Case Problem Statement

One businessman after having many successful years of sweet shop wants to invest in Real Estate. His plan is to buy a luxury f
loan for buying the flat with DEBT:EQUITY ratio as 70:30. He is ready to invest the euity portion and looking for debt from c
planned to pay back the debt through the rent he recieved and keep the flat as collatoral against the debt. He is looking to buy a
expecting a monthly rent of Rs. 2.50 Lacs per month.

Considering this case as a classic / simple case of Non-Recourse Debt (Project Finance), we prepared the financial model and a
collection and debt repayment to figured out if the project is feasible for financing or not. We took proper assumptions for the

Please analyse each sheet, each term and formula used in the sheet. In Module 4 you are supposed to prepare a same financial
infrastructure projects
Project Cost (CapEx) Rate
(Rs./sq.ft) 3000 % of Project Cost
Flat 2500 7,500,000 73.7%
Interior Decoration 125 375,000 3.7%
Furniture 250 750,000 7.4%
Fixtures 10 30,000 0.3%
Building Registration 10 30,000 0.3%

Broker Fee 75 225,000 2.2%

Stamp Duty 250 750,000 7.4%
Fund Raising Fee 25 75,000 0.7%
Tranfer of Deed Fee 50 150,000 1.5%

Interest During Moratorium 60 180,000 1.8%

Loan and Documentation Fee 25 75,000 0.7%

CSR, HSE, Training 10 30,000 0.3%

Total Project Cost 10,170,000

O & M Cost (Monthly Breakdown) (OpEx)

Building Maintainence 15 45,000
Utilities (Electric + Water + Internet) 4 12,000
Salary (Maid + Acountant) 4 12,000
Plumber + Electrician + Misc etc 3 9,000
Insurance (0.35 %) 10 30,000

Total O&M Cost (per year) 966,000

Revenue Parameters
City Mumbai
Size (Sq. ft) 3,000.00
Avg. Occupancy (Months) 10.00
Rent (Rs./Month) 250,000.00
Deposit (Months) 4.00 (OR One-Third of Annual Rent)
Rent Appreciation 5%
Interest on Rental Deposit 8%

Year---> 1 2 3 4 5 6 7 8
Rent 2.500 2.625 2.756 2.894 3.039 3.191 3.350 3.518
Interest on Deposit 0.067 0.070 0.074 0.077 0.081 0.085 0.089 0.094
Revenue (million INR) 2.567 2.695 2.830 2.971 3.120 3.276 3.440 3.612
 9 10 11 12 13 14 15 16 17 18 19
3.694 3.878 4.072 4.276 4.490 4.714 4.950 5.197 5.457 5.730 6.017
0.098 0.103 0.109 0.114 0.120 0.126 0.132 0.139 0.146 0.153 0.160
3.792 3.982 4.181 4.390 4.609 4.840 5.082 5.336 5.603 5.883 6.177
 20 21 22 23 24 25
6.317 6.633 6.965 7.313 7.679 8.063
0.168 0.177 0.186 0.195 0.205 0.215
6.486 6.810 7.151 7.508 7.884 8.278
 PROJECT DETAILS ASSUMPTIONS
Size in Sq. Ft 3000 10.17 Inflation 4.00% Debt rate
Equity 30% 3.05 DDT 0.00% Moratorium
Debt 70% 7.12 Tax Holiday 0 yrs Debt tenure
Debt Service Resv (DSR) 0.25 yrs Tax rate 25.00% Depreciation

Year ------> Today COD 1 2

Date ---> 5-Jul-2020 4-Oct-2020 31-Oct-2021 31-Oct-2022
Revenue Collection
Rent 2.500 2.625
Interest on Deposit 0.067 0.070
Other Sources 0.000 0.000
Total Revenue (million INR) 2.567 2.695
Operating expenses
Building Maintainence 0.540 0.562
Utilities (Electric + Water + Internet) 0.144 0.150
Salary (Maid + Acountant) 0.144 0.150
Plumber + Electrician + Misc etc 0.108 0.112
Insurance (0.35 %) 0.030 0.031
Total Operating Expenses 0.966 1.005

EBITDA 1.601 1.690

Non Operating Expenses
Interest payment -0.696 -0.650
Depreciation -0.525 -0.488
Total Non-Operating Expenses -1.221 -1.139
Income before taxes 0.380 0.552
Tax -0.095 -0.138
Net Income 0.285 0.414
Cash Flow
Equity -3.05 0.000 0.000
Net Income 0.285 0.414
Add back depreciation 0.525 0.488
Principal Payment (-) -0.439 -0.484
CSR (0.50 % of Net Income) (-) -0.004 -0.005
Final Project Cashflow (Equity) -3.05 0.0 0.367 0.414

DSCR ---> 1.33 1.37

Final Project Cashflow -10.17 0.0 1.502 1.548

ASSUMPTIONS RESULTS
10.0% USD/INR 70.00 Equity IRR 23.28%
0.25 yrs Discount 10% Min DSCR 1.33
10.0 yrs Construction Time 0.25 yrs Avg DSCR 1.55
7.00% MAT 18.5% Project IRR 17.10%

3 4 5 6 7 8 9
31-Oct-2023 31-Oct-2024 31-Oct-2025 31-Oct-2026 31-Oct-2027 31-Oct-2028 31-Oct-2029

2.756 2.894 3.039 3.191 3.350 3.518 3.694

0.074 0.077 0.081 0.085 0.089 0.094 0.098
0.000 0.000 0.000 0.000 0.000 0.000 0.000
2.830 2.971 3.120 3.276 3.440 3.612 3.792

0.584 0.607 0.632 0.657 0.683 0.711 0.739

0.156 0.162 0.168 0.175 0.182 0.189 0.197
0.156 0.162 0.168 0.175 0.182 0.189 0.197
0.117 0.121 0.126 0.131 0.137 0.142 0.148
0.032 0.034 0.035 0.036 0.038 0.039 0.041
1.045 1.087 1.130 1.175 1.222 1.271 1.322

1.785 1.885 1.990 2.101 2.217 2.340 2.470

-0.600 -0.545 -0.483 -0.416 -0.341 -0.259 -0.168

-0.454 -0.422 -0.393 -0.365 -0.340 -0.316 -0.294
-1.054 -0.967 -0.876 -0.781 -0.681 -0.575 -0.462
0.731 0.918 1.114 1.320 1.537 1.766 2.008
-0.183 -0.229 -0.278 -0.330 -0.384 -0.441 -0.502
0.548 0.688 0.835 0.990 1.152 1.324 1.506

0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.548 0.688 0.835 0.990 1.152 1.324 1.506
0.454 0.422 0.393 0.365 0.340 0.316 0.294
-0.534 -0.590 -0.651 -0.719 -0.793 -0.876 -0.967
-0.005 -0.006 -0.006 -0.007 -0.007 -0.008 -0.009
0.463 0.515 0.571 0.629 0.691 0.756 0.825

1.41 1.46 1.51 1.56 1.62 1.67 1.73

1.597 1.650 1.705 1.764 1.826 1.891 1.959

Numbers in mill INR
Blue coloured cells are inputs

10 11 12 13 14 15 16 17
31-Oct-2030 31-Oct-2031 31-Oct-2032 31-Oct-2033 31-Oct-2034 31-Oct-2035 31-Oct-2036 31-Oct-2037

3.878 4.072 4.276 4.490 4.714 4.950 5.197 5.457

0.103 0.109 0.114 0.120 0.126 0.132 0.139 0.146
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
3.982 4.181 4.390 4.609 4.840 5.082 5.336 5.603

0.769 0.799 0.831 0.865 0.899 0.935 0.973 1.011

0.205 0.213 0.222 0.231 0.240 0.249 0.259 0.270
0.205 0.213 0.222 0.231 0.240 0.249 0.259 0.270
0.154 0.160 0.166 0.173 0.180 0.187 0.195 0.202
0.043 0.044 0.046 0.048 0.050 0.052 0.054 0.056
1.375 1.430 1.487 1.547 1.608 1.673 1.740 1.809

2.607 2.751 2.903 3.063 3.231 3.409 3.596 3.793

-0.068 0.000 0.000 0.000 0.000 0.000 0.000 0.000

-0.273 -0.254 -0.236 -0.220 -0.204 -0.190 -0.177 -0.164
-0.341 -0.254 -0.236 -0.220 -0.204 -0.190 -0.177 -0.164
2.266 2.497 2.666 2.843 3.027 3.219 3.419 3.629
-0.567 -0.624 -0.667 -0.711 -0.757 -0.805 -0.855 -0.907
1.700 1.873 2.000 2.132 2.270 2.414 2.565 2.722

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

1.700 1.873 2.000 2.132 2.270 2.414 2.565 2.722
0.273 0.254 0.236 0.220 0.204 0.190 0.177 0.164
-1.067 0.000 0.000 0.000 0.000 0.000 0.000 0.000
-0.010 -0.011 -0.011 -0.012 -0.012 -0.013 -0.014 -0.014
0.896 2.116 2.225 2.340 2.462 2.591 2.728 2.872

1.80

2.030 2.116 2.225 2.340 2.462 2.591 2.728 2.872

 18 19 20 21 22 23 24 25
31-Oct-2038 31-Oct-2039 31-Oct-2040 31-Oct-2041 31-Oct-2042 31-Oct-2043 31-Oct-2044 31-Oct-2045

5.730 6.017 6.317 6.633 6.965 7.313 7.679 8.063

0.153 0.160 0.168 0.177 0.186 0.195 0.205 0.215
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
5.883 6.177 6.486 6.810 7.151 7.508 7.884 8.278

1.052 1.094 1.138 1.183 1.231 1.280 1.331 1.384

0.280 0.292 0.303 0.316 0.328 0.341 0.355 0.369
0.280 0.292 0.303 0.316 0.328 0.341 0.355 0.369
0.210 0.219 0.228 0.237 0.246 0.256 0.266 0.277
0.058 0.061 0.063 0.066 0.068 0.071 0.074 0.077
1.882 1.957 2.035 2.117 2.201 2.289 2.381 2.476

4.001 4.220 4.451 4.694 4.949 5.219 5.503 5.802

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

-0.153 -0.142 -0.132 -0.123 -0.114 -0.106 -0.099 -0.092
-0.153 -0.142 -0.132 -0.123 -0.114 -0.106 -0.099 -0.092
3.848 4.078 4.318 4.571 4.835 5.112 5.404 5.710
-0.962 -1.019 -1.080 -1.143 -1.209 -1.278 -1.351 -1.427
2.886 3.058 3.239 3.428 3.626 3.834 4.053 4.282

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

2.886 3.058 3.239 3.428 3.626 3.834 4.053 4.282
0.153 0.142 0.132 0.123 0.114 0.106 0.099 0.092
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
-0.015 -0.016 -0.017 -0.018 -0.019 -0.020 -0.021 -0.022
3.024 3.185 3.354 3.533 3.722 3.921 4.131 4.352

3.024 3.185 3.354 3.533 3.722 3.921 4.131 4.352

 Debt /Loan Repayment Schedule

Debt Amount 7.12 Period No. Date (EoQ) Int. Pmt. Prin. Pmt. Total Pmt. Prin. Balance
Debt rate 10.00% 0 4-Oct-2020 0.18 0 0.18 7.12
Moratorium 0.25 yrs 1 2-Jan-2021 0.18 0.11 0.28 7.01
Term 10.0 yrs 2 2-Apr-2021 0.18 0.11 0.28 6.91
Payment Periods 40 3 1-Jul-2021 0.17 0.11 0.28 6.79
One period is one quarter 4 29-Sep-2021 0.17 0.11 0.28 6.68
COD 4-Oct-2020 5 28-Dec-2021 0.17 0.12 0.28 6.56
First Quarter End 2-Jan-2021 6 28-Mar-2022 0.16 0.12 0.28 6.44
7 26-Jun-2022 0.16 0.12 0.28 6.32
8 24-Sep-2022 0.16 0.13 0.28 6.20
9 23-Dec-2022 0.15 0.13 0.28 6.07
10 23-Mar-2023 0.15 0.13 0.28 5.94
11 21-Jun-2023 0.15 0.14 0.28 5.80
12 19-Sep-2023 0.15 0.14 0.28 5.66
13 18-Dec-2023 0.14 0.14 0.28 5.52
14 17-Mar-2024 0.14 0.15 0.28 5.37
15 15-Jun-2024 0.13 0.15 0.28 5.23
16 13-Sep-2024 0.13 0.15 0.28 5.07
17 12-Dec-2024 0.13 0.16 0.28 4.92
18 12-Mar-2025 0.12 0.16 0.28 4.75
19 10-Jun-2025 0.12 0.16 0.28 4.59
20 8-Sep-2025 0.11 0.17 0.28 4.42
21 7-Dec-2025 0.11 0.17 0.28 4.25
22 7-Mar-2026 0.11 0.18 0.28 4.07
23 5-Jun-2026 0.10 0.18 0.28 3.89
24 3-Sep-2026 0.10 0.19 0.28 3.70
25 2-Dec-2026 0.09 0.19 0.28 3.51
26 2-Mar-2027 0.09 0.20 0.28 3.32
27 31-May-2027 0.08 0.20 0.28 3.11
28 29-Aug-2027 0.08 0.21 0.28 2.91
29 27-Nov-2027 0.07 0.21 0.28 2.70
30 25-Feb-2028 0.07 0.22 0.28 2.48
31 25-May-2028 0.06 0.22 0.28 2.26
32 23-Aug-2028 0.06 0.23 0.28 2.03
33 21-Nov-2028 0.05 0.23 0.28 1.80
34 19-Feb-2029 0.05 0.24 0.28 1.56
35 20-May-2029 0.04 0.24 0.28 1.32
36 18-Aug-2029 0.03 0.25 0.28 1.07
37 16-Nov-2029 0.03 0.26 0.28 0.81
38 14-Feb-2030 0.02 0.26 0.28 0.55
39 15-May-2030 0.01 0.27 0.28 0.28
40 13-Aug-2030 0.01 0.28 0.28 0.00
 Date (EoQ) Int. Pmt. Prin. Pmt. Total Pmt.
31-Oct-2021 0.696 0.44 1.134
31-Oct-2022 0.650 0.48 1.134
31-Oct-2023 0.600 0.53 1.134
30-Oct-2024 0.545 0.59 1.134
30-Oct-2025 0.483 0.65 1.134
30-Oct-2026 0.416 0.72 1.134
30-Oct-2027 0.341 0.79 1.134
29-Oct-2028 0.259 0.88 1.134
29-Oct-2029 0.168 0.97 1.134
29-Oct-2030 0.068 1.07 1.134
Total 4.225 7.12 11.344