TECHNO ECONOMIC FEASIBILITY REPORT

ON

HOTEL-CUM-RESTAURANT

THE EDEN
AT

NADDI
TEHSIL DHARMSHALA DISTT-KANGRA (H.P)
 MARKETING

Himachal pradesh which has been so well endowed by nature has recently come up very fast as a
major tourist destination in India. Apart from the natural beauty which offers a lot to the tourists, the
adventure seekers, the nature lovers, the peaceful and safe envirinment of the state has become a
major attraction for the visitors. It is the only state which provides opportunities for variety of activities in
which the tourists belonging to different age groups and havingdiffrent tastes can engage themselves. It
offfers an exposure to district culture and life style of its own, monuments of ancient art in the form of
temple and forts. monastries rich wild life and numerous adventure activities like
trekking,mountaineering,riverrafting,sking,hang gliding, para gliding, angling etc.

Dharmshala is the headquarter of Kangra ditrict. Dharmshala is often referred to as the second capital
of Himachal Pradesh after Shimla.Hon'ble Chief Minister of Himachal Pradesh hold its cabinet meeting
at Dharmshala . It is also known as the second wettest place in the country after Chirapunji.

8 km up at 6500 above mean sea leval is Mcleodganj, the seat of Tibetan Govt.in exile and hub of
attraction for the international diplomacy, foreign tourist and patients suffering from chronic diseases
who find the tibetan system of medicines quite effective and flock to the two physicians or to the Tibetan
Institute of Astrophysics and medicines.

Naddi is just 5km away from Mcleodganj. The area is fully surrounded by the big mountains. Just 1km
from Naddi there is natural Lake name "Dal L ake" for which the people from far & wide come for picnic
and enjoy the scenic beauty of the hilly area.

Dharmshala is well connected by road with all the places.Hardly 10km down hills at gaggal is an Airport
from where bi-weekly flights are opreating between Delhi-Shimla-Dharmshala. Kangra mandir railway
station is hardly 18km from Dharmshala.

The Himachal Pradesh Cricket Association has with the help of BCCI has got constructed the Cricket
Stadium in Dharmsala and Ranji, IPL and other International cricket matches are being organised in
Dharmsala which has become a unique attraction to the indian as well as to the foreign
resident/tourists.

There is tremendous tourism potential in and around Dharmshala by way of adventure tourism including
mountaineering centre, Mcleodganj and pilgrimage tourism to holy shrines like Chamunda Mata ,
Brijeshwari Devi Mata , Chintpurni Mata and Jawal ji Mata

The Govt accomodation available at Dhramshala/Mcleodganj is not adequate even to meet the
requirement of visiting officers and tourists.

Due to acute shortage of accomodation in Dharmshala, the tourists see wide gap between the policies
and practices, If immediate step are not taken to add more bed accomodation and facilitates,it is feared
that Dharmshala would lose its emerging pioneering status to those status who may provide better
incentives to tourism industry.
 FINANCIAL

S. No. PARTICULARS Rs. in LAKHS.

1 Land 14.43
2 Building 112.15
3 Furniture/Fixture, Linen & Drappery 12.51
4 Misc. Fixed Assets 12.66
5 Contingency 1.26
6 Pre-operative Expenses 4.30
TOTAL 157.31

LAND

Mr Vikas Dhiman, owner has a piece of land at Naddi where he proposed to construct the
the hotel.The detail of land is given in enclosed documents The value of land has been
taken at Rs. NIL

BUILDING

As per deatiled estimate of the building prepared by the promoter's Architect, the total cost of
construction works out to Rs.112.15 Lakh inclusive of electric, sanitary and water suppy
installation.

FURNITURE & FIXTURE

The detail of furniture & fixture is given in the Annexture- V and the total cost works out to
Rs. 12.51 Lakh. The items included in the Annexure are available in the surrounding market
without any difficulty on competitive rates.

MISC. FIXED ASSETS

The detail of misc. fixed assets is given in the Annexture- VI and the total cost works out to
Rs. 12.66 Lakh. The items included in the Annexure are available in the surrounding market
without any difficulty on competitive rates.

CONTINGENCY

The detail of above expenses is given in Annexure- VII. This has been worked out at 3% of
the furniture & fixture and Misc. fixed assets to take care of the escalationin prices etc. The
amount works out at Rs. 1.26 Lakh.
 MEANS OF FINANCE

The proposed project is costing Rs. 157.31 Lakh and shall be financed as under:-

S.No. PARTICULARS Rs. In Lakhs

1 Promoters' Share 107.31

2 Loan from bank 50.00

Total 157.31

NOTE:- Subsidy from Tourism department whether centre or state is not considered as the
same will be released only after the completion of the hotel building.

PROMOTERS' SHARE

Promoters' share is Rs. 107.31 Lakh which works out to be 68.22 of the total cost of the
project. This amount shall be invested by the promoter out of their own sources.

TERM LOAN

The promoter proposes to avail term loan of Rs. 50 Lakh which works out to 31.78 of the
total cost of project.
 COST OF PRODUCTION AND PROFITABILITY

The statement showing estimated profitability spread over a period of 7 years is given in
Annexure- . The average occupancy during 1st & 2nd year has been assumed at 35%
which is increased to 40% from 3rd year onward. The estimate is based on the following
assumptions.:-

1 The detail of the overheads inclusive of power requirement is given in Annexure - XII.
Average assumed is 60%, 65% and 70% in the 1st, 2nd and 3rd year onward respectively.

2 The detail of manpower requirement and annual wage bill s given in Annexure- XI. The total
manpower requirement is 12 no's and the annual wage bill works out to Rs. 8.28 Lakh in the
1st year.

3 Interest on term loan has been calculated at 13.50% as per detail given in Annexure- XVI.

4 Depreciaton has been calculated on WDV method and the detail is given in Annexure-XVII.
Depreciation of 10% on building and furniture & fixture and 15% of Misc. fixed assets has
been considered. Contingency expenses have also been capitalised while providing the
depreciation.

Profitability statement indicates sound financial position of the unit and is therefore
recommended for speedy implementation.
 ECONOMIC VIABILITY
CASH FLOW STATEMENT

The Projected cash flow statement is given in Annexure-- XIX. The repayment will start from
the ist year onward i.e after 6th months of completion of the construction. The cash flow
statement shows significant accumulation of surplus which is considered sufficicant to repay
the term loan instalments.

PROJECTED BALANCE SHEET

The projected Balance Sheet is given in Annexure -- XX. Enough reserves and surplus
would be generated by the unit as is apparent from the projected Balance Sheet. The overall
financial position of the unit is considered sound.

DEBT SERVICE COVERAGE RATIO

Calculation of Debt Service Coverage Ratio is given in Annexure-- XXI.The average DSCR
works out to 2.01: 1. which can be termed as satisfactory.

BREAK-EVEN POINT

Calculation of BEP is given in Annexure-XXII. The BEP is based on the 3rd year of operation
i.e. 40% occupancy and it works out to 32.68%.

CONCLUSION AND RECOMMENDATION

Tourism is an ever growimg industry and is also an important source of revenue. As per the
latest Tourism policy of Govt of Himachal Pradesh, tourism is to be promoted in a big way. It
will be one of the good hotels of its kind in this area. Moreover employment opportunities
shall be generated for the local people. Keeping this in view, there appears to be good
scope for promoting a hotel.
 INTRODUCTION

Mr.VIKAS DHIMAN have proposed to set up a hotel at Naddi, Upper Dharmsala, Distt
kangra (H.P).

The aforesaid Hotel will be run under the name " THE EDEN "

The proposed hotel will consist of 13 double bed-rooms with attached toilets, In addition to
this the hotel shall have one spacious restaurant. The proposed hotel shall provide all
modern facilities and amenties to the tourists.

The cost of the hotel project has been estimated at Rs. 157.31 Lakh, and the same shall be
met out of Term Loan to the extent of 50.00 lakh. the detail of complete project is given
seperately.
 ANNEXURE-I

PROPOSED ACCOMODATION

GROUND FLOOR

Parking

FIRST FLOOR

Reception
Restaurant- attached toilets
Kitchen
1 double bed-room with attached toilet

SECOND FLOOR

4 double bed-rooms with attached toilets

THIRD FLOOR

4 double bed-rooms with attached toilets

FOURTH FLOOR

4 double bed-rooms with attached toilets

TOTAL BED CAPACITY 26 BEDS

 ANNEXURE-II

PROPOSED OCCUPANCY

The occupancy has been assumed as under:-

First Year 35%

Second Year 35%

Third year & Onward 40%

 LIST OF ANNEXURES

S.NO. PARTICULARS ANNEXURE

1 PROPOSED ACCOMODATION I
2 PROPOSED OCCUPANCY II
3 DETAIL OF LAND (DOCUMENTS ENCLOSED) III
4 DETAIL OF BUILDING (ABSTRACT OF COST ENCLOSED) IV
5 DETAIL OF FURNITURE/FIXTURE,LINEN.DRAPPERY AND V
CROCKERY/CUTLERY
6 MISC. FIXED ASSETS VI
7 CONTINGENCY VII
8 PRE-OPERATIVE EXPENSES VIII
9 GROSS INCOME STATEMENT IX
10 REQUIREMENT OF FOOD STUFFS X
11 DETAIL OF MAN POWER REQUIREMENT XI
12 OVERHEADS XII
13 REPAIR & MAINTENANCE XIII
14 INSURANCE XIV
15 REPLACEMENTS XV
16 INTEREST ON TERM LOAN & REPAYMENT XVI
17 DEPRECIATION ON FIXED ASSETS XVII
18 PROJECTED PROFITABILITY XVIII
19 PROJECTED CASH-FLOW STATEMENT XIX
20 PROJECTED BALANCE SHEET XX
21 PROJECTED DEBT SERVICE COVERAGE RATIO XXI
22 PROJECTED BREAK-EVEN POINT XXII
 DETAIL OF FURNITURE& FIXTURE, LINEN & DRAPPERY ETC
ANNEXURE-V

FURNITURE & FIXTURE

S.NO. ITEMS QTY RATE TOTAL

a Double Beds 13 10000 130000

b Easy Chairs 26 4500 117000
c Centre Tables 13 3000 39000
d Bed Side Tables 26 1000 26000
e Dinning Chairs 32 2500 80000
f Dinning Tables 8 7500 60000
g Wooden wardrobe/racks 13 5000 65000
h Carpet in rooms Lump-sum 100000
i Reception Furniture Lump-sum 25000
j Reception Counter Lump-sum 25000
k Office Furniture Lump-sum 20000
l Curtain Cloth & Blinds Lump-sum 45000
m Misc. Items, like buckets, mugs
waster paper baskets, flower pots
ashtrays etc. Lump-sum 30000

TOTAL 762000

LINEN DRAPPERY

S.NO. ITEMS QTY RATE TOTAL

a Matresses 26 4000 104000

b Pillows 52 300 15600
c Bed Sheet 52 600 31200
d Pillow Covers (Pair) 52 200 10400
e Bed Covers 26 1500 39000
f Towels 52 250 13000
g Blankets 26 2500 65000
h Quilts 26 2000 52000
i Foot mats 26 350 9100

TOTAL 339300

CROCKERY/CUTLERY/KITCHEN UTENSILS ETC.

a Kitchen Utensils Lump-sum 75000

b Crockery/cutlery etc. Lump-sum 75000

150000

Grand Total 1251300

SAY RS. 12.51 LACS

 ANNEXURE-VI

MISC. FIXED ASSETS

S.NO. PARTICULARS QTY RATE TOTAL

a Room Heaters 13 1000 13000

b Television (Colour) 22" LCD for Rooms 13 15000 195000

c Television (Colour) for Dinning hall (LCD) 1 35000 35000

d Fire Fighting Equipments 13 3000 39000

e Deep-freezer 1 3000 3000

f Coffee Machine 1 6000 6000

g Cooking Gas 2 15000 30000

h EPABX Lump-sum 50000

i Juicer/Mixer/Grinder/Kitchen Equip. Lump-sum 15000

j Computer,Printer & etc Lump-sum 30000

k Lift 1 850000

TOTAL 1266000

SAY RS. 12.66 LACS

 ANNEXURE-VII

CONTINGENCIES

These are taken to account for the unforeseen escalation in the prices of building,
furniture & fixture and Misc. fixed assets

5% OF FURNITURE.FIXTURE & MISC FIXED ASSETS.

Building It is already taken in

the estimate.
Furniture & Fixture 1251300

Misc. Fixed Assets 1266000

Total 2517300

SAY RS. 25.17 LACS

5% of 25.17 = 1.26 Lacs

 ANNEXURE-VIII
PRE-OPERATIVE EXPENSES

S.NO. PARTICULARS TOTAL

A Legal Fee, Consultancy etc. 15000

B T.A. 25000

C Postage & Stationery 5000

D. Misc. Expenses 10000

E. Establishment during construction 60000

F. Security Deposits with various Govt Deptt 15000

G Intt. During Construction Average 300000

TOTAL 430000

SAY RS. 4.30 LACS

 TOTAL COST OF THE PROJECT:

PARTICULARS AMOUNT

1 LAND 14.43

2 BUILDING 112.15

3 FURNITURE & FIXTURE 12.51

4 MISC. FIXED ASSETS 12.66

5 CONTINGENCIES 1.26

6 PRE-OPERATIVE EXPENSES 4.30

TOTAL 157.31

MEANS OF FINANCE:

1 TERM LOAN 50.00

2 PROMOTERS' SHARE 107.31

TOTAL 157.31

DER 0.47 : 1
 ANNEXURE-XVI
TERM LOAN REPAYMENT:
AND
INTEREST SCHEDULE

S. NO. OPENING REPAYMENT CLOSING INTEREST

YEAR BALANCE BALANCE 13.50%

Ist Year 50.00 3.57 46.43 6.75

2nd Year 46.43 7.74 38.69 6.27

3rd Year 38.69 7.74 30.95 5.22

4th Year 30.95 7.74 23.21 4.18

5th Year 23.21 7.74 15.48 3.13

6th Year 15.48 7.74 7.74 2.09

7th Year 7.74 7.74 - 1.04

 ANNEXURE-XVII

DEPRECIATION SCHEDULE
ON W.D.V. BASIS

PARTICULARS NIL 10% 15% TOTAL

LAND 14.43 14.43

BUILDING 112.15 112.15

FURNITURE & FIXTURE 12.51 12.51

MISC. FIXED ASSETS 12.66 12.66

CONTINGENCIES 0.56 0.34 0.90

PRE-OPERATIVE EXP. 4.20 0.10 4.30

TOTAL 14.43 129.42 13.10 156.95

W.D.V METHOD

IST YEAR DEP 0 12.94 1.97 14.91

BALANCE 14.43 116.48 11.14 142.04

2ND YEAR DEP 0 11.65 1.67 13.32

BALANCE 14.43 104.83 9.46 128.72

3RD YEAR DEP 0 10.48 1.42 11.90

BALANCE 14.43 94.35 8.05 116.82

4TH YEAR DEP 0 9.43 1.21 10.64

BALANCE 14.43 84.91 6.84 106.18

5TH YEAR DEP 0 8.49 1.03 9.52

BALANCE 14.43 76.42 5.81 96.66

6TH YEAR DEP 0 7.64 0.87 8.51

BALANCE 14.43 68.78 4.94 88.15

7TH YEAR DEP 0 6.88 0.74 7.62

BALANCE 14.43 61.90 4.20 80.53
 ANNEXURE-IX
GROSS INCOME STATEMENT

A) ROOM RENT

FIRST FLOOR

STD 1 Double bed-room with attached toilets @ Rs. 1500 per room per day

1 X 1500 X 365 = 547500

SECOND FLOOR

STD 2 Double bed-room with attached toilets @ Rs. 1500 per room per day

2 X 1500 X 365 = 1095000

DELUXE 2 Double bed-room with attached toilets @ Rs. 2250 per room per day

2 X 2250 X 365 = 1642500

THIRD FLOOR

STD 2 Double bed-room with attached toilets @ Rs. 1500 per room per day

2 X 1500 X 365 = 1095000

DELUXE 2 Double bed-room with attached toilets @ Rs. 2250 per room per day

2 X 2250 X 365 = 1642500

FOURTH FLOOR

STD 2 Double bed-room with attached toilets @ Rs. 1500 per room per day

2 X 1500 X 365 = 1095000

DELUXE 2 Double bed-room with attached toilets @ Rs. 2250 per room per day

2 X 2250 X 365 = 1642500

TOTAL 8760000
B) CATERING INCOME

40 % of Room Rent 3504000

Grand Total 12264000

Say Rs. 122.64 lacs

INCOME DURING DIFFERENT YEARS AS PER ASSUMED OCCUPANCY

1ST YEAR 2ND YEAR 3RD YEAR & ONWARD

35% 35% 40%

42.92 42.92 49.06
 ANNEXURE-X
REQUIREMENT OF RAW-FOOD STUFFS

( 40% of Catering Income)

Rs. In lacs

Ist Year 35% 3504000 X 40% X 35% 490560 4.9056

2nd Year 35% 3504000 X 40% X 35% 490560 4.9056

3rd Year 40% 3504000 X 40% X 40% 560640 5.6064

& Onward
 ANNEXURE-XI
DETAIL OF MANPOWER REQUIREMENT

S.NO. PARTICULARS NO. MONTHLY SALARY AMOUNT( RS.)

1 Manager-cum-Receptionist 1 12500 150000

2 Head Cook 1 10000 120000

3 Asstt Cook 2 7500 180000

4 Attendant/Waiters 4 5000 240000

5 House Keeper 1 3000 36000

6 Accountant/Clerk 1 3500 42000

7 Masalchi 1 2500 30000

8 Chowkidar 1 2500 30000

Total 828000

Say Rs. 8.28 Lacs

5% increase assumed every year from 2nd year onward

1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th

8.28 8.69 9.13 9.59 10.06 10.57 11.10 11.65 12.23 12.84
 ANNEXURE-XII
DETAIL OF OVERHEADS

S.NO. PARTICULARS AMOUNT( RS.)

A POWER 240000

B WATER 12000

C LAUNDARY EXPENSES 54000

D COOKING GAS 60000

E FREE FOOD TO STAFF 84000

F PRINTING & STATIONERY 9000

G TOILET & SANITARY EXPENSES 48000

H MISC OFFICE EXPENSES 150000

Total 657000

Say Rs. 6.57 Lacs

AVERAGE ASSUMED

1ST 2ND 3RD ONWARD

60% 65% 70%

3.94 4.27 4.60

 ANNEXURE-XIII
REPAIR AND MAINTENANCE

THESE EXPENSES ARE ASSUMED AT 1% ,.2% AND 3% OF THE COST OF BUILDING , FURNITURE & FIXTURE
AND MISC. FIXED ASSETS IN THE 1ST, 2ND AND 3RD YEAR OF OPERATION RESPECTIVELY. THEREAFTER
THESE EXPENSES ARE ASSUMED TO BE CONSTANT AT 3% PER ANNUM.

1ST YEAR 156.95 X 1% = 1.57

2ND YEAR 156.95 X 2% = 3.14

3RD YEAR & 156.95 X 3% = 4.71

ONWARD

ANNEXURE-XIV
INSURANCE

THESE ARE ASSUMED AT 0.50% OF THE FIXED ASSETS

WHICH WORKS OUT TO Rs. 0.78 LACS FOR ALL THE YEARS

ANNEXURE-XV
REPLACEMENTS

THIS HAS BEEN TAKEN AT Rs. 30000/- PER YEAR FROM 2ND YEAR
ONWARD TO TAKE CARE OF REPLACEMENTS OF CROCKERY/CUTLERY AND
LINEN & DRAPPERY.
SAY Rs. 0.30 LAC
 ANNEXURE-XVIII
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V VI VII

INCOME

Room Rent/Restaurant sale 42.92 42.92 49.06 49.06 49.06 49.06 49.06

TOTAL INCOME 42.92 42.92 49.06 49.06 49.06 49.06 49.06

DIRECT EXPENSES

Raw Materials 4.91 4.91 5.61 5.61 5.61 5.61 5.61

Salary & Wages 8.28 8.69 9.13 9.59 10.06 10.57 11.10
Overheads 3.94 4.27 4.60 4.60 4.60 4.60 4.60
Repair & Maint. 1.57 3.14 4.71 4.71 4.71 4.71 4.71
Advertisement 0.12 0.12 0.12 0.12 0.12 0.12 0.12
Insurance 0.78 0.78 0.78 0.78 0.78 0.78 0.78
Replacement - 0.30 0.30 0.30 0.30 0.30 0.30

TOTAL 19.60 22.21 25.25 25.70 26.18 26.69 27.21

PROFIT BEFORE
INTT & DEP. 23.32 20.71 23.81 23.35 22.87 22.37 21.84

FINANCIAL EXPENSES

Intt. Loan 6.75 6.27 5.22 4.18 3.13 2.09 1.04

Depreciation 14.91 13.32 11.90 10.64 9.52 8.51 7.62

TOTAL 21.66 19.59 17.13 14.82 12.65 10.60 8.66

PROFIT AFTER
INTT & DEP 1.67 1.12 6.68 8.53 10.22 11.77 13.18

RESERVE & SURPLUS 1.67 2.79 9.47 18.00 28.23 39.99 53.17
 ANNEXURE-XIX
PROJECTED CASH FLOW STATEMENT

PARTICULARS CONST. I II III IV V VI VII

STAGE

SOURCES

PROFIT BEFORE
INTT, DEP & TAX 23.32 20.71 23.81 23.35 22.87 22.37 21.84

PROMOTER'S
SHARE 107.31

TERM LOAN 50.00

TOTAL 157.31 23.32 20.71 23.81 23.35 22.87 22.37 21.84

APPLICATIONS

FIXED ASSETS 156.95

INTT ON LOAN 6.75 6.27 5.22 4.18 3.13 2.09 1.04

REPAYMENT OF LOAN 3.57 7.74 7.74 7.74 7.74 7.74 7.74

TOTAL 156.95 10.32 14.01 12.96 11.92 10.87 9.83 8.78

OPENING BALANCE 0.00 0.36 13.36 20.06 30.91 42.35 54.35 66.89
SURPLUS 0.36 13.00 6.70 10.85 11.44 12.00 12.54 13.06
CLOSING BALANCE 0.36 13.36 20.06 30.91 42.35 54.35 66.89 79.95
 ANNEXURE-XX
PROJECTED BALANCE SHEET

PARTICULARS CONST. I II III IV V VI VII

STAGE

LIABILITIES

Promoters' Share 107.31 107.31 107.31 107.31 107.31 107.31 107.31 107.31
Reserve & Surplus 1.67 2.79 9.47 18.00 28.23 39.99 53.17
Term Loan 50.00 46.43 38.69 30.95 23.21 15.48 7.74 -

TOTAL 157.31 155.40 148.79 147.73 148.53 151.01 155.04 160.48

ASSETS

Fixed Assets (Net) 156.95 142.04 128.72 116.82 106.18 96.66 88.15 80.53
Cash & Bank Bal. 0.36 13.36 20.06 30.91 42.35 54.35 66.89 79.95

TOTAL 157.31 155.40 148.79 147.73 148.53 151.01 155.04 160.48

 ANNEXURE-XXI
DEBT SERVICE COVERAGE RATIO

YEARS I II III IV V VI VII

PARTICULARS
A.

NET PROFIT 1.67 1.12 6.68 8.53 10.22 11.77 13.18

INTT. ON LOAN 6.75 6.27 5.22 4.18 3.13 2.09 1.04

DEPRECIATION 14.91 13.32 11.90 10.64 9.52 8.51 7.62

TOTAL 23.32 20.71 23.81 23.35 22.87 22.37 21.84

A= 158.28

B.

INTT. ON LOAN 6.75 6.27 5.22 4.18 3.13 2.09 1.04

REPAYMENT T/L 3.57 7.74 7.74 7.74 7.74 7.74 7.74

TOTAL 10.32 14.01 12.96 11.92 10.87 9.83 8.78

B= 78.69

AVERAGE DSCR = 2.01 :1

SATISFACTORY
 ANNEXURE- XXII
BREAK EVEN POINT
Based on 3rd year of operation i.e. 40% of occupancy

S.No. PARTICULARS AMOUNT

Rs. (Lakhs)

A FIXED EXPENSES
1 Salary 9.13
2 Repair & Maintenance 4.71
3 Overheads (30% 1.38
4 Insurance 0.78
5 Depreciation 11.90
6 Interest on Term Loan 5.22

Total 33.13

B VARIABLE EXPENSES
1 Raw food stuff 5.61
2 Overheads (70%) 3.22
3 Replacements 0.30
Total 9.13

C SALES REALISATION 49.06

D CONTRIBUTION (C-B) 39.93

E BREAK-EVEN-POINT A/D*40% 33.19

.