Project Synopsis

1 Name of Project : Ratna Batika

2 Location : Ward no-27, Archale Pokhara Nagarpalika
3 Type of Business : Service
4 Main Share Holder: Mr. Pramod Dev Poudel
( Rs. in '000)
5 Total Project Cost : 7823
Fixed Capital: 6810
Working Capital: 1013
6 Loan : 3000
Fixed Capital: 2200
Working Capital: 800
7 Equity Finance : 4823
Fixed Capital: 4610
Working Capital: 213

8 Annual Sales Revenue : 9233

9 Annual Operating Cost : 6337
10 Net Profit :(1st Year) 1919
11 Break Even Point :
Normal 41%
Cash 26%

12 Return on Investment (5 year Average) : 27%

13 Return on Equity (5 year Average): 32%
14 Internal Rate of Return (up to 4th year of operation) 52%
15 NPV @ 12% (up to 6th year of operation) Rs. 7341
16 Average Debt/Equity Ratio: 38%

17 Pay Payback Period:

Normal 2 Years around
Cash 1 Years around
18 Average Net Profit Margin 17%
19 Average Gross Profit Margin 28%
 Annex 1
Rs.in '000
INVESTMENT IN FIXED ASSETS 6,810
I. Land -

II. Building, Other Civil Constructions and Logistics 5,500

III. Machineries and Equipmens 10

IV. Furniture, Fixture and Office Equipments 300

V. Preliminary / preoprative Expenses 1,000 100

Preliminary Expenses 1,000

SOURCES OF FINANCING

Total Fixed Assets Investment 6,810

Net Fixed assets investment 6,810
Term Loan 2,200
Net Loan 3,000
Equity Participation 4,610
Loan Portion on Total Fixed asset 32%
 Annex 1.1
(Rs. In 000)
INVESTMENT IN THE COMPLEX (Details)
5,910
I. Land 7.5 Ropani -

II. Building , Other civil Constructions and Logistics 5,500

Building , Other civil Constructions and Logistics 5,000
Contingencies 10% 500

III. Machineries and Equipments 10

IV. Furniture, Fixture and Office Equipments 300

V. Preliminary/Preoperative Expenses 100

Preoperative Expenses 50
Research/Analysis /Development Cost 25
Legal/Consultancy fee 25
Note:
II. Building, Other Civil Constructions and Logistics
Building 5,500
5,500

CALCULATION OF DEPRECIATION
Annex 2
Method WDV
Calculation of Depreciation Year
Rate Cost 1 2 3 4 5
II. Buildings… 10% 5500 550 495 446 401 361
III. Machineries
Machineriesand
andEquipmens
Equipments 15% 10 2 1 1 1 1
IV. Furniture, Fixture and Office Equipments 20% 300 60 48 38 31 25
Total 5510 613 546 488 437 391
Cumulative Amount 613 1159 1647 2083 2475
Assets Summary Capitalize
Value
Buildings… 5500 4950 4455 4010 3609 3248
Machineries and Equipments 10 9 7 6 5 4
Furniture, Fixture & Office Equipments 300 240 192 154 123 98

5810 5199 4654 4169 3737 3350

 Annex 3
ESTIMATION OF PRESENT WORKING CAPITAL REQUIREMENT
Based on the Occupancy
CURRENT ASSETS 1113
Working Days 365
Rs. In '000s'
MDR COT

I. Inverntories* 1035
Consumable for Hotel upkeep 90 4 63
Food and Beverage 90 4 972

II.Account Receivable 1 365 17 17

III.Cash and Bank Balances-to meet exp of 30 days 12 30 62 62
1113

CURRENT LIABILITIES 100

I. Account Payables** 30 12 100

Working Capital 1013 1013

Short term loan from financial institutions 79% 800
Equity Share Capital 21% 213
*Worked out at direct cost excluding interest on loan fund.
**Worked out at cash expenses excluding interest on loan fund.
 Annex 4
ESTIMATION OF VARIABLE EXPENSES

Variable Expenses 4298

1 Utilities (Fuel, elctricity etc) 60
2 Repair & Maintenance 40
a Land 0.5% 0
b Building 1% 48
c Machineries & Equipments 2% 0
d Furniture 2% 5
3 Raw Materials 4198

3 Raw Materials

1. Hotel upkeep for 7 rooms @ 10% 7*100*365 256

2. Restaurant and bar for 5 hotel guest @ 60% 5*0.6*2000*365 2190
3. Restaurant and bar for 4 outside guest @ 60% 4*0.6*2000*365 1752
Total Rs. In '000 4198

Annex 5
ESTIMATION OF FIXED ADM EXPENSES

(At 100% Capacity Utilization)

Rs. In '000
FIXED COST 2040

I. Depreciation 613
II. Amortizaton of preoperative expenses 100
III. Insurance 51
IV. Interest on long term loan 264
V. Office Overhead 100
VI. Electricity and Water 54
VII. Salaries 858
 Annex 5.1
ESTIMATION OF FIXED ADM EXPENSES
(Detail)
Rs. In 000
A. FIXED COST 2040

I. Depreciation 613

II. Amortization of Preoperative Expenses @ 10% 100

III. Insurance
Building 0.9% 5500 48 51
Machineries 1.6% 10 0
Furniture 0.9% 300 3

IV. Office Overheads 100

i. Communication 24
ii. Stationery & Printing 10
iii. Legal & Auditing 20
iv. Local Transportation 25
v. Publicity and Promotion 20
vi. Miscellaneous 1% 1

V. Salaries 858
i. Indirect labor 264000
ii. Direct labor 594000

VI. Interest on Long Term Loan @ 12% 264

VII. Electricity and water 54

1 Electricity charge 150 KW @ Rs. 200/KW/Month 30
2 Water charge @ 2000/month 24

A. Indirect Labor No. of employes 1

Description No. Amount Amount/month

1 Manager 1 20000 20000

Allowances & benefits 10% extra 2000
G. Total 22000

B. Direct Labor No. of employes 3

Description No. Amount Amount/month

1 Cooks 1 15000 15000

2 Waiters 2 15000 30000
Allowances & benefits 10% extra 4500
G. Total 49500
 Rs. In '000
Sales Revenue@ 60% Occupency 9,233

1. Restaurent & Bar 5,400

2. Hotel Rooms 3,833

Annex 6.1
ESTIMATE OF SALES REVENUE
Rs. In '(000)
1. Fixed income from rented space at 100% rated capacily 5,400
Quantity M.Income Y. income
Building
1. Restaurant & Hall 1 450 5,400

2. Hotel rooms at 60% Capacity of operation 3,833

Hotel Rooms (7 rooms) 3,833

G.Total 9,233
 Annex 7
STATEMENT OF INCOME AND EXPENDITURE
Rs. In 000
Target Minimum Achievement
Year 1 2 3 4 5
Sales increment 60% 60% 60% 60% 60%

A INCOME
Gross Income 9233 9694 10179 10688 11222

B EXPENDITURES
Fixed Operating Cost 2040 2182 2335 2499 2674
Vari. Operating Cost 4298 4512 4738 4975 5224

C OPERATING PROFIT 2895 2999 3106 3214 3325

Depreciation 613 546 488 437 391
Amortization 100 100 100 100 100

D EBIT 2183 2353 2518 2678 2834

Interest on Long term Loan 264 222 176 124 65
Interest on Short Term Loan 0 0 0 0 0
E EAI 1919 2131 2342 2554 2768
Bonus to employee 5% of PBT 0 0 0 0 0

F EARNING BEFORE TAX 1919 2131 2342 2554 2768

INCOME TAX @ 25% 0 533 585 638 692

G NET PROFIT AFTER TAX 1919 1598 1756 1915 2076

H DIVIDENDS 0 0 0 0

I ACCUMULATIVE PROFIT 1919 3517 5273 7189 9265

(Retained Earnings)
Assumption
Inflation on revenue and variable expenses will be on same ratio.
Inflation on fixed expenses will be on 7% per annum
 Annex - 8
CASH FLOW PROJECTIONS

(Nrs. '000)
Year 0 1 2 3 4 5
A. CASH INFLOW 7823 2895 5284 7247 9266 11342
1 Opening Balance - 2285 4141 6051 8017
2 Equity Capital for:
a Fixed Assets 4610 0 0 0 0 0
b Working Capital 213 0 0 0 0
Additional loan from promoter
3 Loan Fund
a Long Term Loan 2200 0 0 0 0 0
b Short Term Looan 800 0 0 0 0
4 Retained Earnings
a Operational Profit 2895 2999 3106 3214 3325

B. CASH OUTFLOW 7823 610 1143 1196 1249 1302

Capital Expenditure 7823
Repayment of Long Term loan - 346 388 434 487 545
Interest on Long Term Loan - 264 222 176 124 65
Interest on Short Term Loan - 0 0 0 0 0
Bonus to employee - 0 0 0 0 0
Corporate Tax Payment - 0 533 585 638 692
Short Term Loan Repayment - 0 0 0 0 0
Divident payment - 0 0 0 0 0
TOTAL CASH BALANCE - 2285 4141 6051 8017 10039
Accumulated Cash Flow -7823 2285 6427 12478 20495 30534
-7823 2285 6427 12478 20495 30534
 Annex - 9
PROJECTED BALANCESHEET

Rs. In "000s"
Year 1 2 3 4 5

A ASSETS
1 Net Fixed Assets 5198 4651 4163 3727 3335
a Fixed Assets (land) 0 0 0 0 0
Fixed Assets 5810 5198 4651 4163 3727
b Depreciation 613 546 488 437 391

2 Current Assets 1113 1113 1113 1113 1113

a Inventories 1035 1035 1035 1035 1035
b Account Receivable 17 17 17 17 17
c Advances tax and others 62 62 62 62 62

3 Cash and Bank Balances 2285 4141 6051 8017 10039

(Available for futher deployments)
4 Preliminary Expenses to be w/off 900 800 700 600 500
TOTAL 9496 10706 12028 13457 14988

LIABILITIES
1 Owners's Equity 4823 4823 4823 4823 4823
a On Fixed Assets 4610 4610 4610 4610 4610
b On Working Capital 213 213 213 213 213
Additional Capital(to be refunded)

2 Loan Fund 2654 2266 1831 1345 800

a Long Term Loan 1854 1466 1031 545 0
b Short Term Loan 800 800 800 800 800

3 Current Liabilities 100 100 100 100 100

a Sundry Crediters 100 100 100 100 100
b Dividend Proposed 0 0 0 0

4 RETAINED EARNINGS 1919 3517 5273 7189 9265

TOTAL 9496 10706 12028 13457 14988
Rounding Errors 0 0 0 0 0
 Annex- 10
CALCULATION OF BREAK-EVEN POINT

Amount in "000s"

Sales Revenue 9233

Annual Operating Expenses
Total Cash Fixed Expenses 1327
Total Fixed Expenses including dep. 2040

Variable Expenses 4298

Raw Material Cost 4198
Other Variable Expenses 4298

A. Normal Break-Even Point 41%

B. Cash Break-Even Point 26%
 Simple Pay Back Period
Annex - 11

Year 0 1 2 3 4 5
Net Profit 6810 1919 1598 1756 1915 2076
Depreciation+Amortization 713 646 588 537 491
Profit before dep+amor 2631 2244 2344 2452 2568
Cumulative Profit -6810 2631 4876 7220 9672 12239
Loan 2200
3 10
Years Month
Simple Pay Back Period= 2 10 3.83 Year
Cash Payback Period = 1 0 1.00 Year

Repayment Schedule
Annex -12
Long Term Loan: 2200
Rate of Interest: 12%
Capital Recovery Factor: 0.28
Time Period: 5
Installment Amount: 610
Total Interest 852

Year 1 2 3 4 5
Installment 610 610 610 610 610
Principal 346 388 434 487 545
Interest 264 222 176 124 65
Loan Outstanding 1854 1466 1031 545 0
 FINANCIAL RATIOS
Annex - 13

Year 1 2 3 4 5
A Debt Service Coverage (A/B) 10.97 13.48 17.66 25.97 50.85

Gross Operating Profit-A 2895 2999 3106 3214 3325

Maturity and Interest-B 264 222 176 124 65
Interest Coverage Ratio 10.97 13.48 17.66 25.97 50.85

B Profitability Ratios
Return on Equity (ROE) 40% 33% 36% 40% 43%
Return on Investment (ROI) 28% 30% 32% 34% 36%
Net Profit Margin 20.8% 17.3% 19.0% 20.7% 22.5%
Gross Profit Margin 31% 32% 34% 35% 36%

FINANCIAL RATIOS
Annex - 13

Year 1 2 3 4 5
A Debt Service Coverage (A/B) 10.97 13.48 17.66 25.97 50.85

Gross Operating Profit-A 2895 2999 3106 3214 3325

Maturity and Interest-B 264 222 176 124 65
Interest Coverage Ratio 10.97 13.48 17.66 25.97 50.85

B Profitability Ratios
Return on Equity (ROE) 40% 33% 36% 40% 43%
Return on Investment (ROI) 28% 30% 32% 34% 36%
Net Profit Margin 20.8% 17.3% 19.0% 20.7% 22.5%
Gross Profit Margin 31% 32% 34% 35% 36%