The Asstt.Gen. Manager, BO Maninmajra, Chandigarh. Reg: - M/s. M/s. Pelican Grand Motels Pvt Ltd Permanent Address : Regd. Office 117 Anand Vihar, Pitampura New Delhi - 110048 Hotel Site

3-10-2012

NH-1 Near Haveli, G.T.Road, Karnal - 132001 As desired, the proposed Hotel site was inspected on 28-9-2012 ,project submitted by the party has examined and after discussions with party Tech/Eco report is prepared as under. Introduction Brief Description of the Company : The Company proposes to setup a Hotel at NH-1 Near Haveli, G.T.Road, Karnal - 132001 Directors of the Company : 1. Sh. Yogesh Kumar Gupta 2. Smt Vijay Laxmi 3. Sh. Jitender Mittal

Registration no of company :

U55101DL2010PTC211161 (issued from the office of Registrar of companies NCT of Delhi & Haryana) : AAFCP 8388 N

PAN

INTRODUCTION : M/s. Pelican Grand Motels Pvt. Ltd. has been incorporated by the office of Registrar of Companies NCT of Delhi & Haryana under part XI of the Companies Act 1956 vide registration number U55101DL2010PTC211161 w.e.f. 7th day of December, 2010. The land was purchased in the name of Sh. Yogesh Kumar Gupta and Smt. Vijay Laxmi, mother of Sh. Yogesh Gupta and for which they formed a Partnership firm under the name & style M/s Pelican Grand Motels vide partnership deed dated 31.01.2005 to carry on the business of Hotels, Motels, Restaurants, recreation centre etc. Then they converted the partnership firm in to company M/s Pelican Grand Motels Pvt. Ltd. and have taken Sh. Jitender Kumar Mittal as director. Presently M/s Pelican Grand Motels Private Limited is having following persons on its board :

Sh. Yogesh Gupta S/o Sh. Bhagat Ram Sh. Jitender Kumar Mittal S/o Sh. Niranjan Dass Smt. Vijay Luxmi W/o SH. Bhagat Ram

Sh. Yogesh Kumar Gupta The Project is being promoted by Sh. Yogesh Kumar Gupta s/o Sh. Bhagat Ram Gupta , r/o15-A Mall Road,Karnal 132001, having sufficient experience of managing the affairs of business activities. Mr. Yogesh Kumar Gupta is legendry business man and is backed by most valuable experience of more than 15 years in the business of channel partner of reputed channels.. He has sufficient business skills to run the business in all evens and odds. Further, the promoter has a sound financial background to support the successful running of the business. Over the period he has become well conversant with all ups and down of the industry. He is well conversant with all pros and cons of the proposed business. Smt. Vijay Laxmi

The second promoter of the proposed Project is Smt. Vijay Laxmi w/o Sh.Bhagat Singh,r/o 15-A Mall Road,Karnal 132001 a house wife, Sh. Jitender Kumar Mittal

The third promoter of the Project is Sh. Jitender Kumar Mittal s/o Sh. Niranjan Dass, r/o 117 Anand Vihar, Pitampura,New Delhi 34, who is a man of means and having sufficient experience of managing the affairs of business activities. Sh. Jittender Kumar Mittal running a

floor mill under the Name & Style M/s. Mahalaxmi Flour Mill at Delhi. He has sufficient business skills to run the business in all evens and odds. Further, the promoter has a sound financial background to support the successful running of the business. Over the period he has become well conversant with all ups and down of the industry. He is well conversant with all pros and cons of the proposed business. The project is mainly being look after by . Sh. Yogesh Kuma Gupta. The company intend to setup a Hotel consisting of Banquets, Restaurant, Fast Food and commercial outlets in the first phase of its planning. The company is already owing land i.e 4.31 acre for the proposed Hotel project at NH-1 near Haveli, G.T. Road Karnal (Haryana) for which the change land use certificate (CLU) from the directorate of Town & Country Planning Haryana has already been obtained and held on record. Party has requested this BO for the following credit facilities: Term Loan : Working Capital 19.20 Cr 75.00 Lacs

The following requisite permissions from state/Central Govt. has been obtained by the party for the construction of the proposed Motel cum resort : -Party has obtained CLU from director of Town and country planning , Haryana dated 168-2011 valid for 18 months from the date of issue , for erecting of Motel building 13818.17 Sq. yards area.( Held on record) as per map of the party the construction for motel and banquet hall is proposed to construct in 10762 Sq meters ( which is about 13523 Sq. Yds./121707 Sq. Ft) - The building plan of the motel building has been approved by District town planner cum Chairman building plans approval Committee, Haryana. - The party has obtained prov.NOC from Commissioner MC /DC Karnal for fire fighting protection. Party has provided fire fighting system/equipments in the project as per prescribed norms. - The party has obtained NOC from Haryana State Pollution Control Board vide Dated 269-2011, party reported that they will abide by all the norms laid down by HSPCB for the construction of proposed mote/resort/banquet hall. - The party has reported that they had obtained NOC/Permission from forest dept. ( Land in front of proposed unit is belong to Forest Deptt. ) for entering on to the Slip road of Express Highway. LOCATIONAL ADVANTAGES: The site of the proposed Motel/Banquet hall/Resort is situated at NH-1 near Haveli, G T Road Karnal. Karnal is an important city which is situated in the midway from Delhi to Chandigarh

which also connects with all important places such as Patiala, Ludhiana, Amritsar, Jammu etc. It is 123 kilometer from Delhi and 130 kilometer from Chandigarh. The Karnal Distt is surrounded by Kurukshetra Distt on its north-west, Jind & Kaithal Distt on its west, Panipat Distt on its south and Uttar Pardesh on east. Karnal is one of Historical Distt of Haryana. It is also known as a city of Daanveer Karn . it is known all over the world for production of Rice, Wheat and milk. It is also known for agriculture research institutions like NDRI (The National Diary research Institute), CSSRI, Wheat research Directorate (The wheat development research institute), National Bureau of Animal Genetics Resources, Sugarcane Breeding institute etc.

The district is basically an Basmati Rice producing area from where quality basmati rice are exported to various European and Gulf countries. Also the Karnal is known for manufacturing of agriculture implements, electronics motors, Submersible pumps, Welding Electrodes, Card Board/Mill Board, Paints, Edible and non edible Oils, Leather and non-leather Footwear, Rice, Milk products etc.

MARKETING TARGET

The Party proposed that Motel/Banquet Hall/Resort targets the varieties of guest by providing hygienic & good eatables & excellent amenities.. The working of the proposed unit shall be monitored under the strict supervision of qualified and experienced professionals of hotel industry. Party reported that they will mainly concentrate on following sectors::

-Corporate and Business Houses for conferences. - Industrialists. - Families for marriage functions and kitty parties. - Highway Traveler. - Packages for families on a Weekend. - Government Organizations NDRI (The National Diary research Institute), CSSRI, Wheat research Directorate (The wheat development research institute), National Bureau of Animal Genetics Resources, Sugarcane Breeding institute etc. For the marketing and to fetch the business for the proposed venture all the means of due an advertisement shall be adopted. Party also proposes to recruit team for marketing.

Land & Building The proposed Mote/Banquet hall/resortl is proposed to install at NH-1, G.T. Road, Near Haweli, Karnal.-Delhi Highway, village Jhanjari,Karnal. at own land having area having area 34 Kanal 16 ie 4.3 Acers. The area is adequate for the requirement of the venture proposed. For the construction of motel party has submitted the estimate and maps from M/S Er Amarjit Singh Paik,BE Civil,M.Tech Structure,Charted Engineer,approved Valuer, Who have assessed the cost of construction for the 30 Bed room G+ 3 story Motel/Banquest hall/Resort to the tune of Rs 1619.91 Lacs, which is realistic and justified for such type of Motel/Banquet hall/Resort as per prevailing market scenario. The construction will includes land development, drive thru areas with fast food, Banquet Hall, Kitty Hall, Restaurants, Bar, 28 rooms, 8 shops etc.

The construction shall be of A class building material for the Motel with all modern amenities for the customers/guest. The future expansion will be implemented by the construction of building up to 6th floor of the Hotel project in the second phaseParty has been advise to submit that the foundation of the proposed Motel is meant for 6th story building. The party has already started the construction of proposed motel and almost completed the civil construction of Banquet hall having capacity for 1000 persons. Party is assured to complete the finishing decoration of banquet hall by Jan.2013. Party reorted that they are assured the complete running by Sept.2013 (COD Date) and the start of repayment of loan by Oct 2014.

-The Motel will compromising of public areas for Lobby / lounge; restaurants for Veg and non veg sepately. - Facilities for the differently able guests (room with attached bathroom earmarked for this Purpose, designated parking, ramps for free accessibility in public areas and to at least one Restaurant, designated toilet (unisex) at the lobby level etc. - Utilize all Eco-friendly Practices - Sewage Treatment Plant

- Rain water harvesting - Waste management , for this party provided STP in the project. -Pollution control method for air, water and light -Introduction of non CFC equipment for refrigeration and air conditioning, party has proposed VRV air conditioning of Daikin. - Energy / water conservation (use of CFL lamps, solar energy, water saving devices / taps) - Fire Fighting Measures/ Hydrants/sprinklers system etc. - Security related features as per the requirement of Star Ranking Motel. - The party will emphasis on to utilize India art and architecture with use of local materials. Water The Hotel will require of water for drinking/food preparation purpose, water will be arranged through Tube-well/Bore with 3 X 25 HP submersible pump set already installed in the existing banquet Hall. The water will be purified with RO system. Quality control The food products shall be Mfg under strict supervision/hygienic conditions /best service and hospitality by experienced and skilled persons as per the satisfaction of consumers and their acceptability. party reported that they will provide the services of hotel at par with slandered of Star Ranking hotels. Manpower The Hotel shall employ skilled workers/Chef and semiskilled/experienced persons required for such type of Hotels. The detail of Manpower is at annexure. For the smooth running of the motel party will employ experienced person from Hotel Industry as general Manager. The party has already appointed hotel consultant Mr. Dheeraj Punj from Panchkula he will assist the party in the installation of motel and further continue in future too. Power -The Hotel will require 160KW Power load at peak time i.e. party time. Provision for 160 KVA Gen Set is provided in the project. The units existing banquet hall is connected with 80 KW power load supported with 160 KVA DG set and after the completion of Motel unit will require additional 80 KW power load. Party will enhance the power load to 160 KW after the completion of the motel. Raw materials The proposed Hotel will require all type of grocery items required for preparation of different food/edible items, Dairy products, soft/hard drinks/ beverage, Spices, and other edible products as main raw materials. Apart from above hotel will required other so many items used for sanitation, clothiers for rooms and other General purpose day to day items required by human being. These materials are openly available in different Markets/ of Haryana/Chandigarh and other markets of nearby states in plenty. The party has already having experience of similar line and having contacts with the suppliers and is assured to get regular supplies for this proposed Hotel. As the proposed project is located on the main national highway of G.T. Road Ambala-Delhi Road and located on main road only 10 km. from Ambala Cantt. So there is a great scope of this project. There is no good Motel near to this area, hence there is a great potential of good occupancy of the rooms as well as restaurant.

Nowadays, customers want best facilities in the shape of physical arrangements of Parties and luxury find dine environment of restaurants etc. after the close of hectic schedule of day work. The customers do not mind in paying a little extra amount but require best services. Due to the locational advantage of the project, as there is no other luxury Hotel other than this in the area. And also the concern shall provide better facilities and better environment to its customers, there is a great scope of the project in the area.

Industrial Scenario on Hotel Industry The hotel industry in India is at $17 billion (Rs 87,601 crore) currently. Thirty per cent of the sector is organised. An additional 20 international brands are expected to come to India in the next two years. About $12 billion (Rs 61,836 crore) is the expected investment in this sector by 2011. Within the sector that is organised, the 5-star hotel segment contributes 58 per cent. Rising costs force hotels, mall developers to import from China Imports can cut down time required to build a hotel by 8-10 months and reduce costs by 4050%, say hotel consultants Regina Anthony and Shabana Hussain New Delhi: The growing pressure on hotel and mall developers, faced with soaring construction costs that have risen by some 40%, is seeing Indian hoteliers and realtors importing built-up rooms, fittings, furniture and utility goods from China to save costs and time. The trend of imports is catching on as costs have risen up to 50%, say industry executives and suppliers. A lot of vendors in China are creating entire (hotel) rooms, says Akshay Kulkarni, director for South Asia at Cushman and Wakefield Hospitality, the hotels division of the real estate consultant by the same name. Hotel operators can go there and choose the room fit-outs that they want for their hotels. This, hotel consultants say, will help budget hotels cut down the time taken to build a hotel by 810 months and costs by 40-50%. Typically, it takes between 12-18 months to build the hotel structure and up to another 10 months to fit it out. It cuts out a lot of costs in terms of time saving, says Kulkarni. With supply in the domestic hospitality industry lagging demand, such measures to ready hotel rooms faster helps the business on the revenues side as well. Even with current expansions and new hotels being put up, Indias 150,000 hotel rooms predicted for 2010, up from 89,000 today, will fall short of demand then by some 100,000 rooms. Hotels importing material and, in some cases, full rooms from China include mid-market hotel firm Sarovar Hotels Pvt. Ltd, which has around 35 new hotels coming up in the next three years,

and business hotel chain Royal Orchid Hotels Ltd, which runs nine hotels in the country and plans to expand across pan-India by 2010. The Sarovars orders range from furniture, sanitary plumbing, hair dryers, electronic safes, keys and locks to glass for windows, shower fittings, mattresses, tiles, soap dispensers and light fittings, for new properties in Chandigarh, Hyderabad and Bangalore. The preferred location in China for such Indian imports is the Guangdong province. Once the consignment is shipped to India, all that hoteliers do is assemble and fit these into the bare room structures. Guangdong has markets called a furniture city, or lights city spread across a 10km stretch on either side of the road, Ajay K. Bakaya, executive director at Sarovar Hotels, said. The only thing you need there is a local representative, or a local office that can manage everything for you once you have placed your order. We see huge cost savings of around 50% with duties and a foreign earnings-linked scheme for capital goods imports, he added. Sarovar works with Hong Kong-based logistics and sourcing The Company Blue Art Overseas Ltd, which is paid a commission of around 3% on the total consignment value shipped to India. According to Ramesh Nahata, chief executive officer of the firm, for a normal factory in China that has orders for about 200-250 rooms, it would take two months for production, one month for transit and clearing, and another 10 days for assembling. In contrast, if you were to give the contract to an Indian contractor, it will take him an average of four-six months to do the same, he said. One early trend among mall developers, according to an analyst tracking realty and construction firms, is that they are importing prefabricated walls from China in the last three-four months after steel prices shot up. The analyst, employed by a domestic brokerage, who did not want to be named because he is not authorized to speak to the media, said, It helps developers cut costs by 15-20% and time by 30-50%. Such practices will also help developers and hotel chains finish projects on time because less manual labour is required for projects where prefabricated materials are used. The Royal Orchid group is, however, more careful of what it gets from China and imports only artificial grass and hot plates from there. It is not completely necessary to go to China for the entire hotel room, particularly not for our five-star rooms that require quality stuff. However, for our four-star rooms, we are looking at importing furniture, flooring and marble from China, said Keshav Baljee, vice- president (corporate affairs) at Royal Orchid Hotels. Furniture imports save time by 10-15%, says Baljee, while imported flooring trims costs by around 20%.

It is Raining New Hotels in India; New Construction Estimates About 70,000-80,000 rooms Over Next Two Years By Varun Soni, Hindustan Times, New Delhi McClatchy-Tribune Regional News

Indicate

Apr. 2, 2008 - NEW DELHI -- It is raining hotels in India, with real estate developers and hospitality majors Emaar MGF, DLF, The Claridges Hotels and Resorts and the InterContinental Hotels Group all announcing plans to open hotels across the country, adding 10,000 rooms in the next three to five years. India is today facing a shortage of 1,50,000 hotel rooms. Estimates are that over the next two years about 70,000-80,000 rooms will be added in the country, while the addition over the next five years will be over 200,000 rooms. Emaar MGF announced its partnership with Marriott International to set up 1,000 rooms in the next three years at a cost of $400 million. JW Marriott Hotels will come up in New Delhi, Hyderabad, Kolkata and a 'Courtyard by Marriott' hotel in Amritsar. DLF and Hilton Hotels Corporation also announced that they had signed management agreements involving seven new hotels. This marks the second stage in the DLF-Hilton joint venture's plans to build and develop 75 hotels in India in the next seven years. The new projects named on Tuesday will bring the total number of new hotels under the DLFHilton alliance to 16, comprising 3,500 rooms. Of the new properties three will be come up in Delhi, two will come up in Chennai and one each at Thiruvananthapuram and Kolkata. Not to be left behind, the Delhi-based The Claridges is also planning to invest $300 million in the next five years to develop five to seven new properties in India and the neighbouring region. The cities in India where The Claridges is planning new hotels are Hyderabad, Chennai, Udaipur, Pune and Kerala. The InterContinental Hotels Group also announced that it had 14 new-look Holiday Inn hotels in various stages of development across the country. Accounting for more than 3,700 rooms, these hotels are scheduled to open over the next three years in 11 cities nationwide. To see more of the Hindustan Times or to subscribe to the newspaper, go to http://www.hindustantimes.com. Copyright (c) 2008, Hindustan Times, New Delhi The cities of Delhi, Hyderabad, Kolkata and Amritsar will each get a luxury hotel to be developed under the banner of Emaar MGF group. The hotels in Delhi, Hyderabad and Kolkatta will be built in collaboration with the JW Marriot group of hotels. The cost of construction of these four luxury hotels is estimated to be around $400 million. The four hotels are believed to be ready for use by the end of 2010, with the Amritsar hotel opening up first. The real estate group of Emaar MGF is keeping its avenues open and is looking for other cities as well as business groups to expand the designing and construction of hotels. The four luxury hotels are to be designed in such a way that the guest can have easy access to retail and shopping stores. Keeping this in mind, the hotel at Jasola, Delhi will have many shopping outlets nearby while the hotel at Amritsar will be made on top of a shopping mall. The Marriot hotel at Kolkatta is going to have two exclusive floors for retail in the hotel building. For

the future, Emaar MGF group has signed a pact with the Hyatt hotel group to further expand their base in hotel construction in India. The shortage of hotels in India has been the bane of the tourism industy, in fact all industry. The government has allowed a hundred per cent FDI (foreign direct investment) in this sector, and we also know that approximately $6.5 billion is being invested in building hotels in India (2006 estimates) and by 2010 there are plans to build about 140,000 new hotel rooms, adding to the existing 110,000. So far so good. Promising plans for the future. Hiltonto build 75 new hotels by 2010. A Ramada Hotel tie-up with Royal Orchid, an Indian The Company, to build four and five-star hotels. The Taj group tapping the lower economic segmentset to introduce 100 $22-a-night range of hotels in five years. Accor, andEmaar (a developer in Dubai) to invest 300 million USD to build another 100 hundred hotels. An Accor tie up with Sofitel to build more hotels. Starwood Hotels to invest hundreds of millions of dollars in hotel brands such as Sheraton, Westin, Le Meridien, W and Aloft. The US-based real estate developer Royal Indian Raj International Corporation (RIRIC) will be investing 6 billion dollars in India and DLF Universal about $ 700-800 million USD. Here are some figures to mull over: India has 110,000 hotel rooms. China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India. And the result of all this are the exhorbitant prices. Whats really sad for us who live in India is that most of us can only dream about staying in the really good hotels. As it says here: The high prices are all the more striking in a low-wage country like India. At a $500 rack rate for the five-star rooms favored by business travelers, a hotel employee earning minimum wage here would have to work about a year to pay for one nights stay, versus about two and a half weeks work for an American earning minimum wage Even though the Chinese earn twice as much as Indians on average, India has the more expensive rooms, according to a recent edition of Travel Business Analyst, an industry newsletter. Comparing rooms of similar quality, suitable for business travelers, a room in Delhi cost $187 on average this year, versus $122 in Beijing; a room in Mumbai was $178, versus $150 in Shanghai. Ofcourse, problems in construction are anticipated, because of the high cost of real estate in India right now, but the government is doing all it can to help with speedy permissions and easing of red tape. From a travelers point of view, it looks good, as the cost of hotels will come down and there will be more choice. And ofcourse thousands of new jobs will be created. (I took the photo of the two famous hotels of Mumbai at Lands End in South Mumbai) Related Reading: Real Estate boom in India

Hotel Industry in India Hotel Industry in India has witnessed tremendous boom in recent years. Hotel Industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of Indian hotel industry. The thriving economy and increased business opportunities in India have acted as a boon for Indian hotel industry. The arrival of low cost airlines and the associated price wars have given domestic tourists a host of options. The 'Incredible India' destination campaign and the recently launched 'Atithi Devo Bhavah' (ADB) campaign have also helped in the growth of domestic and international tourism and consequently the hotel industry. In recent years government has taken several steps to boost travel & tourism which have benefited hotel industry in India. These include the abolishment of the inland air travel tax of 15%; reduction in excise duty on aviation turbine fuel to 8%; and removal of a number of restrictions on outbound chartered flights, including those relating to frequency and size of aircraft. The government's recent decision to treat convention centres as part of core infrastructure, allowing the government to provide critical funding for the large capital investment that may be required has also fuelled the demand for hotel rooms. The opening up of the aviation industry in India has exciting opportunities for hotel industry as it relies on airlines to transport 80% of international arrivals. The government's decision to substantially upgrade 28 regional airports in smaller towns and privatization & expansion of Delhi and Mumbai airport will improve the business prospects of hotel industry in India. Substantial investments in tourism infrastructure are essential for Indian hotel industry to achieve its potential. The upgrading of national highways connecting various parts of India has opened new avenues for the development of budget hotels in India. Taking advantage of this opportunity Tata group and another hotel chain called 'Homotel' have entered this business segment. According to a report, Hotel Industry in India currently has supply of 110,000 rooms and there is a shortage of 150,000 rooms fueling hotel room rates across India. According to estimates demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, hotel rates in India are likely to rise by 25% annually and occupancy by 80%, over the next two years. This will affect the competitiveness of India as a cost-effective tourist destination. To overcome, this shortage Indian hotel industry is adding about 60,000 quality rooms, currently in different stages of planning and development, which should be ready by 2012. Hotel Industry in India is also set to get a fillip with Delhi hosting 2010 Commonwealth Games. Government has approved 300 hotel projects, nearly half of which are in the luxury range. The future scenario of Indian hotel industry looks extremely rosy. It is expected that the budget and midmarket hotel segment will witness huge growth and expansion while the luxury segment will continue to perform extremely well over the next few years.

Hotel Industry in India Over the last decade and half the mad rush to India for business opportunities has intensified and elevated room rates and occupancy levels in India. Even budget hotels are charging USD 250 per day. The successful growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific. 'Hotels in India' has supply of 110,000 rooms. According to the tourism ministry, 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 to accommodate 350 million domestic travelers. 'Hotels in India' has a shortage of 150,000 rooms fueling hotel room rates across India. With tremendous pull of opportunity, India is a destination for hotel chains looking for growth. The World Travel and Tourism Council, India, data says, India ranks 18th in business travel and will be among the top 5 in this decade. Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, 'Hotel India' room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in India' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012. MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range. Sources said, the manpower requirements of the hotel industry will increase from 7 million in 2002 to 15 million by 2010. With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. ' Hotel Industry in India' is set to grow at 15% a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games. Already, more than 50 international budget hotel chains are moving into India to stake their turf. Therefore, with opportunities galore the future 'Scenario of Indian Hotel Industry' looks rosy. ITC Hotels, the fully-owned subsidiary of tobacco giant ITC, plans to double its property count to over 120 over the next five years with an investment of around Rs 5,000 crore. It plans to set up premium 5-star properties in Chennai, Kolkata and Bangalore and foray into retail space, villas and service apartments. It currently has 66 properties spread over 50 destinations across the country. As part of groups expansion plans, the Kolkata and Chennai properties, spread over 8 acres, are expected to be operational by 09, The Company sources said. Slated to be the biggest hotel in south India, with project cost ranging between Rs 800 crore and Rs 1,000 crore, the ITC Grand Chola, a 650-room hotel at Chennai, will house service apartments, a high-end mall, conference and business facilities and a private-viewing theatre. The Kolkata property will complement ITCs existing hotel Sonar Bangla in the eastern metropolis. In the National Capital Region, plans are afoot to set up a super-deluxe 100-room resort along

with around 200-villas at Classic Golf Resort in Gurgaon, with a total investment of around Rs 400 crore. ITCs 250-room Bangalore project is expected to be completed by 08 with an investment of around Rs 350 crore. The group is also evaluating the option of having a second property in the city with 400 rooms. The Growing Indian Hospitality Industry India has the potential to become the number one tourist destination in the world with the demand growing at 10.1 per cent per annum, the World Travel and Tourism Council (WTTC) has predicted. The WTO (World Travel Organisation) predicts that India will receive 25 million tourists by year 2015. Major attractions in India are the world's highest mountains, miles of coastline with excellent beaches, tropical forests and wildlife, desert safari, lagoon backwaters, ancient monuments, forts and palaces, adventure tourism and, of course, the Taj Mahal. India currently has over 200,000 hotel rooms spread across hotel categories and guesthouses and is still facing a shortfall of over 100,000 rooms (source: FHRAI). The country is witnessing an unprecedented growth in hotel constructions and will be adding almost 114,000 hotel guest rooms to its inventory over the next five years. (source: HVS) The earlier setbacks in global tourism have strengthened the Department of Tourism's resolve to promote India's tourism through aggressive marketing strategies through its campaign 'Incredible India'. The 'marketing mantra' for the Department of Tourism is to position India as a global brand to take advantage of the burgeoning global travel and trade and the vast untapped potential of India as a destination.

Over the last decade and half the mad rush to India for business opportunities has intensified and elevated room rates and occupancy levels in India. Even budget hotels are charging USD 250 per day. The successful growth story of 'Hotel Industry in India' seconds only to China in Asia Pacific.'Hotels in India' have supply of 110,000 rooms. According to the tourism ministry, 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 - to accommodate 350 million domestic travelers. 'Hotels in India' has a shortage of 150,000 rooms fueling hotel room rates across India. With tremendous pull of opportunity, India is a destination for hotel chains looking for growth. The World Travel and Tourism Council, India, data says, India ranks 18th in business travel and will be among the top 5 in this decade. Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receiving almost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity, 'Hotel India' room rates are most likely to rise 25% annually and occupancy to rise by 80%, over the next two years. 'Hotel Industry in India' is eroding its competitiveness as a cost effective destination. However, the rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is adding about 60,000 quality rooms, currently in different stages of

planning and development and should be ready by 2012. MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range. Sources said, the manpower requirements of the hotel industry will increase from 7 million in 2002 to 15 million by 2010. With the USD 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. 'Hotel Industry in India' is set to grow at 15% a year. This figure will skyrocket in 2010, when Delhi hosts the Commonwealth Games. Already, more than 50 international budget hotel chains are moving into India to stake their turf. Therefore, with opportunities galore the future 'Scenario of Indian Hotel Industry' looks rosy.

ICRA expects the Indian Hotels industry to finish 2011-12 on a weaker note with subdued pricing power eroding margins. Although some revival in operational metrics was witnessed during late 2010-11, the industry continued to lack the pricing power to drive out of its current stagnancy. Globally weak macroeconomic scenario, the European sovereign debt crisis, geo-political turmoil in the Arab countries, high interest rates, inflation and a muted domestic corporate performance during the current fiscal (year to March 31, 2012) have sapped the industrys ability to sustain inflation adjusted Average Room Realizations (ARRs). Muted ARRs and high costs have led to one of the weakest nine month (9M) periods (AprilDecember-11) in over five years. With uncertainty continuing to cloud the near term, wavering business/consumer confidence and a sluggish economy, there is no significant trigger for the industry during the next two-three quarters. While the start of the next season (in Q3, 2012-13) may bring some relief to the industry in some specific markets, we expect real traction to return to the industry only by 201314; overall, we expect this to be a slow and long slog to recovery. We expect ARR growth during the current fiscal to be limited to around 5%, followed by around 5-8% during 2012-13. In the current inflationary environment, RevPAR growth of around 6-7% is required to maintain profitability levels. All the same, we remain optimistic on the long term growth story for the Indian hospitality industry. The improving demographics, rising affluence and the current under penetration throw up significant growth opportunities for the hospitality sector. This is further reinforced by the India-centric growth strategy several global hotel majors are following. An uneasy calm prevails in the global markets; consumer confidence low Over the past few quarters, the global economy has been affected by various natural, social and economic headwinds; the earthquake in Japan during March-2011, the floods in Thailand during October-2011 or the civil unrest in the Arab countries and most importantly the ongoing economic crisis in the EU. Despite these upheavals, foreign tourist arrivals (FTA) to India grew by 8.8% to 62.9 lakh tourists while international tourist arrivals grew by 4.4% to 980 million travellers during CY2011 (Calendar year - Period ending December-11). The pace was however significantly slower than the 11.8% (FTA) and 7.0% (international travellers) of the previous year. Growth in arrivals to Africa and the Middle East was weak while arrivals to Europe, Asia, the Pacific and Americas led the international traveller growth during CY2011. With strengthening regional business ties, South and South-East of Asia witnessed strong intra-regional demand during the period.

As is the case with industries that depend on discretionary spending, the performance of the hotels industry is intrinsically knit with the economic growth. However, we have in the past witnessed periods of decoupling between the hotels industry and GDP growth; particularly during periods of recession and the early phases of recovery. During the economic down cycle, the faster pace of deceleration in the hotels industry, as witnessed during 2009, can take the industry to deep troughs. While the climb during the initial phases of recovery is faster than the economic revival, a strong underlying economy is a pre-requisite for a sustained recovery. Indian hotel sector: SWOT analysis According to recent estimates of the World Travel & Tourism Council (as of early 2005), Indian tourism demand will grow at 8.8% over the next ten years, which would place the country as the second most rapidly growing tourism market in the world. With the Indian hotel industry capturing the attention of the world, let us understand its strengths, weaknesses, opportunities and threats. Strengths India's rich culture heritage: With a historical backdrop of 5,000 years, India is one big package of culture and legend that never fails to captivate the imagination of the visitor. Along with endless natural splendors like the mighty Himalayas, the vast Indo Gangetic Plains, lush tropical jungles and a long coastline. A visit to the country is a changing spectacle of religions, customs, festivals, sights and sounds. Demandsupply gap: Indian hotel industry is currently facing a mismatch between the demand and supply of rooms leading to higher room rates and occupancy levels. With 95,000 odd rooms in the country, the size of the hotel industry represents an abysmal figure for India's size and growth prospects. Though new capacities are expected to come in the next five years demand will outpace supply in the short to medium term. The table below highlights that, over the last 24 months, major cities in the country have witnessed impressive growth in average room rates, due to strong demand and not much addition to supply. FY02 Delhi Mumbai 4.2% 11.2 % 3.7% 6.9% 8.2% FY03 5.7% 15.2 % 15.1 % 6.6% 12.1 % FY0 4 2.3 % 2.2 % 11.7 % 5.4 % 9.8 % ARRs: Average growth rate FY0 5 31.4 % 28.7 % 29.1 % 6.4 % 18.4 %

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source HVS international Government support: Till a few years ago, the Indian government had a total apathy towards promotion of tourism. In fact, the industry did not find a place in the government's fund allocation. Things have, however, witnessed a change. The government seems to have realized the importance of tourism and is willing to spend towards the development of the industry. The 'Incredible India' campaign is a product of this realization. The focus on infrastructure, modernisation of airports, open sky policy, development of new tourist destinations and circuits, more fund allocation towards tourism are some of the initiatives taken by the government to promote tourism. The Indian hotel industry stands to gain from this proactiveness shown by the government. Weaknesses Poor support infrastructure: India is currently spending a miniscule amount compared with its needs, on infrastructure. China is spending seven times as much as India on infrastructure (excluding real estate) in absolute terms. In 2003, total capital spending on electricity, roads, airports, seaports and telecom was US$150 bn in China (10.6% of GDP) compared with US$21 bn in India (3.5% of GDP). However, over the past 2-3 years, the government has realized the importance of infrastructure and has focused on improving it. Opportunities Rising Income: While there has been much talk about record number of foreign tourist arrivals, very little has actually been said or done about domestic tourism, which, according to our estimates, has registered a 40% annual growth in the last three years and is currently estimated at 300 m travelers. Per capita income grew by an impressive 7.1% in 2005, while Gross Domestic Savings touched an all time high of 28%. Significantly, the present-day consumption boom in India has been influenced more by higher disposable income rather than lower savings. This is good news, as income induced spending is likely to sustain itself for a longer period. Higher disposable incomes are also expected to enhance the concept of traveling for leisure. Also, there has been an overall transformation in consumption pattern in the last five years. The increase in number of young people, their rising aspiration levels, and an increase in their spending power has led to a change in the consumption pattern. There is a marked shift from spending on traditional categories like food and grocery, clothing and jewelry, to lifestyle categories such as leisure, and aspirational products and services. Open sky benefits: The opening up of the aviation industry in India brings exciting opportunities for the hotel industry (airlines transport around 80% of international tourists). Increased airline activity has stimulated demand and has helped to improve India's troubled infrastructure. Increased competition among airline companies will further lead to the

development of new and improved services. Also the open skies policy has benefited both international and domestic travel. New business opportunities: We believe that, over the next three to five years, the biggest surge in accommodation demand is expected to come from commercial zones that are being developed in metro suburbs and secondary markets. Mixed-use development projects that include retail and commercial space have also gained momentum in the last 24 months and will continue to be an attractive option. This provides a unique opportunity for hospitality projects. Also the new concept, which is going to gain importance is that of budget hotels (started by Indian Hotels Ginger, the erstwhile Indione). Due to their inherent nature of operation, associated costs and flexibility, budget hotels will be better suited to withstand the next economic downturn as and when it takes place. Threats Event risk: Dependency on foreign tourism can be a double-edged sword as travel decisions are based on global patterns and events that happen elsewhere can have serious impact the performance. Events like 9/11, SARS outbreak and Afghanistan and Iraq wars have severely impacted the tourism industry in the past and the threat remains. Increasing competition: Global hospitality majors like the Four Seasons, Shangri-La and Aman Resorts are all making their entry into the Indian market. They are not the only ones who are turning their attention to India. The Hilton Group is deciding on a comeback and has tied up with the Oberoi Group. Two other groups - the Carlson Group and the Marriott chain are furiously hunting for new hotels in India's top cities. This will increase the competition for the existing Indian hotel majors. Conclusion The outlook for the hospitality market in India is optimistic and will continue to remain so, in our opinion. The economy's buoyancy, initiatives to improve infrastructure, growth in the aviation and real estate sectors and easing of restrictions on foreign investment will fuel demand for hotels across star categories in the majority of markets. India's hotel industry is increasingly being viewed as investment-worthy, both within the country and outside, and several international chains are keen to establish or enhance their presence here. We anticipate that, over the next three to five years, India will emerge as one of the world's fastest growing tourism markets and will be hard to ignore.

SynopsisMid-market the new mantra Hotel industry in India has been an important industry to the Indian Economy. It is one of the largest foreign exchange earners, to the country and also one of the largest employers, both directly and indirectly.

The hotel industry in India can be divided into eight segments based on the norms set by the Ministry of Tourism. They are 5-Star Deluxe, 5-Star, 4-Star, 3-Star, 2-Star, 1-Star, Heritage and Unclassified. However, the 3-star, 2-star, 1star and unclassified hotels in India are spread across the length and breadth of the country and are highly fragmented in nature, whereas, the upscale, mid market and heritage categories are highly organized. The upscale category hotels are primarily present in the metros and the tier 1 cities and are now targeting the tier 2 cities for expansion. The industry is characterized significantly by small unorganized players, labour-intensive operations, seasonality, cyclicality, highly capital intensive nature and highly sensitive to the external factors like economy, terrorism and political status. The demand for the hotel rooms is driven by the rise in the number of the domestic and well as the foreign tourists. The demand for the foreign tourists is driven by the level of growth in Global GDP, increased business activities of other nations with India, growing number of tourist destinations, rise in trade and sporting events, marketing efforts likeAtithi Devo Bhava & Incredible India. Domestic tourist arrivals are the backbone of Indian Hotel Industry as the number of domestic tourists is more than 100 times as compared to foreign tourists. Domestic tourists are of 2 types, leisure travelers and business travelers. Growth in leisure travelers is driven by rising personal discretionary income, evolving lifestyle, growing number of multi earner families, weekend vacation culture, improvement in rail, air as well as road connectivity, diverse topography and rich cultural heritage. Drivers of domestic business traveling are rise in trade and commerce, increasing geographical spread of companies, growing MICE culture. In the upscale category, global majors in the hospitality industry like IBIS, Westin, Novotel, RitzCarlton, Sofitel, Pullman, Ista, Aloft, Dusit D2, Shangri la are planning to enter India or expand their existing operations. Players like Lemon Tree, IBIS, Park, Sarovar and Ginger have identified that there is dearth of quality rooms in the mid market segment across the country, especially in the tier 1 and tier 2 cities. Approximately, 55 per cent of the upcoming inventory is expected to be in the mid market and economy segment. Entry of such organized players is expected to improve the quality of offerings and bridge the wide gap between mid market and upscale category. CARE Research has identified ten major cities for study of Hotel Industry in India. These cities represent a healthy mix of business and leisure destinations with varied topography and culture. These ten locations are expected to see a surge in room inventory in the upscale category. Kolkata and Noida are expected to witness the highest growth in the room inventory. Overall, CARE Research expects about 27,000-28,000 rooms to be added in the upscale category in the ten cities upto CY15. CARE Research believes that the performance of the industry in the medium term will be a mixed result, with some cities showing a robust growth, whereas some cities will suffer due to the huge supply influx.

Marketability

The Motel is proposed to install for the setting up of with latest amenities for providing boarding/lodging, Bar, restaurant, Spa, Fitness Club, Swimming pool etc which shall be at par with the standard of Star Ranking Hotel A detailed market survey has been conducted by the party and their observations are as under: 1. The location is most suited for a hospitality project because of its close proximity to Karnal,Kurkshetra,Panipat and Yamuna Nagar Towns and being on a very busy National Highway. The Target customers for the above project are observed as corporates, high net worth Indians residing in Karnal and adjoining area beside being busiest national highway with the luxury buses carrying passengers, and cars on the Highway.

2.

. 3 4 5 6 7 There are 7-8 nos Motels already running in Karnal and adjacent area. A vibrant highway can provide very exciting moments for such a project due to the extensive patronage of high way travelers. In this project it was observed that this facility could very well fill the vaccum of fine hospitality lacking in this belt. Party will adopt latest on line reservation system through Website to facilitate the guests for room booking, party hall booking etc. Party reported that they will also negotaiate with branded hotel chains for market for the proposed motel/resort./ Banquet hall.

As on date there is a big gap between demand and availability of good hotel in and around Karnal. Keeping in view the large economic development in the Karnal Distt, Panipat Distt and religious tourist rush in Kurukshetra Distt there is big demand of a good hotel in the area.

Karnal attracts both the Highway clientele and the regular clientele. Due to the increasing business structure both in the Government as well as in Private Sector, increasing tourist and midway customers the pressures on availability of rooms are increasing day by day. With the increasing population and developments in construction for residential areas which has almost eaten-off of open area/spaces where previously people generally conducted religious functions specially marriages. Also the old system of tent age/temporary pandaals has almost replaces with banquet halls, being the old system takes lot of time and botheration and in the current living style people are already having lack of time and for easiness the demand of these

banquet Hall has tremendously increased. Conclusion:The proposed Hotel is technically feasible and viable need based credit facilities may be considered as per PNB rules and norms. The assessment is based on the informations supplied by the party and actual working of similar hotel . N.P.Singh Dy.Manager Industries.