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Pre-Feasibility Study

Prime Ministers Small Business Loan


Scheme
(Montessori School)

Small and Medium Enterprises Development Authority


Ministry of Industries & Production
Government of Pakistan www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan e Iqbal, Egerton Road, Lahore
Tel 92 42 111 111 456, Fax 92 42 36304926-7
helpdesk@smeda.org.pk

REGIONAL
OFFICE
PUNJAB
3rd Floor, Building No.
3, Aiwan e Iqbal,
Egerton Road Lahore,
Tel: (042) 111-111456
Fax: (042)6304926-7
helpdesk.punjab@smed
a.org.pk

REGIONAL
OFFICE
SINDH
5TH Floor, Bahria
Complex II, M.T.
Khan Road, Karachi.
Tel: (021) 111-111456
Fax: (021) 5610572
helpdeskkhi@smeda.org.pk

REGIONAL
OFFICE
KPK
Ground Floor
State Life
Building The
Mall, Peshawar.
Tel: (091)
9213046-47
Fax: (091) 286908
helpdeskpew@smeda.org.pk

September 2013

REGIONAL
OFFICE
BALOCHISTA
N
Bungalow No.
15-A Chaman
Housing Scheme
Airport Road,
Quetta. Tel: (081)
831623, 831702
Fax: (081) 831922
helpdeskqta@smeda.org.pk

Pre-Feasibility Study
(Montessori School)

Table of Contents
1.
DISCLAIMER........................................................................................................................
................... 3
2. PURPOSE OF THE
DOCUMENT ......................................................................................................... 4
3. INTRODUCTION TO
SMEDA .............................................................................................................. 4
4. INTRODUCTION TO
SCHEME............................................................................................................ 5
5. EXECUTIVE
SUMMARY....................................................................................................................... 5
6. BRIEF DESCRIPTION OF PROJECT &
PRODUCT......................................................................... 6
7. CRITICAL
FACTORS ............................................................................................................................
6
8. INSTALLED & OPERATIONAL
CAPACITIES ................................................................................. 7
9. POTENTIAL TARGET
MARKETS/CITIES........................................................................................ 8
10. PROJECT COST
SUMMARY ......................................................................................................... 8

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10.1 PROJECT ECONOMICS


.................................................................................................................... 9
10.2 PROJECT FINANCING
.................................................................................................................... 10
10.3 PROJECT
COST............................................................................................................................. 10
10.4 LAND REQUIREMENT
.................................................................................................................... 10
I.
BUILDING RENT
................................................................................................................................. 11
II. SUITABLE
LOCATION..........................................................................................................................
11
10.5 OFFICE EQUIPMENT DETAILS
....................................................................................................... 12
10.6 FURNITURE
................................................................................................................................... 13
10.7 HUMAN RESOURCE
REQUIREMENT.............................................................................................. 14
10.8 KEY PERSONNEL
.......................................................................................................................... 14
10.9 REVENUE GENERATION
................................................................................................................ 15
10.10 OTHER EXPENSE
.......................................................................................................................... 16
11. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS
....................................................... 16
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12. ANNEXURE
1 .................................................................................................................................. 17
12.1 INCOME
STATEMENT..................................................................................................................... 17
12.2 BALANCE SHEET
........................................................................................................................... 18
12.3 CASH FLOW
STATEMENT.............................................................................................................. 19
13. USEFUL LINKS
............................................................................................................................... 20
14. KEY
ASSUMPTIONS.....................................................................................................................
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1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said matter. Although, the material included in
this document is based on data/information gathered from various reliable
sources; however, it is based upon certain assumptions which may differ from case
to case. The information has been provided on as is where is basis without any
warranties or assertions as to the correctness or soundness thereof. 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, its
employees or agents do not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
contained information does not preclude any further professional advice. The
prospective user of this memorandum is encouraged to carry out additional
diligence and gather any information which is necessary for making an informed
decision, including taking professional advice from a qualified consultant/technical
expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk

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2. PURPOSE OF THE DOCUMENT


The objective of the pre-feasibility study is primarily to facilitate potential
entrepreneurs in project identification for investment. The project pre-feasibility
may form the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept
development, start-up, and production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in Montessori
School by providing them with a general understanding of the business with the
intention of supporting potential investors in crucial investment decisions.

The need to come up with pre-feasibility reports for undocumented or minimally


documented sectors attains greater imminence as the research that precedes such
reports reveal certain thumb rules; best practices developed by existing enterprises
by trial and error, and certain industrial norms that become a guiding source
regarding various aspects of business set-up and its successful management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form basis of any Investment Decision.
3. INTRODUCTION TO SMEDA
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The Small and Medium Enterprises Development Authority (SMEDA) was


established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the
number, scale and competitiveness of SMEs", SMEDA has carried out sectoral
research to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based
capacity building programs of different types in addition to business guidance
through help desk services.

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4. INTRODUCTION TO SCHEME
Prime Ministers Small Business Loans Scheme, for young entrepreneurs, with an
allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidised financing at 8% mark-up per annum for one hundred thousand
(100,000) beneficiaries, through designated financial institutions, initially through
National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).
Small business loans with tenure upto 7 years, and a debt : equity of 90 : 10 will be
disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber
Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally
Administered Tribal Areas (FATA).
5. EXECUTIVE SUMMARY

The fast paced life of the metropolitan cities is significantly influencing the life style
of its inhabitants. Economic pressures are compelling both parents to work
towards achieving and sustaining quality life standards. This has further added to
complexity and competition of a metropolitan dweller. As a result of these social
changes, the trend of sending children to Daycare Centers or to Montessori
schools at a much earlier age is gaining rapid grounds, resulting in high demand
for Montessori schools in metropolitan cities. The growing population has
somewhat exhausted the limited capacity of existing private as well as public
primary school systems. Private sector with its investment capacity to provide
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adequately equipped and qualified staffed school systems is well positioned to


capitalize on this opportunity for establishing viable school systems in the country.
Montessori school education is the first formal learning stage for a child. This prefeasibility provides information on establishing a Montessori school in any
metropolis of Pakistan, starting classes from Play-group to Class II (aged 3 7)
focusing on middle income tier of the society. The school will provide quality
education starting at the Elementary level, charging an affordable fee structure.
Advanced educational procedures will be practiced teaching an extensive
curriculum, using modern teaching methodology at par with international
standards.
The Montessori school will have sophisticated infrastructural facilities, spacious
classrooms, and wide-ranging learning material from books to toys for a
meaningful educational experience.
The Montessori school business venture entails a total investment of about Rs.
2.20 million. This includes a capital investment of Rs. 1.72 million and a sum of
Rs.0.47 million as initial working capital. The project is financed through 90% debt

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and 10% equity. The Net Present Value (NPV) of the project is around Rs. 3.46
million with an Internal Rate of Return (IRR) of 48% and a payback period of 3.29
years.
The project will generate direct employment opportunity for 16 persons. Higher
return on investment and a steady growth of business is expected with the
entrepreneur having some prior experience in the related field of business. This pre
feasibility encompasses essential information regarding various aspects of starting
a Montessori school business in Pakistan. This pre feasibility will encompass
essential information regarding various aspects of starting a Montessori
school business in Pakistan.

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT


Schools with high reputation have a stringent admission selection process, for
which Montessori schools provide the necessary training. This has given rise to a
high demand for Montessori school systems that prepare children for admission to
reputable primary schools providing necessary educational training starting at an
early age. With the growing population and a limited number of schools,
establishment of elementary schools has become a potent business opportunity.
The overall proposed capacity of the Montessori school is for 170 students.
However, the school will start with 86 students initially in year 1, gradually
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increasing to 170 students in year 8. Each class level from Playgroup, KGI, KGII
has two sections while class I and II will have one section each. The maximum
number of enrolments per class is limited to 20 students from Playgroup till KG II
and 25 students for class I and II.
The proposed building for the project will be acquired on rent, covering an
approximate area of 1.5 Kanals to accommodate the proposed student strength.
The total project cost for setting up this school is estimated at Rs. 2.20 million out
of which the Capital cost is estimated at Rs. 1.72 million and working capital of Rs.
0.47 million. The project is financed through 90% debt and 10% equity. The project
NPV is around Rs. 3.46 million with an IRR of 48% and payback period of 3.29
years.

7. CRITICAL FACTORS
?

12

At a Montessori school level, teachers/attendants play a critical role in the


success of the learning process. Therefore, it is suggested that staff employed
by the school should be highly educated and properly trained for Montessori

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education. Before starting education services, it is recommended that teacher


training program should be imparted.
?

The education curriculum should be well researched and comprehensive. In


addition to paper course work, it is suggested that visual and other teaching
tools should also be optimally used.

Parents are conscious about the well being and safety of their children at
schools, therefore, it is suggested that the school environment ensures security
and should be free from any apparent hazards. The school should preferably
not be located in a highly populated location or at a location with high traffic
hazards.

The area of the classrooms should be in line with the number of students in
each classroom. Moreover, the classrooms should either be air-conditioned or
at least well ventilated. Classrooms should also be well equipped with teaching
as well as extra-curricular activity aids.

Adequate provisions for physical, either indoor or outdoor or both facilities


should be made available.

Continuous teacher parent interaction should also be a regular feature of the


school education system.

? Higher return on investment and a steady growth of business is closely


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associated with continuous training and capacity building of the entrepreneur.


Prior experience/education in the related field of business can be a big
advantage

8. INSTALLED & OPERATIONAL CAPACITIES


It is proposed that students be admitted for Playgroup to Class II. There are 8
proposed classrooms for the school having a total capacity of 170 students. (The
school will start with 86 students initially in year 1, gradually increasing to 170
students in year 8). The maximum number of enrolments per class is limited to 20
students from Playgroup till KG II and 25 students from Class 1 till Class 2.
However, this capacity may not be achieved in the initial years of operations. The
building will be acquired on rent, covering an approximate area of 1.5 Kanals to
accommodate the proposed student strength. Year wise capacity utilization details
are mentioned in the table below:

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Class

Table 1 - Year Wise Number of Students


Students Per
(Maximum Utilization)

Play Group
KG-I
KG-II
Class I
Class II
Total

Year 1
2
0
2
0
2
0
1
31
3
8

Year 2
2
6
2
6
2
6
1
6
1
6
11

Year3
Year
2
8
2
8
2
8
1
8
1
8
12

Year 4
3
1
3
1
3
1
1
19
9
13

Year 5
3
3
3
3
3
2
1
2
1
14

9. POTENTIAL TARGET MARKETS/CITIES


All major cities in the country are suited for starting a Montessori school. However,
with the increasing population pressure and increasing concentration of well
reputed Montessori schools in metropolitan cities, peripheral and smaller cities also
present a very lucrative business opportunity for opening up a well planned
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Montessori school. Other than Lahore, Karachi & Islamabad, cities like Sargodha,
Multan, Faisalabad, Sheikhupura, Rahimyar Khan, Gujranwala, Sialkot, Gujrat,
Hyderabad and Abbotabad are some of the cities in this category. Moreover, the
presence of large middle class families in major cantonment cities of the country is
another opportunity to be tapped.
A suitable location will depend upon the target market. It is recommended that the
Montessori school should be located in an easily approachable location in line with
the selected target market.

10. PROJECT COST SUMMARY


A detailed financial model has been developed to analyze the commercial viability
of Montessori School under the Prime Ministers Small Business Loan Scheme.
Various cost and revenue related assumptions along with results of the analysis
are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as appendix.

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10.1 Project Economics


It is proposed that students be admitted for Playgroup to Class II. There are 8
proposed classrooms for the school having a total capacity of 170 students. The
maximum number of enrollments per class is limited to 20 students from
Playgroup till KG II and 25 students from Class 1 till Class 2. However, this
capacity may not be achieved in the initial years of operations. The building will be
acquired on rent, covering an approximate area of 1.5 Kanals to accommodate the
proposed student strength. The year wise capacity utilization details are
mentioned in the table below:

Class

Table 2 - Year Wise Number of Students


Students Per
(Maximum Utilization)

Play Group
KG-I
KG-II
Class I
Class II
Total

Year 1
2
0
2
0
2
0
1
3
1
3
8

Year 2
2
6
2
6
2
6
1
6
1
6
11

Year3
Year
2
8
2
8
2
8
1
8
1
8
12

Year 4
3
1
3
1
3
1
1
9
1
9
13

Year 5
3
3
3
2
2
14

The following table shows internal rate of return, payback period and net present
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value:
Table 3 - Project Economics
Description
Internal Rate of Return (IRR)
Payback Period (Yrs)
Net Present Value (NPV)

Details
48%
3.29
3,460,51
0
Returns on the scheme and its profitability are highly dependent on the
entrepreneur having some practical knowledge about advanced educational
procedures, teaching an extensive curriculum and using modern teaching
methodology in sync with international standards along with qualified and
experienced faculty to be hired.

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10.2

Project Financing

Following table provides details of the equity required and variables related to bank
loan;
Table 4 - Project Financing
Description
Total Equity (10%)
Bank Loan (90%)
Markup to the Borrower (%age/annum)
Tenure of the Loan (Years)
10.3

Details
Rs.
220,168
Rs.
1,981,5098%
7

Project Cost

Following requirements have been identified for operations of the proposed


business.
Table 5 - Capital Investment for the Project
Capital Investment
Amount (Rs.)
Land
Building/Infrastructure
Furniture & fixtures
932,50
0
Schools Office Equipment
253,70
0
Computer & Equipment
490,50
0
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Pre-operating Cost
Total Capital Costs
Initial Working Capital
Total Project Cost

49,97
7
1,726,67
7 475,00
0
2,201,67
7

10.4 Land Requirement


For a batch of 170 students, 1.5 kanals of land comprising double story building
would be sufficient. A purpose built building may also be acquired on rent. The
covered area should have 8 classrooms, 1 room for principal, 1 for teachers
coordinator and 1 room for the administration staff. Appropriate numbers of
washrooms are suggested for teachers, principal, children and administration staff.
A big hall should be allocated with proper divisions for entertainment room and
computer section. An adequate area should be allocated for the playground. The
playground should have seesaws, slides, monkey bars and other playing
equipment and tools.

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Space RequirementsTable 6 - Covered Area Requirements


Required Area (Sq. ft)
Class Rooms (8 rooms)
1,92
0
Entertainment Room
37
6
Admission Office
10
0
Principal Office
15
0
Admin Room
10
0
Computer Class
30
0
Washrooms, Store & Kitchen
55
4
Grounds aprox.
3,25
0
Total Covered Area Requirement
6,75
0

It is recommended that the proposed project should be established in a rented


building to reduce initial infrastructure cost. In case a purpose built building is
purchased, infrastructure cost will increase.
i.

Building Rent

Monthly rent for the proposed 1.5 Kanal building in the middle or upper middle
income group area is estimated at Rs. 100,000 and total building rent during year
1 would be approximately Rs. 1,200,000.
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ii.

Suitable Location

The suitable location will depend upon the target market. All major cities in the
country are best suited for starting a Montessori school. However, with the
increasing population pressure and increasing concentration of well reputed
Montessori schools in metropolitan cities, peripheral and smaller cities also
present a very lucrative business opportunity for opening up a well-planned
Montessori school. Other than Lahore, Karachi & Islamabad, cities like Sargodha,
Multan, Faisalabad, Sheikhupura, Rahimyar Khan, Gujranwala, Sialkot, Gujrat,
Hyderabad and Abbotabad are some of the cities in this category. Moreover, the
presence of large middle class families in major cantonment cities of the country is
another opportunity to be tapped.

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10.5

Office Equipment Details

The details of the different equipment required for the project is given in the
following tables:
Equipment

Table 7- Office Equipment


QuantitCosts Cost per
y

Computers
Computers Lab
Networking Cost
Printer
Scanner
Server
Fax Machine
Telephone Sets
UPS 3.0 KVA
Total Equipment

Description

3
1
01
1
1
1
1
4
2

Table 8 - Electrical & Other


EquipmentCost
Costs
Quantity
per

Air conditioners (in principal room)


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Unit (Rs.)
25,00
0
25,00
0
20,00
07,50
0
5,00
0
35,00
0
12,00
01,50
0
40,00
0

Unit (Rs)
45,00
0

Total
Cost
(Rs
75,00
0
250,00
020,00
07,50
0
5,00
0
35,00
0
12,00
06,00
80,00
490,50

Total
Cost
(R45,00

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Ceiling fans
Exhaust fans
Energy Saver
Water coolers

2
64
7
41

Refrigerator
Microwave
Electric Kettle
Fire extinguisher
Vacuum cleaner
Telephone/facsimile
Wall clock
Total

1
1
1
2
1
1
1
2

Description
Play Equipment
See Saw
4 Feet Slide

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2,50
0
2,00
0200
20,00
0
25,00
07,50
0
2,50
0
15,00
0
15,00
0
12,00
0 750

Table 9 Playing Equipment Costs


Quantity
Cost per
Unit (Rs)
1
1

65,00
8,00
14,70
20,00
0
25,00

12,00
0
15,00
0

7,50
0
2,50
30,00
15,00
0
0
12,00
09,00
0
253,70
0
Total
Cost
(R
12,00
0
15,00
0

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6 Feet Slide
8 Feet Slide
Monkey Bars 6x6
Zig Zag Bridge
Monkey Jumping
Total
10.6

1
1
1
1
1

17,00
0
20,00
0
12,00
0
10,00
0
15,00
0

Furniture

17,00
0
20,00
0
12,00
0
10,00
0
15,00
0
101,00
0

As this business is related to education sector therefore there is exclusive


requirement of furniture and fixtures. Following furniture will be required at
Montessori School:

Description
Principal Office
Table & Chair
Visitors Chairs
Cupboard
Admin Office
Table
Chairs
Cupboard
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Table 10 - Furniture Costs


Quantity

Unit
Cost
(R

Total
Cost
(R

1
3
1

20,00
03,00
0
7,50
0

20,00
9,00
7,50

1
2
1

5,00
0
2,50
0
7,50
0

5,00
5,00
7,50

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Class Rooms
Round tables for Play Group to KG II
Chairs for Play Group to KG II
Student Table & Chair for Class 1 & 2
Teacher Table & Chair
Cupboards & Book shelves
White Boards
Children Books / Toys / Entertainment
equipment
Computer Lab
Computer Chairs
Computer Tables
Cupboard
Soft board
White board
Reception Area Furniture
Total Furniture & Fixture Cost

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2
0
12
0
5
08
8
8

3,00
0
1,50
0
4,50
0
5,00
0
5,00
0
2,50
0

60,00
180,00
225,00
40,00
40,00
20,00
100,00
0

2
0
1
01

2,50
0
3,50
0
7,50
0
2,50
0
2,50
0
15,00
0

50,00
0
35,00
07,50
0
2,50
0
2,50
0
15,00
0
831,50
0

1
1
1

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10.7

Human Resource Requirement

Following human resource is estimated for the Montessori School which will be
required during the first year:
Table 11 - Human Resource
for the first year
Position
Number required
Salary/mont
Annual
h
Salary
(Rs 25,00
(Rs300,00
Principal
1
0
0
Teachers Coordinator
1
15,00
180,00
0
0
Computer Teacher
1
15,00
180,00
0
0
Games Teacher
1
15,00
180,00
0
0
Teacher Play Group
2
12,00
288,00
0
0
Teacher KG-I
2
12,00
288,00
0
0
Teacher KG-II
2
12,00
288,00
0
0
Class I
1
12,00
144,00
0
0
Class II
1
12,00
144,00
0
0
Accountant
1
15,00
180,00
0
0
Guard
1
10,00
120,00
0
0
Student Attendent
1
10,00
120,00
0
0
Cleaner
1
10,00
120,00
0
0
TOTAL
1
2,532,00
6
0

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Salaries of all employees are estimated to increase at 10% annually.


10.8

Key Personnel

i. Principal
The principal should be responsible for coordinating all the activities of the school
including the hiring of teachers, developing liaison with the parents, maintaining and
developing the brand name of the school for appropriate positioning, course design,
admission tests and extra-curricular activities.
ii. Teachers Coordinator
An experienced and trained Montessori school teacher is recommended for this
post The Coordinator would be assisting the principal in all school matters. He/she
will be responsible for teachers attendance, their performance and evaluation.
He/she has to collaborate with students, parents, staff and volunteers to ensure that
group activities run effectively. Supervise and monitor the tutoring of students.
Coordinate any special projects to increase coaching awareness among teachers
including arranging guest speakers, visits and workshops.

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iii. Accountant
The accountant will be responsible for book keeping and maintaining accounts,
salaries, and other administrative expenditures.
iv. Teachers
Experienced teachers or fresh graduates with a natural aptitude for teaching
should be employed. A balanced mix of experienced and fresh teachers is
recommended for efficient running of the school. Each teacher shall be given a
class and held responsible for proper training, imparting knowledge, arranging cocurricular activities for the children and their performances in the examinations.
v. Student Attendant
The students in the elementary institutes are very young and may also need
attendants or baby-sitters.
vi. Computer Teacher
The teacher should be responsible for the introduction of information technology to
the young students and for proper arrangement of students games and basic
computer learning.
10.9 Revenue Generation
Expected revenue generation by the number of students admitted in the school
during the first year is given in the table below:
Table 12 - Expected Revenue Generation during Year-I
Number of Total Number of
Classes
Students in
each Class

40

40

40

25

25
170

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Class Name

Fee Per
Student

Registration Fee
Admission Fee

2,500
7,500

Playgroup

3,500

KG I

4,000

KG II

4,300

Class I

4,800

Class II

5,300

Net Fee of School

Year - I
Qty.
Rupees

86
86
20
20
20
13

13
86

215,000
645,000
840,000
960,000
1,032,000
748,800
826,800
5,267,600

Pre-Feasibility Study
(Montessori School)

Table 13 - Revenue Assumptions


Students fee growth rate
Production capacity utilization during Year 1

30

September 2013

7.5
%
50%

10.10 Other Expense


Other than salaries, following operating expenses are assumed to be incurred
during Year 1:
Table 14 Other Operating Expense during Year 1
Other Operating Expenses:
Rs.
Teacher training expense
36,000
Utilities - elec, gas, telephone
318,142
Internet & communication expense
30,000
Stationary & printing
90,000
Newspaper, books & periodicals
30,000
School events & programmes
60,000
Consultancy charges & audit fee
36,000
Computer lab expenses
30,000
Postage
36,000
Advertisement
60,000
Plantation expense
30,000
Transportation & travelling
24,000
Medical & first aid
30,000
Repair & maintenance
90,000
Misc. Office expense
30,000
Office supplies
30,000
Janitorial expense
60,000
Rental expense
1,200,000
Total

2,220,142

11. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS


?

Punjab Education Foundation


78-B1, Gulberg III, Lahore, Pakistan.
Ph: 042-99268114-7
Fax: 042-99268118

Directorate of Staff Training Development


Wahdat Colony, Wahdat Road
Lahore
Tel # 042 99260108

16
September 2013

Pre-Feasibility Study
(Montessori School)

12. ANNEXURE 1
12.1

Income Statement
Income
Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9

Revenue

5,267,600
11,363,832

6,350,010
13,028,539

7,274,372
14,663,684

1,992,000
3,208,136
1,992,000
3,208,136
3,275,600
8,155,696

2,191,200
3,528,950
2,191,200
3,528,950
4,158,810
9,499,590

2,410,320
3,881,844
2,410,320
3,881,844
4,864,052
10,781,839

2,651,352
4,270,029
2,651,352
4,270,029
5,848,394
11,361,111

1,292,2
80
1,452,0
00384,9
52
33,0
75
39,6
90
66,1
50
33,0
75
39,6
90
33,0
75
99,2
25
39,6
90
26,4
60
66,1
50
33,0
75
33,0
75
33,0
75
33,0
75
99,2
25
66,1
50
216,7
20

1,563,65
9
1,756,92
0 465,79
236,46
5
43,75
8
72,93
0
36,46
5
43,75
8
36,46
5
109,39
643,75
8
29,17
2
72,93
0
36,46
5
36,46
5
36,46
5
36,46
5
109,39
672,93
0
216,72
0

1,892,02
7
2,125,87
3 563,60
940,20
3
48,24
3
80,40
6
40,20
3
48,24
3
40,20
3
120,60
948,24
3
32,16
2
80,40
6
40,20
3
40,20
3
40,20
3
40,20
3
120,60
980,40
6
243,82
3

Faculty Salary
Total cost of sales
Gross Profit

8,499,746
15,631,140

Year 10

9,840,583
16,800,336
2,916,487
4,697,032
2,916,487
4,697,032
6,924,095
12,103,304

General administration & selling expenses


Administration expense
Building rental expense
Utilities - elec, gas, telephone
Internet & communication expense
Teacher training expense
School events & programmes
Computer lab expenses
Consultancy charges & audit fee
Newspaper, books & periodicals
Stationary & printing
Postage
Transportation & travelling
Advertisement
Office supplies
Medical & first aid
Misc. Office expense
Plantation expense
Repair & maintenance
Janitorial expense
Depreciation expense

32

September 2013

540,00
0
1,200,00
0 318,14
230,00
0
36,00
0
60,00
0
30,00
0
36,00
0
30,00
0
90,00
0
36,00
0
24,00
0
60,00
0
30,00
0
30,00
0
30,00
0
30,00
0
90,00
0
60,00
0
216,72
0

1,174,8
00
1,320,0
00349,9
57
31,5
00
37,8
00
63,0
00
31,5
00
37,8
00
31,5
00
94,5
00
37,8
00
25,2
00
63,0
00
31,5
00
31,5
00
31,5
00
31,5
00
94,5
00
63,0
00
216,7
20

1,421,5
08
1,597,2
00423,4
48
34,7
29
41,6
75
69,4
58
34,7
29
41,6
75
34,7
29
104,1
86
41,6
75
27,7
83
69,4
58
34,7
29
34,7
29
34,7
29
34,7
29
104,1
86
69,4
58
216,7
20

1,720,02
5
1,932,61
2 512,37
238,28
8
45,94
6
76,57
7
38,28
8
45,94
6
38,28
8
114,86
545,94
6
30,63
1
76,57
7
38,28
8
38,28
8
38,28
8
38,28
8
114,86
576,57
7
243,82
3

2,081,23
0
2,338,46
1 619,97
042,21
3
50,65
6
84,42
6
42,21
3
50,65
6
42,21
3
126,63
950,65
6
33,77
0
84,42
6
42,21
3
42,21
3
42,21
3
42,21
3
126,63
984,42
6
243,82
3

2,289,353
2,572,307
681,967
44,324
53,188
88,647
44,324
53,188
44,324
132,971
53,188
35,459
88,647
44,324
44,324
44,324
44,324
132,971
88,647
243,823

2,518,2
88
2,829,5
37750,1
63
46,5
40
55,8
48
93,0
80
46,5
40
55,8
48
46,5
40
139,6
20
55,8
48
37,2
32
93,0
80
46,5
40
46,5
40
46,5
40
46,5
40
139,6
20
93,0
80
243,8
23

Pre-Feasibility Study
(Montessori School)
Amortization of pre-operating costs
Subtotal
Operating Income

9,995
9,995
9,995
9,995
9,995
2,986,85
3,808,5
4,129,9
4,481,5
4,866,37
8 288,74
72350,2
03734,1
24
2
1,366,8
2,057,72
2
38
50
71
3

5,304,78
1
2,850,91
5

5,766,07
9
3,733,51
0

6,271,26
8
4,510,57
2

6,824,623
4,536,488

2,850,915

3,733,510

4,510,572

4,536,488

7,430,8
44
4,672,4
60

Gain / (loss) on sale of office equipment


Earnings Before Interest & Taxes

288,742

350,238
2,253,923

734,150

1,366,871

Interest expense on long term debt (Debt facility : Bank 1)


Subtotal
Earnings Before Tax

150,56
150,56
9
138,17
4

132,3
132,3
05
217,9
33

112,5
112,5
26
621,6
23

91,1
91,1
05
1,275,7
66

67,90
67,90
6
2,186,01
7

42,78
42,78
2
2,808,13
3

15,57
15,57
2
3,717,93
8

4,510,572

4,536,488
4,672,460

Tax
NET PROFIT/(LOSS) AFTER TAX

138,17
4

217,9
33

20,1
601,4
76

99,0
1,176,7
53

237,25
1,948,76
4

340,93
2,467,19
4

521,58
3,196,35
0

680,11
3,830,45
8

685,297
3,851,191

712,4
3,959,9
68

33

September 2013

4,672,4
60

12.2

Balance Sheet

Balance Sheet

Assets
Current
assets
Cash & Bank
Accounts receivable
Pre-paid building rent

Fixed assets
Land
- Building/Infrastructure

93,250

Year 0

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Year 7

Year 8

Year 9

Year 10

375,000
400,858
447,199
833,846 1,686,170
3,188,234
5,141,785
7,742,773
11,290,353
14,872,799
18,826,729
119,718 264,037
309,645
358,503 416,826 481,919 554,372
629,369
688,519
737,079
100,000 110,000 121,000
133,100
146,410 161,051
177,156
194,872 214,359
235,795
- Total Current Assets
475,000
630,576
832,236 1,276,591
2,191,083
3,766,111
5,800,859
8,492,017
12,134,081
15,797,113
19,563,808
-

- Machinery & equipment


253,700 228,330 202,960 177,590 152,220
126,850
101,480
76,110 50,740
25,370 - Furniture & fixtures
932,500
839,250
746,000 652,750
559,500 466,250 373,000 279,750 186,500
- Office vehicles - - - Office equipment
490,500 392,400
294,300 196,200
98,100
626,016
500,813 375,610
250,406 125,203 - Total Fixed Assets
1,676,700
1,459,980 1,243,260
1,026,540
809,820 1,219,116
975,293
731,470
487,646
243,823
-

Intangible assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS
Liabilities & Shareholders' Equity

49,977
49,977
2,201,67
7

39,98
2
39,98
2
2,130,53
8

29,98
6
29,98
6
2,105,48
2

19,99
1
19,99
1
2,323,12
2

9,99
5
9,99
5
3,010,89
9

4,985,227

6,776,152
19,563,808

9,223,487

12,621,727

16,040,936

Current liabilities
Accounts payable
Total Current Liabilities
Other liabilities
Deferred tax
Long term debt (Debt facility : Bank 1)
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES

1,981,50
9
1,981,50
9
220,16
220,16
8
2,201,67
7

45,273
45,273

95,07
3
95,07
3

104,58
0
104,58
0

115,03
8
115,03
8

126,542
126,542

139,196
139,196

(444,213)
985,5
71
541,3
58

(753,465)
682,86
7(70,59
8)

(1,114,560)
355,03
8
(759,52
1)

(34,543)
1,761,46
7
1,726,92
4

(89,027)
1,523,16
2
1,434,13
5

(224,285)
1,265,07
7
1,040,79
2

220,16
138,17
4
358,34
1
2,130,53
8

220,16
356,10
6
576,27
4
2,105,48
2

220,16
957,58
2
1,177,75
0
2,323,12
2

220,1
2,134,33
5
2,354,50
3
3,010,89
9

846,18
4,083,09
9
4,929,28
3
4,985,22
7

846,18
6,550,29
4
7,396,47
7
6,776,15
2

153,116
153,116

168,427
168,427

185,270
185,270

203,7
97
203,7
97

(1,522,457)
(1,522,457)

(1,969,985)
(1,969,985)
(2,874,433)

(2,418,810)
(2,418,810)

(2,874,433)
-

846,18
9,746,64
4
10,592,82
89,223,48
7

846,18
13,577,10
2
14,423,28
5
12,621,72
7

846,184
17,428,292
18,274,476
16,040,936

846,1
21,388,2
60
22,234,4
44
19,563,8
08

12.3 Cash Flow Statement


Cash Flow Statement

Operating
activities
Net profit
1,948,764
2,467,194
Add: depreciation expense

Year 0

Year 1

Year 2 Year 3 Year 4 Year 5 Year 6

Year 7

Year 8

Year 9

Year 10

138,174
217,933
601,476
1,176,753
3,196,350
3,830,458
3,851,191
3,959,968
216,720
216,720 216,720
216,720 216,720 243,823 243,823
243,823
243,823 243,823 amortization of pre-operating costs
9,995
9,995
9,995
9,995
9,995
Deferred income tax
(34,543)
(54,483)
(135,258)
(219,929)
(309,252)
(361,095)
(407,897)
(447,529)
(448,825)
(455,623) Accounts receivable
(119,718)
(144,318)
(45,608)
(48,858)
(58,323)
(65,093)
(72,454)
(74,997)
(59,150)
(48,560) Pre-paid building rent
(100,000)
(10,000)
(11,000)
(12,100)
(13,310)
(14,641)
(16,105)
(17,716)
(19,487)
(21,436)
235,795
Accounts payable
45,273
49,800
9,507
10,458
11,504
12,654
13,920
15,312
16,843
18,527
Other liabilities
Cash provided by operations
(100,000) 245,900 284,646
644,732 1,131,830
1,804,768 2,281,379
2,956,027
3,547,580
3,582,446 3,953,930

Financing activities
Debt facility : Bank 1 - principal repayment
Additions to Debt facility : Bank 1
Issuance of shares
Purchase of (treasury) shares
Cash provided by / (used for) financing activities
Investing activities
Capital expenditure
Acquisitions
Cash (used for) / provided by investing activities
NET CASH

September 2013

1,981,50
9 220,16
8
2,201,67
7

(220,042
)
-

(238,30
5) -

(258,08
5) -

(279,50
6) -

(302,704
)
626,016

(327,829
)
-

(355,038)
-

(220,042
)

(238,30
5)

(258,08
5)

(279,50
6)

323,312

(327,829
)

(355,038)

(1,726,677)

(626,016)

(1,726,677)

(626,016)

375,000

25,858

46,341

386,647

852,324

1,502,064

1,953,550

2,600,989

3,547,580

3,582,446

3,953,930

19

September 2013

Pre-Feasibility Study
(Montessori School)

13. USEFUL LINKS


Prime Ministers Office, www.pmo.gov.pk
Small and Medium Enterprise Development Authority, www.smeda.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk First Women Bank Limited (FWBL),
www.fwbl.com.pk Government of Pakistan, www.pakistan.gov.pk Ministry of Industries &
Production, www.moip.gov.pk

Ministry of Education, Training & Standards in Higher Education http://www.moptt


38

September 2013

Pre-Feasibility Study
(Montessori School)

Government of Punjab, www.punjab.gov.pk


Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtoonkhwa, www.khyberpakhtunkhwa.gov.pk
Government of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan,
www.gilgitbaltistan.gov.pk Government of Azad Jamu Kashmir, www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Security Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers and Commerce and Industries (FPCCI)
www.fpcci.com.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
All Pakistan Private Schools Welfare Association (APPSWA)
www.appswa.com.pk

39

September 2013

Pre-Feasibility Study
(Montessori School)

14. KEY ASSUMPTIONS


Table 15 - Operating Assumptions
Operational Days Per Month
Months Operational

- Capacity Utilization Assumptions


Capacity UtilizationTable
(First 16
Year)
First Year Student Enrollment
Student Drop-out Ratio
40

September 2013

22
12

50%
85
5%

Pre-Feasibility Study
(Montessori School)

Students addition in Year - 2


Students addition in Year 3
and onwards

25 Nos.
10 Nos.

Electricity Growth Rate Table 17 - Economic Assumptions


Salary Growth Rate
Rent Growth Rate
Student Fee Growth Rate
Admission Fee Growth Rate
Misc. Expense Growth Rate
Table 18 - Expense Assumptions
Office Expense (Stationary,
Entertainment etc.)
Communication Expense
Advertisement Expense
Teachers Training Expense
Repair & Maintenance Expense

41

September 2013

10%
10%
10%
7.5%
5%
5%
Rs. 90,000 per
annum
Rs. 30,000 per
annum
Rs.
60,000 per
annum
Rs.
36,000 per
annum
Rs.
90,000 per
annum