Credit Analysis

Credit Analysis, Risk Rating of Companies in
Construction, Hospitality, Beverages

Business and International Trade Transactions
MAYANK TEWARI
1
ACKNOWLEDGEMENT
An endeavour over a period can be successful only with the advice and support of well wishers. I take this
opportunity to express my gratitude to all those who encouraged me to complete the project.
I would like to thank Mrs.Archana Sethi and Mr.A.M. Tiwari for providing the opportunity to work in a
prestigious organization, well known in the country.
I express my sincere thanks to Mr.James Minz who steered me throughout the project voyage through his
excellent guidance and constant inspiration.
I also extend thanks to Mr.Vivek Krishnamoorthy for his guidance and support during this period.
2
Executive Summary
The Project lasted 2 months and spanned across industries Hospitality, Beverages and Construction
seeking Credit from the bank; also covering the process adopted by the bank in order to facilitate import
and export of goods via Letters of Credit.
The Construction Industry analysis was carried out in detail and included the debt service calculation for
the facilities seeked by the company and Risk Analysis on the parameters discussed.
Beverages Industry included the study of Key Financial Aspects of the company long with Break even
calculation, Debt Service and Interest Service Calculation.
The Project in Hospitality has been covered in detailed covering the cost of project, cost escalation, and
new Projections
3
TABLE OF CONTENT
REPORT
Credit analysis process 5
The 5c's 6
Project appraisal process 7
CONSTRUCTION INDUSTRY
Swot analysis 12
Case in point-ABC CON PVT LTD 14
Risk Rating Model for Construction Companies 15
BEVERAGE INDUSTRY
Financial Analysis of XYZ Industries Pvt. Ltd. 17
HOSPITALITY INDUSTRY
Project background 22
Project cost 23
Justification of cost escalation 27
Development strategy 29
Hotel industry analysis 40
Viability aspects 43
Risk analysis 47
Conclusion 49
Cost Details and Projections 51
INTERNATIONAL TRADE TRANSACTIONS
Letter of credit 66
Different types of letters of credit 66
Documents that can be presented for payment 68
BIBLIOGRAPHY 74
4
REPORT
CREDIT ANALYSIS PROCESS
Credit analysis is the method by which one calculates the creditworthiness of a business or organization.
In other words, It is the evaluation of the ability of a company to honour its financial obligations. The
audited financial statements of a large company might be analyzed when it issues or has issued bonds. Or,
a bank may analyze the financial statements of a small business before making or renewing a commercial
loan. The term refers to either case, whether the business is large or small.
The objective of credit analysis is to look at both the borrower and the lending facility being proposed and
to assign a risk rating. The risk rating is derived by estimating the probability of default by the borrower
at a given confidence level over the life of the facility, and by estimating the amount of loss that the
lender would suffer in the event of default
Credit analysis involves a wide variety of financial analysis techniques, including ratio and trend analysis
as well as the creation of projections and a detailed analysis of cash flows. Credit analysis also includes
an examination of collateral and other sources of repayment as well as credit history and management
ability. Analysts attempt to predict the probability that a borrower will default on its debts, and also the
severity of losses in the event of default. Credit spreads—the difference in interest rates between
theoretically "risk-free" investments such as U.S. treasuries or LIBOR and investments that carry some
risk of default—reflect credit analysis by financial market participants. [1]
Before approving a commercial loan, a bank will look at all of these factors with the primary emphasis
being the cash flow of the borrower. A typical measurement of repayment ability is the debt service
coverage ratio. A credit analyst at a bank will measure the cash generated by a business (before interest
expense and excluding depreciation and any other non-cash or extraordinary expenses). The debt service
coverage ratio divides this cash flow amount by the debt service (both principal and interest payments on
all loans) that will be required to be met. Commercial Bankers like to see debt service coverage of at least
120 percent. In other words, the debt service coverage ratio should be 1.2 or higher to show that an extra
cushion exists and that the business can afford its debt requirements.
5
The 5C's
Capacity to repay is the most critical of the five factors; it is the primary source of repayment - cash. The
prospective lender will want to know exactly how you intend to repay the loan. The lender will consider
the cash flow from the business, the timing of the repayment, and the probability of successful repayment
of the loan. Payment history on existing credit relationships - personal or commercial- is considered an
indicator of future payment performance. Potential lenders also will want to know about other possible
sources of repayment.
Capital is the money you personally have invested in the business and is an indication of how much you
have at risk should the business fail. Interested lenders and investors will expect you to have contributed
from your own assets and to have undertaken personal financial risk to establish the business before
asking them to commit any funding.
Collateral, or guarantees, are additional forms of security you can provide the lender. Giving a lender
collateral means that you pledge an asset you own, such as your home, to the lender with the agreement
that it will be the repayment source in case you can't repay the loan. A guarantee, on the other hand, is
just that - someone else signs a guarantee document promising to repay the loan if you can't. Some
lenders may require such a guarantee in addition to collateral as security for a loan.
Conditions describe the intended purpose of the loan. Will the money be used for working capital,
additional equipment or inventory? The lender will also consider local economic conditions and the
overall climate, both within your industry and in other industries that could affect your business.
Character is the general impression you make on the prospective lender or investor. The lender will form
a subjective opinion as to whether or not you are sufficiently trustworthy to repay the loan or generate a
return on funds invested in your company. Your educational background and experience in business and
in your industry will be considered. The quality of your references and the background and experience
levels of your employees will also be reviewed.
6
Project Appraisal Process
Risks
Industry Risk
Government Policies and Regulations
Availability of Infrastructure
Industry Rating
Industry Scenario and Outlook
Technology Upgradation
Availability of Input
Product Obslelnce
Business Risk
Operating Efficiency
Competition
Demand and Supply
Cost of Labor
Cost of Raw Material
Product Pricing
Surplus Available
Marketing
Management Risk
Background
Integrity and Market Standing/Reputation of
Promoters
Organization setup and Management Hierarchy
Expertise/Competence of person holding key
positions
Delegation and Decentralization of Authority
Achievement of Targets
Track Record in Execution of projects
Track Record of Debt Repayment
Track Record in Industry Relations
Financial Risk
Financial Strength of Promoters
Reliability & Reasonableness of Projections
Past Financial Performance
Reliability of Operations data & Financial
Ratios
Provisioning of Bad Debts
Qualifying Remarks of Auditors
7
Analysis
Market Aspect
 Demand and Potential for each product item
 Supply and Potential of each product vis-à-vis Competitors/Substitutes
 Discount Structure
 After Sale Service
 Competitors Status & level of Operations
 Size of Market
 Supply Position with respect to Present/Future Demand
 Availability of Substitutes as Customer Preference
o Buy back arrangements
o Influence of Government on Demand Projections
o Competition from Imported Goods
o Government Import Policy & Import Duty structure
Technical Aspect
 Location and Site
o Advantages and Disadvantages of Location
o Minimize site cost
o Availability of Infrastructure Facilities
(Power/Water/Transport/Communication/Technology)
o Adequacy of Land
o Accommodating Future Expansion
 Raw Material
o Cost of Essential Raw material and Consumables
o Past and Future Price Trends
o Quality
o Availability on Regular Basis
o Transportation Charges
o Government Policies regarding Supply of Goods/Prices
o Firm Arrangement for Procurement
 Plant/Machinery/Plant Capacity/Process
o Indigenous or Imported
o Machinery able to work at Plant Capacity, Input, Investment Outlay and Cost
o Latest Technology/Cost Effective
o Purchase of Old Machinery as per Guidelines
o Equipment for Utility services
o Collaborators Present and Future Support
o Plant Capacity and Economic Size
o Entrepreneur’s Present and Future Plans
o Optimum utilization by the process
o Process ensures future expansion/debottlenecking
o Arrangement for Inspection
o Good Quality of Products
Financing Aspect
 Cost
 Profitability
8
o Direct Costs
o Other Expense
o Gross/Net Profit
 Past trends and Performance
 Breakeven Analysis
o Make or Buy Decision
o Maximum Production of High contribution item
o Optimizing Product mix
o Impact of Cost Factors
 Fund Flow Statement
o Funds from Internal/External Sources
o Deployment of Funds
o Liquidity Problems
 Balance Sheet Projections
o What it Owns/Owes
o Realistic or Not
 Financial Ratios
o D/E
o DSCR
o TNW/TOL
o Profit/Sales
o Sale-Tangible
o Output/Investment
o Current Ratio
 Sensitivity Analysis
o Selling Price
o Product Mix
o Plant capacity
o Utilization
o Sales
 Economic
o Increase in Saving and Inclusion of Society
o Creation & Increment in Employment
o Development of Region/Environment/Pollution
9
CONSTRUCTION INDUSTRY
Introduction
The construction industry is the second largest industry of the country after agriculture accounting for 11
percent of India’s GDP. Indian construction industry employs 32 million people and its total market size
is estimated at Rs. 2,48,000 crores (35,640 million €). The level of a country’s development is reflected
by its infrastructure and the desperate need for infrastructure development has increased the demand of
the construction industry in India.
The activities of the construction industry include working on new structures as well as additions,
alterations, and repairs to existing ones.
Segmentation of Construction Industry in India
 Residential, industrial, commercial, and other buildings.

 Sewers, roads, highways, bridges, tunnels, and other projects.
 Specialized activities such as carpentry, painting, plumbing, and electrical work.
Overview
India is on the verge of witnessing a sustained growth in infrastructure build up. The construction industry
has been witness to a strong growth wave powered by large spends on housing, road, ports, water supply,
rail transport and airport development. While the construction sector's growth has fallen as compared to
the pre-2008 period, it has picked up in the recent past. Its share as a percentage of GDP has increased
considerably as compared to the last decade. To put things in perspective, the total investment in
infrastructure - which in this case also includes roads, railways, ports, airports, electricity,
telecommunications, oil gas pipelines and irrigation - is estimated to have increased from 5.7% of GDP in
2007 to around 8.0% by 2012. The Planning Commission of India has proposed an investment of around
US$ 1 trillion in the Twelfth five-year plan (2012-2017), which is double of that in the Eleventh five-year
plan.
From a policy perspective, there has been a growing consensus that a private-public partnership is
required to remove difficulties concerning the development of infrastructure in the country. Given that the
resource constraints of the public sector will continue to limit public investment in infrastructure in
10
infrastructure investments, - especially backward and rural areas - the PPP based development will be
needed wherever feasible. At the same time, reviewing the factors that constrain private investments
would be necessary to encourage and speed up the process. The share of private investments is expected
to increase to half in the Twelfth five-year plan as compared to the intended 30% for the Eleventh five-
year plan.
The real estate industry comprising of construction and development of properties has grown from family
based entities with focus on single products and having one market presence into corporate entities with
multi-city presence having differentiated products. The industry has witnessed considerable shift from
traditional financing methods and limited debt support to an era of structured finance, private equity and
public offering.
The construction sector is a major employment driver, being the second largest employer in the country,
next only to agriculture. This is because of the chain of backward and forward linkages that the sector has
with other sectors of the economy. About 250 ancillary industries such as cement, steel, brick, timber and
building material are dependent on the construction industry. A unit increase in expenditure in this sector
has a multiplier effect and the capacity to generate income as high as five times.
Key Points
Supply The past few years has seen a substantial increase in the number of contractors
and builders, especially in the housing and road construction segment.
Demand Demand exceeds supply by a large margin. Demand for quality infrastructure
construction is mainly emanating from the housing, transportation and urban
development segments.
Barriers to entry Low for road and housing construction. However, high working capital
requirements can create growth problems for companies with weak financial
muscle.
Bargaining power Low. Due to the rapid increase in the number of contractors and construction
of suppliers service providers, margins have been stagnant despite strong growth in volumes.
Bargaining power Low. The country still lacks adequate infrastructure facilities and citizens have to
of customers pay for using public services.
Competition Very high across segments like road construction, housing and urban
infrastructure development. Relatively less in airport and port development.
11
SWOT Analysis
Strengths
 Employment and training opportunities in the field of construction.

 Private sector housing boom and commercial building demands Construction of the multi
building projects on the feasible locations in the country.
 Good structured national network facilitates the boom of construction industry.
 Low cost well- educated and skilled labour force is now widely available across the country.
 Sufficient availability of raw material and natural resources in the country is supportive for the
industry.
Weakness
 Distance between construction projects reduces business efficiency.

 Training itself has become a challenge.
 Changing skills requirements and an ageing workforce may emphasize the skills gap.
 Improvement in long-term career prospects is highly required to encourage staff retention and
new entrants.
 External allocation of large contracts becomes difficult.
 Lack of clearly defined processes and procedures for construction and its management.
 Huge amount of money needs to be invested in this industry.
Opportunities
 Continuous private sector housing boom will create more construction opportunities.
 Public sector projects through Public Private Partnerships will bring further opportunities.
 Developing supply chain through involvement in large projects is likely to enhance the chances in
construction.
 Renewable energy projects will offer opportunities to develop skills and capacity in new markets.
 More flexible training delivery techniques are now available.
 Financial supports like loan and insurance and growth in income of people is in support of
construction industry.
12
Threats
 Long term market instability and uncertainty may damage the opportunities and prevent the
expansion of training and development facilities.
 Current economic situation may have an adverse impact on construction industry Political and
security conditions in the region and Late legislative enforcement measures are always threats to
any industry in India.
 Infrastructure safety is a challenging task in construction industry.
 Lack of political willingness and support on promoting new strategies.
 Natural abnormal casualties such as earth quake and floods are uncertain and can prevent the
construction boom.
 Inefficient accessibility in planning and concerning the infrastructure.
 Competitors are emerging in the industry by leaps and bounds.
13
Case in point-ABC CON PVT LTD
Facility Applied for-
Name Term Loan

Amount 100 lakhs
Margin 40%
Purpose construction of factory, purchase of plant and machinery
Security EM of factory, plots etc.
Hypothecation of Plant and machinery
Interest BR+4.5%+TP presently 15.5% PA on monthly rest
Repayment In 20 quarterly inst. Of 5 lakhs. Moratorium of 3 months from
Initial production
Upfront fee 1.00% of loan amount
Documentation
fee As applicable
Name Working Capital Loan

Amount 80 lakhs
Margin 25% on Stocks and 40% on book debts
Purpose to meet working capital requirement
Security hypothecation of stocks and debtors
Interest BR+4.5% presently 15% p.a. on monthly rest

Repayment
Initial 250+service tax per lakhs
Documentation
fee As applicable
DSCR Calculation
Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2017-19

Audited Estimate Projected Projected Projected Projected TOTAL
(In lakhs)
PAT 35.8 28.37 37.18 47.68 57.94 69.41 276.38
Add: Dep 1.21 21.02 17.88 15.19 12.91 10.97 79.18
: Term Loan Inst 4.88 13 11.31 8.19 5.07 1.43 43.88
Total 41.89 62.39 66.37 71.06 75.92 81.81 399.44
Term Loan Inst 4.88 13 11.31 8.19 5.07 1.43 43.88

Term Loan Principle Repayment 0 0 24 24 24 24 96
14
Total 4.88 13 35.31 32.19 29.07 25.43 139.88
DSCR 8.58 4.80 1.88 2.21 2.61 3.22 2.86

Gross DSCR 2.86
Risk Rating Model for Construction Companies
Analysis Rating
1. Financial Evaluation
 Financials
o TOL/TNW
o Current Ratio
o ROCE (%)
o Inventory and Debtors Holding (months)
 Subjective Assessment
o Quality of Inventory
o Realisability of Debtors
o Quality of Investment/Advances made to group
o Transparency in Accounting
o Estimated cash profit of current year to Net Repayment Obligations
of Current year
2. Business/ Industry
 Expected Sales Growth
 Availability of Inputs
 Production/Product strength
 Marketing Strength
3. Management Evaluation
 Actual Gross Sale/Targeted Sales
 Actual PBT/Targeted PBT
 Subjective Assessment of Management
 Constitution
 Year of Existence
 Commitment and Sincerity
 Track Record in Debt Repayment
4. Conduct of Account Evaluation
 Conduct of Accounts
 Submission and reliability of Feedback statements & Other Information
5. Term Loan Evaluation
 Debt-Equity Ratio
DSCR/Repayment Period-
 A) In case existing companies already availing TL/DPG
 B) In case of existing companies proposes to avail fresh term loan/DPG
15
Total Score
Evaluation Score
Financial Evaluation
Business and Industry Evaluation
Management Evaluation
Conduct Evaluation
Term Loan Evaluation
Weighted Score
16
Beverage Industry
Financial Analysis of XYZ Industries Pvt. Ltd.
LIABILITIES 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.2
0 1 2 3 4 5 6 7 8 9 0
Audite Audite Audite Prov. Est. Est. Est. Est. Est. Est. Est.
d d d
Paid Up Capital 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10
Share Premium 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Reserves & Surplus (Excluding 237.49 129.72 91.82 157.19 288.05 433.40 551.28 672.71 798.40 929.61 1064.40
Revaluation Reserves)
Misc. Expenditure not Written 0.23 0.18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Off
Accumulated Losses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Deferred Tax Liability (+)/ Asset 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(-)
Tangible Net Worth 539.36 431.64 393.92 459.29 590.15 735.50 853.38 974.81 1100.5 1231.7 1366.50
0 1
Investment in Allied Concerns & 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87
Amount of Cross Holdings

Net Owned Funds/ Adjusted 530.49 422.77 385.05 450.42 581.28 726.63 844.51 965.94 1091.6 1222.8 1357.63
3 4
TNW
Secured Loans 1534.5 1433.8 1417.3 36.77 300.00 240.00 180.00 120.00 60.00 0.00 0.00
1 9 9
Unsecured Loans 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Security Deposits - Long Term 220.30 340.19 225.00 1245.0 1586.8 1516.1 1693.8 1693.8 1693.8 1693.8 1693.86
0 6 3 6 6 6 6
Share Application Money 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Creditors - Long Term/ Deferred 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loans 1754.8 1774.0 1642.3 1281.7 1886.8 1756.1 1873.8 1813.8 1753.8 1693.8 1693.86
1 8 9 7 6 3 6 6 6 6
Total Long Term Funds 2294.1 2205.7 2036.3 1741.0 2477.0 2491.6 2727.2 2788.6 2854.3 2925.5 3060.36
7 2 1 6 1 3 4 7 6 7
Current Liabilities
Bank Borrowings - Short Term 1219.9 1560.4 1542.6 1650.0 1950.0 1950.0 1950.0 1950.0 1950.0 1950.0 1950.00
3 0 6 0 0 0 0 0 0 0
Sundry Creditors - Short Term 1146.1 991.62 1057.5 955.00 546.61 266.49 100.00 100.00 100.00 100.00 100.00
6 0
Taxes Payable/ Statutory Dues 58.06 59.01 59.80 158.65 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Advances from Customers 337.92 76.07 2000.5 1252.0 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4 0
Expenses Payable 163.27 454.57 536.98 486.62 265.00 265.00 265.00 265.00 265.00 265.00 265.00
Unsecured Loans - Short Term

Misc. Current Liabilities
Total Current Liabilities 2925.3 3141.6 5197.4 4502.2 2763.8 2483.7 2317.2 2317.2 2317.2 2317.2 2317.25
4 7 8 7 6 4 5 5 5 5
Total Liabilities 5219.5 5347.3 7233.7 6243.3 5240.8 4975.3 5044.4 5105.9 5171.6 5242.8 5377.61
1 9 9 3 7 7 9 2 1 2
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loans 1754.8 1774.0 1642.3 1281.7 1886.8 1756.1 1873.8 1813.8 1753.8 1693.8 1693.86
1 8 9 7 6 3 6 6 6 6
0 1
DER 3.25 4.11 4.17 2.79 3.20 2.39 2.20 1.86 1.59 1.38 1.24
3 4
TNW
Term Liability/ Adjusted TNW 3.31 4.20 4.27 2.85 3.25 2.42 2.22 1.88 1.61 1.39 1.25
17
Total Liabilities 5219.5 5347.3 7233.7 6243.3 5240.8 4975.3 5044.4 5105.9 5171.6 5242.8 5377.61
1 9 9 3 7 7 9 2 1 2
0 1
TOL 4680.1 4915.7 6839.8 5784.0 4650.7 4239.8 4191.1 4131.1 4071.1 4011.1 4011.11
5 5 7 4 2 7 1 1 1 1
3 4
TNW
TOL/ Adjusted TNW 8.82 11.63 17.76 12.84 8.00 5.83 4.96 4.28 3.73 3.28 2.95
ASSETS 31.03.10 31.03.11 31.03.1 31.03.13 31.03.14 31.03.1 31.03.16 31.03.17 31.03.18 31.03.1 31.03.2
2 5 9 0
Audited Audited Audited Prov. Est. Est. Est. Est. Est. Est. Est.
Gross Block 2146.93 2032.93 1958.85 1932.00 2297.00 2002.00 1736.50 1497.55 1282.50 1088.95 914.75
Depreciation 198.58 200.43 180.75 220.00 295.00 265.50 238.95 215.06 193.55 174.19 156.78
Capital Work in Progress

Net Block 1948.35 1832.50 1778.10 1712.00 2002.00 1736.50 1497.55 1282.50 1088.95 914.75 757.98
NON CURRENT
ASSETS
Security Deposits 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Investments 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87
Margin for NFB limits 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Non Current Assets 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Non Current Assets 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87
Total Long Term Uses 1957.22 1841.37 1786.97 1720.87 2010.87 1745.37 1506.42 1291.37 1097.82 923.62 766.85
Current Assets
Stocks 597.97 652.17 783.11 1092.00 1070.00 1070.00 1070.00 1070.00 1070.00 1070.00 1070.00
Sundry Debtors 645.46 824.30 2243.33 1510.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00
<= 6 Months Old 645.46 824.30 2243.33 1510.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00 1500.00
> 6 Months Old 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Export Receivables 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Cash & Bank Balances 1006.93 1079.10 1166.86 1192.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
Advances to Suppliers 11.66 28.41 45.00 55.00 50.00 50.00 50.00 50.00 50.00 50.00 50.00
Loans & Advances 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Excise Duty Recoverable 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Misc. Current Assets 1000.27 922.04 1208.52 673.46 600.00 600.00 600.00 600.00 600.00 600.00 600.00
Total Current Assets 3262.29 3506.02 5446.82 4522.46 3230.00 3230.00 3230.00 3230.00 3230.00 3230.00 3230.00
Total Assets 5219.51 5347.39 7233.79 6243.33 5240.87 4975.37 4736.42 4521.37 4327.82 4153.62 3996.85
Difference 0.00 0.00 0.00 0.00 0.00 0.00 308.07 584.56 843.79 1089.20 1380.76
Net Working Capital 336.95 364.35 249.34 20.19 466.14 746.26 912.75 912.75 912.75 912.75 912.75
Current Ratio 1.12 1.12 1.05 1.00 1.17 1.30 1.39 1.39 1.39 1.39 1.39
Export Receivables 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Current Ratio (excl. Export 1.12 1.12 1.05 1.00 1.17 1.30 1.39 1.39 1.39 1.39 1.39
Receivables)
18
KEY FINANCIAL FIGURES

31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.1 31.03.2
0 1 2 3 4 5 6 7 8 9 0
Audite Audite Audite Prov. Est. Est. Est. Est. Est. Est. Est.
d d d
Sale Turnover/ Receipts 15353. 17667. 18739. 27882. 31500. 31500. 31500. 31500. 31500. 31500. 31500.
07 47 02 00 00 00 00 00 00 00 00
- Domestic 15353. 17667. 18739. 27882. 31500. 31500. 31500. 31500. 31500. 31500. 31500.
07 47 02 00 00 00 00 00 00 00 00
- Exports 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- Export Incentives 0.00 72.58 77.21 73.01 155.00 0.00 0.00 0.00 0.00 0.00 0.00
- Job Charges & Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Receipts
Growth 15.07 6.07 48.79 12.98 0.00 0.00 0.00 0.00 0.00 0.00
Other Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Operating Profit -85.62 -87.33 20.82 99.00 198.24 220.19 178.57 183.97 190.39 198.78 204.19
Profit Before Tax -85.62 -87.33 20.82 99.00 198.24 220.19 178.57 183.97 190.39 198.78 204.19
Tax 0.00 0.00 4.00 33.65 67.38 74.84 60.70 62.53 64.71 67.56 69.41
Profit After Tax -85.62 -87.33 16.82 65.35 130.86 145.35 117.87 121.44 125.68 131.22 134.78
Depreciation 198.58 200.43 180.75 220.00 295.00 265.50 238.95 215.06 193.55 174.19 156.78
Misc. Exp. Written Off 0.23 0.18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Cash Profit 112.96 113.10 197.57 285.35 425.86 410.85 356.82 336.49 319.23 305.41 291.56
Interest Paid 206.25 205.54 182.52 259.00 248.48 266.74 257.29 247.84 238.39 228.94 223.03
EBIDTA 319.44 318.82 384.09 578.00 741.72 752.43 674.81 646.86 622.33 601.91 584.00
Paid Up Capital 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10 302.10
Deferred tax liability 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Reserves & Surpluses (Excl. Reval. 237.49 129.72 91.82 157.19 288.05 433.40 551.28 672.71 798.40 929.61 1064.4
0
Reserves)
Misc. Exp. Not W/off 0.23 0.18 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Accumulated Losses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Share Premium Account 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Tangible Net worth 539.36 431.64 393.92 459.29 590.15 735.50 853.38 974.81 1100.5 1231.7 1366.5
0 1 0
Investment in Allied Concerns & 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87 8.87
Amount of Cross Holdings
Net Owned Funds/ Adjusted TNW 530.49 422.77 385.05 450.42 581.28 726.63 844.51 965.94 1091.6 1222.8 1357.6
3 4 3
Share Application Money 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Borrowings 2754.4 2994.2 2960.0 1686.7 2250.0 2190.0 2130.0 2070.0 2010.0 1950.0 1950.0
4 9 5 7 0 0 0 0 0 0 0
Secured 2754.4 2994.2 2960.0 1686.7 2250.0 2190.0 2130.0 2070.0 2010.0 1950.0 1950.0
4 9 5 7 0 0 0 0 0 0 0
Unsecured 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Investments 8.87 8.87 8.87 8.87 8.87 0.00 0.00 0.00 0.00 0.00 0.00
Total Assets 5219.7 5347.5 7233.7 6243.3 5240.8 4975.3 5044.4 5105.9 5171.6 5242.8 5377.6
4 7 9 3 7 7 9 2 1 2 1
Current Assets 3262.2 3506.0 5446.8 4522.4 3230.0 3230.0 3230.0 3230.0 3230.0 3230.0 3230.0
9 2 2 6 0 0 0 0 0 0 0
Non-Current Assets 1957.4 1841.5 1786.9 1720.8 2010.8 1745.3 1814.4 1875.9 1941.6 2012.8 2147.6
5 5 7 7 7 7 9 2 1 2 1
Out of which Net Fixed Assets 1948.3 1832.5 1778.1 1712.0 2002.0 1736.5 1497.5 1282.5 1088.9 914.75 757.98
5 0 0 0 0 0 5 0 5
Net Working Capital 336.95 364.35 249.34 20.19 466.14 746.26 912.75 912.75 912.75 912.75 912.75
Current Ratio 1.12 1.12 1.05 1.00 1.17 1.30 1.39 1.39 1.39 1.39 1.39
Debt Equity Ratio 3.25 4.11 4.17 2.79 3.20 2.39 2.20 1.86 1.59 1.38 1.24
Term Liability/ Adjusted TNW 3.31 4.20 4.27 2.85 3.25 2.42 2.22 1.88 1.61 1.39 1.25
TOL/ Adjusted TNW 8.82 11.63 17.76 12.84 8.00 5.83 4.96 4.28 3.73 3.28 2.95
19
Operating profit/ Sales(%age) -0.56 -0.49 0.11 0.36 0.63 0.70 0.57 0.58 0.60 0.63 0.65
TOL/TNW 8.68 11.39 17.36 12.59 7.88 5.76 4.91 4.24 3.70 3.26 2.94
Fund Flow:
Long Term Sources 2294.4 2205.9 2036.3 1741.0 2477.0 2491.6 2727.2 2788.6 2854.3 2925.5 3060.3
0 0 1 6 1 3 4 7 6 7 6
Long Term Uses 1957.4 1841.5 1786.9 1720.8 2010.8 1745.3 1506.4 1291.3 1097.8 923.62 766.85
5 5 7 7 7 7 2 7 2
Surplus/ Deficit (-) 336.95 364.35 249.34 20.19 466.14 746.26 1220.8 1497.3 1756.5 2001.9 2293.5
2 1 4 5 1
Short Term Sources 2925.3 3141.6 5197.4 4502.2 2763.8 2483.7 2317.2 2317.2 2317.2 2317.2 2317.2
4 7 8 7 6 4 5 5 5 5 5
Short Term Uses 3262.2 3506.0 5446.8 4522.4 3230.0 3230.0 3230.0 3230.0 3230.0 3230.0 3230.0
9 2 2 6 0 0 0 0 0 0 0
Surplus/ Deficit (-) 336.95 364.35 249.34 20.19 466.14 746.26 912.75 912.75 912.75 912.75 912.75
DSCR 1.55 1.55 1.90 1.96 2.53 2.54 1.94 1.90 1.87 1.85 1.82
ISCR 1.55 1.55 2.08 2.10 2.71 2.54 2.39 2.36 2.34 2.33 2.31
Break Even Point
Particulars 2014 2015 2016 2017 2018 2019 2020

Income 8870.00 8870.00 8870.00 8870.00 8870.00 8870.00 8870.00
Less: Variable Expenses
Purchases 4704.19 4567.57 4645.19 4673.14 4697.67 4718.09 4720.00
Other Manufacturing Expenses 1125.00 1090.18 643.78 1018.04 1125.00 1095.00 1095.00
Selling & Admin Exp. 1175.00 1200.00 1400.00 1427.40 1454.79 1482.19 1509.59
Total Variable Expenses 7004.19 6857.75 6688.97 7118.58 7277.46 7295.28 7324.59
Contribution 1865.81 2012.25 2181.03 1751.42 1592.54 1574.72 1545.41
Less: Fixed Expenses
Electricity 625.00 625.00 625.00 625.00 625.00 625.00 625.00
Direct Labour 217.00 215.00 215.00 215.00 215.00 215.00 215.00
Selling & Admin Exp. 600 600 600 600 600 600 600
Interest on TL/CC/Other 248.4791 266.7375 257.2875 247.8375 238.3875 228.9375 223.0313
Depreciation 295.00 265.50 238.95 215.06 193.55 174.19 156.78
Total Fixed Expenses 1985.48 1972.24 1936.24 1902.89 1871.94 1843.13 1819.81
BEP (in Rs.) 1.06 0.98 0.89 1.09 1.18 1.17 1.18
BEP (in %) 106.41 98.01 88.78 108.65 117.54 117.05 117.76
Cash BEP (in Rs.) 1.22 1.11 1.00 1.21 1.30 1.28 1.28
Cash BEP (in %) 122.22 111.21 99.73 120.93 129.70 128.11 127.90
IRR Calculation
Particulars 2014 2015 2016 2017 2018 2019 2020

Cash
Outflow
Cost of plant 400.00 0 0 0 0 0 0
Interest on 248.48 266.74 257.29 247.84 238.39 228.94 223.03
TL
Total (A) 648.4791 266.7375 257.2875 247.8375 238.3875 228.9375 223.0313
Cash Inflow
PAT 130.86 145.35 117.87 121.44 125.68 131.22 134.78
20
Depreciation 295.00 265.50 238.95 215.06 193.55 174.19 156.78
Total (B) 425.86 410.85 356.82 336.49 319.23 305.41 291.56
Net (B-A) -222.62 144.12 99.54 88.66 80.85 76.47 68.53
IRR 42%
Interest payment on Loan
TERM LOAN
OPENING BALANCE 36.77 300.00 240.00 180.00 120.00 60.00 0.00
FRESH AVAILMENT 300.00
REPAYMENT 36.77 60.00 60.00 60.00 60.00 60.00
CLOSING BALANCE 300.00 240.00 180.00 120.00 60.00 0.00 0.00
Q1 BALANCE 36.77 300.00 240.00 180.00 120.00 60.00 0.00

Q2 BALANCE 300.00 285.00 225.00 165.00 105.00 45.00
Q3 BALANCE 300.00 270.00 210.00 150.00 90.00 30.00
Q4 BALANCE 300.00 255.00 195.00 135.00 75.00 15.00
936.77 1110.00 870.00 630.00 390.00 150.00
AVERAGE BALANCE 234.19 277.50 217.50 157.50 97.50 37.50 0.00
ROI 15.75% 15.75% 15.75% 15.75% 15.75% 15.75% 15.75%
INTEREST 36.89 43.71 34.26 24.81 15.36 5.91 0.00
TOTAL
TOTAL INTEREST 248.48 266.74 257.29 247.84 238.39 228.94 223.03 1710.70
21
Hospitality Industry
PROJECT BACKGROUND
Incorporated on 20-5-1992, AAA Pvt. Limited (AAAPL) has been implementing a 12 storey 5 Star
Deluxe Hotel Project along with a Shopping arcade. The Project is on stream and civil construction has
been completed. The finishing, furnishing, electrification and other services works are now in progress.
All statutory approvals for the Hotel Project have since been obtained by the Promoters.
The initial cost of AAAPL with 512 standard rooms was estimated as Rs 866.89 Crores and based on the
feasibility study of HVS, ”The Hotel Industry Experts”, The Project was financed by a consortium of
Banks in a debt equity ratio of 2:1 and Term Loan of Rs 580 Crores was being sanctioned.
The following Banks participated in the debt sharing:-
(Rs. in Crore)
Sl. Lenders in Consortium Term Loan Bank Guarantee
No. Limit
1 Punjab National Bank 150.00 15.00
2 The Jammu & Kashmir Bank Ltd. 100.00 15.00
3 United Bank of India 75.00 15.00
4 Bank of India 95.00 -
5 Syndicate Bank 60.00 -
6 Union Bank of India 50.00 8.00
7 Indian Bank 50.00 7.00
Total 580.00 60.00
22
PROJECT COST
(Rs. in Crores)
Sr. Particular Original Revised cost Variance
No. (B-A)
(A) (B)
I. Land and Site Development:

i) Cost of 20,000 sq. mt. of land
Amt paid to DDA 170.00 170.00
Add:
- Interest to DDA 6.38 9.56
- Lease Deed registration charges 13.60 7.99
Sub-total 189.98 187.55
iii) Cost of landscaping, boundary wall, main gates, roads, 10.00 20.00
ramps & other development works
Total 'I' 199.98 207.55 7.57
II. Cost of Buildings, Other Civil Works, Furnishings,

Furniture, Fixtures & Interiors
i) Buildings Civil Works
a) Accommodation area 35.42 52.00
b) Corridor Area 5.42 -
c) Public area 21.45 22.93
c) Banquet/Convention & Lobby Area - 23.29
d) Service areas 8.40 7.53
e) Shopping Arcade Area 26.01 -
f) Office Area - 25.50
g) Atrium Area - 12.86
f) Parking/Plant room area (Basement Area) 46.05 113.66
g) Water storage and other tanks etc. 0.75 1.50
h) Swimming pool/waterways/fountains etc. 1.50 3.00
Sub-total 144.99 262.26 117.27
ii) Cost of other Civil works

a) Plumbing and water proofing (20% of building civil work) 28.55 52.45
b) Electricals & others (18% of building civil work) 25.69 47.21
Total ‘II’ 199.23 361.92 162.69
23
III. Cost of Furnishing, Furniture, Fixtures & Interiors etc.
i) Rooms and suites
A) Luxury Tower
Total (180Rooms) 39.95 56.08 16.13
B) Deluxe Tower
TOTAL (300 Rooms) 44.24 73.90 29.66
ii) Corridor lobby & public areas 34.49 53.01

iii) Others 5.00 5.00
Total 'III' 123.68 187.99 64.31
IV. Plant & Machinery:

Transformer (1500KVAx6) 2.10 3.75
Sub-Station/Panels/Distribution Board 5.00 8.65
DG Sets (1500KVAx6) 12.00 14.25
Air-conditioning & Ventilation 32.50 48.65
(Chiller (3500 TR, AHR/FCU, Thermostat etc.)
Lifts & Escalators 13.50 18.85
Water Filtration & Treatment Plant 2.25 4.15
Swimming Pool Filtration Plant & softening plant 1.00 2.80
Hydro pneumatic System 1.00 1.65
Sewage Treatment Plant & Water Softening Plant 1.50 3.85
Boilers/Steam Generators (6-1000kg/hr) 1.35 2.75
Fire-Fighting Equipment 2.95 4.70
Laundry Equipment 2.36 3.75
Kitchen Equipment & Cold Storage) 4.00 9.25
EPABX (600 lines out) 1.25 3.30
Computers - Hardware/Software/ (Server/Fedelio) 3.50 6.25
Health Club Equipment 3.50 5.40
Building Management System (Digital) 2.00 6.40
Electronic Key Locks 0.70 1.50
25" CTV/Music/CCTV/PA System 3.00 8.60
Mini bars/Tea-Coffee Machine 0.75 1.75
Business Centre/Conference Equipment 1.50 2.35
Gas Bank/Pumps etc. 0.90 1.65
98.61 164.25 65.64
V. Misc. Fixed Assets:

Crockery/Cutlery/Glassware 2.75 7.85
Housekeeping equipment & supplies 2.25 8.75
Linen & Staff Uniform 2.00 6.50
Signage/Graphics 0.75 2.15
Vehicles 2.50 6.75
Office Equipment 5.00 6.50
Total 'V' 15.25 38.50 23.25
VI. Technical Consultants Fee:

Architect/Structural Engineer (5% of civil works) 9.96 18.10
24
Interior Designer (7% of furnishing cost) 8.66 13.16
Services Consultant (2.5% of P&M and elect.) 3.82 4.11
Landscape Consultant 3.00 3.50
Restaurant, Kitchen, Facility & Back-office Consultant 3.50 4.50
Financial, Legal & Other Consultant 1.00 3.50
Project Management Consultant 2.50 3.00
Taj Advisory/Technical Services fee 2.50 3.50
TOTAL (VI) 34.94 53.36 18.42
VII. Financial Overheads 87.12 176.89 89.77
VIII. Preliminary & Pre-operative Cost

Preliminary Expenses 0.50 0.50
Appraisal, Upfront & Legal Fee 4.50 6.50
Establishment/Misc. Expenditure 5.00 5.50
Deposits, rate, taxes, insurance & other fees 2.50 2.50
Travelling Expenses 3.00 3.00
Recruitment/Training 4.00 4.00
19.50 22.00 2.50
IX. Cost during Start-up/ Soft Opening/Training 9.00 12.50 3.50
X. Marketing Overheads 18.27 14.50 -3.77
XI. Contingencies (3.5% of cost of project, excluding land cost 61.31 23.45 -37.86
and civil cost of building)
XII. Margin Money for Bank Guarantees and Working Capital -- 10.00 10.00
Total Cost of Project (I to XII) 866.89 1272.90 406.01
Status of Project
a) Project Land
The said plot of land, measuring 20000 square meters was advertised for auction by Delhi
Development Authority vide its auction document, with a reserve price of Rs.167.40 crores.
The company has paid the total money of Rs.170 crore towards land cost and of Rs.9.56 crore
towards interest. The company has also paid Rs.7.99 crores towards stamp duty and lease deed has
been executed in favor of the company. Thus the total cost of land including registration and interest
amount to Rs.188.58 crores. The company has also proposed expenditure on landscaping and site
development work amounting to Rs.20 Crores.
The company had made cost estimate of Rs 199.98 Crores in its earlier Project Report which has
now escalated to Rs 207.55 Crores mainly due to increase of land development and landscaping cost.
25
b) Cost of Buildings, Other Civil Works
(Rs. in Crores)
Cost Variation
Activities Original Report Revised Parameters (B-A)
Area Rate/sqft Cost (A) Area Rate/sqft Cost (B)
Accommodation Area 208344 1700 35.42 236367 2200 52.00 16.58
Corridor 41669 1300 5.42 -- -- 00 -5.42
Public Area 107263 2000 21.45 84922 2700 22.93 1.48
Banquet/convention/lobby -- -- 00 61286 3800 23.29 23.29
Service Areas 64584 1300 8.40 37638 2000 7.53 -0.87
Shopping Arcade 148629 1750 26.01 -- -- 00 -26.01
Office Area -- -- 00 94457 2700 25.50 25.50
Atrium Area -- -- 00 21430 6000 12.86 12.86
Parking/Plant Room 460452 1000 46.05 454629 2500 113.66 67.61
Water Storage/Tanks -- -- 0.75 -- -- 1.50 0.75
Swimming Pool 1.50 3.00 1.50
Plumbing/water proofing 28.55 52.45 23.90
Electricals/Others 25.69 47.21 21.52
TOTAL 0 0 0
26
JUSTIFICATION OF COST ESCALATION
AAAPL has submitted the following major reasons for the cost escalation:-
(i) Company had signed the Technical Services & Development Assistance Agreements with the
reputed and respected chain of hotels for the development of Hotels under consideration. The said
operator advised substantial changes in the design, construction and furnishing concept due to
which the cost increased. Though AAAPL had entered into an agreement when the Hotel
construction was at initial stage however, neither the operator nor the AAAPL Management could
quantify such major changes to be incorporated in the Project.
ii) Amendments in Master Plan of Delhi (MPD), 2021
The Ministry of Urban Development, Govt. of India has brought number of changes in the MPD,
2021 for development of Hotels in order to match the hotel development with the international
standards and to provide flexibility to the developers. The relevant changes are described here-in-
below:-
(a) Removal of Height Restrictions.

The height restriction for the hotel has been removed and the hotels complex can be
developed up to the height as per its functional requirements, subject to statutory
clearances from Airport Authority of India, Fire Departments etc.
a) Increase in Ground Coverage from 30% to 40%.

The MPD, 2021 has increased the ground coverage from 30% to 40% for hotels in order
to provide relaxations and flexibility in the hotel development.
b) Increase in Atrium area from 5% to 10%.

The permissible atrium area has been increased from 5% to 10% of the total plot area.
This is in addition to the ground coverage of 40%. Thus now one can develop hotel with
total ground coverage of 50%. It is relevant to add that only 25% of the atrium is counted
towards FAR and the balance 75% is free from FAR. This has resulted into increase in
buildable area.
i) Increase in Cost of Construction/Construction Materials
27
Cost of building materials i.e. bricks, cement, stone dust and steel has shot up abnormally by
approx 30% to 40% per cent during the last two years however since the contingency provision
was not kept to the extent, it has resulted in the excessive cost escalation.
iv) Appointment of Hotel Operator
Suggestions given by Architects and Project Consultants
(a) The height restriction for hotels has been removed. Accordingly, height of entrance lobby and
banquet was increased to 8 mtrs.
(b) Column free structure in the banquets with large spans.
Suggestions as above increased civil cost, air-conditioning cost, power back-up cost and cost of
interiors.
(c) Swimming pools shifted from ground floor to second floor terrace resulting increase in structure cost
& water proofing cost. It also resulted in the increase in open area for circulation and parking at
ground floor.
(d) Increase in height of boundary wall and installation of security gadgets at the gates and other area
keeping in view the security threats to the hotels specifically in Delhi & Mumbai.
(e) Substantial up-gradation and changes in the elevation/façade of the Hotel Complex.
(f) Up-gradation in the brands and quality of Sanitary-wares and China-wares to keep pace with
international standards.
(g) Substantial up-gradation and changes in hotel rooms and public area including high quality wooden
flooring & paneling and wall paper in the rooms.
(h) Quality of marbles both for the flooring and Dado upgraded.
(i) Building Automation and Management System substantially upgraded.
v) Higher Water Table

AAAPL has reported that, the water level at the project site was found to be at 12 Ft depth and
due to higher water table, heavy foundation work was suggested which resulted in the increase of
structural cost.
Capital Cost per Room:-
The capital cost per room (Excluding land cost and cost of High end offices) in the present case comes to
Rs 1.93 Crores while according to the Federation of Hotel and Restaurant Association of India (FHRAI ),
the average cost per room ranges from Rs 75 lakh to Rs 1.80 crore for a five-star deluxe Hotel.
28
In exceptional cases like Leela Palace Hotel in Delhi, the capital cost has been observed to be Rs 3.5
crores per room (without Land)
DEVELOPMENT STRATEGY:-
As per the original plan, AAAPL had to develop a Five Star Deluxe and a Five Star Hotel consisting of
200 and 312 standard rooms respectively. (Total 512 Rooms).
However on the suggestions of Operators/consultants, AAAPL changed the development strategy to

provide a better mix of lodging and other services in order to have higher revenue earning.
As per the new strategy AAAPL is developing two towers – Luxury Tower & Deluxe Tower discussed in
the following paragraphs.
Luxury Tower Luxury Tower is being developed with 180 key rooms and suites.
Name of the Facility Number of Rooms

Rooms 167
Suites 12
Presidential Suite 1
Total 180
Other Services in the Luxury Tower:-
In addition to above, following facilities & services are also being provided in the Luxury
Tower:
Sr. Name of the Facility Number

No.
1 Banquet Halls with pre-function area Ball Room-I
Ball Room-II
2 Meeting Rooms Meeting Room-I
Meeting Room-II
Meeting Room-II
3 Board Room One
4 Syndicate Room Syndicate Room-I
Syndicate Room-II
Syndicate Room-III
5 Business Centre One
29
6 Main Lobby One
7 All day Dining One
8 Bar One
9 Swimming Pool One
10 Specialty Restaurant One
11 Health Club and Spa One
Deluxe Tower:-
AAAPL in consultation with project consultants has decided now to develop the Deluxe Tower
with 300 key rooms and suites.
Name of the Facility Number of

Rooms
Rooms 288
Suites 12
Total 300
Other Services in the Deluxe Tower-
In addition to above, following facilities & services are also being provided in the Deluxe Tower:
Sr. Name of the Facility Number

No.
1 Banquet Halls with pre-function area Ball Room-III
Ball Room-IV
Ball Room-V
2 Business Centre, One
3 Main Lobby One
4 All day Dining One
5 Bar One
6 Swimming Pool One
7 Health Club One
8 Specialty Restaurant One
Construction and Sale of High End Offices:-
30
As discussed in the earlier paragraphs, the company’s strategy to develop retail space has now been
changed and has decided to develop premium office spaces at first & second floor. The office spaces
would be leased out and thereafter would be sold to the strategic investors and High Networth
Individuals, interested in the fixed rental income and capital appreciation. The enhanced term loan would
thus be serviced from revenue of Hotel operations, rentals of leased spaces and sale of leased high ended
office spaces.
Regarding the feasibility of sale of leased office space, the Promoters have already consulted some of the
reputed real estate agents and in view of the positive market reports, they do not envisage any problem in
the sale of leased property.
As per the new strategy, AAAPL has proposed to sell “High end office “super area of 193680 Sq.ft in a
phased manner at a sale price of Rs 21000 per Sq.ft. As per the company’s strategy, the company shall
construct offices in first stage and lease them out after furnishing and start getting the leased rents.
However simultaneously AAAPL shall also start looking for prospective buyers of leased property and
shall start selling with best bargains. As per legal opinion obtained by AAAPL, the sale of built up space
is permissible as per terms of sanction of project land.
As the viability of proposal and servicing of debt also depends upon the timely sale of leased property as
per details available in annexure, the Promoters shall undertake to induct funds in case of shortage in cash
flow from their own sources acceptable to the lenders.
Now with the substitution of retail area with the high-ended office area, the convention cum banquets
have been shifted on ground floor to restrict the functions, conferences and large gathering on ground
floor only. This will also reduce stress on the staircases and elevators. It will further reduce the
disturbances to the public area as well accommodation area in the hotels. Further, the office area is being
provided at first floor and second floor which would act as buffer for the noise and other disturbances
because of marriage parties / social gathering during night time in the banquets.
Development of Convention Centre/ Banquet Halls
In order to meet the large demand of large Convention Centre and Banquets in NCR, AAAPL is now
developing large Convention Centre, which is separable into 5 banquets / ballrooms by way of collapsible
partitions. If required, the same can be converted into one or more large banquets / ballrooms as per
requirement. The Convention Centre / all the banquets taken together can accommodate about 3,500 pax
at a time which is largest available space in any banquet / convention centre in Delhi at present. East
Delhi currently has no quality Meeting & Conference facilities while it is expected that there to be latent
31
demand from businesses in and around the area which cannot currently hold functions in Delhi owing to a
dearth of quality facilities and also the exorbitant rates charged by existing facilities. There exists a
parallel demand for such facilities by the social segment. Weddings and social events are a large revenue
source for most banquet facilities. This unique facility coupled with large inventory of rooms would place
the hotel in a monopolistic status.
The building for the 5 Star Deluxe Hotel and Commercial Space is proposed to be constructed as per
building byelaws in force & permitted FSI (Floor space Index). Details of area statement based on the
permissible FSI & allowable non FSI area has been worked out by, architects engaged by the promoters
for the project are as under:
FAR, Ground coverage & FAR distribution etc.
DERIVED FAR AREA CALCULATIONS
Description Acre SQ.MT. SQ.FT

Plot area 4.94 20000 2,15,280
Derived Far 2.25 2.25 2.25
FAR Area n.a. 45000 4,84,380
GROUND COVERAGE CALCULATIONS
1 Description Acre SQ.MT. SQ.FT
2 Ground coverage 40% 1.976 8000 86112.00
3 Additional 10% for atrium 0.494 2000 21,528.00
PROPOSED BUILT UP AREA DISTRIBUTION
S.No Activities Area SqMt Area Sqft
1 Luxury Tower 18213.30 196048
2 Deluxe Tower 22816.33 245595
3 Office Space 8775.26 94457
Total 49804.89 536100
3 level basements 42236.08 454629
32
Total 92041.00 990730
Floor wise area statement-details of covered area, constructed area based on the floor wise building plan
lay out submitted to DDA is summarized in the table:
Deluxe Tower Covered Area (FAR) Non FAR area Built up area
Ground Floor
- Lobby area 175.00 - 175.00
- Conventional
Centre 3092.20 - 3092.20
- 50% of atrium 248.86 746.58 995.44
- 50% of ESS area 77.27 - 77.27
Mezzanine Floor 957.17 957.17
First Floor 262.08 - 262.08
Second Floor 214.71 - 214.71
Third Floor 2,378.29 - 2,378.29
Fourth/Service Floor - 1899.13 1899.13
Fifth Floor 1,595.63 - 1,595.63
Sixth Floor 1,595.63 - 1,595.63
Seventh Floor 1,595.63 - 1,595.63
Eighth Floor 1,595.63 - 1,595.63
Ninth Floor 1,595.63 - 1,595.63
Tenth Floor 1,595.63 - 1,595.63
Eleventh Floor 1,595.63 - 1,595.63
Twelfth 1,595.63 - 1,595.63
Basements - 19348.94 19348.94
Total 20170.62 21994.65 42165.27
33
Luxury Tower Covered Area (FAR) Non FAR area Built up area
Ground Floor
- Lobby area 175.00 - 175.00

- Conventional
Centre 2251.32 - 2251.32

- 50% of atrium 248.86 746.58 995.44
- 50% of ESS area 77.27 - 77.27
Mezzanine Floor 957.17 957.17
First Floor 319.26 - 319.26
Second Floor 226.35 - 226.35
Third Floor 1,945.88 - 1,945.88
Service Floor 1442.96 1442.96
Spa at Fourth Floor 628.57 628.57
Fifth Floor 1,149.26 - 1,149.26
Sixth Floor 1,149.26 - 1,149.26
Seventh Floor 1,149.26 - 1,149.26
Eighth Floor 1,149.26 - 1,149.26
Ninth Floor 1,149.26 - 1,149.26
Tenth Floor 1,149.26 - 1,149.26
Eleventh Floor 1,149.26 - 1,149.26
Twelfth 1,149.26 - 1,149.26
Basements - 15445.47 15447.47
Total 16023.76 17635.01 33658.77
Area statement (Cont.) square meter

Office Space Covered Area (FAR) Non FAR area Built up area
First Floor 4,870.76 - 4,870.76
Second Floor 3,904.48 - 3,904.48
34
Basements 7,441.67 7,441.67
Total 8,775.24 7,441.67 16,216.91
Approved Built up area & Estimated Area to be constructed
The promoters have got prepared the revised building plan for approval soon as prepared by their
architect and project consultant, based on revised ground coverage of 50% (including 10% for atrium),
proposed FSI of 225%, service floor, atrium area of 2000 sq.mt. and 3 level basement total area proposed
to be constructed works out to 990729 square feet spread over two blocks linked by several passages and
office area. The layout of the buildings has been planned with a view to maximize revenue generation
potential while maintaining the permitted ground coverage and FAR norms as well as aesthetics. Thus,
the commercial buildings are spread out horizontally on the ground and 2nd floors only since these enjoy
the maximum rentals due to greater visibility and access. Third floor is public area in both the Hotels and
Fourth floor is service area with Spa facilities and Gym. The Hotel rooms shall be from 5 Th floor to 12 th
floors. Each of the hotels as well as commercial areas are also provided with independent basements for
parking. The FAR area used works out to 484053 square feet that is within the permissible FAR of
484380 square feet. Total commercial leasable area or the super that includes loading of atrium and other
common spaces and services works out to 193680 square feet that is in accordance with prevailing market
norms and practices.
Explanation of terms used
CARPET AREA
The actual usable area of an apartment/office unit/showroom etc minus wall thickness. It is that area
within the walls where you can actually lay a carpet.
COVERED AREA
Covered area is the FSI area or FAR. It excludes stairwells, lift shafts, passages, corridors, balconies,
basements and is the area “usable” by the occupier.
BUILT-UP OR CONSTRUCTED AREA
Built-up area, over and above the carpet area, would include the space covered by the thickness of the
inner and outer walls of the flat. Constructed area means the entire area enclosed by its periphery wall,
including area under the walls, columns, half area of the walls common with other premises, cupboards,
35
lifts, balconies, basements etc which shall form an integral part of the premises. Built up area is used for
estimation of civil construction costs.
SUPER BUILT UP AREA
It is said to include the proportionate common areas on the floor, such as the passage, staircase, and so on.
This would usually be around 25-35 per cent of the carpet area. However, there is a tendency of loading
even the common areas of the building/project such as the garden, open area, clubhouse and other
recreational facilities. The concept of super area is used to estimate the projected revenues of the project
since the sale price and lease rent is quoted in terms of super area. For the purpose of leasing out the
building and calculation of leasable area, the construction area projecting outside the walls and part of the
podium/outside atriums/basement area are loaded on to the constructed area.
COST OF FURNISHING/FURNITURE/INTERIORS
ORIGINAL ESTIMATES REVISED ESTIMATES

VARIATION
i) Rooms and suites No. Cost Per Total Cost No. Cost Per Total
LUXURY TOWER Room Room Cost
- Deluxe Rooms 90 1850000 16.65 92 2750000 25.30

- Executive Rooms 90 1850000 16.65 42 3250000 13.65
- Club Rooms 10 2750000 2.75 33 3250000 10.73
- Suites 10 3250000 3.25 8 4500000 3.60
- Executive Suite - - - 4 5000000 2.00
- Presidential Suite 1 6500000 0.65 1 8000000 0.80
201 39.95 180 56.08 16.13
DELUX TOWER
- Deluxe Rooms 137 1350000 18.50 202 2250000 45.45
- Executive Rooms 137 1350000 18.50 86 2750000 23.65
- Club Rooms 20 2000000 4.00 - - -
- Suites 10 2750000 2.75 12 4000000 4.80
- Presidential Suite 1 5000000 0.50 - - -
305 44.24 300 73.90 29.66
ii) Corridor lobby & public 34.49 53.01 18.52

areas
iii) Others 5.00 5.00
Total 506 123.68 480 187.99
Variance:-Rs.64.31 Crores
36
Since the furnishing standards have been upgraded at the advice of the project consultants and operator
because of up-gradation of infrastructure and services in East Delhi and increase in emphasis on the
increased number of Deluxe category rooms and Club rooms in the Hotel for better value addition.
PLANT AND MACHINERY
As a part of above-said strategy at the advice of project consultants and the Promoters experience, they
have up-graded the brands of plant & machinery as well as its capacity. It is relevant to add here that the
company had to incur on number of extra items which were not part of work contract executed with the
contractors and suppliers. It is relevant to add here that there is substantial amount of work both in lifts /
elevators and air-conditioning which does not form part of main contract but has to be undertaken either
departmentally or through some other contractor. Also the cost of all types of metals has substantially
increased in the international and domestic market, which has increased the cost of plant & machinery.
Keeping in view of the above said factors, the cost of plant & machinery has now been estimated at
Rs.164.25 crore as per details hereinabove.
Crockery / Cutlery / Glassware

Considering the large banqueting facilities, large room inventory and above all the Promoters experience
which is similar in size and operations (except banquets which are much higher here), they have estimated
the cost of misc. assets as above.
Technical Consultant’s Fee

Technical Consultant’s Fee has increased with the increase in respective elements of cost as per
prevailing practices for charging such fees by the architects / technical consultants. However, there is no
increase in percentage of such fee to the particular cost.
Financial Overheads
The financial overheads have increased with the increase in loan as per calculation given in the annexure.
The Financial overheads have increased from Rs. 87.12 crore to Rs. 176.89 crore because of increase in
loan amount, extension of COD & increase in ROI because of increase in Base Rates of the Banks.
Cost during start-up / soft opening / training period
The amount has been estimated based upon the experience and amount incurred in the start-up / soft
opening / training period.
37
Contingencies
Since approx 75% to 80% of Hotel construction stands completed, the company has made provision for
contingency @3.5% of the cost of project excluding the cost of land & civil cost of building in order to
meet any further price escalation.
Margin Money for Working Capital / Bank Guarantee

The company has been sanctioned Bank Guarantee Limit of Rs.60 crore for providing bank guarantees in
favour of custom authorities for the import of material under EPCG scheme at 10% margin in the shape
of FDRs. Company needs to provide guarantees to sales tax and other authorities for which margin of Rs.
One crore has been considered. The Company therefore provided margin of Rs.7 crore in the form of
FDRs and balance Rs.3 crore has been provided for the margin towards working capital.
MEANS OF FINANCE
Particulars Previous Estimate Revised Estimate
Amount % Share Amount % Share
Promoter’s Contribution
- Equity Share Capital 153.03 255.00
- Unsecured Interest Free Loans 133.86 207.90
286.89 33.09% 462.90 36.36%
Term Loan from banks/FIs 580.00 66.91% 810.00 63.64%

Total 866.89 100.00% 1272.90 100.00%
The Promoters are in process of mobilizing the funds required to meet the additional cost as mentioned
above. The detailed sources of mobilization shall be provided to the lenders before any debt drawl.
ADDITIONAL PROMOTER CONTRIBUTION OF RS.176.01 CRORE TOWARDS

ADDITIONAL COST OF RS.406.01 CRORE:
The total increase in the cost of project of hotel complex is Rs.406 crores, out of which the term loan of
Rs.230 crores is proposed to be raised from the term lending banks. The additional required funds for the
project to meet the additional cost of Rs.406.01 crore shall be raised on prorate basis so as to maintain the
Debt Equity ratio of 1.31:1 for the additional loan. With this the overall debt equity ratio for the project
38
would decrease from 2:1 to 1.75:1. The Promoters shall provide the sources of their contribution to the
lenders for their satisfaction.
HOTEL INDUSTRY ANALYSIS
Enthralling cosmopolitan city of New Delhi is the capital of implausible India and is a fusion of Victorian
as well as Mughal elegance. Enamouring Delhi is full of scope and is emerging as splendid city of
modern influence with a time honoured traditional touch. Indian financial aspects are given a
positive push by the enormous rush of travellers to India leading to a direct impact on the upward trend of
hotels demand. Delightful conurbation of Delhi can be appropriately title as the city of hotels and it seems
like the second largest economy is a star studded village of hotels and accommodation
hubs. Becharming urban land of New Delhi a city of hotels is the busiest focal point of India and attracts
both leisure as well as business vacationers. Engrossing Five star hotels in Delhi are the undisputed crown
of Delhi Hotels which are appreciated across the cosmos for their awe inspiring architectural beauty,
ostentatious facilities and above approach services.
These luxury hotels in Delhi are a prestigious collection of world renowned hotel brands which offers
unique signatures of hospitality.
Delhi is one of the most important locations for business and investors in India. Delhi is the fastest-
growing consumer markets in India. It has seen active infrastructure development over the past decade.
Further, in view of the recently concluded Common Wealth Games, there is large infrastructure
developments in terms of new roads, new bridged, construction of Terminal-3 at IGI Airport, number of
sports Stadiums etc. Similarly, the existing infrastructure has substantially upgraded. Unlike other fast
39
growing areas such as Bangalore and Mumbai, Delhi does not currently face a breakdown in
infrastructure facilities. Major companies have shifted their bases to Delhi and the NCR owing to ease of
operations facilitated by better infrastructure, lower capital and rental values and availability of skilled
manpower. It is the largest market for high-end consumer durables and has the highest concentration of
households with an annual income of above Rs.44,00,000/-. The area of East Delhi consists of a
population with a high income levels and a propensity to spend. However, this market has not yet been
tapped, warranting the development of quality hotels in the area. Further, a series of ambitious economic
reforms aimed at deregulating the economy and stimulating foreign investment had firmly moved India
into the front ranks of the rapidly growing Asia-Pacific region. Today, India is one of the most exciting
emerging markets in the world. Skilled managerial and technical manpower that match the best available
in the world as well as an educated middle class whose size exceeds the population of the US or that of
the European Union, provide India with a cutting edge in global competition. Despite the rapid
appreciation of the rupee, IT and ITES companies have managed to sustain their advantage over other
companies by acquiring scale and going up the value chain into more specialized domains of technology.
India’s economic growth story stays intact, as is seen by the recent rise in the stock indices. India has
registered an impressive economic growth in the past three years.
The economy (GDP) has grown from 7.4% in financial year 2009-10 to 8.5% in 2010-11 respectively.
The Indian economy is aspiring for double digit growth and is on course to be the world’s third largest
economy by the year 2025. The advent of information technology coupled with a sizeable young and
educated workforce fluent in English, is gradually transforming India as an import destination for global
companies for the outsourcing of their customer services and technical support.
The Tourism Industry in India contributed 6% to the GDP in 2009/10. According to estimates of the
World Travel and Tourism Council (WTTC), GDP growth for Travel & Tourism economy is expected to
average 9% per annum over the coming ten years. The government’s “Tourist Visa on Arrival Scheme”
for citizens of Japan, Finland, Luxembourg, Singapore, and New Zealand, is also expected to establish the
country’s image as a tourist-friendly nation and further bolster Foreign Tourist Arrivals (FTAs) in the
future. These initiatives have generated a renewed interest in Indian tourism, a testament to which is the
marked improvement in FTAs from January to August of 2010 (increase of 10% year-over-year). Overall,
our outlook for foreign travel to India is positive. Domestic demand for hotels in India has historically
been higher than demand from foreigners. Though a large portion of domestic demand originates from
commercial activity, an increasing number of Indians are taking annual holidays, both within the country
and overseas.
40
India is fortunate to have a domestic market that supports the growth of the travel industry even when the
world economy is experiencing a downturn. According to HVS, domestic travel has never been given its
due. Even today, it is the statistics on the foreign travelers that garner attention; however, it is the less
represented domestic segment that forms the major component of revenue generated by the Indian travel
industry. The domestic travel will continue to play a dominant role, not just within hospitality, but across
sectors and will help further insulate the Indian economy from the problems in other countries and make
India less susceptible to global economic downturns. The availability of quality hotels in the mid market
and budget segment is also providing more cost-effective travel options and encouraging travel across
different cities in India.
According to the Department of Industrial Policy and Promotion, Rs.1, 23,378 crore worth FDI has
poured in during April-March, 2010. Also India has replaced the US as the second most important FDI
destination after China for the year 2010-11. This would provide robust growth to the economy resulting
higher demand of five star deluxe and five star hotel rooms in India.
The expansion of the Indira Gandhi International Airport at Delhi has given priority by the government
due to the Common Wealth Games organized in Delhi. The expansion is scheduled in five phases, the
recently completed first phase saw the modernization of existing terminals and the opening of a new
integrated Terminal-3 (T3) spread over 5.4 million square feet. This is expected to increase the airport’s
handling capacity from 12 million passengers per annum (mppa) to 37 mppa. Thus, the capacity of the
Delhi Airport would not be bottleneck both for the foreign and domestic tourist.
Another contributor of growth across all positioning will be Medical Tourism. Medical tourism, whereby
world-class medical treatment is provided at comparative advantage combined with attractive resorts for
convalescence, is clearly on the rise. The drivers of medical tourist are: low cost of medical treatment,
high trained and experienced medical staff, hospital infrastructure, and the universality of English as a
language of communication. In addition, specialty hospitals are present and accessible to the domestic
population only in the major cities of the country. Thus, we believe hotel project opportunities around
hospitals at metro locations are also worth exploring. The new segment of foreign travellers for Medical
Tourism would provide higher occupancy in NCR hotels.
In addition, the nationwide launch of the much awaited faster third generation (3G) telecom services by
the private players in India is expected to lead to an explosion in mobile marketing. This will in turn
41
benefit the hospitality sector as international trainers, consultants; technicians etc. will be brought into the
country to enable the 3G services. Hotel across multiple locations where the services will be introduced
are expected to benefit from these international visitations.
With the growth of recognized sporting events like the IPL T20 annual cricket tournaments, upcoming
Formula 1 Motor Race the domestic leisure travel is expected to grow further. Also with corporate
sponsorship playing a significant part in driving the success of these large format events (usually covering
multiple cities), the growth in internal travel by these sponsors is expected to directly benefit airline and
hotel business (in 2009 domestic travel grew by 16% over that of 2008). The growth in demand from
successful large format sporting events remains an untapped opportunity. As regards the supply from the
new hotels, the probability factor for their development is in the next five years and till that time the
increased demand would offset the increase in supply.
VIABILITY ASPECTS
Parameters Original Projections as accepted Projected now by the Company
ARR 1 2 3 4 5 1 2 3 4 5
2010-11 2011-12 2012-13 2013-14 2014-15 2012-13 2013-14 2014-15 2015-16 2016-17
Deluxe Tower 8493 8618 9057 9495 9969 8364 8866 9309 9775 10263
Luxury Tower 10116 10269 10807 11336 11903 10233 10847 11390 11959 12557
Occupancy
Deluxe Tower 65% 62% 68% 74% 74% 57% 68% 73% 77% 77%
Luxury Tower 65% 60% 65% 71% 71% 56% 67% 72% 74% 74%
F&B%
to Sales
Deluxe Tower 90% 90% 90% 90% 90% 125% 125% 125% 125% 125%
Luxury Tower 60% 60% 60% 60% 60% 80% 80% 80% 80% 80%
PBDIT 50% 49% 51% 52% 52% 53% 52% 52% 51% 51%
DSCR 1.65 1.41
42
Parameters HVS report Earlier Projections HVS report fresh Projections
ARR 1 2 3 4 5 1 2 3 4 5
2010- 2011- 2012- 2013 2014- 2012-13 2013- 2014- 2015- 2016-
11 12 13 -14 15 14 15 16 17
Deluxe Tower 8493 8618 9057 9495 9969 8164 8654 9087 9541 10018
Luxury Tower 10116 10269 10807 11336 11903 10233 10847 11390 11959 12557
Occupancy
Deluxe Tower 65% 62% 68% 74% 74% 57% 68% 73% 77% 77%
Luxury Tower 65% 60% 65% 71% 71% 56% 67% 72% 74% 74%
F&B%
to Sales
Deluxe Tower 41.2% 42.3% 41.6% 41.2% 41.2% 159% 149% 146% 144% 144%
Luxury Tower 27.5% 28.5% 28.1% 27.7% 27.7% 90% 84% 83% 82% 82%
PROJECTED FINANCIALS:
We have estimated occupancy and ARR for both the Luxury and Deluxe Towers as under for the
currency of term loan.
Luxury Tower
- For the year ended on -
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Particulars
ARR (Rs.) 11390 11959 12557 13185 13844 14536 15263
Occupancy 72% 74% 74% 74% 74% 74% 74%

(%)
Deluxe Tower
- For the year ended on -
Particulars 2014- 2015- 2016-17 2017-18 2018-19 2019-20 2020-21
15 16
ARR (Rs.) 9309 9775 10263 10776 11315 11881 12475
Occupancy (%) 73% 77% 77% 77% 77% 77% 77%
ROOM REVENUE:-
43
The projections of annual revenue have been placed at annexure. The average room revenue (ARR) has
been accepted for both the towers for this Hotel project. The first year ARR for Deluxe and Luxury
Tower are accepted as Rs. 8364/- and Rs 10233/- respectively which are lower than Central Delhi Hotels
of same status.
OCCUPANCY LEVEL:-
The occupancy level of Deluxe and Luxury Tower for the first year have been accepted as stabilizing at
77% and 74% respectively. The occupancy level has been as per HVS report.
FOOD & BEVERAGE SALES:-

F & B revenue for Deluxe and Luxury Tower have been accepted at 80% and 125% respectively of room
revenue. Though the revenue projected is higher than the normally accepted in such type of Hotels
however the higher values have been projected because of Convention Centre/ 5 numbers of Banquet
Halls with higher area and capacity of guests accommodated there. Moreover the F &B revenue has been
vetted by HVS report.
INCOME FROM LEASED OFFICE SPACE

The Total super area for lease has been quantified as 193680 Sq Ft which shall be converted to high end
offices to fetch the average rent of Rs 175 per sq.ft per month. The leased office property shall also be
sold on simultaneous basis with best bargains and the sale rate has been accepted as Rs 21000/- per Sq ft
prevailing in that area for such properties. AAAPL has provided legal opinion of the bank’s empanelled
Advocate / Lawyer regarding feasibility / permissibility of sale of premium office space in parts with
reference to the lease agreement entered with DDA for this property. AAAPL shall provide comfort
letters from real estate dealers for confirming the prevailing sale prices of leased property in that area.
RATE OF INTEREST:-
Rate of interest has been considered as 13.75% PA during construction period and 13.25% PA during
operational period linked to the BOI base rate of 10.75%PAfor the existing and proposed term loan.
REPAYMENT PERIOD
The Company has already been sanctioned term loan of Rs.580 crore by the participating term lenders
which is repayable in 32 quarterly instalments commencing from the quarter ending June, 2013.
44
The repayment of additional term loan of Rs.230 crore is proposed to be paid in 28 quarterly instalments
commencing from 30.06.2014.
Both the Term Loans shall terminate on 31-3-2021.
The Projected Profitability Statement for the period of term loan are summarized below which shows that
the cash generation will be sufficient to timely service the proposed debt.
(Rs. in Lacs)
Particular 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Hotel 28365.77 31117.06 32672.91 34306.56 36021.89 37822.98 39714.13

revenue
Op. Expenses 12503 13934 14612 15325 16075 16862 17689
Gross 15863 17183 18061 18981 19947 20961 22026

operating
profit
PBDIT %age 52% 51% 51% 51% 51% 51% 51%
(add)
Rental 3130 3066 2666 2133 1750 1048 332
income
Sale 6101 4210 4210 7016 6724 8068 6993
Proceeds of
part office
space
Less : Cost of 2616 1570 1570 2616 2180 2616 2267
Part of office
Space Sold
Profit from 3485 2640 2640 4400 4543 5452 4725
sale of part
office space
(less)
Depreciation 4682 4682 4682 4682 4682 4682 4682
Interest on 9644 8662 7615 6279 4602 2856 1100

TL
Interest on 66 66 66 66 66 66 66
W. Cap.
PBT 6911 8207 9666 13081 15413 18304 19604
Tax 1382 1641 1933 2616 3083 5901 6645
PAT 5529 6565 7733 10465 12331 12404 12959
Add 4682 4682 4682 4682 4682 4682 4682

Depreciation
Cash Profit 10210 11247 12414 15146 17012 17085 17640
The project shall start earning cash profits from the first year of operation, which shall stabilize in the
three years of operations. The cash flow shall also increase because of sale of leased high end offices.
Sensitivity Analysis
45
The Base case average DSCR of the project is computed at 1.41 and Base case IRR (Post Tax) has been
computed at 15% (excluding land value). The sensitivity analysis of the project has been carried out on
different parameters and the results are as under:-
Sr. No. Sensitivities DSCR

Avg. Min.
1 Base Case 1.41 1.33
2 5% decrease in revenue 1.35 1.25
3 5% increase in operating cost 1.40 1.30
4 5% decrease in revenue and 5% increase in operating cost 1.31 1.22
5 1.5 % increase in interest rate 1.31 1.22
6 5% decrease in revenue, 5% increase in operating cost and 1.19 1.09
1.5% increase in interest rate
The detailed calculation of DSCR, IRR and its sensitivity analysis is enclosed herewith as annexure.
Average IRR (Post Tax) for the Hotel project has been computed as 15%.
Security for the Term Loan
The entire Term Loans of Rs.810 crore and of and Bank Guarantee of Rs.60 crore would continued to be
secured against the equitable mortgage on first pari-passu basis of project land and buildings to be
constructed thereon and hypothecation of plant & machinery, furniture, fixtures, fittings, equipments and
other assets of the project. The total market value of the project including the office area on its completion
is projected at more than Rs.1677 crore as per valuation carried out by HVS.
RISK ANALYSIS
Risk Description Risk Mitigation
Pre Implementation Risk
Cost increase and The earlier cost escalation was partly due to time over-run and partly due to
Completion delay Various suggestions given by The Hotel Operator and project consultant who
was appointed late.
The revised project cost has been finalised based on the company’s past
experience in implementing similar projects and modifications suggested by
Hotel Operator and project consultant. Also the configuration of the hotel is
based on the feasibility study undertaken by HVS Global Services.
In view of the above, AAAPL is confident of completing the Project in time.
Funding Risk One of the major risk perceived for the project is delay in tie-up of the means of
finance for the project. However since the Promoters have good relations with
their Banks, no problem is envisaged in timely tie up.
46
Risk Description Risk Mitigation
Non-Political force majeure/ Commercial insurance is to be taken by AAAPL to cover such risks.
damage / destruction
Post Implementation (Operations) Risk
Performance Shortfall The occupancy volumes and ARR has been accepted in terms of HVS report
prepared recently for this Hotel only. The F&B income has also been accepted
as per the perception of HVS report which is however higher than the average
industry norms.
Additional cash flow from the sale of leased office space has been accepted as
per the Management’s perception. AAAPL has obtained legal opinion on the
feasibility / permissibility of sale of leased property and prevailing prices in that
area.
As per AAAPL, since there is no 5 Star Deluxe Hotel & Convention of their size
and standard & with the backing of brand like “Sheraton” in East Delhi area, no
shortfall in performance is expected. AAAPL shall also undertake to make good
any shortfall in projected cash flow in order to service the debts. The promoters
shall provide necessary comfort to the lenders in this regard by way of
guarantees/securities.
Increase in operating AAAPL expects to have control on most of cost functions except food and
expenses beverages. Any adverse movement in food and beverage prices is generally
passed on to the end customer.
Sensitivity scenario underlining the above mentioned scenario has been

considered and the company has fair debt servicing capability.
Market Risk
Competition Risk Because of series of 5-Star/Deluxe Hotels operating in Delhi and NCR by highly
reputed operators, there is a enormous competition in Hotel Industry. However
as mentioned earlier that since there is no hotel in east Delhi of AAAPL
standard at present, AAAPL is confident of attracting the East Delhi regional
crowd where substantial potential is available. Moreover because of Sheraton’s
reputation and lower ARR as compared to the Central Delhi Hotels, AAAPL do
not envisage any adverse competition.
CONCLUSION
The Project with initial cost of Rs 866.69 Crores was financed by a consortium of Banks in a debt equity
ratio of 2:1 and AAAPL was sanctioned Term Loan of Rs 580 Crores to complete the Hotel Project.
47
Though the Term Loan has been almost availed however the Project has attained approx. 75 to 80% of
completion and because of time and cost over-run, the cost of Project has increased from Rs 866.69 crores
to Rs.1272.90 Crores and AAAPL has accordingly requested the existing lenders to consider sanctioning
of additional Term Loan of Rs 230 Crores to complete the project. We have been apprised by AAAPL
that Punjab National Bank at the request of its group company, M/s AAB Developers & Infrastructure
Pvt. Ltd. (ADIPL) had sanctioned Lease Rental discounting (LRD) loan of Rs.1280 crore towards
discounting of future lease rentals of AAB Mall, Gurgaon which resulted in the higher exposure in a
Group account. Consequently all other group loans including the term loan of Rs.150 crore and bank
guarantee limit of Rs.15 crore for this project were adjusted with Punjab National Bank thereby
increasing the additional Term Loan requirement from Rs 230 Crores to Rs 380 Crores.
The feasibility study and development strategy for the Hotel Project was prepared by HVS International,
a Hospitality Consultants of international repute.
As per the new strategy, the Project shall have 180 Rooms & Suites in its Luxury Tower and 300 rooms
& Suites in Deluxe Tower along with host of other services like Convention Centre / Banquet Halls,
Meeting rooms, Health Club and restaurants etc. It has also been decided by the management to
develop and sell HIGH-END / ULTRA-PREMIUM OFFICES in place of RETAIL SPACE.
As per the new strategy, AAAPL shall lease out the high-end / ultra-premium offices initially
and shall start bargaining for selling the same in a phased manner.
AAB Group who is developing the Hotel Complex is known for quality and innovative
developments and is further known for providing extra luxurious features in their projects. Even
though such features increase the cost of the project but at the same time it provides higher
revenue on its operationalization and success of the project.
The viability of the Hotel Project as per the original proposal was based on the cash flow from
Hotel Operations, lease rent of commercial space and income from its other allied services.
However the Project viability has now been based partly on the cash flow from Hotel operations,
lease rentals from high-ended office spaces developed within the Hotel Complex and from the
sale of these leased office space. The company has already obtained legal opinion on the
feasibility of sale of leased office space.
48
The Debt Equity ratio was stipulated at 2:1 for the initially assessed cost of Rs.866.89 crore. The
additional cost of Rs.406.01 crore has been vetted at Debt Equity ratio of 1.31:1 resulting in the
total Debt Equity ratio for the project at 1.75:1.
The Hotel shall be operational by April 2012 and it has been studied that the combined cash flow
with the proposed Hotel operations together with cash flow from sale of leased office space, the
company shall be in a position to repay the debts of Rs 810 crores with an average DSCR of 1.41
to substantiate the viability of the proposal.
49
DETAILED COST OF PROJECT OF HOTEL & CONVENTION CENTRE COMPLEX
(Rs. in
Lacs)
I. Land and Site Development : Area Rate( Per sq. ft.) Amount
i). Cost of 20,000 Sq. Mt of land

Amt paid to DDA 17000
Add: Interest to DDA 956
Registration Charges 799 18755
iii) Cost of landscaping, boundry wall, main gates,

roads, ramps & other development works 2000 20755
II. Cost of Buildings, Other Civil Works, Furnishigs, Furniture,

Fixtures & Interiors
i). Buildings Civil Works
a) Accommodation area 236367 2200 5200
b) Public Area 84922 2700 2293
c) Banquet/ Convention& Lobby Area 61286 3800 2329
d) Service areas 37638 2000 753
e) Office Area 94457 2700 2550
f) Attrium Area 21430 6000 1286
g) Parking/Plant Room Area (Basement Area) 454629 2500 11366
h) Water storage and other tanks etc. 150
i) Swimming pool/waterways/fountains etc. 300
26226
ii) Cost of other Civil works

a) Plumbing and water proofing (20% of building 5245
civil work)
b) Electricals & others (18% of building civil work) 4721 36193
III Cost of Furnishing, Furnitures, Fixtures & Interiors etc.

.
i) Rooms and suites No. Cost Per Total Cost

Room/Suite
Luxury Segment
- Deluxe Rooms 92 2750000 2530
- Executive Rooms 42 3250000 1365
- Club Rooms 33 3250000 1073
- Suites 8 4500000 360
- Executive Suites 4 5000000 200
- Presidential Suite 1 8000000 80
180 5608
Deluxe Segment
- Deluxe Rooms 202 2250000 4545
- Executive Rooms 86 2750000 2365
- Suites 12 4000000 480
300 7390
ii) Corridor lobby & public areas 5301
iii) Others 500 18798
IV. Plant & Machinery:

Transformer (1500KVAx6) 375
Sub-Station/Panels/Distribution Board 865
DG Sets (1500KVAx6) 1425
Air-conditioning & Ventilation 4865
(Chiller (3500 TR, AHR/FCU, Thermostat etc.)
Lifts & Escalators 1885
Water Filteration & Treatment Plant 415
Swimming Pool Filterational Plant & softening plant 280
Hydropneumatic System 165
Sewage Treatment Plant& water softening plant 385
Boilers/Steam Generators (6-1000kg/hr) 275
Fire-Fighting Equipment 470
Laundry Equipment 375
Kitchen Equipment & Cold Storage) 925
EPABX (600 lines out) 330
Computers - Hardware/Software/ (Server/Fedelio) 625
Health Club Equipment 540
Building Management System (Digital) & Equipments 640
Electronic Key Locks & System 150
25" CTV/Music/CCTV/ Public announcement system 860
Mini bars/Tea-Coffee Machine 175
Business Centre/Conference Equipment 235
Gas Bank/Pumps etc. 165 16425
V. Misc. Fixed Assets:
Crockery/Cutlery/Glassware/Silver Sets 785
Housekeeping equipment & supplies 875
Linen & Staff Uniform 650
Sinages/Graphics 215
Vehicles 675
Office Equipment 650 3850
VI. Technical Consultants Fee:

Architect/Structural Engineer (5% of cost of civil works) 1810
Inteior Designer (7% of furnishing cost) 1316
Services Consultant (2.5% of plant & machinery and elect.) 411
Landscape Consultant 350
Restaurant , Kitchen, Facility & Back-office Consultant 450
Financial, Legal & Other Consultant 350
Project Management Consultant 300
Taj Advisory/Technical Services fee 350 5336
VII. Financial Overheads 17689
VIII
. Preliminary & Pre-operative Cost
Preliminary Expenses 50
Appraisal, Upfront & Legal Fee 650
Establishment/Misc. Expenditure 550
Deposits, rate, taxes, insurance & other fees 250
Travelling Expenses 300
Recruitment/Training 400 2200
IX. Cost during Start -up / Soft Opening / Trainging Period 1250
X. Marketing Overheads 1450
XI. Contingencies 2345
XII. Margin Money for Bank Guarantee and Working Capital 1000
Total 127290
PROJECTED CASH FLOW STATEMENT OF HOTEL & CONVENTION COMPLEX

(Rs. in Lacs)
Particular Pre-Op. 2014- 2015- 2016- 2017- 2018- 2019- 2020- 2021- 2022-
Per. 15 16 17 18 19 20 21 22 23
Increase in share capital 25500 0 0 0 0 0 0 0 0 0
PAT 0 -2151 3265 5529 6565 7733 10465 12331 12404 12959
Less : Profit on Sale of Part office 0 0 2672 3485 2640 2640 4400 4543 5452 4725
Space
Add :Sale of Part office space 0 0 4677 6101 4210 4210 7016 6724 8068 6993
Balance after adjustment for -2151 5271 8145 8135 9302 13081 14511 15020 15226
Sales
Depreciation 0 4682 4682 4682 4682 4682 4682 4682 4682 4682
Reserve for Replacement 0 199 503 851 1245 1307 1372 1441 1513 1589
Increase in term loan 81000 0 0 0 0 0 0 0 0 0
Increase in unsecured loan 20790 0 0 0 0 0 0 0 0 0
Increase in WC loan 0 550 0 0 0 0 0 0 0 0
Increase in Security Deposits 0 1424 160 -220 79 -210 -351 -3 -403 -475
Total inflows 127290 4703 10615 13457 14141 15081 18784 20631 20811 21022
Increase in Fixed Assets 126290 0 0 0 0 0 0 0 0 0

Increase in Current Assets 0 850 0 0 0 0 0 0 0 0
Term loan repayment 0 0 5438 7409 7409 8723 12348 13170 13224 13279
FDR for Margin Money 700 0 0 0 0 0 0 0 0 0
Total outflows 126990 850 5438 7409 7409 8723 12348 13170 13224 13279
Opening balance 0 300 4153 9331 15379 22111 28468 34904 42365 49951
Surplus for the year 300 3853 5178 6048 6732 6357 6436 7461 7587 7743
Closing balance 300 4153 9331 15379 22111 28468 34904 42365 49951 57694
PROJECTED BALANCE SHEETS OF HOTEL & CONVENTION COMPLEX COMPLEX
(Rs. in Lacs)
Particular Pre-Op. 2014- 2015- 2016- 2017- 2018- 2019- 2020- 2021- 2022-
Per. 15 16 17 18 19 20 21 22 23
Liabilities
Share Capital 25500 25500 25500 25500 25500 25500 25500 25500 25500 25500
Revenue reserves 0 -2151 1114 6643 13208 20941 31405 43736 56140 69099
Reserve for Replacement 0 199 702 1553 2797 4104 5477 6918 8430 10019
Net Worth 25500 23548 27316 33695 41505 50545 62382 76154 90070 104617
Unsecured Loan 20790 20790 20790 20790 20790 20790 20790 20790 20790 20790
Term Loan 81000 81000 75563 68154 60745 52021 39673 26504 13279 0
WC Loan 0 550 550 550 550 550 550 550 550 550
Security Deposits 0 1424 1583 1363 1442 1232 881 878 475 0
Total 127290 127312 125802 124552 125033 125139 124277 124876 125165 125958
Assets
Gross Fixed Assets 126290 126290 126290 126290 126290 126290 126290 126290 126290 126290
Depreciation 0 4682 9363 14045 18726 23408 28090 32771 37453 42135
Cost of sale of Part office 0 2006 4622 6192 7762 10378 12558 15174 17442
Space
Net Fixed Assets 126290 121609 114921 107624 101372 95121 87823 80961 73663 66714
Current Assets 0 850 850 850 850 850 850 850 850 850
Cash & bank balance 300 4153 9331 15379 22111 28468 34904 42365 49951 57694
FDR for Margin Money 700 700 700 700 700 700 700 700 700 700
Total 127290 127312 125802 124552 125033 125139 124277 124876 125165 125958
PROJECTED ANNUAL REVENUE OF HOTEL & CONVENTION CENTRE COMPLEX
PARTICULARS 2014- 2015- 2016- 2017- 2018- 2019- 2020- 2021- 2022-
15 16 17 18 19 20 21 22 23
Luxury Tower
No. of Days 365 365 365 365 365 365 365 365 365
Occupancy 56% 67% 72% 74% 74% 74% 74% 74% 74%
ROOMS AVAILABLE 180 180 180 180 180 180 180 180 180
- Deluxe Rooms 92 92 92 92 92 92 92 92 92
- Executive Rooms 42 42 42 42 42 42 42 42 42
- Club Rooms 33 33 33 33 33 33 33 33 33
- Suites 12 12 12 12 12 12 12 12 12
- Presidential Suite 1 1 1 1 1 1 1 1 1
Total Room Nights 65700 65700 65700 65700 65700 65700 65700 65700 65700
Room Nights at stated Occupancy 36792 44019 47304 48618 48618 48618 48618 48618 48618
Deluxe Tower
No. of Days 365 365 365 365 365 365 365 365 365
Occupancy 57% 68% 73% 77% 77% 77% 77% 77% 77%
ROOMS AVAILABLE 300 300 300 300 300 300 300 300 300
- Deluxe Rooms 202 202 202 202 202 202 202 202 202
- Executive Rooms 86 86 86 86 86 86 86 86 86
- Suites 12 12 12 12 12 12 12 12 12
Total Room Nights 10950 10950 10950 10950 10950 10950 10950 10950 10950
0 0 0 0 0 0 0 0 0
Room Nights at stated Occupancy 62415 74460 79935 84315 84315 84315 84315 84315 84315
Average Room Realisation
Luxury Tower 10233 10847 11390 11959 12557 13185 13844 14536 15263
Deluxe Tower 8364 8866 9309 9775 10263 10776 11315 11881 12475
RevPAR
Luxury Tower 5730 7267 8201 8850 9292 9757 10244 10757 11295
Deluxe Tower 4684 5940 6703 7233 7595 7975 8373 8792 9232
ROOM TARIFF REVENUE 8985 11376 12829 14056 14758 15496 16271 17085 17939
Luxury Tower 3765 4775 5388 5814 6105 6410 6731 7067 7420
Deluxe Tower 5220 6602 7441 8241 8654 9086 9541 10018 10518
F& B SALES
F&B Sales as % of Room Revenue

Luxury Tower 80% 80% 80% 80% 80% 80% 80% 80% 80%
Deluxe Tower 125% 125% 125% 125% 125% 125% 125% 125% 125%
Total F&B Sales 9537 12072 13612 14953 15701 16486 17310 18176 19084
Luxury Tower 3012 3820 4310 4651 4884 5128 5384 5654 5936
Deluxe Tower 6525 8252 9302 10302 10817 11358 11926 12522 13148
MINOR OPERATING DEPTT SALES
MOD Sales as % of Room Revenue
Luxury Tower 15% 15% 15% 15% 15% 15% 15% 15% 15%
Deluxe Tower 15% 15% 15% 15% 15% 15% 15% 15% 15%
Total MOD Sales 1348 1706 1924 2108 2214 2324 2441 2563 2691
Luxury Tower 565 716 808 872 916 962 1010 1060 1113
Deluxe Tower 783 990 1116 1236 1298 1363 1431 1503 1578
RENTAL
INCOME
OFFICE SPACE (FAR IN SQ.FT.) 94,457 94,457 94,457 94,457 94,457 94456. 94456. 94456. 94456.
7 7 7 7
OFFICE SPACE (SUPER AREA IN 193,68 193,68 193,68 193,68 193,68 193,68 193,68 193,68 193,68
SQ.FT.) 0 0 0 0 0 0 0 0 0
CAPACITY UTILISATION 70% 90% 95% 95% 95% 95% 95% 95% 95%
AVG. RENT/SQ.FT./MONTH (Rs.) 175.00 175.00 175.00 201.25 201.25 201.25 231.44 231.44 231.44
TOTAL RENTAL INCOME 2,847. 3,660. 3,863. 4,443. 4,443. 4,443. 5,110. 5,110. 5,110.
10 55 92 50 50 50 03 03 03
AREA SOLD ( Sq ft) - 22,273 29,052 17,431 17,431 29,052 24,210 29,052 25,178
COMMULATIVE AREA SOLD - 22,273 51,325 68,756 86,188 115,24 139,45 168,50 193,68
0 0 2 0
BALANCE AREA 193,68 171,40 142,35 124,92 107,49 78,440 54,230 25,178 -
0 7 5 4 2
Balance Rent Receivable 2,847 3,450 3,130 3,066 2,666 2,133 1,750 1,048 332
SALE PROCEEDS FROM PART OFFICE SPACE
Percentage of Leased Area Sold 11.50 15.00 9.00% 9.00% 15.00 12.50 15.00 13.00
% % % % % %
Cumulative percentage of Leased 11.50 26.50 35.50 44.50 59.50 72.00 87.00 100.00
Area Sold % % % % % % % %
Sale Value of Leased Property Sold 4,677 6,101 4,210 4,210 7,016 6,724 8,068 6,993
Less cost of Property Sold 2,006 2,616 1,570 1,570 2,616 2,180 2,616 2,267
Profit on Sale of Part office Space 2,672 3,485 2,640 2,640 4,400 4,543 5,452 4,725
INTEREST CALCULATION DURING CONSTRUCTION PERIOD

OF HOTEL & CONVENTION CENTRE COMPLEX
Int. Rate 13.75%

First Instalment Jun-14
Loan Amount 81000.00

Instalment Period Quarterly
Gestation period 24 months
(Rs. in Lacs)
Op. Bal. Disbursement Closing Balance
July , 2012 43000.00 0.00 43000.00 12221
Sept., 2012 43000.00 7500.00 50500.00 782
Dec., 2012 50500.00 20000.00 70500.00 2082
March, 2013 70500.00 10500.00 81000.00 2604

Total 17689
INTEREST CALCULATION DURING OPERATIONAL PERIOD
Int. Rate 13.25%
First Instalment Jun-14
Loan Amount 81000

Instalment Period Quarterly
Gestation period 24 months
(Rs. in Lacs)
Op. Bal. Repayment Balance Interest
Term Loan of Term Loan of Total
Rs.58000 lacs Rs.17000 lacs Loan

1 81000.00 0.00 0.00 0.00 81000.00 2683
2 81000.00 0.00 0.00 0.00 81000.00 2683
3 81000.00 0.00 0.00 0.00 81000.00 2683
4 81000.00 0.00 0.00 0.00 81000.00 2683
5 81000.00 1359.38 0.00 1359.38 79640.63 2683
6 79640.63 1359.38 0.00 1359.38 78281.25 2638
7 78281.25 1359.38 0.00 1359.38 76921.88 2593
8 76921.88 1359.38 0.00 1359.38 75562.50 2548
9 75562.50 1359.38 492.86 1852.23 73710.27 2503
1
0 73710.27 1359.38 492.86 1852.23 71858.04 2442
1
1 71858.04 1359.38 492.86 1852.23 70005.80 2380
1
2 70005.80 1359.38 492.86 1852.23 68153.57 2319
1
3 68153.57 1359.38 492.86 1852.23 66301.34 2258
1
4 66301.34 1359.38 492.86 1852.23 64449.11 2196
1
5 64449.11 1359.38 492.86 1852.23 62596.88 2135
1
6 62596.88 1359.38 492.86 1852.23 60744.64 2074
1
7 60744.64 1359.38 821.43 2180.80 58563.84 2012
1
8 58563.84 1359.38 821.43 2180.80 56383.04 1940
1
9 56383.04 1359.38 821.43 2180.80 54202.23 1868
2
0 54202.23 1359.38 821.43 2180.80 52021.43 1795
2
1 52021.43 2265.63 821.43 3087.05 48934.38 1723
2
2 48934.38 2265.63 821.43 3087.05 45847.32 1621
2
3 45847.32 2265.63 821.43 3087.05 42760.27 1519
2
4 42760.27 2265.63 821.43 3087.05 39673.21 1416
2
5 39673.21 2265.63 1026.79 3292.41 36380.80 1314
2
6 36380.80 2265.63 1026.79 3292.41 33088.39 1205
2
7 33088.39 2265.63 1026.79 3292.41 29795.98 1096
2
8 29795.98 2265.63 1026.79 3292.41 26503.57 987
2
9 26503.57 2265.63 1026.79 3292.41 23211.16 878
3
0 23211.16 2265.63 1026.79 3292.41 19918.75 769
3
1 19918.75 2265.63 1054.17 3319.79 16598.96 660
3
2 16598.96 2265.63 1054.17 3319.79 13279.17 550
3
3 13279.17 2265.63 1054.17 3319.79 9959.37 440
3
4 9959.37 2265.63 1054.17 3319.79 6639.58 330
3
5 6639.58 2265.63 1054.17 3319.79 3319.79 220
3
6 3319.79 2265.63 1054.17 3319.79 0.00 110
Total 58000.00 23000.00 81000.00 61954
CALCULATION OF DSCR - NORMAL PROJECTIONS
(Rs. in Lacs)
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

Profit after Tax -2151.18 3264.99 5528.75 6565.25 7732.70 10464.73 12330.79 12403.62 12958.86
Less : Profit on Sale of

Part office Space - 2671.55 3484.63 2639.86 2639.86 4399.77 4543.48 5452.18 4725.22
Add :Part sale of office

space - 4,677.37 6,100.92 4,209.63 4,209.63 7,016.06 6,723.72 8,068.47 6,992.67
Balance after
adjustment -2151.18 5270.81 8145.04 8135.03 9302.47 13081.02 14511.03 15019.91 15226.31
Depreciation 4681.62 4681.62 4681.62 4681.62 4681.62 4681.62 4681.62 4681.62 4681.62
Reserve for
Replacement 198.71 503.09 850.97 1244.68 1306.92 1372.26 1440.88 1512.92 1588.57
10732.5
Interest on Term Loan 0 10462.32 9643.90 8662.22 7615.23 6279.29 4602.33 2856.45 1099.68
Increase( Decrease ) in
Security Deposits 1423.55 159.87 -220.31 79.31 -210.48 -350.80 -2.92 -403.42 -474.78
14885.1
Total A 9 21077.71 23101.22 22802.86 22695.76 25063.39 25232.93 23667.47 22121.39

Repayment of Term
Loan 0.00 5437.50 7408.93 7408.93 8723.21 12348.21 13169.64 13224.40 13279.17
10732.5
Interest on Term Loan 0 10462.32 9643.90 8662.22 7615.23 6279.29 4602.33 2856.45 1099.68

10732.5
Total B 0 15899.82 17052.83 16071.15 16338.44 18627.50 17771.98 16080.85 14378.85

DSCR 1.39 1.33 1.35 1.42 1.39 1.35 1.42 1.47 1.54

Average DSCR 1.41
CALCULATION OF DSCR WHEN TOTAL REVENUE DECREASES BY 5%
(Rs. in Lacs)

2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
Revenue
21581.76
29712.16
33231.17
34981.79
36079.94
38797.25
40199.78
42106.58
42532.93
Total operating expenses

9454.70
12050.78
13743.72
15272.54
16016.16
16797.39
17618.12
18480.32
19386.06
PBDIT
12127.05
17661.39
19487.45
19709.26
20063.78
21999.86
22581.66
23626.26
23146.87
(less) depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
(Less) interest
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
PBT
-3287.07
2517.44
5161.93
6365.42
7766.93
11038.95
13297.70
16088.19
17365.57
Tax payable
0.00
503.49
1032.39
1273.08
1553.39
2207.79
2659.54
3217.64
3473.11
PAT
-3287.07
2013.95
4129.54
5092.34
6213.54
8831.16
10638.16
12870.56
13892.46
Less : Profit on Sale of Part office Space

0.00
2671.55
3484.63
2639.86
2639.86
4399.77
4543.48
5452.18
4725.22
Add :Part sale of office space

0.00
4677.37
6100.92
4209.63
4209.63
7016.06
6723.72
8068.47
6992.67
Balance after adjustment

-3287.07
4019.77
6745.83
6662.11
7783.31
11447.45
12818.40
15486.84
16159.90
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
Reserve for Replacement

198.71
503.09
850.97
1244.68
1306.92
1372.26
1440.88
1512.92
1588.57
Increase in Security Deposits

1423.55
159.87
-220.31
79.31
-210.48
-350.80
-2.92
-403.42
-474.78
TL Int.
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
Inflows
13749.31
19826.67
21702.01
21329.94
21176.60
23429.82
23540.31
24134.41
23054.99
TL Instalment
0.00
5437.50
7408.93
7408.93
8723.21
12348.21
13169.64
13224.40
13279.17
TL Int.
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
Outflows
10732.50
15899.82
17052.83
16071.15
16338.44
18627.50
17771.98
16080.85
14378.85
DSCR
1.28
1.25
1.27
1.33
1.30
1.26
1.32
1.50
1.60
Average DSCR
1.35
CALCULATION OF DSCR WHEN OPERATING COST INCREASES BY 5%
(Rs. in Lacs)

2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
Revenue
22717.64
31275.96
34980.17
36822.94
37978.88
40839.21
42315.56
44322.72
44771.51
Total expenses
9927.44
12653.31
14430.90
16036.16
16816.96
17637.26
18499.03
19404.33
20355.36
PBDIT
12790.20
18622.65
20549.27
20786.78
21161.91
23201.95
23816.53
24918.38
24416.14
(less) depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
(Less) interest
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
PBT
-2623.92
3478.70
6223.75
7442.94
8865.06
12241.05
14532.58
17380.31
18634.84
Tax payable
0.00
695.74
1244.75
1488.59
1773.01
2448.21
2906.52
3476.06
4427.48
PAT
-2623.92
2782.96
4979.00
5954.35
7092.05
9792.84
11626.06
13904.25
14207.37

0.00
2671.55
3484.63
2639.86
2639.86
4399.77
4543.48
5452.18
4725.22

0.00
4677.37
6100.92
4209.63
4209.63
7016.06
6723.72
8068.47
6992.67

-2623.92
4788.78
7595.29
7524.12
8661.82
12409.12
13806.30
16520.54
16474.81
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
Reserve for Replacement

198.71
503.09
850.97
1244.68
1306.92
1372.26
1440.88
1512.92
1588.57

1423.55
159.87
-220.31
79.31
-210.48
-350.80
-2.92
-403.42
-474.78
TL Int.
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
Inflows
14412.45
20595.68
22551.47
22191.96
22055.11
24391.49
24528.21
25168.11
23369.90
TL Instalment
0.00
5437.50
7408.93
7408.93
8723.21
12348.21
13169.64
13224.40
13279.17
TL Int.
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
Outflows
10732.50
15899.82
17052.83
16071.15
16338.44
18627.50
17771.98
16080.85
14378.85
DSCR
1.34
1.30
1.32
1.38
1.35
1.31
1.38
1.57
1.63
Average DSCR
1.40
CALCULATION OF DSCR WHEN TOTAL REVENUE DECREASES BY 5% AND OPERATING COST
INCREASES BY 5%
(Rs. in Lacs)

2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
Revenue
21581.76
29712.16
33231.17
34981.79
36079.94
38797.25
40199.78
42106.58
42532.93
Total expenses
9927.44
12653.31
14430.90
16036.16
16816.96
17637.26
18499.03
19404.33
20355.36
PBDIT
11654.32
17058.85
18800.26
18945.63
19262.97
21159.99
21700.75
22702.25
22177.57
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
(Less) interest
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
PBT
-3759.80
1914.90
4474.74
5601.79
6966.12
10199.08
12416.80
15164.18
16396.27
Tax payable
0.00
382.98
894.95
1120.36
1393.22
2039.82
2483.36
3032.84
3279.25
PAT
-3759.80
1531.92
3579.79
4481.43
5572.90
8159.27
9933.44
12131.34
13117.01
-
2,671.55
3,484.63
2,639.86
2,639.86
4,399.77
4,543.48
5,452.18
4,725.22

-
4,677.37
6,100.92
4,209.63
4,209.63
7,016.06
6,723.72
8,068.47
6,992.67

-3759.80
3537.74
6196.08
6051.21
7142.67
10775.56
12113.68
14747.63
15384.46
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
Reseve for Replacement

198.71
503.09
850.97
1244.68
1306.92
1372.26
1440.88
1512.92
1588.57

1423.55
159.87
-220.31
79.31
-210.48
-350.80
-2.92
-403.42
-474.78
TL Intt
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
Inflows
13276.57
19344.64
21152.26
20719.04
20535.95
22757.92
22835.59
23395.20
22279.54
TL Instalment
0.00
5437.50
7408.93
7408.93
8723.21
12348.21
13169.64
13224.40
13279.17
TL Intt
10732.50
10462.32
9643.90
8662.22
7615.23
6279.29
4602.33
2856.45
1099.68
Outflows
10732.50
15899.82
17052.83
16071.15
16338.44
18627.50
17771.98
16080.85
14378.85
DSCR
1.24
1.22
1.24
1.29
1.26
1.22
1.28
1.45
1.55
Average DSCR
1.31
CALCULATION OF DSCR WHEN INTEREST COST INCREASES BY 1.5%
(Rs. in Lacs)

2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
Revenue
22717.64
31275.96
34980.17
36822.94
37978.88
40839.21
42315.56
44322.72
44771.51
Total operating expenses
9454.70
12050.78
13743.72
15272.54
16016.16
16797.39
17618.12
18480.32
19386.06
PBDIT
13262.94
19225.18
21236.46
21550.40
21962.72
24041.82
24697.44
25842.40
25385.45
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
(Less) interest
11947.50
11646.74
10735.66
9642.85
8477.33
6990.15
5123.35
3179.82
1224.17
PBT
-3366.18
2896.83
5819.17
7225.94
8803.77
12370.05
14892.46
17980.96
19479.65
Tax payable
0.00
579.37
1163.83
1445.19
1760.75
2474.01
2978.49
3596.19
4492.88
PAT
-3366.18
2317.46
4655.34
5780.75
7043.02
9896.04
11913.97
14384.77
14986.78

0.00
2671.55
3484.63
2639.86
2639.86
4399.77
4543.48
5452.18
4725.22

0.00
4677.37
6100.92
4209.63
4209.63
7016.06
6723.72
8068.47
6992.67

-3366.18
4323.28
7271.63
7350.52
8612.79
12512.33
14094.21
17001.05
17254.23
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62

1423.55
159.87
-220.31
79.31
-210.48
-350.80
-2.92
-403.42
-474.78
TL Intt
11947.50
11646.74
10735.66
9642.85
8477.33
6990.15
5123.35
3179.82
1224.17
Inflows
14686.48
20811.51
22468.60
21754.30
21561.26
23833.30
23896.26
24459.07
22685.24
TL Instalment
0.00
5437.50
7408.93
7408.93
8723.21
12348.21
13169.64
13224.40
13279.17
TL Intt
11947.50
11646.74
10735.66
9642.85
8477.33
6990.15
5123.35
3179.82
1224.17
Outflows
11947.50
17084.24
18144.59
17051.77
17200.55
19338.36
18293.00
16404.23
14503.34
DSCR
1.23
1.22
1.24
1.28
1.25
1.23
1.31
1.49
1.56

Average DSCR
1.31
WORST CASE - WHEN TOTAL REVENUE DECREASES BY 5%, OPERATING COST INCREASES
BY 5% AND INTEREST COST INCREASES BY 1.5%

2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
Revenue
21581.76
29712.16
33231.17
34981.79
36079.94
38797.25
40199.78
42106.58
42532.93
Total expenses
9927.44
12653.31
14430.90
16036.16
16816.96
17637.26
18499.03
19404.33
20355.36
PBDIT
11654.32
17058.85
18800.26
18945.63
19262.97
21159.99
21700.75
22702.25
22177.57
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
(Less) interest
11947.50
11646.74
10735.66
9642.85
8477.33
6990.15
5123.35
3179.82
1224.17
PBT
-4974.80
730.49
3382.98
4621.16
6104.02
9488.22
11895.78
14840.81
16271.77
Tax payable
0.00
146.10
676.60
924.23
1220.80
1897.64
2379.16
2968.16
3254.35
PAT
-4974.80
584.39
2706.38
3696.93
4883.21
7590.58
9516.62
11872.65
13017.42

0.00
2671.55
3484.63
2639.86
2639.86
4399.77
4543.48
5452.18
4725.22

0.00
4677.37
6100.92
4209.63
4209.63
7016.06
6723.72
8068.47
6992.67
-4974.80
2590.21
5322.67
5266.70
6452.99
10206.87
11696.86
14488.93
15284.87
Depreciation
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62
4681.62

1423.55
159.87
-220.31
79.31
-210.48
-350.80
-2.92
-403.42
-474.78
TL Intt
11947.50
11646.74
10735.66
9642.85
8477.33
6990.15
5123.35
3179.82
1224.17
Inflows
13077.87
19078.44
20519.64
19670.48
19401.46
21527.83
21498.91
21946.95
20715.88
TL Instalment
0.00
5437.50
7408.93
7408.93
8723.21
12348.21
13169.64
13224.40
13279.17
TL Intt
11947.50
11646.74
10735.66
9642.85
8477.33
6990.15
5123.35
3179.82
1224.17
Outflows
11947.50
17084.24
18144.59
17051.77
17200.55
19338.36
18293.00
16404.23
14503.34
DSCR
1.09
1.12
1.13
1.15
1.13
1.11
1.18
1.34
1.43
Average DSCR
1.19
INTERNAL RATE OF RETURN
(Rs. in
Lacs)
PROJECT
COST

Cost of Land 20755
Other than Land 106535
Year 0 2013 2014 2015 2016 2017 2018 2019 2020 2021

OUT FLOW
Capital Cost 106535
INFLOW

PAT -2151 3265 5529 6565 7733 10465 12331 12404 12959
Interest 10733 10462 9644 8662 7615 6279 4602 2856 1100
Depreciation 4682 4682 4682 4682 4682 4682 4682 4682 4682
Salvage Value 66714

Total Inflow 0 13263 18409 19854 19909 20030 21426 21615 19942 85454

Net Inflow -106535 13263 18409 19854 19909 20030 21426 21615 19942 85454

NPV 117,047
IRR (Post Tax) 15%
INTERNATIONAL TRADE TRANSACTIONS
LETTER OF CREDIT
A letter of credit is a document issued by a financial institution, or a similar party, assuring payment to a seller of
goods and/or services provided certain documents have been presented to the bank. These are documents that
prove that the seller has performed the duties under an underlying contract (e.g., sale of goods contract) and the
goods (or services) have been supplied as agreed. In return for these documents, the beneficiary receives payment
from the financial institution that issued the letter of credit. The letter of credit serves as a guarantee to the seller
that it will be paid regardless of whether the buyer ultimately fails to pay. In this way, the risk that the buyer will
fail to pay is transferred from the seller to the letter of credit's issuer. The letter of credit can also be used to ensure
that all the agreed upon standards and quality of goods are met by the supplier, provided that these requirements
are reflected in the documents described in the letter of credit.
Letters of credit are used primarily in international trade for transactions between a supplier in one country and a
customer in another. Most letters of credit are governed by rules promulgated by the International Chamber of
Commerce known as Uniform Customs and Practice for Documentary Credits (UCP 600 being the latest version).
They are also used in the land development process to ensure that approved public facilities (streets, sidewalks,
storm water ponds, etc.) will be built. The parties to a letter of credit are the supplier, usually called
the beneficiary, the issuing bank, of whom the buyer is a client, and sometimes an advising bank, of whom the
beneficiary is a client. Almost all letters of credit are irrevocable, i.e., cannot be amended or cancelled without the
consent of the beneficiary, issuing bank, and confirming bank, if any.
Different types of letters of credit
 Import/export Letter of Credit
The same credit can be termed as import and export LC depending on whose perspective it is being looked upon.
For the importer it is termed as Import LC and for the Exporter of goods, Export LC.
 Revocable Letter of Credit
In this type of credit, buyer and the bank which has established the LC, are able to manipulate the letter of credits
or make any kinds of corrections without informing the seller and getting permissions from him. According to
UCP 600, all LCs are Irrevocable, hence this type of LC used no more.
 Irrevocable LC
In this type of LC, Any changes (amendment) or cancellation of the LC (except it is expired) is done by the
Applicant through the issuing Bank. It must be authenticated by the Beneficiary of the LC. Whether to accept or
reject the changes, depends on the beneficiary.
 Confirmed LC
An LC is said to be confirmed when another bank adds its additional confirmation (or guarantee) to honor a
complying presentation at the request or authorization of the issuing bank.
 Unconfirmed LC
This type of letter of credit, does not acquire the other bank's confirmation.
 Transferrable LC
A Transferable Credit is the one under which the exporter has the right to make the credit available to one or more
subsequent beneficiaries. Credits are made transferable when the original beneficiary is a middleman and does not
supply the merchandise himself but procures goods from the suppliers and arrange them to be sent to the buyer
and does not want the buyer and supplier know each other. The middleman is entitled to substitute his own
invoice for the one of the supplier and acquire the difference as his profit in transferable letter of credit
mechanism.
Important Points of Consideration:
A letter of credit can be transferred to the second beneficiary at the request of the first beneficiary only if it
expressly states that the letter of credit is "transferable". A bank is not obligated to transfer a credit.
A transferable letter of credit can be transferred to more than one second beneficiary as long as credit allows
partial shipments.
The terms and conditions of the original credit must be indicated exactly in the transferred credit. However, in
order to keep the workability of the transferable letter of credit below figures can be reduced or curtailed.
• Letter of credit amount
• Any unit price of the merchandise (if stated)
• The expiry date
• The presentation period or
• The latest shipment date or given period for shipment.
The first beneficiary may demand from the transferring bank to substitute his name for that of the applicant.
However, if a document other than invoice required in the transferable credit must be issued in a way to show the
applicant's name, in such a case that requirement must be indicated in the transferred credit.
Transferred credit cannot be transferred once again to any third beneficiary according to the request of the second
beneficiary.
 Untransferable LC
It is said to the credit that seller cannot give a part or completely right of assigned credit to somebody or to the
persons he wants. In international commerce, it is required that the credit will be untransferable.
 Deferred / Usance LC
It is kind of credit that won't be paid and assigned immediately after checking the valid documents but paying and
assigning it requires an indicated duration which is accepted by both of the buyer and seller. In reality, seller will
give an opportunity to the buyer to pay the required money after taking the related goods and selling them.
 At Sight LC
It is a kind of credit that the announcer bank after observing the carriage documents from the seller and checking
all the documents immediately pays the required money.
 Red Clause LC
In this kind of credit assignment, the seller before sending the products can take the pre-paid or part of the money
from the bank. The first part of the credit is to attract the attention of the acceptor bank. The reasoning behind this,
is the first time this credit is established by the assigner bank, it is to gain the attention of the offered bank. The
terms and conditions were written by red ink, going forward it became famous with that name.
 Back to Back LC
This type of LC consists of two separated and different types of LC. First one is established in the benefit of the
seller that is not able to provide the corresponding goods for any reasons. Because of that reason according to the
credit which is opened for him, neither credit will be opened for another seller to provide the desired goods and
sends it.
Back-to-back L/C is a type of L/C issued in case of intermediary trade. Intermediate companies such as trading
houses are sometimes required to open L/Cs by supplier and receive Export L/Cs from buyer. SMBC will issue a
L/C for the intermediary company which is secured by the Export L/C (Master L/C). This L/C is called "Back-to-
back L/C".
Documents that can be presented for payment
To receive payment, an exporter or shipper must present the documents required by the letter of credit. Typically,
the payee presents a document proving the goods were sent instead of showing the actual goods. The Original Bill
of Lading (BOL) is normally the document accepted by banks as proof that goods have been shipped. However,
the list and form of documents is open to negotiation and might contain requirements to present documents issued
by a neutral third party evidencing the quality of the goods shipped, or their place of origin or place. Typical types
of documents in such contracts might include:
 Financial Documents
o Bill of Exchange, Co-accepted Draft
 Commercial Documents
o Invoice, Packing list
 Shipping Documents
o Transport Document, Insurance Certificate, Commercial, Official or Legal Documents
 Official Documents
o License, Embassy legalization, Origin Certificate, Inspection Certificate, Phytosanitary certificate
 Transport Documents
o Bill of lading (ocean or multi-modal or Charter party), Airway bill, Lorry/truck receipt, railway
receipt, CMC Other than Mate Receipt, Forwarder Cargo Receipt, Deliver Challan...etc
 Insurance documents
o Insurance policy, or Certificate but not a cover note.
Payment Cover Letter
AB MC bank
Global Trade Services
To
PNB Preet Vihar
<Address>
Amount :<Amount used by the facility>
L/C No :
Presented by :
Documents are <Enclosed documents>
They comply with terms and conditions as stated.
They were presented within L/C presentation period.
Remitting the amount through (RTGS/Fed Wire) to branch: <Bank branch Address>
Beneficiary Certificate
Sold to : <Importer Name>
<Importer Address>
L/C No:
Sales Order No :
Description
Description of products sold

Signature: <Exporter>
Certificate of Origin
<<Notifies the IMPORTER that the products of EXPORTER are products of EXPORTING country>>
Marks & No. No. of Weight Description

Packages/Bags
L/C No:
Sales Order No :
<Chamber of Commerce>
<of Exporting Country>
Commercial Invoice
Sold to <IMPORTER>
Details No
Sales Order No:
Invoice No:
L/C No:
Description
Marks & No. No. of Weight Description

Packages/Bags
L/C No:
Sales Order No :
Payment Terms
• Letter of credit amount
• any unit price of the merchandise (if stated)
• the expiry date
• the presentation period or
• the latest shipment date or given period for shipment.
Signature: <Exporter>
Air Waybill
Shipper’s Name: <Exporter Name>
Shipper’s Address: <Exporter’s Address>
Consignee’s Name: <Importer’s Bank>
Consignee’s Address: <Importer’s Bank Address>
TO BY
DESTINATION FLIGHT
Marks & No. No. of Weight Nature of Goods

Packages/Bags
L/C No:
Sales Order No :
<Exporter Signature>
Shipper’s Signature
<Airlines>
Carrier’s Signature
BIBLIOGRAPHY
1. http://economictimes.indiatimes.com/india-to-be-worlds-3rd-largest-construction-mkt-by-
2025/articleshow/20856489.cms
2. http://www.asiaconst.com/past_conference/conference/13th/AC13India.pdf
3. http://en.wikipedia.org/wiki/Construction_industry_of_India
4. http://www.equitymaster.com/research-it/sector-info/construction/Construction-Sector-Analysis-
Report.asp
5. http://www.marketresearchindia.in/Real_Estate_&_Construction_Market_Research_in_India.pdf
6. WWW.HVS.COM
7. http://dx.doi.org/10.4172/2157-7110.1000260
8. IMAP’s Food & Beverage Industry Global Report-2013
9. INDIAN HOTELS INDUSTRY-Quarterly Report by ICRA March 2013
10. www.wikipedia .com

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Credit Analysis, Risk Rating of Companies in

Construction, Hospitality, Beverages

CREDIT ANALYSIS PROCESS

Segmentation of Construction Industry in India

 Residential, industrial, commercial, and other buildings.

 Employment and training opportunities in the field of construction.

 Distance between construction projects reduces business efficiency.

Facility Applied for-

Name Term Loan

Name Working Capital Loan

Interest BR+4.5% presently 15% p.a. on monthly rest

Particulars 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2017-19

Term Loan Inst 4.88 13 11.31 8.19 5.07 1.43 43.88

DSCR 8.58 4.80 1.88 2.21 2.61 3.22 2.86

Risk Rating Model for Construction Companies

Financial Analysis of XYZ Industries Pvt. Ltd.

Amount of Cross Holdings

Unsecured Loans - Short Term

Capital Work in Progress

Break Even Point

Particulars 2014 2015 2016 2017 2018 2019 2020

Particulars 2014 2015 2016 2017 2018 2019 2020

Interest payment on Loan

Q1 BALANCE 36.77 300.00 240.00 180.00 120.00 60.00 0.00

The following Banks participated in the debt sharing:-

I. Land and Site Development:

II. Cost of Buildings, Other Civil Works, Furnishings,

ii) Cost of other Civil works

ii) Corridor lobby & public areas 34.49 53.01

Total 'III' 123.68 187.99 64.31

IV. Plant & Machinery:

V. Misc. Fixed Assets:

VI. Technical Consultants Fee:

VII. Financial Overheads 87.12 176.89 89.77

VIII. Preliminary & Pre-operative Cost

IX. Cost during Start-up/ Soft Opening/Training 9.00 12.50 3.50

X. Marketing Overheads 18.27 14.50 -3.77

Total Cost of Project (I to XII) 866.89 1272.90 406.01

Activities Original Report Revised Parameters (B-A)

Area Rate/sqft Cost (A) Area Rate/sqft Cost (B)

Accommodation Area 208344 1700 35.42 236367 2200 52.00 16.58

Corridor 41669 1300 5.42 -- -- 00 -5.42

Public Area 107263 2000 21.45 84922 2700 22.93 1.48

Banquet/convention/lobby -- -- 00 61286 3800 23.29 23.29

Service Areas 64584 1300 8.40 37638 2000 7.53 -0.87

Shopping Arcade 148629 1750 26.01 -- -- 00 -26.01

Office Area -- -- 00 94457 2700 25.50 25.50

Atrium Area -- -- 00 21430 6000 12.86 12.86

Parking/Plant Room 460452 1000 46.05 454629 2500 113.66 67.61

Water Storage/Tanks -- -- 0.75 -- -- 1.50 0.75

Swimming Pool 1.50 3.00 1.50

Plumbing/water proofing 28.55 52.45 23.90

Electricals/Others 25.69 47.21 21.52

ii) Amendments in Master Plan of Delhi (MPD), 2021

(a) Removal of Height Restrictions.

a) Increase in Ground Coverage from 30% to 40%.

b) Increase in Atrium area from 5% to 10%.

i) Increase in Cost of Construction/Construction Materials