Pre-Feasibility Study

DIAGNOSTIC LABORATORY

Turn Potential into Profit
Small & Medium Enterprise Development Authority
Government of Pakistan

http://www.smeda.org.pk
Lahore
Small and Medium Enterprise Development Authority, 6st Floor, LDA Plaza Egerton Road,. Lahore 54792, Pakistan
Tel: 92-42-111-111-456 Email: helpdesk@smeda.org.pk
Karachi
Small and Medium Enterprise Development Authority, 5th floor, Bahria Complex-II
Moulvi Tameezuddin Khan Road, Karachi
Tel: 92-21-111-111-456, 5610432, 5610536, 5610459, Fax: 92-21-5610572
Email: helpdesk-khi@smeda.org.pk
Peshawar
Small and Medium Enterprise Development Authority, Ground Floor, Statelife Building, The Mall, Peshawar Cantt.
Tel: 92-91-111-111-456, 92-91-9213046-7 Fax: 92-91-286908, Email: helpdesk-pew@smeda.org.pk
Quetta
Small and Medium Enterprise Development Authority, Bunglow No.15-A Chaman Housing Scheme, Airport Road, Quetta
Tel: 92-81-2831702, 92-81-2831623 Fax: 92-81-2831922, Email: helpdesk-qta@smeda.org.pk

June 2008

BAL-PREF-12/June 2008

0

Pre-feasibility Study

Diagnostic Laboratory

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide
a general idea and information on the said area. All the material included in this document is based on
data/information gathered from various sources and is based on certain assumptions. Although, due
care and diligence has been taken to compile this document, the contained information may vary due to
any change in any of the concerned factors, and the actual results may differ substantially from the
presented information. SMEDA does not assume any liability for any financial or other loss resulting
from this memorandum in consequence of undertaking this activity. Therefore, the content of this
memorandum should not be relied upon for making any decision, investment or otherwise. The
prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather
any information he/she considers necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or other form.

DOCUMENT CONTROL
Document No.

PREF - 12

Prepared by

SMEDA-Balochistan

Approved by

Head of Department

Issue Date

June 2008

Issued by

Library Officer

BAL-PREF-12/June 2008

1

...................................................................... 2 2...............2 7............9 Suitable Location .......................................................................................................... 2 2.......................................... PURPOSE OF THE DOCUMENT ....... Machinery and Equipment requirement ...................................................................................................................................................................................................................... 1 2.................................................................................... 11 Projected Balance Sheet............................................................................2 Land ........................................................................................ 4 2.......................................................................................................1 2........................................................ 4 2.......................6.........................................6. KEY ASSUMPTIONS ............................................................... 6 Furniture and Fixture . 5 3............................................................... 7 Utilities Requirement ..... 10 8..............6................ 5 BASIC REQUIREMENTS ...........................................................................................................................5 Project Capacity Assumptions ................. 2 2........... 14 BAL-PREF-12/June 2008 2 ....................................................................... 14 9........................................................................................................................................................................................................................................... 8 7.......................................................................................................................... 9 8.............2 Hematology ...................................................1 3.........................................................4 9........................................................... 2 2.............................................................................2 4............................................................................................................8 Project Investment........................................................................... ..............5 4................................................................................ MARKET INFORMATION...........7 Working Time.. 5 Target Customers ........................10 Key Success Factors / Practical Tips for Success...............................2 8.........................................................................................................5 5..................................................................9 Recommended project parameters.......5 Micro biology .... 12 Projected Cash Flow Statement ....................................................... 6 4........................................1 7............................................................................................................................................................................................................................................2 2................................................................................... 9 Project Returns ........................................................................................................................2 3............................................................................. 5 Market Overview & Demand............... 14 Depreciation Expense Assumptions ..............................4 4..............................1 Bio Chemistry .................................................................................... 1 Opportunity Rationale................................................................ 9 Project Financing............... 14 Expense Assumptions. 2 2...................................................................................................................1 8........................... 2 2............................................ 4 2.............................................3 9....... 1 Proposed Business Legal Status . PROJECT ECONOMICS .................................................................................... 6 Office equipment.............................1 4............................. 14 Revenue Assumptions............................................. 8 6..........6................................................................ 4 2.......3 Serology .............................................................5 2............................................. HUMAN RESOURCE REQUIREMENT.......... Introduction............................................................................................................................................... ............ 1 Project Capacity..........................4 Histopythology ......................................................................................................................................4 2................. FINANCIAL ANALYSIS.2 9...................................................................................................... 2 Product mix & Test details..................... 14 Economic Assumptions............................................................................................................1 9....6 Project Brief .. 8 Covered Area Requirement...............................................................................6.........................................................................................................1 5............................................................................................................................................................................... 4 3............................................. 2 2....................................................... 7 LAND & BUILDING REQUIREMENT.............................................................. PROJECT PROFILE ................................................................................................................. 9 7........................................................................................................................................................................................................................................................................................6..................................................................................................................................................3 4................................................................................ 8 5..................................................................................................................Pre-feasibility Study Diagnostic Laboratory Table of Contents 1........................ 1 Market Entry Timing.................................... 13 9...................................................3 Project Cost .....................................................3 Projected Income Statement.....3 2....................................6 Chemical Pathology .................................................................... 6 Other Equipment Required.......................................................... 1 2......................................

.........................................................Pre-feasibility Study 9............. 15 Financing Assumptions..............................................................................7 9............................8 Diagnostic Laboratory Cost of Goods Sold.....................6 9............................. 15 Cash flow Assumptions............................................................ 15 BAL-PREF-12/June 2008 3 ................................................................................................................

Pre-feasibility studies and business plan development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way. please visit our website: www. fruits and vegetables. marble and granite. gems and jewelry. textiles.1 Since its inception in October 1998. SMEDA provides business guidance through its help desk services as well as development of project specific documents. niche marketing. technology up gradation and human resource development. urban transport and dairy. leather and footwear. SMEDA had adopted a sectoral SME development approach. SMEDA has so far successfully formulated strategies for sectors including. These documents consist of information required to make well-researched investment decisions. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including financial aspects. In order to facilitate these investors. This document is in the continuation of this effort to enable potential investors to make well-informed investment decisions. marine fisheries. surgical instruments. These services include identification of viable business opportunities for potential SME investors.Pre-feasibility Study Diagnostic Laboratory Introduction to SMEDA The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program.pk BAL-PREF-12/June 2008 4 . In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants.smeda. Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by SMEDA. A few priority sectors were selected on the criterion of SME presence.org. 1 For more information on services offered by SMEDA. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

Pakistan is a densely populated country. 2. Increasing trend of medical diagnosis through scientific medical tests has increased the need of high capital investment in this sector. the overlapping and harsh climate of Pakistan causes major viral diseases through out the year. As the need is increasing day by day due to the increase in population and diseases. These tests are based or conducted on the collected sample of blood/urine of the patient. primarily in urban district of Balochistan province. he can hire a doctor for his Laboratory.1 Project Brief This document describes the investment opportunity for setting up a diagnostic laboratory.Pre-feasibility Study Diagnostic Laboratory 1. 2. if the entrepreneur is not a doctor himself. The document highlights marketing. on an average of 100 tests per day are expected initially. Moreover. at least one-third of the population is living below the poverty line.3 Market Entry Timing As such there is no specific time required for an entry in health sector. This creates a great demand for Diagnostic Laboratories in Pakistan. therefore. Moreover. and production.4 Proposed Business Legal Status A Diagnostic Laboratory can be started as a sole proprietorship or on partnership basis. Project p rofile The proposed project is for setting up a Diagnostic Laboratory. finance and business management. which includes the Biochemistry. start-up. Although the selection depends totally upon the choice of the entrepreneur. A big investment opportunity exists in this sector. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective. exploit this opportunity and provide latest and dependable diagnostic services on round-the-clock basis. which has direct impact on public & private sector health care centers. management and financial aspects required for the establishment and successful venture. the document/study covers various aspects of project concept development. 2. 2. This venture can easily be started. 2. hygienic environment and professional staff also contribute to the popularity of private sector hospitals and laboratories. It provides a range of services relating to medical tests. The entrepreneur must have MBBS degree to have a license and hygiene environment is mandatory and inspected by the health department from time to time. These handicaps pose a serious threat to the health of the masses. Serology. Hematology. which has no access to clean water and proper sanitation facilities. Introduction of latest technology. Moreover. Investment in the private sector can. investment can be made any time during the year. The Laboratory can be established in any major city of Pakistan. Histophythology. Purpose of the Document The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. but this financial feasibility is based on a Sole proprietorship. Micro Biology and Clinical Pathology. due to this particular nature of business.2 Opportunity Rationale Lack of infrastructure and growing number of population has also increased demand of medical facilities. BAL-PREF-12/June 2008 1 .

Hepatitis B & Hepatitis C. 2. Malignant Cell and Cytology tests.6. Co-ebullition Profile and platelets identification tests.3 Serology It comprises of Hepatitis A. 2.6. This project is recommended to be established in urban districts at far flange areas from major cities to facilitate the locals in their diagnosis. 2.6. HIV. Urea and Cholesterol identification tests. Venereal Disease Research Laboratories.6 Product mix & Test details The diagnostic laboratory is capable of conducting six categories of chemistry tests. Description 1 2 3 4 5 6 7 8 Average Fee Rs.5 Micro biology All kinds of Culture and Sensitivity tests are included in microbiology. timely identification of diseases will also reduce motility rate and will also support the public hospital/local doctors for appropriate treatment as per diseases.Pre-feasibility Study 2. Stool DR and Pregnancy tests.6. additionally common test under these six categories are as following. it will generate great business opportunities for the entrepreneur. Uric Acid. Sugar Glucose Uric Acid Urea Creatinine Cholesterol Triglyceride High density Lepo protein Cholesterol Low density Lepo protein Cholesterol BAL-PREF-12/June 2008 2 80 100 100 100 150 100 550 Average Cost/Test 40 50 50 50 70 50 250 Average Tests/Month 240 100 50 60 70 40 50 550 250 60 . 2.6 Chemical Pathology The category includes Urine DR. 2. 2. Thus. No. Patients who at present take great pains to go to other developed cities to have their tests will find the laboratories at hand. Furthermore. Remitted Arthritis Factor and Anti Setuctolycin O Titer tests.6.5 Diagnostic Laboratory Project Capacity The proposed capacity of this diagnostic laboratory is 150 tests per day. Bio Chemistry S. 2.1 Bio Chemistry This category includes Sugar/Glucose. Average market cost and sale for conducting these tests are described as following.4 Histopathology This includes Biopsies. Pap smear.2 Hematology Hematology includes CBC.6.

Description 1 2 3 4 Biopsies Pap smear Malignant cell Cytology 800 400 400 300 Micro Biology S. Hepatitis A Hepatitis B Hepatitis C HIV VDRL Typhoid Vidal Remitted Arthritis factor (RA Factor) ASO Titer Histophysiologies S. Description 1 2 3 4 5 6 7 Cells related tests CBC CP ESR Platelets Co-egolations profile Peripheral smear 150 150 150 50 150 150 150 Serology S. No. No. Culture and Sensitivity Blood Urine 300 300 300 Chemical Pathology S. No. Average Cost/Test 70 70 70 25 70 70 70 Average Tests/Month 40 50 60 60 50 50 40 200 150 150 300 200 150 150 150 Average Cost/Test 80 70 70 150 80 70 70 70 Average Tests/Month 140 80 80 120 100 110 110 40 150 70 70 Average Fee Rs. Description 1 2 3 Average Fee Rs. No.Pre-feasibility Study 9 10 Diagnostic Laboratory Lever function tests Cardiac enzymes 150 250 70 120 70 100 Average Fee Rs. Average Cost/Test 350 200 200 150 Average Tests/Month 50 30 30 40 Average Cost/Test 150 150 150 Average Tests/Month 100 160 200 Average Cost/Test 70 40 50 Average Tests/Month 200 100 60 Hematology S. Urine D. Description 1 2 3 Average Fee Rs. No.R Stool D.R Pregnancy tests BAL-PREF-12/June 2008 150 80 100 3 . Description 1 2 3 4 5 6 7 Average Fee Rs.

156.9 million and working capital cost of Rs. 4. Project Investment Total Project cost is Rs.9 Suitable Location A Diagnostic Laboratory should be established at a location that is easily accessible and has population concentration or the appropriate place would be near private or public hospitals.253.9 Recommended project parameters. and 25 days per month. Therefore two shifts would be necessary for smooth operations of tasks/obligations Project Working shifts Working hours per day Per month working Per annum working 2. BAL-PREF-12/June 2008 4 . Project Parameters Capacity Human Resource Technology/ Machinery Location 7 Local / Foreign Area close to the hospitals 150 tests/ day (45.Pre-feasibility Study 2.7 Diagnostic Laboratory Working Time As per nature of business recommended timings would be 16hrs per day.  Selection of technical / skilled staff would be very crucial decision to be made by the management.8 Diagnostic Laboratory 2 Shifts (1 Shift = 8 hours) 16 25 days (Excluding holidays) 400 hrs per month 300 Days.25million 2.430 2.10 Key Success Factors / Practical Tips for Success The commercial viability of the proposed diagnostic Laboratory depends on the following factors:  Location of the project is of prime importance. 12000 hours.316 66% 21.000 tests/year) Financial Summary Project Cost IRR NPV Payback Period Cost of Capital (WACC) 4. 2. 0.156 million. This includes capital cost of Rs.0 Yrs 12% 2.  Continuous efforts should be made for up-gradation of the technology.  The most important factor for the success of the project is the quality of service provided to the patients and clean environment. 3.

Pre-feasibility Study Diagnostic Laboratory 3. Government of Pakistan has developed an elaborate system of public health care in the country. The basic services that will be provided will also be determined by the need of the locality and its adjacent areas. which operate in an organized manner by private sector in Pakistan. Market Info rmation 3. expensive as well. Rural Health Centers and Dispensaries. These technologies are new and therefore.70 million (estimated for 2007). This has given rise to demand of private sector health care facilities.35 million which rose to 158.1 Introduction Pakistan is the seventh populous country in the world. This infrastructure consists of Hospitals. Moreover. National medical and health Establishment. whereas trend of consulting private sector hospitals. High technology and computerized diagnostic machines are now playing increasing role in overall medical treatment. The details of various medical & health facilities establishment for the year 2006 are given below. rapid technological advances have revolutionized the diagnostic techniques in the medical field. 3. According to the census of 1998. In addition to this Specialized Medicare Centers like Maternity & Child Health and TB Centers are also established in the country. Basic Health Units. As a result not many public sector hospitals have been able to acquire these new technologies. Hospitals Dispensaries Rural health centers TB Clinics Basic Health Units 924 4712 560 288 5336 Maternity & Child Health Centers 906 Total Beds Population / Bed 102073 1522 It is evident from the above figures that the high population growth rate has rendered the existing health facilities as insufficient to meet the requirement of the existing population. the population of Pakistan was 132.5 Target Customers The major target market of the facility consists of residential areas in the vicinity of the laboratory. and especially. This growth rate is a tremendous challenge to the existing infrastructure. The number of existing laboratories is not as high to meet the growing demand of tests. it affects the health care system in the country. this industry has not yet been developed to any sizeable extent in the country and as such it is not capable enough to meet the demand of the growing population. However. laboratories and medical treatment is on higher side. BAL-PREF-12/June 2008 5 . 3. which has resulted in high level of environmental pollution. There are number of diagnostic laboratories.2 Market Overview & Demand The demand for diagnostic laboratory is rising in accordance with the increase in population and diseases.

Following are the details of office equipment.000 60.000 Total 54.000 8.000 90.000 60.000 6.000 6.000 20.Pre-feasibility Study Diagnostic Laboratory 4.500 450.2 Number 1 2 1 1 1 1 1 Cost per unit 400.000 12. fans & lights. chairs. Description Air conditioner Refrigerators Water Cooler Computers Printers Scanner Telephone sets Fax Machine Total 4.000 180.400 Furniture and Fixture Furniture and fixture mainly include Sofa set.000 18.000 18.400 has been provided for acquiring the required office equipment.000 30. An amount of Rs.000 8. The details are as under.000 25.000 60. air conditioners.000 12000 4.500 450.000 Total 400.466.000 12000 6 Total 30.1 Machinery and Equipment requirement The major cost involved in establishing a Diagnostic Laboratory is the cost of machinery and equipment.000 10. Basic R equirements 4. tables.000 178. The following requirement is estimated for running the laboratory. curtain and fire extinguishers.500 Office equipment It includes computers. Description Blood Analyzer Binocular Microscope Clinical Water bath Incubator ELISA for hormone Analysis Centrifuge Machine Photoclorimeter / Chemistry analyzer Miscellaneous Lab Equipment Total 4.000 1. telephone and fax etc.000 2.000 325. Description Sofa Set 3 seat Counter desk Waiting sofas Number 2 1 2 BAL-PREF-12/June 2008 Cost per unit 15.3 Number 2 1 1 2 1 1 2 1 Cost per unit 27.000 325.400 20.000 1.000 4. 178.000 20. The proposed Laboratory would be providing diagnostic services to the patients.000 25.200 20.000 .000 24.000 10.

000 127. Electrical nature of equipment.000 2.000 Other Equipment Required.000 10.000 74. uniform supply is essential therefore. Generator.Pre-feasibility Study Office Table Total 4.000 . Description Electricity Generator Stabilizer Weight Machine Light and Electricity Appliances Miscellaneous Total 4. Following are the recommended equipments.000 50. Stabilizer is mandatory.000 2.000 5.000 10.000 Total 40.5      Number 1 3 1 Utilities Requirement Electricity Telephone Gas Water Waste Disposal BAL-PREF-12/June 2008 7 Cost per unit 40.000 30.4 Diagnostic Laboratory 1 10.

Position Chief Executive (Manager)/Doctor Lab Technicians Receptionist/ accountant Sweepers Total BAL-PREF-12/June 2008 Persons Monthly Salary/person 20.2 Covered Area Requirement The covered area requirement for diagnostic laboratory is about 772 sq.000 432.Pre-feasibility Study Diagnostic Laboratory 5.000 18.006.400 6.000 . Human resource requirement.000 1.500 8 Total Salary/ annum.200 1.000 8. An amount of Rs.1 Land Keeping in view the proposed capacity.080. 926.000 2.) 252’ Cost per Sq. Land & B uilding Requirement 5. However. 60’ 360’ 100’ 772 800 1200 1.ft 1200 Total land and building / Construction cost Cost (Rs) 302.350 per Sq.400 has been allocated for the acquisition of land.400 72. ft.000 642. 5.000 1 4 1 1 7 6.200 1. ft. feet. 240. cost of land may vary according to location.000 120.000 288. 1. The table given below gives a sketch of the area requirement. Section Number Reception hall & 1 partitioned waiting room Wash room 2 Diagnostics Lab 1 Store Room 1 Total covered area cost Total cost of land Area 14’x18’ 5’*6’ 20’x18’ 10’x10’ Total Area (sq. approximately 772 square feet is sufficient to set up the diagnostic center. along with annual cost of salaries for diagnostic unit on the basis of two shifts is given below. Human Resource Requirement Total staff of 7 persons is required for a diagnostic laboratory project.000 926.400 1.200 Rs.000 96.

316 Project Returns Description IRR MIRR Pay Back Period (Yrs) Net Present Value (NPV) 7.400 53.000 250.906.2 4.841 79.000 178.856 2.905.500 3.675 100.316 . Project Economics 7.593.156.080.) 1.436 66% 31% 2.77 16.400 1.3 Equity Project 79% 35% 1.253.249.800 70.516 Total Project Cost 7.460 4.1 Project Cost Description Land Building & Infrastructure Machinery & Equipment Furniture & Fixtures Office Equipment Pre-operating costs Total Capital Cost Working Capital Raw Material Inventory Upfront Insurance Payment Cash Total Working Capital Amount in (Rs.935.000 926.500 74.05 21.430 Project Financing Description Debt Financing Equity Financing Total BAL-PREF-12/June 2008 Percentage 30% 70% 9 Amount in Rs 1.Pre-feasibility Study Diagnostic Laboratory 7.156.

387 7.856 15% 5 7 70% 30% 0% Year 1 1.773 Year 5 4.843.935.169 40% 75% - Year 8 7.557 45% 83% - . in actuals Year 10 9.430 @ 12% 10 BAL-PREF-12/June 2008 Year 4 3.13 Project 66% 31% 2.169 6.243.285 2.849.198 1.249.657 26% 45% 15.Pre-feasibility Study Diagnostic Laboratory 8.236.545.436 Year 3 2.253.149.387 42% 78% - Year 9 8.804 21% 33% 8.906.512.545.044 30% 55% 27.738 36% 70% 123.156.350.110 10.314 8.934 2.962.620. Financial Anal ysis Financial Evaluation of Pre-Feasibility Diagnostic Laboratory Key Variables Total Investment in Project Equity Debt Lease Interest Rate Debt Tenure Total Number of Employees Free Cash Flow to Equity (FCFE) Free Cash Flow to Firm (FCFF) Profit margin on sales ROE Times interest earned Internal Rate of Return (IRR) Modified Internal Rate of Return (MIRR)* Payback Period (yrs) Net Present Value (NPV) SMEDA 4.90 34% 65% 53.04 Year 6 5.77 16.487.658.85 @ 16% Year 2 1.236.965.350.586 4.314 43% 80% - Rs.609.959.811.460 1.243.05 21.78 Equity 79% 35% 1.901 5.316 2.901 39% 72% - Year 7 6.925 3.

672 2.843 102.305 5.019 4.812 1.519.010 19.080 55.148.141 816.594 43.724.887 6.792 8.288 17.523 744.615 1.700 789.654 2.864 67.636.593 8.364.984 618.991 2.830.512 5.423 35.152 11 BAL-PREF-12/June 2008 .416. in actuals Year 10 Revenue Cost of goods sold Gross Profit 5.341 755.653.590 40.326 7.967 25.919.185 3.744.943.691 35.615 10.636 30.854 3.030 574.703 138.697.786 7.238.854 9.789 84.617 5.373 23.164.080 138.615 1.471.320.480 7.182.813 467.375 16.164.844.740 1. etc.068 108.675 27.570 213.715.305.788 51.522.724 5.615 1.023 26.615 10.737.182.059 4.495.594.951.607 6.238 2.207.740 63.615 10.834 9.053.166 70.298.761.615 1.794.972.238 12.462 426.336 19.854 3.749.070 1.805 93.089 1.089.273.749.763 1.561.388 1.372 90.641 14.788 138.700 683.128 8.449.716 28.739.943.506 9.215 563.014.724.054 37.381.708 44.725 6.857 48.281.700 917. fax.740.349 53.077.899 7.852 678.097.220 93.763.100 Income from Cash at Bank Earnings Before Interest & Taxes 22.756 70.779.696 3.633 5.700 853.328.518.465.675 6.724.700 733.590 1.575.599 11.840.042.388 5. etc.266 75.563.466 14.448 11.073 138.185 1.390 25.477.346 23.238.570 7.878 7.703 63.059 519.642 13.693 8.920 21.782 20.267 138.439 7.255 3.174 3.267 47.238.) Promotional expense Insurance expense Professional fees (legal.466 16.449.381.388 1.854.414.030 574.887 6.769 3.207.774 6.615 10.659. expense (phone.820.980 3.158 2.700 12.000 15. etc.596 19.699 16.615 10.212 12.993.844.586 388.643 10.047 3.821 17.919.979.334 71.887 14.478 1.848 4.199.068 6.001.773 77.782 2.525 28.559 9.964.119.748 4.397.266 138.435.864 138.084 79.951.820.118 4.552 5.334 138.593.) Depreciation expense Amortization expense Subtotal Operating Income 354.769.821 102.917 84.615 970.679.300.700 Interest expense Earnings Before Tax 187.654 7.594 138.271 21.161 22.181 4.666 2.) Office expenses (stationary.480 79.476 2.922 4.783 11.943.359.523 7.264 1.238 7.779 139.871 159.116 18.469 1.722.086 6.640.251 5.314 44.908 77.442 7.097.205.660 11.Pre-feasibility Study 8.207.411 127.853 3.381.439 16.233 5.152 8.638 10.850 174.700 27.586 6.315 21.638 294.059 4.371.305 8.041.935.480 138.983.115 9.794.238 2.073 59.724 54.548 General administration & selling expenses Administration expense Utilities expense Travelling & Comm.174 2.202.059 574.607 23.586 4.707 3.957.641 10.617 5.622 2.791 18.199.561.282.561.866 Balance brought forward Total profit available for appropriation Dividend Balance carried forward 1.059 10.820.635 5.148.397.122.175.617 12.886.775 1.866.708 15.370 1.217 6.030 2.483.629.193 513.742 33.506 253.370.666 10.390 17.667 63.783 345.185 1.1 Diagnostic Laboratory Projected Income Statement SMEDA Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs.371.390 54.636.439 7.700 Tax NET PROFIT/(LOSS) AFTER TAX 323. audit.865 26.096.164.331 6.

377.840 956.109.000 648.708 1.238 5.042 463.202 512.202 487.217 177.961 3.825.880 3.160 1.906.392 294.316 42.156 10.080.000 178.981.168 91.073 572.080.501 7.288.979 1.300 1.455 1.706 59.575.513.316 2.059 7.460 7.646 5.011 567.169 180.800 59.000 89.529.713.483 1.464 2.797 182.611 183.080.425 40.906.150 Intangible assets Pre-operation costs Total Intangible Assets TOTAL ASSETS 53.600 160.906.215.789 6.720 3.475 62.960 2.480.902.800 1.080.763 9.435 2.899 10.943.145.496 6.906.000 694.460 8.280 5.000 555.795 10.000 70.726.450 51.760 1.460 TOTAL CAPITAL AND LIABILITIES 4.038.756 4.490 4.134.501 165.460 1.400 21.134.800 3.120 75.164.750 37.516 1.080.872.906.273.040 2.100 115.647.675 250.890 2.866.003 269.080 51.319.611 182.460 2.011 539.849.605 21.900 151.480 1.560 3.000 926.724.436.961 Fixed assets Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office equipment Total Fixed Assets 1.647.152 11.820.906.628 222.042 418.940 43.377.913 851.304 1.099.020.251 463.743 294.906.561.866.381.700 98.460 Retained earnings Total Equity 2.431 512.075 201.460 1.961 9.018 567.740 3.439 10.843 47.815 142.821 8.776 7.431 539.464 32.434.720 63.080 1.854 6.890 8.088.355 180.695 4.182.099 1.400 107.541 324.852.906.981.440 1.857.765 1.125 55.685 1.080.500 4.400 3.273.920 2.727 606.080.120 2.844.000 787.300 169.500 53.185 4.760 179.593.856 1.983 180.159.425 Shareholders' equity Paid-up capital 2.940 3.Pre-feasibility Study 8.613 11.961.018 572.460 574.225 1.460 5.338.460 4.775 48.200 142.073 1.401 67.380 1.070 1.856 176.249.617 8.127 244.070.800 4.820.028.743 354.195.080.348 9.400 1.773 5.467.795 2.100 32.392 240.642.156.436.875 178.920 8.2 Diagnostic Laboratory Projected Balance Sheet SMEDA Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs.080.491 9.906.829.156.200 796.887 9.528 11.460 3.500 133.388 4.480 3.631.240.800 124.520 876.120 1.743.080.961.724 2.805 7.314 7.200 2.995 1.640 3.100 5.460 6.906.466.355 179.150 66.610 1.797 181.491 2. in actuals Year 10 100.354.830.820.072 354.811 71.122.519 8.000 880.840 1.064.700 10.691 1.987.582 176.100 44.077 8.000 602.274.700 6.238.111 240.000 833.825 70.113.800 42.500 74.000 509.156 2.983 181.114.111 Assets Current assets Cash & Bank Raw material inventory Pre-paid insurance Total Current Assets Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Lease payable Deferred tax Long term debt Total Long Term Liabilities - - - - - - 12 BAL-PREF-12/June 2008 - - (0) 0 (0) 0 .906.699 6.035.917 114.881.219 502.204.115.080.114.906.249.169 180.251 487.000 463.501 2.297.604.072 418.987.000 741.400 5.841 79.233 182.528 2.425 183.148 783.848 5.433 55.605 2.844.030 3.436.207.

571 1.902.850.700 176.134 4.113 8.615 814 (22.319.615 10.516) Financing activities Change in long term debt 1.000 100.615 814 (25.238 3.087 3.263.501 7.350 2.110 Cash balance brought forward Cash available for appropriation Dividend Cash carried forward 100.109.971 3.243.038.984 26.763) 3.110 - - - - - - - - - - NET CASH 100.156.724.943.986) 3.319.127 6.727) 3.207.830.278) 3.700 814 (23.182.059 138.373) (185.487.800) Year 1 Year 2 Year 3 Year 4 Year 5 1.615 10.219) (324.929) (281.202.811.841) (79.615 10.219) - - - - - Year 6 5.590 138.925 4.003 17.Pre-feasibility Study 8.208 4.984 63.830.821 5.615 814 (18.545.620.127 15.561.169 Year 8 7.675) (150.887 6.697.856 Issuance of shares 2.075 4.615 10.891.984 45.629.233 3.236.441 3.934 2.700 814 (23.007 8.804 (185.341 138.392 1.000 1.388 2.984 54.179) (213.901 Year 7 6.691) 3.249.185 1.174 138.984 25.820.207.030 1.243.825.179) (245.929) (324.658.089 138.229 6.905.628 5.329 2.314 Rs.381.917 4.099 (20.158 138.617 5.866 138.387 Year 9 8.314 9.156) (245.580 7.800) Acquisitions Cash (used for) / provided by investing activities (3.642.168 1.350.906.857.350.586 5.156) (281.3 Diagnostic Laboratory Projected Cash Flow Statement - - - - - - - (0) 0 (0) 0 SMEDA Year 0 Operating activities Net profit Add: depreciation expense amortization expense Deferred income tax Raw material inventory Advance insurance premium Accounts payable Cash provided by operations (70.597.003 7.198 1.901 6.469 138.202 1.984 59.387 8.917 1.612.109.872.164.066.264 138.961 13 BAL-PREF-12/June 2008 .560.609.902.658.025.169 7.940 43.872.168 2.700 814 (16.815 5.615 814 269.615 10.055 9.642.905.069.377.825.059 4.512.929.647) 3.545.439 7.815 2.700 814 (27.418.316 Investing activities Capital expenditure (3.038.984 23.984 240.501 3.460 Purchase of (treasury) shares Cash provided by / (used for) financing activities 4.075 11.590) 3.679.811.857.238.318) 3.096) 3.244 5.199.148.615 814 (20.198 574.991 138.233 9.951 5.113 2.397.373) (213.739 2.984 28.285 3.089.000 100.840.442 7.865.697.015 6. in actuals Year 10 9.096.152 9.854 4.102 1.628 13.000 1.236.854 3.

of Business Days in a Year 300 Total Assumed Capacity 150 * 300 = 45.000 * 203.1 Project Capacity Assumptions Description Calculation Maximum Number of Tests/Day 150 Assumed total No.2 Revenue Assumptions Description Calculation Weighted Average Fee / Test Rs. 5.55 Fee Growth Rate / Year 10% Capacity Utilization in 1st Year (@60%) 27.000 Tests st Total Revenue in 1 Year 9. 203.4 Expense Assumptions Communication Expense 3. Key Assu mptions 9.5 Depreciation Expense Assumptions Depreciation Method Straight Line Building & Infrastructure 5% Machinery & Equipment 5% 14 BAL-PREF-12/June 2008 .3 27. Audit etc) 0.Pre-feasibility Study Diagnostic Laboratory 9.000 Units Capacity Utilization 1st Year 60% Growth in Capacity Utilization 10% Maximum Attainable Capacity 95% 9.5% of revenue Operating Cost Growth Rate 5% Machinery & Equipment Insurance Rate 5% 9.5% of revenue Professional Fee (Legal.55 = Rs.980 Economic Assumptions Electricity Price Growth Rate 6% Gas Price Growth Rate 6% Water Price Growth Rate 6% Salary Growth Rate 10% 9.5% of administration expense Office Expense 5% of administration expense Promotional Expense 0.495.

000 = 2.000 Direct Gas Cost 27.000 Direct Electricity Cost 27.6 Cost of Goods Sold All the direct costs that directly affect the revenue of any project are called Cost of Goods Sold (COGS).7 3.654 Direct Labor Cost 288.000 Total COGS 9. 104.95 * 27. Cost of Sales/Test in 1st year Daily Cost Total 1st Year Direct Cost in Rs.000 9.175. following are the components and estimated value of COGS in the first year: Description Weighted Avg.8 Financing Assumptions Debt 30% Equity 70% Long Term Debt Interest Rate 15% Tax Treatment Sole proprietorship Discount Rate for NPV (WACC) 12 15 BAL-PREF-12/June 2008 .95 104.654 Cash flow Assumptions Accounts Receivables Cycle (In Days) 0 Accounts Payable Cycle (In Days) 30 Initial Cash in Bank 100.833. For a diagnostic laboratory.Pre-feasibility Study Diagnostic Laboratory Furniture & Fixtures 5% Office Equipment 5% 9.