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TERM PAPER ON

ADVANCED FINANCIAL
MANAGEMENT

Submitted by:
TEAM 11
SUSHOBHAN DAS - 16BSP2659KK
TONMOY DEY- 16BSP2731KK
URVASHI- 16BSP3424KK
VATSAL GOHIL- 16BSP2811KK
YASH EHELANI- 16BSP2928KK
YUDHAJIT MUKHERJEE- 16BSP2951KK

 India’s high rates of diabetes and hypertension. Also. compared to eight percent globally. The major contributing causes to CKD are diabetes and high blood pressure among others.  A kidney transplant is a permanent solution.  Services are fragmented and largely concentrated in big cities.  The cost of supporting the treatment of patients undergoing dialysis and suffering from ESRD is very high in the order of Rs 10.  Hypertension is observed in 20-40 percent adults in urban areas and 12-17 percent adults in rural areas.2 million in 2000 and is expected to increase to 213. the number suffering hypertension was estimated to be 118. Moreover. This makes dialysis a critical alternative for people living with CKD. ABSTRACT Dialysis is essential for patients suffering from “End Stage Renal Disease (ESRD)” and it is observed from preliminary studies that the prevalence of Chronic Kidney Disease (CKD) the precursor to ESRD is 0.000 Indians newly diagnosed with CKD each year die within months due to lack of treatment.000 to Rs 20. and poor infrastructure in the country.2 million in 2025.5 per day.000 per month. but a 2004 study has projected the number of diabetes cases in India as 34.7 million already. these diseases are increasing at an alarming rate across the country. more than 90 percent of the 230.  India is the world capital for diabetes cases with 19. with 37% of the country’s population below the international poverty line of USD1. . low kidney donation rates.3 million cases in 1995 to a projected increase to 57. Other major factors which make this sector prepared for new ventures would be  Demand for dialysis is growing at a rate of 31 percent in India. kidney transplants can fail.5 million in 2025. high prices and the need for frequent treatments make dialysis a financial burden for many patients and unaffordable for others.  Despite the importance of dialysis. as well as increased awareness of CKD and treatment options. but availability is extremely limited due to stringent regulation.8% in India. it is impossible to support such high treatment costs.

NPV method is a process of calculating present value of project cash flows.40000 per month.50.  In Kolkata one technician would be required for 3 machines at a salary of about 25000/month. the rate of debt would be around 14%.  Reception. Since our plan is to setup six dialysis machines. maintenance and electricity cost would be around Rs. we could attend to around 18 patients. 35000 per month.000. We plan to keep the rates at mid-range of Rs.  A Staff nurse would be required for every two patients and her salary would be about 15000/month. 60000 per month for 1 hour per day retainer- ship. and finding out the net present value by subtracting the initial investment from the present value of cashflows .1200 to Rs. The major costs involved would be:  A Basic Dialysis machine from a reputed company would cost Rs. The machine is expected to have a life of seven years. using the cost of capital as discount rate. net present value (NPV) and internal rate of return (IRR).  A Nephrologist would also be required on retainer ship for supervision and he would charge about Rs.  Single dialyzer dialysis would costRs.3000 per session.5. So to calculate feasibility of the project weuse different capital budgeting tools such as pay back period (PB). 1000 for Consumables. Revenue It takes about three to four hours to complete one dialysis. In the private market the rates of dialysis varies from Rs.  Renting would cost about Rs. The required funds would be borrowed from banks.2000.Project Overview The basic plan of this project is to set-up a dialysis center with 6 dialysis machines in an area lacking dialysis centersand having enough target customers.

at which the NPV associated with a project equals to zero. Ct = net cash inflow during the period t Co = total initial investment costs r = discount rate. Pamphlets can be distributed and banners can be hung around.•A project can be accepted if its NPV is positive Where. Online marketing would be another way that could boost awareness. and t = number of time periods  Payback period is the time duration required to recoup the investment committed to a project  IRR of a project/investment is defined as the rate of discount at which the present value of cash inflows and present value of cash outflows are equal  IRR can be restated as the rate of discount. MARKETING Target customers would be patients suffering from “End Stage Renal Disease (ESRD)” who can either afford the services or have medical insurance or claims from the government. . Marketing would be done at the hospitals around the region.

VATSAL GOHIL 4TH WEEK Modelling & Investment Viability Methodology Primary data would be collected from  Patients suffering from ESRD: costs incurred. suggestions.  Finding the major competitions in the market. different challenges faced by them. Cash-flow Projections SUSHOBHAN MID OF 2ND DAS WEEK RD 6. The Usefulness & Quality of URVASHI 2ND WEEK the Business Plan 3.  Growth rate of the industry. Data Sufficiency . problems faced by them. The Marketability of the YUDHAJIT MID OF 2ND Proposed Venture MUKHERJEE WEEK 5. Financial Analysis. The Usefulness and Quality YASH EHELANI 2ND WEEK of the Business Model 4.PLAN OF WORK SL NO. basis of TONMOY DEY 3 WEEK Assumptions & Reasoning 7. Secondary data would be collected for  Finding the macroeconomic conditions.  Currently running dialysis center: Costs involved. ACTIVITY DONE BY DEADLINE 1. .  Compare various models in the market. Data Collection YUDHAJIT END OF 1ST MUKHERJEE WEEK 2. government regulations. how they heard(learnt) about their current dialysis center.

due to lack of financial resources. Excess salt.8% in India. By balancing the fluid levels in the body the kidneys assist in maintaining the chemical composition of the body. Kidneys produce Erythropoietin. 4. this hormone simulates the production of RBC cells in the body. Excess water in the body results in high blood pressure and swelling of body parts leading to failure. lack of trained manpower & infrastructure leads to severe strain on existing health policies in the light of the increasing burden of CKD. Removes the waste and water from the blood stream a. In India. Assist in maintaining the blood pressure a. Balancing the chemical composition of the body a. Chemical imbalance in the system disrupts the normal metabolism resulting in multiple diseases. 3. The burden of Chronic Kidney Disease (CKD) is increasing in alarming proportion all over the world. Kidneys are probably the only vital organs which can be realistically replaced by artificial means.2 million in 2000 and is expected to increase to 213. reduction of RBC count results in anemia and ultimately weakening of the body. the number suffering hypertension was estimated to be 118. Hypertension is observed in 20-40 percent adults in urban areas and 12-17 percent adults in rural areas. Assist in producing Red Blood Cells (RBC) a.5 million in 2025. these hormones regulate the salt and fluid content of the . and other chemicals are filtered by the blood to maintain the appropriate balance required for the body. these diseases are increasing at an alarming rate across the country.INTRODUCTION Dialysis is essential for patients suffering from “End Stage Renal Disease (ESRD)” and it is observed from preliminary studies that the prevalence of Chronic Kidney Disease (CKD) the precursor to ESRD is 0. Maintenance dialysis is a well-recognized modality of treating patients having end stage renal disease. The major contributing causes to CKD are diabetes and high blood pressure among others. The kidneys release hormones such as renin and angiotensin. Why Dialysis? The human kidney performs the following functions. 1. these chemicals and salts are along with the excess water is removed from the body in the form of urine by the kidneys. RBC cells act as oxygen carriers in the blood stream. 2.

35000 per month. Kidneys produce a hormone called Calcitriol.5. . failure of kidneys causes reduces calcitriol production and leads to renal bone disease PRIMARY COSTS  A Basic Dialysis machine from a reputed company would cost Rs.body and assist in contracting and relaxing the blood vessels that manage the blood pressure.000. 5. 1000 for Consumables. 60000 per month for 1 hour per day retainer- ship. Assist bone development a.  Single dialyzer dialysis would costRs.  In Kolkata one technician would be required for 3 machines at a salary of about 25000/month. Failure of kidneys increases blood pressure. resulting in contraction of blood pressure leading to high blood pressure. which strains the heart.  A Staff nurse would be required for every two patients and her salary would be about 15000/month.50.  A Nephrologist would also be required on retainer ship for supervision and he would charge about Rs. maintenance and electricity cost would be around Rs. this maintains the correct level of calcium and phosphate in the blood and bones.40000 per month.  Reception.  Renting would cost about Rs.

45000 per month Salary of receptionist= Rs.1000 per dialysis Approximate Number of patients that can be administered in a day in six machines = 18 Number of days the facility will be available in a month= 25 days Operating cost for first year =12*(Technicians+Nephrologist+Nurses+Receptionist+Electricity+Rent)+Repair+ Marketing+ Consumables =12*(50000+60000+45000+10000+25000+40000)+0+100000+(1000*18*25*12) =12*230000+100000+5400000 =Rs.000. Revenue per month= Rs.00. 100000 per year Repair and maintenance cost =Rs.60000 per month Salary of three nurses=3*Rs. rent and electricity increase at 5% per year Cost of Marketing=Rs.1.25000= Rs. Revenue in a year= Rs.00.15000=Rs. 100000 from 3rd year as first 2 years are covered under warranty =Rs.60.000. .08.Financial projections Operating Costs Salary of two technicians= 2 *Rs.000 per month Rent=Rs.2000*18*25= Rs.900000*12=Rs.82. 25.2000 Approximate Number of patients that can be administered in a day in six machines = 18 Number of days the facility will be available in a month= 25 days Therefore.40000 Costs of salaries.10000 per month Cost of Electricity and maintenance =Rs.000 Revenue Charge of one dialysis =Rs.9. 200000 for 6th and 7th year Cost of consumables=Rs.50000 per month Charge of Nephrologist=Rs.

30000 .50. Machine life is approximately seven years and scrap value is Rs.000.5.Initial Cash Outflows A decent dialysis machine from a reputed company would cost Rs.

6750 1456042.77.75 0.75 6 9222537.73 Payback period  3300000-2540000=760000  (760000/2402000)*12=3.09 7 1401336 0.8772 2228088 2 2402000 0.25 10800000 1845202.5194 958398.13 Year Cash Flows in Rs. payback period= 1 year 4 months NPV= 8877714.2697 247674.5921 1187133.73-3300000= Rs.89 7 9398664 10800000 1401336 8 9383597.714.3506 -702461. 1 2540000 0.Year Initial Cost Operating Cost Revenues Cash flows 1 3300000 8260000 10800000 2540000 2 8398000 10800000 2402000 3 8642900 10800000 2157100 4 8795045 10800000 2004955 5 8954797.17 9 1222223 0.50 4 2004955 0.57 10 918334.4556 718692.86 8 -2003597.11 10800000 157762.17 0.13 0.71 Total 8877714.89 0.87 10800000 918334.3996 559973.n) PV of Cash Flows in Rs.17 9 9577777 10800000 1222223 10 9881665.796~ 4 months Therefore.3075 375833.31 6 157762. PVIF(14. .7695 1848339 3 2157100 0.73 We see that NPV is quite high therefore investment is feasible.17+3600000 10800000+180000 -2003597.86 5 1845202.55.

6 per cent in 2018 amid strong private consumption" .000 Indians newly diagnosed with CKD each year die within months due to lack of treatment.  Despite the importance of dialysis.7 per cent in 2017 and 7. Growth is projected to reach 7. Marketing Strategies Positioning 1) Caters to Dialysis Patients 2) Who don’t want to go to hospital & wants Value Added Service 3) Those who prefer a Stand Alone Center with modern infrastructures & facilities Marketing Mix 1) Serenity Package ( Dialysis + Spa. Massage) 2) Bliss Package ( Dialysis + Game Room/Movie Room) 3) Soul Package (Dialysis + Health Gourmet Meals) Target Market & Segmentation 1) Demographics – Patients with Chronic Kidney Disease need Dialysis 2) Lifestyle – Lives a social life & does not want to get bogged down in hospitals 3) Always looks at vale for money . as well as increased awareness of CKD and treatment options.Growth Rate  Demand for dialysis is growing at a rate of 31 percent in India. Facial. more than 90 percent of the 230.So we can say that the macroeconomic conditions are quite favorable.  India’s high rates of diabetes and hypertension. compared to eight percent globally. Macroeconomic Conditions According to IMF World Economic Outlook Update "India has positioned itself as one of the most dynamic emerging economies.

With this project. . we see that there is also room for some tie up with NGO’s to provide low cost dialysis. We see that the NPV is quite high and payback period is low. we see that the investment is feasible and we should go ahead with starting the project. Marketing Techniques 1) Print Ads 2) Telecommunications 3) Word of Mouth & Buzz Marketing Strategy 4) Event Sponsorships 5) E-Marketing INFERENCE From the above projections.