Ilf&s Tev Sample

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TECHNO ECONOMIC VIABILITY REPORT

TEV Report

Contents

SECTION 1CHAPTER 1 : CHAPTER 2 : CHAPTER 3 : CHAPTER 4 :

INTRODUCTION TO THE STUDYSTUDY OVERVIEW BANGALORE THE IT HUB OF INDIA ADVANTAGE BANGALORE IT DEVELOPMENT FUELING REAL ESTATE GROWTH IN BANGALORE

SECTION 2CHAPTER 5 : CHAPTER 6 : CHAPTER 7 : CHAPTER 8 :

TECHNO ECONOMIC VIABILITY OF IT PARK IN JIGANI BOMMASANDRA LINK ROADLOCATION AND ACCESSIBILITY NEIGHBOURHOOD ANALYSIS OF THE STUDY AREA REAL ESTATE DEVELOPMENT AROUND THE STUDY AREA SWOT ANALYSIS OF THE STUDY AREA

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IL&FS Property Management and Services Limited

TEV Report

SECTION - I

INTRODUCTION TO THE STUDY

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IL&FS Property Management and Services Limited

TEV Report

CHAPTER - 1

STUDY OVERVIEWThe Company, having base in Hyderabad has been allotted 8 acres of land for development of IT Park in the upcoming Industrial area on Jigani Bommasandra Link Road. The Company has leased the land from KIADB for a period of 6 years. According to agreement clauses: The lease shall be converted into a sale subject to fulfillment of all terms and conditions. The conversion of lease into sale shall also be subject to the utilization of minimum 50% of the total plot area in accordance with the proposals furnished. Within a month of date of approval, the company has to submit the comprehensive plans for land utilization, building, sheds, etc., for approval from statutory authority. The company has to start civil work within 3 months of allotment. Within a year of allotment, the company has to complete civil work and formally start its operations. On this regard, Techno Economic Viability (TEV) study has been taken up to with the aim To assess the feasibility of locating IT Park in Jigani Bommasandra Industrial area Development Constraints and Future potential of the Jigani Bommasandra Industrial area in terms of IT Growth.

Scope of Work Location and Accessibility analysis of the site. Neighbourhood Analysis. Physical and Social Infrastructure Analysis Real Estate Developments in the area. Potential for IT development. Identifying Strength, Weakness, Opportunities and Threats (SWOT) for Development of IT park on the Study Area. Financial Analysis.

Limitation The allotment letter states the allocation of this plot to the company for Software Development industrial use. However based on interaction with concerned official at IL&FS the study here is carried out for an IT Park.

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IL&FS Property Management and Services Limited

TEV Report

CHAPTER - 2

BANGALORE THE IT HUB OF INDIABangalore renamed as Bengaluru, is the capital of one of the most prospering states, Karnataka. The city of Bangalore, with a population of over 6 million, is the 3rd largest city in India (5th largest metropolitan area) and the 27th largest city in the world. Bangalore is located on the Deccan Plateau, almost in the centre of the Indian peninsula. At an elevation of 920m, Bangalore is known for its mild, "salubrious" climate throughout the year and until recently was regarded as a "pensioner's paradise" because it was a small and sleepy town, by Indian standards. Today the city of Bangalore is recognized the world over as the IT Capital of India. Ever since the city discovered its potential as a high-tech city in the early 1980s, Bangalore has seen a major technology boom and is today home to more than 250 high-tech companies including homegrown giants like Wipro and Infosys. In 1998, News Week magazine ranked Bangalore among the worlds Hottest Tech Cities. Business Week placed Bangalore among the Global Hot Spots of the 21st Century. Further, the United Nations Human Development Report-2000 recognises Bangalore as the fourth leading hub of technological innovation, ahead of many cities in USA, Europe, Japan, China and South East Asia. This has given Bangalore the rightly earned status of 'Silicon Valley' of India, solely accounting for 55 per cent of India's total exports of software. As an IT Destination a recent research study based on various parameters ranks Bangalore as under: Parameters Rank Indias top tech cities Zonal stack up in India Manpower availability Environment & life style ICT Infrastructure availability and usage Total score / overall

66.2 1 1 1 1

The growth of the software industry in Karnataka has been spectacular. In the year 2001 Bangalore saw a cumulative investment of around US $1.3 billion in the software industry. About 146 new software industries came up during 2001. 2002 saw addition of another 110 IT industries. At present there are more than 1500 Companies are operational within the state employing more than 100,000 professionals. There has been a constant increase in number of companies over the years. 1. 2. 3. 4. 1999-2000 - 782 companies 2000-2001 - 928 companies 2001-2002 - 1038 companies (as of May 2002) 2002-2003 - 1154 companies (as of April 2003)

The number of IT/ITES companies setting up shop in Karnataka is rising by the day, but a majority of them (77%) are very small in size with export revenues of less than Rs 10 crore. The total IT export was Rs 37,600 crore ($8.3 bn) in 2005-06. There are five companies in the state with sales of over Rs 1,000 crore. The two biggies, Infosys Technologies and Wipro, alone totaled up figures of $2 bn each (Rs 18,000 crore combined) last fiscal. While both have a presence outside the state, a significant portion of their sales comes from their Karnataka businesses. At last count, there were 177 companies with exports of Rs 10-50 crore. Looking at the number of Software Technology Park (STP) units which plays a big role in GSDP of Karnataka and the approved ones, a vast majority of them had IT exports of less than Rs 10 crore. The total number of software technology parks in 2005-06 was 1721, of which 201 were registered during the financial year. Below is a break up of the number of IT companies under STPI in Bangalore classified by type of activity Integrated circuit design (IC) - 46

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IL&FS Property Management and Services Limited

TEV Report

Communication software - 108 Systems software - 166 Application software - 293 Service companies - 303Types of Software Industries in Bangalore

The IT industry's composition in Bangalore shown in the diagram below indicates that a large percentage of the companies are involved in high technology software development. It is expected that IT exports from Karnataka will touch Rs 49,000 crore ($10.8 billion) in the current financial year.

10% 17% 33%

General Software Application Software IT Enabled Services IC Design System Software

13% 10% 17%

Communication Software

Statistics - Software Exports from Karnataka Year Value of Export 2002-03 Rs. 12350 crore 2003-04 Rs. 18100 crore (US$ 4,022 million) 2004-05 Rs. 27600 crore (US$ 6,272 million) The export growth during 2004-05 over 2003-04 figures was 52%. Segment wise Exports during 2004-05 Enterprise application 52% Technology Software 33% ITES / BPO -13% Others - 2% Export of ITES / BPO Sector 2003-04 - Rs. 2237 crores (US$ 497 million) 2004-05 - Rs. 3500 crores (US$ 795 million

Growth in Software Export of India (1998 2005) 5

IL&FS Property Management and Services Limited

TEV Report

BENEFITS TO INVESTORS The explosive growth of IT in Karnataka has been helped in no small measure by the progressive policies of the Government. The Karnataka Government offers special assistance, incentives and concessions for the Information Technology industries depending upon investment category of industries. Basically classification for benefits has two categories- industries with investment up to 100 crores and more than 100 crores i.e. Mega projects. Some of the benefits that the Government offers investors which have investments in fixed assets up to Rs. 100 Crores in the Information Technology sector are listed below: Entry Tax Exemption Information Technology industries will be exempt from payment of Entry Tax on computer hardware, computer peripherals and other capital goods including captive power generation sets, during implementation stage which can be extended up to 5 years from the date of commencement of implementations. Power Tariff Concessions Software industries will be treated as industrial (and not commercial) consumers and electricity tariff applicable to the industrial consumers will be levied on such industries. As continuous uninterrupted and quality power supply is one of the prime requirements of sustenance and growth of Information Technology industries, these industries will be given priority in the sanctioning and servicing of power. The IT industries will also be exempt from power-cuts without any time limit. Captive power generation sets installed by the Information Technology industry will be eligible for the following incentives. Total exemption from payment of electricity tax without any time limit. Mega Projects: The concessions detailed above are primarily meant for IT companies where initial investment in a new company, or in expansion, modernization is less than Rs. 100 crores. If the investment is more than Rs. 100 crores, the Government considers that project as a Mega project and a special set of initiatives and concessions will be worked out with reference to the needs of the company. In addition, a project that employs more than 1000 employees will also be considered as a Mega project and these concessions are applicable for both the new units as well as for existing units that create additional employment by incremental investment. The other incentives for all IT / ITES industries are as follows: Quick Clearances from Pollution Control Board: Karnataka State Pollution