A BRIEF STUDY ON EMAAR-MGF

AN EMERGING REAL ESTATE BARRON

BY

PRESENTED TO EMAAR GROUP (GROUP-4)PROF. ANURAG YADAV

PGDBA-I, SEC-B

NITESH KUMAR B28ARUN SINGH B9AMIT GUPTA B4GARIMA KUMARI B18MUKESH PANDEY B24BISWARUP

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CHATTERJEE B14

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TABLE OF CONTENTS

ELEMENTS PAGE NUMBERS

COVER PAGE 1 TABLE OF CONTENTS 2 TITLE & SCOPE OF THE STUDY 3 METHODOLOGY 4 ABSTARCT 5 MISSION AND VISION 6 THE REAL ESTATE SECTOR IN INDIA 7-16

1. EVOLUTION2. KEY CHARACTERISTICS

3. KEY SEGMENTS-RESIDENTIAL, COMMERCIAL, RETAIL, HOSPIATALITY.

INTRODUCTION 17-341. OVERVIEW 172. HISTORY OF THE GROUP 23-253. STRENGTHS 25-304. STRATEGY 30-335. ORGANISATIONAL HIERRARCHY 33-34

BOARD OF DIRECTORS 35 FIG.1-LOCATION MAP 36 CHART 1.-LAND ACQUISITION PROCESS 37 PROJECT PLANNING & EXECUTION 38-40 SALES AND MARKETING 41-42 FLOW DIAGRAM 42 RESIDENTIAL PROJECTS 43-48 COMMERCIAL PROJECTS 49-51 SOME LOCATION PLANS 51-52 NEW DEVELOPMENTS 53-54 STATEMENT OF ASSETS AND 55 LIABILITIES AS ON 31ST MARCH, 2007 WHY EMAAR MGF IS A 56-62 BIG BET FOR INVESTORS? CONCLUSION 63 REFERENCES 64

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TITLE & SCOPE OF THE STUDY

This brief insight is all about EMAAR-MGF Land Limited.

Emaar MGF Land Limited is a joint venture between Emaar Properties PJSC

(“Emaar”) of Dubai and MGF Development Limited (“MGF”) of India. Emaar

is one of the world’s leading real estate companies – having developed

approximately 45.0 million square feet of real estate across residential,

commercial and other business segments and with operations in 16 countries, as

of August 31, 2007. MGF has over the last 10 years established itself as one of

the key players in retail real estate development in Northern India.

The obvious reason for having the group effort on this topic is to find out how

two different companies from two different country works so efficiently to

leverage the strategic relationship with a diversified business model especially

concentrating on real estate with an excellent execution capability. They have

already attained financial strength within these couple of years with a strong

emphasize on experienced management practice.

Registered Office: ECE House, 28, Kasturba Gandhi Marg, New Delhi 110 001, IndiaTel: +91 11 4152 1155; Facsimile: +91 11 4152 4619

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METHODOLOGY

We have ailed different mechanism to make our effort more viable and

successful. Some of them are-

Internet searching

Red Herring Prospectus

Company bulletins

Real estate magazines

Oral references

ABSTRACT

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This report is a journey with an insight into every possible aspect of EMAAR-

MGF group. It includes the overview about the joint venture, projects

undertaken so far, new and upcoming projects, financial fact sheet, other

interested areas, location map of some of its project, its organisational

hierarchy, its mission and vision, stock market performance, venture with other

partners etc.

We have tried to collect and present every possible information about our

group. This is an amalgamated effort that we expect to be worthy once it get the

approval from respective concern.

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OUR VISION

To be India’s Leading and Most Admired Real Estate Company

OUR MISSION

Develop and deliver unique lifestyles and work place environments in

India through:

World Class Quality

Socially Responsive Communities

Integrated Infrastructure

Iconic Master-planned Developments

To be recognized as a Responsible Corporate Citizen and an “Employer

of Choice".

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THE REAL ESTATE SECTOR IN INDIA

Real estate involves the purchase, sale and development of land, residential and

non-residential buildings. Real estate sector activities also encompass activities

in the housing and construction sector.

EVOLUTION OF THE REAL ESTATE SECTOR

Historically, the real estate sector in India has been unorganised and

characterised by various factors that impeded organised dealing such as the

absence of a centralised title registry providing title guarantee, lack of

uniformity in local laws and their application, non-availability of bank

financing, high interest rates and transfer taxes and the lack of transparency in

transaction values. In recent years, however, the real estate sector in India

has exhibited a trend towards greater organisation and transparency,

accompanied by various regulatory reforms. The trend towards greater

organisation and transparency has contributed to the development of reliable

indicators of value and organised investment in the real estate sector by

domestic and international financial institutions and has resulted in the greater

availability of financing for real estate developers. Regulatory changes

permitting foreign investment are expected to further increase investment in the

Indian real estate sector. The nature of demand is also changing, with

heightened consumer expectations that are influenced by higher disposable

incomes, increased globalisation and the introduction of new real estate

products and services. These trends have been reinforced by the substantial

growth in the Indian economy, which has stimulated demand for land and

developed real estate. Demand for residential, commercial and retail real estate

is rising throughout India, accompanied by increased demand for hotel

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accommodation and improved infrastructure. Additionally, the tax and other

benefits applicable to SEZs are expected to result in a new source of demand.

As can be seen from the charts below, CRIS INFAC expects cumulative

investments of Rs. 5,106 billion in real estate-related construction, leading to

8,288 million sq. ft. of additional space between fiscal 2006 to 2008 (Source:

“Construction Annual Review” (February 2006)).

KEY CHARACTERISTICS OF REAL ESTATE SECTOR

The Indian real estate sector has traditionally been dominated by a number of

small regional or local players with low levels of expertise. The sector has seen

limited inflow of institutional capital and has used high net-worth individual

and other informal sources of financing as the major source of funding, leading

to low levels of transparency. This is rapidly changing as the sector is

witnessing far higher growth rates and significantly improved quality

expectations as India gets better integrated with the global economy.

Some of the key characteristics of the Indian real estate sector are:

• Highly fragmented market dominated by regional players – Rapid growth in

the last decade has seen the emergence of larger players that have differentiated

themselves through superior execution and branding. Further, these players are

now able to capitalize on their early mover advantage with high market share

but remain confined to local or regional markets. While the larger regional

players are now initiating efforts to develop a broader geographic presence,

their home markets continue to generate a majority of their profitability.

• Local know-how is a critical success factor in the development phase – One

of the key reasons for the emergence of local developers is the critical

importance of local knowledge and relationships in ensuring successful and

timely development of real estate projects. Property is a state-governed subject

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in India and the rules and regulations that affect, among other things, approval

processes and transaction costs, vary from state to state.

• High transaction costs – The real estate sector has traditionally been

burdened with high transaction costs as a result of stamp duty on transfers of

title to property that varies state by state. Though efforts are being made at the

state level to reduce the stamp duties, they continue to be as high as 11% in

certain states.

• Enhanced role of mortgage financing – Over the last five years, a significant

portion of new acquisitions, particularly in the larger cities in India, has been

financed through banks and financial institutions. This has been aided by a

sharp decline in interest rates and broad availability of financing products, due

to aggressive marketing and product development by financial institutions.

The rapid growth witnessed in the Indian real estate sector is due to a

combination of strong demand drivers, increased availability of capital for the

sector, as well as historical supply constraints.

KEY SEGMENTS IN REAL ESTATE INDUSTRY

RESIDENTIAL DEVELOPMENT

The growth in the residential real estate market in India has been largely driven by rising disposable incomes, a rapidly growing middle class and youth population, low interest rates, fiscal incentives on both interest and principal payments for housing loans, heightened customer expectations, and increased urbanisation and nuclearisation. In connection with a review of opportunities in the Indian real estate sector, Jones Lang LaSalle’s publication “The New Investment Mantra – Understanding Risks and Returns in the Indian Real Estate Sector” (July, 2006), highlights that:• India’s housing shortage increased from 19.4 million units in fiscal 2004 to 22.4 million units in fiscal 2006 and is expected to rise further.

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• The retail market for mortgages is expected to further grow at a CAGR of 17% from USD16 billion in fiscal 2006 to USD30 billion in fiscal 2009.Further, Cushman & Wakefield have noted that there is scope for 400 township projects over the next five years spread across 30 to 35 cities, each having a population of more than 0.5 million and that the total project valuededicated to low and middle income housing in the next seven years is estimated at USD40 billion. (Source:“Opportunities for Private Equity Investment in Indian Real Estate” (3rd Quarter, 2006)).

Drivers of demand in residential real estate market:

According to NCAER’s 2005 report “The Great Indian Middle Class”, the number of households with annual incomes of between Rs. 2,000,000 and Rs. 5,000,000 per year, Rs. 5,000,000 and Rs. 10,000,000 per year and inexcess of Rs. 10,000,000 per year is expected to increase in size by 23%, 26% and 28%, respectively, between fiscal 2002 and fiscal 2010. These higher income households will be target customers for mid to luxury residential developments offered by premium residential property developers. In addition to rising income levels and increasing affordability, changing demographics, lower interest rates, rising disposable incomes and fiscal incentives have spurred demand for real estate in India.

• By 2013, India is expected to add 91 million people to the working population (aged 25-44 yrs). Over the next 20 years, the working age population is projected to grow at 1.9% per annum. (Source: Ministry of Urban Affairs, Government of India, 2006)

• Favorable economic environment has led to a change in the income distribution pattern with an increasing concentration of families in the middle and higher income groups Further, nuclearisation of Indian families has accelerated the demand for mortgages and for new housing. It is estimated that 20 million additional residential units will be needed over the next few years to meet housing demand. Rising income levels and greater job creation, particularly in sectors such as business process outsourcing and financial services is also resulting in enhanced demand for quality housing. Further, housing mortgage rates have declined from 14% to approximately 7.5-8.0% over the last five years, making it easier for the expanding middle-class to buy homes. This decrease, coupled with aggressive marketing and innovativeschemes, has created greater consumer desire for mortgage financing.

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Drivers of Real

COMMERCIAL DEVELOPMENT

The recent growth of the commercial real estate sector in India has been fuelled

in large part by the increased revenues of companies in the services business,

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particularly in the IT and ITES sectors. Industry sources expect the IT and ITES

sectors to continue to grow and generate additional employment, which is

expected to result in increased demand for commercial space. The charts below

illustrate the rapid growth experienced by the IT and ITES sectors in India:

Supply

RETAIL DEVELOPMENT

CRIS INFAC estimates that retail spending in India in fiscal 2005 was Rs. 9.9

lac crore, of which organised retail accounted for Rs. 35,000 crore, or

approximately 3.5%. The organised retail segment in India is expected to

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grow at a rate of 25% to 30% over the next five fiscal years. The growth of

organised retail segment is expected to be driven by demographic factors,

increasing disposable incomes, changes in perception of branded products,

the entry of international retailers into the market, the availability of cheap

finance and the growing number of retail malls (Source: “Retailing Annual

Review” (September 2005)). The major organised retailers in India currently

include Pantaloon, Shopper’s Stop, RPG Group, Landmark Group, Tata Trent,

Globus, Piramal Group and Provogue India. While the organised retail segment

has so far been limited to larger cities in the country, retailers have announced

major expansion plans in smaller cities and towns. The growth of organised

retail in India will also be affected by the reported entry into the sector of major

business groups such as Bharti, Bennett & Coleman, Hindustan Lever and Hero

Group. International retailers such as Metro, Shoprite, Lifestyle and Dairy Farm

International have already commenced operations in the country while global

retailing giants like Walmart and Carrefour have announced plans to enter

India. CRIS INFAC estimates that, over the next five years, 73.78 million sq. ft.

of floor space and Rs. 369 billion of real estate investment will be required to

sustain the growing organised retail market (Source: “Retailing Annual

Review” (September 2005)). The last two or three years have witnessed a

proliferation of shopping malls, enclosures having different format of retailers

and usually including anchor tenants who cover large areas and are important

for attracting footfalls. Malls offer value in terms of variety of shops and lease

out floor space to individual shops which are enticed by the economies of scale

resulting from sharing of cost

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India has four metros: Mumbai, Delhi, Kolkata and Chennai, and an equal

number of mini metros: Bangalore, Hyderabad, Ahmedabad and Pune. Initially,

most retail players launched their ventures in the metros and mini metros.

However, of late, the retail phenomenon is spreading to regional centres across

the country. Players are entering these cities early to gain a first-mover

advantage and enjoy benefits of a larger customer base and a higher share of

loyal customers. Over the past few years, the share of these cities in the

percentage of organised retail has been growing steadily. CRIS INFAC

estimates construction investments of Rs. 112 billion over the next five years

leading to around 105 million sq. ft of mall space by 2010 (Source:

Construction, Annual Review” (February 2006)). Of the total malls space to be

available by 2010, Mumbai, Pune, Delhi and NCR (including Gurgaon, Noida,

Greater Noida, Faridabad and Ghaziabad), Bangalore and Hyderabad will have

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a share of 74%. The balance 26% will be made up by cities such as Kolkata,

Chennai, Ahmedabad, Jaipur, Nagpur, Lucknow, Indore, Ludhiana and

Chandigarh.

HOSPITALITY DEVELOPMENT

With the increase of disposable income in the hands of upwardly mobile middle

class Indians, the propensity of spending a larger portion of income on travel

and leisure has been steadily increasing. This factor, coupled with the changing

lifestyle of the urban population and an increase in business travel due to a

growing economy, has created demand for mid-tier as well as top-quality hotels

across this country. In addition, India is also emerging as a major destination

for global tourism which in turn pushing up the demand for hotels and resorts

across India. This increasing demand for hotels and resorts across India offers

yet another opportunity for real estate development. According to HVS

International, the majority of segments in the Indian hotel industry have shown

robust recent growth in room rates as well as occupancy rates (Source: “Indian

Hotel Values – Has the Summit Been Scaled?”(April 2006)). With increased

demand and limited availability of quality accommodation, the average room

rates in metropolitan markets have shown significant growth in 2006 including

36.7% for Hyderabad, 32.5% for Delhi, 30.5% for Jaipur, 24.7% for Mumbai

and 24.0% for Bangalore. Agra, Kolkata, Chennai and Goa experienced a

growth range of between 17.0% and 21.0% in 2006 (Source: “Hotels in India –

Trends and Opportunities” (2006 Edition)). The general increase in both room

rates and occupancy rates is expected to contribute significantly to the demand

for new hotel developments.

According to CRIS INFAC, room demand is expected to grow at a CAGR of

10% over the next five years. This is expected to be accompanied by increases

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in average room rates of 20% and 10% in fiscal 2007 and 2008, respectively. It

is expected that the growth in occupancy rates will be assisted by factors such

as the 10% CAGR in the number of incoming travellers to India over the next

five years. The following chart shows changes in room demand and availability

as well as occupation rates since fiscal 2000 and projections through to fiscal

2010 (Source: “Hotels Annual Review” (July 2006))

The following chart shows growth in average rate by hotel classification from

fiscal 1996 to fiscal 2006. Across categories, overall average hotel room rates

have increased at compounded growth rate of 5.8% over the past ten year

period driven by the strong growth in room rates in high-end and luxury hotels

(Source: HVS International “Hotels in India – Trends and Opportunities”

(2006 Edition)).

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INTRODUCTION

OVERVIEW

Emaar MGF Land Limited (“Emaar MGF” or the “Company”) is a joint

venture between Emaar Properties PJSC (“Emaar”) of Dubai and MGF

Development Limited (“MGF”) of India. Emaar is one of the world’s leading

real estate companies – having developed approximately 45.0 million square

feet of real estate across residential, commercial and other business segments

and with operations in 16 countries, as of August 31, 2007. MGF has over the

last 10 years established itself as one of the key players in retail real estate

development in Northern India. We commenced our operations in India in

February 2005. Our primary business is the development of properties in the

residential, commercial, retail and hospitality sectors. In addition, we have also

identified healthcare, education and infrastructure as business lines for future

growth. Our operations span across various aspects of real estate development,

such as land identification and acquisition, project planning, designing,

marketing and execution. As of August 31, 2007, we have Land Reserves

across India approximating 12,544 acres of which we have development plans

for approximately 11,580 acres expected to provide us with an estimated

Developable Area of approximately 559.0 million square feet and an estimated

Saleable Area of approximately 542.0 million square feet. “Saleable Area”

refers to the part of the Developable Area relating to our economic interest in

such

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property. “Developable Area” refers to the total area we develop in a property,

and includes carpet area, common area, service and storage area and car

parking. Such area, other than car parking space, is often referred to in India as

“super built-up” area. Our mission as a real estate development company is to

develop and deliver unique integrated lifestyle and work place environments

and planned developments and to be recognised as a responsible corporate

citizen and an employer of choice. In our residential business line, our main

focus is on developing integrated master planned communities in the mid to

luxury segment, wherein we design, build and sell a wide range of properties

including villas, townhouses and apartments of varying sizes. By “integrated

master planned communities”, we mean that developments have one or more

community facilities, including hospitals, schools, retail and commercial

buildings enabling a “live, work and play” theme within the same development.

In our commercial business line, we are focussed on developing, selling and

leasing office and SEZ properties targeted towards a wide range of customers

from individual users and small companies to large corporates in various

sectors including IT and ITES. Our commercial properties shall include both

stand-alone commercial sites and properties forming part of our integrated

master planned communities. In our retail business line, we are developing for

sale or lease shopping centres within our integrated master planned

communities and on a stand-alone basis, large regional destination malls and

luxury retail space at our luxury hotel developments. In our hospitality business

line, we are developing hotels at various price points in the luxury, up market,

midmarket and budget segments across India. We intend to enter into

management agreements with well-recognized,

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experienced and successful international hospitality companies for the

operation and management of our hotels, on an exclusive geographical basis

wherever possible. We have entered into joint ventures with Accor for the

development and operation of budget hotels and Premier Travel Inn for the

development and operation of midmarket category hotels in India. Both of these

joint ventures are on an exclusive basis (the details of which are set out under

“History and Certain Corporate Matters – Joint Venture and Other Agreements”

below). In addition, we have entered into relationships with Intercontinental

Hotels group companies, Four Seasons Hotels Limited and Marriott Hotels

India Private Limited for the operation and management of some of our other

hotel

properties.

Our current projects under development include:

• Mohali Hills (plots), part of a 3,000 acre project of integrated master planned

communities in Mohali near Chandigarh with an estimated Saleable Area of 5.7

million square feet all of which is currently under

development and has been launched for sale. This project is expected to be

completed in the fiscal year 2009-10.

• The Views at Mohali Hills, part of a 3,000 acre project of integrated master

planned communities in Mohali near Chandigarh with an estimated Saleable

Area of 1.9 million square feet all of which is currently under development and

has been launched for sale. This project is expected to be completed in the

fiscal year 2009-10

• The Villas at Mohali Hills, part of a 3,000 acre project of integrated master

planned communities in Mohali near Chandigarh with an estimated Saleable

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Area of 1.2 million square feet all of which is currently under development.

This project is estimated to be completed in the fiscal year 2009-10.

• Boulder Hills (Group Housing Phase I), a 14 acre residential project (part of a

510.4 acre integrated master planned community) in Hyderabad with an

estimated Saleable Area of 1.9 million square feet all of which is currently

under development. This project is expected to be completed in the fiscal year

2009-10.

• Palm Springs, a 16.5 acre high-end residential project in Gurgaon with an

estimated Saleable Area of 0.7 million square feet all of which is currently

under development and has been launched for sale. This project is expected to

be completed in the fiscal year 2009-10.

• The Commonwealth Games Village 2010 residential complex, a 27.7 acre

project in Delhi with an estimated saleable area of 1.8 million square feet, all of

which is currently under development. This project is

expected to be completed in the fiscal year 2009-10

• Chennai Esplanade (Phase I), a 7 acre residential project (part of a 14 acre

project) in North Chennai with an estimated Saleable Area of 0.4 million square

feet all of which is currently under development. This project is expected to be

completed in the fiscal year 2009-10.

• Palm Drive, a 31.6 acre residential development in Gurgaon with an estimated

Saleable Area of 3.3 million square feet, all of which is currently under

development. This project is expected to be completed in the fiscal year 2009-

10.

• The Central Plaza at Mohali Hills, part of a 3,000 acre development of

integrated master planned communities in Mohali near Chandigarh. This retail

development has an estimated Saleable Area of 0.5 million square feet all of

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which is currently under development and has been launched for sale. This

project is expected to be completed in the fiscal year 2009-10.

• “Courtyard by Marriott” in Amritsar, a hotel project of approximately 150

keys. The project is expected to be completed in the fiscal year 2009-10.

• “J.W. Marriott” in Kolkata, a hotel project of approximately 250 keys. The

project is expected to be completed in the fiscal year 2009-10.

• “Holiday Inn” in Kolkata, a hotel project of approximately 250 keys. The

project is expected to be completed in the fiscal year 2009-10.

• “Holiday Inn” in Dehradun, a hotel and convention centre project of

approximately 200 keys. The project is expected to be completed in the fiscal

year 2009-10.

• A luxury hotel in Jasola of approximately 250 keys. The project is expected to

be completed in the fiscal year 2009-10.

Details of our Land Reserves are contained under “—Description of Our

Business — Land Reserves” below.

As of August 31, 2007, most of our Land Reserves are located in or near

prominent cities across India as indicated in the table below:

Location Acreage

North

Chail 18

Dehradun 1,129

Delhi 1,313

Ghaziabad 378

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Gurgaon 2,808

Jaipur 416

Jalandhar 238

Lucknow 390

Ludhiana 347

Mohali 2,775

South

Chennai 51

Coimbatore 264

Hyderabad 510

Kochi 360

Mangalore 75

Mysore 153

East

Kolkata 6

Shillong 80

West

Alibaugh 25

Goa 483

Indore 205

Pune 520

Total 12,544

We estimate that our Land Reserves will provide us with a Saleable Area of

approximately 134.9 million square feet of plotted residential development

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(including built up villas), 300.0 million square feet of built up residential

properties, 86.6 million square feet of commercial properties, 17.0 million

square feet of retail properties and 5,225 keys in our hospitality properties as of

August 31, 2007.

For the three months ended June 30, 2007 (our first quarter in which revenues

were recognised) our consolidated total income was Rs. 1,931.7 million and our

consolidated net profit (as restated) was Rs. 499.4 million.

For the year ended March 31, 2007, our consolidated total income was Rs.

168.7 million and our consolidated net loss was Rs. 466.0 million.

HISTORY OF THE GROUP

Our Company was incorporated on February 18, 2005 as a joint venture

between Emaar and MGF on an exclusive basis in India. The details of the joint

venture agreement and the exclusivity arrangement are set out under “History

and Certain Corporate Matters – Joint Venture and Other Agreements” below.

We had shareholder funds (i.e., paid up share capital and reserves) of Rs. 47.7

billion as of June 30, 2007. The Company was converted into a public limited

company on August 13, 2007. Emaar, incorporated in 1997, is one of the

world’s leading real estate companies – having developed approximately 45.0

million square feet of real estate across residential, commercial and other

business segments and with operations in 16 countries as of August 31, 2007. It

is listed on the Dubai Financial Market and is part of the Dow Jones ‘Arab

Titan’ Index and S&P IFCG Extended Frontier 150 Index. Emaar is also an FT

Global 500 company, a global ranking by Financial Times that provides an

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annual snapshot of the world’s largest companies, listed on the basis of market

capitalization. In October 2006, Emaar was awarded ‘Best Developer in the

UAE’ for the second consecutive year and ‘Best Developer in Egypt’ at the

Euromoney Gulf Real Estate Awards. Emaar is developing several real estate

projects including the Burj Dubai Downtown development (a development

which is expected to comprise properties spanning the residential, retail,

commercial and hospitality sectors, including the Burj Dubai – stated to be the

world’s tallest tower, the Dubai Mall – stated to be the world’s largest

entertainment and shopping mall, the Old Town – a low-rise residential

community, Burj Dubai Lake Hotel and Serviced Apartments and the Burj

Dubai Boulevard) and the King Abdullah Economic City in the Kingdom of

Saudi Arabia (a development which is planned to be a mixed use city extending

along a 35 kilometre shoreline and is located near the commercial hub of

Jeddah). In addition to the UAE, India and Saudi Arabia, Emaar has projects in

various countries including Egypt, Turkey, Morocco, Jordan, Pakistan and the

United States of America. Emaar is an ISO 9001:2000 quality certified

company. In addition to geographical expansion, Emaar is also diversifying into

other sectors, including leisure and hospitality, malls, education, healthcare and

finance. In the hospitality and leisure sector, Emaar has entered into an

exclusive agreement with Giorgio Armani S.p.A. to build and manage Armani

hotels and resorts globally. In the education sector Emaar acquired Singapore-

based Raffles Campus Pte Limited, a company involved in providing education

with campuses in Singapore, Indonesia, Hong Kong, China and Vietnam.

Emaar also holds equity in Dubai Bank which is focused on retail and

commercial banking; Amlak Finance PJSC, a leading UAE Islamic home

financing company; and Emaar Industries and Investments (Pvt) JSC which has

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an investment focus on technology and light manufacturing industries in the

Gulf region. In June 2006, Emaar acquired WL Homes LLC (trading as John

Laing Homes), a large homebuilder in the United States. Emaar further

acquired Hamptons Group Limited, which is a global property sales,

management and development services company.

MGF, incorporated in 1996, is engaged in the field of retail real estate

development in Northern India. It is currently one of the leading shopping mall

developers in Northern India, with approximately 2.0 million square feet of

retail space delivered and approximately 3.0 million square feet of retail space

under development as of June 30, 2007. Some of MGF’s completed projects

include The Metropolitan, The Plaza and Megacity Mall in Gurgaon, the City

Square Mall in West Delhi, MGF Metropolitan Mall in Saket in South Delhi

and MGF Metropolitan Mall in Jaipur. It has been agreed between Emaar and

MGF that in the event that the FDI policy restricts the Company from

developing a retail project in India, MGF shall be authorised to undertake such

project.

STRENGTHS

We believe that the following are our primary competitive strengths:

Strong parentage providing access to international and local capabilities

Our parentage of Emaar and MGF provides us with the organisational skills,

experience and the resources required for delivering large scale, quality

projects. Emaar’s brand name, development expertise and

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international experience combined with MGF’s local knowledge and

capabilities gives us the ability to identify suitable locations, acquire and

aggregate large parcels of land and design and develop quality residential,

commercial, retail and hospitality properties. We are well-positioned to emulate

international best practices followed by Emaar, such as emphasis on customer

satisfaction, through, for example, offering the customers a choice of

customising the interiors of their homes. We also use Emaar’s experience to

bring an innovative marketing approach to the Indian residential real estate

sector through Emaar’s “Street of Dreams” concept.

High proportion of fully paid for Land Reserves

As of August 31, 2007, over 70% of our Land Reserves are fully paid for, of

which over 397.0 acres are under development. Most of our Land Reserves are

located in or near prominent cities across India such as Delhi, Pune, Hyderabad,

Chennai, Indore and Chandigarh. Details of these locations are contained under

“Overview” above.

Scale of operations

We believe that our market position is enhanced by our strong parentage, Land

Reserves and access to capital.As a result, we are able to:

• negotiate in relation to and purchase large plots of land from multiple sellers

directly, thus enabling us to aggregate land at relatively lower prices.

• be a preferred development partner for land owners with large and/or strategic

tracts of land.

• undertake large-scale and complex projects providing us with the opportunity

to capture value from the size and integrated nature of such developments.

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• undertake projects in multiple phases providing us with the opportunity to

monitor market acceptance and modify our projects in accordance with

customer needs.

• capitalise on large-scale purchasing opportunities, leading to operational and

cost efficiencies.

Diversified business model

Our real estate business is diversified across geographical locations and

business lines. Our Land Reserves are spread over 22 cities in 16 states in India,

and we have commenced projects in eight cities in seven states in India. These

projects are spread over eight residential properties, including plots, villas,

townhouses and apartments, one retail property and five hospitality properties.

In addition, although we generally sell our residential properties, we intend to

sell or lease commercial and retail properties and intend to hold and, through

third parties, manage and operate hospitality properties.

Execution capability

We employ a robust process involving internal teams and external consultants

when undertaking projects. We believe that this, together with close monitoring

by our management and staff and the experience of our promoters, Emaar and

MGF, enhances our product delivery. For example:

• We have strong relationships with a number of real estate brokers that assist

us in identifying and acquiring land in strategic locations.

• We work closely with specialists and consultants including international

architects in designing and planning our projects to ensure quality design and

make them environment friendly.

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• We have a joint venture with Leighton International Limited, part of an

Australian based global construction

group, for the construction of our projects in India. We have also signed a term

sheet with Multiplex Limited, part of another Australian based global

construction group, to establish a joint venture to provide

construction services for our projects in India.

• We have a joint venture with Turner Construction International LLC, to

provide construction management services, program management services and

project management services for our projects in India.

Leveraging our strategic relationships

In addition to our strategic relationships with Leighton International Limited,

Multiplex Limited and Turner Construction International LLC, we have

relationships with the following parties which enhances the

marketability of our hospitality, healthcare and infrastructure projects:

• We have entered into joint ventures with Accor for the development and

operation of “Formule 1” budget category hotel and Premium Travel Inn for the

development and operation of “Premier Travel Inn” midmarket category hotels.

We have also entered into a management agreement with SC Hotels & Resorts

(India) Private Limited, part of the Intercontinental Hotels Group, pursuant to

which we have agreed to build and fit out a “Holiday Inn” branded hotel in

Kolkata to be managed and operated by SC Hotels & Resorts (India) Private

Limited. We have also entered into a management agreement with

Intercontinental Hotels Group (India) Pvt. Ltd. Pursuant to which we have

agreed to build and fit out a “Holiday Inn” branded hotel

29

and convention centre in Dehradun to be managed and operated by

Intercontinental Hotels Group (India) Pvt. Ltd. We have entered into an

operating agreement and a memorandum of understanding with Marriott

Hotels India Private Limited (with respect to the development, operation and

management of a hotel under the “Courtyard by Marriott” brand in Amritsar

and a hotel under the “JW Marriott” brand in Kolkata) and a

letter of intent with Four Seasons Hotels Limited (with respect to the

development, operation and management of a hotel under the “Four Seasons”

brand in Hyderabad). Further details of these relationships

are set out under “Our business lines – Our hospitality business” below.

• We have entered into a memorandum of understanding with Fortis Healthcare

Limited pursuant to which we have agreed to form a joint venture company to

undertake the development of hospitals across India

• We have a memorandum of understanding with Dubai Aerospace Enterprise

(DAE) Limited (“DAE”) to work together with DAE to explore potential areas

of co-operation and to identify and evaluate the design, construction,

expansion, renovation, modernisation, commissioning, maintenance, operation,

management and development of existing and new airports in India with a view

to further our respective strategic objectives in India. Further details of this

relationship are set out under “Our other initiatives – Infrastructure

projects” below.

Strong financial position

We have shareholder funds (i.e., paid up share capital and reserves) of Rs. 47.7

billion as of June 30, 2007. As of June 30, 2007, we had approximately Rs.

31.5 billion of total principal amount of outstanding indebtedness including

secured redeemable non-convertible debentures issued to Prudential ICICI

30

Trust Limited A/c Liquid Plan for an aggregate consideration of Rs. 2.5 billion

having a credit rating of A1+ (SO) by ICRA Limited. The Company has also

received an A+ rating from CARE for long term debt programmes and a PR1+

rating from

CARE for short term debt programmes. We have a debt to equity ratio of 0.66

as of June 30, 2007. As a result, we believe we have the ability to incur

additional indebtedness at competitive rates and terms.

Experienced management

We have a professional, experienced and dedicated management team drawn

across the real estate and various other industries. Because of the established

brand names and reputation of Emaar and MGF in real estate

development, we have been able to recruit high calibre management executives

from diverse backgrounds.

STRATEGY

The key elements of our business strategy are as follows:

Create value through integrated master planned communities

We believe that the large size of our Land Reserves enables us to develop

integrated master planned communities, which provide residential and other

offerings across various price points thus optimising the potential and use of

our Land Reserves. We intend to focus on developing integrated master

planned communities in the mid to luxury segment, with a mix of residential

offerings and one or more community facilities, including hospitals, schools,

retail, commercial and recreation enabling a “live, work and play” theme within

the same project. We intend to ensure that our integrated master planned

communities meet high quality standards in order to enhance the premium we

31

may charge and/or demand for our core business offerings within such

communities. Further, we are able to create value by developing and offering

parts of our projects in a staggered or phased manner, thereby potentially

extracting greater value from successive phases as the project reaches

completion and greater facilities are made available. Undertaking projects in

multiple phases also provides us with the opportunity to monitor market

acceptance and modify our projects in accordance with customer needs.

Adopt international benchmarking and follow best practices in

development and customer service

We believe that consumer aspirations are rising along with demand for high

quality developments across our business lines. In order to set new benchmarks

for quality to meet these new aspirations, we are using

international designs used by Emaar as models for our Indian product offerings.

We intend to continue to employ a robust process involving internal teams and

external consultants in order to deliver projects that can be benchmarked on an

international basis. We believe we have a differentiated marketing model. We

intend to market residential property in India based on the “Street of Dreams”

concept used by Emaar in Dubai. A Street of Dreams is to be located in a

residential project and consists of a number of distinct model homes displaying

a variety of villas, townhouses and apartments from such residential project.

Each model home has a different design theme, ranging from modern to

classical. Being fully furnished and equipped, such models are intended to give

prospective buyers an impression of living within one of our community

homes. We plan to have a Street of Dreams in most of our large residential

developments. One Street of Dreams has been constructed in our Boulder Hills

32

project in Hyderabad and two others are under construction in our Mohali Hills

project in Mohali and our Palm Springs project in Gurgaon.

In addition, we train our marketing and sales teams in our customer relationship

management (“CRM”) and customer lifecycle management systems and

processes, which we adopt from best practices of Emaar and John Laing

Homes. In our residential business, our CRM systems and processes are

expected to provide us an insight into trends in customer requirements, in terms

of type, location and price of the product offerings, and guide us in planning

our development and promotional activities. As an extension of our marketing

and sales team, we have a customer care cell with the primary responsibility of

recording any complaints or feedback from clients, to ensure consistency and

continuity of our client interface. In addition, given our relationship with

Emaar, we have been using and intend to continue to use Hamptons Group

Limited to sell and market our properties overseas.

Increase our Land Reserves in strategic locations

Continuing to build our Land Reserves is critical to our growth strategy. We

seek to acquire parcels of land and development rights over parcels of land in

various locations, over a period of time, for future development. In some cases,

these parcels of land may be consolidated to form a contiguous landmass, upon

which we can undertake development. We intend to continue acquiring land

across India for our projects in order to replenish and augment our Land

Reserves. We have identified and acquired land in and around 22 cities which

we believe are suitable for our projects and are in the process of acquiring

further land in existing and new cities to achieve a presence in India’s 40

largest cities by population over the next five years.

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Capitalise on strategic alliances with domain leaders

To ensure excellence in our processes and product delivery, enhance the

premium we may charge and/or demand for our product offerings and enable

our management to focus our core business of real estate development, we have

entered into and will continue to enter into strategic relationships. We have

entered into relationships with

Leighton International Limited and Multiplex Limited (for construction),

Turner Construction International LLC (for project management), Accor,

Premier Travel Inn, InterContinental Hotels group companies, Four Seasons

Hotels Limited, Marriott Hotels India Private Limited (in relation to our

hospitality business) and Fortis Healthcare Limited (in relation to our

healthcare business).

Invest in human capital and recognition as an employer of choice

Investment in human capital is a key part of our business strategy and is derived

from our mission to be recognised as a responsible corporate citizen and

employer of choice. We focus on various areas which we

believe will enable us to retain and attract experienced and qualified human

capital by (i) aligning the interests of our employees with ours, (ii) spreading

responsibility for achieving our business objectives throughout our

organisation, (iii) extending best practices amongst our employees and (iv)

providing our employees with access to the international skills, experience and

resources of Emaar.

O RGANISATIONAL STRUCTURE

34

Board of Directors

35

H. E. Mohamed Ali Rashed Alabbar- Chairman

Mr. Shravan Gupta- Executive Vice Chairman & Managing Director

Mr. Siddharth Sareen- Executive Director 

Mr. Siddharth Gupta- Executive Director

Mr. Ahmed Jamal Jawa- Director

Mr. Pradip Kumar Khaitan- Director

Mr. Ram Charan- Director

Mr. Om Prakash Vaish- Director

Mr. Ghyanendra Nath Bajpai- Director

Mr. Kiran Sharadchandra Karnik- Director

Mr. Aman Mehta- Director

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37

Below is a flow chart illustrating our land identification and acquisition process.

38

Project planning and execution

The project planning and execution process commences with the obtaining of

requisite regulatory approvals, including environmental approvals and the

development of a project concept based on the area’s marketability, target

customers, potential return and legal status. After a detailed review of the site

parameters, we formalize an architectural brief based on the project concept

which is subsequently finalized with selected architects and other external

consultants. We closely monitor the development process, construction quality,

actual and estimated project costs and construction schedules. We endeavour to

maintain high health and safety standards on our construction sites. In order to

ensure the high quality of our projects, we have entered into a series of

memoranda of understanding and agreements with leading construction and

project management companies. Our design and engineering is carried out by a

team of our appropriately qualified employees and external specialists such as

architects and consultants. We believe these elements of our project execution

methodology are essential for developing products which appeal to consumers

at the higher end of the markets. Our memoranda of understanding and

agreements include:

• Construction – We have formed a joint venture with Leighton International

Limited part of an Australian

based global construction group, to carry out construction of our projects in

India. The parties have agreed

that the joint venture company is to provide construction services to us as its

preferred customer and we are

to treat it as our preferred contractor. The parties have agreed that each of the

Company and Leighton

39

International Limited (or their respective affiliates) shall own 50% of the issued

share capital of the joint venture company and are not permitted to transfer their

shares directly or indirectly to a third party (except their respective affiliates)

for a period of three years. The joint venture is intended to implement global

best practices in technology and design for construction of our projects. Subject

to some limited exceptions, Leighton has agreed to work on real estate projects

in India exclusively through the joint venture company and to provide the joint

venture company with all necessary support, assistance and resources to ensure

that after a five year period the company is a self sustaining construction

company. A similar undertaking has been given by the Company. Leighton

Holdings Limited is the parent company of Australia’s largest project

development and contracting group. The details of the joint venture agreement

are set out under “History and Certain Corporate Matters – Joint Venture and

Other Agreements” below. With over 25,000 employees, the Leighton group’s

operations are spread around the Asia-Pacific region with projects in countries

such as Australia, Indonesia, Malaysia, Singapore, China and India and in the

Arabian Gulf. Leighton Holdings Limited is listed on the Australian Stock

Exchange. Through the joint venture company, we intend to benefit from

Leighton’s construction expertise and experience, which enables our

management to focus on the development rather than the construction of

projects. We believe the joint venture company will improve the quality of

construction in our developments and also allow us to embark on more complex

and ambitious projects. The first few projects that the joint venture company is

constructing are Mohali Hills, The Views and The Central Plaza in Mohali and

The Palm Springs in Gurgaon.

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We have also signed a term sheet with Multiplex Limited, part of another

global construction group, to establish a joint venture company to provide

construction services to us as its preferred customer in India on an exclusive

basis. The parties have agreed that each of the Company and Multiplex Limited

shall own 50% of the issued share capital of the joint venture company. The

term sheet provides that Multiplex Limited shall not undertake construction

activities similar to those contemplated by the term sheet in India other than

through the joint venture company.

• Project Management – We have an agreement with Turner Construction

International LLC (“Turner”) to establish a joint venture company to provide

construction management services, program management services and project

management services for our projects in India. We intend to benefit from

Turner’s experience by strengthening our planning and execution capabilities.

Turner has agreed not to directly or indirectly engage or involve itself in

providing construction management services, program management services

and project management services in India other than through the joint venture

company during the term of the agreement – initially a period of five years

which is renewable. Each of the Company and Turner currently own 50% of the

issued share capital of the joint venture company and are not permitted to

transfer their shares directly or indirectly to a third party (except for their

respective affiliates) for a period of five years. The details of the joint venture

agreement are set out under “History and Certain Corporate Matters –

Joint Venture and Other Agreements” below.

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Sales and marketing

We have a panel of over 150 brokers, who market our residential, commercial

and retail projects. We offer continuous training and support to the brokers (for

example, attending road shows and presentations to potential customers)

intended to help achieve higher sales against quarterly targets. We also have a

strong relationship with various housing finance companies to ensure that the

customers are given access to the various financing schemes relating to our

residential projects. We focus on jointly developing and marketing co-branded

financing schemes for the convenience of our residential customers. A number

of housing finance companies with whom we have relationships share their

customer databases and premises across India to market these schemes on

exclusive basis. We offer two types of payment plans to our residential

customers. The first is the upfront payment of 100% of the purchase price

within 45 days of booking the property and the second is a phased payment

plan which requires the customer to pay the purchase price in instalments until

the property is completed. We have a preference for collecting 100% of the

purchase price upfront to insulate against the risk of default of payment by

a customer. In order to encourage this, we offer to the customer by way of an

incentive, an average discount of approximately 10% to the purchase price.

As a part of the sales department, there is a dedicated customer service team

comprising over 50 employees responsible for servicing our customers through

the entire sales process, from the booking process through to the transfer of

property to the new owner. The sales take place through our corporate office,

branches and sales centres. We intend to market residential property in India

based on the “Street of Dreams” concept used by Emaar in Dubai. A Street of

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Dreams is to be located in a residential project and consists of a number of

distinct model homes displaying a variety of villas, townhouses and apartments

from such residential project. Each model home has a different design theme,

ranging from modern to classical. Being fully furnished and equipped, such

models are intended to give prospective buyers an impression of living within

one of our community homes. We plan to have a Street of Dreams in most of

our large residential developments. One Street of Dreams has been constructed

in Hyderabad and two others are under construction in our developments in

Mohali and Gurgaon.

The flow diagram below illustrates our sales process:

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RESIDENTIAL PROJECTS

 

A prime location, just minutes away from the central business district, the Commonwealth Games Village is Delhi’s only purpose-built, self-contained premium residential community.

 

 

Comprise of independent low-rise luxury homes, featuring the highest design standards and premium amenities at attractive price points. Each family can occupy one entire floor of The Terraces with independent access and enjoy unhindered privacy of these true value homes.

 

 

 

Surrender completely to natural beauty. Surround yourself with acres of refreshing greens. Experience what clean, healthy living should be. Welcome to Garden Terraces, low rise luxury residences at The Palm Drive. Walk into your home and experience a great sense of space. Enjoy the feeling of luxury, quality and workmanship. And prepare to be welcomed by greens as you step out.

 

 

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A world-class leisure and residential community spread out over approximately 531 sprawling acres, BHGCC has been envisioned as a complete, self-contained township built around an 18-hole championship golf course where every home is designed to the most demanding international standards.

 

 

A well planned integrated community spread over approximately 14 acres, Esplanade is one of the largest housing developments in Chennai. With basic amenities like Education, healthcare, a well known commercial hub and the famous Marina beach a short distance away, Esplanade will comprise of upscale, well appointed apartments with modern conveniences such as a clubhouse, jogging track, swimming pool and more.

 

 

With an emphasis on modern and sleek designs with exquisite finishing, and architectural styles ranging from contemporary to avant-garde, The Palm Drive will have a home to match your dreams. Choose from the convenience of stylish apartment living or the opulence and freedom of a beautiful spacious villa. Amenities such as Club Lounge, Club Café, Billiards Lounge, Home Theatre Room and World-Class Gymnasium complete the entertainment centre at the very heart of The Palm Drive’s social scene.  

 

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Not just a perfect blend of style and form but also a promise to be fine living, The Villas will feature a mix of Andalusian, Mediterranean and Spanish architecture that will be an epitome of elegance and quality lifestyle. These signature homes are appointed with premium brand amenities, providing every convenience for the ultimate in contemporary living.

 

 

The Views is a gated community comprising of world-class apartments in two, three and four bedroom sizes and penthouses. Part of the 3000 acre integrated master planned community of Mohali Hills, apartments at The Views are uniquely configured around elegantly landscaped gardens and parklands echoing the distinctive international character evident throughout Mohali Hills.

 

 

A harmonious blend of lifestyle options, from low-rise luxury villas to spacious apartment towers, situated in acres of elegantly landscaped gardens and parks awaits you on entering The Palm Springs. Distinct in theme and set in small clusters within wide-open landscaped gardens, each villa benefits from privacy, yet is just a short walk from the clubhouse, pool and fitness facilities.

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Mohali Hills

Mohali Hills is a 3000 acre township offering luxury villas, apartments, terraced apartments, styled on Spanish architectural lines, shopping complexes, schools and offices.

Within the Mohali Hills Township are a cluster of premium 2, 3 and 4 BHK apartments and penthouses,'The Views' on 25.8 acres. Apart from the immaculate construction of the apartments, the condominium offers a health club, swimming pool, jacuzzi, tennis courts and a mini Cineplex.

The Villas

 

 

The Villas at Mohali Hills are not just a perfect blend of style and form but also promise to be the epitome of fine living by offering the best from Andalusian, Mediterranean and Spanish architecture. It is a once in a lifetime opportunity to experience a signature lifestyle.

Spanish Villas

   

 

The Spanish style is a reflection of the homes found in the Iberian Peninsula as a response to its particular climate and availability of materials. Simplicity characterises this style, yet handcrafted Mexican decorative tiles highlight the arched entryways and gables. Balconies and windows are enhanced with decorative wrought iron railings. This style witnessed a renaissance in early 20th century California, where the climate mimics that of Spain.

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Mediterranean Villas  

 

The Mediterranean style echoes the architecture of its cousin, the Emirates Hills. A simplified version, the Mediterranean style reflects the rectilinear forms of the many vernacular white-washed hillside towns that dot the Mediterranean Coast. From this simplicity, the refinement in solid details presents a style that echoes the past but forges into the modern era.

Andalusian Villas  

 

The Andalusian style originated in the Iberian Peninsula when the Moors integrated their culture and architecture with the panish. Characterized by the blending of the simple forms found in simple Spanish vernacular and in Moorish traditions of highly ornamental fenestration and facades, it utilizes courtyards and verandahs to maximise thermal delight. Andalusian Revival homes can be found.

The View at Mohali Hills

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The Commonwealth Games Village 2010.

A new landmark in the heart of Delhi from Emaar MGF.

Prime location just minutes away from the central business district - Connaught Place, the Commonwealth Games Village is Delhi’s only purpose-built, self-contained premium residential community.

Wherever you need to travel, for business or pleasure, the Commonwealth Games Village 2010 is the perfect starting point.

The Commonwealth Games Village: global living inspired by an international event, developed by Emaar MGF* - India’s premier real estate and infrastructure development company.

Committed to creating a new India.

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Commercial, IT Parks & SEZs

    

The Palm Square is strategically located as a gateway to The Palm Drive, Gurgaon most desirable residential address being developed by Emaar MGF. Spread across on 3.5 acres of land, The Palm Square will offer a world-class office environment. With large floor plates, open span design and central corridor, every square foot of space at The Palm Square seems bigger. The entire complex will boast of the highest quality specifications and craftsmanship, measuring up to the highest international standards.

 

The Palm Springs Plaza is strategically located on the Golf Course Road, Gurgaon's most desirable address. It stands sentinel to The Palm Springs, Emaar MGF's master-planned, integrated community. Setting new benchmarks for excellence in design, quality, facilities and operational management, The Palm Springs Plaza is designed to meet the most stringent demands of today’s business in a globalised world by providing an environment built to nurture excellence and productivity.

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Hyderabad International Convention Centre (HICC) is India’s largest and most technologically advanced convention centre. It has been developed by the Cyberabad Convention Centre Private Limited, a joint venture between Emaar Properties (PJSC) of Dubai and Andhra Pradesh Investment Infrastructure Corporation (APIIC). The convention centre is an integrated 2,91,000 sq. ft. facility having seating capacity of about 6,500 and is also equipped with several automated features to facilitate diverse utilization.

The Palm Springs Plaza  

A state-of-the-art commercial complex, The Palm Springs Plaza is strategically located on the Golf Course Road, Gurgaon's most desirable address. It stands sentinel to The Palm Springs, Emaar- MGF's master-planned, integrated community comprising low-rise luxury villas and spacious apartment towers, surrounded by acres of elegantly landscaped gardens. Setting new benchmarks for excellence in design, quality, facilities and operational management. The Palm Springs Plaza will be home to some of the finest corporate offices and most sought after retail brands.

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Some of the location plans:

THE PALM SQUARE

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COMMONWEALTH GAMES VILLAGE

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New Developments

1) Emaar-MGF acquire Majority Stake in Singapore Company

A deal valued at Rs. 630 crore was signed by Emaar-MGF on 18th April, 2007 

to acquire a majority stake in Singapore based RSH Ltd, taking its share to

87.3%.  This marks the company’s entry into the fashion and lifestyle market.

2) Emaar-MGF to Raise Capital

Emaar-MGF proposes to raise $2.9 billion in an IPO to fund its pan-India

projects in the second half of 2007. Of the $ 4 billion pledged for India, $1

billion was brought in as one of the largest FDI investments in real estate till

date.

3) Emaar-MGF-Accor Tie-up for Budget Hotels

Accor, the French hospitality giant tied up with Emaar-MGF in November 2006

for a joint venture to set up 100 of the Formula 1 brand of budget hotels in

India. The joint partnership would set up 50 hotels in the 1st 5 years in the top 7

metros at a cost of $300 million.

The locations for the 100 hotels have already been identified, adding 10,000

hotel rooms across the country for budget travellers, in the range of Rs. 1,000 to

Rs.1, 500.

The company has plans to build 10 luxury hotels as well, for which land has

already been purchased. Two plots worth almost Rs. 400 crore have been

acquired in Jasola, Delhi to start the luxury hotel chain. The Delhi and Mumbai

hotels would be in the 7 star category.

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The total investment on the hotel segment would be to the tune of Rs. 13,000

crore in the first 5 years. While Emaar-MGF would construct the hotels, a

specialty partner would manage them.

4-star business hotels would be set up in the state capitals and other major

cities, including Ahmedabad, Indore, Lucknow, Kochi, Goa, Jaipur and

Amritsar.

The Group is considering investment in the serviced apartment category as

well, and so far 8 cities have been identified. These apartments could be part of

a hotel project or independent structures.

4) Emaar-MGF's Foray into Education

The social responsiveness and timing of Emaar-MGF is truly admirable. In

April 2007, it announced its plans of setting up 100 schools and a few institutes

of higher learning. The latter would offer general as well as specialized courses

in business administration, retail management, arts, hospitality, tourism and

nursing.

Emaar-MGF Education would set up these schools within the integrated

townships it is developing across the country, following the CBSE, ICSE and

International Baccalaulreate courses.

The first of these schools will come up in Neemrana, Rajasthan, at a cost of

Rs.100 crore. While Emaar-MGF would own and finance the schools, the

administration would be handled by an independent charitable trust. The

Neemrana School will involve an investment of Rs.100 crore, and will

accommodate 1,800 students.

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Why Emaar MGF is a big bet for investors?

The recent meltdown and the following volatility in the broader markets has left two sets of believers on the streets: one set believes in bubbles, and expects them to burst at periodic intervals, while the other believes there is a fundamental reason innate to these so-called bubbles, which is the strong undercurrent of robust domestic macroeconomic growth.

For the latter set of believers, it is just a matter of conviction in the Indian growth story, while for the former worries about a correction and the bursting of such bubbles.

For some sectors of the economy, however, these divergent sets of investors align together. With a little bit of apprehension about a correction in prices in some pockets, we would like to include the Indian real estate too, in this league.

Here's why: the perennial demand-supply mismatch is likely to continue in the near future.

Though real estate buyers, and more so, investors may delay their buying decision, there is middle class demand, which has taken wings due to the rise of sectors like information technology (IT), IT-enabled services and financial services.

More recently, creation of manufacturing hubs in places such as Sriperumbudur in Tamil Nadu, Manesar in Haryana and Ludhiana in Punjab make one approve of this trend.

With the rate cuts announced by the US Federal Reserve, domestic rates too are expected to soften. An interest rate cut would mean cheaper home loans and thus higher demand for real estate.

Most real estate developers are gearing up for this upsurge in demand by laying out plans to construct millions of square feet (sq ft) in various sizes and shapes, across the country. But, there are a handful of developers in India, who have the scale and pace to set up shop in every nook and corner of the vast geography.

The markets have witnessed a rally in realty stocks in both directions last year, as well as the listings of a number of players including the largest of all -- DLF.

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Now, Emaar MGF Land is set to join this league, with its plans to raise around Rs 6,000 crore via an IPO.

Two, tango

Emaar MGF Land is a joint venture (JV) between Dubai-based Emaar Properties PJSC and Delhi-based MGF Development, incorporated in 2005. Emaar better known as the company which built the Burj Dubai, the world's tallest tower, has a global presence with operations in 16 countries, while MGF is a 10-year old real estate developer from North India with developments like City Square Mall, MGF Metropolitan in Delhi, The Plaza and Megacity in Gurgaon to its credit.

Now, the Emaar MGF JV has acquired over 13,000 acres all over the country and plans to develop it into integrated townships, residential apartments, commercial retail and office spaces, hotels and hospitals.

HOTEL PROJECTS

Project LocationNumberof keys

Estimated completion

Courtyard by Marriott

Amritsar 135FY09-FY10

JW Marriott

Kolkata 300FY09-FY10

Holiday Inn

Kolkata 250FY10-FY11

Holiday Inn

Dehradun 200FY09-FY10

A luxury hotel

Jasola, New Delhi

250FY10-FY11

Besides the parentage, the joint venture has also brought in the largest foreign direct investment (FDI) in real estate from institutions like Citigroup, JP Morgan and New York Life. As on September 2007, the company's paid-up capital of Rs 4,840 crore (Rs 48.40 billion) consisted of a 42 per cent share of Emaar, a 53.3 per cent from MGF and the rest from global financial institutions.

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All the jazz

After achieving a breakeven in 27 months of inception, the joint venture is proposing to aggregate between Rs 5,540-Rs 6,464 crore (Rs 55.40-64.64 billion) through an IPO, which would amount to a post-issue stake of 10.2 per cent in the company. The price band for the issue is fixed at Rs 540-630 a share. At the upper end of the price band, the market capitalisation would thus work out to Rs 62,152 crore (Rs 621.52 billion).

EMAAR MGF'S ONGOING DEVELOPMENTS

Project Nature

Saleable area(in million sq ft)

Estimated completion

Mohali, ChandigarhMohali Hills (Mega township)

Mohali Hills Plots

5.7FY09-FY10

The Views (apartments)

1.9  

The Villas 1.2  Central Plaza (retail space)

0.5  

HyderabadBoulder Hills (Phase I)

Group housing

1.9FY09-FY10

GurgaonPalm Springs, Gurgaon

High-end residential project

0.7FY09-FY10

Palm Drive Residential 3.3FY10-FY11

Palm SquareCommercial and retail

0.3FY10-FY11

New DelhiThe Commonwealth Games

Residential 1.8 FY09-FY10

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Village 2010ChennaiChennai Esplanade (Phase I)

Residential 0.4FY09-FY10

Earlier, the issue price was fixed at Rs 610-690 a share amounting to a market cap of Rs 69,382 crore (Rs 693.82 billion). Owing to volatility in the markets the issue price has been revised downwards. Even then, this will make Emaar MGF the second largest real estate developer by market capitalisation after DLF, which has a market capitalisation of about Rs 1,39,000 crore (Rs 1390 billion).

"The increase in Emaar MGF's equity base will help it leverage better, since even now, the debt-equity ratio is as low as 0.86," claims Shravan Gupta, executive vice chairman and managing director, Emaar MGF Land.

PROFITABLE ESTATE

Rs crore6M FY07

FY08E FY09E FY10E

Revenues 501.7 1020 2200 3000Operating profit

201.4 408 836 1140

OPM (%) 40.1 40 38 38Net profit 130 270 572 765NPM (%) 26 26.5 26 25.5

Emaar MGF plans to utilise Rs 2,560.50 crore (Rs 25.60 billion) from the issue to make part payment for its land, Rs 775.50 crore (Rs 7.75 billion) toward development and construction costs of its Palm Drive project in Gurgaon, and the rest for repayment of loans.

Besides, the company has projects under development, including the 2,700 acre-plus integrated township in Mohali, a residential township in Hyderabad, Delhi, Chennai and high-end residential and commercial developments in Gurgaon.

"Out of the proposed reserves, Emaar MGF has already paid up for almost 90 per cent of the land," mentions Gupta, hinting at the robustness of the developer.

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Courting grandeur

Emaar MGF has mega plans for using its over 13,000 acre (about 566 million sq ft of saleable area) land reserves. The company has ongoing projects on around 18 million sq ft at present and aims to develop about the same area over the coming year.

"Going forward, we aim to expand our execution ability from 18 million sq ft a year to nearly 30 million sq ft over the coming five years," says Sanjay Baweja, chief financial officer, Emaar MGF. For this, the company has tied up with international construction majors like Australia's largest contractor, Leighton, and other players like Multiplex and Turner Construction International.

Such contractors bring along global best practices in construction, project management skills and world class equipment to the table. This ensures timely and high quality execution of Emaar MGF's projects which range from anywhere over 100 acre to 3,000 acre. For smaller projects however, the company has tied up with domestic construction majors like L&T, Ahluwalia Contracts, and the like.

The company has also forayed into the airport, hospitality, healthcare and education sectors with marquee names as its associates. It plans to set up a speciality hospital and an international school in each of its integrated township, in association with Fortis Healthcare [Get Quote] and Singapore-based Raffles Campus, respectively.

Raffles Campus is a subsidiary of Emaar Properties, after the latter acquired the former. Dubai Aerospace Enterprise is its partner for development of airport infrastructure in India. For its hospitality venture, Emaar MGF has chalked out about 4 million sq ft properties across various cities and tied up with global hospitality brands like Accor, Premier Travel Inn, Marriott, Intercontinental, Four Seasons and Hyatt.

Strength in strategy

The business model of Emaar MGF Land is an attempt to bring about the robust international practices from Emaar as well as its partner contractors, creating a stable revenue model for what is today just a two-year old startup. "We are looking to build properties, which could be converted into real estate investment trusts (REITs) going forward, as soon as the market opens up for REITs," says Gupta.

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To achieve this, the company has adopted a multi-pronged strategy. Although for residential properties it will go by the build-and-sell route, its commercial properties will be leased out for long periods. It plans to manage integrated townships and commercial properties by floating a facilities management subsidiary going forward. Besides, it will own the real estate in the healthcare venture with Fortis, which will set up hospitals in Emaar MGF townships. A similar strategy is followed for schools to be set up in tandem with Raffles.

For hotels, the strategy may differ depending on its partner, as some partners like Accor and Premier Travel Inn have entered into a JV with the company for a chain of hotels, while others have ventured in for select properties. For instance, Accor will set up and manage 40 hotels with an average of 80-100 rooms under its new global brand Formule 1 with Emaar MGF in a 50:50 JV. With Premier Travel Inn too, the company will set up 50 three-star hotels with over 5,000 rooms over the next seven years.

On the other hand, Marriott, Intercontinental, Four Seasons and Hyatt are going to manage some of Emaar MGF's properties in Kolkata, Hyderabad, Gurgaon and Goa. However, since the company has been in operations for just about two years, investors may have to wait and watch for its operations to yield high cash flows.

Though the company has paid up for almost 90 per cent of its land reserves, it may have to hold on to its land for longer periods, thus delaying its planned projects, if property prices correct or remain low for a prolonged period. Comfort can be derived from the fact that a large part of its Gurgaon and Mohali projects which were launched recently have been pre-sold,  and are expected to be completed by FY10.

Valuations

Emaar MGF Land has not published the valuation of its land reserve. However, based on details about payment to be made for a part of its land reserves, around 5,300 acre of its land could be attributed a value of Rs 28,750 crore (Rs 287.50 billion) � close to Rs 5.4 crore (Rs 54 million) an acre, or Rs 292 a share. If one values the remaining 7,900 acre of land reserves, which consist of contiguous land parcels in cities like Pune, Kolkata, Indore, Coimbatore, Kochi, Ludhiana, Jalandhar, Ghaziabad and a few others at a lower average valuation of Rs 4.5 crore (Rs 45 million) per acre, one arrives at a value of Rs 360 a share.

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This value includes the townships, residential and commercial projects already launched in New Delhi, Mohali, Gurgaon, Hyderabad and Chennai as well as the five hotel projects. Besides, the company has deals inked for setting up hotels amounting to a capacity of close to 5,000 keys and also hospitals and schools in its townships.

To sum up, this rough estimate leads us to conclude that the issue appears fairly priced. Since almost 90 per cent of the land reserves are owned and the fact that it has a room for further leverage makes the company attractive. Add to this, the set of investors in the company and the tie-ups it has entered to ensure timely execution of its projects aids in shrugging off execution risks.

Although not an exception for real estate developers, Emaar MGF, too, has a large part of its land reserves still defined as agricultural land. Hence, any change in legislation regarding use of agriculture land or any delays in conversion of use to non-agriculture, can impact its plans.

The only risk besides that could arise from a slowdown in demand leading to correction in real estate prices. Given the fair pricing, there appears to be little upside in the near term considering the uncertainty over real estate prices.

However, in the long run, one could expect Emaar MGF to do an encore of DLF. Long term investors who buy into the great Indian growth story will reap handsome rewards from this issue.

CONCLUSION

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Emaar-MGF is focused on developing new-age integrated townships that would

change the way people live in India. These townships would include a choice of

homes for buyers, from apartments to villas, row houses and vacant plots for

customized construction. Shopping complexes and landscaped gardens would

be integrated with world-class medical care, schooling and recreational

facilities. Adding vibrancy to the township would be Strip Malls offering a

variety of entertainment and branded products, ultimately redefining suburban

living.

Besides real estate, it has also been forayed to hospitality, retail and in

infrastructure. So, definitely it would be the largest player in the infrastructure

industry soon.

REFERENCES

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Reality Plus magazine

EMAAR-MGF Website

Various search engines

Red Herring Prospectus

Stock Market Report

Company Brochure

Newspaper

Magic Bricks Real Estate Research articles

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