Final Valuation Report L&T Worli December 2012

Valuation Report Re - valuation of an apartment in Worli, Mumbai

Prepared on the behalf of Larsen & Toubro Limited December 2012 i

Pre-tax Re -valuation Report of a

Residential apartment Located in Worli, Mumbai

Prepared on behalf of

Larsen & Toubro Ltd.

December 2012

Contact Details:

Larsen & Toubro Ltd.

TC2 Building, Gate No. 5,

Powai Works

Mumbai - 400072

Knight Frank India Private Limited

Paville House, Near Twin Towers,

Off Veer Savarkar Marg, Prabhadevi,

Mumbai - 400025

Pradeep Gandhi: [email protected]

KF Ref. No.MVL/603


Prepared on the behalf of Larsen & Toubro Limited December 2012 ii

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

Client Name Larsen & Toubro Ltd.

Property Address Turf View Apartment, Seth Motilal Sanghi Marg, Worli

Purpose of Valuation Internal Reporting

Location Mumbai

Description Re-valuation of a residential apartment in Worli

Areas Built-up Area 1665 sq. ft.

Tenure Freehold

Tenancies ..

Valuation Sales Comparison Approach

Valuation Date 21st December 2012

Market Value 54 Mn

MV Analysis .

Valuers Details Pradeep Gandhi, MRICS

Regional Head (West) Research & Advisory Services

*In our analysis, 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 analysis for any expenses of realization, 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 analysis.


Prepared on the behalf of Larsen & Toubro Limited December 2012 iii

Abbreviations& Measurements

Abbreviations

FSI Floor Space Index CBD Central Business District

` Indian Rupee MCGM Municipal Corporation of Greater Mumbai

Mn Million BEST Bombay Electric Supply & Transport

Company

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

CPI Consumer Price Index NA Not Applicable

CRR Cash Reserve Ratio

SLR Statutory Liquidity Ratio

USD United States Dollar

Measurements

1 acre 43,560 sq. ft.

1 mn 10 Lakh

1 sq. km. 100 Ha

1 sq. mt. 10.764 sq. ft.

1 hectare 2.47 Acre


Prepared on the behalf of Larsen & Toubro Limited December 2012 iv

Table of Contents

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

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

1. Instructions ......................................................................................................................... 2

1.1 Engagement of Knight Frank India Pvt. Ltd. ......................................................................... 2

1.2 Scope of enquiries and investigations................................................................................. 3

1.3 Basis of Valuation ............................................................................................................... 4

2. Economic Snapshot: INDIA .................................................................................................. 5

2.1 Economic Indicators (As on 21st December 2012) ................................................................. 5

2.2 Real Estate Indicators .......................................................................................................... 5

3. City Overview - MUMBAI....................................................................................................... 6

3.1 Salient Features Mumbai ................................................................................................... 6

3.2 Demographic and Employment Indicators ........................................................................... 7

3.3 Infrastructure of Mumbai ..................................................................................................... 9

4. Real Estate Market CommentaryMumbai ......................................................................... 14

4.1 Residential Overview ......................................................................................................... 14

4.2 Supply and Absorption ...................................................................................................... 14

4.3 Prices ................................................................................................................................ 16

4.4 Outlook ............................................................................................................................. 17

5. The Property ...................................................................................................................... 18

5.1 Property Description .......................................................................................................... 18

5.2 Site .................................................................................................................................... 19

5.3 Connectivity and Neighbourhood ...................................................................................... 19

6.1 Methodology ..................................................................................................................... 20

6.2 Valuation Bases ................................................................................................................ 20

6.3 Valuation Assumptions ..................................................................................................... 20

6.4 Valuation Analysis ............................................................................................................. 21

6. Summary ........................................................................................................................... 27

7. Disclaimer ......................................................................................................................... 28

Annexure I: Photographs ................................................................................................................ 29

Annexure II: General Principles and Limiting Conditions ................................................................ 31


Prepared on the behalf of Larsen & Toubro Limited December 2012 2

1. Instructions

1.1 Engagement of Knight Frank India Pvt. Ltd.

1.1.1 Instructions

On the instructions received from Larsen & Toubro Ltd., Knight Frank (India) Pvt Ltd have been

appointed to re value the apartment located on the 2nd floor of a residential building known

as Turf View located in Worli, Seth Motilal Sanghi Marg, Mumbai 400018 with a built-up area

of 1,665 sq. ft.

1.1.2 Valuation Standard

The exercise has been carried out in accordance with the Royal Institute of Chartered Surveyors

(RICS) valuation standards, March 2012 edition.

1.1.3 Purpose of Valuation

The client has confirmed that the valuation report is required for the purposes of internal

reporting.

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 the analysis 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 Knight Frank India Pvt. Ltd. quality assurance procedures.

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 17th December 2012 by Ms Vidhi Wahi Post Graduate Diploma Business

Management (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 the following document

- Photo copy of Sale Agreement of the property

It is recommended that the document is subject to formal legal inspection in order to ensure

that there are no elements, restriction or charges contained which are likely to have detrimental

effect upon the cash flows 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

As per the details provided by the client the built-up area of the flat is 1665 sq. ft. The parking

stated in the agreement is encroached by the society and is no longer available with the flat.

Society intimates an open car parking but no authentic documents are available. However a

verbal communication by society is made for providing an open car park. But since its a verbal

communication with no guarantee of being honoured we have not considered car park in this

valuation. This valuation of the subject property is carried out on the basis of the built up area

made available to us by the client.

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 cash flow from the

Property.

No allowance has been made in our analysis 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 analysis

1.3.2 Date of Valuation

The date of valuation is 21st December 2012.



2. Economic Snapshot: INDIA

2.1 Economic Indicators (As on 21st December 2012)

Parameter Value

GDP Growth Rate Q1 2012-13 5.50 %

Per Capita Income 2010 2011 ( current prices ) ` 54,835

Inflation CPI September 2012 9.73 %

CRR and SLR 4.25% and 23.00%

Repo Rate 8.00 %

Bank Rate 9.00 %

Savings Bank Rate 4.00 %

Deposit Rate 8.50 % - 9.00 %

` / 1 USD 55.45

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

Risk Free Rate on 91 day Government T Bill 8.1439 %

Source: MOSPI, RBI

2.2 Real Estate Indicators

Parameter Value (`mn)

FDI Inflow in Construction Development: Townships, Housing,

Built-up Infrastructure (April 2011 March 2012) 152,360


Built-up Infrastructure (April 2010 March 2011) 75,520


Built-up Infrastructure (April 2012 August 2012) 32,650

Source: http://dipp.nic.in



3. City Overview - MUMBAI

3.1 Salient Features Mumbai

Mumbai, the summer capital of Maharashtra, is the country's financial powerhouse and its

economic nerve centre. The city contributes almost 5% of Indias GDP and up to 40% of the GNP.

It is a multi-functional city with a vast array of economic opportunities, which has resulted in it

attracting a large migratory population from all over the country. The city is well connected to

international nodes by two ports and an international airport.

Located on a peninsula extending southwards from the mainland of Maharashtra it consists of

two distinct regions: Mumbai city district and Mumbai suburban district. The city district region

is also commonly referred to as the island city or South Mumbai.

The total area of Mumbai is 437 sq. km. with the island city spanning over 67.79 sq. km. and the

suburban district across 370 sq. km., administered by the Municipal Corporation of Greater

Mumbai.

Mumbai City

Source: Knight Frank Research



-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011

Po

pu

lati

on

(in

mn

.)

Years

Population Growth Trend in Greater Mumbai

Island City Suburbs Total

3.2 Demographic and Employment Indicators

The table below depicts some of the key statistics of the city:

Parameters Value

Area 437 sq. km.

Total Population 11,990,000 (Census 2001)

12,480,000 (Census 2011)

Population Density (per sq. km.) Mumbai Suburban: 20,925; Mumbai City: 20,038

Sex Ratio (Females per 1000 males) Mumbai Suburban: 857; Mumbai City: 838

Literacy Rate Mumbai Suburban: 90.90%; Mumbai City: 88.48%

Popular Languages Hindi, English, Marathi

Source: MMRDA, Census of India 2011

Demographic Pattern

Greater Mumbai accounts for 11% of Maharashtras population and 1.03% of Indias population.

Greater Mumbai has witnessed a decline in the rate of population growth. The population

growth rate in Mumbai is still higher than that of Maharashtra.

Over the period of 1901-71, population in the island city increased steadily, soaring higher than

the suburbs. However, during the last four decades, population growth in the island city has

been negligible, while that of suburbs has been increasing exponentially. The graph below

indicates the increasing population of the suburbs in comparison to the island city.

Source: MMRDA, Census of India 2011



Socio Economic Scenario

The table below gives the classification of households in Mumbai with respect to the various

income groups:

Mumbai city Island city

Income segment (per annum) No. of Households % No. of

Households %

`1,000,000 348,000 10% 62,200 9%

Total 3,504,800 100% 720,400 100%

(Source: Indicus Database 2009-10 Housing Skyline of India)

The following chart shows the proportionate number of households within each SEC category

based upon their income profiling:

(Source: Indicus Database 2009-10 Housing Skyline of India)

0%

20%

40%

60%

80%

100%

SEC A SEC B SEC C SEC D SEC E

21%

55%

72% 78%

95%

18%

18%

15% 9%

3%

24%

15%

9% 8%

12%

5% 2% 2%

24%

7%

Greater than 1,500,001

1,000,001-1,500,000

500,001-1,000,000

300,000-500,000

Less than 300,000



3.3 Infrastructure of Mumbai

Existing Infrastructure:

Project Distance Observations

Existing Arterial Road Network

Bandra Worli Sea-

Link 5.6 km

It connects intersections of the Western Express Highway and S.V. Road

at Bandra end and Khan Abdul Gaffar Khan Road at Worli. It has helped

in decongesting the traffic problems at Mahim junction for those

commuting between suburban locations and island city, reducing the

travel time between the two locations.

Western Expressway 25 km Extending from Bandra to Dahisar, this 8 lane arterial road has been

enhancing the south-north connectivity in the city

Eastern Expressway 24 km This 6 lane arterial road between Sion and Thane provides the south-

north connectivity

Sion Panvel Highway 25 km This 8 lane road has been instrumental in providing the west-east

connectivity between Mumbai and Navi Mumbai

Existing Suburban Rail Network

ChurchgateVirar 60 km Crucial for south-north connectivity in the western zone, separate lines

for suburban trains provide excellent connectivity

CST Kalyan Kasara /

Khopoli

121 km /

115 km

This suburban rail network provides excellent south-north connectivity

of the city with the central suburbs

CSTVashi Panvel 49 km This suburban rail network provides connectivity between Mumbai and

Navi Mumbai

Thane Panvel 49 km This suburban rail network provides connectivity with the satellite city of

Navi Mumbai

Existing Air & Water Network

Airport

~ Area of

1450

acres

Chhatrapati Shivaji International Airport (CSIA) is one of Indias busiest

airports having recorded passenger traffic of 29.07 million in 2010-11

with a growth rate of 14%. Currently CSIA has three domestic terminals

at Santa Cruz and two international terminals at Sahar in operation.

Ports -

There are two principal ports: Mumbai Port Trust (MbPT) and Jawaharlal

Nehru Port Trust (JNPT). JNPT is the country's largest container port.

MbPT and JNPT handled 56.18 million tonnes and 65.75 million tonnes



Project Distance Observations

Existing Arterial Road Network

cargo traffic respectively in 2011-12. JNPT has a container terminal,

which has been developed through private investment on a Build-

Operate-Transfer (BOT) basis.

(Source: Knight Frank Research)

Proposed Infrastructure Projects:

Project Distance Observations Status Expected Completion

Upcoming Arterial Road Network

Mumbai Trans

Harbour Link

(MTHL)

22 km

This `96,300mn six - lane sea bridge is

expected to be the most significant link

between Mumbai and Navi Mumbai at

Sewri and Nhava respectively. The

financial feasibility has been concluded.

The authority has shortlisted contractors

so that the work can be commissioned by

2013.

Planned Beyond 2017

Eastern

Freeway 16.8 km

This project is expected to enhance the

connectivity of South Mumbai with eastern

suburbs and serve as an important link

road running parallel to the Eastern

Expressway. This freeway will begin at CST

and go up to Anik and further to Pajjarpol

and Ghatkopar. The real estate markets of

Chembur and Wadala are likely to be the

biggest beneficiaries on account of this

enhanced connectivity with the CBD and

South Mumbai

Under

Construction 2013

Multi-modal

Corridor (Virar

Alibaug)

140 km

This `100 bn. project is basically

broadening of the existing route of Virar-

Bhiwandi-Panvel-Pen-Alibaug. This

corridor will primarily enhance the

connectivity at the periphery of the MMR

Planned Beyond 2017




and also with other cities by serving as a

link to important national highways that

link Mumbai to cities like Ahmadabad,

Delhi, Chennai and Bangalore. The land

survey work is in progress and Phase I

Virar-Chirner (Near JNPT) is expected to be

complete by 2017.

Upcoming Suburban Rail Network

Metro Rail

Phase I

(Versova

Andheri

Ghatkopar)

11.40

km

The much needed west-east connectivity

through the MRTS will be addressed. This

link is expected to enhance the

connectivity with office locations of

Andheri like MIDC and SEEPZ. Construction

work is in the advanced stage on this

phase with 12 stations on route.

Under

construction 2013

Metro Rail

Phase II

(Charkop

Bandra

Mankhurd)

31.90

km

The west-east connectivity through this

MRTS is expected to benefit residential

pockets like Charkop and Oshiwara in the

western suburbs and Chembur and

Mankhurd in the central suburbs

Planned Beyond 2017

Monorail

Phase I

(Wadala

Chembur)

8.2 km

This route will have 7 stations on route and

provide connectivity with locations like

Bhakti Park, BPCL colony and Chembur

Under

construction 2013

Monorail

Phase II (Jacob

Circle

Wadala)

12 km

With 11 stations on route, this project is

expected to enhance connectivity in

otherwise congested locations of Lower

Parel and Dadar. Although the financial

feasibility is completed, the project work

will be commissioned only after a

successful run of the Phase I

Planned 2016-17




Navi Mumbai

suburban train

network

extension

(Nerul

Seawood

Uran)

32 km

Currently the region is connected through

the JNPT road. However, this suburban

train network is likely to enhance

connectivity and prove beneficial to

residential markets like Ulwe. The

construction work is in progress from the

Seawood end and will extend up to Uran

Under

construction 2016

Navi Mumbai

Metro Rail

Phase I

(Belapur to

Pendhar)

11.10 km

The 11 elevated stations enroute this metro

rail network are expected to enhance

connectivity within the Navi Mumbai zone.

Residential pockets of Kharghar are likely

to realise the maximum benefit on account

of the enhanced connectivity with the

commercial hubs of CBD Belapur and

Taloja

Under

construction 2014

Navi Mumbai

Metro Rail

Phase II and III

(Pendhar to

Khandeshwar)

10.35

km

This section with 7 stations will link Phase

I at Pendhar and stretch up to

Khandeshwar. On completion of this

phase, the residential micro-markets of

Kalamboli, Kamothe and Khandeshwar are

likely to benefit by the connectivity with

CBD Belapur.

Planned 2016

Western

Elevated Rail

Corridor (Oval

Maidan

Virar)

62.27

km

This `210 bn. two track elevated corridor is

expected to enhance the connectivity on

the Churchgate Virar section in the

western zone. While being a mass rapid

commute option, this train corridor will

also provide comfortable travelling by

employing air conditioned train service.

This project is expected to benefit the

residential markets of peripheral western

suburbs beyond Borivali by enhancing

Bidding

Stage Beyond 2017




their connectivity with the CBD of South

Mumbai and cross section of the Mumbai

Metro Phase I. The Rail Board has

approved the project and is currently at

the bidding stage which is expected to be

complete by early 2013.

Upcoming Major Infrastructure Project

Navi Mumbai

International

Airport

-

In wake of the air travel demand from MMR

increasing from 29 mn passengers in

2010-11 to an estimated 119 mn in 2030-31,

this second international airport is being

developed in Navi Mumbai. While the

residential market has witnessed an

enormous growth in anticipation of this

project, it will provide a major boost to the

economy of the Navi Mumbai region with a

host of commercial activities that are likely

to come up. The project has secured the

Environmental Clearance in November

2010. Phase I is expected to have an

annual capacity of 10 mn passengers.

Planned Phase I by 2015


While various initiatives are anticipated to boost growth along different corridors, problems

such as delays in advancement of work due to various approvals required can be a hindrance. If

these primary problems are tackled more effectively, these infrastructure initiatives would

transform Mumbai from an overcrowded and increasingly polluted city to one that is not only a

global commercial hub but also a preferred residential location.



4. Real Estate Market CommentaryMumbai

4.1 Residential Overview

Mumbai is the financial powerhouse that fuels the Indian economic growth engine and is

understandably the most active residential market in the country in terms of transaction

density. The global economic crisis of 2008 affected the market adversely as prices dipped in

some micro-markets at the premium end of the market. The prices rebounded in the subsequent

two years, scaling to their 2007 highs. These unaffordable prices have consequently caused

absorption numbers to fall consistently over the past 10 quarters as seen in the property sales

registrations data from the stamp and registration department of Maharashtra. Increasing

interest rates, liquidity pressures and regulatory bottlenecks have hurt market sentiment and

virtually put the brakes on the exponential price escalation.

4.2 Supply and Absorption

Currently the Mumbai Metropolitan Region (MMR) residential market can be divided into seven

micro-markets namely, the island city, western suburbs, central suburbs, Thane, Navi Mumbai,

peripheral western suburbs and peripheral central suburbs. The detailed break-up of regions

comprising each micro-market is shown below

Micro-Markets Location Covered

Island city South and Central Mumbai Regions of South and Central Mumbai from Dadar in Central

Mumbai to Colaba/Nariman Point in South Mumbai

Western suburbs Bandra to Borivali

Central suburbs Matunga to Mulund and Powai

Thane Thane city including Ghodbunder Road

Navi Mumbai Navi Mumbai from Airoli to Panvel

Peripheral western suburbs Regions beyond Borivali

Peripheral central suburbs Regions beyond Thane to Karjat/Khopoli and Kasara

The core of the residential market has been steadily shifting northward of the MMR over the

years as people are prepared to move further away from the CBDs to find an apartment that fits

their budget. This has prompted a flurry of construction activity in the peripheral suburbs to

accommodate this demographic shift. Residential units under construction are primarily

concentrated on the northern fringes of the Mumbai market.



1%

11%

22%

11% 13%

0%

19%

24%

Supply Distribution

MMR - Central Mumbai

MMR - Central Suburbs

MMR - Navi Mumbai

MMR - Peripheral CentralSuburbs

MMR - Peripheral WesternSuburb

MMR - South Mumbai

MMR - Thane

MMR - Western Suburbs

The Mumbai real estate market has stagnated during FY 2012 as buyers have largely kept away

from the market expecting an imminent drop in prices in the near future. Absorption numbers in

FY 2012 are estimated to have dropped by more than 60% from its 2007 peaks and 35% from FY

2011. This steep drop in absorption levels should have resulted in a similar correction in prices.

However, a regulator imposed supply crunch through delay in approvals ensured that market

equilibrium was maintained.

Approximately 55,000 units were launched in FY 2012, down almost 40% from the 92,000 units

launched during FY 2011. Supply has also been constrained during FY 2012 as developers have

been actively delaying project launches and looking to liquidate current inventory before

launching any fresh product, to ease pressure on prices going forward.

Further, rising interest and other input costs such as land and labour in addition to the

increasing raw material costs like cement and steel have constrained developers from cutting

prices as they are already hard pressed to maintain their current operating margins of 30-35%.

The cost of land is by far the biggest factor that has stopped a developer from reducing prices

as the product prices have to be linked to the continuously increasing land prices.

As per Knight Frank Research, over the next couple of years, Mumbai residential space is

expected to witness completion of approximately 110,000 units. Supply of residential units in

the MMR residential market is

shown in the chart alongside.

An analysis of the break-up of the

upcoming supply in the MMR

market indicates that majority of

the upcoming supply is expected

to be infused in the micro-market

of western suburbs accounting

for ~24% of the upcoming supply,

followed by Navi Mumbai region accounting for 22% of the overall supply.




4.3 Prices

Prices have been moving in a narrow range in the past four quarters as a virtual stoppage of

new launches over the past year constrained supply and cushioned prices from dropping in

spite of absorption levels steadily trending downward. Prices in premium micro-markets of

South and Central Mumbai locations like Parel, Lower Parel and Mahalaxmi, have declined close

to 10% over the previous three quarters while prices in Navi Mumbai, Thane and the peripheral

suburbs of Central & Western Mumbai have either been stable or have trended marginally

upward.

Developers in a bid to liquidate their higher priced inventory have been more open to

negotiation in the premium segment, reducing prices up to a maximum of 25% in favour of a

sizeable up-front payment.

We have also observed the number of cancellations increasing over the past few quarters. This

is symptomatic of a wary investors segment which is fast losing faith in the current scenario

where developers are hard pressed to even service their debt obligations.

Location wise price comparison

Location Price - October 2012 (`/sq.ft.) Price - October 2011 (`/sq.ft.)

Cuffe Parade 35000 71000 37000 62000

Malabar Hills 45000 76000 58000 66000

Napeansea Road 47000 74000 55000 70000

Mahalaxmi 21000 42000 20000 40000

Worli 25000 48000 25000 49000

Lower Parel 21000 38000 22000 39000

Prabhadevi 22000 45000 20000 42000

Bandra West 26000 42000 22000 42000

Andheri 12000 17000 9850 17000

Goregoan 9000 11500 8500 11500

Kandivali 9000 11500 8500 11500

Borivali 8500 13000 7500 13000

Mira Road 4500 5500 4400 5400

Virar 3500 4500 3200 4500

Naigon East 3000 3300 2900 3300

Vasai 3300 3700 3100 3500

Chembur 9500 15000 9000 15000

Bhandup 8000 9500 7500 9000

Mulund 8000 10000 7500 9500



Thane 6000 8700 5500 8700

Dombivali 3500 5000 3000 4000

Kalyan 3500 4500 3000 4200

Ambernath 2500 3800 2500 3800

Vashi 7000 10000 7000 10000

Airoli 6500 7200 6500 7200

KoparKhairane 6000 7500 6000 7500

Kharghar 4500 7500 4500 7100

Panvel 3300 6500 3200 6500

Source: Knight Frank Research

4.4 Outlook

The stagnant real estate prices today suggest a stalemate between buyers and sellers, but

market indicators strongly hint at an imminent inflection point. Project approvals that were

practically stalled in 2011, have started coming through again as the Development Control

Regulations were amended early this year. However, demand is likely to remain subdued due to

the prevailing uncertainty in the economy. The increase in inventories coupled with the ongoing

slack in absorption is expected to put downward pressure on prices.

Further, the rise in interest costs for the realty sector by 37% Y-O-Y in FY 2012 and decline in net

profits by 28% for the same period may compel developers to lighten their inventory load and

deleverage their balance sheets.



5. The Property The subject property is an apartment in a residential building called Turf View located on Seth

Motilal G Sanghi Marg, Worli. The access road of the subject property connects Worli Naka to

Haji Ali. On the ground floor of the building is the Vitesse showroom of cars. The neighbourhood

is pre-dominantly a high-end commercial locality.

(Source: Knight Frank Research, Google Maps)

5.1 Property Description

The subject property is a residential apartment located on the 2nd floor of a Ground + 5 storeys

residential building known as Turf View .The built-up area of the apartment is 1665 sq. ft. The

subject property for the purpose of this valuation exercise is an unfurnished apartment. The

subject building is a high end residential building with modern amenities. There are two wings

in the complex and each wing has one elevator for vertical movement.

The property description provided by the client is as follows:

Sr. No Particulars Area (In Sq. ft.)

1 Built-up Area 1665



5.2 Site

The major residential projects in the neighbourhood are Samudra Mahal, Raheja Anchorage

Eden Hall, Poonam Apartment and Sterling Seaface. Prominent commercial landmark buildings

located in the immediate vicinity are Nehru centre, BMW showroom, Deloitte office, and Hinduja

house. Prominent malls and entertainment centres in the vicinity is Atria Mall.

The property is surrounded at its boundary as follows:

Northern Side: National Sports Club of India

Southern Side: BMW showroom, Deloitte office and Novartis maintained Garden

Eastern Side: Jade Garden Hall and Nehru centre

Western Side: Tao Art Gallery

5.3 Connectivity and Neighbourhood

The subject property is conveniently located for surface commuting by automobiles, taxis, &

B.E.S.T. (city) buses. The property is conveniently located from civic amenities such as schools,

shopping area, ATMs, hospitals, colleges, recreation grounds and major business centres like

the Bandra Kurla Complex and commercial buildings in premium southern Mumbai localities of

Worli and Nariman Point.

Destination Distance from the property (in km.)

Mahalaxmi Railway Station 3.0

Domestic airport 16.0

International airport 18.0

Bandra Kurla complex 12.0



6. Valuation Analysis

6.1 Methodology

The method used for computing the market rent of the subject property is comparison method

under market approach.

Market Approach Comparison method

This method is applicable to all properties which 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 rented in the market and thus 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 behaviours 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 prices are then adjusted for their

difference from the subject property. Finally a market value for the subject property is estimated

from the adjusted sales price of the comparable properties.

6.2 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 a property should exchange on the date of valuation between

a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein

parties had each acted knowledgeably, prudently and without compulsion."

6.3 Valuation Assumptions

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

general principals and limited conditions (Annexure I), General assumptions (Annexure II), and

within this report



6.4 Valuation Analysis

We have been appointed to estimate the Market Value of an apartment measuring 1665 sq. ft. of

built up area, located on 2nd floor in a residential building known as Turf View. The valuation of

the subject property has been undertaken on the basis of the details provided by the client.

Details of the subject property are as follows:

Location Property Description Area (sq. ft.)

Flat no 23,Turf View

Worli, Seth Motilal

Sanghi Marg, Mumbai-

400013,

2nd Floor flat in Ground +

5 storey residential

building

Built Up Area: 1665

For our valuation purpose, we carried out market survey and made enquiries in which we

attempted to find out from our market sources the recent lease transactions of similar

properties in the vicinity, which can be compared with the subject property. Our sources of

market survey and enquiries included:

Sub Registrars office

Real estate developers & brokers

During our market survey, we came across the following properties that have been transacted

and quoted from the various sources of our enquiries, as mentioned above, in the catchment

area of site in the vicinity

Comparable 1:

Comparable 1 is a 3 BHK apartment on the 1st Floor of the same building with built up area of

1665 sq. ft. It was sold in June 12 for ` 65 mn i.e. ` 39,039 per sq. ft. on built up area.

Comparable 2:

Comparable 2 is a 3 BHK apartment on the 3rd Floor of the same building with a built up area of

1665 sq. ft. It was sold in November 2011 for ` 62.5 mn i.e. ` 37,538 per sq. ft. on built up area.

Comparable 3:

Comparable 3 is a sea facing apartment on the 5th floor of a residential complex known as

Poonam Apartments. It is located on the Annie Besant road. Apartment built up area is 1000 sq.



ft. The said property is currently available for sale at quoted rate of ` 45 mn i.e. ` 45,000 per sq.

ft. on built up area.

Location Map of Comparable Properties

In order to estimate the market value of the subject property, premiums and discounts are

allocated to the comparable properties taking in to consideration certain of the parameters for

comparison. As per valuation standards, there are certain parameters to be used for such

comparisons. We have compared the subject property with the three comparable instances on

the following parameters:

Location (Sea View) This parameter defines the property location, unique

characteristics and features of the location, locational advantages. Better the location

better will be the demand of the property in the market and relatively higher would the



property command in terms of capital values in the region. Within the micro-market, it

was observed that properties having sea view exhibit a significant premium.

Access road This parameter differentiates the properties on the basis that properties

having main road frontage exhibit a discount.

Age and Maintenance of the Building - This parameter is simply the reflection of the

condition of the property. In the real estate market, properties well maintained

command premium.

Amenities, specification & Grade - This parameter differentiates the properties on the

basis of amenities available in the building. A building with amenities like lift, security

etc. gain advantage.

The above four parameters are the standard parameters of comparison used in valuation of

properties and they typically explain the property characteristics in the micro-market. Weights

are assigned to these parameters depending on their significance in evaluating the comparable

instances against the subject property.

Table comparing the comparable properties with the subject property is given below:

Parameter for

Comparison C1 Turf View C2 Turf View

C3 Poonam

Apartments

Location (Sea

View)

The property is

located in the

same Building

therefore no

adjustment.

The property is

located in the

same Building

therefore no

adjustment.

The comparable

enjoys sea view thus

discount has been

considered for subject

property.

Access Road

The property is

located in the

same Building

therefore no

adjustment.

The property is

located in the

same Building

therefore no

adjustment.

The comparable has

direct access from Dr.

Annie Besant road

thus premium has

been considered for

subject property.

Age and

Maintenance of

the Building

The property is

located in the

same Building

therefore no

adjustment.

The property is

located in the

same Building

therefore no

adjustment.

The comparable is

located in fairly better

maintained building

thus discount is been

considered for the



subject property

Amenities,

Specifications &

Grade

The property is

located in the

same Building

therefore no

adjustment.

The property is

located in the

same Building

therefore no

adjustment.

The comparable

property has more

amenities (like

garden, children

playground etc.) thus

discount has been

considered for the

subject property.

Since comparable 2 were sold a year back we have provided a premium of 5% in capital value

considering the appreciation in the market since the time of transaction.



Estimation of the market value for the subject property by comparable method is given below:

Valuation of Apartment - Sales Comparison Method

Subject Property

Comparables

C1 C2 C3

Name of the property Turf View Turf View Turf View Poonam

Apartments

Location Worli Worli Worli Annie Besant Road

Month of Transaction NA Jun-12 Nov-11 NA

Transaction Structure NA Outright Sale Outright Sale Quote

Built-up Area (sq. ft.) 1665 1,665 1,665 1,000

Car Parking Nil Closed Car park Open Car Park Open Car Park

Age of the building ~29 year ~29 year ~29 year ~17 years

Total Amount (` mn) NA 65.0 62.5 45.0

Car Parking Charges (` mn) NA 2.0 1.5 1.5

Total Amount excluding Car Park (` /mn) NA 63.0 61.0 43.5

Known Quoted / Transacted Price (` / sq.ft.)

NA

37,838

36,637

43,500

Discount for Maximum Negotiation NA 0% 0% 5%

Effective Rate excluding Car Park (` / sq. ft.)

NA

37,838

36,637

41,429

Parameter for Comparison Weightage C1 C2 C3

Location (Sea View) 30% 0.0% 0.0% -10.0%

Access Road 25% 0.0% 0.0% 5.0%

Age and Maintenance of the Building 20% 0.0% 0.0% -2.5%

Amenities, Specifications & Grade 25% 0.0% 0.0% -5.0%

Total 100%

Effective (weighted average) discount/appreciation

0% 0% -4%

Property rate in comparison to the comparable properties (` /sq.ft.)

37838 36637 39979

Time Adjustment

Average appreciation / market correction of property value from the point of transaction (% per annum)

0%

Material Date of Valuation 21-Dec-2012

Time factor 1.00 1.05 1.00

Time adjusted rate (` / sq. ft.) 37838 38468 39979

Average property rate (` / sq. ft.) 38153

Built up Area of subject property (sq. ft.) 1665

Market Value of the Subject property (` Mn)

63.5

All the comparable include car parking with them so we have deducted the car park cost from

the capital value. We have assumed an approximate value for open and closed parking

depended on the market. In market open car park is available at an average of ` 1.5 mn and



closed car park at ` 2.0 mn. To estimate the value we have considered an average of the two

transactions in the same building as that of the subject property. To give an upper limit of

capital value we have considered a quote of Poonam apartments, which is being adjusted on

various parameters as Poonam Apartment is a better residential complex. Thus the value of the

subject property is calculated at ` 38,153/sq. ft. with upper limit to be ` 39,979/sq. ft. Since the

probability to acquire a car park in society is also not available this will have a negative effect

on the marketability. To account of this negativity we enquired with local brokers and our in-

house residential team and came to know that such property will sell at a discount of 10-20%.

To be on the conservative side we had assumed an average of 15% discount.

Particulars Unit Value

Built-up area sq.ft. 1,665

Estimated capital value ` per sq.ft 32,430

Market value ` mn 54

Estimation of the market value for the subject property by comparable method is given below:

As shown in the table above, the market value is `54 mn.



7. 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 property listed in the table below is fair and reasonable.

Location Property Description Area (sq.ft.) Market Value

(` mn.)

Flat no 23,Turf View

Worli, Seth Motilal

Sanghi Marg,

Mumbai-400013,

2nd Floor flat in

Ground + 5 storey

residential building

Built Up Area: 1665 54

For Knight Frank (India) Private Limited,

Pradeep K. Gandhi

MRICS, Regional Head (West) Research and Advisory Services

Abhishek Iyer

Lead Consultant Research and Advisory Services

Vidhi Wahi

Consultant Research and Advisory Services

Note:

Our analysis 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



8. 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) Private Limited

1st and 2nd Floor, Paville House

Off Veer Savarkar Road

Prabhadevi

Mumbai 25

Tel: (022) 67450101

Fax: (022) 67450202

www.knightfrank.com



Annexure I: Photographs

Present view of the Building Building Entrance

Internal View of Living room Internal View of Kitchen



View of the Building View of the Building



Annexure II: 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 analysis and reports

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

of the report.

1) Confidentiality

Our analysis 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 on valuation 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 cash flow 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 analysis 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 analysis 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 analysis is 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 analysis 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 estimation of cash flow assignment does 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 III: General Assumptions

We assume that information provided by client or its representative for this analysis 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 analysis 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 cash flows 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 analysis 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 analysis over the period of

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

estimation 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.

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