Problem with drupal 7 multisite installation OS: UBUNTU 11.10

What I want to achieve:

www.example.local     Main Installation

www.example1.local    Installation inside sites folder

I took the following steps:

Installed drupal 7 as normal installation in the folder /var/www/example.

in /etc/hosts added the following:

127.0.0.1   www.example.local

127.0.0.1   www.example1.local


Then in /etc/apache2/sites-available ::

ServerName www.example.local

DocumentRoot /var/www/example

in example file.

and 

ServerName www.example1.local

DocumentRoot /var/www/example/sites/www.example1.local

in www.example1.local file.

I created folder 


  /var/www/example/sites/www.example1.local


and copied default.settings.php and made a settings.php from it.

Now , when I go to www.example.local I get the normal(main) installation it works fine.

But when I go to www.example1.local I see the list of files in the www.example1.local folder



What is the step I am missing?
Or did I do something wrong ? Thank you in advance.

PS: I have not made any change in settings.php of the subsite.
Documentroot is not proper for the second case.
It should be like this

ServerName www.example1.local
DocumentRoot /var/www/example