it. It has its own
balance sheet and profit and loss statement. Lenders are supposed to lend to these Special
Purpose Vehicles (SPV) based on their assets and liabilities and not the assets and liabilities
of the parent firm. In most cases, the Special Purpose Vehicle (SPV) Company takes non-
recourse financing. This means that in the event of a default, investors can only seize the
assets of the project and not the assets of the parent firm, which may be involved in the
project.

Here, in this project, “Home Developers” need to create SPV for non-recourse liability. To
complete the project, they need to get a debt loan from commercial bank of 70% of total
capital expenditure which is Rs. 56.01 million. For that necessary assumption like debt rate/
loan rate, moratorium period, loan term needs to take into consideration for loan / debt
repayment. For that, have to prepare debt/ loan repayment schedule so that final cash flow
amount can be estimation can be accurate.
Here, estimated construction period is 1.8 year so moratorium period also assumed for 1 year.
And at 10 % interest rate, first installment will be paid from 28 JUL, 2022. Interest
installment will be year wise. So, there are total 12 installments in 12 years which need to pay
back to the bank with principle amount at 10% of compound interest rate.

To prepare the schedule in model, interest payment (IPMT) formula and principle payment
(PPMT) formula should be used in excel.

IPMT (interest rate, period, number payments, PV, [FV], [Type] )

PPMT (interest rate, period, number payments, PV, [FV], [Type] )

From table no. 14 , it is cleared that for the debt of Rs. 56.01 million, interest at 10% interest
rate for 12 year in 12 terms will be 42.68 million. This payment will be made from the profit
earned from the project.

4) Cash flow

The cash flow projections include the amount of funds needed for startup and identifies
where these monies will come from. The amount of equity capital is determined along with
the amount and source of all borrowed funds and leases.

31
From the above fin flow statement, it’s clearly shows that payback period is of twelve years.
In Twelve years, company can pay the interest and principal payment from the revenue it will
generate by selling the flats.

Here, final project cash flow is Negative for the year 2020 because in the year 2020
construction will just be started so there will be no revenue during the construction time
period. After completion of construction in 2021, cash flow shows positive values. This
means in from 2022, bank have cash on hand which shows that project is financially feasible.

5) DSCR (Debt Service Coverage Ratio)

The debt service coverage ratio (DSCR) is defined as net operating income divided by total
debt service. it is the amount of cash flow available to meet annual interest and principal
payments on debt, including sinking fund payments.

Min DSCR 1.30

Avg DSCR 1.88

Here’s how to interpret:

• DSCR < 1: You have negative cash flow. You don’t have enough income to service all of
your debt.
• DSCR = 1: You have exactly enough cash coming in to service your debt, but you don’t
have additional cash cushion.
• DSCR > 1: You have positive cash flow. The higher you’re DSCR, the more income you
have to pay off your debt

In this project, Net operating income (EBITDA – Tax) is 10.72 and total debt service
(interest+ principal) is 8.23 for the year 2022. So, the DSCR for that year will be 1.30. This
means the business has 130% more incoming cash flow than needed to cover debt payments
for the year 2022. Similarly, for remaining year business has 141%, 152%, and 164% more
incoming cash flow than needed to cover debt payments for the year 2023, 2024, and 2025
respectively. The DSCR increasing on each year as the net operating income is increasing.

6) Internal Rate of Return

The internal rate of return rule is a guideline for evaluating whether to proceed with a project
or investment. The IRR rule states that if the internal rate of return on a project or investment
is greater than the minimum required rate of return, typically the cost of capital, and then the

32
project or investment should be pursued. Conversely, if the IRR on a project or investment is
lower than the cost of capital, then the best course of action may be to reject it.

IRR is the rate of return that yields a net present value (NPV) of zero. A project is feasible if
the IRR is greater than the interest rate you can borrow at. IRR is an indicator of how
efficiently the capital is used in a business.
The Net Present Value (NPV) is defined as the sum of the present values of the individual
cash flows (both incoming and outgoing) of a series of cash flows. And the Present Value is
defined as the current worth of a future sum of money or stream of cash flows at a certain
discount rate.
IRR represents the time adjusted earnings over project life. It is that rate that equates the
present value of cash inflows to the present value of cash outflows of the project. Or in other
words, the discount rate that set sets NPV of cash flows to zero.
In the calculation of IRR, a distinction is made in Project IRR and Equity IRR. As the name
suggests, the project and equity IRRs differ in terms of the cash inflows. Project IRR signifies
returns to all investors in the project. For the Project IRR, the cash flows considered would be
the ones directly benefiting the project. Equity IRR measures the returns for the shareholders
of company, after the debt has been paid off. Therefore, the latter is based on the free cash
flows of equity holders.
Results:
Equity IRR – 20.95%
Project IRR – 12.22%

For this project, Project IRR (12.22%) is greater than discount rate (10%) and Equity IRR is
(20.95%). So, the project is feasible.

33
34
Real estate development can be very exciting and profitable. It can also be difficult and risky.
Ultimately, the two main goals for a developer and his or her lender are to mitigate risk and
maximize profit. In order to accomplish those goals, a forthright and accurate comparison
needs to be made between potential home buyers and the competition and future competition
for those home buyers. Without this information, it is difficult for any developer to determine
the proposed market they need to capture and the feasibility of a project.

Study of Residential suggest that, it is not that much easy to predict the feasibility of project.
To check the feasibility of such project, there is need to list out those factors which cannot be
control by project promoters, but such factors greatly affect on the project cash flows. And
after determining those factors, we would able to perform sensitivity analysis of such project.

The report involves the financial modeling and analysis of 50 flats housing in Gurugram,
Haryana IN. For the project non-recourse debt is beneficial as it need huge investment. By
taking appropriate assumptions and data provided in, financial model is prepared. Financial
viability of the project is determined by calculating the cash flow statement, DSCR and IRR.
The finding of the calculation is as below:

Equity IRR for the project is 20.95% and Project IRR for the project is 12.22%. DSCR is
for the year 2022, 2023, 2024 and 2025 is 1.30, 1.41, 1.52 and 1.64 respectively. The project
has a minimum DSCR is 1.30 and average DSCR ratio is 1.88.

From above findings, it can be concluded that development of project is beneficial,

considering DSCR and Project IRR of the project. Thus, it shows that bank will
definitely provide the loan as the project is financially feasible

35
 Bibliography:
1) https://economictimes.indiatimes.com/wealth/personal-finance-news/real-estate-gets-
highest-investment-in-
haryana/articleshow/8445499.cms?utm_source=contentofinterest&utm_medium=text&ut
m_campaign=cppst
2) http://plannersweb.com/2013/12/pro-forma-101-how-much-money/
3) http://plannersweb.com/2013/12/proforma-101-getting-familiar-with-a-basic-tool-of-real-
estate-analysis/
4) Pimpri Chinchwad Branch of WIRC of ICAI and CREDAI and Builders Association of
Pimpri Chinwad on 22nd April, 2017
5) http://timesofindia.indiatimes.com/city/noida/7400cr-infra-plans-for-GB-
Nagar/articleshow/46449939.cms
6) https://plus.google.com/+EntrepreneurIndiaNewDelhi
7) https://www.linkedin.com/company/niir-project-consultancy-services
8) http://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdf
9) http://siteresources.worldbank.org/SouthAsiaExt/Resources/223546-
1269620455636/6907265-
1284569649355/Chapter1SARHousingFinanceOctober2010.pdf
10) http://www.niua.org/db_main.asp

36
Prepared by: Sapna Joshi
37