INTERNSHIP REPORT

Project Title : Financial Modelling and Analysis

BY-ROHIT PATIDAR

VARDHAN CONSULTING
ENGINEERING
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Chapter 1 Table of Contents

Executive Summery 2
INTRODUCTION 3
REAL ESTATE 4
SIGNIFICANCE OF STUDY 5
BREAKEVENANALYSIS 11
CONCLUSION 22

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Executive Summery

This is an attempt to know how the theories can be applied to practical situation. As a

student of PGDM, it is a part of study for everyone to undergo summer project at some

good institute or organization. So for this purpose, I got the opportunity of summer

training at VCE.In the first part of the project report, the general information of the

company has been collected. Information is gathered through the primary and

secondary source as well. In the second part of the report, contains the specialized

subject study. Objective of the project is to work on the various Financial Modelling

Strategies. Goals indicate what a business unit wants to achieve;. Every business must

design a strategy for achieving its

goals, consisting of a Financial Goal.

Financial modelling provides an opportunity for finance professionals to assess risk and

reward in a project or a business, Spreadsheets and models are produced and used by

staff at all levels in the organisation. The different stages of model development are

covered in this section. ‘The Principle of Error Reduction’ – errors are inevitable yet we

can attempt to classify them and learn to avoid the more risky operations. What kinds

of features and processes might an auditor look for in a model? We look at an example

from HMRC that shows how anticipating issues can help the model’s construction. We

outline the technical approach used by software engineers that can be followed in these

iterative steps – specification, development, testing and use. Inputs, workings and

outputs – this approach offers a useful basis for promoting a standard model structure.

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INTRODUCTION

Financial modeling is the task of building an abstract representation (a model) of a real

world financial situation.[1] This is a mathematical model designed to represent (a

simplified version of) the performance of a financial asset or portfolio of a

business, project, or any other investment.

Typically, then, financial modeling is understood to mean an exercise in either asset

pricing or corporate finance, of a quantitative nature. It is about translating a set of

hypotheses about the behavior of markets or agents into numerical predictions. [2] At

the same time, "financial modeling" is a general term that means different things to

different users; the reference usually relates either to accounting and corporate

finance applications or to quantitative finance applications.

Real estate is property consisting of land and the buildings on it, along with its natural

resources such as crops, minerals or water; immovable property of this nature; an

interest vested in this (also) an item of real property, (more generally) buildings or

housing in general.

Techvardhan Infra Pvt. Ltd (Any Company) “CLIENT” 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. The expected CapEx is

Rs. 8 Crore and OpEx is Rs. 50 Lacs / per annum for the whole project

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REAL ESTATE:

The term real estate is defined as land, including the air above it and the group belowit,

and any building or structure on it is also referred to as realty. It covers

residentialhousing, commercial offices, and trading spaces such as theater, hotels, and

restaurantretail outlets, industrial buildings such as factories and government

buildings. Realestate involves the purchase, sale and development of land, residential

and non-residential buildings. The main players in the real estate market are the

landlords,developers, builders, real estate agents, tenants, buyers etc. The activities of

the realestate sector encompass the housing and construction sectors also. The real

estatesector in India has assumed growing importance with the liberalization of theecon

omy. The consequent increase in business opportunities and migration of thelabor force

has, in turn, increased the demand for commercial and housing space,especially

rental housing. Developments in the real estate sector are

being influenced by the developments in the retail, hospitality and entertainment (e.g.: 

Hotels, resorts,cinema theater) industries, economies services and information technolo

gy (IT)enabled services etc. The real estate sector is a major employment driver, being

thesecond largest employer next only to agriculture. This is because of the chain

of  backward and forward linkage that the sector has with the other sectors of economy,

especially with the housing, construction and commercial sector. About

250 ancillaryindustries such as cement, steel, brick, timber, building material etc

are dependent onthe real estate industry.

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SIGNIFICANCE OF STUDY

Knowledge and learning become perfect when it is associated with theory and practice.

Theoretical knowledge gets its perfection with practical application. As our educational

system predominantly text based, inclusion of practical orientation program, as an

academic component is as exception to the norm. This Internship Report is an

important partial requirement of MBA program. As the parties; educational institution

and the organization substantially benefit from such a program, it seems a “win-win

situation”. That is why practical orientation is a positive development in professional

area. Recognizing the importance of practical experience,

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MARKET

TECHVARDHAN PVT LTD will target three distinct customer segments. The largest

segment that they will service . This segment is growing at 7% a year with 18,000

prospective customers. This segment is especially attractive since most of the local

rental properties that are geared toward students are run down, poor quality units. The

second market segment is local professionals who are increasing at 4% and have 12,000

potential members. The last segment is faculty and staff of the University. This section

has a 5% growth rate and 6,000 potential customers.

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Strategy 

TECHVARDHAN PVT LTD will initially focus their efforts on buying and developing

existing properties. Once the properties are purchased, each unit will be hard wired

with Internet access, state-of-the-art amenities will be installed, and safety measures will

be implemented ensuring a cutting edge, safe environment. This course of action will be

initially pursued as a way to efficiently utilize capital and establish a reputation within

the community. Future projects may include custom build outs. 

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Financial Plan

We want to finance growth mainly through cash flow. We recognize that this means we

will have to grow more slowly than we might like.

The most important factor in our case is collection days. We can't push our clients hard

on collection days. Therefore, we need to develop a permanent system of receivables

financing, using one of the established financial companies in that business.

7.2 Important Assumptions

MSN's plan depends on the assumptions that are made in the following table. These are

annual and monthly assumptions that show the consistent growth of the company. Since

we operate on a monthly collection basis, we are assuming that the majority of the

collections will be timely and in full.

Some of the underlying assumptions are:

We assume a healthy growth trend in the local real estate market, along with a

continued strong local economy.

We assume that we stay in line with the continuing advances in technology and housing.

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Break-even Analysis

The following table and chart summarize our break-even analysis. With per month

fixed costs and a variable per-unit cost, the number of units we will need to rent out to

cover our monthly costs is shown below. TECHVARDHAN PVT LTD first housing

complex will consist of 40 units. According to the calculations, we will break-even within

our first year of operation.

The break-even assumes that all units will be occupied and that all rent will be paid in a

timely manner. This assumption is probably unrealistic; therefore our initial break-

even per unit will most likely be higher.

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Project Cost (CapEx)      

Rate

(Rs./sq.ft % of Project

  ) 45000 Cost

3,60,00,0

Land 8000 00 45.0%

2,02,50,0

Material 450 00 25.3%

78,75,0

Labour 175 00 9.8%

27,00,0

Transportation 60 00 3.4%

6,75,0

Building Registration 15 00 0.8%

22,50,0

Decoration 50 00 2.8%

18,35,0

Broker Fee 41 00 2.3%

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49,50,0

Stamp Duty 110 00 6.2%

14,40,0

Loan and Documentation Fee 32 00 1.8%

20,25,0

Extra 45 00  

8,00,00,0
 
Total Project Cost   00

O & M Cost (Monthly Breakdown)

(OpEx)    

56,2

Interest 1.3 50  

1,35,0

Utilities 3.0 00  

90,0

Salary (Acountant) 2.0 00  

1,16,6

Misc. etc 2.6 67  

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2,25,0

Insurance (0.35 %) 5.0 00  

       

50,00,000.

Total O&M Cost (per year)   22  

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In terms of the types of products sold, the market is divided into two main product

segments based on

their power output or watt peak (Wp) value (see Table 1). Products that deliver power

up to 10.999 Wp are

categorized as pico PV products delivering a Tier 1 level (see Box 3) of electricity

access.5

These include

portable lighting systems like solar lanterns, study lamps, task lights and torches, and

fixed micro solar home

systems that offer very basic lighting (two or three lights) and a mobile charging facility.

Standalone off-grid

products with capacities of 11 Wp and above are categorized as SHSs and can have

multiple configurations

and capacities based on end-use requirements and consumer affordability. These range

from basic systems that

provide lighting along with mobile charging and small appliance use (11–20.999 Wp) to

those that support a

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larger number of appliances and deliver power for a much longer duration (above 21

Wp).

Revenue Parameters        

City Gurugram      

90

Size (Sq. ft) 0      

Total no of Flat 0      

36,00,00

Price of Flat 0      

Interest on Rental

Deposit 8%      

         

Year---> 1      

180000000.00
     
Sales 0

Interest on Deposit 4800000.000      

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Revenue (million 184800000.00

     
INR) 0

         

Indian-verified products are manufactured primarily by companies of Indian origin,

based on specifications

defined by MNRE. They are officially listed as registered or authorized manufacturers

of solar PV products

on the MNRE website (MNRE, 2018). In this category, MNRE requires companies to

conform to its product

specifications and get their products tested for performance and quality at registered

testing labs. The MNRE’s

Lab Policy for Testing, Standardisation and Certification of Renewable Energy Sector

(MNRE, 2017) does not

necessarily demand products conform to international standards, but the policy’s

objective is to update Indian

standards and adopt international standards. Therefore products based on MNRE

guidelines may or may not

actually meet internationally accepted quality standards.

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Some prominent companies in this category include: Gautam Solar, Vikram Solar,

Ritika Systems, Andslite, Thrive

and Andromeda, among others. These manufacturers follow MNRE’s testing

requirements. However, data from

these large market players in India is not captured as is done for products in the

previous category. The absence of

this data presents a significant gap in understanding the actual market share of pico PV

products in the country.

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Year ------>   Today COD 1

Date --->   25-Jul-2020 6-Sep-2020 30-Sep-2021

Revenue Collection  

180000000.00

Rent       0

Interest on Deposit       4800000.000

184800000.00

Total Revenue (million INR)       0

Operating expenses  

56,25

Interest       0

Utilities (Electric + Water + 1,35,00

Internet)       0

90,00

Salary (Acountant)       0

1,16,66

Plumber       7

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2,25,00

Insurance (0.35 %)       0

50,00,000.

Total Operating Expenses       22

         

179799999.78

EBITDA       0

Non Operating Expenses  

Interest payment       -5505999.159

Depreciation       -2.520

Total Non-Operating Expenses       -5506001.679

174293998.10

Income before taxes       1

Tax       -43573499.525

130720498.57

Net Income       6

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Cash Flow  

23999999.9

Equity   0    

130720498.57

Net Income       6

Add back depreciation       2.520

Principal Payment (-)       -2559343.415

CSR (0.50 % of Net Income) (-)       -653602.505

Final Project Cashflow 23999999.9 127507555.17

(Equity)   0 0.0 5

         

DSCR --->       16.89

         

Final Project Cashflow   - 0.0 135572897.74

79999999.6 9

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310.05

Equity IRR %

Min DSCR 16.89

Avg DSCR 16.89

Project

IRR 56.15%

The internal rate of return (IRR) is a metric used in capital budgeting to estimate the

profitability of potential investments. The internal rate of return is a discount rate that

makes the net present value (NPV) of all cash flows from a particular project equal to

zero.

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In corporate finance, the debt-service coverage ratio (DSCR) is a measurement of the

cash flow available to pay current debt obligations. The ratio states net operating

income as a multiple of debt obligations due within one year, including interest,

principal, sinking-fund and lease payments.

Challenges Faced •

Initially when I interacted with the community members over phone to get their

feedback on Asha Soap, language was a barrier because they spoke in a Bhojpuri

accent. But after I visited the field, I observed and tried to communicate in their

language, which was important to establish a feeling of trust. • Getting a daily update

from the Block Coordinator was a challenge in the beginning since they were not used

to constant monitoring. I overcame that by telling them the importance of regular

monitoring for a pilot implementation project. • There was a time when I was asked by

both my bosses for urgent submissions. That’s when I met the deadlines successfully by

multi-tasking.

Learning The 3-month Summer Internship exposed me to various aspects of Project

Management. I spent the initial week to read about the Projects and interact with the

field team. During the field visit to villages in Uttar Pradesh, I learnt about the

behaviour of a rural consumer and ways to enhance sales in the rural market; the key

to which is Behaviour Change Communication. I maintained the MIS daily and did

village level analysis to find out the Laggards, Star Performers, Low Potential and

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Under Developed villages which enhanced by ability to compile, analyze and interpret

data.

CONCLUSION

Learning The 3-month Summer Internship exposed me to various aspects of Project

Management. I spent the initial week to read about the Projects and interact with the

field team. During the field visit to villages in Uttar Pradesh, I learnt about the

behaviour of a rural consumer and ways to enhance sales in the rural market; the key

to which is Behaviour Change Communication. I maintained the MIS daily and did

village level analysis to find out the Laggards, Star Performers, Low Potential and

Under Developed villages which enhanced by ability to compile, analyze and interpret

data.\

The term real estate is defined as land, including the air above it and the group belowit,

and any building or structure on it is also referred to as realty. It covers

residentialhousing, commercial offices, and trading spaces such as theater, hotels, and

restaurantretail outlets, industrial buildings such as factories and government

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buildings. Realestate involves the purchase, sale and development of land, residential

and non-residential buildings. The main players in the real estate market are the

landlords,developers, builders, real estate agents, tenants, buyers etc. The activities of

the realestate sector encompass the housing and construction sectors also.

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