PREAMBLE

There are two methods that I think should be considered when undertaking a startup venture to
set up a Psycho-Social Rehabilitation Center. The need for this has been discussed in my
executive summary which was already circulated to you a while back.

RETREAT

The most profitable would be a state of the art retreat and spa which is targeted towards up
market Sri Lankan Expatriates and foreigners who are looking for a place to chill out and relax on
their generally 2 to 3 week annual vacations when they come to Sri Lanka and the Psycho-Social
Rehabilitation be an additional extension of the retreat. Based on the theme that is now
emerging as one of the most sought out activities is wellness retreats that can be classified as an
environment where the inner harmony that guides everything we do is nurtured.
If the Retreat is designed with holistic architecture and treads as lightly as possible upon the land
to let natures rhythms lull you back to life. Wellness programs in Ayurveda, detox, yoga and spa
combine on site pampering and rejuvenation with enlightened learning for healthy living long
after you leave these naturally rejuvenating surroundings.

Both can be accommodated and of course the charges would be in keeping with concepts that
are scenic and fashioned after similar such entities in the Region. A percentage of profits from
this venture could subsidize the Psycho-Social Rehabilitation center while the balance can be the
ROI and profits on the capital invested. The actual return cannot be estimated at this time and
depends on overheads which will be expensive and the cost of building rooms and a scenic
surrounding to maintain international standards and comply with ecological standards. Once
completed, which may take around 3 to 5 months and a gestation period of at least a year or
more in operation. Depending on the total investment the profit component can be repatriated if
the Articles of Association are specifically written to cater to this and the Organization complies
with the local regulatory requirements approved by the Board of Investment in Sri Lanka. The
location is not more than 20 minutes from the Colombo Airport Highway exit and depending on
the facilities available and the design of the Retreat services offered (Meals and Ambience
should be Excellent) could be charged upwards of US $ 500 per head. Such a retreat should be
located on a land extent of at least 25 acres (43,560 square feet) and should comprise of a
minimum of 400 rooms. The Retreat has to be marketed well specially through an Agent
network based in the US, Canada and European Countries. The only area that is a 20 minute
drive from the Airport can be found in Uswetakeiyawa, and where land in excess of 20 acres is
still available. This location is just a 30 minute drive to the main town Elakanda and around 45
minutes to the City of Wattala. Banks, Supermarkets and a Hospital are conveniently located in
this area. The financial capital Colombo (depending on traffic) is an hour and half drive from
here. An acre of land (160 perches) will cost a minimum of US $ 500,000/- thus at present
market prices 25 acres of land will cost approximately US $ 12,500,000/-. Design of the retreat
by an Architect, Building Costs and the time to complete with an expected ROI has to be
researched and submitted to you if such a venture interests you. The only guideline I have if
marketed properly and we have full occupancy year round (2 guests per room) US $ 1000 per
day one can expect a turnover of US $ 400,000/- a day. On this option we have to consult an
leisure expert to estimate operational overheads. The Government of Sri Lanka is openly
promoting tourism so such a venture will be viewed favorably. The investment can be partially
funded as an initial capital influx and a bank loan and tax concessions can be easily obtained if a
proper project proposal, done by a professional is available. Initial research and getting
professionals involved to prepare the necessary documentation, finding a suitable property and
other sundry startup work will cost around US $ 3,000/-.

The second would be only the Psycho-Social Rehabilitation Center for which the investment is
substantially lower and I have prepared an estimate if this is the way you would like to start a
project and invest in Sri Lanka. Note that these are just estimates and expect a + or – 10% on
the actuals.

To start a Psycho-Social Rehabilitation Center would require a building with at least enough
rooms with adequate toilets and sufficient garden space to provide outdoor activities for
Residents of those with Mental Health Illness. The garden space must be large enough to add
additional rooms, have a kitchen a dining area for 35 individuals. I have contacts with one of Sri
Lanka’s leading Psychiatrist who is also keen on involving himself in such a project. Of course he
is keen that it should be a non-profit but I am sure that a compromise can be reached so that you
can after some time sell of your interest and a formula can be found for you to be paid an
interest on your investment. This will essentially be a Non-Governmental-Organization (NGO)
registered under the Public Security Ordinance obligating compulsory registration of NGOs
which have a turnover of Rs. 50,000/- (US $ 500/-) and above. I have draft articles of
Association for such an NGO.

There has to be enough space in the premises to construct a Reception area and Office and Staff
quarters and additional toilet facilities and rooms. Rooms will be shared by two Residents
totaling 25 and 5 staff so at minimum we need an up stare house with at least 6 to 7 bedrooms
allowing for building toilets and additional rooms to finally cater to 30 individuals or in the
alternative two adjacent properties. There has to be provision made for a fully functional large
kitchen with minor staff toilet facilities and a dining area which will serve both Residents and
staff. The land should be landscaped so that the environment caters aesthetically both for the
Residents and creates a good first impression when prospective clients visit the place. There
should be a method of separating the facility to cater to Male, Female and special needs
individuals and controlled temperature hot water is a necessity. Meals provided should be of the
highest standard. Ideally a house in a 40 perch parcel of land on rent would be cost effective
initially with a view to purchase a property after the Center is established and has acquired a
reputation for excellent care giving. Monthly Charges per Resident should be Rs. 40,000/- and
there has to be a feel good factor so that the Guardian of the Resident feels they are getting
value for money. All other expenses apart from board and lodging, such as medication, Doctors
visits, transportation and celebration of Birthdays of Residents will have to be charged for
separately according to the Resident’s Guardians wishes. A vehicle owned by the Center (even
what is commonly called Trishaw) is desirable.
Rents in the area I mentioned earlier vary from Rs. 40,000/- to 80,000/- (US $ 500/- at the
upper end) and the usual practice is a 6 month deposit. I have kept a 40,000/- spread. Of course
finding a land owner willing to allow his or her property to be used as Rehabilitation Center is
the only milestone but an increased rent would be one method of overcoming this. I have also
advertised for a land with a house and enough garden space to allow for adding rooms to house
30 individuals or a 30 to 40 perch land in the same area for outright purchase. But that would
require an upfront investment for a 40 perch land would be US $ 125,000/- and depending on
the Contractor the buildings can be finished by 3 to 4 months. I am in touch with an architect
and construction engineer who will give me a price estimate tomorrow for the building which
will be completely green in keeping with ecologically practices, which I will forward to you. In
the meanwhile I have just made a simple income/expenses statement so that you can get a
general idea of what running an establishment like this would entail based on the financials of
the institute I presently live in. The costs are in Rs. in brackets where I have stated individual
costs with statutory pension and at present tax deductibles are not applicable at these wage
rates. I have made provision for other incidental expenses such as outdoor medical, pay in lieu of
leave, and travelling for staff and monthly entertainment for Residents such as Movies, Picnics
and general day out of the institute at least once a month.

Staff Requirements

Monthly

 Psychiatrist visit. (40,000/-)

 Qualified visiting Psychologist to plan and design therapeutic programs for the
daily routine of the Residents taking into account individual and collective needs
of the Residents and review effectiveness of activities.(25,000/-)
 Accountant (20,000/-)

In-House-Staff

 Supervisor (me) IT, Correspondence, Daily Review, Report Preparation,

Computerized Accounts etc. (30,000/-)
 Matron (40,000)
 Two Therapist/Counsellors for 25 Residents(40,000 + 8,000)
 Security gate keeper two shifts (Day/Night) (20,000)

Daily Staff

 One Male staff member for Male Residents and One Female staff member for
Female Residents for the purpose of taking care of daily and routine requirements
of Residents (these are junior positions and those who have just completed a
diploma in Counselling or Psychology will suffice) (20,000 + 4,000)
 Receptionist cum Office Assistant (15,000 + 3,000)
 Accounts Clerk (12,000 + 2,400)
 Cook and two Assistants (15,000+16,000 + 6,200)
  One Cleaning and Laundry Lady(12,000 +2,400)
 Gardner(10,000)

TOTAL WAGES Rs. 204,400/-

MONTHLY INCOME 25 RESIDENTS @ 40,000 a month Rs. 1,000,000/- US $ 6250/-

Less Monthly Expenses

Rent Rs. 80,000/-

Meals Rs. 232,500/-
Wages Rs. 204,400/-
Electricity Rs. 25,000/-
Water Rs. 25,000/-
Telephone Rs. 20,000/-
Wi-Fi Rs. 5,000/-
Gas Rs. 21,000/-
Misc. Rs. 100,000/-
TOTAL Rs. 712,900/- US $ approx.. 4,456/- per month

SURPLESS Rs. 287,100/- US $ approx. US $ 1,795 per month

Note that the largest slice of expenses are for meals and wages and the US $ is calculated at Sri
Lankan Rs. 160/- it fluctuates depending on the local currency market

There will be at least a US $ 750/- investment initially of to get the land brokers and other
parties to do the running around and photograph and send us available properties for sale/lease
or rent so that we may make a choice. Once we have selected a property the actual costs will be
submitted for your approval. The only items I have not costed in this are items such as furniture
and fittings, Kitchen Equipment and other requirements which will have to be purchased once
the premises are ready for moving and we are ready with staff and geared to admit Residents.
The reason I omitted this was there are many seasonal and off season offers and some of these
can be bought for bargain prices depending on the Vendor or Brand one chooses. Now to
answer your issues of your earlier email to me.

1. This is a start up
2. The initial costs of getting information and finding suitable properties which are lien free and
do the necessary groundwork such as required permits if any and check if the soil conditions are
good and the land does not flood. In the case of option 1 of what I have stated in the Preamble
US $ 3,000/-in the case of option 2 US $ 750/-. (I am forwarding this to my Psychiatrist who will
be the most important person to this venture becoming a success) This will be required by end
August once you have decided which of my concepts of the preamble suits you.
3. It is preferred that you visit the Country once suitable properties are selected which would be
in late, September this year and also as you will be a shareholder you have to be in Sri Lanka.
4. The Company will be registered as a new NGO or a Retreat with foreign Investment and the
services of a Registered Company Secretary are required. Their charges vary from US $ 200/- to
500/- depending on whom we choose.
5. Option one allows for a 10 year tax holiday and profit repatriation whereas in option two it
can be overcome
6. It is totally up to you determine what extent you want to be involved. In any case all monthly
accounts will be sent to you and you will be always kept updated with a monthly status report.
7. Again this depends on your choice of an up market retreat or a psycho-social Rehabilitation
Center. I will have a better fix on the initial investment once the property is finalized and if we
are to build or rent with renovations which I should be able to inform you tomorrow. But in my
estimate the land cost per acre in option 1 would cost at a minimum US $ 500,000/- and a 25
acre parcel would be in the region of US $ 12,500,000/-. The cost of building 400 rooms and all
the other luxurious surroundings and facilities depending on the actual acreage we intend to
develop to justify a charge in excess of US $ 500/- per day per head has to be estimated. This
would be a sizeable investment. Finally I will be costing at least 6 to 8 months of operational
expenses on the project decided upon so that we don’t end up with cash flow problems.

Trust this gives you a better idea of what I am proposing and await your response with anything
you need to clarify or require further details.

Regards,
Ajith