Download - Final Valuation Report_DMI _FEB 2014

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KnightFrank.co.in Knight Frank (India) Pvt. Ltd.

Valuation of a land parcel

Located in Tukwada, Vapi, Gujarat

Prepared on behalf of

DMI Finance Private Ltd.

February 2014

Contact Details:

DMI Finance Pvt. Ltd.

Ashi Bhavan, Ground Floor,

19, Rouse Avenue,

New Delhi - 110002

Knight Frank India Pvt. Ltd.

Paville House, Near Twin Towers,

Off Veer Savarkar Marg, Prabhadevi,

Mumbai - 400025

Pradeep Gandhi: [email protected]

Valuation Report Valuation of land parcel for proposed industrial use in Vapi, Gujarat ii

Prepared on behalf of DMI Finance Pvt. Ltd. February 2014

Executive Summary

The executive summary below is to be used in conjunction with the valuation report of which it

forms a part and is subject to the assumptions, caveats and bases of valuation stated herein

and should not be read in isolation.

On the instructions received from DMI Finance Pvt. Ltd. (the client) vide an engagement letter

dated January 22, 2014 and our subsequent correspondence, Knight Frank India Pvt. Ltd. has

been appointed to undertake the valuation of a 31.3-acre land parcel located in Vapi. Knight

Frank India Pvt. Ltd. has estimated the market value of the subject property. Based on the

instructions received from the client, we have carried out pre-tax* valuation.

Client Name DMI Finance Pvt. Ltd.

Address & Location Tukwada Village, Vapi, Valsad District, Gujarat

Purpose of

Valuation

Internal

Description Valuation of a 31.3-acre land parcel for proposed industrial use

Land Area Land parcel measuring 31.3 acres has been converted to non-agricultural industrial

use

Tenure of Land Freehold

Valuation Approach Market Approach

Valuation Date February 3, 2014

Market Value

(Land Parcel)

` 640 mn.

Valuers Details Pradeep Gandhi, MRICS

Regional Head (West) Research & Advisory Services

In preparing our valuation reports, no allowances are made for any liability which may arise for

payment of Corporation Tax or Capital Gains Tax, or any other property-related tax, whether

existing or which may arise on development or disposal, deemed or otherwise. No allowances

are made in our valuations for any expenses of realisation, or to reflect the balance of any

outstanding mortgages, either in respect of capital or interest accrued thereon. All valuations

are given without any adjustment for capital-based government grants received or potentially

receivable on the date of the valuation.

Valuation Report Valuation of land parcel for proposed industrial use in Vapi, Gujarat iii


Abbreviations & Measurements

Abbreviations

FSI Floor Space Index CBD Central Business District

` Indian Rupee Mn. Million

CPI Consumer Price Index CRR Cash Reserve Ratio

Nos. Numbers Q1 Quarter One

`/sq. ft. Rupees per square feet Q2 Quarter Two

Sq. ft. Square Feet Q3 Quarter Three

Sq. km. Square Kilometre Q4 Quarter Four

Sq. mt. Square Metre FDI Foreign Direct Investment

GNP Gross National Product NPV Net Present Value

GDP Gross Domestic Product TEUs Twenty Foot Equivalent Units

SLR Statutory Liquidity Ratio NA Not Applicable

USD United States Dollar EoU Export Oriented Unit

MoU Memorandum of Understanding SEZ Special Economic Zone

Measurements

1 acre 43,560 sq. ft.

1 mn. 10 lakh

1 sq. km. 100 Ha.

1 sq. mt. 10.764 sq. ft.

1 Ha. 2.47 acres

Valuation Report Valuation of land parcel for proposed industrial use in Vapi, Gujarat iv


Table of Contents

Executive Summary .................................................................................................................... ii

Abbreviations & Measurements ................................................................................................. iii

Table of Contents ....................................................................................................................... iv

1. Instructions ............................................................................................................... 6

1.1 Engagement of Knight Frank India Pvt. Ltd. .................................................................. 6

1.1.1 Instructions ............................................................................................................... 6

1.1.2 Valuation Standard ..................................................................................................... 6

1.1.3 Purpose of Valuation .................................................................................................. 6

1.1.4 Conflict of Interest ...................................................................................................... 6

1.1.5 Currency and Measurement ......................................................................................... 6

1.1.6 Responsibility to Third Parties ..................................................................................... 6

1.1.7 Disclosure and Publication .......................................................................................... 6

1.1.8 Limitations on Liability ................................................................................................. 7

1.1.9 Vetting ....................................................................................................................... 7

1.2 Scope of Enquiries and Investigations ........................................................................... 7

1.2.1 Inspection .................................................................................................................. 7

1.2.2 Enquiries .................................................................................................................... 7

1.2.3 Legal Parameters of Property ........................................................................................ 7

1.2.4 Environmental Aspects ................................................................................................ 7

1.2.5 Information Provided .................................................................................................. 8

1.3 Basis of Valuation ...................................................................................................... 8

1.3.1 Market Value ............................................................................................................. 8

1.3.2 Date of Valuation ........................................................................................................ 8

2. Economic Snapshot: India ........................................................................................... 9

2.1 Economic Indicators (December 2013) .......................................................................... 9

2.2 Real Estate Indicators ................................................................................................. 9

3. Vapi Overview ........................................................................................................... 10

3.1 Vapi ......................................................................................................................... 10

3.2 Connectivity .............................................................................................................. 10

3.3 Demographics............................................................................................................ 11

3.4 Economic Features ..................................................................................................... 11

4. Property ................................................................................................................... 14

4.1 Location ................................................................................................................... 14

4.2 Site: ......................................................................................................................... 14

Valuation Report Valuation of land parcel for proposed industrial use in Vapi, Gujarat v


4.3 Legal Aspects ........................................................................................................... 15

4.4 Site Inspection and Observation ................................................................................. 16

4.5 Connectivity and Neighbourhood ................................................................................ 16

5. Valuation Analysis ..................................................................................................... 17

5.1 Methodology ............................................................................................................ 17

5.2 Valuation Bases ........................................................................................................ 18

5.3 Valuation Assumptions .............................................................................................. 18

5.4 Valuation Consideration ............................................................................................. 18

5.5 Valuation Analysis ..................................................................................................... 19

5.6 Comparable .............................................................................................................. 19

6. Summary .................................................................................................................. 22

Annexure I: General Principles and Limiting Conditions ............................................................. 23

Annexure II: General Assumptions ........................................................................................... 27

Disclaimer ............................................................................................................................ 33

Valuation Report Valuation of land parcel for proposed industrial use in Vapi, Gujarat 6


1. Instructions

1.1 Engagement of Knight Frank India Pvt. Ltd

1.1.1 Instructions

On the instructions received from DMI Finance Pvt. Ltd. (the client) vide an engagement letter

dated January 22, 2014 and our subsequent correspondence, Knight Frank India Pvt. Ltd. has

been appointed to undertake the valuation of a 31.3-acre land parcel located in Vapi. Based on

the instructions received from the client, we have carried out the pre-tax* valuation.

1.1.2 Valuation Standard

The exercise has been carried out in accordance with the International Valuation Standard vide

Red Book published by Royal Institute of Chartered Surveyors (RICS).

1.1.3 Purpose of Valuation

The client has confirmed that the valuation report is required for internal assessment.

1.1.4 Conflict of Interest

We confirm that we have no conflict of interest in providing this report to the client and that we

are acting as external valuers for the exercise.

1.1.5 Currency and Measurement

The currency used in the report for valuation of the subject property is Indian Rupees (`). This is

the currency normally used for property transactions in India. All measurements are in sq. ft. (1

sq. mt. = 10.764 sq. ft.) as this is the prevailing market practice in India.

1.1.6 Responsibility to Third Parties

Our valuation report is only for the use of our client and no responsibility is accepted to any

third party for the whole or any part of its contents.

1.1.7 Disclosure and Publication

Neither the whole nor any part of this valuation nor any reference thereto may be included in

any published document, circular or statement, nor published in anyway, without our prior

written approval of the form or context in which it may appear. If our opinion of values is

disclosed to persons other than the addressee of this report, the basis of the valuation should

be stated.



1.1.8 Limitations on Liability

No claim arising out of or in connection with this valuation report may be brought against any

member, employee, partner, or consultant of Knight Frank India Pvt. Ltd.

Knight Frank India Pvt. Ltd.s total liability to any direct loss or damage caused by the

negligence or breach of contract in relation to this instruction and valuation report is limited to

the amount specified in the terms of the engagement letter (if any). We do not accept any

liability for any indirect or consequential loss (such as loss of profit).

1.1.9 Vetting

The report has been vetted as per the quality assurance procedures of Knight Frank India Pvt

Ltd.

1.2 Scope of Enquiries and Investigations

1.2.1 Inspection

We were instructed to carry out an inspection of the property. Our inspection of the property was

undertaken on January 29, 2014 by Mr. Sampuran Das MBA (Finance).

1.2.2 Enquiries

In carrying out these instructions, we have undertaken verbal/web-based enquiries referred to

in relevant sections of the report. We have relied upon this information as being accurate and

complete.

1.2.3 Legal Parameters of Property

We have been provided with list of survey numbers, area details for the respective survey

numbers and village map. However, we have not been provided with the title and legal

documents pertaining to the property. It is recommended that the documents are subjected to

formal legal inspection in order to ensure that there are no elements, restriction or charges

contained which may have detrimental effect upon the valuation provided.

1.2.4 Environmental Aspects

For the purpose of this report, we have assumed that the property is not subject to

environmental contamination. However, it is recommended that an appropriate consultant may



be engaged to confirm our assumptions. If the subsequent investigation identifies any

environmental contamination on the site, our report may require revision.

1.2.5 Information Provided

In this report, we have been provided with information by the client, its advisors and other third

parties. We have relied upon this information being materially correct in all respects and have

not physically measured or verified the same from any legal documents or government

authorities. We have been provided with the list of survey numbers and the area details of the

land parcel (as per client):

Location Area (sq. mt.)

Industrial NA Dated 31.12.13 98,034


Total 126,665

Total Area (in acres) 31.3

1.3 Basis of Valuation

In accordance with your instructions, we have provided opinions on valuation of the project on

the following basis:

1.3.1 Market Value

The market value of the freehold interest in the property in its current physical condition is the

basis of valuation.

Valuation has been made on the assumption that the property is sold in the open market

without the benefit of a deferred term contract, leaseback, joint venture, management

agreement or any similar arrangement which would serve to alter the value of the properties.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on

the property or for any expenses or taxation which may be incurred in effecting a sale. Unless

otherwise stated, it is assumed that the property is free from encumbrances, restrictions and

outgoings of an onerous nature which could affect the value.

1.3.2 Date of Valuation

The date of valuation has been considered as February 3, 2014.



2. Economic Snapshot: India

2.1 Economic Indicators (December 2013)

Parameter Value

GDP Growth Rate Q1 2013-14 (at 2004-05 prices) 4.80%

Per Capita Income 2012 2013 (Current prices) ` 68,757

Inflation CPI (August 2013; Provisional) 9.52%

CRR and SLR 4.00% and 23.00%

Repo Rate 7.50%

Bank Rate 9.50%

Base Rate 9.70 - 10.25%

`/1 USD 61.8

Risk Free Rate on Government Securities: 6.90 GS 2019 8.0907%

Risk Free Rate on 91 day Government T Bill 9.6947%

Source: MOSPI, RBI

2.2 Real Estate Indicators

Parameter Value (` mn.)

FDI Inflow in Construction Development: Townships, Housing,

Built-up Infrastructure (April 2013 July 2013) 20,920


Built-up Infrastructure (April 2012 March 2013) 72,480





Source: http://dipp.nic.in



3. Vapi Overview

3.1 Vapi

Vapi is an important industrial town in the southern part of the Indian state of Gujarat. It is

located between Mumbai and Surat. The industrial growth over the last decade has blurred the

physical boundaries between Daman, Vapi and Silvassa. Vapis industrial corridor includes the

areas within the municipal limit and the notified areas of Vapi. It also includes the surrounding

areas of Sarigram, Daman, Bhiland, Umargam, Morai and Silvassa. The industrial corridor

extends across an area of 284 sq. km.

Location Map of Vapi

3.2 Connectivity

Vapi has an excellent transport network. National Highway (NH)-8, which connects Mumbai with

Ahmedabad, bisects Vapi into two parts the eastern part, which includes the industrial and

newly constructed residential areas, and the western part, which is the original location of the

town. Vapi is also an important railway station on the Western Railway (Mumbai-Vadodara main

line) as many important trains halt here. Daman Port and Mumbai Port are at a distance of about

15 km. and 170 km. from the Vapi Industrial Estate respectively. The closest airport is at



Mumbai, 170 km. south of Vapi. There is also an air strip at Daman, which is currently used by

the Coast Guards.

3.3 Demographics

According to the 2011 Census, Vapis municipal area has a population of 71,400, while the

notified area has a population of 23,844. Basic information on population (2001) in villages

around Gujarat Industrial Development Corporation (GIDC) Vapi is as follows:

Villages Area (Ha.) Population

Morai 309 951

Bagwada 31 907

Tukwada 815 3,832

Salvav 802 4,046

Balitha 403 34,831

Total 2,360 44,567

3.4 Economic Features

Vapi offers a well-developed industrial infrastructure which includes the supply of water

(supplied by the GIDC) and power (supplied by the Gujarat Electricity Board [GEB]). Social

infrastructures like educational institutes, hospitals, communication network, fire department,

etc. are also available here. Many residential areas have developed around this industrial belt.

Vapi has one of the largest common effluent treatment plant (CETP) designed by the National

Environmental Engineering Research Institute (NEERI) in collaboration with Kirloskar. The plant

has a capacity of 55 MLD. of effluent treatment.

Developed by the GIDC, the Vapi Industrial Estate came into existence in 1967-68. The estate is

fully developed and operational. It is spread across 1,140 Ha. and houses nearly 759 industries,

majority of which are small-scale units. It is primarily a chemical estate where about 70 % of the

total industries manufacture chemicals such as dyes and dyes intermediates, pigments,

pesticides, fine chemicals and pharmaceuticals. The remaining 30% include paper mills,

packaging, engineering, plastic, textiles, food processing, printing ink, etc.

Total area of GIDC Vapi: 1,140 Ha.

Area for industrial: 580 Ha.

Area for commercial: 30 Ha.

Area for residential: 103 Ha.

Other PP/utilities: 427 Ha.



Economic Base and Drivers for the region

Vapis geographical location and easy accessibility to the port infrastructure have attracted a

large number of manufacturing businesses. There are some 3,000 industrial units and 200

commercial establishments in the industrial estate of Vapi. Some of the key large-scale

industries are enumerated below:

Welspun India Ltd., the largest producer of terry towel in Asia, operates a state-of-the-

art, fully integrated terry towel unit at Morai Village Vapi, Gujarat.

Alok Industries operates a large blended cotton fabric plant in Morai Village Vapi.

Raymond's has set up its third worsted fabric unit near Morai Village, Vapi.

3.5 Land Price Gradient in GIDC Estates



Vapi Secondary Rate (INR Mn/acre) Sarigram 30-45 Umargam 40-45

Vapi 40-45 Dungra 40-50

Gundlav, Valsad 24-30 Pardi 28-35

Based on our interaction with market intermediaries, we understand that Vapi & Dungra GIDC

secondary land prices have appreciated by (15-20) % due to scarcity; this has led to investors

and industries shifting towards villages of Morai, Tukvada and Pardi GIDC. Further Sarigram &

Umergam GIDC land price have appreciated by (15-20) % due the proposed new port at

Umgargam. Overall land prices have appreciated by 10-15% is past one year.



4. Property

4.1 Location

The subject property is a 31.3-acre land parcel located in Tukwada Village, Desai Falia, Vapi,

Valsad District, Gujarat. The map below depicts the approximate location of the subject

property.

4.2 Site:

As per the client, the land area details have been stated below:




Total 126,665


The industrial non-agricultural (NA) certificate has been received by M/s Roha Agri Developers

Pvt. Ltd. under section 65/B of the Bombay Land Revenue Code, 1879. The subject land parcel is

located 2.5 km. off NH-8 in Tukwada. Currently, it is under private plantation which includes

plantation of orchards, mango, chiku, sal Wood/teakwood and papaya; the plantations divides

this large land parcel in different sectors/zones, connected by internal (kutcha rasta) farm

pathways. Further we have observed presence a small farm house, greenhouse and nursery. The

property is accessible through an internal village road off NH-8.



The internal Tukwada village road, from the NH-8 side is being widened to accommodate future

growth; however, as of now it is not a tarmac road. The access road to the subject land parcel is

a narrower section of the village road (less than 15 ft in width). The subject property has (1000 ft

approx.) frontage on the narrow section of the village road.

From our understanding based on interactions with locals, the approach road would also be

widened in due time however as of now no such activity was observed. Based on our

interactions with market participants, we understand that, in general minimum 30 ft road width

is necessary for getting Industrial NA conversion. The land parcel is plain land with large

number of trees and plantation of varied species. The subject property is bounded by a

river/canal on the southern side (the river is adjoined with the land parcel, currently there is

industrial type pump installed to provide irrigation for the large plantation). Further, being a

large land parcel, no clear demarcation of boundary was observed.

4.3 Legal Aspects

Legal Title

As stated in the general terms of business, we do not undertake searches or

inspections of any kind (including web-based searches for title information, searches in

any publicly available land registers or land revenue cards).

We have not been provided by any land registry entries, title documents or reports on

title.

In our report, we have assumed a clear and marketable title and that all documentation

is satisfactorily drawn.

We have assumed that the property is not subject to any unusual or onerous covenants,

restrictions, encumbrances or outgoings.

We have not received any clarification/confirmation from the client regarding the

ownership of the subject land parcel. For the purpose of this report, we have assumed

that the title of the property is freehold.

We recommend that our understanding of all legal title issues is referred to your legal

advisors for their confirmation that our understanding is correct. If any matters come to

light as a result of your legal advisors review, we recommend that these matters are

referred back to us, as this information may have an important bearing on the values.



4.4 Site Inspection and Observation

As stated in the general terms of business, we have not undertaken a site survey of the

property.

During our limited site inspection, we did not inspect any inaccessible areas.

We have not been provided with a copy of the ground condition report for the site. We

have assumed that there is no adverse ground or soil conditions and that the load

bearing capacity of the site is sufficient for the buildings constructed/being

constructed/proposed to be constructed.

Our site observation did not bring out any significant flood risk to the site. Hence, for

the purpose of the valuation, we have considered the site to be under low flood risk.

Knight Frank is not qualified to undertake scientific investigations of sites to establish

the existence or otherwise of any environmental contamination, nor do we undertake

searches of public archives to seek evidence of past activities which might identify

potential for contamination.

Subject to above, while carrying out our valuation inspection, we have not been made

aware of any uses conducted at the subject property that would give cause for concern

as to possible environmental contamination. Our valuation based on an assumption

that the subject property is unaffected.

4.5 Connectivity and Neighbourhood:

The immediate neighbourhood of the property primarily consists of an agricultural land parcel.

The subject land parcel is located on the outskirts of Vapi city. Distances of the property from

the nearest civic amenities and transport nodes have been given below:

Hospitality Fortune Hotel about 9 km.

Residential Area Vapi City- 10 km.

Industrial Area Morai Industrial Area about 3 km.

GIDC about 8 km.

Railway Station Railway Station about 10 km.

Education Poddar International School about 2.5 km.

Police Station Police Station about 2.7 km.

Mall Empress Mall (McDonalds) 3 km.



Photographs of the Subject Property

5. Valuation Analysis

5.1 Methodology

Depending upon the type, nature, location of the property, purpose of valuation and market

dynamics, we have used a combination of comparison method under market approach. This

method is applicable to all the properties that are capable of being bought and sold in the

market. A comparison is made for the purpose of valuation with similar properties that have

recently been sold or are available for sale in the market.

Market Approach Sales Comparison Method

This method is applicable to all properties that are capable of being bought and sold in the

market. A comparison is made for the purpose of valuation with similar properties that have

recently been sold in the market and have a transaction price. The sales comparison approach

is the preferred approach when sales data are available.

Sales prices of comparable properties are usually considered the best evidence of market value

of the property being valued. Sales comparison method models the behaviour of the market by

comparing the property being appraised with similar properties that have recently been sold or

for which offers to purchase have been made. Comparable properties are selected for similarity



to the subject property considering attributes like age, size, shape, quality of construction,

building features, condition, design, gentry, etc. Their sale/quoted prices are then adjusted for

their difference from the subject property.

As per the prevailing micro-market practice, once achievable rates are established based on

comparable instances, we apply an aggregation and consolidation premium to arrive at the final

market value of the subject property.

5.2 Valuation Bases

The valuation base for the report is market value. Market value is defined within RICS valuation

standards as:

The estimated amount for which an asset or liability should exchange on the date of valuation

between a willing buyer and a willing seller in an arms length transaction after proper

marketing wherein the parties had each acted knowledgeably, prudently and without

compulsion.

5.3 Valuation Assumptions

Our valuation is based on a number of assumptions which have been drawn to your attention in

General Principles and Limiting Conditions (Annexure I), General Assumptions (Annexure II),

and within this report.

5.4 Valuation Consideration

In estimation of the market value of the subject property, we have considered the property

to be freehold and free from all encumbrance and charges.

We have been informed by the client that the subject property has been converted to NA

industrial use before the date of valuation.

The market value of the land parcel has been assumed depending upon the individual

characteristics of the land parcel.

The subject property has been compared with the instances of comparable properties at the

subject micro-market. Instances have been sourced from market intermediaries and

participants.



5.5 Valuation Analysis

We have been appointed to estimate the pre-tax valuation of a land parcel admeasuring 31.3

acres located in Tukwada Village, Vapi, Valsad District, Gujarat. As per the client, the land area

details have been stated below:




Total 126,665


Market inquiries have been made for similar land parcels that have recently been sold or have

been offered for sale in the vicinity of the subject property. Our sources of market survey and

enquiries include market participants like

- Landlords, Government employees of local authorities (Sub Registrar, etc.),

- Local residents, Real estate developers, Real estate agents, etc.

In Gujarat, we have witnessed favourable government policies that have been believed to

accelerate industrialisation. Such policies have led to availability of large land parcels for

industrialisation.

5.6 Transaction/ Sales Comparable

During our market survey, we came across following instances that are available for sale in the

vicinity of subject property:



Comparable Locations Land Use Area (acres) Rate (INR/acre)

L1 Morai Village, next to Aloke Industries Agricultural 10.0 15

L2 Morai Village Agricultural 5.0 12.5

L3 Salvav Village, Vapi Agricultural 27.0 15

Not Applicable GIDC, Vapi Industrial 1 34

Valuation of Land Subject

Property

Land Comparables

Sales Comparison Method L1 L2 L4

Location

Tukwada,

Desai Falia,

(Near Poddar

Int School)

Vapi

Morai Village,

Taluk: Pardi,

Vapi

(Near Aloke

Industries)

Morai Village,

Taluk: Pardi,

Vapi

Salvav Village

(off NH) Before

Tukwada

Month of Transaction (Tentative) NA Jan-13 Jul-13 Oct-13

Transaction Structure NA Sales

Transaction

Sales

Transaction

Sales

Transaction

Owner/Seller NA Company Company Individual

Land/Plot Size (acres) 31.3 10 5 27

Known Land Use Status

Non

Agricultural

(NA)

Agricultural Agricultural Agricultural

Known Transaction Price (INR Mn) NA NA NA NA

Land rate (INR Mn/Acre) NA 15.00 12.50 15.00

Land Rate (INR/Sq. Ft.) NA 344 287 344

Discount on negotiation (%) NA 0% 0% 0%

Effective Land rate (INR Mn/Acre) NA 15 12.5 15

Effective Land rate (INR/Sq. Ft.) NA 344 287 344

Parameter for Comparison Weightage L1 L2 L4

Parameter L1 L2 L3

Physical Site Attributes

(Size & Topography)

The comparable property is smaller in

size than the subject property;

therefore appropiate discount has

been considered


size than the subject property; therefore

appropiate discount has been

considered

The comparable property is similar

in size than the subject property;

therefore no discount has been

considered

FrontagePremium has been considered for

Frontage

Premium has been considered for

Frontage

No premium or discount has been

assumed

Industrial Infrastructure

Given the comparable is Agricultural

Land, Key Industrial Infrastructure

like Roads (of min 30 ft width),

Industrial Power Supply, Water

Supply, Industrial Gas, Effluent

Treatment, Warehouse is absent in

the comparable property therefore no

discount has been considered

Given the comparable is Agricultural

Land, Key Industrial Infrastructure like

Roads (of min 30 ft width), Industrial

Power Supply, Water Supply, Industrial

Gas, Effluent Treatment, Warehouse is

absent in the comparable property


considered

Given the comparable is

Agricultural Land, Key Industrial

Infrastructure like Roads (of min 30

ft width), Industrial Power Supply,

Water Supply, Industrial Gas,

Effluent Treatment, Warehouse is



considered

Connectivity, Accessibility

The comparable property is closer to

NH8; therefore discount has been

considered

The subject property is located on

narrow village road, 2.5 Km from NH 8.

The comparable property is at a similar

distance from NH8; therefore no

discount has been conside

The comparable property 5 km

from NH8; therefore premium has

been considered, road to Salvav

village is inferior to Tukvada.

Therefore premium has been

considered



Size & Topography 30% -5.00% -5.00% 0.00%

Frontage 10% 10.00% 10.00% 0.00%

Industrial Infrastructure 30% 0.00% 0.00% 0.00%

Location, Connectivity &

Accessibility 30% -5.00% 0.00% 15.00%

Total 100%

Effective (weighted average)

discount/appreciation -2.0% -0.5% 4.5%

Land rate in comparison to the

comparable properties (INR per

sq.ft.)

337 286 360

Time Adjustment

Average appreciation / market

correction of land value from the

point of transaction (% per

annum)

15.00% 15.00% 10.00%

Material Date of Valuation 3-Feb-14

Time factor 1.15 1.23 1.02

Time adjusted rate (INR/sq.ft) 388 352 369

Average land rate for Agricultural

(INR per sq.ft) 370

Premium for Cost of Conversion

(Industrial NA) (INR/sq.ft) 100*

Market Value of Industrial NA land

(Subject Land Parcel) (INR/sq.ft) 470

Average land rate (INR Mn per

acre) 20.5

Plot area of subject property

(acres) 31.3

Market Value of the Subject Land

Parcel (INR mn.) 640

*Based on our interactions with market intermediaries, the official and admin fees for

conversion of agricultural land for Industrial purpose would be in the range of Rs 80-100/sq.ft.

Further the timelines required for the same would be about 3-6 months.



6. Summary

On the basis of assumptions, methodology of valuation and on the belief that there are no

onerous restrictions, covenants or unusual outgoings, we are of the opinion that the achievable

market value of the subject properties listed in the table below is fair and reasonable.

Location Property

Description

Area

(acres)

Market Value

(` mn.)

Tukwada, Vapi, Valsad District, Gujarat Land

(Industrial NA) 31.3 640

For Knight Frank India Pvt Ltd,

Pradeep Gandhi

MRICS, Regional Head (West) Research and Advisory Services

Binita Patel

Lead Consultant Research and Advisory Services

Sampuran Das

Consultant Research and Advisory Services

Note:

Our valuation is only for use of the party to whom it is addressed and no responsibility is

accepted to any third party for the whole or any part of its content.



Annexure I: General Principles and Limiting Conditions

General Principles Adopted and Limiting Conditions in the Preparation of Valuations and

Reports

These are the general principles and limiting conditions upon which our valuation and reports

are normally prepared; they apply unless we have specifically mentioned otherwise in the body

of the report.

1) Confidentiality

Our valuation and reports are confidential to the client or to whom they are addressed for

the specific purpose to which they refer. They may be disclosed to other professional

advisors assisting the client in respect of that purpose, but the client shall not disclose the

report to any other party. No responsibility is accepted to any other party and neither the

whole, nor any part, nor reference thereto may be included in any published document,

statement or circular, or published in any way, nor in any communication with third parties,

without our prior written approval of the form and context in which it will appear.

2) Use of Report

The opinion of value expressed in this report shall be used for the purpose stated in this

report only. We are not responsible for any consequences arising from the valuation being

quoted out of context.

3) Source of Information

Where it is stated in the report that information has been supplied by the sources listed,

this information is believed to be reliable and no responsibility is accepted should it prove

not to be so. All other information stated without being attributed directly to another party

is obtained from our searches of records, examination of documents or enquiries with the

relevant authorities. This report has been prepared on the basis that full disclosure of all

information and facts which may affect the valuation have been made known to ourselves

and we cannot accept any liability or responsibility in any event, unless such full disclosure

has been made.



4) Legal Title

Whilst we may have inspected the title of the property as recorded in the register document

of title, we cannot accept any responsibility for its legal validity.

5) Town Planning and other Statutory Regulations

Whilst we may make verbal enquiries or gather information on Town Planning, we do not

normally carry out requisitions with the various public authorities to confirm that the

property is not adversely affected by any public schemes such as road and drainage

improvements. If reassurance is required, we recommend that verification be obtained from

your lawyers or other professional advisors.

Our valuations are prepared on the basis that the premises and any improvements thereon

comply with all relevant statutory regulations. It is assumed that they have been, or will be

issued with a Certificate of Fitness for Occupation by the competent authority.

6) Leases and Tenancies

Enquiries as to the financial standing of actual or prospective lessees or tenants are not

normally made unless specifically requested. Where properties are valued with the benefit

of lettings, it is therefore assumed that the lessees or tenants are capable of meeting their

obligations under the lease or tenancy and that there are no arrears of rent or undisclosed

breaches of covenant.

7) Development Agreements

Unless otherwise stated, no allowances are made in our valuation for any joint venture

agreement, development right agreement or other similar contracts.

8) Site Surveys

We have not conducted any boundary checks; however, we assume that the dimensions

correspond with those shown in the title document, certified plan or any relevant

agreement.

9) Structural Surveys

We have neither carried out a building survey nor any testing of services, nor have we

inspected those parts of the property which are inaccessible. We cannot express an



opinion about or advice upon the condition of uninspected parts and this Report should not

be taken as making any implied representation or statement about such parts. Whilst any

defects or items of disrepair are noted during the course of inspection, we are not able to

give any assurance in respect of rot, termite or pest infestation or other hidden defects.

10) Site Conditions

We do not normally carry out investigations on the property or neighbouring land (including

the past and present uses) in order to determine the suitability of the ground conditions

(including contamination or potential for contamination) and services for the existing or any

new development, nor have we undertaken any archaeological, ecological or environmental

surveys. Unless we are otherwise informed, our valuations are on the basis that these

aspects are satisfactory and that, where development is proposed, no extraordinary

expenses or delays will be incurred during the construction period.

11) Deleterious or Hazardous Materials

No investigation was carried out to determine whether or not any deleterious or hazardous

materials have been used in the construction of the properties, or have since been

incorporated and we are therefore unable to account or report for such in our report.

12) Diseases and Infestations

Whilst due care is taken to note the presence of any disease or infestation, we have not

carried out any test to ascertain possible latent infestations or diseases affecting crops or

stock. We are therefore unable to account for such in our Report.

13) Outstanding Debts

In the case of buildings where works are in hand or have recently been completed, we do

not normally make allowance for any liability already incurred, but not yet discharged, in

respect of completed works, or obligations in favour of contractors, sub-contractors or any

members of the professional or design team.

14) Taxation, Encumbrances, Statutory Notices and Outgoings

Unless otherwise stated, no allowances are made in our valuation for any expense of

realization or for taxation which might arise in the event of a disposal, deemed or

otherwise. We have considered the property as if free and clear of all charges, lien and all



other encumbrances which may be secured thereon. We also assumed the property is free

of statutory notices and outgoings.

15) Attendance

The instruction and the valuation assignment do not automatically bind us to attendance in

court or to appear in any enquiry before any government or statutory bodies in connection with

the analysis unless agreed when the instruction is given.



Annexure II: General Assumptions

We assume that information provided by client or its representative for this valuation

for all relevant projects is true and accurate. It includes details of measurements of land

and built up area, etc.

We have not gone through the legal aspects like documents of title deed, lease deed,

revenue records, court matters (if any), and documentation like joint development with

other companies. We also assume for this valuation assignment that the title and

development rights of all the properties lies with the Company and is clear, marketable

and free of all encumbrances, restrictions, easements or charges which may have

detrimental effect upon the value of the property. It is also assumed that company has

paid all property related taxes.

We have neither carried out any soil testing nor structural surveys nor are we experts in

the field of structural survey. Therefore, we do not give any assurance that properties

are free from structural defect. If any investigation identifies any structural defect in the

property our report may require revision. Neither are we the experts in the town

planning to factor the town planning aspects in the project. Sewers, main services and

the roads giving access to the property have been provided.

We assumed that all the constructed structures and proposed construction is/will be

free from harmful materials and/or techniques. Our valuation is on the basis that no

such materials or techniques have been used.

Unless advised by the company or representative of the company, we do not normally

make allowance for any liability already incurred, but not yet discharged, in respect of

balance land cost, completed works, or obligations in favour of contractors,

subcontractors or any other professional.

We have assumed that demand; supply, pricing, fiscal and monetary policies of

Government, taste of public will remain same as on date of valuation over the period of

time of development. All of these factors are in strong relation with the value of

property. Any radical change in any of the factor may affect estimation at large.

Unless advised by the company or representative of the company, no allowance is

made for any expense of realization or for taxation, which may arise in the event of a

disposal. The property is considered as if free and clears of all mortgages or other

charges that may be secured thereon.



For the purpose of this report we have assumed that the property is not subject to

environmental contamination. However, as we are not experts in this field, we

recommend that an appropriate consultant may be engaged to confirm our

assumptions. If the subsequent investigation identifies any environmental

contamination on the site, our report may require revision.



Annexure III: Alternative Valuation Based on (Quoted Comparable)

Comparable:

During our market survey, we came across following instances that are available for sale in the

vicinity of subject property:

Instance 1 L1:

The instance property is an agricultural land parcel measuring 25 acres located at

Tukwada. It is available for sale at a rate of ` 30 mn. per acre. The property is accessible

via an internal village road off NH-8.

Instance 2 L2:

The instance property is an industrial land parcel measuring 16 acres (excluding land &

building of cable factory) located at Udwada. It is available for sale at a rate of ` 25 mn.

per acre. The property is accessible via a 30-ft. road off NH-8. Further, this land parcel

has an existing cable factory on it; the land & building of the existing factory is not part

of the sale. The 16 acres surplus land has been demarcated separately with provision

for creating entry exit from the approach road.

Instance 3 L3:

The instance property is an industrial land parcel measuring 10 acres at Udwada after

the toll plaza on NH-8. It is available for sale at a rate of ` 35 mn. per acre.

Limitation: The enquiries were made for Industrial land parcels, with the perspective of setting

up a manufacturing unit. Further as communicated by us entire transaction amount would be

reflected in our books. Given the prevalence of off-balance sheet transactions in the market, the

quotes received may have been higher due to tax adjustments for sellers point of view. Keeping

in view the actual transacted values and appreciation in land value; for our valuation therefore

we have considered higher discount for negotiation.



Parameter L1 L2 L3

Physical Site

Attributes (Size &

Topography)




considered




considered

The comparable property is smaller in size

than the subject property; therefore

appropiate discount has been considered

Land Use

Current land use is agricultural however;

NA Convertion is possible with

permisible residential, low intensity

polluting industries like Pharma.

Premium has been considered since NA

Certificate is available for the subject

land parcel

Industrial NA certificate is avialable for

the subject land parcel. Land Use for the

comparable property is industrial,

therfore no discount has been used.

Industrial NA certificate is avialable for

the subject land parcel. Land Use for the

comparable property is industrial, therfore

no discount has been used.

Industrial

Infrastructure

Key Industrial Infrastructure like Roads

(of min 30 ft width), Industrial Power

Supply, Water Supply, Industrial Gas,

Effluent Treatment, Warehouse is



considered

Key Industrial Infrastructure like Roads

(of min 30 ft width), Industrial Power

Supply, Water Supply, Industrial Gas,

Effluent Treatment, Warehouse is present

in the comparable property therefore

discount has been considered

Key Industrial Infrastructure like Roads (of

min 30 ft width), Industrial Power Supply,

Water Supply, Industrial Gas, Effluent

Treatment, Warehouse is present in the

comparable property therefore discount

has been considered

Connectivity,

Accessibility

The subject property is located on

narrow village road, 2.5 Km from NH 8.

The comparable property is adjacent to

NH8; therefore discount has been

considered

The subject property is located on narrow

village road, 2.5 Km from NH 8. The

comparable property is on NH8;

therefore discount has been considered

The subject property is located on narrow

village road, 2.5 Km from NH 8. The

comparable property is 3 km off NH 8

however its on district road (more than

30ft )

Location, Connectivity

& Accessibility

The subject & comparable property are

adjacent; hence no discount or premium

has been considered

The subject property is well connected on

district road hence discount was been

assumed, however we have also

assumed a premium as the location is

after toll plaza

The subject property is well connected on

district road hence discount was been

assumed, however we have also assumed

a premium as the location is after toll

plaza



Valuation of Land Subject

Property

Land Comparables

Sales Comparison Method L1 L2 L4

Location

Tukwada,

Desai Falia,

(Near Poddar

Int School)

Vapi

Tukwada,

Taluk: Pardi,

Vapi

(Near Poddar

Int School)

Zynium Cables,

Udwada Pariya

Road, Vapi

Udwada, on NH

Vapi (after Toll

Plaza)

Month of Transaction NA NA NA NA

Transaction Structure NA Quoted Quoted Quoted

Owner/Seller NA Company Individual/Broker Individual/Broker

Land/Plot Size (acres) 35 25 16 10

Known Land Use Status

Non

Agricultural

(NA)

Agricultural Industrial NA Industrial NA

Known Transaction Price (INR

Mn) NA NA NA NA

Land rate (INR Mn/Acre) NA 30.00 25.00 35.00

Land Rate (INR/Sq. Ft.) NA 689 574 803

Discount on negotiation (%) NA -20% -15% -20%

Effective Land rate (INR

Mn/Acre) NA 24 21 28

Effective Land rate (INR/Sq.

Ft.) NA 551 488 643

Parameter for Comparison Weightage L1 L2 L4

Size & Topography 20% -10.00% -15.00% -20.00%

Land Use 20% 5.00% -10.00% -10.00%

Frontage 10% -10.00% -5.00% -20.00%

Industrial Infrastructure 25% 0.00% -10.00% -10.00%

Location, Connectivity &

Accessibility 25% -10.00% -10.00% -20.00%

Total 100%

Effective (weighted average)

discount/appreciation -4.5% -10.5% -15.5%

Land rate in comparison to the

comparable properties (INR

per sq.ft.)

526 437 543

Time Adjustment

Average appreciation / market

correction of land value from

the point of transaction (% per

annum)

0% 0.00% 0.00% 0.00%

Material Date of Valuation 3-Feb-14

Time factor 1 1 1

Time adjusted rate (INR Mn

per acre) 526 437 543

Average land rate (INR per

sq.ft) 502

Average land rate (INR Mn per

acre) 22

Plot area of subject property

(acres) 31.3

Market Value of the Subject

Land Parcel (INR mn.) 684



Disclaimer

The statements, information and opinions expressed or provided in this publication are

intended only as a guide to some of the important considerations that relate to property

investment. Although we believe they are correct and not misleading, with every effort having

been made to ensure that they are free from error, they should not be taken to represent, nor are

they intended to represent, investment advice or specific proposals, which must always be

reviewed in isolation due to the degree of uniqueness that will attach thereto.

Neither Knight Frank nor any persons involved in the preparations of this publication give any

warranties as to the contents nor accept any contractual, tortuous or other form of liability for

any consequences, loss or damage which may arise as a result of any person acting upon or

using the statements, information or opinions in the publication. This publication is

confidential to the addressee and is not to be the subject of communication or reproduction

wholly or in part.

Knight Frank India Pvt. Ltd.

1st and 2nd Floor, Paville House,

Off Veer Savarkar Road,

Prabhadevi,

Mumbai 400025

Tel: (022) 67450101

Fax: (022) 67450202

www.knightfrank.com

Download - Final Valuation Report_DMI _FEB 2014

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