external factor analysis_scribd

8/13/2019 External Factor Analysis_scribd

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Introduction of EFASBrief Overview of Real Estate IndustryOpportunities for Real Estate Industry

Threats for Real Estate IndustryEFAS Analysis of DLF Pvt LtdEFAS Analysis of Shobha DevelopersConclusion


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Limitation of SWOT Analysis Uses only single level of analysis No weights to reflect priorities

Advantage of EFAS Two level of analysis

Study of Threats and OpportunitiesStudy of ability of the organization to respond toabove factors

EFAS provides weighted score


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ExternalStrategic Factors Weight Rating

WeightedScore Comments

1 2 3 4 5

1.00

Opportunities

Threats

Total Weighted Score


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Real estate contributes about 5 per cent toIndias GDP. The total revenue generated in FY11 stood atUSD 66.8 billion.The housing shortage in urban and rural Indiawill be around 21.7 and 19.7 million unitsrespectively in 2014 .

Real Estate Sector

Residential Commercial


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Scenario A localised, fragmented

market presentsopportunities for

consolidation There are few large, pan-

India players like DLF andUnitech

Key Drivers Rapid urbanisation Decreasing household

size Easy availability of home

loans

Trends Demand expected to

grow at a CAGR of 19 percent between 2010 and

2014 - Tier 1metropolitan cities areexpected to account forabout 40 per cent of this.

Demand-Supply gap ishighest in low and mid

income segments. Demand exceeds supply

3 to 4 fold in low andmid income segments.


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Scenario Few large developers

with a pan-Indiapresence dominate themarket

Key Drivers Rapid growth in services

sectors: IT/ITeS, BFSI andTelecom

Demand for office spacein Tier 2 cities

Increase in tourism

Trends The top three cities -

Mumbai, the NCR andBengaluru - account for46 per cent of totaldemand for office spacein India

Between 2010 and 2014,

demand growthprojected to be thehighest in cities likeKolkata and Chennai


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Opportunities Weight omments

Increased FDI Limit 0.15 Upto 100% FDI allowed withGovt. Permission FDI flows for the period2012-13 stood at USD 1,260

million Minimum 10 Hectares for Serice housing plots and 50,000sq. mts for other projects.

Increased Per capitaincome

0.1 Disposable income to investin real estate

Growing constantDemand

0.09 Urbanization Better Infrastructure

Government Initiatives 0.09 Allocation of USD 833 millionfor Rural Housing Fund Rajiv Awas Yojana JnNURM


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Threats Weight omments

High Inflation 0.05 Interest rate risk. Exchange rate risk. Low savings.

Land Acquisition bill 0.15 Increased cost of project. Deindustrialisation fear.

Direct Tax Code 0.15 No tax rebate on HRA. No tax rebate on home loaninterest. Increased tax on capital gain.

Liquidity Crunch 0.15 D/E ratio requirement ofbanks decreased to 3:7 from5:7. New loan disbursementguidelines from RBI to banks.


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Threats Weight omments

Political Instability 0.05 New government. Red Tape. Parties favouritism.

Non transparency ofpricing

0.02 No systematic way of pricing. No Regulator. Multiple brokers mark up.

Total 1


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DLF LTD

External Factors Weight RatingWeighted

Score Comments

Opportunities

Increased FDI Limit 0.15 4.00 0.60 NO FDI investment and higher allowed limits give opportunity to raise fund infuture

Increased per capita income andNRI customers interest 0.10 4.00 0.40

Popular in NRIs, High end residential projects will be good investmentopportunities for NRIs

Growing constant demand 0.09 4.00 0.36 Project over 53 MSF is under execution

Government initiative 0.09 4.00 0.36 Presence in all over india provide opportunity to

Threats

High Inflation 0.05 3.00 0.15 Interest rate risk, low tendency to spend money

Land acquisition bill 0.15 4.00 0.60 Land Bank is 314 MSF as on Sept 2013 in 10 major cities of India

Direct Tax code 0.15 3.00 0.45 Taxable home loans will discourage the investors

Liquidity crunch 0.15 1.00 0.15 Very High Debt, Debt/Equity Ratio is 7:1

political instability 0.05 3.00 0.15 Operational mostly in politically stable regions

Non transparency of pricing 0.02 3.00 0.06 Price based on built up area or super built up area are generally manipulated

Total Scores 1.00 3.28

x

5 4 3 2 1

Outstanding Average Poor


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Shobha Developers

External Factors Weight RatingWeighted

Score Comments

Opportunities

Increased FDI Limit 0.15 3.00 0.45100% of FDI subject to certain criterion but 60% already invested as per 12-13

AR

Increased per capita income andNRI customers interest 0.10 4.00 0.40

Popular in NRIs, High end residential projects will be good investmentopportunities for NRIs

Growing constant demand 0.09 4.00 0.36 45 Ongoing projects mainly in Southern regions & NCR

Government initiative 0.09 2.00 0.18

ThreatsHigh Inflation 0.05 3.00 0.15 Interest rate risk,exchange rate risk,low savings

Land acquisition bill 0.15 2.00 0.30 Increase cost of projects, Less Land bank

Direct Tax code 0.15 3.00 0.45 Taxable home loans will discourage the investors

Liquidity crunch 0.15 5.00 0.75 Good Debt/Equity ratio of 3:5. Required by banks 5:5 or 3:7

political instability 0.05 3.00 0.15 Operational mostly in politically stable regions

Non transparency of pricing 0.02 2.00 0.04 Prices are not transparent

Total Scores 1.00 3.23

x

5 4 3 2 1

Outstanding Average Poor


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EFAS score shows that both DLF and ShobhaDevelopers has average performance to thefactors in its external environment.


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Thank You

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