Property Management Service:

New Business Venture

A Postgraduate Project Report submitted to Manipal University in partial
fulfilment of the requirement for the award of the degree of

MASTER OF TECHNOLOGY
in
ENGINEERING MANAGEMENT

Submitted by
Yatish Talvadia

Under the guidance of

Mr. Anant Vishal Goel
&
Mr. Ashish Goel
Managing Partner
URSQFT Infrastructure
Pvt. Ltd
&
Prof. Dr. Shiva Prasad H.C
Professor
Department of Humanities
and
Management






DEPARTMENT OF MECHANICAL AND MANUFACTURING ENGINEERING
MANIPAL INSTITUTE OF TECHNOLOGY
(A Constituent College of Manipal University)
MANIPAL 576104, KARNATAKA, INDIA


July 2013

DEPARTMENT OF MECHANICAL AND MANUFACTURING ENGINEERING
MANIPAL INSTITUTE OF TECHNOLOGY
(A Constituent College of Manipal University)
MANIPAL 576 104 (KARNATAKA), INDIA



Manipal
26/07/2013


CERTIFICATE


This is to certify that the project titled PROPERTY MANAGEMENT SERVICE:
NEW BUSINESS VENTURE is a record of the bonafide work done by YATISH
TALVADIA (Reg. No. 110917004) submitted in partial fulfilment of the requirements
for the award of the Degree of Master of Technology (M. Tech.) in ENGINEERING
MANAGEMENT of Manipal Institute of Technology Manipal, Karnataka, (A
Constituent College of Manipal University), during the academic year 2011-13.






Prof. Dr. Shiva Prasad H.C
Professor,
Department of Humanities and
Management, MIT, MANIPAL
Prof. Dr. Divakara Shetty S
HOD, Mech. & Mfg. Engg.
M.I.T, MANIPAL






i

ACKNOWLEDGMENT

First and foremost, I am thankful to Mr. Anant Goel and Mr. Ashish Goel, Managing partner,
URSQFT Infrastructure Pvt. Ltd. for giving me an opportunity and necessary facilities for
carrying out this thesis work.

I am deeply indebted to Prof. Dr. Shiva Prasad H.C, Professor, Department of Humanities and
Management, my mentor for his guidance, encouragement, inspiration and valuable suggestions
throughout this thesis work.

It is with deep sense of gratitude that I sincerely thank Ms. Megha Ailavajhala, IT Consultant,
for her guidance and timely help throughout this thesis work.

I am thankful to Prof. Dr. Divakara Shetty S, HOD, Department of Mechanical and
Manufacturing Engineering and Prof. Dr. Nagaraj Naik, Project Coordinator, Department of
Mechanical and Manufacturing Engineering for timely help.

At last, but not least I am thankful to my parents for their emotional support and encouragement
throughout this thesis work.




Yatish Talvadia

ii

ABSTRACT

In India residential property is managed by owner or his/her friends and relatives. Other styles
include hiring someone to live on site and take care of property and tenants' requests, as a
building care taker, but this style of management has fallen out of favor due to single person
competency of handling various issues raised during management. For such properties,
professional service is requiring to take care of property management as well as tenants
problem. Objective of the researcher is to prepare a business plan for property management
services by analyzing the market condition, service demand and check its economic viability.

Methodology adopted for preparing a business plan includes distribution of questionnaire; to
analyze the need of customers, conducting market study, creating service proposal, conducting
SWOT analysis, preparing marketing plan, preparing financial statements for first three years of
operations and based on the financial statement evaluating the economic viability of business
proposal.

Target customers found PMS very useful service, local economy and market supports the PMS
by providing sufficient target properties in target area. Proposed financial statement generates
profit from the very first year of operations, makes business an economic viable proposal.

PMS provides the solution of many problems related with property management, target customer
found it very useful as it takes away the burden of property management from the owner and
encourage owner to let out their property and earn capital yield on their investment. PMS also
encourage investors to invest in different cities in real estate where capital appreciation is more
and gain higher return on their investments.
iii

LIST OF TABLES

Table No. Table Title Page No.
3.1 Yearly sales growth 9
3.2 Financials start up 9
3.3 Tenancy initiation activities 11
3.4 Maintenance and Management activities 12
3.5 Capital value as of 1Q 2013 14
3.6 Rental value as of 1Q 2013 14
3.7 SWOT matrix 16
3.8 Target population of NRIs/PIOs 17
3.9 Most used website by NRIs/PIOs July 2011-June 2012 17
3.10 Most used services by NRIs/PIOs 18
3.11 Marketing expenses 20
3.12 Total payroll 21
3.13 Manpower requirement - start up year 21
3.14 Man power break down with unit increase 22
3.15 Skill requirements 22
3.16 General assumptions 23
3.17 Sensitivity analysis 23
3.18 Source of fund 23
3.19 Projected profit and loss summary - yearly 24
3.20 Projected cash flow analysis - yearly 24
3.21 Break even sales volume 25
4.1 Projected start up costs break down 29
4.2 Anticipated yearly expenses 29
4.3 Monthly sales projection 30
4.4 Employee monthly salary & annual growth rate 30
4.5 Marketing ROI 31
4.6 Projected profit and loss statement - yearly 32
4.7 Break even analysis 32
4.8 Projected balance sheet 33
4.9 Business ratios - yearly 34
iv

LIST OF FIGURES

Figure No. Figure Title Page No.
3.1 Business plan outline 6
3.2 Business revenue model 8
3.3 Organizational structure 20
4.1 Status of properties (owner/rented/locked up) 27
4.2 People interested in PMS 28
4.3 Marketing expense break down for first year 31



Contents
Page No.
Acknowledgement i
Abstract ii
List of Tables iii
List of Figures iv

Chapter 1 INTRODUCTION 1
1.1 Problem Statement 2
1.2 Scope 2
1.3 Aim and Objectives 2
1.4 Organization of Report 2

Chapter 2 BACKGROUND THEORY 3

Chapter 3 METHODOLOGY
3.1 Survey 5
3.2 Sample Selection 5
3.3 Design of Service 5
3.4 Business Plan Outline 7
3.4.1 Business Description 7
a. The Services 7
b. Financing 7
c. Business Revenue Model 7
d. Pricing 8
e. Sale Growth 9
f. Expansion Plan 9
g. Exit Strategy 9
3.4.2 Financing Summary 9
a. Required Funds 9
b. Investor Equity 10
c. Management Equity 10
3.4.3 Product and Services 10
a. Property Management Service 10
i. Tenancy Initiation Activities 11
ii. Reporting and Management Activities 11
3.4.4 Market Analysis 13
a. Economic Outlook & Industry Analysis 13
i. Financial support to the Industry 13
ii. Decline in Project launches 13
iii. Stable Rents; Rising Capital value 13
b. Competition 15
c. SWOT Analysis 15
d. Customer Profile 16
3.4.5 Marketing Plan 18
a. Marketing Objectives 18
b. Marketing Strategies 18
i. General and Traditional Marketing Strategies 19
ii. Online Marketing Strategies 19
3.4.6 Organizational Plan and Personnel Summary 20
a. Organization Structure 20
b. Personnel Expenses 21
c. Manpower Requirement 21
d. Skill Requirement 22
3.4.7 Financial plans 22
a. Underlying Assumptions 22
b. Sensitivity Analysis 23
c. Source of Fund 23
d. Profit and Loss Statement 24
e. Cash Flow Analysis 24
3.5 Economic Viability 25
a. Break Even Analysis 25
b. Business Ratios 26
i. Asset Liability Ratio 26
ii. Asset Equity Ratio 26
iii. Acid Test Ratio 26
iv. Cash to asset Ratio 26

Chapter 4 RESULT ANALYSIS 27
4.1 Survey Findings 27
4.2 Financial Analysis and Economic Feasibility Analysis 29
4.2.1 Start Up Cost 29
4.2.2 Sales Forecast 30
4.2.3 Monthly Sales 30
4.2.4 Personnel Analysis 30
4.2.5 Marketing Expenses and ROI 30
4.2.6 Profit and Loss Statement 31
4.2.7 Break Even Analysis 32
4.2.8 Balance Sheet 33
4.2.9 Business Ratios 33
a. Asset Liability Ratio 33
b. Asset Equity Ratio 33
c. Acid Test Ratio 34
d. Cash to asset Ratio 34

Chapter 5 CONCLUSION AND FUTURE SCOPE
5.1 Conclusions 35
5.2 Limitations 35
5.3 Future Scopes 35

REFERENCES 36
APPENDIX I to XV
PROJECT DETAILS



1

CHAPTER 1
INTRODUCTION

Looking at the assets that people inherit or create in life, the most tangible, undisputedly, always
is real estate. Not only its an asset, its an investment that grows and becomes increasingly
valuable with time and need proper and timely management. Real estate assets are immobile and
hence keeping them in close watch is a difficult task for those not living in the close vicinity of
assets. Real estate assets are more vulnerable of encroachment as compare to other assets,
problems like trespassing, encroachment, tenant profiling and filtering, tenant evacuation,
maintenance of assets makes the management of real estate assets more obscure, and problem
became more severe in absence of owner in the vicinity of the property.

Property owner like Non Resident Indians (NRIs), Person of Indian Origin (PIOs), Jetsetters
(mobile people), real estate investors and others who are in transferable job find very difficult in
managing their real estate assets, with the risk mention above, owner prefer not to rent out their
properties in order to minimise the maintenance and risk involve in it. Opting an option of not
renting, results in heavy loss for the property owners, not only it curbs their property yield but
un managed property also suffer in property appreciation as compared to managed property.
Managing and protecting real estate assets is like managing a cash, for assuring safety of it,
owner need to keep an eye over it, which requires time and physical presence.

The above problem motivates me to find the solution of such issues, catering all the needs and to
prepare a business plan. Real estate assets managed by a professionals, can turn out to be more
profitable, less precarious and hassle free investment option. The solution of the problem is to
have professional Property Management Services (PMS), owner can appoint property managers
for their property, role of those property managers is to manage and handle the property. PMS
not only protect and manage clients property but it also act as an USP (Unique Selling
Proposition) for their assets, as well managed property are on higher priority for tenants and
buyers.

PMS provides the solution of many problems related with property management, it takes away
the burden of property management from the owners. PMS encourage owner to let out their
property and earn capital yield on their investment.




2


1.1 Problem Statement
In this thesis, researcher focused on analyzing the need of Property Management Service (PMS)
and developing a business plan for PMS and evaluating the economic feasibility of the business
the business plan.

1.2 Scope
Scope of the study was limited to Delhi and National Capital Region (NCR), all the market
analysis and financial numbers were subjected to the market condition of Delhi/NCR only.

1.3 Aim and Objectives of the research
The aim of the study is to create a new service business called Property Management Service.
In order to achieve the above stated aim, the following research objectives are set to:
Analyse the need of PMS
Form a service proposal satisfying the need of property owner.
Prepared a business plan for the service proposal.
Developed an economic feasibility of the proposed business.
1.4 Organization of the report
CHAPTER 2. Literature Review
This chapter defines the term and concept of Property Management Service (PMS) and its
implications in managing residential properties.

CHAPTER 3. Methodology
This chapter describes the detailed methodology adopted for analysing the need of PMS and
preparing a business plan for same. Adopted methodology includes questionnaire preparation
and distribution, preparing business plan as per the business plan outline which includes
developing the services, market analysis, marketing strategies, financial statements.

CHAPTER 4. Result Analysis
This chapter deals with the survey findings and economic feasibility of the business plan from
the projected financial statements and also estimated the marketing return on expenses made on
marketing campaign.

CHAPTER5. Conclusions and Future Scopes.
This chapter concludes the findings and limitation involved in the work study. Also discusses the
future scope of the work.
3

CHAPTER 2
LITERATURE REVIEW

Property management service is a very new concept for Indian service industry, nothing much
was written about the property management pertaining to Indian Scenario. This chapter defines
the term and concept of Property Management Service (PMS).

Management is defined as getting things done through and with others [1]. It can be more
scientifically defined as the co-ordination of all the resources of an organization through the
process of planning, organizing, directing and controlling in order to attain organization
objectives [2]. Management is seen as a process demanding the performance of a specific
function.

Property management is emerging as a managerial science today [3]. It transcends beyond the
role of rent collector [4]. Managing property involves establishing goals, objectives policies and
implementation of strategies to achieve those goals and objectives. Property management is an
activity that seeks to control interests in property owner and particular purpose for which the
property is held [5]. Property management as the work carried out to manage and maintain the
development including its facilities at the level that will retain or enhance the value of the
development, create a safe, functional and conducive living environment for occupants, keep or
restore every facility in efficient working order and in good state of repair, and project a good
appearance or image for the development [6]. Property management regards responsibility as
including all the necessary making to ensure the economic and physical vitality of property
assets [7].

According to [8] Property management define as the various human activities or interactions in
dealing with consequences arising from the use or occupation of premises for various or mixed
purposes. The property may range from a flat, apartment, estate, shopping mall, office tower or
industrial building with thousands of units. property management is a social science which
demands very high interpersonal skill in dealing with the customers, that is, owners residents,
property owners and tenants in response to the respective requirements of management services
or in answer to their complaints [8]. However, this definition is inadequate since there is no
specification made on the requirements of management services and people would mix up the
concepts of property management with other kind of property services such as property leasing
service.


4

According to Macey [9] property management can be defined as the application of skill in caring
for the property, its surroundings and amenities, and in developing a sound relationship between
landlord and tenant. And also between the tenants themselves, so as the estate, as well as the
individual houses, may give the fullest value to both the landlord and tenants. From the
landlords point of view, it is desirable that the properties should be as efficiently and
economically maintained and managed as possible; while from the tenants point of view, the
house should provide a home, the focal point for a full and happy life for the family, set in
surroundings where there are opportunities for attaining the wider goal of a full and happy
community life. This definition is more comprehensive by defining the point of view of the
general requirements of the landlords and tenants from the requirement of the property
management services.


























5

CHAPTER 3
METHODOLOGY

This chapter describes the detailed methodology adopted for analysing the need of PMS and
preparing a business plan for same. Services offered by PMS are designed by keeping target
customer prospective. Target customers for this business are those property owners staying away
from their property and find managing a property difficult and time consuming. Such customers
are NRIs/PIOs, Real Estate Investors, Jetsetters (mobile people) and all other customers
managing real estate assets.

3.1 Survey
Questionnaire was prepared and distributed via email to target customers, having at least a single
property in Delhi/NCR. Survey excludes the customer staying on rented property in Delhi/NCR.
Objective of survey is:
To know target customers interest in PMS,
To identify the activities of targeted customer want in PMS.
To estimate the price of services, target customers are willing to pay for PMS.
To know the frequency of visit made by the target customers for managing their
property.

3.2 Sampling
Sample size of 270 was selected keeping confidence level of 90percent (Z scores = 1.64), margin
of error 0.05, Std. deviation of 0.5, by using the equ. 3.1

Necessary Sample Size = (Z-score) (Std. Dev.)
(Margin of error) (3.1)


3.3 Design of Service
Service was designed catering the needs of targeted customer. As per the designed service, the
business plan was prepared, outline of business plan is designed to cover the description of the
business, financial summary, product and service, strategic market analysis, marketing plan,
organizational plan & personnel summary and financial plan as shown in below Fig. 3.1.

Fig. 3.1 Business plan outline
1. Business
Description
The Services
Financing
Business
Revenue
model
Pricing
Sales
Forecast
Expansion
Plan
Exit
Strategy
2. Financing
Summary
Required
Funds
Investor
Equity
Management
Equity
3. Product &
Services
Property
Management
Service
4. Market
Analysis
Economic
Outlook and
Industry
Analysis
Competition
SWOT Analysis
Customer
Profile
5. Marketing
Plan
Marketing
Objectives
Marketing
Strategies
Marketing
Expenses &
ROI
6.
Organizational
Plan &
Personnel
Summary
Organization
Structure
Personnel
Expenses
Manpower
Requirement
Skills
Requirement
Personnel
Expenses
7. Financial
Plan
General
Assumption
Sensitivity
Analysis
Source of
Funds
Profit and
Loss
Statement
Cash Flow
Analysis
Balance
Sheet
Break Even
Analysis
Business
Ratios
6
7

3.4 Business Plan
The purpose of business plan is to raise fund for the development of a residential Property
Management Firm while showcasing the expected financials and operations over the next
three years. Outline used for preparing business plan is shown in Fig. 3.1.

3.4.1 Business Description
Business provides the PMS for residential properties in Delhi/NCR, major services included
in PMS are maintenance and management of residential properties, letting services and
supervision of any work done in the property.

a. The Services
The business will offer residential property management service to its clients. For this
service, the business will generate fees equal to nine or ten percent of the aggregate rent
collected. The benefit of using this service includes:

Hassle free management of asset
Zero involvement in the day to day operations involved in managing tenants and
properties.
Handle almost every aspect of the clients property.
A monthly/quarterly/half yearly inspection report

b. Financing
Capitals require to start the business is $55,000; management contribution is of $10,000 and
$45,000 from bank loan. The interest rate and loan agreement depends on the prevailing
rates. This business plan assumes that the business will receive a 10 year loan with a 12.5
percent fixed interest rate. The financing will be used for the following:

Development of the Companys office location.
Financing for the first six months of operation.
Capital to purchase a company vehicle.

c. Business Revenue Model
Business in long term generates revenue from two source of income; one is recurring income,
income which occurs at fix interval and second is non recurring income. Source of recurring
income is PMS monthly fees and brokerage fees (avg. interval of three years). Non recurring
income is secondary income generates from the issues involved in the property which are
under PMS contract, such issues are supervising the work order for assuring the quality of
work done by external vendors, legal issues involve in the lease agreements, taxation, RWAs
and eviction of tenants from owners property. (Fig. 3.2)

8

In the initial years business will focused only on the revenue generation from the PMS fees,
and supervision fees. Financial statements are made considering only PMS fees and
supervision fees, as other income source are uncertain and difficult to estimate before
knowing the real time performance of business.


Fig. 3.2 Business revenue model


d. Pricing
Survey revealed that target customers are willing to pay 12 percent of rent as a management
fees. Financials were calculated keeping 10 percent of rent as a management fees for the first
three years of operation. 10 percent of rent manages to cover the cost of operations in the
very first year itself and it also two percent lower than that of people willingness to pay as
shown in survey (Appendix I), which makes its a lucrative services offered at best rate for
managing their assets.







PMS
Revenue
Model
Recurring
Income
PMS Fees
Brokerage
Fees
Non Recurring
Income
Supervision
fees (Work
Orders)
Legal
consultation
fees
Eviction Fees
9

e. Sales Growth
Business expects a moderate rate of growth at the start of operations. Below are the expected
sales growths over the term of three year (Table 3.1). Refer Appendix IV to VI for sales
forecast, cost of sales forecast and gross margin.

Table 3.1 Yearly sales growth
Year 1 2 3
Growth (percent) 0.0 30 50
Property management fees $82,800 $1,07,640 $1,61,460
Ancillary services $32,400 $42,120 $54,756
Totals $1,15,200 $1,49,760 $2,16,216


f. Expansion Plan
Management intends to start its operations by calling on relationships and intense initial
marketing. As the business develops its operations, and when the business becomes
profitable, the business may seek to expand by acquisition and through the development of
additional property management offices throughout the northern states of India.

g. Exit Strategy
In case business receives very high client response and before it became difficult to upkeep
the quality of service, management may seek to sell the business to a third party for a
significant earnings multiple through a qualified business broker to sell the business on behalf
of the firm.

3.4.2 Financing Summary
a. Required Funds
Any start up needs initial fund for starting the operation; the firm requires $55,000 of initial
fund. Table 3.2 shows a breakdown of how this fund raised.

Table 3.2 Financials start up
Equity Contributions Amount
Management Investment $10,000
Total Equity Financing $10,000
Banks and Lenders
Banks and Lenders $45,000
Total Debt Financing $45,000
Total Financing $55,000


10

b. Investor Equity
Management is not seeking an investment from a third party at this time.

c. Management Equity
Management owns 100 percent of the company share.

3.4.3 Products and Services
The major product of the business is Property Management Service and supporting products
are ancillary services which includes supervision of any work done in the managed property.
Below is the description of services included in the product.

a. Property Management Service
For ascertained clients, the Company collect rent, place new tenants in clients property, act
as an owner-tenant liaison, ensure legal and tax compliance, manage the accounting records
of the property, granting online access to owner of PMS portal to see the status of his
property. Owner can access all his/her propertys scanned lease documents, repair quotation,
tenant profile via PMS portal, repair request or complaint may also be raised using PMS
portal.

Services are designed to look after the asset, protect the asset, when required represent the
asset and keep owner informed regarding the asset and the surrounding areas.

Services can be sub divided in two parts:

i. Tenancy initiation activities

ii. Reporting and management activities













11

i. Tenancy initiation activities
Service proposal was designed for letting helps in getting right tenant in quick time, it
minimizes the gap between check out and check in of tenants, which in turns minimizes the
rent loss to owner. Table 3.3 shows all the activities involved in letting services under the
tenancy initiation activities.

Table 3.3 Tenancy initiation activities
Rental valuation
Rental readiness
o Electric repairs
o Plumbing repairs
o Carpentry repairs
o Painting repairs
o Other repairs
o Cleaning
Asset marketing (property portals, print media, social media, personal agent network)
Tenant profiling
Tenant viewings
Rent negotiation
Tenant verification liaising
o Employer verification
o Salary proof
o Police registration
Lease agreement
o Drafting
o Signing
o Registration
Key handover & Walk In






12

ii. Reporting and Management Activities

Reporting frequency:
The clients are provided with the initial in-depth report followed by two quarterly reports and
an in-depth half-yearly report as per the scheduled time line. All the reports are electronic
(PDF format) and delivered to owners designated mailbox as per the schedule.

Maintenance & Management Activities:
Maintenance and management activities as per the reporting frequency are shown in below
Table 3.4. Designed activities include all the requirement of the customer, described by them
in survey. Refer Appendix I for survey responses.

Table 3.4 Maintenance and Management activities
Activity
Frequency
M* Q* H*
Initiation and Set up
Rent
Collection


Deposit


Asset inspection
External structure


Internal structure


Fixtures


Seepage


Infestation


Valuation update

Other checks
Utility dues check


Society dues check


Neighbourhood check

Area update
Vicinity update


Regional developmental work

Mail pick up and forwarding


* M: Monthly, Q: Quarterly, H: Half Yearly





13

3.4.4 Market Analysis
a. Economic outlook and Industry analysis
The real estate sector is a critical sector for Indian economy. It has a huge multiplier effect on
the economy and therefore, is a big driver of economic growth. It is the second largest
employment-generating sector after agriculture [11]. Growing at a rate of about 20 percent
per annum and this sector has been contributing about 5-6 percent to Indias Gross Domestic
Product (GDP) [11]. Not only does it generate a high level of direct employment, but it also
stimulates the demand for over 250 ancillary industries such as cement, steel, paint, brick,
building materials, consumer durables and so on.

i. Financial support to the sector
In the financial years 2007-08, 2008-09 and 2009-10, the housing and real estate sector
attracted Foreign Direct Investments (FDIs) of 8.9 percent, 10.3 percent and 11 percent
respectively, of the total FDI in India. However, the financial year 2010-11 saw a mere 6
percent FDI in this sector [11]. The year 2010 saw the Indian real estate sector spring back
into action after the gloom and recessionary pressures experienced in the aftermath of the
global downturn. The focus on affordable housing helped the sector tide over the financial
crunch it had witnessed. This sector holds huge potential to attract Foreign Direct Investment
(FDI) in its various segments. However, progress is possible only with the joint efforts of
both the industry and the Government. On the one hand, the industry should work towards
increased ttransparency, clear land titles, improved delivery and project execution while on
the other hand the Government must provide fiscal incentives to developers. There is need to
review the existing FDI guidelines for investment and development in Indian real estate in
order to increase the flow of foreign capital into the sector.

ii. Decline in project launches
First Quarter of 2013 of National Capital Region (NCR) witnessed a decline of 38 percent in
the number of housing units launched compared to fourth quarter of the previous year. The
launches were mainly in the mid-end segment and were concentrated in suburban locations of
Gurgaon (66 percent) and Noida (34 percent). While Gurgaon received a 26 percent quarter-
on-quarter increase in the number of units launched [11].

iii. Stable rents; rising capital values
Most locations in Delhi witnessed stable capital values in both mid and high-end segments.
Capital values in the high-end segment in Central Delhi witnessed a 7 percent appreciation
over the quarter due to limited supply and high demand (Table 3.5). Among the suburban
locations, Gurgaon receives a higher appreciation than Noida, due to buoyant demand from
both end-users and investors. Rental values across most markets remained stable, except in
Gurgaon that saw an increase of 10.0 percent over the previous quarter (Table 3.6). This is
14

due to the high demand from the workforce in the various companies located nearby, coupled
with the limited project completions [11].
Table 3.5 and Table 3.6, show the capital value and rent of the high end and mid end segment
properties in Delhi/NCR and the appreciation or depreciation occurs in capital value and rent
from first quarter to fourth quarter of year 2012.

Table 3.5 Capital value as of 1Q 2013
Sub market Average achievable
rate (INR/SQFT)
Percent change (percent)
HIGH END
SEGMENT
3 month ago
(4Q2012)
1 year ago (2012)
Delhi- South West 50,000-60,000 0 0
Delhi- South East 25,000-45,000 0 8
Delhi-South Central 27,000-50,000 0 15
Delhi Central 60,000-90,000 7 7
Gurgaon Luxury 22,000-32,000 6 29
Gurgaon High End 11,000-18,000 7 23
Noida 6,500-8,500 5 9
MID END
SEGMENT

South East 25,000-30,000 0 10
South Central 25,000-30,000 0 9
Gurgaon 6,800-11,500 6 18
Noida 4,500-6,200 2 2
Source: Cushman & Wakefield, 1Q 2013


Table 3.6 Rental value as of 1Q 2013
Sub market Average achievable
rent (INR/MTH)
Percent change (percent)
HIGH END
SEGMENT
3 month ago 1 year ago
Delhi- South West 3,00,000-5,00,000 0 0
Delhi- South East 1,50,000-3,00,000 0 6
Delhi-South Central 2,00,000-3,25,000 0 0
Delhi Central 3,00,000-5,25,000 0 10
Gurgaon Luxury 2,50,000-4,00,000 0 0
Gurgaon High End 80,000-2,50,000 10 8
Noida 50,000-95,000 0 -6
MID END
SEGMENT

South East 1,00,000-1,75,000 0 8
South - Central 1,00,000-1,75,000 0 0
Gurgaon 40,000-90,000 4 0
Noida 25,000-45,000 0 0
Source: Cushman & Wakefield, 1Q 2013




15

b. Competition
PMS in Delhi/NCR is one of its kind services; no other service provider providing property
management services in Delhi/NCR, still business will indirectly compete with Resident
welfare association (RWA), facility management companies and builders in house property
management service.

In future, business will face direct competition with some big names, planning to start PMS
in Delhi/NCR, few are:
Sahara Home Care
Reliance Property Management Services
Knight Franks Inc
Jones Lang LaSalle Inc.

c. SWOT Analysis
Property Management Service (PMS) business generally are able to remain profitable and
cash flow positive in Indian economic climate due to the fact that its a new service for Indian
service sector and huge demand and no supply makes it more profitable and less risky. One
of the best aspects of a Property Management Service is that they are able to generate highly
gross margins from their service.

One of the primary strengths of a Property Management Service is that business is going to
be receiving a highly recurring stream of revenue as it relates to property maintenance and
management ongoing basis. No current competition in Delhi/NCR and high gross margin
further strengthen the PMS.

Property Management Service SWOT analysis focuses on the weaknesses that are associated
with this type of business. PMS Business constrained with the pricing flexibility, no customer
wants to cut his profit as it affects on the net worth of the property. Legal laws like Delhi
rental act (1958) are very complex and time consuming and tenant oriented. PMS requires
very high level of services, so managing a flat structure organization requires thorough
training of employees.

The Opportunities in PMS business is continued expansion in tier one city like Hyderabad,
Bangalore, Pune, Mumbai and Chennai Opportunity to enter in other services like hospitality,
service apartments. Development of proprietary products (PMS portal, CRM)




16

The threats that the Property Management Firm faces are significant. This is primarily due to
the fact that there are a number of independent agents as well as other real estate
agencies/brokerages that are in constant competition for the letting services needed within the
Delhi/NCR market. The business will need to use aggressive referral tactics in order to
ameliorate the risk in getting tenants for managed property. By seeing with high profits and
limited competition business may attracts many other players in the similar services which
increase the threat of losing on market share. SWOT Matrix is shown in Table 3.7

Table 3.7 SWOT Matrix
Strengths
No competition in Delhi/NCR
Very high gross margin
Limited start up risk
IT supported CRM and PMS
Flat organization structure
Opportunities
Continued expansion in other tier 1
city
Ability to develop additional services
(hospitality, service apartments,
transactions, advisory)
Development of proprietary product
Support to other services like
Transactions & Advisory
Weaknesses
Limited flexibility pricing
Legal Law
Require high level of services
Threats
Changes in regulation/Govt. can
impact the business
Product comparison from other
countries PMSs
Risk from upcoming reputed brands.
(Sahara, Reliance, JLL, Knight
Frank)


d. Customer Profile
The Businesss average client will be a real estate investor staying away from their purchased
assets like NRIs and Person of Indian Origin (PIOs). Common traits among clients will
include:
Currently owns at least one property in Delhi/NCR.
Is seeking service agency to look after day to day management of their real estate
portfolio.
Willing to pay 10 percent of aggregate rent roll in exchange for property management
services.
Ready to spend at least $25 per month for non rented assets with the Property
Management Firm.

17

Population of NRIs/PIOs in Target Countries:
Business focuses more on intense online marketing in selected countries (Table 3.8) with
maximum numbers of NRIs/PIOs in order to develop strong customer pool.

Table 3.8 Target population of NRI/PIO
S.No Country Overseas Indians living abroad NRI PIO
1 Australia 448430 213710 234720
2 Malaysia 2050000 150000 1900000
3 Singapore 670000 350000 320000
4 UAE 175000 1750000 0
5 UK 1500000 1500000 0
6 USA 2245239 927283 1317956
Source: Ministry of International affairs, 2012

Best way to reach the target market is via online marketing. Online marketing strategies
discussed in detail under marketing section. Online presence of target customer is mention in
the Table 3.9 and most services used by NRIs/PIOs is mentioned in Table 3.10
Table 3.9 Website used by NRIs July 2011-June 2012

Online Activity

Top Website Used
General news about India Timesofindia 25 percent
Business & economic news from India Economictimes 16 percent
Financial info from India (quotes, rates, etc) Moneycontrol 20 percent
Jobs in India Naukri 50 percent
Real estate info in India 99acres 14 percent
Social networking in India Facebook 74 percent
Professional networking in India Linkedin 41 percent
Matrimony Bharatmatrimony 43 percent
Table 3.6 Contd.


Friendship/Dating Facebook 42 percent
Picture sharing Facebook 32 percent
Indian spirituality/religious content The Hindu 11 percent
Glamour/lifestyle content from India Yahoo 19 percent
Check travel/tourism info about India Makemytrip 20 percent
Book travel tickets for India (travel portals only) Makemytrip 19 percent
Online shopping from India (non-travel products) Ebay 15 percent
Transfer money online to India Icicibank 17 percent
Indian video / picture galleries Youtube 27 percent
Indian cinema Bollywood 13 percent
Indian music Raaga 15 percent
Indian sports Cricinfo 31 percent
Astrology


Astrology 18 percent
18



3.4.5 Marketing Plan
Business intends to maintain an extensive marketing campaign that will ensure maximum
visibility for the business in its targeted market. Below is an overview of the marketing
strategies and marketing objectives of the Company.

a. Marketing Objectives
Develop an online presence by developing a website and placing the Companys
name and contact information with online directories.
Implement a local campaign with the Companys targeted market via the use of flyers,
local newspaper advertisements, and word of mouth advertising.
Establish relationships with real estate brokerages within the targeted market.

b. Marketing Strategies
These strategies will include, but are not limited to:
Print advertisements
Direct mailing
Referrals from contractors and real estate businesses
Online marketing strategies
Word of mouth advertising
Sponsorship of local events
Table 3.10 Services used by NRI/PIO July 2011-June 2012
Banks
Used
percent
Indian rupee bank account in India SBI 24 percent
Foreign exchange bank account in India SBI 23 percent
Online money transfer ICICI / Money2India 27 percent
Third party cash transfer Western Union 50 percent
Travelling
Book from an online travel portal Makemytrip 25 percent
Book directly from an airline's website Air India express 16 percent
Most used airline to fly to India Air India 20 percent
Social Media
News TV channel NDTV 26 percent
Entertainment TV channel Star Plus 15 percent
Newspaper The Times of India 35 percent
Magazine


India Today 33 percent
19


Business intends to use a number of marketing strategies that will allow the Property
Management Firm, to easily target real estate investors within the target market. Below is a
description of how the business intends to market its services to the target public.

i. General and Traditional Marketing Strategies
The Management intends to develop an extensive reputation among the general public of
Delhi/NCR. The business intends to maintain a very high visibility both from the presence of
the Company and through carefully planned and executed marketing strategies throughout the
Delhi/NCR market. The business will regularly advertise in Delhi/NCR newspapers and other
publications. Advertisements will be frequently placed in these publications to remind the
general public about Property Management Firm and to showcase the services offered by the
Property Management Firm. Direct mailing is another strategy that Management intends to
use to showcase the opening of the Residential property management service to the general
public.
Management will send flyers within community circulars and within community newspapers
to set the visibility of the Property Management Firm throughout the life of the business at
appropriate intervals. However, once the Property Management Firm has a very highly
established customer base then Management can somewhat back on these marketing
expenditures. The business is planned to maintain a very broad-based marketing campaign all
times to continue to increase the awareness of the firm and establishing a brand name.
One of the best ways that the business can gain further visibility as well as a strong reputation
in the community is to partner with builders and real estate property agents that will provide
the business with an ongoing stream of referrals. When it comes to services, the best way to
market a business is by use of referrals. This is primarily due to the fact that a potential
customer is sent by referral trusts; the referring party gives opinion about the service.

ii. Online Marketing Strategies
The business will also maintain a moderate sized Internet presence by advertising in local
search directories. These advertising strategies are of minimal cost, and provide some
additional visibility for people that are searching for local residential property management
service.
As the Internet has become extremely popular over the past 10 years, it is imperative for
Management to maintain a large scale website that showcases the Property Management
Firm, the Companys services related to managing properties, the pricing of Property
Management Firms service, and contact information.
20

As such, having a presence on the Internet will not only provide the Property Management
Firm with a greater degree of legitimacy, but it will also become a very valuable source of
traffic to the Property Management Firm.
For instance, when the Property Management Firm is developing its initial location in New
Delhi/NCR, then a search engine optimization firm can ensure that Company site comes up
first when someone does a search for residential property management services within a
specific market. It will also substantially boost the visibility of the Property Management
Firm (or provide referrals) on an ongoing basis.
Table 3.11 shows marketing expenses and net profit. Refer Appendix II for complete
marketing expenses break down.
Table 3.11 Marketing expenses
Year 1 2 3
Total marketing costs $10,896 $11,986 $13,184
Total net profits $4,436 $18,865 $28,052


3.4.6 Organizational Plan and Personnel Summary
a. Organization Structure:
Business believes in flat structure organisation, as in small service industry, decision making
rights should be given at all levels. Flat structure organization require well skilled and trained
employee. Below Fig. 3.2 shows the organization of structure.



Fig. 3.3 Organizational structure





Property
Manager
Field Officer Handyman
Relation
Manager
Administrative
Staff
21

b. Personnel Expenses:
Below Table 3.12 shows the total annual payroll and payroll of individual post. Refer
Appendix VII for complete employee salary break down and growth.

Table 3.12 Total payroll Yearly
Year 1 2 3
Relation Manager $7,700 $8,162 $8,652
Property Managers $9,279 $9,836 $10,426
Field officer $7,358 $7,726 $8,112
Handy man $5,671 $5,955 $6,252
Office boy $149 $149 $149
Administrative satff $5,500 $5,830 $6,180
Total $35,508 $37,508 $39,622

c. Manpower Requirement
Manpower requirement of business grow as the number of property increases; initially
business requires manpower of seven employees and 14 employees by the end of first year.
Below Table 3.13 and Table 3.14 shows the breakdown of man power requirement.

Table 3.13 Manpower requirement - start up year
Month
Numbers of Personnel

Relation
Manager
Property
Managers
Field
officer
Handy
man
Office
boy
Administrative
Staff
Total
1 1 1 1 2 1


1 7
2 1 1 1 2
1
1
1 7
3 1 1 1 2 1 1 7
4 1 1 1 2 1 1 7
5 1 1 2 3 1 1 9
6 1 1 2 3 1 1 9
7 1 1 2 3 1 1 9
8 1 2 3 4 1 1 12
9 1 2 3 4 1 1 12
10 1 2 3 4 1 1 12
11 1 2 4 5 1 1 14
12 1 2 4 5 1 1 14




22

Table 3.14 Man power break down with unit increase
Property
Units
1-39 40-69 70-105 106-140
Manpower
1-RM,1-PM,1-FO,2-
HM,1-OB,1-AS
1-RM,1-PM,2-FO,3-
HM,1-OB,1-AS
1-RM,2-PM,3-FO,4-
HM,1-OB,1-AS
1-RM,2-PM,4-FO,5-
HM,1-OB,1-AS
RM: Relation Manager; PM: Property Manager; FO: Field Officer; OB: Office Boy; AS: Admin. Staff

d. Skill Requirement
Each skill requirement is ranked on a scale of 1; little or no skill, to 5; highly developed
skills. Table 3.15 shows the skill requirement of each post.

Table 3.15 Skill requirements
Skills
Property
manager
Field
officer
Handy man Administrator Rm
Marketing knowledge 5 2 2 3 5
Graphics skills 5 2 1 5 5
Create a marketing kit 4 2 1 2 5
Sales knowledge 5 2 2 2 5
People skills 5 4 3 3 5
Network of real estate
Brokers
4 5 3 2 5
Understands real estate
Trends
5 3 1 2 5
Accounting skills 3 2 1 5 3
Property management

Knowledge
5 3 3 2 4
Basic computer skills

5 3 2 5 5
Knowledge of
documentation
5 5 3 5 5
Note: 5; highly developed skills,, 4; developed skills, 3; moderately developed skills, 2;
slightly developed skills, 1; no skills

3.4.7 Financial Plan
Financial planning is done for next three years, to know the financial viability of business and
to identify the cash flow of business to ensure smooth flow of cash in business operations.
a. Underlying Assumptions
The Company has based its projected financial statements on the following:
Property Management Firm will have an annual revenue growth rate of 30 percent for
second year and 50 percent for third year.
The Owner will acquire $55,000 of debt funds to develop the business.
The loan will have a 10 year term with a 12.5 percent interest rate.
23

Table 3.16 General assumptions
Year 1 2 3
Loan interest rate 12.5percent 12.5percent 12.5percent
Business tax 8percent 8percent 8percent
Revenue growth - 10percent 12percent
Min. Pms fees per unit $100 $100 $100
Usd to inr conversion Usd 1 = inr 55

b. Sensitivity Analysis
The Businesss revenues are sensitive to the overall condition of the financial markets. A
sudden and dramatic increase in the rate of inflation or actual interest rates can have a
significant impact on the overall revenue of the business. Additionally, the business will
generate ongoing streams of revenue from the rents collected on behalf of clients, and as
such, in times of economic recession, the business will be able to maintain its revenue base
despite declines in home values and rental rolls. Sensitivity analysis is conducted on three
cases, case one as standard, on which the financial statement are made, loan interest rate 12.5
percent and number of property is 180, case two attributes are 13.5 percent of loan interest
rate and 150 properties, case three; 15 percent loan interest rate and 120 properties. Table
3.17 shows business with case one generates profit of 3.45 percent from first year, case two
gives a loss of 12 percent in first year and case three gives a loss of 29 percent. Business will
be stable under case two and three as recurring stream of rental income will make business
profitable from second year onwards.

Table 3.17 Sensitivity analysis
First year Case 1 Case 2 Case 3
Interest rate (percent) 12.5 13.5 15
Property units 180 150 120
Net revenue $ 3,970.00 $ (14,025.00) $ (32,937.00)
Gross profit margin 3.45% (12)% (29)%

c. Source of Fund
Business will raise the capital by promoters investment and bank loan (Table 3.18)

Table 3.18 Source of fund
Equity contributions amount
Management investment $10,000.00
Total equity financing $10,000.00
Banks and Lenders
Banks and Lenders $45,000.00
Total debt financing $45,000.00
Total financing $55,000.00

24

d. Profit and Loss Statement
Profit and Loss statement was prepared for first three years of business operation to check the
financial stability of the business. Table 3.19 summarise the profit and loss statement for first
three years. Refer Appendix VIII for complete profit and loss statement.

Table 3.19 Projected profit and loss - yearly
Year 1 2 3
Sales $1,15,200 $1,26,720 $1,41,214
Operating costs $93,420 $88,920 $93,709
EBITDA* $16,020 $31,524 $41,342
Taxes, Interest, and Depreciation $10,232 $11,178 $11,631
*EBITDA: Earnings before interest, tax, depreciation and amortization

e. Cash Flow Analysis
Cash flow statement was created for first three years of operation, below Table 3.20 shows
yearly cash flow analysis of business. Refer Appendix XII - XV for expanded cash flow
analysis for first, second, third year.

Table 3.20 Projected cash flow analysis - yearly
Year 1 2 3
Cash from operations $9,688 $24,246 $33,612
Cash from receivables $0 $0 $0
Operating cash inflow $9,688 $24,246 $33,612

Other cash inflows

Equity investment $10,000 $0 $0
Increased borrowings $45,000 $0 $0
Sales of business assets $0 $0 $0
A/p increases $0 $0 $0
Total other cash inflows $55,000 $0 $0

Total cash inflow $64,688 $24,246 $33,612

Cash outflows

Repayment of principal $2,415 $2,734 $3,096
A/p decreases $5,000 $6,000 $0
A/r increases $0 $0 $0
Asset purchases $1,500 $500 $3,000
Dividends $0 $0 $0
Total cash outflows $8,915 $9,234 $6,096
Net cash flow $55,773 $15,012 $27,515
Cash balance $55,773 $70,785 $98,300
25

3.5 Economic Viability
Economic viability of business is analysed from financial statement, break even sales volume
and business ratios of the first three years of business operations.

3.5.1 The Break-Even point in sales volume is calculated as:

a. Revenue
The sum of all sales and other income, net returns and sales commissions.

b. Cost of Sales (Cost of Goods Sold)
The cost of service includes portal charges, conveyance charges and stationary cost. These
costs are also called direct or variable costs.

c. General & Administrative Costs (Overhead)
These are all the costs not directly, or easily, related to sales volume such as advertising, bank
charges, computer expenses, insurance, office wages & salaries, officers compensation,
telephone, utilities, depreciation, interest, taxes. These costs are also called indirect or fixed
costs.

d. a minus b minus c = PROFIT.
Break even calculated using the equ. 3.2

Break-Even Point = FC/ (1-VC/S) (3.2)

Where;
FC: Fixed Cost
VC: Variable Cost
S: Sales Volume

Table 3.21 Break even revenue
Year 1 2 3
Monthly Revenue $9,252 $9,256 $10,038
Yearly Revenue $1,11,021 $1,11,076 $1,20,458







26

3.5.2 Business Ratios

a. Asset to Liability Ratio
This ratio provides a clue as to the debtors immediate borrowing ability and also tells a story
about current cash flow. It is important to know whether or not over the years if Current
Assets are increasing over Current Liabilities. Ideally, the Asset to Liability Ratio should
be greater than one.

b. Asset to Equity ratios
An Asset to Equity ratio greater than two means that a company uses more debt than equity
to finance it assets. An Asset to Equity ratio less than two means that a company uses more
debt than equity to finance it assets.

c. Acid Test Ratio
It determines whether a firm has enough short-term assets to cover its immediate liabilities
without selling inventory. Businesses with ratios of less than one cannot pay their current
liabilities and should be looked at with extreme caution.

d. Cash to Assets ratio
Ratios greater than one demonstrates a firm's ability to cover its current debt, but ratios that
are too high might indicate that a company is not allocating enough resources to grow its
business.
















27

CHAPTER 4
RESULT ANALYSIS

This chapter deals with the survey findings and economic feasibility of the business plan
from the projected financial statements and also estimated the marketing return on expenses
made on marketing campaign.

4.1 Survey Findings
Total respondents participated in survey were 64 and all 64 respondents owns a property in
Delhi/NCR and their property status are shown in Fig.4.1.


Fig.4.1 Status of properties(owner/rented/locked up)

Out of 64 properties, assuming each respondent has single property, 34 properties are rental
properties and eight are locked up units (Fig. 4.1). Out of 42 properties, 14 are managed by
owners, 12 are managed by friends and relatives and 16 are unmanaged or irregularly
maintained. As per the survey finding managing a property was a stressful and time
consuming activity. The average amount the owners are spending on their property
management is $40 per month. After describing about PMS, 25 respondents shown extremely
interested, seven are very interested, and 16 are moderately interested in this service (Fig.
4.2). Refer Appendix I for survey questionnaire and response.

22
34
8
Owner
Tenant
Vacant/Holiday
Home
28


Fig. 4.2 Number of persons interested in PMS

Survey revealed that the owners are willing to pay fees equivalent to 12 percent of rent roll
for managing their property and for non rented or locked up unit $25 per month per unit. As
per the owners feedback PMS should include services like (Appendix I):

a. Rent Collection/Deposit
b. Letting service
c. Rental readiness
d. Valuation
e. Regular inspection check (monthly report)
f. Utility bills, society dues, and other bills.
g. Mail pick up and forwarding
h. Pre vacating inspection check













25
7
16
8 8
0
5
10
15
20
25
30
Extremely
interested (5)
Very
interested (4)
Moderately
interested (3)
Slightly
interested (2)
Not at all
interested (1)
T
o
t
a
l

n
o
.

o
f

p
e
r
s
o
n

29

4.2 Financial analysis and Economic feasibility of business venture
4.2.1 Start up Cost
Business required $55,000 to start the services; $45,000 will be borrowed by bank for 10 year
term with 12.5 percent interest rate, and remaining $10,000 management equity investment.

Table. 4.1 Projected start up costs break down
Initial lease payments and deposits $900
Working capital $22,000
FF&E $5,000
Leasehold improvements $1,000
Security deposits $465
Insurance $500
Company vehicle $9,000
Marketing budget $11,000
Miscellaneous and unforeseen costs $5,000
Total start up costs $54,866

Office rent was estimated from the market price, market rent of fully furnished 300sqft-
500sqft, eight seater office space on Sohna road, Gurgaon is $400-$500 per month. Working
Capital required for first year is $22,000 that covers all the general and administrative
expenses. Fix Furniture and Equipment (FF&E) cost around $5,000, main office equipment
required are laptops, printer, fax machine, intercom device. Additional cost for modifying the
improvement of leased unit will cost about $1,000, business required vehicles for day to day
operation, budget of $9,000 cover the cost of one hatchback car and two 100cc motor cycle
cost. Business will spend about 20 percent of start up budget over intense marketing in the
initial years. Start up cost allocates $5,000 to the miscellaneous and unforeseen cost.
Anticipated yearly expenses are shown in Table 4.2.


Table 4.2 Anticipated yearly expenses
Year 1 2 3
General and administrative $25,200 $26,208 $27,256
Marketing expenses $11,000 $11,986 $13,184
Professional fees $5,000 $5,000 $5,000
Insurance costs $500 $500 $500
Travel and vehicle costs $9,000 $0 $0
Rent and utilities $5,500 $5,720 $5,949
Miscellaneous costs $1,816 $1,998 $2,197
Total $58,016 $51,411 $54,087




30

4.2.2 Sales Forecast
The total number of target properties in Delhi/NCR is estimated for this business plan is
27000 units; estimation was based on total NRI remittances and FDI inflows in Housing Unit
during 2008-2012 in Delhi/NCR. Goal of business is to manage at least five percent of total
target properties. In first year business estimated to manage 129 properties which are nine
percent of set goal. Refer Appendix IV for sales forecast.

4.2.3 Monthly Sales
Business start up with managing nine units and expects quarterly growth of 30 units, first
year goal is to manage at least 120-130 units. Ancillary services start up is three units and
quarterly growth is expected as 12 units. 12 months sales projection break down is shown in
below Table 4.3. Refer Appendix V and VI for detailed monthly and yearly sales projection.

Table 4.3 Monthly sales projection
Month 1 2 3 4 5 6 7 8 9 10 11 12
Property Management fees 9 24 39 39 54 69 69 84 99 99 114 129
Ancillary services 3 9 15 15 21 27 27 33 39 39 45 51
Total 12 33 54 54 75 96 96 117 138 138 159 180

4.2.4 Manpower Analysis
Table 4.4 and Table 4.5 shows monthly salary for each employee and annual growth rate of
each post. Salaries of each position considered as per market standards. Refer Appendix VII
for complete manpower analysis.

Table 4.4 Employee monthly salary & annual growth rate
Position Per month Annual growth rate
Relation Manager $642 6.0%
Property Manager $546 6.0%
Field Officer $273 5.0%
Handy man $145 5.0%
Office boy $145 5.0%
Administrative Officer $458 6.0%


4.2.5 Marketing Expenses and ROI
On total marketing cost, returns on investment for first year is 36.09 percent which increased
to 306.74 percent in second year and in third year it further increases to 695.23 percent.
Marketing return on investment is shown in below Table 4.7 and break down in Fig. 4.3
Refer Appendix II for Marketing ROI and break down.



31

Table 4.6 Marketing ROI
Year 1 2 3
Total short term marketing $4,400 $4,794 $5,274

Total intermediate marketing $3,300 $2,996 $3,296

Total long term marketing $3,300 $4,195 $4,615

Total marketing costs $11,000 $11,986 $13,184
Total net profits
$3,970 $36,765 $91,662
Total marketing ROI
36.09% 306.74% 695.23%


Fig. 4.3 Marketing expense break down for first year



4.2.6 Profit and Loss Statement
Estimated profit margin for the first year of operation is 3.45 percent, for second year profit
margin increases to 24.55 percent and for the third year it further increased to 42.39 percent.
Complete yearly profit and loss statement for three successive years is shown in Table 4.7.
Refer Appendix VIII to XI for expanded profit & loss statement.








$4,400
$3,300
$3,300
Total Short Term
Marketing
Total Intermediate
Marketing
Total Long Term
Marketing
32

Table 4.7 Projected profit and loss - yearly
Year 1 2 3
Sales $1,15,200 $1,49,760 $2,16,216
Cost of goods sold $5,760 $7,428 $9,249
Gross margin 95.00% 95% 96%

Operating income $1,09,440 $1,42,332 $2,06,967

Expenses
Payroll $37,248 $39,297 $41,458
General and administrative $25,200 $26,208 $27,256
Marketing expenses $11,000 $11,986 $13,184
Professional fees $5,000 $5,000 $5,000
Insurance costs $500 $500 $500
Travel and vehicle costs $9,000 $1,000 $0
Rent and utilities $5,500 $6,875 $8,594
Miscellaneous costs $1,850 $1,998 $2,197
Payroll taxes $0 $0 $0
Total operating costs $95,298 $92,863 $98,190

EBITDA* $14,142 $49,469 $1,08,777
State income tax $692 $3,544 $8,318
Interest expense $5,490 $5,170 $4,808
Depreciation expenses $3,990 $3,990 $3,990
Net profit $3,970 $36,765 $91,662
Profit margin 3.45% 24.55% 42.39%
* EBITDA ; Earning before income tax, depreciation and amortization

4.2.7 Break Even Analysis
Business in the start up first year operated at 104 percent of break even and 135 and 179
percent of break even in second and third year of operation.

Table 4.8 Break Even Analysis
Year 1 2 3
Monthly Revenue $9,252 $9,256 $10,038
Yearly Revenue $1,11,021 $1,11,076 $1,20,458
Company Operating At 104% 135% 179%



33

4.2.8 Balance Sheet
Company forecasted balance sheet for projected three years is shown in Table 4.9

Table 4.9 Projected balance sheet - yearly
Year 1 2 3
Assets

Cash $60,678 $1,00,904 $1,94,699
Amortized development/Expansion costs $5,000 $5,500 $6,050
Company vehicle and lease deposits $9,450 $1,450 $450
FF&E $5,500 $2,000 $5,000

Accumulated depreciation ($3,990) ($7,980) ($11,970)
Total assets $76,638 $1,01,874 $1,94,229

Liabilities and equity

Accounts payable $0 $0 $0
Long term liabilities $42,585 $39,851 $37,117
Other liabilities $0 $0 $0
Total liabilities $42,585 $39,851 $37,117

Net worth $34,052 $62,022 $1,57,112
Total liabilities and equity $76,638 $1,01,874 $1,94,229


4.2.9 Business Ratios
Asset to Liability Ratio
This ratio provides a clue as to the debtors immediate borrowing ability and also tells a story
about current cash flow. It is important to know whether or not over the years current assets
are increasing over current liabilities. Ideally, the Asset to Liability Ratio should be greater
than or equal to one. As shown in Table 4.10 asset to liabilities for the first year it is 1.76, and
for second and third year it is 2.45 and five, which is an indicator of healthy business,
financing stable and viable proposal.

Asset to Equity Ratio
An Asset to Equity ratio greater than 2.0 means that a company uses more debt than equity to
finance it assets. An Asset to Equity ratio less than 2.0 means that a company uses more debt
than equity to finance it assets. In our business proposal a ratio of ratio are 2.31 for the first
year which state that business used more debt than equity in creating assets. In the second
ratio reduced to 1.69 and in the third year it further reduced to 1.25, (Table 4.10). For any
start up business initially the loan amount required for creating assets is more than the equity.
34

Acid Test Ratio
It determines whether a firm has enough short-term assets to cover its immediate liabilities
without selling inventory. Businesses with ratio of less than one cannot pay their current
liabilities. As shown in Table 4.10 ratio is 1.39 for the first year, and for second and third its
2.42 and 5.01 respectively. It shows that the business is capable of paying liabilities without
selling projected services.

Cash to Assets ratio
Ratio greater than one demonstrates a firm's ability to cover its current debt. The higher Cash
to asset might indicate that a company is not allocating enough resources to grow its business.
From the Table 4.10, for first year ratio is 0.79 and for second and third year its 0.99 and one,
which shows business is pumping sufficient money for its growth.

Table 4.10 Business ratios - yearly
Year 1 2 3
Financials
Profit Margin 3.45% 24.55% 42.39%
Assets to Liabilities 1.76 2.45 5.00
Equity to Liabilities 0.76 1.45 4.00
Assets to Equity 2.31 1.69 1.25

Liquidity
Acid Test 1.39 2.42 5.01
Cash to Assets 0.79 0.99 1.00















35

CHAPTER 5
CONCLUSION AND FUTURE SCOPE

5.1 Conclusions

PMS is the solution of many problems related with management of the residential
property. Survey revealed that people consider PMS, a useful service, among 64
respondents only two respondents shows no interest in PMS remaining 62 find the
service useful. Services required by the customer was analysed from survey and
service proposal was prepared matching all the customers requirement. PMS expect
that people of Delhi/NCR will find it beneficial and value for money service. Thus
meeting the objective one and two of this report.

Business plan of Property Management Service offer an opportunity to invest in first
of its kind service in Delhi/NCR. Business will grow 50 percent over the first three
years as shown in the financial projections. Estimated profit margin for the first year
of operation is 3.45 percent, for second year profit margin increases to 24.55 percent
and for third year it further increased to 42.39 percent.
5.2 Limitations
Market Study conducted was region specific, limited to Delhi/NCR.
Study was based on assumption like loan interest rate, market trends, USD rates,
which may vary with time.
5.3 Future Scopes

Similar services can be carried in other tier one cities like Bangalore, Mumbai, Pune,
Chennai, and Hyderabad.
Business plan outline can be used as a standard for any other service businesses.
Study on the technological factors like developing proprietary PMS portal and CRM
software can be done.
Study on Ethical practice of property management will be helpful in creating a
transparency in offered services under PMS.








36

REFERENCES

[1] C.C. Nwachukwu, Management Theory and Practice, Africana First
Publishers Limited, Nigeria, 2007
[2] American Institute of Management, Inc., What is Management?, pp. 2-6, 1959
[3] R.C. Kyle and F.M. Baird Property Management, Real Estate Education
Company, Chicago, II, 1995
[4] M.I. Lawal, Principles and Practice of Housing Management, Reprinted
edition. ILCO Books. ISBN 978-33340-0-x, Lagos, 2002
[5] L.H. Li, Property Management in China: Opportunities and Problems,
Property Management. MCB University Press , Vol. 15, No. 1. p.6 11. ISSN
0263 7472, 1997
[6] G. Singh, Re-engineering property management: Sustaining Asset Value
through Effective Property Management, Conference of Property
Maintenance and Management in the 90s 30 31 May, Kuala Lumpur,
Malaysia, 1994
[7] G. Singh, Property Management in Malaysia, Federal Publications,
Malaysia, pp. 4, 1996
[8] K.S. Wong, Property Management in Private Practice, Unpublished Lecture
Notes, Kurus Pengunes an Hartanah dan Facilities 20 23, September,
INSPEN, 1999.
[9] Loo, K. Francis, A Guide of Effective Residential Proper Management in
Hong Kong, Hong Kong University Press, 1991.
[10] J.P. Macey & C.Y. Bacher, Housing Management, The Estate Gazette
Limited, London, 1984
[11] S. Goel, Market Beat Residential Snapshot: NCR, India, A Cushman &
Wakefield research publication, Delhi, 2013
















APPENDIX I
Survey Questionnaire and Responses

Q1. Do you own a property in India?
Answer Options

Response Percent Response Count

Yes

100% 64

No

0% -


answered question 64


skipped question -


Q2. If yes, Who Lives in?
Answer Options

Response Percent Response Count

Owner

34% 22

Tenant

53% 34

Vacant/Holiday Home

13% 8

Comments

0


answered question 64


skipped question -


Q3. If it is rented/locked up, then who manages that property?
Answer Options

Response Percent Response Count

Yourself

33.3% 14

Friends/Relative

28.6% 12

Society

0.0% 0

No One/Irregular

38.1% 16


answered question 42


skipped question 22


Q4. Do you think managing a property is stressful and time consuming task?
Answer Options

Response Percent Response Count Rating
Extremely (5)

38% 24 120
Very Much (4)

19% 12 48
Moderately (3)

19% 12 36
Slightly (2)

13% 8 16
Not at all (1)

13% 8 8

answered question 64 228

skipped question -


Average Rating

3.6

Q5. About how often do you visit your property for inspection?(Owner staying himself, skip this)
Answer Options

Response Percent Response Count

More than once a week

10% 4

Once a week

0% 0

2-3 times a month

0% 0

Once a month

48% 20

Once every 3 months

10% 4

Once every 6 months

24% 10

Once a year

10% 4

Less than once a year

0% 0

Not at all

0% 0


answered question 42


skipped question 22

Q6. In a typical month, how much do you usually spend on managing your property?

Answer Options

Response Percent Response Count

$0 to $15

13% 8

$16 to $30

28% 18

$31 to $60

34% 22

$61+

31% 20


answered question 64


skipped question


Q7. After reading the above PMS description, how useful would this new service be to you?

Answer Options

Response Percent Response Count

Extremely useful (5)

53% 34 170
Very useful (4)

25% 16 64
Moderately useful (3)

13% 8 24
Slightly useful (2)

6% 4 8
Not at all useful (1)

3% 2 2

answered question 64 268

skipped question -


Avg. Rating 4.2

Q8. How interested are you in this service?

Answer Options Rating Response Percent Response Count Rating Count
Extremely interested (5) 5 36% 25 125
Very interested (4) 4 7% 7 28
Moderately interested (3) 3 29% 16 48
Slightly interested (2) 2 14% 8 16
Not at all interested (1) 1 14% 8 8

answered question 64 225

skipped question -


Avg. rating 3.6


Q9. Have you previously searched or asked for similar services like Property Management Services? (Select all
that apply.)

Answer Options

Response Percent Response Count

Never

16% 10

Friends/family

22% 14

Advertisements

0% 0

Online search

63% 40

Phone book

0% 0

None of the above

0% 0

Other (please specify)

0% 0


answered question 64


skipped question -


Q10. How important is price in your decision to use this service?
Answer Options

Response Percent Response Count

Extremely important (5)

19% 12 60
Very important (4)

28% 18 72
Moderately important (3)

31% 20 40
Slightly important (2)

16% 10 20
Not at all important (1)

6% 4 4

answered question 64 196

skipped question -


Avg. Rating

3.1

Q11. About how much per cent of rent would you be willing to pay for this service for managing your rented
property?
Answer Options

Response Count

Average Fees

12%

answered question

64.00

skipped question

-


Q12. About how much would you be willing to pay per month for this service for managing non rented
property? (Please enter a whole number. Enter the number of dollars you are willing to pay.)

Answer Options

Response Count

Average fees

$ 35.00

answered question

64.00

skipped question

-


Q13. How likely are you to recommend this service to someone you know?

Answer Options

Response Percent Response Count

Extremely likely (5)

31% 20 100
Very likely (4)

19% 12 48
Moderately likely (3)

25% 16 48
Slightly likely (2)

19% 12 24
Not at all likely (1)

6% 4 4

answered question 64 224

skipped question 0


Avg. Rating 3.5

Q14. Do you think 10% of Rent for this Service is too cheap, too expensive, or about right?

Answer Options

Response Percent Response Count

Much too cheap

0% 0

Somewhat too cheap

0% 0

Slightly too cheap

6% 4

About right

50% 32

Slightly too expensive

25% 16

Somewhat too expensive

6% 4

Much too expensive

13% 8


answered question 64


skipped question -

Q15. If our new service were available today, how likely would you be to subscribe?

Answer Options

Response Percent Response Count

Extremely likely (5)

38% 24 120
Very likely (4)

16% 10 40
Moderately likely (3)

28% 18 54
Slightly likely (2)

6% 4 8
Not at all likely (1)

13% 8 8

answered question 64 230

skipped question -


Avg. Rating 3.6

Q16. If you are not likely to use our new service, why not? ( Leave blank if you are likely to use )

Answer Options

Response Percent Response Count
Do not need a service like
this

0.0 % 0
Satisfied with current way of
property management

33.3 % 8
Cannot pay for a service like
this

50.0 % 8
Not willing to pay for a
service like this

16.7 % 0

Comments

0


answered question 16


skipped question 48


Q17. How interested are you in receiving electronic information about our company?

Answer Options

Response Percent Response Count

Extremely interested (5)

33.3 % 20

Very interested (4)

0.0 % 0

Moderately interested (3)

40.0 % 24

Slightly interested (2)

20.0 % 12

Not at all interested (1)

6.7 % 4


answered question 60


skipped question 4


Avg. Rating 3.33




Q. What are the Services you required from property managers?
Rent Collection/Deposit

64.00

Letting service

64.00

Rental readiness

64.00

Valuation

64.00

Regular Inspection Check (monthly report)

64.00

Other:

Utility bills


Pre vacating inspection check

mail pick up and forwarding
APPENDIX II
Marketing ROI and Break Down

Marketing ROI
Year 1 2 3
Short Term Marketing

Billboards $550 $599 $659
Radio Advertisements $220 $240 $264
News Paper Advertisements $2,200 $2,397 $2,637
PPC Marketing $1,430 $1,558 $1,714
Total Short Term Marketing $4,400 $4,794 $5,274

Intermediate Term Marketing

Brochures $1,650 $1,798 $1,978
Mailers $1,650 $1,199 $1,318
Total Intermediate Marketing $3,300 $2,996 $3,296

Long Term Marketing

Website Search Engine Optimization $1,650 $2,397 $2,637
General Company Branding $1,650 $1,798 $1,978
Total Long Term Marketing $3,300 $4,195 $4,615

Total Marketing Costs $11,000 $11,986 $13,184
Total Net Profits $3,970 $36,765 $91,662
Total Marketing ROI 36.09% 306.74% 695.23%

Marketing Breakdown
Year 1 2 3
Short Term Marketing

Billboards 5.00% 5.00% 5.00%
Radio Advertisements 2.00% 2.00% 2.00%
News Paper Advertisements 20.00% 20.00% 20.00%
PPC Marketing 13.00% 13.00% 13.00%

Intermediate Term Marketing

Brochures 15.00% 15.00% 15.00%
Mailers 15.00% 10.00% 10.00%

Long Term Marketing

Website Search Engine Optimization 15.00% 20.00% 20.00%
General Company Branding 15.00% 15.00% 15.00%

Total Marketing Costs (%) 100.00% 100.00% 100.00%



APPENDIX III
Loan Amortization

Inputs Outputs
Loan Amount $45,000 Expected Payment (EMI) $658.69
Interest Rate 12.50% Total Interest Paid $34,043.13
Loan Term (in Years) 10

Number of Payments Per Year 12


APPENDIX IV
Sales Forecast

In 2011-12, NRI remittances were USD 66.13 Billion, (3, 42, 885.05 Crores),
against n FDI inflow of USD 46.8 billion. Past three years inward remittance
has been upswing. Not been effected by factors such as fragile global
economy and boosted by falling rupee. USA and gulf countries were the top
sources of remittance in India. With Europe, place as third. RBI study finds
40% of such remittances were used for real estate investments. INR Crores No. of Units
NRI Remittances (As per RBI)

342885

NRI remittance in real estate
Assuming 40%
137154

Total 137154

50% of the total were invested in housing sector 68577

Assuming 20% of investment were made in Delhi/NCR during 2011-12 13715

Avg. Price of unit in Delhi/NCR is 2

No. of units own by NRI in Delhi/NCR during 2011-12

6858
In 2008-2010 NRI Remittance in real estate are very high as compared to
2011-12


Estimating the no. of properties own by NRI clients in Delhi/NCR from
2008-2012, multiply the units of 2011-12 by 4
27431
Goal is to manage 10% of the total properties

1372
Estimated properties Under PMS contract after 1st year of operation

129
After first year, business achieved 9 percent of set goal.





APPENDIX V
Monthly Sale
Monthly Sales Analysis - Revenue

Month 1 2 3 4 5 6 7 8 9 10 11 12
Property Management Fees $900 $2,400 $3,900 $3,900 $5,400 $6,900 $6,900 $8,400 $9,900 $9,900 $11,400 $12,900
Ancillary Services $300 $900 $1,500 $1,500 $2,100 $2,700 $2,700 $3,300 $3,900 $3,900 $4,500 $5,100
Totals $1,200 $3,300 $5,400 $5,400 $7,500 $9,600 $9,600 $11,700 $13,800 $13,800 $15,900 $18,000
Monthly Sales Analysis - Units
Month 1 2 3 4 5 6 7 8 9 10 11 12
No. of Managed Unit 9 24 39 39 54 69 69 84 99 99 114 129
Ancillary Services 3 9 15 15 21 27 27 33 39 39 45 51
Totals 12 33 54 54 75 96 96 117 138 138 159 180

Monthly Sales Analysis - Cost of Sales
Month 1 2 3 4 5 6 7 8 9 10 11 12
Property Management Fees $45 $120 $195 $195 $270 $345 $345 $420 $495 $495 $570 $645
Ancillary Services $15 $45 $75 $75 $105 $135 $135 $165 $195 $195 $225 $255
Totals $60 $165 $270 $270 $375 $480 $480 $585 $690 $690 $795 $900

Monthly Sales Analysis - Gross Profit
Months 1 2 3 4 5 6 7 8 9 10 11 12
Totals $1,140 $3,135 $5,130 $5,130 $7,125 $9,120 $9,120 $11,115 $13,110 $13,110 $15,105 $17,100
Gross Total $1,09,440
APPENDIX VI
Yearly Sales





Yearly Sales

Year 1 2 3
Growth (%) 0.0% 30.0% 50.0%
Property Management Fees $82,800 $1,07,640 $1,61,460
Ancillary Services $32,400 $42,120 $54,756
Totals $1,15,200 $1,49,760 $2,16,216

Cost of Sales

Year 1 2 3
Growth (%) 0.0% 30.0% 50.0%
Property Management Fees $4,140 $5,337 $6,644
Ancillary Services $1,620 $2,091 $2,606
Totals $5,760 $7,428 $9,249

Gross Profit

Year 1 2 3
Total $1,09,440 $1,42,332 $2,06,967
APPENDIX VII
Personnel Analysis

Personnel Analysis - Monthly
Month 1 2 3 4 5 6 7 8 9 10 11 12
Relation Manager $642 $642 $642 $642 $642 $642 $642 $642 $642 $642 $642 $642
Property Managers $546 $546 $546 $546 $546 $546 $546 $1,092 $1,092 $1,092 $1,092 $1,092
Field Officer $273 $273 $273 $273 $545 $545 $545 $818 $818 $818 $1,090 $1,090
Handy man $291 $291 $291 $291 $436 $436 $436 $582 $582 $582 $727 $727
Office Boy $145 $145 $145 $145 $145 $145 $145 $145 $145 $145 $145 $145
Administrative $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458
Totals $2,354 $2,354 $2,354 $2,354 $2,772 $2,772 $2,772 $3,736 $3,736 $3,736 $4,154 $4,154
Numbers of Personnel
Month 1 2 3 4 5 6 7 8 9 10 11 12
Relation Manager 1 1 1 1 1 1 1 1 1 1 1 1
Property Managers 1 1 1 1 1 1 1 2 2 2 2 2
Field Officer 1 1 1 1 2 2 2 3 3 3 4 4
Handy Man 2 2 2 2 3 3 3 4 4 4 5 5
Office Boy 1 1 1 1 1 1 1 1 1 1 1 1
Administrative 1 1 1 1 1 1 1 1 1 1 1 1
Totals 7 7 7 7 9 9 9 12 12 12 14 14
Personnel Plan - Yearly
Year 1 2 3
Relation Manager $7,700 $8,162 $8,652
Property Managers $6,550 $6,943 $7,360
Field Officer $3,270 $3,434 $3,605
Handy Man $3,490 $3,665 $3,848
Office Boy $1,740 $1,827 $1,918
Administrative $5,500 $5,775 $6,064
Total $28,250 $29,805 $31,446
APPENDIX VIII
Profit and Loss Statement

Projected Profit and Loss

Year 1 2 3
Sales $1,15,200 $1,49,760 $2,16,216
Cost of Goods Sold $5,760 $7,428 $9,249
Gross Margin 95.00% 95% 96%

Operating Income $1,09,440 $1,42,332 $2,06,967

Expenses

Payroll $37,248 $39,297 $41,458
General and Administrative $25,200 $26,208 $27,256
Marketing Expenses $11,000 $11,986 $13,184
Professional Fees $5,000 $5,000 $5,000
Insurance Costs $500 $500 $500
Travel and Vehicle Costs $9,000 $1,000 $0
Rent and Utilities $5,500 $6,875 $8,594
Miscellaneous Costs $1,850 $1,998 $2,197
Payroll Taxes $0 $0 $0
Total Operating Costs $95,298 $92,863 $98,190

EBITDA $14,142 $49,469 $1,08,777
State Income Tax $692 $3,544 $8,318
Interest Expense $5,490 $5,170 $4,808
Depreciation Expenses $3,990 $3,990 $3,990
Net Profit $3,970 $36,765 $91,662
Profit Margin 3.45% 24.55% 42.39%

Proforma Profit and Loss (Yearly)

Year 1 2 3
Sales $1,15,200 $1,49,760 $2,16,216
Operating Costs $95,298 $92,863 $98,190
EBITDA $14,142 $49,469 $1,08,777
Taxes, Interest, and Depreciation $10,172 $12,704 $17,116
Net Profit $3,970 $36,765 $91,662

APPENDIX IX
Expanded Profit and Loss Statement: First year

Profit and Loss Statement (First Year) Total
Months 1 2 3 4 5 6 7 8 9 10 11 12 1Year
Sales $1,200 $3,300 $5,400 $5,400 $7,500 $9,600 $9,600 $11,700 $13,800 $13,800 $15,900 $18,000 $1,15,200
Cost of Goods Sold $60 $165 $270 $270 $375 $480 $480 $585 $690 $690 $795 $900 $5,760
Gross Margin 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%



Operating Income $1,140 $3,135 $5,130 $5,130 $7,125 $9,120 $9,120 $11,115 $13,110 $13,110 $15,105 $17,100 $1,09,440


Expenses

Payroll $2,354 $2,354 $2,354 $2,354 $2,772 $2,772 $2,772 $3,736 $3,736 $3,736 $4,154 $4,154 $37,248
General and Administrative $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $25,200
Marketing Expenses $917 $917 $917 $917 $917 $917 $917 $917 $917 $917 $917 $917 $11,000
Professional Fees and Licensure $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $417 $5,000
Insurance Costs $42 $42 $42 $42 $42 $42 $42 $42 $42 $42 $42 $42 $500
Travel and Vehicle Costs $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $9,000
Rent and Utilities $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $458 $5,500
Miscellaneous Costs $154 $154 $154 $154 $154 $154 $154 $154 $154 $154 $154 $154 $1,850
Payroll Taxes $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Costs $7,192 $7,192 $7,192 $7,192 $7,610 $7,610 $7,610 $8,573 $8,573 $8,573 $8,991 $8,991 $95,298


EBITDA -$6,052 -$4,057 -$2,062 -$2,062 -$485 $1,510 $1,510 $2,542 $4,537 $4,537 $6,114 $8,109 $14,142
State Income Tax $7 $20 $32 $32 $45 $58 $58 $70 $83 $83 $96 $108 $692
Interest Expense $469 $467 $465 $463 $461 $459 $457 $454 $452 $450 $448 $446 $5,490
Depreciation Expense $333 $333 $333 $333 $333 $333 $333 $333 $333 $333 $333 $333 $3,990


Net Profit -$6,860 -$4,876 -$2,891 -$2,889 -$1,323 $662 $664 $1,684 $3,669 $3,671 $5,238 $7,222 $3,970
APPENDIX X
Expanded Profit and Loss Statement: Second year
Profit and Loss Statement (Second Year)
Quarterly Break Down 20% 30% 25% 25% 100%
Quarter Q1 Q2 Q3 Q4 2 yr
Sales $29,952 $44,928 $37,440 $37,440 $1,49,760
Cost of Goods Sold $1,486 $2,228 $1,857 $1,857 $7,428
Gross Margin 95.0% 95.0% 95.0% 95.0% 95.0%

Operating Income $28,466 $1,13,864 $35,583 $35,583 $3,79,548

Expenses

Payroll $7,859 $11,789 $9,824 $9,824 $39,297
General and Administrative $5,242 $7,862 $6,552 $6,552 $26,208
Marketing Expenses $2,397 $3,596 $2,996 $2,996 $11,986
Professional Fees and Licensure $1,000 $1,500 $1,250 $1,250 $5,000
Insurance Costs $100 $150 $125 $125 $500
Travel and Vehicle Costs $200 $300 $250 $250 $1,000
Rent and Utilities $1,375 $2,063 $1,719 $1,719 $6,875
Miscellaneous Costs $400 $599 $499 $499 $1,998
Payroll Taxes $0 $0 $0 $0 $0
Total Operating Costs $18,573 $27,859 $23,216 $23,216 $92,863

EBITDA $17,095 $25,642 $12,367 $12,367 $85,474
State Income Tax $709 $1,063 $886 $886 $3,544
Interest Expense $2,092 $2,053 $2,013 $1,973 $5,170
Depreciation Expense $998 $998 $998 $998 $3,990

Net Profit $13,297 $21,528 $8,470 $8,511 $72,770
APPENDIX XI
Expanded Profit and Loss Statement: Third year

Profit and Loss Statement (Third Year)
Quarterly Break Down 20% 30% 25% 25% 100
Quarter Q1 Q2 Q3 Q4 3
Sales $43,243 $64,865 $54,054 $54,054 $2,16,216
Cost of Goods Sold $1,850 $2,775 $2,312 $2,312 $9,249
Gross Margin 95.7% 95.7% 95.7% 95.7% 95.7%

Operating Income $41,393 $62,090 $51,742 $51,742 $2,06,967

Expenses

Payroll $8,292 $12,437 $10,364 $10,364 $41,458
General and Administrative $5,451 $8,177 $6,814 $6,814 $27,256
Marketing Expenses $2,637 $3,955 $3,296 $3,296 $13,184
Professional Fees and Licensure $1,000 $1,500 $1,250 $1,250 $5,000
Insurance Costs $100 $150 $125 $125 $500
Travel and Vehicle Costs $0 $0 $0 $0 $0
Rent and Utilities $1,719 $2,578 $2,148 $2,148 $8,594
Miscellaneous Costs $439 $659 $549 $549 $2,197
Payroll Taxes $0 $0 $0 $0 $0
Total Operating Costs $19,638 $29,457 $24,547 $24,547 $98,190

EBITDA $21,755 $32,633 $27,194 $27,194 $1,08,777
State Income Tax $1,664 $2,495 $2,079 $2,079 $8,318
Interest Expense $1,932 $1,889 $1,846 $1,802 $4,808
Depreciation Expense $998 $998 $998 $998 $3,990

Net Profit $17,163 $27,251 $22,272 $22,316 $91,662
















APPENDIX XII
Projected Cash Flow: Yearly

Proforma Cash Flow Analysis - Yearly
Year 1 2 3
Cash From Operations $7,960 $40,755 $95,652
Cash From Receivables $0 $0 $0
Operating Cash Inflow $7,960 $40,755 $95,652

Other Cash Inflows

Equity Investment $10,000 $0 $0
Increased Borrowings $45,000 $0 $0
Sales of Business Assets $0 $0 $0
A/P Increases $0 $0 $0
Total Other Cash Inflows $55,000 $0 $0

Total Cash Inflow $62,960 $40,755 $95,652

Cash Outflows

Repayment of Principal $2,415 $2,734 $3,096
A/P Decreases

$0 $0
A/R Increases $0 $0 $0
Asset Purchases $1,500 $500 $3,000
Dividends $0 $0 $0
Total Cash Outflows $3,915 $3,234 $6,096

Net Cash Flow $59,046 $37,521 $89,556
Cash Balance $59,046 $96,566 $1,86,122

APPENDIX XIII
Expanded Cash Flow: First Year
Cash Flow Analysis (First Year)
Month 1 2 3 4 5 6 7 8 9 10 11 12 Total
Cash From Operations -$6,528 -$4,543 -$2,559 -$2,557 -$990 $994 $996 $2,017 $4,001 $4,004 $5,570 $7,555 $7,960
Cash From Receivables $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Operating Cash Inflow -$6,528 -$4,543 -$2,559 -$2,557 -$990 $994 $996 $2,017 $4,001 $4,004 $5,570 $7,555 $7,960


Other Cash Inflows
Equity Investment $10,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,000
Increased Borrowings $45,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $45,000
Sales of Business Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
A/P Increases $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Cash Inflows $55,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $55,000


Total Cash Inflow $48,472 -$4,543 -$2,559 -$2,557 -$990 $994 $996 $2,017 $4,001 $4,004 $5,570 $7,555 $62,960


Cash Outflows
Repayment of Principal $190 $192 $194 $196 $198 $200 $202 $204 $206 $209 $211 $213 $2,415
A/P Decreases $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
A/R Increases $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Asset Purchases $1,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $1,500
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cash Outflows $1,690 $192 $194 $196 $198 $200 $202 $204 $206 $209 $211 $213 $3,915


Net Cash Flow $46,782 -$4,735 -$2,753 -$2,753 -$1,188 $794 $794 $1,813 $3,795 $3,795 $5,360 $7,342 $59,046
Cash Balance $46,782 $42,047 $39,294 $36,542 $35,353 $36,147 $36,941 $38,754 $42,549 $46,344 $51,704 $59,046 $59,046
APPENDIX XIV
Expanded Cash Flow: Second Year

Cash Flow Analysis (Second Year) Total
Quarterly Growth (%) 20 30 25 25 100
Quarter Q1 Q2 Q3 Q4 2
Cash From Operations $9,590 $14,386 $11,988 $11,988 $47,952
Cash From Receivables $0 $0 $0 $0 $0
Operating Cash Inflow $9,590 $14,386 $11,988 $11,988 $47,952

Other Cash Inflows
Equity Investment $0 $0 $0 $0 $0
Increased Borrowings $0 $0 $0 $0 $0
Sales of Business Assets $0 $0 $0 $0 $0
A/P Increases $8,717 $13,076 $10,897 $10,897 $43,587
Total Other Cash Inflows $8,717 $13,076 $10,897 $10,897 $43,587

Total Cash Inflow $18,308 $27,462 $22,885 $22,885 $91,540

Cash Outflows
Repayment of Principal $1,708 $1,747 $1,787 $1,827 $7,070
A/P Decreases $5,975 $8,963 $7,469 $7,469 $29,876
A/R Increases $0 $0 $0 $0 $0
Asset Purchases $2,398 $3,596 $2,997 $2,997 $11,988
Dividends $6,713 $10,070 $8,392 $8,392 $33,567
Total Cash Outflows $16,795 $24,377 $20,645 $20,685 $82,501

Net Cash Flow $1,513 $3,085 $2,240 $2,200 $9,039
Cash Balance $1,03,634 $1,06,719 $1,08,959 $1,11,159 $1,11,159














APPENDIX XV
Expanded Cash Flow Analysis: Third Year

Cash Flow Analysis (Third Year) Total
Quarterly Growth (%) 20 30 25 25 100
Quarter Q1 Q2 Q3 Q4 3
Cash From Operations $12,914 $19,371 $16,143 $16,143 $64,570
Cash From Receivables $0 $0 $0 $0 $0
Operating Cash Inflow $12,914 $19,371 $16,143 $16,143 $64,570

Other Cash Inflows
Equity Investment $0 $0 $0 $0 $0
Increased Borrowings $0 $0 $0 $0 $0
Sales of Business Assets $0 $0 $0 $0 $0
A/P Increases $10,025 $15,038 $12,531 $12,531 $50,125
Total Other Cash Inflows $10,025 $15,038 $12,531 $12,531 $50,125

Total Cash Inflow $22,939 $34,409 $28,674 $28,674 $1,14,696

Cash Outflows
Repayment of Principal $1,869 $1,911 $1,954 $1,999 $7,733
A/P Decreases $7,170 $10,756 $8,963 $8,963 $35,852
A/R Increases $0 $0 $0 $0 $0
Asset Purchases $3,229 $4,843 $4,036 $4,036 $16,143
Dividends $9,040 $13,560 $11,300 $11,300 $45,199
Total Cash Outflows $21,307 $31,069 $26,253 $26,297 $1,04,926

Net Cash Flow $1,632 $3,340 $2,421 $2,377 $9,769
Cash Balance $1,12,791 $1,16,131 $1,18,552 $1,20,929 $1,20,929














PROJECT DETAILS




Student Details
Student Name Yatish Talvadia
Register Number 110917004 Section / Roll No 4
Email Address
yatish.ursqft@gmail.com
yashiyatish@gmail.com
Phone No (M) +91-8750531224

Project Details
Project Title
Property Management Service: New Business Venture

Project Duration 11 Months
Date of
reporting
9
th
July 2012(Monday)

Organization Details
Organization
Name
URSQFT Infrastructure Pvt. Ltd.
Full postal address
with pin code
Plot No. 1, Basement, Kehar Singh Estate, Westend Marg, Saket
Website address www.ursqft.com

Faculty Name Prof. Dr. Shiva Prasad H.C
Full contact
address with pin
code
Professor,
Department of Humanities and Management
Manipal Institute Of Technology, manipal, Karanataka
Email address hcshipra@gmail.com