Mohit Mehtas Paper Presented For Iov Seminar Ver 1

Paper Presented for the seminar Dated 13th June,2009 in Rodas Hotel, Powai organized by
Institution of Valuers, Mumbai Branch

Value Add Consultant Presents

Special Township

Feasibility Studies and Valuation
For
Private Equity Investment Purpose

Presented By
Er.Mohit R Mehta
FIV,MRICS,MIE,MISSE
Promoter
Value Add Consultant
Advisors & Valuers
vac@consultant.com
+91-98924 89265

Value Add Consultant 1/13


Feasibility Study and Valuation of Special Townships
Development Project

Introduction
Housing has been one of the major concerns of Government of India due to large demand and
supply gap exits since independence. It has been realized that there is a need to incentivise
investment by private sector in real estate development. Government of India announced its
policy to permit 100% foreign direct investments for a development of integrated townships.

Government of Maharashtra in collaboration with Maharashtra economic development council
has organized an International infrastructure summit in 2002. Outcome of the summit was
Government of Maharashtra approved the Special Township Scheme in the year 2004.

Development Control Regulation for Respective Municipal Corporation like Greater Mumbai/
Thane Municipal Corporation/ MMR Region was amended to include provision for the Special
Township by Urban Development Department of Government of Maharashtra by issuing a
various Notifications i.e. No. TPS 1204 / Thane D.P. DCR / UD -12 dated 25th May,2006.

This paper has been presented to indicate how an private equity investor will be advised for
prospective acquisition of township land.

The key Regulations for Thane Municipal Corporation:
(Note: Most of the regulations are almost similar for each region except Few Regulations)

Heading : Summary of regulation
Area Requirement Land Area shall be more then 100 Acres ( 40 Ha)
Access : Wide Access not less then 18 mt. width
Land Parcel : Entire land parcel should be contiguous
Exclusion : Area under forest, water bodies like river, creek canal,
reservoir, land in 100 mt. Limit of the high flood level of
major lakes, dams and surrounding restricted area, land in


command area of irrigation projects, land falling within the
belt of 200mt. From the historical monuments and places
of archeological monuments, heritage precincts and
places, any restricted areas, notified national parks,
existing and proposed industrial zones, gaothan areas or
congested areas, truck terminus specially earmarked on
development plan, wildlife corridors and biosphere
reserves, eco-sensitive zone/area, quarry zone and
recreational tourism development zone catchments areas
of water bodies, defense areas, cantonment areas,
notified area of SEZ, designated Port/ Harbor areas and
recreational tourism zones.
Manner of Declaration : Land owner or developer holding rights do not require
procedure under section-37 for declaration it special
township however in case UD department needs to
process under section -37 for notifying land under this
scheme.
Infrastructure : Roads (Including Development Plan roads),approach
road, street lights, water supply and drainage system shall
be provided and maintained by developer till urban local
body take charge of the township.
Amenity Development : Developers needs to develop amenity as designated
Water Supply : Developer should Identify the source of drinking water
(excluding ground water source) and get firm commitment
from any water supply authority for meeting daily 140 liters
per capita per day exclusive of water for fire fighting and
gardening.
Water Storage Capacity : At least 1.5 times actual required capacity determined by
expected residential and floating population.
Drainage & Garbage : Developer should arrange in consultation with
Disposal Maharashtra Pollution Control Board.
Power : The developer shall ensure continuous and good quality
power supply to township area. Developer may use
captive power generation route with approvals form
authorities.
Environment : Environment clearance shall be obtained from the Ministry
of Environment and forests,Government of India (MOEF’s)
Parks /Garden & Playground : The township shall provide at least 20% of the total area
as with proper landscaping and open uses designated in
the township which shall be developed by developer.
Special Concessions : N.A. Permission is automatic as soon as the scheme is
notified.
Stamp Duty : The stamp duty rates applicable is notified special
township area shall be 50% of prevailing rates of the
Stamp Act.
Development Charges : A special township project shall be exempted upto 50% of
the development charges.
Grant of Government Land : Government land can be leased out at market rent
Mumbai Tenancy & : The condition that only agriculturist will be eligible to buy
Agriculture Land Act. the agriculture land shall not be applicable in special


township area.
Ceiling of agriculture land : There shall be no ceiling limit for holding agriculture land
to be purchased by the owner/developer for such project
ULC Act. : Projects shall be exempted under purview of ULC Act.
Development Control : Prevailing DRC is applicable as well as CRZ notification is
Regulation applicable
Scrutiny Fees : A Special Township Project shall be partially exempted
from payment of scrutiny fee
Floating FSI : Township have Floating FSI concept, unused FSI of one
of plot can be used anywhere in the whole township
Special Benefits : Concessions in respect of Star Category Hotels, Hospitals,
and Multiplexes in Property Tax shall be provided
Planning Considerations : The township project has to be an integrated township
project. It should have following land use plan
Land Use Plan : Residential, Commercial, Educational, Amenity Spaces,
Health Facilities, Parks, Gardens, & Play Grounds, Public
Utilities
Residential Zone : Out of the total built up area proposed to be utilized at
least 60% of the area shall be used for purely residential
development. Out of 60% proposed area for residential
zone 10% shall be built for residential tenements having
built up upto 40 sq.mts.
Commercial : It should be properly distributed in hierarchical manner
such as convenient shopping, community centre etc.
Educational : Comprehensive educational system providing education
from primary to secondary should be provided
Amenity Space : Market, essential shopping area, recreation centers, town
hall library etc should not be less that 5% of gross area of
township should be distributed evenly in township
Health Facilities : Area requirement as per prevailing planning standards
Public Utilities : Appropriate area allocation for power receiving station sub
station, water supply system, sewerage and garbage
disposal system, police station, public parking, cemetery /
cremation ground, bus station, fire brigade station, and
other public utilities shall be provided
Transport : The entire area of the township shall be well knitted with
proper road pattern with effective linkages with inside and
outside roads. All the roads shall be developed by
developer as per standards and prescribed road width
Service Industries : It can be provided in residential zones
DP Reservations : Reservations can be shifted anywhere in the township
area with Municipal commissioner approval
DP reservations : It shall not be handed over to planning authority
DP Roads : It shall be developed and maintained by developer and
always open to access for general public without any
restrictions
Residential, Agricultural, : The total FSI for the declared township is One (1)
Green & No Development excluding area under Agriculture/Green Zone/ No
Zone Development Zone if any,
For Agriculture/Green Zone/ No Development Zone


applicable FSI will be 0.2.
Global FSI : There will be no restriction of FSI for a particular Plot
however FSI of entire township should not increase as
mentioned above
Height Restriction : It should be as per prevailing, DCR however it can be
increased subject to provisions of fire fighting
arrangements and prior approval of Chief Fire Officer
Use of DRC : DRC originated from any other area outside township shall
not be permissible in township
FSI for Agricultural, Green & : 50% of the total area is developable with gross FSI of 0.20
No Development Zone of the entire gross area of the project
TDR concept : Utilization of TDR generated form handing over build able
reservation to authority is permissible over and above the
permissible FSI
Tree Plantation : 150 trees per ha. needs to be planted & maintained by the
developer in residential zone townships and 400 trees per
ha. shall be planted and maintained by developer in the
agriculture, green zone and no development zone
township
Zone Changes : After submission of proposal no zone change proposal
shall be considered by Government
Sale Permission : Unless basic infrastructure to the satisfaction of
commissioner has been provided by the developer sale
permissions for plots or flats shall not be given to
developer
Phase wise Development : In case development carried out in phase wise manner
Sale permission is granted if phase wise basic
infrastructure is completed by the developer
Amenities, facilities & utilities : Plots earmarked for amenities, facilities and utilities shall
also be developed simultaneously developed phase wise
along with residential /allied development

Land Marks in Approval Process :

1 Locational Clearance :
1.1 A proposal should be submitted to Urban Development department and director of
town planning and environment department along with ownership documents.
1.2 Within 90 days from the receipt of application a location clearance may be granted
by Government under Section 45 of MRTP Act,1966.
1.3 Location clearance is valid for the period of one year from the date of issue.
1.4 If letter of intent and final approval is not obtained then such clearance stand
lapsed unless renewed by the Government on application received before expiry of
one year.

2 Letter of Intent :
2.1 Letter of Intent shall be obtained by the developer upon receipt of locational
clearance from the Government, by submitting the proposal in respect of special
township along with environmental clearance.
2.2 Letter of intent can be issued within period of 45 days from the date of receipt of
the final proposal. It is valid for six months unless renewed



3 Final Approval :
3.1 On submission of plans, undertaking and agreement for development and
maintenance of basic infrastructure amenities along with bank guarantee of 15% of
its development costs.

4 Implementation & Completion:

Stage : Time Line
Basic Infrastructure & Amenity : As per the phases of the scheme
Entire Township : Within 1 years from the date of final sanction
Occupancy Certificate : Occupancy Certificate is must for building use

5 Hypothetical Township Scheme :
5.1 A hypothetical case of valuation of 500 Acres land to be acquired for developing a
Special Township near upcoming international airport in Panvel has been discussed in
this paper. Even though author has carried out similar assignments however to protect
confidentiality of the client here presented live case by using hypothetical scheme.
5.2 A prospective acquirer /developer have approached for valuation of land parcel for the
purpose of infusing private equity investments and debt form the international lender.
5.3 There are four possible scenarios in such instance. i.e. 1. Developer has already had
final approval for the township intends to carry out valuation. 2. Developer has location
clearance and letter of intent however did not applied for final approval 3.Developer
has location clearance however yet to secure the letter of intent 4. Developer has just
short listed site base on the assumption that location clearance and approval will be
given on application for the same.


5.4 In first scenario there are more likely that township proposal will actually implemented
and developed in phase wise manner. In this scenario factors affecting would be totally
different then in case of scenario 4, where in there are no certainty and there are lots of
variable which can affect township valuation to a greater extent.
5.5 In this paper we are discussing scenario no.- 4 where a 500 acre site with combination
of Residential, Agricultural, Green & No Development Zones.

6 Valuation Methodology :
6.1 Since this is an income producing development project where in profits of investments
will be realized in future, income approach is best suited to arrive a more accurate and
reliable valuation. In income approach a discounted cash flow techniques will be the
best method as revenue of development will be realized in future in phase wise.
6.2 A more reliable market approach for valuation of land acquired for may not be
applicable due to non availability of exact comparable sale instances. However value
arrived under DCF approach can be cross verified/ ascertained by using other
approaches like cost approach and market approach.
6.3 In cost approach, where valuation of land is arrived by deducting total replacement
cost of similar township minus sum of cost of building, infrastructure, approvals,
marketing, amenities etc. will provided residual land value. However it is very difficult to
find out cost of similar township as such township are not in existence as well as have
different combination of development mix.
6.4 In this paper valuation using discounted cash flow will be discussed for simplicity.

7 Key Factors affect Valuation of Land:

Total Development Costs Infrastructure cost Location
Track record of developer Demand & Supply Access
Management Team of Developer Approval timings Area of Land
Developable Area ( Global FSI) Construction Cycle Topography
Competitions from other projects Availability of Funding Sales Plan
Developments in surrounding area Soil bearing Capacity Connectivity
Amenities provided and availability of infrastructure Neighborhood
Timing for completion for entire township & each phase Phase plan
Launch cycles for various types of products of township Inflation
Availability of Water, Power & Sewage disposal mechanism Attractions
Discounting Rate used for NPV, Sale Rate, Payment Terms Maintenance
Development Mix i.e. residential, retail, commercial and other Cost of Fund
Distance form major landmarks airport, railway station, CBD Cost of capital
Class of houses like basic, premium house or ultra luxury etc. Super Area Ratios
Quality of development, amenities and infrastructure at large Branding of township
Overall real estate market and particular market under focus Political Scenario
Overall Team i.e. Architects, Structural designers, Planners etc. Tax Structuring
Lease Rentals, Lease Terms, Property Tax & Capitalisation Rate Target Segments Profile
Overall Country Risk, GDP Growth, Inflation and Currency Risks Availability of Loan to Buyers
Interest Rate Cycle & Apatite towards investment in the Supply of similar land/project
particular geographical where land is situated



8 Financial Model
8.1 We have prepared a discounted cash flow model as presented below in Table No.- 2
for illustration purposed incorporating most of the assumptions as listed in Table No.-1
to arrive at net cash flow form the project. We have assumed that Net Present Value
( NPV) arrived from this cash flow statement will be, a some what nearest, monetary
number of land value, a prospective acquirer willing to pay for investing in such large
project.
8.2 Due to the fact that all other costs has been incorporated to arrive NPV and taxes
applicable on the project also incorporated in the model by incorporating Debt @
designed debt equity ratio and allowing interest deduction from the profit of the project
to calculate corporate tax and other taxes payable from the project. However for the
simplicity we have illustrated an example where in overall effect of interest paid out will
result in the marginal tax rate @ 30% of the profits from the project. We prepare a
projected profit and loss accounts and balance sheet exactly arrive at applicable taxes.
However for the simplicity here, provisional tax figures are illustrated.
8.2 In this financial model we have plugged in all possible options with flexibility to change
all the input to arrive at NPV and Land Value figures quickly. We have also run
sensitivities on various key factors, which were observed most sensitive to arrive at
proper and reliable values which a perspective acquirer willing to pay after carefully
scrutinizing from the range of values.
8.3 I would like to mention here that land value for the townships projects depends on
combination of many factors as you can visualized in the financial model. It is very
difficult to source as accurate data at acquisition stage for each variable. Hence
running sensitivities is must for arriving more reliable results.

9 Scenario and Sensitivity Analysis
9.1 Valuation is a result of through analysis to be performed. We use sophisticated
software’s like Argus or Forecast Plus and Estate Master to arrive at land value,
however in absence of any such software’s best way is to develop a valuation model in
spreadsheet like excel and carry out scenario analysis as well as sensitivities to arrive
at more accurate result. I have developed valuation model for three scenarios.
1 Base Case Scenario
2 Worst Case Scenario
3 Best Case Scenario
9.2 In each scenario, by changing various factors as above, tabulated various key
performance matrix i.e. Return of Investment ( ROI), Internal Rate of Return ( IRR), Net
Present Value ( NPV), Profit of Cost, Break Even Time etc.
Sample Sensitivity Matrix
Arrived Land Value Per Sft
Discounted Rate 20% 25% 30%
Residential 60% 689 459 321
Development 70% 597 413 275
Component 75% 591 402 269

9.3 Based on the matrix identified three most sensitive factors to focus on and created a
value matrix for each case by changing these three most sensitive factors, which affect
land value to greater extent.


9.4 After preparing NPV and IRR matrix for various combinations as stated above, short
listed most likely scenarios and band of value by picking up a range from entire matrix
looking at IRR as well as NPV.
9.5 This band of the value is most nearest market value of land, however for the
purpose of certification of a single value I have correlated values using other methods
and picked up a more reliable and appropriate figure form the valuation bend.
8.4 This might be interest to all the stake holders that during implementation of project we
transfer all the assumptions used in the financial model during valuation and feasibility
study to software like “Argus”. We keep track of each and every factor by running
models and produce reports on monthly basis to know the changes in the Key
Performance Indicators. This help in devising strategies for the mitigation mechanism
in the township management should adopt for the keeping their objectives and goals in
line with the original thoughts.

10 Projected Revenue
10.1 Revenue from various sources generated after the development has been projected
and phase wise distributed depending on the overall master plan & sales strategy.
10.2 Total Projected Revenue form the subject township project is projected at INR
12,200 Corers.

11 Projected Cost
11.1 Total project cost / investments have been incorporated in the financial model as
stated in Table -2. This includes soft costs like approvals, consultants, branding &
marketing as well as hard costs like cost of infrastructure, buildings and other
amenities.
11.2 Overall Projected cost excluding land and interest cost is INR 5291 Crores.

12 Net Cash Flow
12.1 A net cash flow statement before tax has been arrived by deducting Revenue and
Costs. We did not described here effect of debt & equity for simplicity however overall
effects has been considered and net cash flow after tax has been prepared to assess
overall profitability and Internal Rate of Return a project generates.

13 Discounting Factor & Capitalisation Rate
13.1 Selection of discounting factor is the key in the entire exercise. We have demonstrated
in Table-1 above how a change in discounting factor has significant influence on
valuation. There are several methods for calculating appropriate discounting rate.
However for simplicity and limited scope we have not discussed how discounting rate
has been arrived.
13.2 Capitalisation Rate/ Yields are assumed from the market analysis of similar types of
properties as well as using fisher’s equation and CAPM model.Even though it has
significant influence on the exit valuation foe the simplicity we did discussed in detail
how capitalization rate has been arrived.

14 Key Performance Indicators NPV,IRR,ROI
14.1 A perspective acquirer / developer will acquire land parcel with specific financial goals.
His/her expectation in terms of returns from the project can be measured from
Profitability of Project i.e. Return on Investment ( ROI), Internal Rate of Return (IRR),
Net Present Value ( NPV) as well as pay back time and profit on costs.


14.2 We have changed project variable to arrive at appropriate IRR & ROI targets and
based on that arrived land value. Even though it will not be 100% accurate result i.e. if
developer purchase land at this price then he will generate a guaranteed profit of this
much rupees. However this is most scientific and internationally accepted way of
arriving land value for such ambitious project.

15 Few Recommendations:

15.1 Please ask for the latest actual measurement and boundary plans while visiting site.

15.2 Ask for designated Development Plan remarks to know about reservations and all the
information necessary to carry out valuation.

15.3 Please verify as much as possible source of water & power and access as well as
connectivity to main highways & rail networks, these are the main challenges a
township developer generally faces.

15.4 The topography of the site plays a big role in overall valuation process. Hence please
ask for land topographical survey plans.

15.5 Overall mission statement, concept plan and objectives of the development are key
information a valuer should find out from the developer.

15.6 A land value depends on developable area potential as well as overall demand in that
particular area. Hence market research should not be ignored while valuing land.

15.7 Master Planning and Architectural design as well as market positioning has important
role in overall township development. Valuer should know all this information by
discussing with developer as much in detail as possible.

15.8 Availability of debt and cost of capital significantly affect profitability as well as overall
returns to the investors. Valuer should ask for the source of funding i.e. debt equity
mix. ( Financial Closure ) and use of fund statements from the developer.

15.9 Tax structuring to avoid tax leakages is most important element for the entire viability
of the project. Valuer should understand prevailing structures for FDI investments as
well as ongoing changes in these structures.

16 Outcome and Conclusion
16.1 Based on the analysis we are of the opinion that value band for the proposed township
project is in the range of Rs.350 per sq.ft. to Rs.600 per sq.ft.
16.2 We have compared above value band with prevailing rates obtained from the proposal
received from investors of the similar township projects to sell the projects as well as
overall market expectation.
16.3 We are of the opinion that the proposed land value is Rs.400 per sq.ft. i.e.1.74
Cr.per acre. As on date of valuation i.e. 13th June,2009.
16.4 This result in total land value of Rs.871 Crores.
16.5 We did not mentioned the detail lists of assumptions made, disclaimers, as well as
documents verified or information to be received from the clients here due to shortage
of space.


Paper Presented for the seminar Dated 13th June,2009 in Rodas Hotel, Powai organized by Institution of Valuers, Mumbai Branch

Table -1 Detail List of Assumptions Used for One of the Scenario to Arrive Valuation of Land Using DCF Techniques
Sr.No. Assumption Unit Value Sr.No. Assumption Unit Value Remark
1 Land Area Acre 500 2 Land Area Sft 21,780,500
3 Time For Development Years 10 4 Letter of Intent Year 1
5 Total No of Phases Nos 5 6 Each Phase Years 2
Revenue Assumptions It is assumed that Loss of Built Up area due to compulsory open space, garden, play ground, roads etc will be compensated by super areas. Hence
effect is nullified.
7 Types of Development Area Sale Rate Unit Escalation Unit
8 Basic Residential % 40 3,500 Rs.Per Sft 5% Per Annum
9 Premium Residential % 15 4,200 Rs.Per Sft 5% Per Annum
10 Luxurious Residential % 5 5,880 Rs.Per Sft 5% Per Annum
11 Commercial Space for Sale % 20 5,000 Rs.Per Sft 7% Per Annum Phase II
12 Retail Space for Sale % 10 7,000 Rs.Per Sft 7% Per Annum Phase II
13 Commercial Space for Lease % 5 25.00 Rs.Per Sft Per Month 7% Per Annum Phase II
14 Retail Space for Lease % 5 50 Rs.Per Sft Per Month 7% Per Annum Phase II
15 Amenity/Other Area Lease Rate % 10 22.5 Rs.Per Sft Per Month 7% Per Annum Phase II
Revenue Receipt Plan INR Phase I II III IV V
16 Basic Residential 10% 45% 45% - -
17 Premium Residential 50% 50% - -
18 Luxurious Residential 5% 25% 45% 25% -
19 Commercial Space for Sale 10% 25% 40% 25% -
20 Retail Space for Sale 20% 35% 20% 15% 10%
21 Commercial Space for Lease - 40% 30% 20% 10%
22 Retail Space for Lease - 10% 25% 40% 25%
23 Amenity/Other Area Lease Rate - 25% 40% 35% 0%
Costs ( Avearage for Entier Duration inclusive of Escalation by Max Price Contracts) INR Phase I II III IV V
24 Approval Costs Sft 150 91% 2% 2% 2% 3%
25 Consultant Fees Sft 150 30% 20% 20% 20% 10%
26 Marketing Costs on 80% of total revenue % 2% 9% 15% 50% 20% 6%
27 Cost of Infrastructure Development Sft 300 60% 10% 10% 10% 10%
28 Cost of Amenity( other area) Development Sft 1,200 2.50% 32.50% 40% 25%
29 Cost of Branding on 80% of total revenue % 3% 9% 15% 50% 20% 6%
30 Cost of Construction for Basic Residential Flats Sft 1,500 25.00% 52.50% 22.50% - -
31 Cost of Construction for Premium Residential Flats Sft 1,700 10% 60% 30% - -
32 Cost of Construction for Luxurious Residential Flats Sft 2,000 - 5% 35% 45% 15%
33 Cost of Construction for Commercial Space for Lease Sft 2,000 10% 30% 25% 20% 5%



34 Cost of Construction for Commercial Space for Sale Sft 1,800 2.50% 12.50% 30% 37.50% 17.50%
35 Cost of Construction for Retail Space for Lease Sft 1,700 5% 37.50% 27.50% 22.50% 7.50%
36 Cost of Construction for Retail Space for Sale Sft 1,500 30% 30.00% 15.00% 20% 5%
Lease Capitalisation Rate
37 Capitalisation Rate for Sale of Commercial Portfolio in Phase – IV 10%
38 Capitalization Rate for Sale of Commercial Portfolio in Phase – V 8%
39 Capitalisation Rate for Sale of Retail Portfolio in Phase - IV Sale 8%
40 Capitalisation Rate for Sale of Retail Portfolio in Phase - V 8%
41 Capitalisation Rate for Sale of Amenity Portfolio in Phase IV 12.50%
42 Capitalisation Rate for Sale of Amenity Portfolio in Phase V 10%

Table – 2 Projected Cash Flow Statement For One of the Scenario Considered for the Township in Phase wise manner
21,780,500 Sft Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
500 Acres % Phase – I Phase – II Phase – III Phase – IV Phase - V
Revenue from Sale of Basic Residential 40 % - - 3,049,270,000 6,403,467,000 8,404,550,438 12,354,689,143 3,706,406,743 - - - -
Revenue from Sale of Premium Residential 15 % - - - 2,881,560,150 4,538,457,236 6,353,840,131 1,667,883,034 - - - -
Flats
Revenue from Sale of Luxurious Flats 5% - - - - 294,159,265 617,734,457 972,931,770 1,362,104,478 1,787,762,127 1,501,720,187 394,201,549
Net Revenue from Lease of Commercial 5% - - 65,341,500 135,256,905 210,066,388 255,805,438 304,746,222 52,366,638 111,173,988 -
Revenue from Sale of Commercial 20 % - - - 816,768,750 873,942,563 1,870,237,084 3,001,730,519 4,282,468,874 7,629,703,914 3,677,248,961 3,957,192,119
Net Revenue from Lease of Retail Space 5% - - - 65,341,500 275,087,715 312,492,457 495,448,657 97,881,567 254,981,482 313,788,832 376,712,697
Revenue from Sale of Retail Space 10 % - - 1,524,635,000 1,631,359,450 1,309,165,959 933,871,717 999,242,737 5,945,383,880 1,716,049,515 1,224,115,321 4,520,552,358
Net Revenue from Lease of Amenity 10 % - - - 58,807,350 310,502,808 579,816,948 909,138,108 352,373,641 635,153,488 - -
Revenue from Sale of Amenity Areas 10 % - - - - - - - 7,273,104,864 - 6,351,534,883 -
Total Revenue from township 100 0 0 4,573,912,000 11,922,658,216 16,141,136,280 23,232,762,655 12,008,602,344 19,618,079,937 12,076,034,724 13,179,600,961 9,248,678,827
Approval Costs 150 (1,470,183,750) (1,470,183,750) (32,670,750) (32,670,750) (32,670,750) (32,670,750) (32,670,750) (32,670,750) (32,670,750) (32,670,750) (65,341,500)
Consultant Fees 150 (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) 0
Marketing Costs 2% (39,040,431) (58,560,646) (78,080,862) (97,601,077) (195,202,154) (390,404,309) (585,606,463) (195,202,154) (195,202,154) (117,121,293) 0
Cost of Infrastructure Development 300 (326,707,500) (1,306,830,000) (2,286,952,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500) (326,707,500)
Cost of Amenity( other Development 1,200 0 0 (65,341,500) (326,707,500) (522,732,000) (522,732,000) (522,732,000) (457,390,500) (196,024,500) 0 0
Cost of Branding 3% (58,560,646) (87,840,970) (117,121,293) (146,401,616) (292,803,232) (585,606,463) (878,409,695) (292,803,232) (292,803,232) (175,681,939) 0
Cost of Construction for Basic Residential Flats 0 (653,415,000) (1,960,245,000) (2,940,367,500) (3,920,490,000) (2,940,367,500) (653,415,000) 0 0 0 0
1,500
Cost of Construction for Premium Residential 0 0 (555,402,750) (1,388,506,875) (1,943,909,625) (1,388,506,875) (277,701,375) 0 0 0 0
Flats 1,700
Cost of Construction for Luxurious Residential 0 0 0 (54,451,250) (163,353,750) (272,256,250) (381,158,750) (490,061,250) (490,061,250) (272,256,250) (54,451,250)
Flats 2,000



Cost of Construction for Commercial Space for 2,000 0 0 (217,805,000) (435,610,000) (435,610,000) (326,707,500) (217,805,000) (217,805,000) (217,805,000) (108,902,500) 0
Lease
Cost of Construction for Commercial Space for 1,800 0 0 (147,018,375) (294,036,750) (441,055,125) (735,091,875) (1,029,128,625) (1,176,147,000) (1,029,128,625) (735,091,875) (294,036,750)
Sale
Cost of Construction for Retail Space for Lease 1,700 0 0 (92,567,125) (370,268,500) (323,984,938) (231,417,813) (277,701,375) (231,417,813) (185,134,250) (92,567,125) (46,283,563)
Cost of Construction for Retail Space 1,500 0 (163,353,750) (326,707,500) (285,869,063) (204,192,188) (163,353,750) (81,676,875) (122,515,313) (204,192,188) (81,676,875) 0
Total Cost of development & other costs (2,221,199,827) (4,066,891,616) (6,206,620,154) (7,025,905,881) (9,129,418,761) (8,242,530,085) (5,591,420,908) (3,869,428,011) (3,496,436,949) (2,269,383,607) (786,820,563)
Net Cash Flow (2,221,199,827) (4,066,891,616) (1,632,708,154) 4,896,752,335 7,011,717,519 14,990,232,570 6,417,181,436 15,748,651,926 8,579,597,775 10,910,217,354 8,461,858,265
Provisional Tax @ Marginal Rate @30% (1,196,301,077) (4,497,069,771) (1,925,154,431) (4,724,595,578) (2,573,879,333) (3,273,065,206) (2,538,557,479)
Net Cash Flow After Provisional Tax (2,221,199,827) (4,066,891,616) (1,632,708,154) 4,896,752,335 5,815,416,442 10,493,162,799 4,492,027,005 11,024,056,348 6,005,718,443 7,637,152,148 5,923,300,785

NPV Before Tax @ 25% 10,055,035,527 6,372,798,617 NPV Considering Provision Tax Figures
Unlevered IRR Before Tax 58% 49%
Land Value 10,000,000,000 10,000,000,000
Land Value Per Acre 20,000,000 20,000,000
Land Value Per Sq.ft. INR 459 INR 459
ROI 13.06% 9.14% ROI Assuming Tax

Introduction of Author

Mohit Mehta is founder promoter and Director of a boutique Valuation & Advisory firm, M/s. Value Add Consultant (“VAC”), India. He is member of Royal
Institute of Chartered Surveyor, U.K.(MRICS). He has started his career as an engineer and then moved to valuation by joining International Property
Consultant. Since then engaged in local and international real estate markets on Multi Million Dollars real estate townships or mega projects. He is registered
with Income Tax Department in Immovable Property Valuer panel and Member of Institution of Valuer, India. VAC believes in sharing and spreading of
knowledge as well as energy efficient sustainable practices.

Apart from Bachelors Degree in Civil Engineering he holds Masters in Valuation Degree, which is accredited by Royal Institute of Chartered Surveyor, London,
U.K. He has recently delivered training program, in the special certificate course in valuation, organized by Institute of Chartered Accountant (ICAI). Value Add
Consultant’s recent one day seminar organized in Mumbai with Institute of Engineers was warmly appreciated by participants and guests. VAC is specialized in
income producing real estate portfolio valuation as well as development project valuation and ongoing monitoring and project management. Please contact
author for any queries either on GSM +91-98924 89265 or Email : vac@consultant.com


Mohit Mehtas Paper Presented For Iov Seminar Ver 1

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Ähnlich wie Mohit Mehtas Paper Presented For Iov Seminar Ver 1

Ähnlich wie Mohit Mehtas Paper Presented For Iov Seminar Ver 1 (16)

Mohit Mehtas Paper Presented For Iov Seminar Ver 1