SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENT OF TWO YEAR POST GRADUATE DIPLOMA IN MANAGEMENT, 2012-14
BY: VARUN MEHRA Roll no.-173/2012 PGDM (FT)
LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT DELHI
JUNE, 2013
CERTIFICATE
DECLARATION
I, Varun Mehra, student of PGDM (Gen.) 2012-14, hereby declare that the summer training project report titled DESIGNING AN INVESTMENT PORTFOLIO FOR REAL ESTATE PROJECTS, is my original work submitted towards the partial fulfillment of the requirement for the award of Post Graduate Diploma in Management by Lal Bahadur Shastri Institute of Management (LBSIM). The contents of the project report have not been published before and reflect the work done by me during my summer internship from April 02, 2013 till June 02, 2013 at Earth Infrastructures Limited, Gurgaon.
Varun Mehra Roll No. 173/2012 PGDM -2012-14 LBSIM, New Delhi
ACKNOWLEDGEMENT
My summer internship experience has been phenomenal in almost every way and my project on Designing an investment portfolio for real estate projects reached its completion and accomplishment with the contributions of many people whom I would like to acknowledge here. It gives me a great pleasure to express my profound gratitude towards Mr. Sachin Jain, General Manager, Earth Infrastructures Ltd., Gurgaon for giving me an opportunity to undertake my project at Earth Infrastructures Limited and for their continued guidance, support and belief in my abilities to handle the project assigned. I also choose this moment to acknowledge the contributions of my faculty guide, Prof. P. Jagannathan, Senior Faculty at Lal Bahadur Shastri Institute of Management, for his valuable and inspiring guidance throughout the progress of this project. My grateful thanks to Dr. Ashish Garg, Head of the Department, Lal Bahadur Institute of Management, for keeping the spirits high and clearing the visions to work on the project. Last but not the least there were so many people who shared valuable information that helped in the successful completion of this project.
EXECUTIVE SUMMARY
Investing is both Arts and Science. Every individual has his own specific financial need and expectation based on their risk taking capabilities. The evaluation of financial planning has been increased through decades, which can be best seen in customers. In today's intricate and volatile market an investment requires constant monitoring and attention. Hence, Portfolio management services are a fast gaining investment option.
This report provides for developing an investment portfolio model which could serve as a guide in managing portfolios of different investors with different profiles. Further, this report was commissioned to establish various constraints related to the real estate investments for small and medium class investors and developing the feasible and productive alternatives to accommodate those constraints for EIL projects. Investment Portfolio model has been developed through the technique of Linear Programming. The objective function and constraints are defined by performing financial analysis and research of different financial assets based on their risks and return. All calculations can be found in the appendices. Furthermore, the constraints related to the real estate investments are broadly be classified into 3 categories:- (i) Inadequacy of funds; (ii) Huge amount of money being blocked and (iii) Inability to pay entire amount at once. Various alternative investment proposals that can be offered by Earth Infrastructures Limited to accommodate the above constraints of its prospect investors have been developed and financially evaluated in terms of both- the feasibility for the company and productivity for investors to form a real estate financial portfolio for small and medium investors. Results of analysis draws to the attention that the proposed alternatives not only make it possible for small and medium investors to invest in the real estate but provide similar or even better returns for them on their investments. The report finds that the company apart than targeting high end investors, can successfully market its project by tapping the lower end of investors also by offering various financial alternatives investment plans.
TABLE OF CONTENTS
CHAPTER 1 INTRODUCTION .............................................................................. 1 1.1 Introduction .......................................................................................................... 1 1.2 Company Profile .................................................................................................. 2 1.3 Real Estate sector in India .................................................................................... 7
LIMITATIONS OF THE STUDY ............................................................................ 39 REFERENCES AND BIBLIOGRAPHY ................................................................. 40 ANNEXURE ................................................................................................................ 41
LBSIM 1 CHAPTER 1 INTRODUCTION
1.1 Introduction Investment into the real estate involves huge amount of money being blocked for a long period of time. It therefore becomes difficult for small and medium class investors to invest into the real estate sector. Hence, in this project I have tried to develop a real estate financial portfolio to target investors belonging to each class of asset by accommodating their different financial constraints. The real estate financial portfolio consists of various alternative investment plans for investors belonging to the different asset classes for investment into the real estate. Alternate plans are built up such that they are also productive for the investors. Hence, each alternative investment plan have been financially evaluated and backed up to work out the individual investment returns. The Portfolio has been developed for Earth Infrastructures Limited commercial project (Beta Tech) and consists of four different investment plans for different classes of investors. As a part of my project, I have also constructed an investment portfolio model consisting of different financial assets to meet the variant expectations of the clients for portfolio management services. Expectations of investors differs from individual to individual in terms of their risk-return appetite which requires building individual portfolio for each investor. Therefore, it requires a portfolio model which could serve as a guide in constructing the individual portfolios for investors based on their expectations. This project aims at designing such portfolio model through analysis of financial assets in terms of their risk and returns.
LBSIM 2 1.2 Company Profile 1.2.1 Company Overview Earth Infrastructures Ltd. is an independent infrastructure provider with committed customer base. Backed by a group of dynamic investors from India and Europe, Earth infrastructures is one of Indias most well capitalized real estate company. It came into existence in 2010 after being separated from EMMAR group. The group is known in the Realty fraternity for its professional might. Implementation of new technology and innovation has been its constant goal and this is evident in all its projects. It is now one of the fastest emerging key players in the Indian real estate landscape with a tremendous growth of two hundred percent in the past two years. Company is driven by the philosophy of INNOVATION BEYOND IMAGINATION which says, that the company believe in making the finest elements of urban living through its magnificent experience in real estate business for over a decade period. With a commitment of high-quality construction, the company is willing to develop world-class townships and commercial complexes in various prime locations of the country.
1.2.2 Corporate Message The Indian real estate sector is growing at a breathtaking pace. Outsourcing, the new phenomena increased the demand for commercial buildings and urban housing besides infrastructure. The stand taken by the government for FDI policies has given a rise for the investments in the realty sector. Earth Infrastructures is willing to embrace al the positive aspects of growth to cater to the changing trends.
LBSIM 3 1.2.2 Product Portfolio Earth Infrastructures has a well diversified product mix comprising residential, commercial, retails, hotels, farm houses and SEZs. Product portfolio of the company exists broadly in the commercial and residential projects
1.2.2.1 Commercial Projects By coming opportunities into real estate Earth is developing its two main commercial projects: 1) Tech-one 2) Iconic
1. Earth Tech one
Tech-one commercial project is in Noida beside Yamuna expressway in SEZ neighbouring specific locations and areas like: DND highway, IGI airport connecting Highway, Gautama Buddha University (ASIAs largest university) which makes this project quiet important from the view point of an investor. This is the very first space is being occupied by Earth in this zone .
Earth is able to utilize this 15 acre plot for multipurpose utilities. Earth is developing studio apartments which are almost sold out before possession office spaces of three types: i) alpha-tech (fully furnished office) ii) beta-tech (semi furnished office space) iii) gamma-tech (raw furnished office space)
Apart from this Earth is developing retail shops and multiplex for the people living in nearby area like universities and residential colonies. With this Earth is developing two buildings fully for commercial company or MNC and a hotel for tourist visiting night safari and international circuit.
LBSIM 4 Earth provides assured return of 12% p.a. in these types of projects to the investors or end users i.e. backed by the bank guarantee. Beta-tech contains area of: 300, 500, 750 and 1000 sq feet and their multiples.
Retail contains area of: 250 sq feet and their multiples.
Fact sheet Type of Project Commercial (Retail, Office Space and Serviced Apartments) Area 15 Acres Total Floors G+12 Possession March 2015
2. Earth Iconic Commercial space is being developed in Gurgaon area near to Shona road surrounded by residential areas.
ICONIC is a right mix of: Retail Stores, Office Spaces and Studio Apartments. Integrated mixed use development providing a very good catchment from within and outside developments. High Street format for ease and convenience of shopping. Special attention has been given to design a detailed unique concept where the exterior complements the interior courtyard. Courtyard style has been made to enhance open air convenience retail.
Fact Sheet:
Type of Project Commercial (Retail, Office Space and Serviced Apartments) Area 3.5 Acres Total Floors G+12 Possession September 2014
LBSIM 5 1.2.2.2 Residential Projects With the booming prospects of real estate in Delhi/ NCR region, Earth Infra has introduced two projects for its residential properties. They are as follows; 1) Elacasa 2) Gracia
1. Earth Elacasa
Earth Elacasa is a residential project in Gurgaon. ELACASA is enviably located on the edge of Dwarka Expressway, which is poised to become the new Shangri-La and centre of Gurgaon. The Expressway is an immaculate blend of strategic location and world class infrastructural development. The region is in the midst of planned commercial and urban development. Moreover, a number of reputed educational institutions and shopping centres are also coming up in the near vicinity.
Features: Elacasa towers have been mounted on a land of 19 acre. Located on the northern peripheral road and has its advantages in being very close to the IGI airport. Close proximity to the Dwarka sector 21 metro station giving it an attractive look to the investors.
Facts Sheet: The Elacasa is available in two sizes i.e. 3BHk and 4BHk. The flat sizes are 1800 per square feet for 3 BHK and 2600 per square feet for 4BHK. The price per square feet is 5500 which is reasonably less than its closest competitors.
LBSIM 6 2. Earth Gracia
Earth Gracia is a residential project located in greater Noida region and comes from eco village. Its architecture is designed by EIGEN. The location is supposed to be this projects USP. It is located on the FNG (Faridabad-Noida-Gurgaon) corridor and very close to the Hindon River.
Location advantages Proposed bridge coming up on the Hindon River which will make Gracia the first plot to enter after crossing the bridge. Also there is a proposed metro coming up in this area which will be an extension of the metro station sector 32 station which would mean that the area would essentially become the part of Noida rather than Greater Noida.
Fact Sheet: There are 3 types of towers in Earth Gracia. There are three types of towers over here. They are:- i) ground+25 floors ii) ground+23 floors iii) ground+21 floors 3BHK with 3 toilets and 3BHK with 2 toilets are available in the ranges of 1295 square feet and 1500 square feet respectively and the price per square feet is Rs 3400 per square feet. There are two towers with 3bhk+3 toilets. Rest six towers are 3bhk with 2 toilets.
LBSIM 7 1.3 Real estate sector in India 1.3.1 Overview The real estate sector in India has come a long way by becoming one of the fastest growing markets in the world. It is not only successfully attracting domestic real estate developers, but foreign investors as well. The growth of the industry is attributed mainly to a large population base, rising income level, and rapid urbanisation. The sector comprises of four sub-sectors- housing, retail, hospitality, and commercial. While housing contributes to five-six percent of the countrys gross domestic product (GDP), the remaining three sub-sectors are also growing at a rapid pace, meeting the increasing infrastructural needs. The real estate sector has transformed from being unorganised to a dynamic and organised sector over the past decade. Government policies have been instrumental in providing support after recognising the need for infrastructure development in order to ensure better standard of living for its citizens. Market Size/ Growth Prospects: The total revenue of the real estate sector was US$ 66.8 billion during 2010-11. By 2020, the sector is expected to earn revenue of US$ 180 billion. In fact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this. Investments: India is ranked 20th in the list of worlds top real estate investment markets with investment volume of US$ 3.4 billion in 2012, according to the latest report titled 'International Investment Atlas' by Cushman & Wakefield. The sector is set for robust inflows of US$ 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites.
LBSIM 8 Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative foreign direct investment (FDI) worth US$ 22,007.67 million from April 2000 to February 2013. FDI flows into the construction sector for the period April-February 2012-13 stood at US$ 1,260 million, according to the department of industrial policy and promotion (DIPP). Some of the major investments in the Indian real estate sector are: Ashiana Housing Ltd plans to foray into Gujarat's real estate with its first project worth Rs 100 crore (US$ 18.01 million) at Halol. Mr Akhilesh Yadav, Chief Minister of Uttar Pradesh (UP) has inaugurated and laid the foundation of development projects worth Rs 3,337 crore (US$ 601.21 million) pertaining to Noida, Greater Noida and Yamuna Expressway. Wave Infratech plans to invest Rs 500 crore (US$ 90.08 million) to set up its first affordable housing venture in the Delhi national capital region (NCR) area. Godrej Properties Ltd (GPL) has signed a development management agreement with United Oxygen Company Pvt Ltd to develop residential housing project in Bengaluru. The project will offer approximately 1,000,000 sq. ft. of saleable area and will be developed as a residential housing project.
1.3.2 FACTORS: For Indian Real Estate Boosters Growing infrastructure requirements from sectors such as education, healthcare and tourism are providing numerous opportunities in the sector. Rising urbanization offering opportunities for real estate development. Young population providing immense opportunities for growth and development across industries wanting to reap the demographic dividend.
LBSIM 9 1.3.3 Government Initiatives According to the latest reforms, FDI up to 100 per cent is allowed under the automatic route in townships, housing, built-up infrastructure and construction development projects to increase investment, generate economic activity, create new employment opportunities and add to the available housing stock and built-up infrastructure. The Ministry of Housing & Urban Poverty Alleviation has planned to introduce a single-window system for clearance of all real estate projects across the country. The system could bring down the average approval time from the current 196 days to 45- 60 days. The Government of India has sanctioned projects worth Rs 41,723 crores (US$ 7.51 billion) for building of 1,569,000 houses/dwelling units for economically weaker/lower income group sections under the Ministrys flagship Jawaharlal Nehru National Urban Renewal Mission (JNNURM) programmes. Housing finances are becoming feasible with the housing loan limit being raised to US$ 52080 for priority sector lending.
1.3.4 Road Ahead The real estate industry in India is yet in a promising stage. The sector happens to be the second largest employer after agriculture and is expected to grow at the rate of 30 per cent over the next decade. A growing migrant population due to increasing job opportunities, together with healthy infrastructure development, is underpinning demand in the regions residential real estate market. The Kalpataru spokesperson feels that the Finance Ministry's motivation through softening of interest rates and lending more to the real estate sector will have a positive impact on both developers and consumers.
LBSIM 10 The real estate market could start to perform better as the easing of FDI norms will begin to show results during the second half of the year, according to Lalit Kumar Jain, Chairman & Managing Director, Kumar Urban Development Ltd and President National CREDAI. The Government of India is looking forward to further improving the attractiveness of the real estate sector for the benefit of all stakeholders in the years to come. In a significant step towards ensuring greater transparency in Indias real estate sector and giving a strong impetus to private and foreign investments, the cabinet approved the Real Estate Regulatory Bill this week. The entire purpose of the Bill is to promote greater accountability between realtors and home buyers and to provide an institutional framework for quicker redressal of disputes between the two parties. The Bill proposes the formation of a single Real Estate Regulatory Authority in every state/union territory of India, which will have specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest. Notably, the Bill will be applicable to all projects that span an area of over 4000 sq. metres. The Bill works both ways. While it aims to hold the developers accountable, it also looks to ensure that the allot tees do not default in making payments. Thus, by providing penalties for both the promoters and the allot tees, the Bill seeks to ensure that non-compliance is minimal."
LBSIM 11 1.4 Objective
My summer internship project was a multi task project involving two different tasks to be performed at different stages. Therefore, it carried the two following objectives:- 1. To vouch investments from the prospect clients for portfolio management services and subsequently managing the portfolio.
It involved:- o Establishing different profiles of investors in terms of their risk-return appetite. o Developing different investment portfolios meeting the variant expectations of investors.
2. To market different projects of Earth Infrastructures Limited to different classes of investors through financial supported investment plans.
It involved: o Determining and understanding different constraints related to real estate investments. o Designing alternate financial plans to accommodate the above constraints.
LBSIM 12 CHAPTER 2 PMS: CONCEPT & OVERVIEW
2.1 Introduction The field of investment traditionally divided into security analysis and portfolio management. The heart of security analysis is valuation of financial assets. Value in turn is the function of risk and return. These two concepts are in the study of investment. Investment can be defined as the commitment of funds to one or more assets that will be held over for some future time period.
In today fast growing world many opportunities are available, so in order to move with changes and grab the best opportunities in the field of investments a professional fund manager is necessary. Therefore, in the present scenario the Portfolio management Services (PMS) is fast gaining importance as an investment alternative for the High Net worth Investors. Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Investment Management Solution in PMS can be provided in the following ways:- Discretionary Non Discretionary Advisory
Discretionary: Under these services, the choice as well as the timings of the investment decisions rests solely with the Portfolio Manager.
LBSIM 13 Non Discretionary: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the investor. However the execution of trade is done by the portfolio manager.
Advisory: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor.
2.2 Portfolio Management: Concept Rule 2, clause (d) of the SEBI (portfolio managers) Rules, 1993 defines the term portfolio as total holding of securities belonging to any person. As a matter of fact, Portfolio is none other than Basket of Stocks. Portfolio Management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. The aim Portfolio management is to achieve the maximum return from a portfolio, which has been delegated to be managed by manger or financial institution.
2.3 Objectives of PMS
1. Safety of Funds The Investment should be preserved, not be lost and should remain in returnable position in cash or kind.
2. Marketability The investment made in securities should be marketable. This means that the securities must be listed and traded in stock exchange so as to avoid difficulty in their encashment.
LBSIM 14 3. Liquidity The portfolio must consist of such securities which could be en-cashed without any difficulty or involvement of time to meet urgent need of funds.
4. Reasonable Return The investment should earn reasonable return to upkeep the declining value of the money and be compatible with opportunity cost of money in terms of current income in form of interest or dividend
5. Appreciation in Capital The money invested in portfolio should grow and result into capital gains
6. Tax Planning Efficient Portfolio management is concerned with composite tax planning covering income tax, capital gain tax, wealth tax and gift tax.
7. Minimize risk Risk avoidance and minimization of risk are important objective of portfolio management. Portfolio managers achieve these objectives by effective investment planning and periodical review of market, situation and economic environment affecting the financial market.
2.4 Types of Financial Instruments 2.4.1 Mutual Funds A mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors having a common financial goal. The collected money is invested in various capital market instruments like shares, debentures and other securities. Mutual funds have both advantages and disadvantages compared to direct investing in individual securities. It is considered to be suitable as it offers the advantages of diversification and liquidity at a lower cost along with the professional management.
LBSIM 15 Advantages Mutual funds have advantages compared to direct investing in individual securities. These include: Increased diversification Daily liquidity Professional investment management Ability to participate in investments that may be available only to larger investors Service and convenience Government oversight Ease of comparison
Types of Mutual Fund Scheme Mutual fund schemes are generally classified by their investment objective. Based on the investment objective, there are 3 types of Mutual fund schemes:- Growth Schemes Balanced Schemes Income Schemes.
A) Growth schemes invest in stocks where the company itself and the industry in which it operates are thought to have good long term growth potential. B) Balanced schemes invest in a combination of both stocks and fixed income securities like debentures, bonds, etc. C) Income schemes invest in government bonds/debentures. It offers investors a regular income usually paid out in the form of monthly dividends.
2.4.2 Equity Equities are a type of security that represents the ownership in a company. Equities are traded (bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term investment option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk.
LBSIM 16 2.4.3 Bullion Gold Gold, the shining yellow metal is one of the most popular investment options. It is considered as a safe haven against all national, political and cultural crises. Traditionally gold has been considered as the most favoured currency of the worlds population. The value of gold is negatively correlated to shares. When the economy is not stable, the price of gold appreciates. The positive of investing in gold is that it improves the consistency of investments. A majority of financial planners recommends around 15-20% allocation of the total portfolio to Gold.
Investment in gold can be made in two forms 1) Physical form 2) Non Physical form.
Investment in physical gold is in form of coins or bars in addition to the physical jewellery possessed by the households. Whereas Non physical form of investment should be in the form of Gold Exchange Traded Fund (A Financial product designed to give an opportunity to the investors to invest in gold without taking the physical custody of the yellow metal). Most of banks are selling gold coins/bars where one can invest.
Silver Silver considered as a poor mans gold is one of the attractive investment option. Normally Gold is preferred over Silver by all investors. The silver market is much smaller in value than the Gold market. Silver is a better investment in a bull market. Price of silver is driven by speculation and supply and demand. Silver price is significantly volatile. This is because of lower market liquidity and demand fluctuations between industrial and store of value uses. Silver often tracks the gold price due to store of value demands, although the ratio can vary. Investment in silver can be made in the form of jewellery or silver coins also.
LBSIM 17 2.4.4 Fixed Income Securities Fixed income refers to any type of investment under which the borrower/issuer is obliged to make payments of a fixed amount on a fixed schedule to the investor. Fixed-income securities can be contrasted with equity securities, often referred to as stocks and shares, which create no obligation to pay dividends or any other form of income. The term income derived from these securities remains same and does not vary materially over time. This can include income derived from fixed-income investments such as debentures, bonds and preferred stocks.
Types of Fixed Deposits a) Bank Fixed Deposits b) Company Fixed Deposits
Bank Fixed Deposits These are the deposits made with the Banks for a fixed period of time. The tenure of such deposits can vary from 3 months to 6months, 1, 3, and 5 years. The minimum deposit amount and the rate of interest vary from bank to bank. These are considered as the safest investments with no risks of default as these are insured under the Deposit insurance and credit guarantee scheme of India. Investors also have a flexibility to take the interest income as a lump-sum amount on the maturity.
Company Fixed Deposits These are the kind of fixed deposits which are made with the company/Non Banking Financial Institutions (NBFC). Investment in Company FD is riskier than Bank FD as if the company defaults the investor cannot sell his documents to recover the investment amount. Examples of companys fixed deposits are investments in debentures, bond, etc. The benefits of investing in Company Fixed Deposits are higher interest rate as compared to Bank FD and no TDS is charged on the interest income of up to Rs 5000 in one financial year.
LBSIM 18 2.4.5 Real Estate Real Estate Investment refers to investment in immovable properties which includes land, buildings, flats, etc. Investing in real estate involves the purchase of real estate property and selling it for a profit. Investment in real estate involves a substantial investment and for a long period of time. Majority of the investors invest in real estate in the form of buying a residential property though it has a wider scope of investing into commercial, hospitality, farm houses, etc. Before making a real estate investment, the investor should evaluate his risk appetite, investment required and the objective of the investment.
The following are the different objectives of investing in the real estate:
1) Rental The aim of this form of investment is to rent out property and earn a continuous stream of rent over a period of time. The value of property also increases over a period of time. The risk in this form of investment is that the owner of the property has to find a tenant at an expected rental and need to pay for the maintenance expenses also.
2) Trading This is a short term objective of making quick profits through speculation in the real estate properties. People investing for this purpose are called traders. The traders in the real estate market, invests in the undervalued properties for a short period of time (say 6 months to one year) and sell them at a small profit.
3) Long term Investment The objective of these type of investments is to make profits through the appreciation in the prices of real estate properties over a long period of time. The investment is made from the long term prospective by the investors, in the properties whose prices are likely to appreciate in the long term due to expected infrastructure developments.
LBSIM 19 CHAPTER 3 METHODOLOGY
The methodology initially required performing the basic financial research for various financial assets in terms of their risk and return, in order to develop an investment portfolio model. Financial research was performed for five different classes of financial assets- Gold, Equity, Mutual Fund, Fixed Income and Real Estate, by extracting the historic prices of each asset. In order to diversify the risk, an index fund and a balanced mutual fund were chosen among the equity and mutual fund classes respectively. Real estate investments constituted the products or projects of Earth Infrastructure Limited. Risk was defined in terms of standard deviation while return is the percentage appreciation in the prices of assets. The risk and returns for financial assets have been calculated in the following manner:- Gold- Average annual risk and return has been calculated using the daily historic prices for last three years. Equity Tracking the performance of various index funds in the last few years, Kotak Nifty ETF was chosen as the best index fund investment. Average annual risk and return has been calculated using the daily historic NAV (Net Asset Value) for last three years. Mutual Fund - Tracking the performance of various balanced mutual funds in the last few years, ICICI balanced fund was chosen as the best mutual fund investment. Average annual risk and return has been calculated using the daily historic NAV (Net Asset Value) for last three years. Fixed Income Current Term deposit rate of SBI for three years has been taken as the average annual return. As the government deposits are considered as a risk free asset, its risk has been taken as zero. Real Estate Average annual risk and return have been calculated using the monthly historic real estate index prices for NCR for the last three years.
LBSIM 20 After calculating the risk and return of each of the 5 financial assets, an investment portfolio model of these 5 financial assets is developed to meet the variant expectations of the investors. The model is developed by applying the technique of Linear Programming which could serve as a guide in managing investors portfolio. The model was created in the excel which helped to calculate the proportions in which investments in each class of assets is to be made to meet investors expectation of return subject to certain constraints related to the investment. Through the database available, various existing clients of the Earth Infrastructures Ltd. were approached to vouch investments for portfolio management. At the same time, awareness for Earth Infrastructure new projects was also increased through continuous interaction. Further, for the second task of the project, various constraints of investors related to the real estate investment were established by networking with various leads generated through personal contacts and existing database once again. This was done in order to tap investors belonging to different asset classes for investment in EIL projects by offering alternate investment plans to them. After a continuous interaction, the constraints were broadly classified into 3 categories:- (i) Inadequacy of funds (ii) Huge amount of money being blocked (iii) Inability of investors to pay entire amount at once
Alternate investment plans that could be offered by EIL to accommodate the above constraints of the prospect clients were developed through discussions with the senior managers and companys present offerings. Following three plans were developed to meet each of the above three constraints:- 1) Loan against Property (LAP) 2) Reduction in the total investment through elimination of interest payments receivable 3) Variable Payment Schedule
LBSIM 21 Each of the three investment plans was financially evaluated to determine the return generated for the investors in order to defend them to the investors. The plans were developed in a manner that they are both feasible as well as conducive for the company and investors respectively. Hence, a real estate financial portfolio was designed for EIL projects, which included the various investment plans uniquely meeting the constraints of different classes of investors in order to successfully market the company projects. Financial evaluation for each investment plan was done by incorporating the concept of time value of money.
LBSIM 22 CHAPTER 4 DATA ANALYSIS AND INTERPRETATION
4.1 Investment Portfolio Model The investment portfolio model has been developed through the technique of Linear Programming. It involves optimization of a portfolio of financial assets by formulating the Linear Programming Problem (LPP). LPP was formulated by defining the objective function and stating the constraints. The objective can be defined in terms of risk or return. Risk and return of a portfolio has been calculated through the following formulas:- Return of a Portfolio: W 1 *R 1 + W 2 *R 2 +W 3 *R 3 + . + W n *R n , Where W and R represents the weights and returns of different assets Risk of a Portfolio: W 1 2 *S 1 2 + W 2 2 *S 2 2 +2W 1 *W 2 * Covariance 12 Where W and S represents the weights and the standard deviations of 1 and 2 asset. (In case of two asset portfolio)
Risk and return of all the 5 financial assets calculated through the financial research are shown in the following table: ASSET RETURN RISK Gold 14% 15.41% Mutual funds 12% 10% Index funds 9% 17% Fixed income 8.75% 0% Real estate 16% 9.25%
LBSIM 23 The above table shows that the Real estate yields the maximum average annual return with a standard deviation of 9.25%, which is lower than all of the other 3 financial assets. Therefore, it appears to be the most attractive asset for major proportion of investment in the total portfolio for earning high returns.
4.1.1 Formulation of LPP This is a hypothetical portfolio that has been built up with an objective of maximising the total return on the portfolio at lower levels of risk. Let say amount invested in Gold, Equity, Mutual Funds, Fixed Income and Real estate be A, B, C, D and E respectively and overall return on the portfolio is stated as Z. Also, the total amount invested in the portfolio is taken as Rs. 100 (for convenience). Hence, following is the LPP problem formulated:
Objective function Max. Z = 0.14A + 0.12B + 0.09C + 0.0875D + 0.19E Subject to the constraints A+B+C+D+E = 100 A,B,C,D,E 5 A,B,C,D,E 30 A 15 E 20
The above constraints were developed keeping in view the diversification and analysing the risk and return of all the 5 financial assets. The constraints are explained as follows:- Constraint-1: It was defined that investment in any financial asset should not be less than 5% keeping in view diversification. Constraint-2: Investment in no asset should be more than 30% in order diversify the risk.
LBSIM 24 Constraint-3: Total investment in all the 5 assets should be equal to 100% as the total amount for investment has been taken as 100. Constraint 4: Investment in Gold should be at least 15% as it is providing descent return of 15% with not much of a standard deviation. Constraint 5: Investment in the real estate should be minimum 20% as it generates the maximum return for investors.
4.1.2 Optimization of LPP
COMPUTATION OF PORTFOLIO RETURN
Gold Mutual funds Index funds Fixed income Real estate Total Amount of investment 30 30 5 5 30 100 Return 15% 12% 9% 8.75% 16% 13.648
Percentage return 13.65%
Interpretation The portfolio return table represents solution to the LPP formulated above. It is an investment model built up in excel, which would provide a guide in constructing different portfolios of the given five financial assets by calculating the investment proportions (weights) of each financial asset. Weights are calculated using the solver function in excel to meet the portfolio objective subject to the investment constraints. In the hypothetical problem formulated above, the total return cell, highlighted in blue, has been set as the target cell with an objective to maximise it by changing the weights of financial assets. Also, the constraints established earlier were added to the problem in the solver. The solver provided the result that maximum of 13.65% of return can be generated within the constraints. It also calculated the proportion of investments in each of the 5 financial assets in order to achieve that maximum return. The same have been highlighted in pink in the above table.
LBSIM 25 4.1.3 Calculation of Portfolio risk After the weights or proportions of investment in each of the financial asset have been determined through the solver, the total risk of the portfolio is calculated by finding the covariance of all the 5 assets with each other.
COVARIANCE MATRIX ASSET Gold Mutual fund Equity Fixed income Real estate Gold 0.00000361 -0.00000026 -0.00000054 0.00 0.00000040 Mutual fund -0.00000026 0.00000278 0.00000422 0.00 -0.00000237 Equity -0.00000054 0.00000422 0.00000739 0.00 -0.00000408 Fixed Income 0.00 0.00 0.00 0.00 0.00 Real estate 0.00000040 -0.00000237 -0.00000408 0.00 0.00005973
Interpretation The above table represents the covariance matrix which has been used to calculate overall risk of the portfolio. Each cell in the matrix shows the covariance between two assets in its corresponding row and column. Covariance matrix has been derived through the historical data of each financial asset. The same has been shown in the annexure.
COMPUTATION OF PORTFOLIO RISK Weights 0.3 0.3 0.05 0.05 0.3
ASSETS Gold Mutual funds Index funds Fixed income Real estate 0.3 Gold 0.000000325 -0.000000024 -0.000000008 0.00 0.000000036 0.3 Mutual funds -0.000000024 0.000000250 0.000000063 0.00 -0.000000213 0.05 Equity -0.000000008 0.000000063 0.000000018 0.00 -0.000000061 0.05 Fixed income 0.00 0.00 0.00 0.00 0.00 0.3 Real estate 0.000000036 -0.000000213 -0.000000061 0.00 0.000005375
Total risk = 0.000555%
LBSIM 26 Interpretation The above table basically represents the application of the covariance matrix to calculate the overall risk of the portfolio. For calculating the total risk of the portfolio, each cell in the covariance matrix, reflecting the covariance between the two assets in the corresponding row and column, is first multiplied with the weights of those two assets which have derived through the solver. For example- in the above table, cell 34
shows the value obtained after multiplying the covariance value between the gold and mutual fund with the weights of gold and mutual fund given in the first row and column of the matrix. Subsequently, all the cell values thus obtained are added to get the overall risk of the portfolio. The total risk of this hypothetical model is 0.000555% in order to earn a maximum rerun of 13.65%. This method of calculating the portfolio risk with the help of covariance matrix, have been derived from the formula for calculating the portfolio risk mentioned earlier.
4.2 Investment Portfolio for Real estate Projects The real estate portfolio has been developed for Earth Infrastructures Limited commercial project (Beta Tech) and consists of four different investment plans for different classes of investors. Each alternative investment plan have been financially evaluated and backed up to work out the individual investment returns. Following are some facts on the basis of which all the four plans have been financially evaluated: Project provides an assured return of 12% p.a. to the investors on the amount of investment made towards the property till possession. Investment is held by the investor for three years only, i.e. till possession. Total investment made by the investor has been taken as Rs.50,00,000 (1000 sq ft @ Rs.5000 per sq ft) Capital gain on the property has been assumed to be 10% every year under the most conservative approach Risk free rate of return or opportunity cost of capital is 9% (calculated earlier)
LBSIM 27 4.2.1 Investment Plan - 1 (Full initial Investment) This is the normal investment plan where the investors can invests in the real estate asset (Beta tech) by making the full payment at once. Investor will earn an assured return of 12% p.a. on the full investment amount till possession and sell off the property after 3 yrs.
BETA TECH PROJECT RETURN Total Investment 50,00,000 Monthly return receivable 50,000 Risk free rate 9% No. of installments 36
Total value of return payments after 3yrs (A) 20,73,068
Total value of the property after 3 years (B) 66,55,000
Total amount receivable after 3 years including capital gain and interest payments (A+B)
87,28,068
Total average yearly return generated 20%
Interpretation The above table shows the average annual return generated from investment in EIL project (Beta tech) for investors, when the full investment is made at once. As per the assured return of 12% p.a. on the investment, an investor would receive Rs.50,000 as a monthly return from the company which can be invested by him at an opportunity cost of capital or risk free rate of interest of 9%. As the return is receivable only till possession, the payments are invested for 3yrs. Value of these deposits after three years will be Rs.20,73,068. This has been calculated using the FV function in excel.
Similarly, value of the property after three years is calculated to be Rs.66,55,000 incorporating the capital appreciation every year. Total value that will be received by the investor at the end of the three years will be Rs.87,28,068. Therefore, the annual internal rate of return earned on the investment of Rs.50,00,000 is 20% (highlighted
LBSIM 28 green in the above table). This has been calculated using the RATE function in excel. This presents a lucrative investment for investors as the return is more than the average annual return 16% on real estate calculated earlier.
4.2.2 Investment Plan -2 (LAP for Small Investors) This is an investment plan offered to the small class investors who do not have adequate money to invest huge amount in the real estate. Loan against Property was provided as an alternate plan to such investors to invest in the real estate. An investor can make a nominal amount of cash down payment available with him and balance amount needed for the investment is financed through loan against the property he is investing into. The following table shows the profile of a small investor willing to invest in a real estate in terms of annual income and surplus funds available for investment monthly.
INVESTOR'S PROFILE Salary Rs. 10,00,000 Annual in-hand salary Rs. 7,40,000 Monthly in-hand salary Rs. 60,000-65,000 Surplus fund available for investment monthly Rs. 10,000-12,000
The above table provides that an investor has monthly savings of Rs. 10,000 to 12,000 which is available for investment. Also, the investor has certain savings equivalent to about Rs.10,00,000 already in his bank which can be made as initial cash down payment and the balance of Rs.40,00,000 is financed through loan against the property. Following table on the next page shows the return generated for the investor through this plan of investment.
LBSIM 29 COMPUTATION OF RETURN KEY Total investment required (A) 50,00,000
Cash down payment (B) 10,00,000
Bank Loan (C) 40,00,000 (A-B) LAP 14%
Term (years) 10
No. of installments 120
Monthly installment payable (D) -61,390
Monthly return receivable from the company (E) 50,000
Net cash flow for month -11,390 (E-D)
No. of installments to be paid 36
Risk free rate 9%
Future value of net loan payments at the end of 3yrs (F) 4,72,260
Value of property after 3yrs. (G) 66,55,000
Loan amount already paid (H) 7,24,102
Balance loan amount to be paid (I) 32,75,897 (C-H)
Net cash inflow at the end of 3yrs. (G-I-F) 29,06,843 Return generated 43%
Interpretation The second table shows that return generated by investor through this investment plan of financing a part of investment through LAP is 43%. As the investor has savings of Rs.10,00,000 to make part of the upfront down payment, the balance of Rs.40,00,000 has been financed through loan against his investment in the property of Beta tech @14% p.a. The loan was provided for 10 years with the monthly installment payable at the beginning of each month. Now, with 14% interest rate, monthly installment payable to the bank amounts to Rs.61,390 calculated using the PMT function in excel. But, the investor is also entitled to receive monthly assured return payment of Rs.50,000 on his investment from the company. Therefore, an investor has to provide for an additional monthly investment, in terms
LBSIM 30 of loan installments, of only Rs.11,390 (61,390 - 50,000), which is in the budget constraint of the investor. Now, as the investment is held for three years, the interest payments will be made by the investor only for three years, after which the loan will be repaid by selling off the investment. Value of the monthly interest payments to bank for three years amounts to Rs.4,72,260 while the value of the property received after 3 years is Rs.66,55,000. Amount of loan already paid off in three years has been calculated using the CUMPRINC function in excel and the balance of Rs.32,75,897 is to be paid by selling off the property. Hence, net value of his initial investment of Rs.10,00,000 becomes Rs.29,06,843 after paying off the loan and deducting the value of monthly investment after three years, thereby generating a huge return of 43%. Therefore, this investment plan offers much higher returns for small investors.
4.2.3 Investment Plan -3 (Reduction in the cost of the property against the assured return- Risk averse investors) This investment plan has been developed for the investors who do not wish to block huge amounts of money in one particular investment only. It offers an option to the investor to diversify his investment into different assets by reducing the investment into the real estate. This plan provides for a reduction in the price of the property for investment by adjusting it against the assured return payments. An investor can forgo the monthly return payments which he is entitled to receive from the company to get the property at lower cost. As the plan involves reducing the cost of the property, the calculations have been done from both the investor and the company side to determine the best feasible price at which the company can offer its property. Four different alternatives have been evaluated indicating reduction the price of the property by 50%, 60%, 70% and 75% of the total return assured return payable by the company to investors over the period of three years.
LBSIM 31
COMPANY SIDE ANALYSIS (Table-1)
PV of interest payments payable to investors = 15,84,133
PARTICULARS PROPOSED ALTERNATIVES I II III IV Discount as percentage of total assured return 50% 60% 70% 75% Discounted value
36,500 Net amount available after paying loan installment (A+B)
11,403
3,684 -4,036 -7,895 Installment invested at risk free rate 9% 9% 9% 9% No. of installments 36 36 36 36
Future value of int. after 3yrs
4,72,788
1,52,732 -1,67,325 -3,27,353 Present values (C)
3,65,079
1,17,937 -1,29,205 -2,52,776 Net inflow for the company (D) [C+Z]
44,65,079
40,37,937
36,10,795
33,97,224
Net present value of property (E) 34,15,867 34,15,867 34,15,867 34,15,867 Net Inflow for company (D-E)
10,49,212
6,22,070
1,94,928 -18,643
LBSIM 32 Interpretation Above table suggests the best feasible alternative that the company can adopt for offering its product at a lower price to the investors. The best feasible alternative for investors is the one in which the net inflow from the property approximately equates the net present value of the property for the company. As per the above table, the best alternative is alternative-IV. But as the company is looses Rs.18,643 under this alternative, it is not a feasible alternative for the company. Hence, a company can offer any alternative between alternative-III and IV. Net present value of the property is equal to the price of the property less the present value of the future assured return payments made over three years. Net Present Value of the property has been calculated to Rs.34,15,867 (50,00,000 - 15,84,133). Evaluating the alternative 1, in which company reduces the price of the property by 50% of the total assured return amount (Rs.18,00,000), the total amount that will be received by the company towards the project from the investor is Rs.41,00,000 (50,00,000-9,00,000). The company now has to finance additional Rs.9,00,000 through external borrowings to meet the total requirement of Rs.50,00,000, which the company is able to finance at the same cost of 12% p.a. Monthly interest payment payable by the company is calculated as Rs.29,000 using the PMT function in excel. Also, assured return offered by the company to the investors reflects the cost of borrowing to the company. So, now on the Rs.41,00,000 received from the investor, the company's cost of borrowing highlight a payment of Rs.41000 per month. But as the company has adjusted the price for the assured return, it is not required to make the monthly return payments, which the company would have made if they had financed it externally. So, it becomes savings for the company which can be invested by the company for earning return. Therefore, the company can make the payment of Rs.29,000 on its external borrowings of Rs.900,000 out of Rs.41,000 and invest the remaining amount of Rs.11,000 at a risk free rate of interest. Value of the investment after 3 years amounts to Rs.472,788. Present value of this amount has been calculated, Rs.3,65,079 using the PV function in excel, for determining the net present revenue from the property. Hence, the total net present inflow from the sale property is Rs.44,65,079 (sum of Z and C in the above table).
LBSIM 33 Now, as the net inflow for this alternative is much more than the Rs.34,15,867, the company still has a scope to further reduce the price of the property and make it more lucrative for the investors in terms of higher returns and lower cost of investment. Therefore, calculations have been done under 3 more alternatives to choose the best feasible option it can offer.
INVESTOR SIDE ANALYSIS (Table-2)
PARTICULARS PROPOSED ALTERNATIVES I II III IV Discount as percentage of total interest payable 50% 60% 70% 75% Discounted value
9,00,000
10,80,000 12,60,000
13,50,000
Total investment
41,00,000
39,20,000 37,40,000
36,50,000 Assured return per annum
Monthly return receivable Risk free rate 9% 9% 9% 9% No. of installments 36 36 36 36 Total amount of Interest Value of interest at the end of 3yrs (A)
11,65,526
13,98,631 16,31,737
17,48,289
Capital gain per annum (under most conservative approach) 10% 10% 10% 10%
Value of property after 3 years (B)
66,55,000
66,55,000 66,55,000
66,55,000
Total amount receivable after 3 years incl. capital gain and interest payments (A+B)
78,20,526
80,53,631 82,86,737
84,03,289
Return on real estate 18% 19% 21% 22% Total average yearly return generated 16.08% 17.22% 18.34% 18.89%
LBSIM 34 Interpretation The above table shows the calculations performed from the investors' point of view. Returns have been calculated under each of the proposed alternatives. As per the feasible alternative that can be offered by the company (between Alternative III and IV), investor is able to generate an overall return between 18.34% and 18.89%. Evaluating the proposed alternative 1 as per the table, the investor is required to invests only Rs.41,00,000 in the property. Thus with savings of Rs.9,00,000, he can diversify his investments by investing the remaining in a risk free asset. Value of such investment after three years will be Rs.11,65,526 while the value of the real estate investment after three years will be Rs.66,55,000. Total value of investor's initial investment after 3 yrs will be Rs.78,20,526 [(A+B) as per the above table]. Therefore, the overall return for the investor is calculated to 16.08% on his total initial investment of Rs.50,00,000 while the return generated on real estate investment of Rs.41,00,000 is 18%. Similarly, returns are calculated under each proposed alternatives. Investor's return increases as the cost of the property is further reduced.
Combined Interpretation As per the calculations in the above table, the best alternative that the company can offer to the investors in this category is somewhere between the alternative-III and IV. A company may choose for alternative-III (highlighted yellow in the table), because, although is not the best alternative for investors, it does not causes much variability in investors return from the one generating from the best alternative as the difference in return for Alternative-III and IV is just 0.5%. This alternative also provides the company with net additional revenue of Rs.1,94,928 from selling the same property as calculated in the table-1 under this investment plan.
LBSIM 35 4.2.4 Investment Plan 4 (Variable payment or installment method) The third alternate investment plan was developed for meeting the constraints of the prospects that do not have the ability to make the entire investment at once but can pay in the installments. Variable payment alternative or installment method has been evaluated for those. Calculations have been shown in the following table.
PAYMENT SCHEDULE AND CALCULATIONS Month End Percentage of total cost payable Amount payable Monthly return receivable Total return inflows Capital inflows PV of cash outflows 0 10% 5,00,000
5,000
10,000
- 5,00,000 2 45% 22,50,000
27,500
1,65,000
- 22,16,626 8 20% 10,00,000
37,500
2,25,000
- 9,41,975 14 20% 10,00,000
47,500
10,45,000
- 9,00,677 36 5% 2,50,000
-
-
66,55,000 1,91,037
Total PV 47,50,316
Interpretation The above table shows the calculations for the schedule of payments made to the company and the assured return payments received from the company by the investor over the three years till possession. The payment schedule is designed as follows:- 10% of the total payment - Cash down payment 45% of the total payment - after 2 months 20% of the total payment - 6 months after the second installment. 20% of the total payment - 6 months after the second installment. Last 5% of the total payment - at the time of possession (at the end of three years from initial payment).
LBSIM 36 In the table, column 1 indicates the month at the end of which next installment payment needs to be paid to the company as per the payment schedule starting from month zero. Subsequently, column 2 and 3 shows the payments made for each installment in percentage and amounts respectively. Now as the amount of investment with the company changes after each installment payment, monthly assured return payment received from the company also changes. Column 4 therefore shows the amount of monthly return payments to be received for particular duration after making each installment payment. Now, these return payments received by the investor can be invested at a risk free rate. Value of these deposits after 3yrs will be Rs.16,34,137. Calculation for the same has been shown in the table in the annexure. Also, as the payment has been made in the installments at the end of different periods, net initial investment can be calculated by finding total present value of all the installment payments to derive net initial investment. Last column in the above table calculates the present value of each cash outflow using the PV function in excel. Total present value amounts to Rs.47,50,316 (highlighted green in the above table) which would make up the initial investment.
COMPUTATION OF RETURN Value of interest receivable at the end of 3yrs (A)
16,34,137 Value of property after 3yrs. (B)
66,55,000
Total money received after 3 yrs (A+B)
82,89,137 Initial Investment
47,50,316
Return generated 20%
Interpretation The above table calculates the total return for the investor under this investment plan. Total initial investment is Rs.47,50,316. Value of investment after three years is Rs.82,89,137. This has been obtained by adding the value of property and assured return after 3 yrs. Hence, the return generated for the investor is 20%.
LBSIM 37 CHAPTER 5 FINDING & RECOMMENDATIONS
5.1 Findings: Investor is able to increase his return on his investment by financing part of the investment through borrowings. EIL project (Beta Tech) provides a return of 20% p.a. as calculated in the investment plan -1. By investing through the investment plan 2, an investor is able to generate a return of approx 43% p.a. on his investment. Investor is able to diversify his portfolio without much fluctuations in return levels. Amount required for investment in EIL project is Rs.50,00,000. By investing through the investment plan 3, investors are able to save an investment of Rs.12,60,000, which can be used by them to invest in other financial assets to diversify their portfolio. Investing the surplus in a minimum return asset (risk free) generates an overall return of 18.34% for investors with the reduced total risk. Investors are able to delay their investments or cash outflows and still earn same returns on the investment. By investing through the investment plan 4, investor is able to make payment in instalments over the span of three years and earns the return of 20% p.a. which is same as when investing the entire amount once.
5.2 Recommendations Increase EILs brand awareness through various portals, websites, CSR activities, sponsoring, etc. As EIL is a new brand in the real estate industry, awareness of its brand and projects needs to be increased among investors. Invest funds in construction of the existing marketed projects, rather than diverting funds to the new projects. It is common among the real estate players that the funds raised for a project is diverted for investment into the new projects. This delays the completion of the project and create a service gap which ultimately leads to the bad
LBSIM 38 image of the company in the market. Hence, EIL is required to avoid stepping into this kind of proposals in order to gain investors confidence. Investment Plan-3, involving substituting the assured interest payments with the reduced cost of the property for investors, was suggested as an additional selling plan. As the company has recently come up with the concept of offering assured returns to the investors on its commercial projects, this option had not been evaluated. Calculations were done for the same and the best feasible alternative has been suggested to the management.
LBSIM 39 LIMITATIONS OF THE STUDY
Historic data, for calculating Risk and return for all five financial assets, have been taken for past 3 years only. Very small proportion of population has been captured to evaluate the investors profiles and constraints for real estate investment. Capital gain on EILs project has been taken as a guess or an approximated figure, as it could not be projected with 100% accuracy.
LBSIM 40 REFERENCES AND BIBLIOGRAPHY
Earth Infrastructures limited, www.earthifra.com Real estate sector in India http://www.ibef.org/industry/real-estate-india.aspx Portfolio management http://en.wikipedia.org/wiki/Portfolio_management http://www.hsbc.co.in/1/2/personal/investments/new-invest/new-invest-types Historic Daily Gold prices, http://www.mcxindia.com/ Real estate prices NCR, RESIDEX, 99acres.com Mutual funds, index funds and past NAVs http://www.amfiindia.com/ Tem deposit rates http://www.ratekhoj.com/fixed-deposits/index.php/ Chapter -4, Portfolio: Risk and Return, Financial Management, IM Pandey Chapter -19, Capital markets in India, Financial Management, IM Pandey