Market Research & Feasibility Study for Retail Mall at Kolkata

Market Survey & Demand Assessment Study

TABLE OF CONTENTS 1.0 EXECUTIVE SUMMARY ................................................................................................................................................. 5

BACKGROUND ............................................................................................................................................................................ 5 OBJECTIVE ................................................................................................................................................................................. 5 SCOPE OF THE REPORT............................................................................................................................................................... 5 APPROACH & METHODOLOGY ...................................................................................................................................................... 5 MARKET ANALYSIS & DEVELOPMENT OPTIONS .............................................................................................................................. 5 2.0 CITY OVERVIEW ............................................................................................................................................................ 6

2.1 INTRODUCTION ............................................................................................................................................................... 6 2.2 DEMOGRAPHICS ............................................................................................................................................................. 6 2.3 ECONOMIC INDICATORS ................................................................................................................................................... 7 2.3.1 GDP overview ...................................................................................................................................................... 7 2.3.2 Income overview .................................................................................................................................................. 8 2.4 ECONOMIC BASE AND DRIVERS FOR THE CITY ................................................................................................................... 8 2.5 EXISTING & UPCOMING INFRASTRUCTURE ....................................................................................................................... 12 2.5.1 Existing Infrastructure ........................................................................................................................................ 12 2.5.2 Upcoming Infrastructure Initiatives ..................................................................................................................... 14 3.0 KOLKATA REAL ESTATE OVERVIEW ....................................................................................................................... 15

3.1 RETAIL......................................................................................................................................................................... 15 3.1.1 Existing Stock .................................................................................................................................................... 15 3.1.2 Existing Scenario & Future outlook .................................................................................................................... 17 3.2 EXISTING & POTENTIAL GROWTH CORRIDORS ................................................................................................................. 18 4.0 SITE AND LOCATION ANALYSIS ............................................................................................................................... 20 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 5.0 5.1 5.2 5.3 6.0 6.1 7.0 Location map ..................................................................................................................................................... 20 Distance chart .................................................................................................................................................... 20 Accessibility & Neighborhood............................................................................................................................. 20 SWOT analysis .................................................................................................................................................. 21 Initial Development Proposition .......................................................................................................................... 21

MICRO MARKET OVERVIEW ...................................................................................................................................... 22 INTRODUCTION TO MICRO MARKET ................................................................................................................................. 22 KEY DEVELOPMENTS ALONG EM BYPASS ....................................................................................................................... 22 RETAIL......................................................................................................................................................................... 23 PROJECT ANALYSIS ................................................................................................................................................... 24 DEMAND ASSESSMENT .................................................................................................................................................. 24 FINANCIAL ANALYSIS ................................................................................................................................................ 25

7.1 ASSUMPTIONS .............................................................................................................................................................. 25 7.1.1 Area Assumptions .............................................................................................................................................. 25 7.1.2 Project Development key dates ......................................................................................................................... 25 7.1.3 Project Structure Assumptions ........................................................................................................................... 25 7.1.4 Construction cost ............................................................................................................................................... 26 7.1.5 Other cost assumptions ..................................................................................................................................... 26 7.1.6 Land development cost ...................................................................................................................................... 26 7.1.7 Revenue assumptions........................................................................................................................................ 26 7.1.8 Phasing assumptions ......................................................................................................................................... 26 7.1.9 Project Returns .................................................................................................................................................. 26 7.1.10 Project Balance Sheet.......................................................................................................................................... 1 7.1.11 Project P&L .......................................................................................................................................................... 1 7.1.12 Project Cash Flows .............................................................................................................................................. 2 7.1.13 Project Cost ......................................................................................................................................................... 1 8.0 CONCLUSION / RECOMMENDATION ........................................................................................................................... 1

CAVEATS AND LIMITATION ..................................................................................................................................................... 2 ANNEXURE 3 SITE PHOTOGRAPHS ..................................................................................................................................... 4

Nov 2010

Market Survey & Demand Assessment Study

Index of Tables Table 1: List of Abbreviations ....................................................................................................................................................... 4 Table 2: List of Measurements..................................................................................................................................................... 4 Table 3: Projected Population Density in KMA in persons per sq. km.: Census 2001 ................................................................. 7 Table 4: Economic indicators of Kolkata as on 2001-02 .............................................................................................................. 7 Table 5: Key Industries .............................................................................................................................................................. 11 Table 6: Existing Infrastructure .................................................................................................................................................. 12 Table 7: Upcoming Infrastructure Initiatives ............................................................................................................................... 14 Table 8: Existing malls in Kolkata .............................................................................................................................................. 16 Table 9: Upcoming Retail developments in Kolkata .................................................................................................................. 17 Table 10: Retail rentals in Kolkata ............................................................................................................................................. 17 Table 11: Distance chart ............................................................................................................................................................ 20 Table 12: Location overview ...................................................................................................................................................... 21 Table 13: SWOT analysis of property ........................................................................................................................................ 21 Table 14: Initial Development Proposition.................................................................................................................................. 21 Table 15: Existing and Upcoming Malls in EM Bypass .............................................................................................................. 23 Table 16: Demand Assessment Table for Retail space ............................................................................................................. 24 Table 17: Construction cost assumptions .................................................................................................................................. 25 Table 18: Land development cost assumptions ......................................................................................................................... 25 Table 19: Land development cost assumptions ......................................................................................................................... 25 Table 20: Construction cost assumptions .................................................................................................................................. 26 Table 21: Other cost assumptions ............................................................................................................................................. 26 Table 22: Land development cost assumptions ......................................................................................................................... 26 Table 23: Revenue assumptions ............................................................................................................................................... 26 Table 24: Phasing assumptions ................................................................................................................................................. 26 Table 25: Project Returns .......................................................................................................................................................... 27 Table 26:Projected Balance Sheet .............................................................................................................................................. 1 Table 27: Projected Profit & Loss ................................................................................................................................................ 2 Table 28: Projected Cash Flows .................................................................................................................................................. 3 Table 29: Project cost summary .................................................................................................................................................. 1 Table 30: Detailed Cost Phasing ................................................................................................................................................. 5

Index of Figures Figure 1:Kolkata ........................................................................................................................................................................... 6 Figure 2: Growth in Working Population ..................................................................................................................................... 7 Figure 3: Sector-wise GDP contribution of Kolkata ...................................................................................................................... 8 Figure 4: Infrastructure Map....................................................................................................................................................... 13 Figure 5: Kolkata Metro Expansion Map .................................................................................................................................... 13 Figure 6: Operational and Upcoming Malls in Kolkata ............................................................................................................... 15 Figure 7: Map depicting the retail spread in Kolkata .................................................................................................................. 16 Figure 8: retail mall rental trend ................................................................................................................................................. 18 Figure 9: CBD and Growth Corridors ........................................................................................................................................ 19 Figure 10: Location Map ............................................................................................................................................................ 20 Figure 11: Real Estate Developments along EM Bypass........................................................................................................... 23

Nov 2010

Market Survey & Demand Assessment Study

List of Abbreviations & Measurements

Abbreviations Approx. BHK BUA SBUA CBD FAR FSI Ft. Govt. INR Km M RCC Sq. ft Sq. m Approximately Bedroom Hall Kitchen Built Up Area Super Built Up Area Central Business District Floor Area Ratio Floor Space Index Feet Government Indian Rupee Kilometer Meter Reinforced Cement Concrete Square Feet Square Meter

Table 1: List of Abbreviations

Measurements 1 Acre 1 Hectare 1 Square Meter 1 Square Yard 43560 Square Feet 2.471 Acres 10.764 Square Feet 9 Square Feet
Table 2: List of Measurements

Nov 2010

Market Survey & Demand Assessment Study

1.0 EXECUTIVE SUMMARY

Background
Cushman & Wakefield (C&W) has been appointed by Forum Malls Pvt Ltd to undertake Retail Demand assessment & feasibility study for setting up of Retail Mall on their property located adjacent to Science City on EM Bypass.

Objective
The objective of this exercise is to: To evolve a development strategy for the subject land parcel with value maximization objective

Scope of the Report

The scope of the Report is as under: Assess the Kolkata real estate market and analyze demand for the retail development. Arrive at optimum phasing and implementation strategy. Assess financial viability of the proposed retail development.

Approach & Methodology

A physical inspection of the subject site & market survey was carried out in the site location. Assessment of real estate trends in and around EM Bypass micro market was mainly based on interaction with local industry players and leveraging on C&W services knowledge base and networks. Secondary research covered the review of existing reports and studies including publications by government agencies; publications by research firms for statistical data; & publications by various industry associations.C&W also conducted a review of the dynamics of the Kolkata real estate micro-market in terms of the overall growth direction, existing and proposed development hubs, and the infrastructure initiatives in the region to establish the development framework for the subject property. Further, a detailed research exercise of the real estate market in Kolkata and perception studies were conducted to establish the project viability, project positioning, pricing and phasing strategy for the development based on market and financial considerations.

Market Analysis & Development Options

The subject micro-market, EM Bypass has been analyzed as relevant for various development components to understand the existing and proposed development patterns for various real estate components. As a result of the detailed analyses, we are of the opinion that: The subject site is suitable for development large format destination mall. This segment has been witnessing demand, which is expected to continue in the long term. We have considered market dynamics of the surrounding micro markets; considering the demand expected to be generated by the subsistent residential population in forthcoming years, and given the size & nature of the development and various other factors such as location, accessibility, we are of the opinion that large format retail development on the subject land parcel is viable. This has been done in order to assess the market prospects for the proposed development. The study evaluates the subject property on various parameters such as location dynamics, competitiveness and demand prospects to ascertain/ assess the sustainability of the proposed development.

Nov 2010

Market Survey & Demand Assessment Study

2.0 CITY OVERVIEW

2.1 Introduction

Kolkata the capital of West Bengal is the main business, commercial and financial hub of eastern India and the northeastern states. The city is situated in the Eastern part of India on the bank of river Ganges and is the worlds 8th largest urban agglomeration. A city with one foot in its 300 year old heritage and a richly mixed culture, and the other forward to grab the best of today, Kolkata tends to be a city that delights with stunning glimpses into a rich culture, history, with amazing oasis of natural beauty in the heart of the city.

Figure 1:Kolkata

2.2

Demographics

As per Census 2001, the Kolkata Metropolitan Area (KMA) houses a population of 14,720,000. Of this, nearly 4.7 million people reside within the Kolkata Municipal Area (KMC). The urban agglomeration Kolkata Metropolitan Area is 1851 sq. km. in size whereas the Municipal Area within this region is about 185 sq. km1. By 2025, the population in KMA is expected to be approximately 22 million. The present density of urban population of Kolkata is 24,760 persons / sq. km. The following table provides a perspective of Kolkatas existing and emerging demographics as stipulated in the Vision 2025 document:
Area/District Kolkata Municipal Area (KMC) Hooghly Howrah Nadia
1

1961 16,740 1,937 4,234 505

1971 18,813 2,487 4,591 685

1981 20,891 3,170 5,805 1,279

1991 22,273 3,993 7,429 1,783

2001 23,149 4,734 8,604 2,256

2011 25,257 5,394 9,606 2,682

2021 26,620 6,169 11,056 3,228

KMA (Kolkata Metropolitan Area) refers to the overall administrative area under KMDA (Kolkata Metropolitan Development Authority) which includes the core city within the KMC (Kolkata Municipal Corporation) and surrounding urban sprawl (outgrowth areas defined by the planning authority).

Nov 2010

Market Survey & Demand Assessment Study

North 24 Parganas South 24 Parganas Kolkata Metropolitan Area (KMA)

2,964 1,008 3,817

4,256 1,465 4,651

5,687 1,821 5,666

7,415 2,430 6,826

9,385 3,201 7,950

10,742 3,590 8,914

12,498 4,191 10,045

Table 3: Projected Population Density in KMA in persons per sq. km.: Census 2001

At present, the average literacy rate in Kolkata is 81.31%. The Age Sex Ratio in Kolkata is currently 956 females per 1000 males. The annual growth rate of population for Kolkata is estimated to be approximately 4%. In order to meet the demands of the growing city population, the Kolkata Metropolitan Development Authority has proposed a few satellite townships around the city. These large developments shall act as counter-magnets and help in effectively reducing the burden on the core areas of the city. The working age population of the state is set to increase by 17 million by 2016, thereby leading to further urbanization.
30 25 20 15 10 5 0 2006 2011 2016 Figure 2: Growth in Working Population
Entering Workforce

Working Age Population in million

2.3

Economic Indicators
2.3.1 GDP overview Kolkata is a major economic centre of India. It is one among the fastest growing cities in the world. Following are the key economic indicators for the city:
Area/Item West Bengal ( Net State Domestic Product in US Mn $ ) KMA ( District Domestic Product in US Mn $) KMAs share in West Bengal (%) Distribution of SDP in KMA by Sector (%) Primary 7,766.55 50.14 0.65 0.63 Secondary 7,310.76 2,362.18 33.95 29.53 Tertiary 14,802.16 5,586.96 33.70 69.84 Total 29,879.47 7,999.28 _ 100

Table 4: Economic indicators of Kolkata as on 2001-02

Nov 2010

Market Survey & Demand Assessment Study

The figure represents sector-wise contribution of Kolkatas GDP to the total GDP of West Bengal. Kolkata has a major share of contribution in the Secondary and Tertiary sector GDP of West Bengal. As of 2001-02, Secondary and Tertiary sector contributed about 30% and 70% respectively to the states GDP. Under The Tertiary sector, the service sector, chiefly IT&ITeS, Real estate, Business Services had a major contribution of nearly 45% to the total GDP of Kolkata3.
Figure 3: Sector-wise GDP contribution of Kolkata
2

25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 Primary

Secondary

Tertiary

GDP West Bengal

GDP Kolkata

2.3.2 Income overview

The Annual Survey of Industries data show that 1990-91 onwards there has been a significant increase in the quantum of Productive Capital base of KMA-districts, registering a growth of about 35.5 percent per annum in the KMA-districts, as against a much lower rate of growth of 19.7 percent per annum for the state as a whole. KMA-districts accounted for an investment of Rs.5591 crores in the large and medium industry projects implemented between 1991 and 2002. This constituted 25 percent of total investment of Rs.22,101 crores in West Bengal during the same period. On the contrary, the labour-output ratios have experienced a declining trend during the last decade in both the state as well as in KMA-districts. This could be explained by increasing adoption of capital-intensive or labour-saving technologies in manufacturing processes.

2.4

Economic Base and Drivers for the City

Trade & Industry in Kolkata has played a significant role in developing the economic scenario of West Bengal. The prominent industrial sectors in Kolkata are Information Technology, Real Estates, Electronics, Apparel and Plastic products. Information Technology is the most developing industry in Kolkata that accounts for a major portion to the overall trade in West Bengal. Some of the other significant industries in Kolkata include construction, chemicals, cosmetics & jewellery, furniture, sports goods, tourism, rubber, media and advertising. Kolkata is also base to several industrial units with produce ranging from jute to electronics. Some of the renowned Indian companies headquartered in Kolkata include Bata India, ITC Limited, Coal India Limited, Birla Corporation, Bengal Peerless, National Insurance Company, Orient fans, Exide, Berger Paints and Tata Tea.

2 3

Source: Statistical Abstract, BAE&S GoWB,: data as of 2001-02 www.indiastat.com

Market Survey & Demand Assessment Study

Stagnation in the major traditional industries in KMA like jute, engineering, cotton and chemicals had been caused by a number of factors including the ownership structure of industries, the national policy of freight equalization for iron and steel, promotion of similar industries in other parts of the country to achieve regional balance etc. However, the knowledge based IT and ITES industries have witnessed year on year higher growth in terms of both annual turnover and exports. The magnitude of software exports from Kolkata rising from Rs. 3.5 billion in 1999-2000 to Rs.12 billion during 2002-03 and further to Rs.16 billion in 2003-04, have clearly reinstated the fact that IT&ITeS industry is the economic spine of Kolkata. WEBEL is the facilitator for development of Information Technology (IT) and IT Enabled Services (ITES) in the state, besides being the nodal agency for development of electronic industries. Principally located in Salt Lake (chiefly in Sector V area), Rajarhat and to some extent in areas around EM Bypass currently, there are approximately 250 IT companies in Kolkata employing over 75,000 IT professionals.

IT/ITES

Nov 2010

Market Survey & Demand Assessment Study

The IT sector in Kolkata had grown at a CAGR of 88% between 1996-97 and 2002-03. During 2001-2005, it has witnessed 70% growth against the national average of 37%. The IT/ITeS Sector witnessed an export turnover of Rs 35 billion in 2006-07. Even during the recent global slowdown, the IT/ITeS growth in Kolkata is currently at 12% in the year 2008-09, which is still higher than the national average. Kolkata had an advantage of lower commercial lease rentals/ capital rates, availability of large talent pool, lower attrition rates, adequate support infrastructure, adequate social infrastructure, affordable housing, which has been the major attraction for IT players looking for expansion plans with cheaper overhead costs.

Industry Overview

MNCs like Pricewaterhouse Coopers, IBM, TCS, Cognizant, Wipro, Skytech, Lexmark, AIG and HSBC including Indian corporate houses like ITC Infotech and Reliance are operational in the city. Some other IT companies in Kolkata include Acumen Soft Technologies, Ambujex Technologies (P) Ltd, Alliant Technologies Private Limited, Apt Software Avenues Pvt Ltd, Bright Soft Solutions, Calinnovations, ChaiONE, Digital care Pvt. Ltd, Kris Systems Pvt Ltd, MaxMobility PVT LTD, Ontrack Systems Limited, Re-Life Digital Solution Pvt Ltd and Webel Technology Limited. Some of the prominent IT campuses in Kolkata are the Wipro SEZ, the DLF IT Park at Rajarhat, Infinity Benchmark, Godrej Waterside, the Technopolis building, RMZ Ecospace mostly concentrated in Rajarhat & Salt Lake Sector V.

Government Initiatives

The West Bengal Government had earmarked IT Industry as the priority sector for Industrial Development in the State. A number of initiatives have been taken by the government to attract IT companies in the state, viz.: Setting up of a dedicated IT department within the ministry in year 2000, Empowering agencies like WEBEL in facilitating the IT sector in Sector V, Salt Lake, Bringing IT within the ambit of Public Utility Services, Procurement and facilitating in land acquisition, Providing land at cross subsidy, Creating requisite physical infrastructure for the IT Industry.

Heavy-engineering Casting, forging, metallic articles, machinery, generators, transformers, electric motors, ships and vessels and related accessories, railway wagons and coaches and accessories have been the dominant traditional industries in KMA in terms of contributing substantially to state domestic product and also providing considerable employment. More than 3 lakh persons are employed in this industry in the state. The metal-based foundry industry and a large number of small engineering units in Howrah have been among the oldest heritage industries of India. This industry manufactures a wide range of products, serves the requirement of automobile industries, railways, agriculture, mining, various parts and components of jute, cotton, cement, rolling mills etc., and is highly labour intensive in nature. This industry has been passing through severe crisis due to a number of reasons, important among them being decentralization of procurement by Indian Railways, shortage of inputs like coal, lack of technological up gradation and diversification and freight equalization policy of the Government of India. Although the number of units is seen to be rising in recent years, there is a need for modernization of this industry to render itself more competitive.

Industry Overview

Construction

10

Nov 2010

Market Survey & Demand Assessment Study

Industry Overview

Construction Industry constitutes the second major activity after manufacture and engineering. The SDP generated in this sector in KMA-districts registered an annual average rate of growth of around 6.3 percent in the present decade (2001 onwards). A major part of the construction activities in KMA is accounted for by real estate and infrastructure development activities. Real estate activities have witnessed a significant jump in recent years within KMA, registering an annual growth of 9.5 percent in the same decade.

Chemicals and Small Scale Industries West Bengal has been among the leaders in production of Chemicals, Drugs & Pharmaceuticals. The recent increasing popularity of herbal drugs has provided a great opportunity for drugs & pharmaceuticals industry in the State and also in KMA. The recently established Haldia Petrochemicals Complex 120 kilometres away from KMA has opened up opportunity for both chemical and drugs & pharmaceuticals industries within KMA.

Industry Overview
The growth of registered Small Scale Industry (SSI) units has been significant in KMA, the total number of registered SSI units in KMA being approximately 6000 employing roughly 33,000 people. The major small-scale units in KMA are metal-based engineering, leather, chemicals and food based industries. However, most of these industries have been plagued by problems like inadequate supply of raw materials, absence of application of modern technology and lack of institutional financing facility.
Table 5: Key Industries

11

Nov 2010

Market Survey & Demand Assessment Study

2.5

Existing & Upcoming Infrastructure

2.5.1 Existing Infrastructure

Infrastructure

Description Kolkatas airport provides both domestic and international connectivity and is located in the north of Kolkata City in Dum Dum. Kolkata is currently serviced by 14 international, 8 domestic airlines and 5 Cargo Airlines. The number of domestic & international passengers in 2006-07 was around 6 million.

Airport

Calcutta Airport has been ranked as the 7th spot much ahead of Hyderabad International Airport (10th Spot), Chennai International Airport (14th Spot) and New Delhi Indira Gandhi International Airport (25th spot) in an official statistics regarding the "Top 25 fastest growing airports 2007" worldwide with a 28.2% increase in the passenger traffic, according to the World Airport Traffic 2007 report released by the Airports Council International. Kolkata has a road space at just 6% of the total city area as against the standard 20% in wellplanned cities like Delhi. The major road developments in KMA are: Belghoria Expressway Kona Expressway Acharya Jagadish Chandra Bose Road Eastern Metropolitan Bypass VIP Road Rajarhat Arterial Road Diamond Harbour Road Basanti Highway National Highway 2 National Highway 6 National Highway 117 National Highway 34 National Highway 35 National Highway 41 The Rabindra Setu, the Vivekananda Setu, the Dakshineshwar Bridge and the Second Vivekananda Bridge, are the vital parts of linkages over the river Hooghly that create better accessibility to the entire KMA and its periphery. Two recent significant developments are the SVTB (Second Vivekananda Tollway Bridge) and the Garia Metro Extension (operational by 2009) both of which have made a significant impact on traffic mobilization by improving connectivity and reducing travel-time. Kolkata has two major long distance railway stations at Howrah Station and Sealdah. Howrah station connects to rest of India and Sealdah station to north of Bengal and northeastern part of the country. It also has The Suburban Railway connecting to the suburbs surrounding the city of Kolkata. The Kolkata Metro is the underground rail network in Kolkata, India. It is run by the Indian Railways and is the first underground built in India with service starting in 1984. The line begins at Dum Dum in the north and continues south through Park Street, Esplanade in the heart of the city till the southern end in Kavi Nazrul. The Port of Kolkata is a riverine port in the city of Kolkata, India. It is the oldest operating port in India, having originally been constructed by the British East India Company. The Port has two distinct dock systems - Kolkata Docks at Kolkata and a deep-water dock at Haldia Dock Complex, Haldia.
Table 6: Existing Infrastructure

Roads

Railways

Port

12

Nov 2010

Market Survey & Demand Assessment Study

Figure 4: Infrastructure Map

Figure 5: Kolkata Metro Expansion Map

Market Survey & Demand Assessment Study

2.5.2 Upcoming Infrastructure Initiatives

Projects Description Several new highways have been proposed in KMA, some major projects are mentioned below with the running length in kilometres: Dum-Dum Barrackpore Expressway - Madhyamgram to Belghoria: 6.0 km Eastern Expressway - NH 34 to Taki: 8.0 km - Taki to B N Dey Road: 22.5 km - B N Dey Road to Baruipur and NH 34 to Barrackpore-Kalyani Road: 30.1 km Southern Expressway - Baraipur to Diamond Harbor Road: 15.5 km - Diamond Harbour Road to Budge Budge to Bauria to NH 6: 22.7 km - Bridge over / tunnel under Hooghly Serampur-Barrackpore-Barasat Expressway - Connecting NH 2 and Eastern Expressway: 22.5 km Western Riverfront Expressway - Andul Road to Bauria Connector: 14.0 km The proposed East-West Metro Corridor will run 13 km from Salt Lake to Howrah station and is set to be operational by 2012. Metro Rail Project The 12 stations on the route will be Howrah, Mahakaran, Central, Bowbazar, Sealdah, Phoolbagan, Salt Lake stadium, Bengal Chemical, City Centre, Central Park, Karunamoyee and Sector V. The route will intersect the existing North-South Metro Corridor at Central Station. KMDA along with international fund houses like JBIC (Japan Bank of International Cooperation) has proposed construction of several flyovers/ bridges at critical junctions some of which have been shown below: Over crossing of Jessore Road and Dum Dum Road (2007-2012) Salt Lake Bypass across J K Saha Bridge (2007-2012) Along Anwar Shah Road across Raja Subodh Mallick Road (2007-2012) Esplanade RA Kidwai Road

New Metropolitan Highways

Bridges/ Flyovers

Across Park Street (2012 onwards) Across Loudon Street (2012 onwards) Across Camac Street (2012 onwards)

Elevated Ring Road Corridor around Kolkata with entry and exit ramps

Across Strand Bank Road-Strand Road-Diamond Harbor Road-AliporePrince Anwar Shah Road-EM Bypass-VIP Road-Circular Canal-Bagabazar (2012 onwards)

Elevated Road from Park Circus to Parama Island (2012 onwards) Patipukur Underpass on Jessore Road (2012 onwards) EM Bypass to VIP Road (2012 onwards) Vivekananda Road Flyover Phase I : Howrah to CR Avenue crossing (2012 onwards) Vivekananda Road Flyover Phase II : CR Avenue crossing to Airport (2012 onwards)
Table 7: Upcoming Infrastructure Initiatives

14

Nov 2010

Market Survey & Demand Assessment Study

3.0 KOLKATA REAL AL ESTATE OVERVIEW

3.1 Retail

Kolkata retail market is envisaged to witness 20 new shopping malls currently in various stages of planning and construction. Kolkata enjoys a vast pool of educated young population, which makes it an ideal location for the services industry.

Figure 6: Operational and Upcoming Malls in Kolkata

Traditionally, the organized retail activity in Kolkata has bee been n concentrated in the Central Business District (CBD) and off-CBD CBD areas. This included markets and high streets areas like Park Street, Camac Street, Shakespeare Sarani, New Market and Elgin Road. The city presently hosts 9 malls, 6 of which are within the vicinity of CBD. However, a major proportion of the proposed supply is targeted towards the Eastern periphery of the city in the suburbs of Rajarhat New Town, VIP road, along the EM bypass and surrounding areas. 3.1.1 Existing Stock Kolkata consumer retail market ket size is INR 13.139 billion4. billion . Out of this, the organized sector comprises of only 2-4 4 % of above. Not only is there a high demand for retail, but also limited present supply, a major causal factor for high absorption and low vacancy levels in retail spa space to about 5%-7% 7% percent. Organized retail (including malls and high streets) supply recorded upsurge since 2005 (2.3 Mn Sq.ft. in 2007 versus 0.7 Mn Sq.ft. in 2005). This addition in retail space has mainly been through the emergence of shopping malls.

Source: Cushman & Wakefield Research

Market Survey & Demand Assessment Study

At present, the organized retail marke market in Kolkata accounts for over 4 Mn Sq.ft. of gross leasable area, which essentially covers the organized retail in high streets, shopping malls and large stand-alone department stores, out of which leasable area in Retail Mall in 2.95 Mn Sq.ft.

Operational Malls Forum - I City Centre - I Metropolis Gariahat Shopping Mall Homeland E Mall South City Mall Mani Square City Centre - II

Location Elgin Road Salt Lake EM Bypass Ballyguange Stn. Chowringee GC Avenue PA Shah Road EM Bypass Rajarhat

Developer Rahul & Co Bengal Ambuja CMGL Toplight Commercials Merlin Group Hooghly Mills South City Group Mani Group Bengal Ambuja

Size 200,000 300,000 175,000 100,000 100,000 84,000 1,000,000 600,000 400,000

Operational Milestone 2003 2004 2005 2006 2007 2007 2008 2008 2009 Table 8: 8 Existing malls in Kolkata

Figure 7: : Map depicting the retail spread in Kolkata

Market Survey & Demand Assessment Study

3.1.2 Existing Scenario & Future outlook Kolkata witnessed no fresh mall supply in Q3 2009. A number of projects are slated to be completed in Q4 of 2010. The retail sector in Kolkata is witnessing significant growth, the scale of the Kolkatas retail revolution can be gauged by the fact that the organized retail mall space is expected to grow to approximately 5.54 Mn Sq.ft. by the year 2013.

Upcoming Retail Development

Forum Courtyard Lake Mall La-Vida Diamond Plaza Down Town Acropolis Avani Riverside Mall Spencer's Galleria Forum-II Downtown

Developer

Location/ Micro market

Type

Development Area (Million sq.ft.)

40000 250000 90000 350000 120000 300000 491000 700000 12,00,000 200000

Expected completion

Forum Projects Space Group Nangalia Group Diamond Group Nangalia Group Merlin Group Avani Group CESC Properties (RPG Group) Forum Projects
Bengal Unitech Universal Infrastructure Pvt Ltd

Elgin Road Lake Market Salt Lake, near Karunamayee Jessore Road Salt Lake (near AMRI Hospital & stadium) RB Connector (besides Siemens) Foresore Road, Howrah Syed Amir Ali Avenue EM Bypass New Town, Rajarhat (Action Area III)

New extension of existing Forum mall

Mall Mall Mall Mall Mall Mall Mall Mall Shopping complex

Q2 2010 Q4 2010 Q4 2010 Q4 2010 Q2 2011 Q4 2011 Q4 2011 Q4 2012 Q4 2013 Q4 2013

Table 9: Upcoming Retail developments in Kolkata

In the past two years a significant number of mall projects sought conversion to commercial or residential development, consequently supply has declined. Retailers showed less preference for upcoming mall projects in peripheral locations like Rajarhat due to uncertainty with regard to the malls' launch and lack of immediate catchments. In 2010 Leasing activities have picked up considerably however it is mostly restricted to the established malls. Rentals across various malls have stabilized in 2010.
Prime High Street Rentals Locations Park Street Camac Street Elgin Road Theatre Road Rent in INR/ Sq.ft./ month 245 268 190 175 Prime Mall Rentals Locations South Kolkata Salt Lake Rajarhat Elgin Road Rent in INR/ Sq.ft./ 5 month 290 400 130 450
Table 10: Retail rentals in Kolkata

Rentals mentioned are for ground floor premises on carpet area.

17

Nov 2010

Market Survey & Demand Assessment Study

The city's malls witnessed major correction in the rentals since 2008; it has stabilized since December 2009. Kolkata is likely to witness an uptrend in the rental values across both the malls and main streets in 2011. Malls with affordable rentals and established catchments are likely to see interest from retailers. Value retail and discount segments will continue to command a significant share of the market pie; seeing increased interest from retailers to enter the segment.

Mall Rental Trend

600
Rent in INR/Sft/month

500 400 300

Salt Lake South Kolkata

200
Rajarhat

100
Elgin Road

0
Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Apr-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Apr-10 Jun-10 Jul-10 Aug-10 May-09 May-10 Sep-10
Figure 8: retail mall rental trend

Feb-09

Mar-09

Feb-10

The high streets also witnessed exits of significant retailers from prominent locations. This is mainly attributable to the unjustifiably high price points in respect to sales. Locations with established catchments in South Kolkata and adjoining areas registered some activity in terms of both leasing as well as retailers' interest.

3.2

Existing & Potential Growth Corridors

It has been observed over the last 3-4 years from the citys development pattern that the overall growth in commercial, residential and retail sectors is shifting to the eastern corridors from central business districts of the city. Kolkata Metropolitan Area is dotted with several existing and upcoming Commercial Micro-Markets, the significant ones being CBD (Park Street, AJC Bose Road), South-Central Kolkata, Salt Lake and New town Rajarhat. Developments at EM Bypass (near the Eastern Kolkata Township) also indicate an emerging Sub-CBD in the years to come with a number of businesses relocating from the old CBD to these areas.

18

Nov 2010

Mar-10

Market Survey & Demand Assessment Study

Figure 9: CBD and Growth Corridors

Kolkata Metropolitan Area has emerging growth corridors other than the established micro-markets that have witnessed sufficient development in the recent past. Of all the growth corridors of Kolkata, Rajarhat is among the most prominent emerging commercial micro-markets with a strong presence of global and national level IT players as the major occupants of the available and upcoming commercial spaces. It not only enjoys nearness to the Airport but also moderate connectivity with the other important regions of Kolkata, as well.

Kona Expressway EM Bypass Corridor Budge Trunk Road Corridor Baruipur Township Area Dankuni - Uttarpara

Growth Corridors Uluberia - Haldia NH6 Growth Corridor

VIP (Nazrul Islam Avenue) Corridor CIT Road - Kankurgachi Ultadanga Corridor Sector V, Salt Lake BRADA Corridor

Batanagar (Maheshtala) Baishnabghata - Patuli Township Area NH2 Growth Corridor

19

Nov 2010

Market Survey & Demand Assessment Study

4.0 SITE AND LOCATION ANALYSIS ALYSIS

4.1.1 Location map

Figure 10: Location Map

4.1.2 Distance chart The distance of the subject property from prominent locations has been listed below: Location Salt Lake Sector V Garia Airport/Dumdum CBD of Kolkata Distance (In Km) 8 12 12.5 5
Table 11: Distance chart

4.1.3 Accessibility & Neighborhood Details Road Accessibility Rail Air Road width Neighborhood Profile Approached by EM Bypass Nearest Railway station is the Garia Station roughly 2 2-3 kilometres by road EM Bypass leads to the Netaji Subhash Bose Airport 25 m Upcoming Residential, Hospitality and Commercial projects

Market Survey & Demand Assessment Study

Primary Catchment Average Rental/Sale Value (INR/Sq ft) Prominent developments in the vicinity

Salt Lake, Kankurgachi, New Town Dumdum, Lower Stretch of EM Bypass (Kasba, Garia, Topsia, Gariahat, Jadavpur) Retail Rentals: 100 per month Silver Spring, Science City, ITC Sonar Hotel, Trade Fair Grounds, China Town
Table 12: Location overview

4.1.4 SWOT analysis Strengths

Good access to CBD, Airport Availability of transport infrastructure Located in one of the prominent growth corridors of the city Availability of good road frontage Abundant greenery (PC Chandra Park) in site vicinity

Weaknesses

Traffic congestion near Science City, due to undergoing Flyover project.

Opportunities
Increased retail space off-take in prominent locations. Low vacancy of 5% in operational Malls, Potential to create large format destination mall.

Threats
Supply of other retail development in vicinity may offer competition

Table 13: SWOT analysis of property

4.1.5 Initial Development Proposition To be provided based on an initial assessment of the site location Development Proposition Retail Details To act as a major retail destination for the city
Table 14: Initial Development Proposition

21

Nov 2010

Market Survey & Demand Assessment Study

5.0 MICRO MARKET OVERVIEW

5.1

Introduction to Micro Market

The Eastern Metropolitan Bypass is a major road connecting the northern corridor to the southern corridor of the city. Beginning from the northern hub of Ultadanga to Garia in the south, the road covers a distance of 21 km along the eastern fringe of the city. It is one of the significant roads (four-lane wide) of the metropolis and is an emerging economic growth corridor. There is a proposal to extend the road to the Falta Export Processing Zone (FEPZ) at Falta on the Hooghly River, further 60 kilometers below Kasba. A number of connecting roads link the bypass to major micro-markets in Kolkata, the most significant among them being the Park Circus connector connecting Park Circus to EM Bypass and the Rash Behari Connector connecting Gariahat to EM Bypass. EM Bypass is connected by various ancillary roads that connect to the CBD regions of Kolkata. These are:

The Park Circus Connector that meets EM Bypass at the junction of the 5-star ITC Sonar Bangla Hotel & Science City The Rash Behari Connector meets EM Bypass at the Ruby Hospital Eastern Metropolitan Bypass Link Road connecting Garia and Patuli township Santoshpur Avenue connecting Santoshpur and Jadavpur Anwar Shah Road Connector connecting Dhakuria and Lake Gardens Maniktala connector connecting Maniktala market

EM Bypass is a major link of Kolkata which is not only the gateway to the IT hub of the city at Sector V, Salt Lake, and the emerging planned township of Rajarhat while approaching from south, but also the corridor that leads eventually to the Airport via Rajarhat on the one hand, while connecting to Ultadanga, one of the major traffic interchange junctions of Kolkata on the other. The site is located at the Eastern Metropolitan Bypass Extension connecting Garia and is expected to capitalise on the positive impacts spurred off by the Garia Metro Station, which is due to open shortly.

5.2

Key Developments along EM Bypass

5-star hotels like the Hyatt Regency and the ITC Sonar Bangla Institutional developments such as West Bengal National University of Juridical Sciences, Govt. College of Engineering and Leather Technology and Satyajit Ray Film & Television Institute Recreational developments like Salt Lake Stadium, Swabhumi, Science City Institutional Health Care developments like the Ruby Hospital, Rabindranath Tagore International Institute of Cardiac Sciences, Peerless Hospital and B.K.Roy Research Centre, Apollo Gleneagles Hospital Educational Institutes like the Calcutta International School Premium Residential Complexes like Silver Spring, Avishikta, Greenwood Nook, Kolkata Greens, Udayan, and Hiland Park ITC Sonar Bangla Hotel II is expected to come up in the same site of ITC Sonar Bangla Hotel which is envisaged as a 500 room, 27 floored structure with two basements A 3.7-km road skirting the Bypass is being planned as a four-lane road which will branch off the Bypass at the Chowbhaga crossing, near the intersection of the Prince Anwar Shah connector and the Bypass, and extend up to Basanti Road. The project will be developed on a public-private partnership by the Kolkata Municipal Corporation, Kolkata Metropolitan Development Authority and some private parties, including the Heritage and Shrachi groups.

22

Nov 2010

Market Survey & Demand Assessment Study

5.3

Retail

EM Bypass is an established residential corridor with s several everal commercial properties lying alongside the fringes of the corridor. On account of the sizeable length of EM Bypass, the real estate characteristics are different along different stretches of the corridor. Kolkata are in EM Bypass, the details of which are given below: Some of the significant retail projects in Kolkata
Name of the Mall/ Retail Project Metropolis Silver Arcade Spencers Retail Mani Square Metro Cash & Carry Location EM Bypass EM Bypass EM Bypass EM By Bypass EM Bypass Developer CMGL Sanjeevani Group Bengal Peerless Mani Group Metro Group Size (sq.ft.) 175,000 70,000 38,000 600,000 100,000 Operational Milestone 2005 2006 2006 2008 2008

Table 15: Existing and Upcoming Malls in EM Bypass

The following diagram represents ts the spatial distribution of real estate projects along Eastern Metropolitan Bypass:

Figure 11: Real Estate Developments along EM Bypass

Market Survey & Demand Assessment Study

6.0 PROJECT ANALYSIS

6.1

Demand Assessment

The proposed project being situated on the lucrative growth corridor of EM Bypass large format retail development may be explored. We have considered the fact that the site is well connected to a large catchment area beginning from Dumdum to Garia via Salt Lake and New Town. Further it is a short driving distance from CBD. The location is already an urban getaway with Science City, PC Chandra Greens and Trade Fair grounds in the vicinity of the project site. The area is also emerging as a high end residential location.
Primary Catchment (Salt Lake, Dumdum, New Town, Kankurgachi Topsia) 2.0 - 6.0 5.0 - 15.0 35 16,600 Secondary Catchment (Lower EM Bypass, Garia, Kasba) 8 - 12.5 20.0 - 30.0 100 22,700

Parameters Distance (km) from micro-market Time (min) from micro-market Area in sq.km. Population density (persons per sq.km.)

Demand for Retail 1) Population Led Demand Average Household Size in Kolkata No of H/H in Primary Catchment No of H/H in Secondary Catchment Shoppers, Spend and Visits Percentage of H/H in Primary Catchment in consumer category for organized retail Percentage of H/H in Secondary Catchment in consumer category for organized retail Average No. of Shoppers per family Average Spend Per visit per person (Primary Catchment) Average Spend Per visit per person (Secondary Catchments) Average No of visits per month (Primary Catchment) Average No of visits per month (Secondary Catchments) Expected Revenues From Primary Residential Catchment From Secondary Residential Catchments Total Expected Revenue per annum Max Chargeable Total Rental (12.5% of Revenues) Max Chargeable Average Rental Total Mall Demand in Micro-market (size) Competition in other retail developments (size) 5015 4804 9820 1,227 100 Mn Rs/annum Mn Rs/annum Mn Rs/annum Mn Rs/annum (Rs./sq.ft/p.a.) Sq.ft. Sq.ft. 4.5 129,114 403,556

80% 70% 2 1,079 763 2 1 Rs Rs

1,022,865
NA 1,022,865

Probable Mall Size in Subject Property

Sq.ft.

Table 16: Demand Assessment Table for Retail space

24

Nov 2010

Market Survey & Demand Assessment Study

7.0 FINANCIAL ANALYSIS

7.1

Assumptions
As per information provided by client, FAR of 2.5 has been assumed for calculating Built-up-Area excluding car parking. Construction costs for the project have been assumed as per market benchmarks and thumb rule assumptions, considering the nature of the development components proposed.

7.1.1 Area Assumptions

Component Area 775,368 513,681 1,289,049 775,368
Table 17: Construction cost assumptions

Built-up Area Car Parking Total Construction Area Total Leasable Area

No assumptions have been made for power, water and other regular costs as these have been treated as a pass-through to the end user, since the charges for these facilities would be recovered by client from the users at actual. 7.1.2 Project Development key dates
Project Key Dates

Start date Construction starts after approval of Development Plan Contruction period (+Lead time) Certification/Approval for Occupancy/Usage Operation/Occupancy starts on Financial year ending (of occupancy/lease)

01-Jan-11 6 Months 42 Months 0 Months 01-Jan-15 31-Mar-15

Table 18: Land development cost assumptions

7.1.3 Project Structure Assumptions

Structure

Equity Return Expectation Rate Debt Rate Equity Percentage Debt Percentage Developer Profit Margin Discounting Rate

20% 12% 35% 65% 12.46%

Table 19: Land development cost assumptions

25

Nov 2010

Market Survey & Demand Assessment Study

7.1.4 Construction cost6

Development Component Cost on BUA (INR/Sq.ft.) 3220 350 Escalation (per annum) 3% 3%
Table 20: Construction cost assumptions

Retail Mall Car Parking

7.1.5 Other cost assumptions

Other Costs Percentage (%)

Architects & Consultants' Fee (%-age of Construction Cost) Admin & Pre-Operative Expenses (%-age of Construction Cost) Advertising & Marketing Cost (%-age of Construction Cost) Miscellaneous & Contingencies (%-age of Construction Cost)
Total

2.4 5.6 1.5 11

20.50
Table 21: Other cost assumptions

7.1.6 Land development cost The infrastructure development like roads, power and water supply is already available inside notified area of ML Dalmiya SEZ. Therefore land development cost for the project has been assumed to be minimal.
Cost component on Built up Area Infrastructure cost Land cost INR in Rs/ Sq.ft. 20 78.89
Table 22: Land development cost assumptions

7.1.7 Revenue assumptions

Escalation (per annum) 5% Capitalization Rate 10.5%
Table 23: Revenue assumptions

Development Component

Rental (INR/Sq.ft.) on saleable/ leasable area 107 per month

Retail Mall

7.1.8 Phasing assumptions

Development Phasing Retail Mall Lease Phasing Retail Mall 31-Mar-11 42.00% 31-Mar-15 85.00% 31-Mar-12 21.00% 31-Mar-16 90.00% 31-Mar-13 20.00% 31-Mar-17 90.00% 31-Mar-14 17.00% 31-Mar-18 95.00%

Table 24: Phasing assumptions

7.1.9 Project Returns Based on the above assumptions, following are the arrived returns for the project:
6

Construction Cost implies bare shell cost without fittings and furnishings and does not include soft costs like overhead charges, consulting fees, etc.

26

Nov 2010

Market Survey & Demand Assessment Study

Project Returns

Project NPV In INR Million st as on Jan 1 2010 1839

Project IRR Equity NPV In INR Million st as on Jan 1 2010 2246 20.7 %

Equity IRR

Retail Mall

31.7%
Table 25: Project Returns

27

Nov 2010

Market Survey & Demand Assessment Study

7.1.10 Project Balance Sheet

Balance Sheet Years Liabilities Share Capital - Equity Reserves & Surplus Term Loan Secured Total Liabilities Assets Fixed Asset Gross Block Depreciation Net Block Cuurent Asset Work In Progress Cash & Bank Balance 76.39 (76.39) 359.23 (359.23) 323.30 (323.30) 290.97 (290.97) 261.88 (261.88) 235.69 (235.69) 212.12 (212.12) 143.18 (143.18) 1-Jan-11 31-Mar-11 0 01-Apr-11 31-Mar-12 1 01-Apr-12 31-Mar-13 2 01-Apr-13 31-Mar-14 3 01-Apr-14 31-Mar-15 4 01-Apr-15 31-Mar-16 5 01-Apr-16 31-Mar-17 6 01-Apr-17 31-Mar-18 7 01-Apr-18 31-Mar-19 8 01-Apr-19 31-Mar-20 9 01-Apr-20 31-Mar-21 10 01-Apr-21 31-Mar-22 11

15.70 -

521.89 -

824.29 (13.95)

824.29 (27.90)

824.29 (26.85)

824.29 (3.68)

824.29 129.66

824.29 338.50

824.29 591.08

824.29 974.49

824.29 1,399.90

824.29 1,746.06

29.16 44.86

969.23 1,491.12

1,530.82 2,341.15

1,986.06 2,782.44

2,380.98 3,178.41

2,259.83 3,080.43

2,068.47 3,022.42

1,820.22 2,983.00

1,522.14 2,937.51

1,224.06 3,022.83

925.98 3,150.17

627.90 3,198.25

44.86 -

1,491.12 2,341.15

2,782.44

3,254.80 3,439.66

3,345.73 3,273.98

3,199.38

3,258.52

3,362.29

3,341.43

Total Assets

44.86

1,491.12

2,341.15

2,782.44

3,178.41

3,080.43

3,022.42

2,983.00

2,937.51

3,022.83

3,150.17

3,198.25

Table 26:Projected Balance Sheet

7.1.11 Project P&L

Nov 2010

Market Survey & Demand Assessment Study

Profitability Statement

1-Jan-11 31-Mar-11 0

Years

01-Apr-11 31-Mar12 1

01-Apr-12 31-Mar13 2

01-Apr-13 31-Mar-14 3

01-Apr-14 31-Mar15 4

01-Apr-15 31-Mar-16 5

01-Apr-16 31-Mar17 6

01-Apr-17 31-Mar18 7

01-Apr-18 31-Mar19 8

01-Apr-19 31-Mar20 9

01-Apr-20 31-Mar21 10

01-Apr-21 31-Mar22 11

Revenue Income Retail Space Maintenance Charges Retail Space Total Revenue Expenditure Operating and Maintenance Cost Total Expenditure PBITD Interest on Retail Space Depreciation Retail Space Profit Before Tax Tax Retail Space Profit After Tax 7.1.12 Project Cash Flows
Cash Flow 1-Jan-11

161

683

785

829

829

953

953

715

19 180

85 768

89 874

99 928

104 932

109 1,062

114 1,067

90 805

19 19 162 66 76 20

79 79 689 278 359 51

83 83 792 260 323 209

87 87 841 233 291 317

91 91 841 201 262 379

96 96 966 165 236 566

100 100 967 129 212 626

79 79 726 70 143 513

14 (14) (14)

14

19 1

28 23

75 133

108 209

126 253

182 383

200 425

167 346

Table 27: Projected Profit & Loss

01-Apr-11

01-Apr-12

01-Apr-13

01-Apr-14

01-Apr-15

01-Apr-16

01-Apr-17

01-Apr-18

01-Apr-19

01-Apr-20

01-Apr-21

Nov 2010

Market Survey & Demand Assessment Study

31-Mar-11 Years 0

31-Mar-12 1

31-Mar-13 2

31-Mar-14 3

31-Mar-15 4

31-Mar-16 5

31-Mar-17 6

31-Mar-18 7

31-Mar-19 8

31-Mar-20 9

31-Mar-21 10

31-Mar-22 11

Sources of Funds Increase in Capital Increase in Term Loan Profit After Tax Total Application of Funds Fixed Assets Work in Progress Interest Payment Tax Term Loan Repayment Total Opening Balance Surplus / Defecit Closing Balance

15.70 29.16 44.86

506.19 940.07 1,446.26

302.39 561.59 863.98

161.56 161.56

688.95 688.95

791.66 791.66

840.81 840.81

841.41 841.41

966.35 966.35 967.02 967.02

725.79 725.79

44.86 44.86

1,446.26 1,446.26

(1,491.12) 13.95 (1,477.17) 13.95 0.64 14.59

65.51 18.62 4.29 88.41

278.45 28.10 121.80 428.34

259.70 75.31 191.99 527.01

233.32 107.67 248.90 589.89

200.54 126.42 298.72 625.68

164.77 182.48 298.72 645.98 129.00 200.49 298.72 628.21

69.92 166.52 298.08 534.53

0.00 -

2341.15 2,341.15

2,341.15 (14.59) 2,326.56

2,326.56 73.15 2,399.71

2,399.71 260.60 2,660.31

2,660.31 264.65 2,924.96

2,924.96 250.91 3,175.87

3,175.87 215.74 3,391.61

3,391.61 320.37 3,711.98

3,711.98 338.81 4,050.79

4,050.79 191.27 4,242.06

Table 28: Projected Cash Flows

Nov 2010

Market Survey & Demand Assessment Study

7.1.13 Project Cost

Description of Items Land Cost: Civil Works: Piling Sub Structure Superstructure Brickwork/ Plaster Waterproofing Anti Termite Boundary Wall including Roads Finishes Door Interior Flooring Elevation Landscaping Utility & Services Lift & Escaltors Electric Firefighting Plumbing & Sanitary A C Plant Building Automation Total Hard Cost

Rate INR Per Sq Ft. 1516

229.70 490.03 612.54 84.22 38.28 15.31 45.94

620

61.25 145.48 153.14 214.39 45.94

1084

218.98 336.90 61.25 91.88 313.93 61.25

3220

Project Cost (INR Million) 118 1175 1,782 3,801 4,751 653 297 119 356 14,366.00 481 475 1,128 1,188 1,663 356 5,260.00 840 1,698 2,613 475 713 2,435 475 2804
Table 29: Project cost summary

Nov 2010

Market Survey & Demand Assessment Study

Months Cost Elements (INR Lacs) Soil Testing

1st

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

Civil Works Pilling Sub-Structure & Basement Superstructur e Brickwork/ Plaster Waterproofing Anti Termite Boundary Wall including Roads & Pathways Finishes Door & Window Interior Flooring Elevation Landscaping Utility & Services Lift & Escaltors Electric Firefighting -

3 -

713 713 -

534 534 -

273 267 6

1,793 267 1,520 6

1,146 1,140 6

1,051 570 475 6

1,182 570 475 131 6

546 475 65 6

276 238 33 6

573 475 33 59 6

306 -

291 -

291 238 33 15 6

291 238 33 15 6

291 238 33 15 6

291 238 33 15 6

291 238 33 15 6

291 238 33 15 6

291 238 33 15 6

238 33 30 6

238 33 15 6

935 392

624 261

624 261

624 261

312 131

312 131

122 -

122 -

122 -

73 -

73 -

428 255 78

199 105

Nov 2010

Market Survey & Demand Assessment Study

Plumbing & Sanitary A C Plant Building & Automation Mobilisation Architect & Consultancy Plan Sanction Fees Total Bare Cost ( 2 to 8) Pre Operative Expenses Administrative & Overhead Expenses Marketing and Publicity TOTAL (9 to 10) Contingency Provisions TOTAL (10 to 11) Interest During Construction @ 12% GRAND TOTAL (11 to 12) MEANS OF FINANCE -

15

5 -

71 107 365 -

48 71 243 15

48 71 243 -

48 71 243 15 -

24 36 122 15 -

24 36 122 -

10 -

122 20 -

122 -

122 -

73 10 -

73 -

21 73 -

7 73 14 15 -

50 225 -

25 1,603 -

25 10 -

19 15 -

275

1,631

35

746

534

288

1,793

2,086

1,690

1,805

1,185

603

885

316

291

433

413

413

374

364

719

505

779

16

11

18

21

17

18

12

773 6 1,054 -

16 1,648 165

1 36 4

7 754 75

11 545 55

6 294 29

18 1,811 181

21 2,107 211

17 1,707 171

18 1,823 182

12 1,197 120

6 609 61

9 894 89

6 322 32

6 297 30

9 441 44

8 421 42

8 421 42

7 382 38

7 371 37

7 726 73

5 510 51

1,054

1,812

39

829

600

323

1,992

2,318

1,877

2,006

1,316

670

983

354

326

486

463

463

420

408

798

561

18

18

24

28

30

43

57

70

83

92

96

103

106

109

112

116

120

123

126

132

1,054

1,813

57

848

623

351

2,022

2,361

1,935

2,075

1,399

761

1,079

457

432

594

576

579

539

532

925

693

Nov 2010

Market Survey & Demand Assessment Study

Heads Promoters Contribution Term Loan from Banks GRAND TOTAL

1st

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

14th

15th

16th

17th

18th

19th

20th

21st

22nd

1,000 54 1,054

62 1,751 1,813

21 36 57

314 534 848

231 393 623

130 221 351

749 1,273 2,022

874 1,486 2,361

717 1,218 1,935

769 1,307 2,075

518 881 1,399

282 479 761

400 680 1,079

169 288 457

160 272 432

220 374 594

213 362 576

215 365 579

200 340 539

197 335 532

343 582 925

257 437 693

Months Cost Elements Soil Testing Civil Works

23rd

24th

25th

26th

27th

28th

29th

30th

31th

32nd

33rd

34th

35th

36th

37th

38th

39th

40th

41st

42nd

Total

291 Pilling Sub-Structure & Basement Superstructure Brickwork/ Plaster Waterproofing Anti Termite Boundary Wall including Roads & Pathways Finishes Door & Window Interior Flooring Elevation Landscaping 238 33 15 6 -

291 238 33 15 6 -

53 33 15 6 -

15 15 -

15 15 -

15 15 -

71 71 71 71 71 71 71 71 36 36 36 36 -

3 11,758 1,782 3,801 4,751 653 297 119 356

199 24 56 119 -

346 29 56 95 166 -

377 48 56 107 166 -

265 43 56 83 83 -

249 38 56 71 83 -

329 48 113 119 50 -

422 48 113 95 166 -

401 48 56 95 166 36

394 48 113 48 133 53

505 52 113 119 150 71

504 52 113 119 166 53

618 113 119 333 53

202 113 89

4,810 475 1,128 1,188 1,663 356

Nov 2010

Market Survey & Demand Assessment Study

Utility & Services 206 Lift & Escaltors Electric Firefighting Plumbing & Sanitary A C Plant Building & Automation Mobilisation Architect & Consultancy Plan Sanction Fees Total Bare Cost ( 2 to 8) Pre - Operative Expenses Administrative & Overhead Expenses Marketing and Publicity TOTAL (9 to 10) Contingency Provisions TOTAL (10 to 11) 552 Interest During Construction @ 12% GRAND TOTAL (11 to 12) 545 326 219 277 464 105 381 520 547 571 422 477 912 596 856 1,023 993 1,231 329 31,448 10 15 20 15 20 14 5 10 15 10 20 5 30 35 119 594 1,603 105 14 73 14 189 24 21 73 71 237 78 24 14 73 48 166 24 21 73 48 203 78 14 14 49 48 349 170 78 14 14 49 24 94 14 7 49 24 114 78 14 21 93 78 14 81 52 14 14 219 153 52 14 88 52 14 21 10 10 303 187 78 10 14 14 38 10 14 14 281 136 52 21 71 349 255 52 14 28 335 221 78 21 14 446 323 78 21 24 41 21 20 8,409 1,698 2,613 475 713 2,435 475

497

490

290

196

218

384

94

328

439

478

485

351

415

806

525

756

909

879

1,094

278

27,296

5 5 502 50 5

5 6 495 50 -

6 4 296 30

4 4 30 199 20

34 8 30 252 25

37 2 421 42

2 3 15 96 10

18 4 30 346 35

34 5 15 473 47

20 5 30 497 50

35 4 30 519 52

33 4 15 384 38

19 8 15 434 43

23 5 12 829 83

17 8 15 542 54

22 9 12 779 78

21 9 15 930 93

24 10 15 903 90

25 6 15

21

1,389 1,092 297

1,119 112

299 30

28,685 2,763

137 689

141 686

145 471

148 368

151 428

153 617

157 262

159 540

162 682

167 714

171 742

176 598

179 657

184 1,096

191 787

195 1,052

202 1,225

210 1,203

217 1,448

226 555

5,078 36,526

MEANS OF FINANCE Heads

23rd

24th

25th

26th

27th

28th

29th

30th

31th

32nd

33rd

34th

35th

36th

37th

38th

39th

40th

41st

42nd

Total

Nov 2010

Market Survey & Demand Assessment Study

Promoters Contribution Term Loan from Banks Grand Total

255 434 689

254 432 686

174 297 471

136 232 368

158 269 428

228 388 617

97 165 262

200 340 540

253 430 682

264 449 714

275 467 742

221 376 598

243 413 657

406 690 1,096

291 495 787

390 662 1,052

454 771 1,225

445 757 1,203

536 912 1,448

206 350 555

13,528 22,998 36,526

Table 30: Detailed Cost Phasing

Nov 2010

Market Survey & Demand Assessment Study

8.0 CONCLUSION / RECOMMENDATION

In the last two years a number of intended retail development projects have been postponed or converted to commercial real estate, thereby bringing down vacanacy levels in existings malls to about 5%. A 15-20% correction in rental values has increased the investment attractiveness for tenant. The economic upturn in 2010 has positively impacted the real estate sector. The retail demand outlook for the next 2-3 yaers is positive. Based on the analysis of the market dynamics and location, the following recommendations are suggested:

Positioning : The general catchments of the micro market have presence of commercial, residential and hotels, catering to the demand for HIG and MIG. The subject micro market is situated close to existing retail and commercial corridor Park Street, Topsia and Kasba. Thus have the opportunity to provide quality retail space at relatively lower rates to the occupiers.

Size : Based upon our Demand Estimation, total BUA recommended for retail is 775,000 sq ft at the subject land parcel. For the retail development, ratio of anchor to vanilla has been recommended to be around 40% to 60% in the overall tenant mix. The project should provide value added services to tenants. This will assist in targeting demand from different segments and spread the risk over a larger demand base.

Rentals and ARR : Considering the price point of other similar retail developments in Kolkata and adjoining High Streets weighted average rentals for the project in current scenario is estimated to be INR 107/ sq ft for retail

Conclusion The above detailed demand and financial analysis concludes that the project is financially viable and will be able to meet the financial obligations. Based on the financial analysis the estimated Project IRR is 20.7 %.

Nov 2010

Market Survey & Demand Assessment Study

CAVEATS AND LIMITATION

1. The Development Feasibility Study (hereafter referred to as the Report) is not based on comprehensive market research of the overall market for all possible situations. Cushman & Wakefield India (hereafter referred to as C&WI) has covered specific markets and situations, which will be highlighted in the Report. C&WI has not carried out comprehensive field research based analysis of the market and the industry given the limited nature of the scope of the assignment. In this connection, C&WI has relied solely on the information supplied to C&WI and update it by reworking the crucial assumptions underlying such information as well as incorporating published or otherwise available information. 2. In conducting this assignment, C&WI has carried out analysis and assessments of the level of interest envisaged for the city under consideration and the demand-supply for the commercial retail & hospitality sector in general. C&WI has also obtained other available information and documents that are additionally considered relevant for carrying out the exercise. The opinions expressed in the Report will be subject to the limitations expressed below. a. C&WI endeavors to develop forecasts on demand, supply and pricing on assumptions that has been considered relevant and reasonable at that point of time. All of these forecasts are in the nature of likely or possible events/occurrences and the Report will not constitute a recommendation to Forum Shopping Centres Pvt Ltd (hereafter referred to as the Client) or its affiliates and subsidiaries or its customers or any other party to adopt a particular course of action. The use of the Report at a later date may invalidate the assumptions and bases on which forecasts have been generated and is not recommended as an input to a financial decision. b. Changes in socio-economic and political conditions could result in a substantially different situation than those presented at the stated effective date. C&WI assumes no responsibility for changes in such external conditions. c. In the absence of a detailed field survey of the market and industry (as and where applicable), C&WI has relied upon secondary sources of information for a macro-level analysis. Hence, no direct link is sought to be established between the macro-level understandings on the market with the assumptions estimated for the analysis. d. The services provided is limited to development feasibility and will not constitute an audit, a due diligence, tax related services or an independent validation of the projections. Accordingly, C&WI will not express any opinion on the financial information of the business of any party, including the Client and its affiliates and subsidiaries. The Report is prepared solely for the purpose stated, and should not be used for any other purpose. e. While the information included in the Report is believed to be accurate and reliable, no representations or warranties, expressed or implied, as to the accuracy or completeness of such information is being made. C&WI will not undertake any obligation to update, correct or supplement any information contained in the Report. f. In the preparation of the Report, C&WI has relied on the following information: i. Information provided to us by the Client and its affiliates and subsidiaries and third parties; ii. Recent data on the industry segments and market projections; iii. Other relevant information provided to us by the Client and its affiliates and subsidiaries at C&WI's request; iv. Other relevant information available to C&WI; and v. Other publicly available information and reports. 3. The Report reflects matters as they currently exist. Changes may materially affect the information contained in the Report. 4. All assumptions made in the feasibility study are based on information or opinions as current. In the course of the analysis, C&WI has relied on information or opinions, both written and verbal, as current obtained from the Clients as well as from third parties provided with, including limited information on the market, financial and operating data, which would be accepted as accurate in

Nov 2010

Market Survey & Demand Assessment Study

bona-fide belief. No responsibility is assumed for technical information furnished by the third party organizations and this is bona-fidely believed to be reliable. 5. No investigation of the title of the assets has been made and owners' claims to the assets is assumed to be valid. No considerations have given to liens or encumbrances, which may be against the assets. Therefore, no responsibility is assumed for matters of a legal nature. 6. The Client including its agents, affiliates and employees, must not use, reproduce or divulge to any third party any information it receives from C&WI for any purpose without prior consent from C&WI and should take all reasonable precautions to protect such information from any sort of disclosure. The information or data, whether oral or in written form (including any negotiations, discussion, information or data) forwarded by C&WI to the Client may comprise confidential information and the Client undertakes to keep such information strictly confidential at all times.

Nov 2010

Market Survey & Demand Assessment Study

ANNEXURE 3 SITE PHOTOGRAPHS

Photographs

Science City and Trade Fair Grounds are opposite to the subject site

Subject Property Photograph

The subject site is adjoining PC Chandra Greens, located on service road abutting EM Bypass

ITC Sonar Bangla, a star hotel property is located adjacent to the site Land Mark hotel a 3 star hotel is also adjacent to the site.

Silver Spring Residential Complex and Spring club is the vicinity of the subject site

Nov 2010