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Information Memorandum

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Information Memorandum

  1. 1. ABC PVT. LTD. 1 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group INFORMATION MEMORANDUM (PROJECT NAME: …………………) (PROJECT LOCATION: ……………………………………………) ABC PVT. LTD. Content Management Services
  2. 2. ABC PVT. LTD. TABLE OF CONTENTS Page No. Executive Summary 4-5 1. Real Estate Macro Scenario …………………………………….. 6-22 1.1 Indian Scenario 1.2 Delhi & NCR 2. About the company……………………………………………………. 23-29 2.1. Introduction 2.2. Project implemented 2.3. Board of Directors 2.4. Key Managerial Personnel 2.5. Shareholding Pattern 2.6. Debt Profile 2.7. Financial Indicators 3. Present Proposal 30-40 3.1. Facility Desired 3.2. Assessment of Equity/debt or mezzanine 3.2.1. About the project 3.2.2. Location of project 3.2.3. Project Implementation Schedule 3.2.4. Status of the Project 3.2.5. Approvals & Consents 3.2.6. Marketing Strategy 3.2.7. Cost of Project 3.2.8. Means of Finance 3.2.9. Detailed Cost of Project 4. Project Calculation & Assumptions 41-45 4.1. Revenue calculation & Assumption 4.2. Expenditure calculation & Assumption 2 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  3. 3. ABC PVT. LTD. 5. Project Financials 46-50 5.1. Profit & Loss Account 5.2. Balance Sheet 5.3. Cash Flow Statement 5.4. Debt Service Coverage Ratio 6. SWOT Analysis 51 7. Confidentiality 52 3 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  4. 4. ABC PVT. LTD. Executive Summary: In addition to being the second major contributor to the GDP, the Real Estate sector is also amongst the fastest growing sectors in the Indian economy. Real Estate as a matter of fact has always been an attractive investment option and with the additional support of the new rules and regulations by the government, it has resulted in significant growth in the residential & commercial Real Estate. The government has always had a major influence on the Real Estate sentiments of the investor's and now with a stable government at center; government is hopeful that the lost confidence shall be revived. The markets of Mumbai, Bangalore and Delhi have seen increased investments and the good news is that the Indian realty sector has been one of the most emerging sectors out of all the developing economies. The year-end saw improvements in the investing patterns in Real Estate in India both in the residential as well as the commercial Real Estate. With National and International brands wanting to expand in India, the commercial and retail Real Estate continues to be a favoured destination for all kinds of investors. The rising income level of the people and with people of all age groups investing in Real Estate, the residential sector is also expected to grow significantly over the next decade. The market is witnessing an increased demand of luxury housing and overall also one can expect the market size of Real Estate in India see a significant growth as well as development. India’s construction sector is forecast to grow at 7-8 percent each year over the next decade following the election of a new government, according to a news report by an international consultancy giant. The country will see increased economic growth, and the removal of barriers to foreign investment will “spur demand for construction” over the coming 12 to 18 months, says PricewaterhouseCoopers India report. The report has been prepared for The Big 5 Construct India exhibition in September and offers a snapshot of the US$157 billion Indian construction sector following the May elections. “With a new government having been formed at the Centre, with a strong mandate to stimulate economic growth, the outlook for the sector appears positive,” it says. An estimated US$1 trillion is being spent on infrastructure over the five years to 2017 and there is increased investment in industrial projects by the government. But it is the private housing sector that the PwC report highlights as a key growth area. It says, “Demand for real estate has been one of the drivers of construction sector growth over the last 10 year. Improvement in economic conditions has the potential to drive demand for real estate, as housing continues to be a favoured investment asset among Indian households.” The total construction market in India for FY2014 was US$157 billion, an increase of US$4 billion over FY2013. Infrastructure accounts for 49 percent, housing and real estate 42 percent and industrial projects 9 percent. 4 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  5. 5. ABC PVT. LTD. 2015 Outlook: The Indian market is vigilantly enthusiastic with the new government proactive approach and business confidence has already started picking up. Various agencies such as Moody, IMF, World Bank predicted handsome GDP at 6.3 to 6.4% and forecasted Indian outlook as steadily growing at lower risk. Although, it is difficult to forecast the real estate market which is highly sentiment driven in India. In 2015, overall property markets are expected to continue edge further into recovery. There are several factors that can be considered as key drivers for the sector in 2015, such as easing pressure of downside risks for rupee and current account deficit, improving export. In commercial real estate, REITs will remain the hottest topic. Real estate funds like Blackstone, Brookfield, Xander and Redfort have already started planning to launch REITs in India. Also large developers like DLF, Prestige Estates, RMZ Corp, Embassy, and Phoenix Mills Ltd. are queuing up to tap into the REIT opportunity. In residential segment while absorption in the luxury segment is expected to remain under pressure due to high price points, the launches in the mid-end and low-end segments will continue to have traction at the introductory prices. What middle income home buyer actual wants is project with basic amenities with the price point which he can afford. It was observed that even during the recession time, projects with right price point witnessed high absorption level. Overall, capital values are expected to remain stable in most of the market in short to medium term due to ample stock availability in both primary and secondary markets. 5 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  6. 6. ABC PVT. LTD. Real Estate Macro Scenario …………………………………….. Indian Scenario Delhi & NCR 6 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  7. 7. ABC PVT. LTD. Real Estate Industry Scenario:- The real estate sector in India assumed greater prominence with the liberalisation of the economy, as the consequent increase in business opportunities and labour migration led to rising demand for commercial and housing space. The growth in the sector, supported by series of reforms, has not only resulted in significant residential and commercial real estate, but also complemented the development of physical and social infrastructure of the country. The liberal economic policies, aimed at improving private participation, adopted by the Indian Government has helped in capitalising the strong fundamentals of the India economy which include young population, rising urbanisation and growing middle-class population. Since the year 2000, Indian GDP has quadrupled to reach USD 1.8 trillion in 2012 and expected to become the third largest economy worth USD 6.6 trillion by 2028. At present, the real estate and construction sectors are playing a crucial role in the overall development of India’s core infrastructure. The real estate industry’s growth is linked to developments in the retail, hospitality and entertainment (hotels, resorts, cinema theatres) industries, economic services (hospitals, schools) and information technology (IT)- enabled services (like call centres) etc and vice versa. The Indian real estate sector has traditionally been dominated by a number of small regional players with relatively low levels of expertise and/or financial resources. Historically, the sector has not benefited from institutional capital; instead, it has traditionally tapped high net-worth individuals and other informal sources of financing, which has led to low levels of transparency. This scenario underwent a change with in line with the sector’s growth, and as of today, the real estate industry’s dynamics reflect consumers’ expectations of higher quality with India’s increasing integration with the global economy. 7 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  8. 8. ABC PVT. LTD. The year 2014 has been quite fruitful for the real estate sector in terms of business sentiment, although the real effect of many of the policies and amendments announced in 2014 will take effect only in 2015. Starting from Union Budget FY2014-15, where affordable housing was considered on par with infrastructure, to relaxation of rigidities in the Land Acquisition and Real Estate Regulatory Bill, India’s new Prime Minister has been offering the India real estate sector consistent doses of energy. The winds of change are now blowing more perceptibly. Inflation, including the house price component, has now been reduced to the lowest level in recallable history. Property buyers are back in force in most cities as enquiries have rebounded, and developers are finally reading the writing on the wall more accurately and coming in with the kind of supply that is relevant to demand. Going by the recent reports of recruitment agencies, many more jobs will be created in 2015 - especially in the IT/ITeS, manufacturing and services sectors - and the demand for homes will increase visibly. Also, REITs are hitting the market at long last, and only a few details need to be sorted out before they get the funding wheels spinning. 2015 will definitely be a good year for the real estate sector on three counts: • The threat of inflation has completely submerged, and borrowing rates are sure to go down from the current levels. This will encourage potential buyers planning to avail of home loans to finally take the plunge. Also, with property prices staying stable and good deals being offered by developers in order to clear their inventory, fence-sitting buyers be further encouraged to press the ‘buy’ button. • Economic activity is gradually picking up, and the Central Bank anticipates GDP growth to reach 6.5% y/y in the next financial year (FY2015-16). Corporate India has already made it clear that there will be more hiring of talent to help tackle rising business activity. Put together, this means a rise in jobs and incomes, which in turn is very favourable for both residential and commercial real estate. • The market has witnessed a re-orientation and developers are now largely focusing on affordable homes. This will go a long way, though definitely not all the way, in bridging the existing wide gap between demand and supply of affordable homes. 8 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  9. 9. ABC PVT. LTD. Residential Real Estate: The residential segment which contributes about 80percent to the real estate sector is expected to grow significantly over the next few decades. It is estimated that Indian cities need to develop at least two million houses annually for the growing population. The actual number could be much higher as it does not include push in demand from re-development and shrinking size of the households. Further, there was a housing shortage of about 18.7 million in 2012. Thus, India needs to develop almost 45-50 million housing units by 2028. During the year 2014, new launches of residential units saw a consistent fall every quarter as a consequence of the subdued demand and high prices. While this was largely the case with high-end projects, the affordable housing segment definitely began to gain favour. This segment was firmly lodged under the priority schemes of the government and central bank, and buyers were seen finding comfort in investing in such projects given the smaller ticket sizes and improving connectivity in the suburbs of the major cities. In the second half of 2014, many large developers who in the recent past concentrated on the mid-to-high segment due to better margins were seen eager to play the volume game and entering into affordable-segment projects in the deeper suburbs. This heartening trend began the ground work on bridging the wedge between demand and supply in our major metropolitan cities. Since developers are sitting on close to 30 months of unsold inventory in the mid-to-high-end segment, we also saw an increase in cash flows because of this new focus. Completions, Net Absorption & Unsold Inventory – Residential: In 2015, developers will become more earnest about right-sizing and right-pricing their offerings. Smaller, yet better-designed and more efficient homes will define the residential real estate market in 2015, and selective corrections in some of the over-priced cities will help bring about faster sales for stagnated supply of larger configurations. Townships will become more prevalent, and the supply of luxury homes will moderate to align with the slow demand dynamics for these offerings. 9 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  10. 10. ABC PVT. LTD. · Affordable Housing: Affordable housing in India refers to housing for the economically weaker section (EWS) and lower income group (LIG) households. This segment is expected to account for 85-90 percent of the total residential development (number of housing units) i.e. about 40-45 million housing units by 2028. Affordable housing in India ranges from 250-650 Square feet and typically costs between USD 8000-17000 per unit. Considering an average housing size of 400 square feet, India requires about 15-18 billion square feet of development in this segment. Affordable housing will clearly be the flavour of the season in 2015. While the ruling government at the Centre and the Central Bank have clearly spelled out their intention to push for affordable housing, it is the State governments which will need to take the implementation initiative. The recently concluded elections have clearly indicated that better governance, planning and good implementation are factors on which performance will be evaluated, and affordable housing is an important yardstick for sure. While affordability will always be a subjective term that assumes different meanings in different markets of India, every city does have its own affordability threshold and benchmark. Developers active in each of the primary cities are now fully aware that they must address the demand for affordable housing in their cities, and stop focusing excessively on high-end and luxury offerings. 10 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  11. 11. ABC PVT. LTD. Commercial Real Estate: The commercial real estate market comprises of office, retail and industrial segments. It is primarily dependent on growth in services (IT/ITeS and BFSI) and industrial (logistics, warehouse and manufacturing) sectors of the economy. A IT/ITeS Sector is the major occupier of office space in India absorbing 52 percent of the new office space which came up since 2010. According to NASSCOM, the revenue from IT/ITeS sector is expected to reach USD 300 billion by 2020, a growth of 177 percent from 2012. The number of employees in IT/ITeS sector is expected to increase by 2.4 million to reach 5.1 million by 2022. BFSI is the second largest office space occupier in India occupying about 16 percent of the total office space. Between 2012 and 2017, the banking sector is expected to experience a CAGR of 20 percent in their deposits, while the insurance sectors may witness a CAGR of 9.5 percent in their premium collection. As per the planning commission, the BFSI sector workforce is expected to increase by 8.5 million between 2012 and 2020. A major driver for real estate could be the awarding of new banking licenses by the Reserve Bank of India. It is expected the awarding of five new banking licenses would create demand for about 4.5-5 million Sq. ft. of office space in a short term. Over the past few years until 2014, the supply of office real estate was higher than demand by 4 to 10 million sq ft. Developer had been too optimistic in their anticipation of a revival in economic activity. Though office real estate prices failed to recover from the after-effects of the financial crisis up to late 2014, there is the beginning of a gradual turnaround. This can be attributed to the fact that commercial real estate developers began to strategically reduce the incoming supply to a new-normal level of occupier demand in the range of 27 to 30 million sq. ft. each year. This helped bring down the vacancy rate to 17% from more than 18.5% just a year ago. Pan-India New Completions, Absorptions and Vacancy – Office: In 2015, demand will remain in this range, marginally improving from the level seen in 2014. However, with the rupee weakening to below INR 62/USD at the current time and India’s GDP growth likely to strengthen further, the positive risk to this forecast of a sharp uptick in demand cannot be ruled out though. Interestingly, while office real estate have not recovered fully from the fall in prices post GFC (unlike residential) there is significant room for upside in the event of a positive change in business sentiment. In fact, such an improvement was already seen after the general elections and is already reflecting in year-end office market leases. The trend of moderate- to-healthy leasing activity will continue in 2015. 11 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  12. 12. ABC PVT. LTD. Retail Real Estate: Retailing in India is expected to increase at a CAGR of 8 percent from USD 518 billion in 2012 to USD 957 billion by 2020. The organised retail is expected to increase from USD 41 billion to USD 191 billion during the same period. On an average, a large retail set-up generates revenue of about USD 410-430 per Square feet. Assuming a revenue of USD 450-500 per Square feet for a larger retail store set-up in India, the total demand for organised retail space by 2020 could possibly reach 275-300 million square feet. In 2014, the retail real estate sector was one of the biggest casualties to market conditions that increasingly favoured the online retail community, with the exclusion of well-managed and leasehold organised retail malls. Strata-sold, poorly-managed, badly-located retail properties lost lustre as more retailers chose to avoid them. 2014 also saw a few of these malls either converting into Grade B office space or reeling under the compounding effect of rising vacancy rates. Vacancy in poorly-built and operated malls was as high as 20%, while good quality malls were relatively better off with about 10% of vacant space. The ecommerce frenzy that has been taking India by storm over the last two years was at its peak during 2014, and now poses a serious challenge to physical retailers and mall developers. The situation is compounded by the absence of adequate regulation on ecommerce in India currently. However, a handful of mall developers have risen to this challenge by identifying key transitions that could help them sail through. The measures they have undertaken include a revamped tenant mix, adoption of the mixed-use format and delivering theme-based shopping experiences. These practices are now common in overseas markets, and Indian retail malls will be seen adapting to them more rapidly in 2015. Pan-India New Completions, Absorptions and Vacancy – Retail: 12 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  13. 13. ABC PVT. LTD. Smart Cities: India’s is urbanizing at an unprecedented rate, so much that estimates suggest nearly 600 million of Indians will be living in cities by 2030, up from 290 million as reported in the 2001 census. With about 30 village dwellers moving every minute from villages to become city dwellers, not many villages will be left India at the end of this century. Today’s cities face significant challenges – increasing populations, environmental and regulatory requirements, declining tax bases and budgets and increased costs. Moreover, the cost of Information and Communication Technologies has plunged making it economical for the government to implement them. Citizens are increasingly getting instant, anywhere, anytime, personalized access to information and services via mobile devices and computers. And they increasingly expect that same kind of access to city services. With increasing urbanization and the load on rural land, the government has now realized the need for cities that can cope with the challenges of urban living and also be magnets for investment. The announcement of ‘100 smart cities’ falls in line with this vision. Alongside the hordes of Indians go the jobs and the money as well: a McKinsey Global Institute study estimated that cities would generate 70% of the new jobs created by 2030, produce more than 70% of the Indian gross domestic product and drive a fourfold increase in per capita incomes across the country. The cities with ongoing or proposed smart cities include Kochi in Kerala, Ahmedabad in Gujarat, Aurangabad in Maharashtra, Manesar in Delhi NCR, Khushkera in Rajasthan, Krishnapatnam in Andhra Pradesh, Ponneri in Tamil Nadu and Tumkur in Karnataka. Many of these cities will include special investment regions or special economic zones with modified regulations and tax structures to make it attractive for foreign investment. This is essential because much of the funding for these projects will have to come from private developers and from abroad. Gujarat International Finance Tec-City (GIFT), Ahmedabad, to be developed over 900 acres, is billed to be one of the country's first smart cities. It will feature remote management of utilities from a single command center, use of data analytics and real-time monitoring of services. It will provide high-quality infrastructure to woo finance and technology firms from places such as Mumbai, Bangalore and Gurgaon. It will have a special economic zone, an international education zone, integrated townships, an entertainment zone, hotels, a convention center, an international techno park, Software Technology Parks of India units, shopping malls, stock exchanges and service units. Kochi Smart City is another such initiative, albeit over a smaller area of 100 hectares. It has a special economic zone that seeks to replicate Dubai's smart city project. Naya Raipur is also being built as a smart city. There are also plans to build seven smart cities along the Delhi-Mumbai Industrial Corridor. 13 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  14. 14. ABC PVT. LTD. Government Policy Initiatives: Under the Sardar Patel Urban Housing Mission, 30 million houses will be built by 2022, mostly for the economically weaker sections and low-income groups, through public-private- partnership, interest subsidy and increased flow of resources to housing sector. The Government of India along with the governments of the respective states have taken several initiatives to encourage the development in the sector. Some of them are as follows: • The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). This move will enable easier access to funds for cash-strapped developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary investors. • The Telangana Real Estate Developers’ Association (Treda) plans to host the Fifth Treda Property Show 2014 at Hitex Centre, Hyderabad. The show will be open to a mix of the populace, including prospective property purchasers, investors, architects and others. • The State Government of Kerala has decided to make the process of securing permits from local bodies for construction of houses smoother, as it plans to make the process online with the launch of software called ‘Sanketham’. This will ensure a more standardised procedure, more transparency, and less corruption and bribery. • The Government of India has proposed to release the Real Estate (Development and Regulation) Bill which aims to protect consumer interest and introduce standardisation in business practices and transactions in the sector. The bill will also enable domestic and foreign investment flow into the sector. • As the Indian economy grows, the real estate sector keeps benefiting. With the increase in foreign tourist arrivals (ETA) every year, there is demand for real estate in the tourism and hospitality sector. Also, with the entry of major private players in the education sector, the major cities, that is Hyderabad, Bangalore, Mumbai, Delhi, Pune, Chennai and Kolkata are likely to account for 70 per cent of total demand for real estate in the education sector. Demand for improved healthcare facilities is also expected to provide a boost to the construction sector in the country. Investments: The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. Some of the major investments in this sector are as follows: • Assotech Realty has tied up with Lemon Tree Hotels to manage and operate its serviced residences. The first project, 210 apartments under the branding of Sandal Suites, will be 14 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  15. 15. ABC PVT. LTD. launched in Noida in 2015. The companies will launch 8-10 similar projects in a phased manner over the next seven years with an investment of Rs 8000-9000 million (US$ 129- 145 million) approximately. • Blackstone Group LP is all set to become the largest owner of commercial office real estate in India after a three-year acquisition drive in which it spent US$ 900 million to buy prime assets. Blackstone has acquired 29 million sq ft of office space in cities such as Bangalore, Pune, Mumbai, and Noida on the outskirts of New Delhi. • L&T Infra Finance Private Equity (PE) plans to raise Rs 37,500 million (US$ 607 million) in an overseas and a domestic fund, and launch a real estate fund. • IDFC Alternatives Ltd has sold two of its real estate investments to PE firm Blackstone Group LP. The assets - a special economic zone (SEZ) in Pune and an information technology’ (IT) park in Noida - were sold for a combined enterprise value of Rs 11, 000 million (US$ 178 million). • Goldman Sachs plans to invest Rs 12,000 million (US$ 194 million) to build a new campus in Bangalore that can accommodate 9,000 people. The new campus is being developed in collaboration with Kalyani Developers on the Sarajapur Outer Ring Road, Bangalore. • Snap deal has entered into a strategic partnership with Tata Value Homes to sell the latter’s apartments on its e-commerce platform, which marks the first time that an e-commerce company has tied up with a real estate venture. Real Estate Capital Markets: 2014 saw gradual growth in demand for Indian real estate, particularly after the general elections in May. Concurrently, fund raising activities picked up, and this momentum will continue in 2015 as well. In coming months one can see less of one-way investments and more of partnerships between investors and developers and other land owners. Joint venture and club funding will become the preferred mode as 2015 progresses. With the improvement of the economic situation, Pune, Chennai, Hyderabad and Kolkata will start attracting sizeable investments along with the top three metros of Mumbai, NCR and Bangalore. This will be a notable change from dynamics seen in the past, wherein only these three cities ruled the roost. In fact, Grade A commercial 15 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  16. 16. ABC PVT. LTD. properties in tier 2 and tier 3 cities appear on the radar of investors, though a full-on focus on these opportunities will probably not take place in 2015. Attractively-placed office assets and high-demand residential categories, especially well-located mid-income projects, will continue seeing considerable investments in 2015.While investors may continue to show limited interest in retail real estate, one can see increased interest in the hospitality sector as compared to previous year. REITs got a green signal from the government in 2014, and this will help ease the pressure on the balance sheets of cash-starved developers. However, the listing of new REITs will be slow and steady. While REITs will succeed over the longer term, they need to pass through the challenging phase ahead for them over the next two years. Real Estate Regulation: Indian real estate will continue to faces a fair share of problems in regulatory front in the year 2015.There are currently still a number of vital regulations and initiatives related to real estate that have been gathering dust on bureaucratic tables. These need to be fast-tracked and implemented in 2015, because they are crucial for the real estate sector's growth and graduation from opaqueness to transparency. While many believe that there is little done by the currently ruling government for the real estate sector, there is a positive sentiment underway owing to small but significant steps taken in the right direction by the new government. In the recent past, two landmark policies that were introduced by the central government were the Land Acquisition, Redevelopment and Rehabilitation (LARR) Bill and the Real Estate Regulatory Authority (RERA - yet to be ratified). However, after almost a year of these two bills being introduced, there has not been much progress. This is largely due to tough clauses included in both these bills, which were actively debated throughout 2014. Some of those clauses were seen as limiting the ability of the industry to function smoothly. The newly-elected government has astutely identified the limiting factors within the two bills and attempted to rectify them rather than introduce new regulations that would merely add to the burden of ‘lip-service’ reforms. In that sense, the present government has done its homework before taking up the task of resolving issues of the real estate sector. Once finalised, the revised bills will appear more investor-friendly and create a favourable environment for developers, buyers, and investors to operate in 2015 as the key changes mooted in the two bills are: - Land Acquisition, Rehabilitation and Resettlement Act (LARR): The LARR (Land Acquisition, Rehabilitation and Resettlement) Act was formulated and re- formulated to counter land-related bureaucracy in India. On the ground, it has actually done quite the opposite ad become a deterrent for developers as well as investors to operate in the Indian real estate and infrastructure space. The real estate sector is desperate to get past this hurdle. It is not 16 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  17. 17. ABC PVT. LTD. just a question of making land available for primary real estate development; the government has correctly identified infrastructure development as they key to accelerated economic growth, and infrastructure is highly land-centric. The modified LARR Act which was put into effect last year by the UPA government attempted to reduce the bureaucracy involved. However, it failed to achieve this purpose and in fact only increased the existing complexities. Given the new government's sharp focus on 'housing for all', fast-tracking of infrastructure and the creation of 100 smart cities across the country, there is very clearly a pressing need to revisit this Act in 2015. Provisions in the bill such as the significant rise in compensation to original inhabitants, the tedious rehabilitation clauses and other norms need to be relaxed if it is to serve its purpose of untangling complexities and delivering a fair shake to all stakeholders. - Real Estate Regulatory Bill (RERA): The still-pending Real Estate Regulatory Bill has been hotly contested at every stage, and its approval has been deferred once again only recently. There is no doubt that it must be enacted sooner rather than later so that the Indian real estate market becomes attractive for foreign investors. However, no version of this Bill that has evolved from the various objections and arguments from the industry's stakeholders has been universally acceptable so far. It will require a strong and determined government to push it through. Three recent revisions to the RERA could conceivably lead to its unilateral acceptance and consequent ratification in 2015:  Reduction of minimum balance to be maintained in the escrow account of a project has been reduced from 70% to 50%: This amount was from the monies collected from the buyers. This will effectively allow developers to continue their practice of diverting funds collected for a project towards land acquisition or other projects, and will work in their favour by also allowing them to grow their land and/or project portfolio. The 50% mandate will still place enough restriction on developers to divert funds elsewhere and ensure better completion records. (However, for buyers, the concerns regarding funds diversion would be higher, and the Bill would be slightly less protectionist towards buyers.)  Coverage expanded to the commercial real estate sector: While the previous version of the bill envisaged coverage of only residential sector, the new government wants commercial real estate to also fall under the ambit of the regulatory authority and its clauses. The limited coverage was largely without any purpose and, therefore, it currently stands rectified. Commercial projects under the purview of the bill would provide protection to investors of commercial assets, as well.  All projects which have not received their completion certificates will also be now covered under the bill and hence this allows larger umbrella coverage for buyers and investors. 17 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  18. 18. ABC PVT. LTD. NOIDA – New Okhla Industrial Development Authority With a lots of open space and green landscapes, Noida has witnessed a very good and planned development in past 10 years and is now recognized one of the few cities which has put themselves way ahead on the planned development map of India. With clear differentiation of boundaries of residential and commercial sectors, Noida has far more planned urban infrastructure compared to other real estate destinations in NCR. A huge range of affordable housing projects launched by several developers has presented lots of options for both middle and lower middle class. The future prospects of the city are also expected to provide good opportunities to the investors and housing options to all segment of people. The presence of world class infrastructure, transport facilities, shopping and entertainment hubs, commercial sector and other lifestyle facilities in and around the city are its main attractions for the property investors and end users. Depending upon the size, location and facilities, the average rates of property in Noida ranges between Rs. 4,200 -5,000 per square foot and onwards. Noida Urban Development Authority is continuously putting its efforts for more planned and improved infrastructure & real estate developments in the city in line with the revised master plan. There is a plan to build and develop international standard infrastructure like 75 Meter and 150 Meter wide roads, flyovers, underpasses, roundabouts on expressways, sewer-treatment plants (STP), a new 400 MW power grid, Ganga water supply and other infrastructure in the 2021 master plan of the city. The NOIDA authority is also working to extend the Metro connectivity to other parts of the NCR. The recently approved Greater Noida to Yamuna Expressway City Metro connectivity has also added a new feat. The sectors from 124 to 144 along Noida-Greater Noida Expressway are the most sought after locations in Noida city today. The micro-market of these sectors is a good mix of commercial, residential, hospitality, education, healthcare and forthcoming retail projects. Because of the shorter travel distance from New Delhi and Faridabad, Noida-Greater Noida Expressway has emerged as the next ‘go-to’ location for office space. According to the experts, the better approach of development, negligible traffic congestion and better quality of construction have been the main reasons why this is the most preferred area. With a great scope for strong and sustained growth for all segments of the realty, a number of premium housing projects including villas in Sectors 32, 44, 74, 75, 76, 77, 78, 94, 119, 137, 143, 142 has also attracted buyers. All the premium projects in these projects offers all lifestyle facilities, lots of green and open landscape area and other facilities for the improved & modern lifestyle. According to provisions in the new revised master plan, the Metro rail extension can lead it to other areas and an expressway will be developed to connect Noida and Greater Noida. A 28 km-long track connecting Sector 32 via Sectors 50 and 71 will be constructed between Noida and Greater Noida, which will be further extended up to Yamuna Expressway. The provision to develop and improved the basic infrastructure has also been included in the master plan. The basic infrastructure includes adequate supply of water, power, and sewage, a road network of over 20km, a 126MW captive power generator, and sewage treatment plants with aggregate capacity of 30,000 kiloliters per day. 18 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  19. 19. ABC PVT. LTD. Only 30% of the total development on Noida Expressway and Yamuna Expressway will be saleable while rest 70% will comprise of open and green landscape area. 40 educational institutes and a variety of retail shopping facilities have also been allocated space along with the expressway. The demand for residential units along the Expressway is continuously rising owing to the superb developments and quality of lifestyle facilities. More than 50% increase in the average capital value have been registered in last 5 years in the residential projects along with the Noida-Greater Noida expressway. It has reached from Rs 3,500 per sq ft in 2009 to Rs 5,200 in 2013. All kind of projects from affordable to mid-segment to luxurious housing with latest technology and world class facilities have been launched along the stretch because of world class infrastructure and superior transport facilities. Education, healthcare and hospitality sector has also grown in the city as a natural demand after rise in the residential developments and possessions. Several reputed schools like Ryan International, Mayoor School, Jaypee Public School, Delhi Public School, Somerville International School, Genesis Global School, Lotus Valley International, The Shriram Millennium School, JBM Global School, and colleges have been established in this area. Several hospital chains are also planning to extend their business in the area. Popular hospitality brands like Westin Resort, Grand Hyatt, Marriott and The Lalit Grand have also planned projects along the expressway. Noida is the well-planned city with better future prospects of infrastructure development, hence is the most recommended in the whole North India for real estate Investment. The availability of hundreds of affordable and mid-end residential options with world-class social as well as physical infrastructure, city has been presenting immense opportunities to the end users. The rewarding in the long term investment in Noida real estate is among the highest in the country. But to get real high returns from real estate, one must invest in the right areas and should remain invested for a longer period. 19 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  20. 20. ABC PVT. LTD. Gurgaon Vs. Noida:- Noida and Gurgaon are both the modern cities of India and has witnessed a lot of infrastructure developments in last 10 years. Both the cities are in fact competitors of each other when it comes to developing new infrastructure such as skyscrapers, metro rail, transport facilities, entertainment and shopping facilities and few other things. Hence, it sometimes becomes difficult to choose one of these cities for investment or living purpose. But to ultimately decide which city is better of two, we will explore some key differences. Despite being so many similarities, there are lots of differences too in terms of environment, facilities and most importantly real estate market of Noida and Gurgaon. Preferred Destination: While Noida is witnessing to be a home to a large number of Indian and international IT and manufacturing companies, Gurgaon on the other hand has become the preferred destinations for at least half the Fortune 500 companies by October 2013. Noida is a major hub for multinational Indian and foreign IT outsourcing firms such as Sapient, Fiserv, Headstrong, HCL, Tech Mahindra, Adobe Systems, AON Hewitt, Fujitsu, CSC, TCS, Ericsson, Dell, Sparta Consulting, EXL Service, First Flight Courier LTD, Students-Leads, IBM, Miracle, WIPRO, Patni Computers, Corbus, Accenture, Samsung etc. India’s biggest energy and power utilities companies including Reliance Infrastructure, NTPC Limited, Tata Power, Bharat Heavy Electricals Limited, Oil India Limited, Gas Authority of India Limited, Indian Oil Corporation, Samsung Engineering, BGR Energy Systems Ltd have their corporate offices in Noida. On the other hand while many of the IT companies which have offices in Noida also running their operations in Gurgaon. Maurti Suzuki Private Limited was the first company that set up a manufacturing unit in the city in 1970s making cars. General Electric was the first American Brand that entered Gurgaon in 1997 and is regarded as the first foreign company in India that was established for outsourcing software work. Coca-Cola, Pepsi, IBM, American Express, Agilent Technologies, Microsoft, 20 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  21. 21. ABC PVT. LTD. and Bank of America are a few to name fortune 500 companies who have chosen Gurgaon to be their Indian corporate headquarters. Infrastructure Developments: Both cities have witnessed a tremendous growth in both residential and commercial infrastructure and demand has almost never beaten the supply except few delays due to Noida Extension land dispute which is yet to be resolved. Gurgaon has been home to as many as 1100 residential skyscrapers with modern planning. But most of the Gurgaon lacks proper urban infrastructure with broken roads and streets that often leads to traffic jams. On the other hand Noida Infrastructure has been planned in a better way and offering wide roads, better water treatment facilities, better public transport and most importantly the basic residential facilities in sectors. Noida follows a better approach to town management. The suburb has well laid-out residential and commercial sectors with wide roads, flyovers and under-passes and plenty of local shopping complexes in each sector. Film City in Noida is the home to India’s top media companies including Aaj Tak, NDTV, IBN, Zee and more because of its easy and quick connectivity with the Political capital of India, New Delhi. However Gurgaon too is located to close proximity to New Delhi but does not offer that much ease of connectivity. Residential, Shopping, Entertainment, Health and Education Facilities: When it comes to comparing the two cities in terms of what they offer to their residents, both almost scores equal. Where on one hand Greater Noida has been producing much more residential units, Gurgaon is also expanding the residential offering along the NH8 towards Bhiwadi and Badshahpur towards Sohna. However the difference in cost of living in both cities is huge, Noida offers an average 3500-4500 per square foot while cost of residential property in Gurgaon starts somewhere from 7000- 8000. Almost every residential sector in Noida is equipped with well-maintained parks and kids play areas while the key parks in Gurgaon are the Leisure Valley Park in Sector 29, Tau Devi Lal Biodiversity Botanical Garden in Sector 52, Netaji Subhash Chandra Bose Park in Sector 14 and Tau Devi Lal park in Sector 23. However, most of the parks in Gurgaon are small and ill-maintained. There are as many as 26 different size shopping and entertainment malls in Gurgaon while One of India’s biggest Great India Place resides in Noida. Other that this some major shopping and entertainment destinations in Noida includes Garden Galleria, The Mall of India (Under Construction), Centrestage Mall, The Spice World Mall, Shopprix Mall, Sab Mall and Atta Market, Sector 18. Leading health care provider institutes in Gurgaon include Fortis Hospital, Medanta and Max Hospital. Gurgaon has become an increasingly popular destination for medical tourism. Noida too is not behind, it has health care facilities from Fortis, Max healthcare, Kailash, Apollo and more. Noida is definitely ahead of Gurgaon when it comes to education facilities. The presence of UP Technical University, Amity University, MTU and many high rated technical and B-Schools in Noida makes it an 21 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  22. 22. ABC PVT. LTD. education hub. Gurgaon has also attracted many educational institutions but most of them are either into offering the post academic training courses or just are not of that scale/reputation except IMT. Transport and Connectivity: Gurgaon is connected to Delhi via NH8 and through Mahrauli. Faridabad has connectivity with Gurgaon via Aravali. Gurgaon is served by Indira Gandhi International Airport, though the airport is just outside the city limits and located within the jurisdiction of Delhi near National Highway 8. Through Delhi Metro, Noida is now connected to Connaught Place, New Delhi, via Barakhambha Road, IP Estate and Akshardham Complex. DND flyover and Kalindi Kunj are two major connectivity mediums between Delhi and Noida. Metro will be further expanded in the city and will go to Greater Noida. Recently, two new extension of Noida Metro has been approved up to ‘Sector 62, Noida’ from ‘Noida City Center’ and up to Jasola in New Delhi from ‘Botanical Garden, Noida’. An extension from Greater Noida to Yamuna Expressway City has also been approved by the authorities. The Delhi eastern peripheral Road, Upper Ganga Canal Expressway and the Ganga Expressway are the three proposed expressways which will be passing the city. Future Greater Noida which has successfully hosted India’s first F1 on state of the art Buddh International Circuit F1 track developed and maintained by Jaypee Group have connectivity with 2 expressways, one in Noida-Greater Noida expressway and another is Yamuna expressway which connects it to Agra via Mathura. The future looks great for Greater Noida, while nothing is new about New Gurgaon. Noida, which supplied less than one third the properties as Gurgaon till 2007, now supplies six times more properties than its competitor. 22 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  23. 23. ABC PVT. LTD. 2. About the company a. Introduction b. Project implemented c. Projects on Going d. Board of Directors e. Key Managerial Personnel f. Shareholding Pattern g. Debt Profile h. Financial Indicators 23 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  24. 24. ABC PVT. LTD. a. Introduction: The ABC Group has been at the helm of the real estate for over 27 year. Since the last 15 years, we have ventured into building residential and commercial (office and retail) spaces with state- of-the-art unparalleled quality and ingenuity. The group has established it’s presence in real estate, education, smart city, hospitality and health sector. Currently, the Group has properties in Delhi, Noida, Greater Noida & Gurgaon. Over the last few years, the group has built an enviable reputation based on excellence, commitment and expertise. Our group intends to further strengthen it’s brand with the highest levels of innovation, product excellence and customer trust. The group has a number of distinguished property development projects to it’s credit in various upcoming towns in India. All the projects are designed keeping in mind the comfort of the end customer. While the group is involved in both residential and commercial spaces, our strength lies in commercial spaces, specifically IT-ITES spaces. b. Project implemented Projects by the group:- The group ventured into organized Residential & Commercial development about 15 years ago, and we are executing/ going to launch the following projects: 1. XYZ Pvt. Ltd. Project Name: XXXXXX (Residential)- The first Residential project launched by the group is by the name of XXXXXX. It is a development of private, detached and opulent apartments spread over 15 acres. It’s a 3 side open corner plot offering lavish Villas and 1/2/3/4 bedroom apartments. ABC Group, the developer of XXXX is known for providing innovative engineering solutions, by having the capacity to gauge market requirements and consumers with the required results. The deliverables are consumer oriented and they are highly modernistic in approach that are made keeping in mind the end utility. 24 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  25. 25. ABC PVT. LTD. Land: 15 acres Total Saleable Area: 27,00,000 sq. ft. (Before FAR Change) Launched Date: June, 2001 Saleable area/Location wise: XXXX/27,00,000 sq. ft./ Sec. 43, Gurgaon USP (Unique Selling Proposition):- • It is proven, that wherever there has been a prosperity, and world-class infrastructure has followed. • 500m from proposed metro line • Proposed international airport • Knowledge park (with universities), 25 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  26. 26. ABC PVT. LTD. Board of Directors: Management Overview 26 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group Space Left Intentionally
  27. 27. ABC PVT. LTD. Debt Profile: As on 31st Mar 2016, the debt profile of the company is nil barring vehicle loans taken by the company from different bank. Other details are as under: Loans and Limits as on (date) Name of Bank/ FI Project Name Sanctione d Limit Rs. In Cr. Current ROI (%) Repayment In Cr. Amount Outstandin g Rs. In Cr. SPV- XYZ Pvt. Ltd. XXX Project AXIS Bank- Auto Loan XXXX 9 14.5 6 3 HSBC –Auto Loan XXXX 8 14.5 4 4 Canara Bank- Auto Loan XXXX 7 9.62 5 2 Indian Bank- Auto Loan XXXX 6 10.25 4 2 Kotak - Auto Loan XXXX 5 10.25 3 2 27 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  28. 28. ABC PVT. LTD. FINANCIAL INDICATORS: - XYZ Pvt. Ltd. XXXX:- ( ` in crore) X Financial Parameters* Past Three Years Audited 31st March 2013 31st March 2014 31st March 2015 Current year Prov. (3M/6M/9M) (In case of listed company) Net Sales/ Revenue P B D I T Profit After Tax Cash Accruals Capital Net worth DER * Annexure-A Current Ratio TOL/TNW Borrowings from Banks/FIs Net Working capital*Annexure-A Annexure-A (i.) DER: Debt to Equity Ratio=Total debt/ equity Financial Year March’13 (In Rs.) March’14 (In Rs.) March’15 (In Rs.) Including Unsecured Loan Debt Equity DER Excluding Unsecured Loan Debt DER 28 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  29. 29. ABC PVT. LTD. Note:- Unsecured loan is nothing but same includes inter-company transactions. (ii.) Net Working Capital: Sceario-1 Current Liabilities include Advance from Customer: Financial Year March'12 (In Rs.) March'13 (In Rs.) March'14 (In Rs.) Current Assets Current Liabilities Net Working Capital Net Working Capital (in Crore) Note:- Current liabilities numbers include advance received from customers. Advance received from customer ‘ll become part of revenue numbers once we comply under mentioned conditions: * Revenue reorganization: a) 25 percent cost of construction and development (excluding land cost, cost of development rights and rehabilitation costs) to be incurred; b) Sale of at least 25 percent of the saleable area; c) Collection of 10 percent or more at the reporting date, at the individual contract level. Sceario-2 Current Liabilities don’t include Advance from Customer: 29 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group Financial Year March'13 (In Rs.) March'14 (In Rs.) March'15 (In Rs.) Current Assets Current Liabilities Net Working Capital Net Working Capital (in Crore)
  30. 30. ABC PVT. LTD. 30 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  31. 31. ABC PVT. LTD. Present Proposal a. Facility Desired b. Assessment of Equity/debt or mezzanine i. About the project ii. Location of project iii. Project Implementation Schedule iv. Status of the Project v. Approvals & Consents vi. Marketing Strategy vii. Cost of Project viii. Means of Finance ix. Detailed Cost of Project 31 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  32. 32. ABC PVT. LTD. 8. Project Calculation & Assumptions 8.1. Revenue calculation & Assumption 8.2. Expenditure calculation & Assumption 32 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  33. 33. ABC PVT. LTD. 9. Project Financials 9.1. Profit & Loss Account 9.2. Balance Sheet 9.3. Cash Flow Statement 9.4. Debt Service Coverage Ratio 33 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  34. 34. ABC PVT. LTD. SWOT Analysis: • Strength • Promoters are into the same line of business for the past 16 years. • Promoters are financially sound to face any challenge. • Customer Service & Satisfaction, • Good Clientele, • Higher product quality, • A green company (recycling, energy, water) • Respecting Customers. • Weaknesses • Company does not have any big project which is delivered through company has completed number of small projects. • Expansion of business (expanding workforce and company may have difficulty managing employees). • Opportunities • Expand business (more customers). • Being the satellite town of Delhi NCR, Noida is one of the finest locations where the demand for group housing residential projects is on rise. • Threats • A deep recession. • Growth Challenge. 34 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group
  35. 35. ABC PVT. LTD. 2. Confidentiality: This Information Memorandum is prepared for raising FDI/Term Loan for ABC Pvt. Ltd. The objective is of the information memorandum is to provide detailed information on the Firm to the potential lender to facilitate their evaluation of the financing opportunity. Each recipient of this Information Memorandum must make its independent assessment of the project and its sponsors with regard to the relevance and adequacy of the information contained herein, and should make the investigation that it deems necessary to determine its interest participating in any means of financing. The Information Memorandum has been prepared solely for the benefit of persons to whom it is distributed. Consequently, it shall not be shown or given to, copied by or discussed in whole or in part, with any other person without the prior written approval of the firm. 35 | P a g e INFORMATION MEMORANDUM Copyright @ABC Group

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