Jaypee Business SchoolA constituent of Jaypee Institute of Information Technology

(Declared Deemed to be University u/s 3 of UGC Act)

A-10, Sector 62, Noida (UP) India 201 307

www.jbs.ac.in

International Business Environment And Export

Import

Corporate Internship ReportInternship Report submitted as a partial requirement for the award of the two year

Master of Business Administration Programme

MBA 2014-16

UFLEX LIMITED

Corporate Internship Supervisor

Name: Mr. Rajeev Malhotra

(VP – Export Division)

JBS-Faculty Supervisor: Dr. Sujata Kapoor

Start Date for Internship: 15.04.2015

End Date for Internship: 15.06.2015

Report Date: 17.06.2015

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Project Report

on

International Business Environment And Export

Import

At

UFLEX LIMITED

Submitted By:

Himanshu Sharma

14609127

(M.B.A-I)

In Regular Degree Programme of Master of Business

Jaypee Business School, Noida

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SELF CERTIFICATE

(DECLARATION)

I, Himashu Sharma, student of MBA 2014-2016 studying at Jaypee Business School Noida, declare

that the project work entitled “International Business Environment And Export Import ” was carried

by me in the partial fulfilment of MBA program.

This project was undertaken as a part of academic curriculum according to the college rules and

norms and it has not commercial interest and motive. It is my original work. It is not to be submitted

to any other organization for any other purpose.

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CERTIFICATE FROM THE ORGANIZATION

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ACKNOWLEDGEMENT

Gratitude is a heart’s memory and putting the feeling of the heart into words, is an art. Those who excel in this

art are ultimately successful.

Determination, hard work and patience are the key to success. Completing a project would not have been

possible without the encouragement and support of many people. At this point of time, I would like to

acknowledge all those who have made a major contribution its development.

I take this opportunity to express my profound gratitude and deep regards to my guide Dr. Rajnish Kumar

Misra – Professor-M.B.A-Jaypee Business School, for her exemplary guidance, monitoring and constant

encouragement throughout the course of this project. The help and guidance given by her time to time shall

carry me a long way in the journey of life on which I am about to embark.

I would also like to express a deep sense of gratitude to Ms. Veena Bansal for his cordial support, valuable

information and guidance, which helped me in completing this project through various stages.

I am obliged to all Division teams of ATS Infrastructure Ltd. , for the valuable information provided by them in

their respective field. I am grateful for their cooperation during the period of my assignment.

Lastly, I thank almighty, my parents, brother, sister and friends for their constant encouragement without

which this assignment would not be possible.

Suraj Singh

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TABLE OF CONTENTS

Serial

No.

Topic Page No.

1. Executive Summary 7

2. Introduction & Objectives 8

3. Company Analysis 10

4. Industry Analysis 15

5. Financial Analysis 25

6. Research Project 35

7. Conclusions & Recommendations 45

8. Key Learnings 48

9. Annexure 49

10. References 52

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Executive Summary

The core objective of the internship is to fulfil the requirement of the MBA program as prescribed by the JIIT

University. An intern has to prepare project report at the end of the internship period but the main objective

of the internship is to get the hands-on experience of the real world organization. The internship was

completed with the objective of getting practical knowledge in the Sales and Marketing Division of ATS

Infrastructure Limited.

As an intern, I realized that I was successful to gather a lot of significant learning experiences which would be

helpful in my future career. The Sales and Marketing Division of ATS Infrastructure Limited offered me ample

space and opportunities, not only to learn but also to exhibit my skills as a operations team member. I could

use my theoretical knowledge of operations in real practice while participating in many discussions. I was

actively involved in the Morning Meetings where everyone shared Safety Contact for the day.

I successfully completed all the assigned tasks and handed them over to my Corporate Mentor at the end of

the internship. I thoroughly enjoyed the challenges that came along every single day. I could also bring some

minor improvisations during my internship which were able to leave their marks.

Following are some of the salient features of the project –

Customers/Investors have a short history of real estate investment but are currently increasing their

allocation to the real estate, more so than Equities, Debt, and Commodities.

Despite of developers investing their large part of funds on Entertainment centers like Shopping Malls,

Multiplexes etc. large part of customers prefer to invest in Residential Projects such as Plots , Group

Housing, and Townships.

Residential Property is gaining as an attractive mode of investment of middle class people leading to

growing demand.

With the shifting of more and more companies and offices to the suburbs, growth in suburban

residential real estate market has also been witnessed. Lavish townships with good quality construction

replete with luxurious amenities and facilities are now coming up. Survey reveals the factors or

specifications needed by the customers where they are investing their funds and also the lack of

facility in their previous or current residence.

I hope this project in its present form may be able to achieve its objectives. I will welcome if any suggestion,

comments will be given through the study.

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Introduction & Objectives

Introduction

Introduction to ATS Infrastructure Ltd.

ATS Infrastructure is about all the colours of life. ATS New Project is the pioneer project in Yamuna Expressway. Top-of-the-line plans with some of the most high-end facilities, ATS Infrastructure Village has a swimming pool, gymnasium, squash, tennis Courts, putting Infrastructure, club house, shopping arcade, 100% power back-up and 24 hour security. With state-of-the-art facilities, ATS Infrastructure New Project is slated to be a landmark of Yamuna Expressway.

ATS believes in providing not just comfortable homes, but also a complete lifestyle to its customers. The willingness to go above and beyond the customers' expectations, and the devotion to build the client's dream homes, has driven the long list of accomplishments. The carefully thought out concepts are executed with precision that eliminates the risk of even slight imperfections.

Every ATS property is a testimony of the joy that can be seen in the faces of its residents. They endorse us without being asked, sharing their experiences with friends and building spontaneous goodwill for us. If you're considering a home in one of our current projects, why not have a word with someone who lives in an ATS development?

Founded in the year 1998, the ATS Group is promoted and run by the dynamic professional Getambar Anand. In the short span of a decade ATS has emerged as a trusted brand in the real estate industry, providing quality homes to its customers.

Introduction to Project – Customer / Investor perception about investing in Real Estate

Investing in real estate presents both unique problems and opportunities. Real estate is a non-liquid, localized investment vehicle. It is immobile, of limited supply, indestructible, and physically real. It is difficult to own buildings-they require maintenance, tenants, regular updating, and are subject to fire, hurricane, and location advantages/disadvantages.

Real Estate Investing has created more millionaires than any other investment vehicle in this country. Investing in real estate is one of the safest and smartest investments that you can make. Real estate appreciates at a rate far greater than the rate of the inflation, builds equity, provides a steady return on investment, provides cash flow, and can offer substantial tax benefits.

Real estate is almost completely dependent on local conditions. One should invest in real estate only if he or she knows the local situation well-including the local economy, market conditions, political environment, building controls, etc. All of these factors can be critical to the success or failure of an investment.

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Objectives of the study

In this project report of mine I would be focusing my attention on some of the important objective that would also be the part of my study. The following are the objectives:

- To study the Corporate World.

- To understand the practical implication of theoretical concepts studied in 1st year of MBA curriculum.

- To study the details of company i.e. company profile in terms of brief profile, mission, objectives,

different department and projects completed and which are soon coming in future.

- Understanding and comparing two industries in terms of financial analysis which includes analysis of

Balance sheet, Profit & Loss Account, Cash Flow statement and different financial ratios like activity

ratio, profitability ratio etc.

- To analyze the Indian retail industry.

- To study the culture and management of a firm.

- To do a research and thus reaching at a conclusion.

- Preparing Questionnaire and getting it filled by Customers / investors.

- Critically examining and evaluating response of respondents from Sample data.

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COMPANY PROFILE

Brief Profile

ATS Group

Founded in the year 1998, the ATS Group is promoted and run by the dynamic professional Getambar Anand. In the short span of a decade ATS has emerged as a trusted brand in the real estate industry, providing quality homes to its customers. ATS today is a conglomerate with operations in across NCR, Chandigarh, Goa and Dehradun. Ranked among the best developers in India, ATS in the name behind some of the most distinguished residential projects in the country. 

A Name Called Trust

Select an ATS project as your destination and your decision is accompanied by a feeling of inner peace that arises from complete trust. A rock solid faith in the quality of construction. The relief of not having to spot loopholes and sneaky fine print. The knowledge that you are secure in the hands of the most trusted name and knowing that your interests will continue to be served much after the project is completed and handed over. 

Top-Notch Professionals

ATS has a policy of working only with the best. This is especially true when we choose the employees of company as well as architects for our projects. If you're considering an ATS home, chances are it would have been designed by one of the top names in the field, like Hafeez Contractor, who has changed the shape of the skyline of Mumbai, Gurgaon and Noida with 166 residential buildings and more than 150 commercial complexes, recreation and sports facilities, hotels and resorts. And, Oru Bose, the International Architectural firm based out of Florida and renowned for cutting edge design and innovative township planning. You can have your peace of mind knowing well that the structure of the building has been designed by world renowned architects and the plumbing plan has passed the master of architecture 

Easy Financing

It'll come as no surprise that ATS projects are preferred properties for banks too. This is because of the customer profile that ATS attracts and because ATS projects are all 'clean' deals. We get our projects approved by institutions like HDFC, ICICI Bank, IDBI Bank, UTI Bank and LIC, which provides you with multiple options for your loan requirements.

With each home a hallmark of an incredible amalgamation of luxury, comfort and style, ATS homes have

been crafted keeping the dreams of the residents in mind. At ATS, each brick that is laid speaks of an

immensely unique craftsmanship and each apartment that is created is an avant-garde piece of work.

With its pristine lush greenery, architectural marvels and a host of resident-centric facilities, ATS Greens

offers future home buyers a perfect get away from the city mayhem, while they are right in the heart of

the city. With celebration of life as the recurring theme of home planning, the residents find it difficult to

break away from the almost surreal beauty of their homes, but when they do, they are greeted by lush

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greenery and vast expanse of sprawling gardens with quiet little corners for relaxation and socialising.

The homes are such beautifully planned that whether you step out into the balcony with your cup of

morning tea or for an evening stroll in the vast gardens, the abundant greenery will continue to lend

tranquility to your mind.

The company was formed sixteen years ago with a seemingly ambitious commitment of redefining the

parameters by which real estate companies are judged. Though an ambitious goal for the company still in

its infancy, the Group has long proved the critics wrong by ushering in an era of professionalism,

integrity, customer focus and an unwavering approach to quality. After delivering several world class

projects, ATS has, in a short span, become a name to reckon with in the real estate sector in India. They

have on-board the best in-house team of 1300 designers, engineers, architects foremen and technicians,

who have brought in renewed passion and craftsmanship to the ergonomical construction designs.

Led by Mr. Getamber Anand, Chairman and Managing Director, a dynamic professional with a deep sense

of commitment to excellence and creativity, the ATS team prides itself on delivering above and beyond on

all its promises.

However, what truly sets ATS apart is not just the high quality of life that it offers to its customers

through splendid boutique homes, but also the fact that the process of procuring these homes is made as

smooth and easy as possible. ATS home buyers have a sense of deep faith in the company, as rock solid as

our construction. This feeling of trust arises from the knowledge that customer interests will be best

served even after completion and handing over of the homes.

ATS GREENS

Industry group Real estate

Entity type Private limited

Main product/service Future homes

Incorporation year 1998

Size group Top decile

Vision and Mission for the future

To be passionate in anticipating and providing the best homesand experience that excites the

customers globally.

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The company's long term vision is to become the leading developer in the real estate sector

through introduction of unprecedented ideals of professionalism and transparency at work. It

also envisions creating new standards of work ethics so that the real estate industry is viewed

with the same dignity and respect as the other industries in the organised sector of our economy.

Company management

NAME DESIGNATION

MR. JOGY P. THOMAS CEO

LT.GEN.(RETD.) H.S.BAGGA PVSM,VSM,CORPORATE HEAD

MR. VIPUL MAHESHWARI CFO

MR. GETAMBER ANAND CHAIRMAN

SWOT Analysis of ATS Infrastructure Ltd.

STRENGTHS

R & D with ATS Infrastructure Litd. have developed excellent R & D and building and developing

capabilities, which has build a strong customer base and establish market leadership through the

high quality of its units quality.

The increasing demand for the real estates presents a great opportunity for ATS Infrastructure

Ltd. to increase and scale up the production.

WEAKNESS

Dreamland has low presence in commercial projects. It has no units of commercial projects.

Dreamland is mainly focused on residential projects.

Not looking towards the scope of western UP where demand of residential projects is increasing.

Few Projects, thereby less coverage in the market.

OPPORTUNITIES

There is a scope of business as there is a demand for real estates.

The big IPO (initial public offering) is a big opportunity of the company.

The concept of wedding mall.

- The theme based malls are the way to the future.

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THREATS

Dreamland has the biggest threat from the global and large players in the real estate like DLF, UNITECH & OMAXE

ATS Infrastructure Projects

City Completed Projects Upcoming Projects

Noida

ATS Greens Village, Sector 93

ATS One Hamlet, Sector 104ATS PristineATS Allure, Yamuna Expressway

ATS Pristine, Sector 150

Greater Noida

ATS Dolce, Sector Zeta 1ATS ParadisoYamuna Expressway

GhaziabadATS Advantage, Phase-2, Indirapuram

GurgaonATS-I, 109

ATS Triumph, Dwarka ExpresswayATS Kocoon, Dwarka ExpresswayATS Tourlamine, Dwarka Expressway

ChandigarhATS Gold Meadows Township, Derabassi

ATS Gold Meadows Villa, DerabassiATS Gold Meadows Lifestyle, DerabassiCASA Espana

ATS Gold Meadows PreludeATS Chandigarh

Facilities provided by ATS

Common Buildings

Club House

Shopping Center

Sports

Sports Facility

Kids Play Area

Swimming Pool

GYM

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Landscape

Landscape Garden/Park

Open Space

Security

Intercom

Water/Gas/Power

Power Backup

24 Hour Water Supply

Others

Wi-fi Connectivity

Property Staff

Lift

Car Parking

INDUSTRY ANALYSIS

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Introduction

The Indian real estate sector has come a long way and is today one of the fastest growing markets in the world. It comprises four sub-sectors – housing, retail, hospitality, and commercial. While housing contributes to five–six percent of India’s gross domestic product (GDP), the remaining three sub-sectors are also increasing at a fast pace. The total realty market in the country is expected to touch US$ 180 billion by 2020.

Real estate in India is being recognised as an infrastructure service that is driving the economic growth engine of the country. Growing infrastructure requirement in diverse sectors such as tourism, education, healthcare, etc., are offering several investment opportunities for both domestic as well as foreign investors. Total investment by private equity (PE) funds in the real estate sector from January–March 2014 was approximately Rs 28 billion (US$ 465.19 million). This is a substantial increase of 28 per cent compared to the previous quarter and close to 2.5 times the investments during January–March 2013.

The role of the Government of India has been instrumental in the development of the sector. With the government trying to introduce developer and buyer friendly policies, the outlook for the real estate sector in 2014 does look promising.

Investments Opportunities

As corporates look to expand businesses, India is expected to witness major demand for office space in 2014. Office space absorption across the country’s seven major cities – Delhi-NCR, Mumbai, Bengaluru, Chennai, Pune, Hyderabad and Kolkata – is likely to increase seven per cent this year to 29 million square feet (sq ft), according to global real estate consultant DTZ.

New supply of retail space in shopping malls in India’s top seven cities is expected to more than double to 11.7 million sq ft in 2014. This will take up the mall stock across India’s metropolitan cities to 87.7 million sq ft by the end of the year, according to a report by Jones Lang LaSalle.

The construction development sector, including townships, housing, built-up infrastructure and construction-development projects garnered total foreign direct investment (FDI) worth US$ 23,131.64 million in the period April 2000–February 2014. Construction (infrastructure) activities during the period received FDI worth US$ 2,462.60 million, according to the Department of Industrial Policy and Promotion (DIPP).

The following are some of the major investments and developments in the Indian real estate sector: Larsen & Toubro (L&T) has bagged a major residential order to build 271 villas and 24 towers in

Bengaluru. “One of our key focus areas has been the growing potential in the residential sector and by winning these prestigious orders we have made significant inroads into this space," said Mr S N Subrahmanyan, Senior Executive Vice-President (Infrastructure and Construction), L&T.

Somany Ceramics plans to invest Rs 150 crore (US$ 24.93 million) over the next 12–24 months for capacity expansion and brand building. “We are looking to finalise two joint ventures (JV) soon. The capacity of our own facilities will also be expanded to shore up total production by 15 million sq m,” according to Mr Abhishek Somany, Joint Managing Director, Somany Ceramics.

Lodha Developers has acquired Clariant Chemicals’ 87-acre plot of land in Thane, Mumbai, for Rs 1,154 crore (US$ 191.76 million). “Thane is a rapidly developing part of the Mumbai Metropolitan Region and we see strong, sustained demand for quality homes in the region,” said Mr Abhinandan Lodha, Deputy Managing Director, Lodha Group.

Xander Group has invested Rs 370 crore (US$ 61.47 million) in Kapstone Constructions, a subsidiary of Mumbai-based developer, Rustomjee. Kapstone Constructions is currently developing the Rustomjee Urbania township in Thane, spread over 127 acres.

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Ambience Group plans to invest about Rs 1,800 crore (US$ 299.07 million) over the next four years to develop two housing projects in Noida and Gurgaon, comprising 1,100 housing units and a 350-acre township at Panipat.

Ansal Buildwell Ltd has signed a memorandum of understanding (MoU) with Bahrain-based VKL Holdings, Al-Namal Group. The MoU will provide both companies the opportunity for joint development in the housing and infrastructure sectors in both India and Bahrain.

Market Size

The market size of the Indian real estate sector stood at US$ 55.6 billion in 2010–11 and is expected to touch US$ 180 billion by 2020. In fact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent in the period 2010–2014, with Tier I metropolitan cities expected to account for about 40 per cent of this growth.

The net office space absorption across the top eight cities – Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata and Ahmedabad – was up 58 per cent during January–March 2014 as compared to the corresponding period last year, according to real estate consultancy Cushman & Wakefield. Among the eight cities, Ahmedabad and Delhi-NCR recorded a threefold increase in net absorption during the period over January–March 2013.

The number of new launches in the residential segment during the first quarter of 2014 has increased by 43 per cent at 55,000 units across eight major cities. Bengaluru recorded the largest number of units launched at an increase of 22 per cent at 16,838 units, followed by Mumbai and Chennai, according to a report by Cushman & Wakefield.

Market size of real estate in IndiaThe market size of real estate in India is expected to increase at a CAGR of 11.2 per cent during

FY2008 – 2020.

Government Initiatives

The Government of India has allowed FDI up to 100 per cent in development projects for townships and settlements. Hundred per cent FDI is also permitted in the hotel and tourism sector through the automatic route.

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A committee on Streamlining Approval Procedure for Real Estate Projects (SAPREP) was constituted by the Ministry of Housing & Urban Poverty Alleviation (MHUPA) to streamline the process of seeking clearances for real estate projects.

The Real Estate (Regulation and Development) Bill, 2013, as approved by the Union Cabinet is a pioneering initiative aimed at delivering a uniform regulatory environment to protect the consumer, help in quick verdicts of disputes and ensure systematic growth of the sector.

FDI in real estate as a per cent of total FDI in IndiaTotal FDI in the real estate sector during April 2000 – September 2013 stood at around US$ 22.7 billion.

The relaxation of the FDI ceiling saw big names joining hands with the Delhi based developments to announce India’s largest FDI in the reality sector. Groups showing interest in India include major Indian and International Companies.

With property boom spreading in all directions, real estate in India is touching new heights. However, the growth also depends on the policies adopted by the government to facilitate investments mainly in the economic and industrial sector. The new stand adopted by Indian government regarding foreign direct investment (FDI) policies has encouraged an increasing number of countries to invest in Indian Properties.

India has displaced US as the second-most favored destination for FDI in the world. As the investment scenario in India changes, India which has attracted more than three times foreign investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion during the corresponding period of 2004-05, making India amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC).

The positive outlook of Indian government is the key factor behind the sudden rise of the Indian Real Estate sector - the second largest employer after agriculture in India. This budding sector is today witnessing development in all area such as - residential, retail and commercial in metros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the sudden jump in Indian real estate.

Road Ahead

The Indian construction and real estate sector continues to be a favoured destination for global investors. Several large global investors, including a number of sovereign funds, have taken the first move by partnering with successful local investors and developers for investing in the Indian real estate market. This is expected to result in high transaction activity, especially in income yielding commercial office assets during 2014.

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The residential asset class looks to have great potential for growth. “With housing requirements growing across cities and funds investing in the asset class primarily in the form of NCDs providing fixed returns, investments in the right project have the potential to yield healthy returns,” said Mr Sanjay Dutt, Executive Managing Director – South Asia, Cushman & Wakefield.

Further, demand for space from sectors such as education and healthcare has opened up ample opportunities in the real estate sector. The country still needs to add three million hospital beds to meet the global average of three for every 1,000 people.

Exchange Rate Used: INR 1 = US$ 0.0166 as on May 2, 2014

Why Invest In Indian Real Estate?

Flying high on the wings of booming real estate, property in India has become a dream for every potential

investor looking forward to dig profits. All are eyeing Indian property market for a wide variety of reasons:

It’s ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the

last financial year. The boom in economy increases purchasing power of its people and creates

demand for real estate sector.

India is going to produce an estimated 2 million new graduates from various Indian universities during

this year, creating demand for 100 million square feet of office and industrial space.

Presence of a large number of Fortune 500 and other reputed companies will attract more companies

to initiate their operational bases in India thus creating more demand for corporate space.

Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are

making profits and another 12 percent are breaking even.

Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors

like auto-components, chemicals, apparels, pharmaceuticals and jewellery, where it can match the

best in the world. These positive attributes of India is definitely going to attract more foreign investors

in the near future.

The relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India

is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to

own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10

hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can

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now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet)

of floor space.

Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest

rewards.

Segments in Indian Real Estate Sector

Demand for Residential Space expected to grow sharply

Key drivers involved in growth of demand of residential space are :

- Rapid Urbanization- Decreasing Household size- Easy availablity of home loans- Repatriation of NRIs- Policy Support- Increasing Tourism

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Demand analysis of top 7 cities (‘000 units) 2010-14

Government Policies helping the real estate sector prosper

Commercial Sector

India has been hit by the global outsourcing waves. If IT/ITES continues to grow at the estimated

growth rate for the next four years it will be an approximately US$24 bn. Industry by FY 2010.

NASSCOM-MCKINSEY surveys have predicted that the ITES sector in India will provide jobs to 1.1mn

sq. ft. of office space.

Over the course of the past five to ten years, the major occupier of the commercial real estate has been

the IT/ITES/BPO sector as opposed to banking, finance, multinational, corporate and large Indian

manufacturing companies. Almost 80 percent of demand for commercial space today is thanks to the

above sector.

Accordingly, a shift is happening towards cheaper and larger locations in the suburbs closer to dense

population pockets supplying quality workforce at competitive rates. Thus, a gradual decline in the

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status of the CBDs, which is already experiencing vacancy rates of over 20-30 percent, is expected

over time.

More and more developers are building quality built-to suit space catering to the end user in the

suburbs. In a nutshell, there will be a huge demand for commercial space in suburban area of major

cities.

Most developers are providing a more efficient and better class of product than they were five years

ago. At cheaper costs. These products are of a global standard and developers are using new age

technologies in order to reduce delivery times.

The capital values of commercial properties have moved up by 10-12 percent over the past 12

months, even though the rental values have remained the same. This disparity will cease once the

interest rates moving upwards.

Looking into the future, we expect supply to continue to match demand. A number of developers will

put up quality products on to the market, thereby stabilizing rental property rates.

Residential Sector

Residential property is gaining ground as an attractive mode of investing for middle-class people

leading to growing demand.

The residential market has picked up due to the lower interest rates coupled with easy accessibility to

loans.

The increase in prices of residential properties nationally has been 15-20 percent. This can be largely

attributed to the increase in the land prices as well as the input costs.

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With the shifting of more and more companies and offices to the suburbs, growth in the suburban

residential real estate market has also been witnessed. Lavish townships with good quality

construction with luxurious amenities and facilities are now coming up.

The demand for good housing is evident, as most of these developments have witnessed a pre-

construction booking of 75-80 percent and even 100 percent in some cases, both by end users and

investors.

There is the total national housing shortage of 41 mn. Units. Out of the above, close to 80 percent

consists of housing for the weaker section.

A study has shown that 50 percent of the formal housing in the country is accessed through the rental

route and not ownership. It is thus pertinent to put in place an environment to encourage more stock

of rental housing.

Retail Sector

Retail is considered the world’s largest private industry with total sales of US$ 6.6tn. With close to 12

mn. Outlets, India has the largest outlet density in the world. The consumers demand for international

quality ambience, convenience and infrastructure will drive future growth.

Retailing is becoming the next boom industry with organized retail being a market of US$6 bn. It is

due to the growing eight fold in the coming decade. It is expected that the share of modern retail shall

grow from about 8 percent in 2007 to 20 percent by the end of the decade.

The total retail industry growing exponentially at 8.5 percent per annum and consumer spending has

increased at 12 percent per annum during the last 3 years.

The Indian consumer today is evolving. The increased purchasing power of the urban educated middle

class, more exposure to brands and products through television and foreign trips, and the growing

number of working couples has led to a change in buying habits and thus the retail scope in India today

about 50 mn. Sq. ft. of organized retail space will be coming up across the country by the year 2010.

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However, the real estate industry is at a critical point. Currently, we have a depleting pool of retailers

and successful department store chains with a lot of shopping center space competing for the same

tenants. This accordingly, creates an opportunity for foreign retailers. There is a dire need to allow 100

percent in retailing.

Developers who can show most ingenuity in creating an interesting environment, both from a shopping

and an experimental standing point, will be the ones that will create an asset that will withstand the test

of times.

A notable trend in the market is the development of integrated retail-cum-entertainment centers. An

increasing number of retailers are focusing on malls as opposed to stand-alone developments. Several

factors determine a retailer’s attraction towards a particular mall. A recent survey revealed that, for a

retailer, the most important parameters in selecting a mall as a potential location are:

1. Consumer demographics

2. Developer reputation

3. Cost of leasing space

4. Quality of other tenants

5. Car parking

6. Support facilities

7. Infrastructure

8. Maintenance

Whilst the number of shopping malls has seen a surge in the recent past, the future development is now focused

on providing for leisure activities as well. A significant number of multiplexes are being developed as an

integral part of retail malls, along with amenities such as food courts and video game parlors. PVR, INOX,

Satyam Cineplex’s and Shringar Films are diving the multiplex business expansion across the nation while

Appu Ghar, The Delhi Based Amusement Park, has plans of starting operations in at least two new locations.

The next step in the evolution of malls in India is specialty malls and theme malls that cater to a specific target

audience. These would include wedding malls, auto malls, home accessories and life style malls, factory outlet

malls, etc.

Some of these chains after setting up in the metros are already looking to foray in to the non-metros to reach

out to a broader customer base.

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NCR22%

Mumbai15%

Pune 4%

Hyderabad7%

Bangalore 5%

Chennai4%

Kolkata8%

Others35%

Forecasted New Retail Space Distribution by 2010

NCR

Mumbai

Pune

Hyderabad

Bangalore

Chennai

Kolkata

Others

Source: Knight Frank Research

Noida5%

Gurgaon26%

Greater Noida17%

Delhi22%

Faridabad4%

Ghaziabad26%

Distribution of current retail space in NCR

Noida

Gurgaon

Greater Noida

Delhi

Faridabad

Ghaziabad

Source: Knight Frank Research

24

FINANCIAL ANALYSIS

Analysis of Profit& Loss statement, Balance Sheet & Cash Flow Statements

(ATS & DLF)

Profit & Loss Account Comparison

Description 2013(in Rs. Cr.) 2012(in Rs. Cr.)

ATS DLF ATS DLFIncomeSales Turnover 902.84 2,150.04 875.95 3,491.32Excise Duty 0 0 0 0Net Sales 902.84 2,150.04 875.95 3,491.32Other Income 4.83 1,154.80 5.98 1,091.34Stock Adjustments 0 0 0 0

Total Income 907.67 3,304.84 907.67 4,582.66

ExpenditureRaw Materials 3,105.43 0 2,014.10 0Power & Fuel Cost 0 36.18 0 23.67Employee Cost 0.27 118.55 0.32 127.12Other Manufacturing Expenses 0 305.57 0 932.88Selling and Admin Expenses 0 0 0.13 0Miscellaneous Expenses 2.85 300.24 7.14 297.74Preoperative Exp Capitalised 0 0 0 0

Total Expenses 3,108.55 760.54 2,021.69 1,381.41

Operating Profit -3.65 1,389.50 -4.05 2,109.91PBDIT 1.27 2,544.30 1.93 3,201.25Interest 0 1,709.89 1.75 1553.78PBDT 1.27 834.41 0.18 1,647.47Depreciation 0.55 141.89 0.32 139.84Other Written Off 0 0 0 0Profit Before Tax 0.72 692.52 -0.14 1,507.63Extra-ordinary items -0.03 -2.76 0 -0.45PBT (Post Extra-ord Items) 0.69 689.76 -0.14 465.47Tax 0.18 188.20 0.10 0Reported Net Profit 0.53 501.56 0.36 1,041.73Total Value Addition 3.12 760.53 7.59 1,381.40Preference Dividend 0 0 0 0Equity Dividend 0 355.95 0 339.68Corporate Dividend Tax 0 60.49 0 55.10

25

Per share data (annualised)Shares in issue (lakhs) 156.05 16,987.19 151.05 16,983.86Earning Per Share (Rs) 0.21 2.95 0.14 6.13Equity Dividend (%) 0 100.00 0 100.00Book Value (Rs) 7.34 86.03 7.14 85.35

Balance Sheet

All figures in Rs. Cr.Description 2013 2012

ATS DLF ATS DLF

Sources Of FundsTotal Share Capital 25.17 339.74 25.71 339.68Equity Share Capital 25.17 339.74 25.17 339.68

Share Application Money 0 0 0 0

Preference Share Capital 0 0 0 0

Reserves 0.32 14,274.46 0.36 14,156.88

Revaluation Reserves 0 0 0 0

Networth 26.58 14,614.2

0 26.07 14,496.56Secured Loans 0.63 10,785.98 0 11,844.67Unsecured Loans 36.93 315.05 0 130.45Total Debt 37.56 11,101.03 0 11,975.12Total Liabilities 64.14 25,715.23 26.07 26,471.68

Application Of FundsGross Block 8.32 2,667.55 6.75 2,481.27Less: Accum. Depreciation 1.73 640.48 1.16 511.97Net Block 6.59 2,542.55 5.59 1,969.30Capital Work in Progress 0 6,876.55 0 2,196.95Investments 10.96 8,875.60 32.97 7,046.65Inventories 35.85 0 4.69 8,111.07Sundry Debtors 4.89 389,38 6.91 519.28Cash and Bank Balance 8.80 9,264.99 1.48 366.57Total Current Assets 49.54 15,842.86 13.02 8,996.92Loans and Advances 5 15,842.86 9.32 15,858.17Fixed Deposits 0 0 10.67 0Total CA, Loans & Advances 54.54 25,107.85 33.07 9,022.55Deffered Credit 0 0 0 573.78Current Liabilities 7.76 9,819.84 45.54 9,596.33

26

Provisions 0.20 444.61 0.13 15,258.76Total CL & Provisions 7.96 10,264.45 45.67 17,89098Net Current Assets 46.58 14,843.40 -12.60 42.26Miscellaneous Expenses 0 0 0.09 0Total Assets 64.13 26,289.57 26.05 26,471.66

Contingent Liabilities 0 10,887.85 0 12,730.36Book Value (Rs) 10.34 86.03 10.14 85.35

Cash Flow Statement

All figures in Rs. Cr.

Description 2013 2012ATS DLF ATS DLF

Net Profit Before Tax 0.41 692.53 0.25 1507.71Net Cash From Operating Activities -31.23 -74.00 26.05 419.15Net Cash (used in)/from Investing Activities -1.34 2756.93 9.00 1158.71Net Cash (used in)/from Financing Activities 37.53 -2723.40 -38.85 -1354.43

Net (decrease)/increase In Cash and Cash Equivalents 4.96 -4048 -3.81 223.44Opening Cash & Cash Equivalents 4.99 355.32 8.80 131.84Closing Cash & Cash Equivalents 9.95 314.84 4.99 355.28

27

RATIO ANALYSIS OF ATS WITH DLF

1) Liquidity Ratios

Liquidity ratios are used to determine a company’s ability to meet its short-term debt obligations. Investors

often take a close look at liquidity ratios when performing fundamental analysis on a firm. Since a company

that is consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy, liquidity ratios

are a good measure of whether a company will be able to comfortably continue as a going concern. The higher

the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

Current Ratio Includes – Current Ratio and Quick Ratio

Current Ratio

One of important function of the financial manager is to maintain sufficient liquidity.

Current ratio is an important criterion to test the liquidity and also the short term Solvency.

The ratio of 2:1 is considered as standard of current ratio.

Mathematically, Current Ratio = Current Assets ÷ Current Liabilities

ATS DLF

2010 0.69 2.59

2011 0.74 2.37

2012 0.82 1.49

2013 0.98 1.46

TABLE-1

2010 2011 2012 20130

0.5

1

1.5

2

2.5

3

ATSDLF

GRAPH-1

28

Quick Ratio

This ratio also tests liquidity.But it is a more refined test of liquidity and solvency.

This ratio takes into consideration the liquid assets only which are directly convertible into cash. The current

assets like inventories which are two steps away from the cash are excluded.

Mathematically,

Quick Ratio =Cash + Marketable Securities + Receivables

Current Liabilities

 Alternatively, quick ratio can also be calculated using the following formula:

Quick Ratio =Current Assets − Inventory − Prepayments

Current Liabilities

A quick ratio of 1:1 is considered adequate.

In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current

obligations using liquid assets.

Company/year ATS DLF

2010 0.97 1.60

2011 1.02 1.37

2012 0. 75 1.06

2013 0.67 0.91

TABLE-2

2010 2011 2012 20130

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

ATSDLF

GRAPH-2

INTERPRETATION

29

In above table1 and Graph 1 current ratio of ATS in 2010 was 0.69 but last year it was 0.98. On the

other hand current ratio of DLF in 2010 was 2.59 where as in last year it is 1.46. From the above it

can be concluded that the financial position of DLF is better than the ATS in terms of current ratio

because DLF have more variations in current ratio as compare to ATS . But Current Ratio of DLF is

decreasing every year while it is increasing for ATS, thus implying that financial position of ATS is

getting better.

From Table 2 and Graph 2, the quick ratio of ATS in 2010 was 0.97 times and last year it was 0.67 . It

kept declining from 2010, but on the other hand quick ratio of DLF in 2010 was 1.60 times and in

2011 was 1.37 but this ratio got declining again. Last year quick ratio was 0.91. From this it can be

concluded that both the companies have declining quick ratio but DLF has a better ratios than DLF.

Thus, DLF has a better financial position than ATS in terms of quick ratio.

2) Profitability Ratios

Profitability ratios measure a company’s ability to generate earnings relative to sales, assets and equity. These

ratios assess the ability of a company to generate earnings, profits and cash flows relative to relative to some

metric, often the amount of money invested.

They highlight how effectively the profitability of a company is being managed.

For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a

previous period is indicative that the company is doing well.

Profitability ratios show a company's overall efficiency and performance. We can divide profitability ratios into two types: margins and returns.

Ratios that show margins represent the firm's ability to translate sales dollars into profits at various stages of measurement. Ratios that show returns represent the firm's ability to measure the overall efficiency of the firm in generating returns for its shareholders.

Margin Ratios includes :

- Operating Profit Margin- Gross Profit Margin- Net Profit Margin- Cash Flow Margin

Return Ratios includes :

- Return on Assets (also called Return on Investment)- Return on Equity - Cash Return on Assets

Here, we have analyzed only Operating Profit margin, Gross Profit Margin and Net Profit Margin which are described below:

30

Operating Profit Margin

Operating margin is a measurement of what proportion of a company's revenue is left over after paying for

variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a

company to be able to pay for its fixed costs, such as interest on debt.

Operating profit is also known as EBIT and is found on the company's income statement. EBIT is earnings before interest and taxes.

The operating profit margin looks at EBIT as a percentage of sales.

The operating profit margin ratio is a measure of overall operating efficiency, incorporating all of the expenses of ordinary, daily business activity.

The calculation is: EBIT/Net Sales = _____%.

Both terms of the equation come from the company's income statement.

Company /year ATS DLF

2010 3.2 48.42

2011 3.6 39.25

2012 4.8 40.54

2013 5.3 33.78

Table No. :3

2010 2011 2012 20130

10

20

30

40

50

60

ATSDLF

Graph No. : 3

Gross Profit Margin

31

A financial metric used to assess a firm's financial health by revealing the proportion of money left over from

revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying

additional expenses and future savings.

The gross profit margin looks at cost of goods sold as a percentage of sales.

This ratio looks at how well a company controls the cost of its inventory and the manufacturing of its products and subsequently pass on the costs to its customers.

The larger the gross profit margin, the better for the company.

The calculation is: Gross Profit/Net Sales = ____%.

Both terms of the equation come from the company's income statement.

Company/ year ATS DLF

2010 1.16 44.06

2011 1.81 32.65

2012 2.32 33.39

2013 2.75 23.54

TABLE-4

2010 2011 2012 20130

5

10

15

20

25

30

35

40

45

50

ATSDLF

Graph No. : 4

Net Profit Margin

Profit margin is very useful when comparing companies in similar industries.

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A higher profit margin indicates a more profitable company that has better control over its costs compared to

its competitors.

When doing a simple profitability ratio analysis, net profit margin is the most often margin ratio used.

The net profit margin measures profitability after consideration of all expenses including taxes, interest, and

depreciation.

The calculation is: Net Income/Net Sales = _____%.

Both terms of the equation come from the income statement.

Company/ year ATS DLF

2010 1.43 22.29

2011 3.22 16.61

2012 4.65 11.74

2013 4.95 7.82

TABLE - 5

2010 2011 2012 20130

5

10

15

20

25

ATSDLF

Graph No. : 5

INTERPRETATION

33

In table 3 we have calculated operating margin of ATS and DLF In case of ATS operating margin in

2010 was 3.2, it keep on increasing and in 2013 it came 5.3. On the other hand operating margin of

DLF in 2010 was 48.42 and in 2013 it came 33.78 . In terms of profitability DLF is better than ATS.

In table 4 the gross profit margin has been calculated. Here in case of ATS, the gross profit margin in

year 2010 was 1.16 and it kept declining and became 2.75 in 2013. On the other hand in case of DLF

the gross profit margin in the year of 2010 was 44.06% and the ratio of this company was also

declining and came to 23.54% last year. From this it can be concluded that the ATS has more

variation in Gross Profit as compared to DLF.

In table 5, the net profit margin has been calculated. In ATS the ratio in 2010 was 1.43 and after it

kept declining and last year it reached to 4.95. On the other hand in case of DLF in year 2010 it was

22.29 and in 2013 it was 7.82. The financial position of DLF is better than the ATS in terms of net

profit.

PROJECT / DETAILED STUDY

34

Topic : Customer / Investor perception about investing in Real Estate

Investing in real estate presents both unique problems and opportunities. Real estate is a non-liquid, localized

investment vehicle. It is immobile, of limited supply, indestructible, and physically real. It is difficult to own

buildings-they require maintenance, tenants, regular updating, and are subject to fire, hurricane, and location

advantages/disadvantages.

Real Estate Investing has created more millionaires than any other investment vehicle in this country. Investing

in real estate is one of the safest and smartest investments that you can make. Real estate appreciates at a

rate far greater than the rate of the inflation, builds equity, provides a steady return on investment, provides

cash flow, and can offer substantial tax benefits.

Real estate is almost completely dependent on local conditions. One should invest in real estate only if he or

she knows the local situation well-including the local economy, market conditions, political environment,

building controls, etc. All of these factors can be critical to the success or failure of an investment.

There are two types of properties that can be invested in are: residential and commercial.

Commercial properties, as their name suggests, are properties that are sold or leased to businesses.

These can include retail areas, warehouse spaces, industrial properties, restaurants, and much more.

Residential properties are homes, duplexes, condos, townhouses, and rental properties rented or

sold to individuals and families.

The Investors can invest in both types of properties! This is because a new real estate investor may spread

himself or herself a bit too thin by trying to attract both businesses and tenants or families to both residential

and commercial properties. Plus, residential real estate investing is very different from commercial real estate

investing. Different skills, networking procedures, and even marketing are required for each.

It may be simpler to focus on one type of buyer or renter and one type of property, at least at first.

For a beginning real estate investor, residential real estate investing makes a great deal of sense. There are

35

many advantages for the beginner investor, and even seasoned investor, interested in residential real estate

investing. One major advantage is that there is already an extensive financing industry in place for residential

properties. In fact, anyone can get funding in order to buy a residential property. There are even government

programs and special programs in place to help those with little money buy their first home.

Residential real estate investing can also be very attractive because there's always a target market interested

in this type of property. When the economy takes a downturn, businesses may tighten their belts first.

However, families and individuals will still need places to live. They will still be renting, and even buying

properties. The fact that there are government initiatives and many types of mortgage programs ensures that

home buyers continue buying even when the economy is in a slump. This can make residential real estate

investing slightly less risky for real estate investors.

There is simply always a market, something that cannot always be said for commercial property investing.

Another major advantage of residential real estate investing is that it takes far less money to get started. While

commercial properties tend to be more expensive, residential homes can be purchased for very little.

Distressed properties and foreclosed properties, in particular, can often be purchased for less than their actual

market value. This makes getting started in residential real estate investing relatively simple. An investor can

simply purchase a property that is being sold for less than its value. He or she can use traditional mortgages or

business loans in order to make the purchase.

After some renovating or even just cleaning up, the investor can then resell the property for considerably more

and therefore make a profit. It is really that simple.

There are many advantages to residential real estate investing. For those new to the real estate investing game

or even for seasoned investors wishing to expand a portfolio with some more solid investments, residential

properties are great investment opportunity.

Real estate investing is a business where the realtors will be investing in his business for a period. These

investors buy the property under a bond and sell this to other dealer who holds up the property for a certain

36

period and again he sells them to the buyer i.e. the owner. In real estate investing, contract based transaction

is also involved. While investing or dealing the property, the realtor can hold the property for a fixed period to

complete the contract. After a period when the realtor sells the property, they get a huge amount of profit

Real Estate Investors Benefits

In my opinion, even with the many opportunities out there today, becoming a real estate investor is still one of

the smartest choices for many would-be entrepreneurs, and here's why. Unlike other choices:

Becoming a real estate investor actually carry less risk.

The truth is everyone needs real estate sooner or later. Businesses need retail space in order to house their

shops or store their supplies, and families need homes in which to live.

This constant demand ensures that the smart real estate investor always has willing audiences looking for his

or her product. This is simply not true of people who sell information products or who work at home at other

careers.

The earning potential for real estate investors are sky-high.

Because real estate investors are selling very high tag items -- homes sell for anywhere from tens of thousands

to millions of dollars -- the profit margins can be terrific.

At the same time, start up costs for the real estate investors are not prohibitive. If you want to own your own

chain of restaurants, you may need to invest hundreds of thousands of dollars or go deep into debt in order to

purchase the space, supplies, and in order to hire the staff. You can realistically become a real estate investor

while still at college and living in a dorm room.

You do not have to have specialized knowledge, tons of ready cash, or much of anything else except

knowledge and focused determination. The truth is, there are already a number of mortgage products, loan

products, and other financial resources in place to help the would-be real estate investor get started. After the

first real estate deal or two, the real estate investor generally has enough money of his or her own to start

investing in more properties.

37

Therefore, the real estate investor does not have to stay in debt and therefore face the risk of losing money in

a bad economy.

Becoming a real estate investor can be deeply satisfying.

A real estate investor helps families find an ideal home, helps people with bad credit find a property that they

thought they could not afford, and helps businesses established a base of operations. It can be truly rewarding

for the real estate investor to make such a deep impact on people's lives. At the same time, the real estate

investor enjoys complete freedom. He or she does not have to report to a boss, spend hours in a cubicle, or

even spend hours at home.

"This sort of freedom - combined with the truly awesome earnings potential of being an investor - makes

real estate investing a wonderful part time business opportunity."

If you want to earn a real living while enjoying greater freedom, consider all your options. Once you do, you

may find that becoming a real estate investor makes the most sense. This is the opportunity that allows you to

survive in just about every economy and allows you to enjoy a truly rewarding career and truly terrific profits

Real Estate Investors Losses

He can make plenty of costly mistakes, and real estate investing can be considered as a high stakes, high risk

game. The end result to failure could cost them much more than their pride.

1) Data Collection

As a preliminary for the business development of the company it was essential to find the customer/investor

perception about investing in real estate.

For collecting the information a questionnaire was designed focusing on the main cities in NCR like Greater

Noida, Noida, New Delhi and Ghaziabad where the company is operating its projects.

The respondents in our sample size are professionals from major public and private institutions which include

managers, consultants, proprietors, business class etc. Approximately 200 questionnaires were filled and

ultimately collected 169 with positive response that they have their interest in investing their funds in real

estate.

38

Table 1 summarizes the total sample size which reflects that majority of respondents have their interest in real

estate.

Table: 1 Sample size and Respondents:

City Total Respondents Interested in Real Estate

Greater Noida 30 25

Noida 30 26

Ghaziabad 30 24

New Delhi 30 26

Total 120 101

Noida 25%

Greater Noida 26%Ghaziabad 24%

New Delhi 25%

No. Of Respondents Interested in Real Estate

Noida

Greater Noida

Ghaziabad

New Delhi

Primary Data

The whole of the study is primary data based oriented through a questionnaire. The contents of the

questionnaire are:

Interest in investing in real estate.

Reasons for investing in real estate. (Short term, Long term, End use, Recurring Returns)

Risk factor in real estate and Return.

Project they like to invest their funds. (Office Spaces, Plots, Shopping Malls, Multiplexes, Group

housing)

39

In which assets class they find themselves most comfortable. (Real Estates, Equities, Debt and

Commodities)

Their need for specifications and factors they find appropriate where they are investing their funds.

Lack of facility in previous or current residence.

2) Findings & Analysis

The company, ATS Infrastructure Ltd. has presently 8 projects out of which 7 have been already

cleared and one is yet to be executed. The developers expect 30-40% returns/profit margins,

although it varies from projects to projects due to various reasons like time, cost of purchase, etc.

- Question 1 among the questionnaire reflects the real estate investment policy specifically. We asked

our respondents do you have interest in investing your funds in real estate.

The answer to the question 1 indicate that a surprising number of respondents, nearly 101 out of 120 have

their interest in investing their funds in real estate.

Exhibit 1: Question 1

Do you have interest in investing in Real Estate!

Interested 85%

Not Interested 16%

No. of Respondents

Interpretation:

40

Certain increase in property prices in the last four years, high income, cheaper loan rates, no longer adverse to

debt and ready to discount future earnings today could be the main reasons for development of interest in

real estate of customers.

Exhibit 2: Question 2

Reasons for investing in Real Estate!

0

10

20

30

40

50

60

Reasons for Investing

Short Term

Long Term

End Use

Recurring Earning

Interpretation:

Since real estate has beaten all forms of investment in last four years and sought to be emerging as a key

element in customers/investors portfolio and by paying an EMI instead of paying taxes and rent they develop a

compulsory saving habit and create a valuable asset for a long period of time could be a possible reason for

this above result

Exhibit 3: Question 3

Top risk factors in Real Estate!

41

0

5

10

15

20

25

30

35

40

Top Risk FactorsAsset Volatility

Lack of reliable data

Legal and Regu-laroty risk

Risk of poor pro-fessional advice

Hard to determine best oppurtunities

Interpretation:

Risk of poor profession advice, legal and regularity risk, hard determining the best opportunities are the top

three factors. Change in government policies, change in trend and fashion cold be the main reason for above.

Exhibit 4: Question 4

Project in which customers/investors like to invest!

05

1015202530354045

Projects of Interest

Office Spaces

Shopping Malls

Plots

Multiplexes

Group Housing

42

Interpretation:

There’s been an evident shift in perception and mindset in the Indian middle class over the last five to ten

years, thanks to the impact of liberalization and opening up of the Indian economy, a rise in average income

across households, and a palpable desire to own things ‘now’. The most crucial aspect of this ‘shift’ in the

consumer’s mindset is perhaps explained by the fact that the young (or Next Generation) are more in charge of

their lives and eager and impatient to assume the world. It’s a generation that is independent, self-reliant and

nuclear in nature. And it is this eagerness that is succeeding that has fuelled a drive to own what one desires

the most: a home, a car and a healthy lifestyle. Other drivers have been incentives from the government to

buy homes, improved quality of buildings and property services and a bouquet of financial options. Tax

concessions, property price dips and lower interest rates have also helped.

Exhibit 5: Question 5

The question ask “on a 5-point scale,….how does the long term expected return for the real estate component

and your portfolio compare with the long term expected return for the following asset class in your portfolio”?

In which of the following asset classes are you most comfortable in investing your funds.

The research report that most respondents believe real estate has an expected return a little above that for

equities and debt. They expect commodities too significantly and somewhat less.

What factors might explain this apparent contradict?

First, allocation might not be based on modern portfolios theory.

Second additional factors affecting risk and return estimates-such as higher relative cost of real

estate.

Consistent with this notion is the real estate has done well relative to stocks and bonds recently, a

number of customers reported investing in real estate only recently.

The question asks about the factors or specifications to be included by developer where the

customers/investors are investing their funds.

43

Exhibit :

The factors listed below are most demanding among all:

Affordable price range.

Availability of loan at low interest rates.

Easy payment plan.

Clear title of property.

Resale value.

Connectivity to schools, hospitals, entertainment centers.

Peaceful locality

Pollution free environment.

Quality construction and maintenance.

Safety and Security, Water Availability, Power Back-Up, Car Parking, Recreational Facility, Club

Membership etc.

ROI (Return on Investment)

Thus, we found that respondents are interested in investing in real estate and at the same time developers are

successful in satisfying the real estate investors. Each developer has an average of 30-40% profit margins,

although it varies from projects to projects because of factors like cost of purchase, time, etc.

44

CONCLUSION / RECOMMENDATIONS

CONCLUSION

Three types of return on investment (ROI) are found with real estate. They are Cash Flow, Return on Taxes, and Appreciation.

First: Before tax Cash Flow

Cash Flow is the amount returned to the investor annually as cash. It represents the most direct type of return, since it is money one can “put in his pocket” right away and as a result is most desirable.However, the amount returned as cash may not be that significant, and by itself would not justify the investment. Cash Flow typically will be lowest in the early years of a projects, and may initially even be negative, meaning additional cash will need to be put into the project over the short term. Cash Flow hopefully will stabilize after a number of years, but often still will be the least of the three ROIs.

Second: Return on Taxes

Many investors, especially those in higher tax brackets, are less concerned with cash return than they are with the tax advantages of real estate investment. For them, real estate provides some of the best tax opportunities available.

Third: Appreciation

The greatest Return on Investment is typically from appreciation, which is the continuing increase in the value of a property due t higher market values each year. Properties can have significant increases in value over time due simply to such market forces.

The assumption of property appreciation may initially seem contradictory, for tax law assumes a decrease in the value of property over time. But such depreciation is a theoretical assumption, while true market instead shows increases over time.

The relative high ROI due to appreciation represents one of the primary reasons for investing in real estate. However, this return is realized only on the sale of the property, and is dependent on an investor being able to tie up his or her money for an extended period of time.

Real estate investing is not for those who need a regular, predictable return on their investment. But it can be very rewarding for those who can invest relatively large amounts and wait for favorable market conditions.

Important Factors in Decision to Invest in Real Estate

1. Location

2. Price – higher and better use, will market allow for better cash inflow

3. Demand - what is the competition among buyers?

4. Existing leases – are they good or bad

5. Existing operating expenses

45

6. Competition – what are new properties coming on market, will they improve our property and make it more valuable

7. Condition – look for cosmetic problem not structural

8. Replacement cost

9. Terms of financing

10. Economic cycle – is the timing good or is there a down-swing

11. Motives of seller – why are they selling (ask them)

Being a new to the market ‘ATS Infrastructure Ltd.’ has a good start, as is has tried to engage itself towards residential projects which have a competitive advantages over the commercial projects.

Since, Real Estate Market is on a boom, it’s a great opportunities for real estate developers to develop its market share and increase its profit margins.

ATS Infrastructe Pvt. Ltd., a real estate developer, presently dealing in residential properties enjoy a number of advantages over other companies.

Residential projects have a large market and even when the economy is downturn, people need place to live. As a result, they are less risky and have a high tag earning potentials as compared to commercial projects.

It also requires less capital for investment than commercial projects and if you want to resell, you can easily get customers in a short span of time and make a profit.

46

RECOMMENDATIONS

In reality asset allocation is far more sophisticated process. It varies from person to person and

depends on person’s financial plan, family background, disposal income, age, and investor’s

preferences. So before targeting the customers the company should consider the factor.

Consider middle- aged person from a middle class background seeking a stable life long job. He

cannot be expected to invest in equities and property. His preference would be bank FDs. On the

other hand, a market savvy young couple in the corporate sector with high cash surplus would prefer

to invest in property. The age factor should be properly defined before targeting.

Company should state to its customers that since real estate has beaten all forms of investment in last

4 years and sought to be emerging as a key element in customer’s portfolio and by paying an EMI

instead of paying taxes and rent, they develop a compulsory saving habit and create a valuable asset

for a long period of time.

Tremendous demand for residential property such as group housing, residential plots, and townships

rather than commercial property. The company should focus on developing the residential property

more rather than commercial property.

There should be an option for discount for customers from registered dealers of the company.

Customers should be approached and asked them to see sample flat without forcing them to buy the

flat. The conveniences should be born by the company.

47

KEY LEARNING’S

Key learning’s involved during internship are :

- Exposure to real business world.- Study of Indian Retail Industry.- Analysis of Indian Retail Industry.- Financial Analysis and comparison of ATS with DLF of balance Sheet, Profit & Loss Account and Cash

Flow Statement.- Studied the meaning and importance of different financial ratio including Profitability ratio and

Liquidity ratio.- Collecting the sample data for research work.- Analysing and reaching up to a conclusion from the collected data.- Prepared the questionnaire.- Interaction with customers related to research and selling of property.

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Annexure-1Questionnaire

What are the customer’s and investors perceptions about investing in Real Estate!

Introduction

Thank you for taking the time to complete the survey. Your feedback is integral to our academic research how

customers think about investing in real estate. Specifically we want to uncover why the real estate is such a

limited part of most of the customers and organization portfolios.

Your answer will remain strictly confidential and will be used for research purpose only. The survey should take

about 5-7 minutes to complete. Thank you once again for your time.

NAME: AGE:

ADDRESS: OCCUPATION:

1. Do you have interest in investing your funds in Real Estate?

[ ] Yes [ ] No

If yes, please answer the following questions.

2. Have you ever invested your funds in Real Estate?

[ ] Yes [ ] No

3. Reasons for investing in Real Estate?

[ ] Short Term Return [ ] Long Term Return

[ ] End Use [ ] Recurring Return

[ ] we do not invest in Real Estate

4. Top risk factors in real estate and return?

[ ] Asset volatility [ ] Lack of reliable valuation data

[ ] Legal and Regularity risk [ ] Risk of poor Profession advice

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[ ] Hard to determine the best opportunities [ ] any other

5. Various big players had registered its presence across the country with a healthy mix of projects. In

which project you would like to invest your funds.

[ ] Office Spaces [ ] Shopping Malls

[ ] Plots [ ] Multiplexes

[ ] Group Housing [ ] Any Other, Please specify_________

6. For which of the following assets classes are you most comfortable in investing your funds.

Least Comfortable Most Comfortable

1 2 3 4 5

Don’t Know _ _ _ _ _

Real Estate _ _ _ _ _

Equities _ _ _ _ _

Commodities _ _ _ _ _

Debt Markets _ _ _ _ _

7. Almost every builder providers the following specifications in his project like:

Affordable Price Range, Availability of loan at low interest rates, Easy Payment Plan.

Connectivity to Public Transport, Work Place.

Proximity to Schools, Hospitals, Entertainment Centers.

Clear title of property, Resale value.

Peaceful locality, Pollution free environment.

Quality Construction, Maintenance, Safety & Security, Water Availability, Power Back-Up, Car parking

facility, Recreational facility, Club Membership etc.

Return on Investment (ROI)

Any other factor or specification you find appropriate or useful in the area you are investing, please

specify______________________________________________

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8. Brand Name is something that immediately comes into your mind. Please rate the developers

according to brand image

_ DLF _ UNITECH _ OMAXE _ ANSALS _ ELDECO

_ DREAMLAND _ EROS _ PARSVNATH

9. Please specify lack of facility in your previous or current residence.

______________________________________________________________________________________________________________________________________________________

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REFERENCES

www.ats infrastructure.com

http://www.ibef.org/industry/real-estate-india.aspx

http://www.crisil.com/pdf/capitalmarket/Industry-content.pdf

www.moneycontrol.com

www.reit.com

www.indianground.com/real_estate_india.aspx

www.economywatch.com/investment/real-estate-investment.html

www.real-estate-investment-information.com

www.greatrealestateinvestinginfo.com

http://www.dlf.in

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