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Pre-Feasibility Study

MONTESSORI SCHOOL

Small and Medium Enterprise Development Authority


Government of Pakistan
www.smeda.org.pk

HEAD OFFICE 6th & 8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (92 042) 111-111-456 Fax: (92 042) 6304926-7 Helpdesk@smeda.org.pk
REGIONAL PUNJAB OFFICE REGIONAL SINDH OFFICE REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456 Fax: (042) 6304926-7 helpdesk@smeda.org.pk

5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 Helpdesk-khi@smeda.org.pk

September, 2006

Pre-Feasibility Study

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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. Revision Prepared by Issue Date Revision Date Issued by PREF-66 2 SMEDA-Punjab August, 2003 September, 2006 Library Officer

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1 2 3

INTRODUCTION TO SMEDA PURPOSE OF THE DOCUMENT PROJECT PROFILE 3.1 3.2 3.3 3.4 PROJECT BRIEF OPPORTUNITY RATIONALE PROJECT COST PROPOSED CAPACITY

4 4 4 4 5 5 5 6 7 7 7 7 8 8 8 9 9 9 9 9 10 10 10 10 10 10 11 11 12 12 12 13 13 14 15 16 17

CURRENT INDUSTRY STRUCTURE 4.1 4.2 PRE SCHOOL/DAYCARE NURSERY/KINDERGARTEN/MONTESSORI

MARKET ANALYSIS 5.1 5.2 5.3 THE UPPER INCOME GROUP THE MEDIUM INCOME GROUP THE LOWER INCOME GROUP

6 7 8

KEY SUCCESS FACTORS REGULATIONS HUMAN RESOURCE REQUIREMENT 8.1 KEY PERSONNEL 8.1.1 Principal 8.1.2 Teachers coordinator 8.1.3 Accountant 8.1.4 Teachers 8.1.5 Student Attendants 8.1.6 Librarian / Activity Teacher 8.1.7 Computer Teacher

9 10

EQUIPMENT REQUIREMENT LAND & BUILDING 10.1 AREA REQUIREMENTS 10.2 RECOMMENDED MODE FOR ACQUIRING LAND 10.2.1 Building Rent 10.3 SUITABLE LOCATION

11 12

PROJECT ECONOMICS FINANCIAL ANALYSIS 12.1 12.2 12.3 PROJECTED INCOME STATEMENT PROJECTED BALANCE SHEET PROJECTED CASH FLOW STATEMENT

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KEY ASSUMPTIONS

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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. Since its inception in October 1998, SMEDA adopted a sectoral SME development approach where key sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved overhauling of the regulatory environment by taking into consideration other important aspects including finance, marketing, technology and human resource development. SMEDA has so far successfully formulated strategies for key sectors including, Fruits & Vegetables, Marble & Granite, Gems & Jewelry, Marine Fisheries, Leather & Footwear, Textiles, Surgical Instruments, Transport and Dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDAs areas of operation. Along with the sectoral focus a broad spectrum of Business Development Services is also being offered to the SMEs by SMEDA. These services include identification of viable business opportunities for potential SME investors. In order to facilitate these investors, SMEDA provides Help Desk Services as well as development of project specific documents. These documents consist of information required to make well researched investment decisions. Pre-feasibility Studies and Business Plan Development are some of the services provided to enhance the capacity of individual SMEs to capitalize on viable business opportunities.

PURPOSE OF THE DOCUMENT

Pre-feasibility studies are developed primarily to facilitate potential entrepreneurs in project identification for investment. Pre-feasibility Studies may form the basis on which an important investment decision maybe made. The document covers various aspects of the business venture from project concept development to, financing and business management.

PROJECT PROFILE

The project is about starting a Montessori school for elementary education of children. The proposed plan is to start classes ranging from Playgroup to Class II. 3. 1 Project Brief

The study provides information regarding investment opportunity for setting up a Montessori school in any metropolitan city of Pakistan i.e. Lahore, Islamabad, Peshawar, Quetta or Karachi. However, the project may also be started in smaller cities, after careful market research. It is also recommended that the Montessori school should be located in an easily approachable location in line with the selected target market.

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3. 2

Opportunity Rationale

Montessori school education is the first formal learning stage for a child. A child learns to recognize different alphabets, words, sounds and characteristics. It teaches children to behave in groups, helping them learn socialization at an early stage. 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 city. 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. This has further added to complication and competition of a metropolitan city resulting in high demand for Montessori schools in the metropolitan cities. Schools with high reputation have a stringent admission selection process, for which Montessori schools provide the necessary training. This has also given rise to high demand for Montessori school systems that can prepare children for admission to reputable Primary schools. The growing population has exhausted the limited capacity of the existing private as well as public primary school systems. The growing population has put tremendous pressure on the existing public sector education infrastructure in the country. Private sector with its investment capacity to provide well equipped and well staffed school system is therefore, well positioned to exploit this opportunity for establishing viable school systems in the country. 3. 3 Project Cost

Total project cost for setting up a Montessori School is estimated at Rs. 2.38million. 3. 4 Proposed Capacity

It is proposed that students be admitted for Playgroup to Class II. There are ten proposed classrooms for the school having a total capacity of 240 students. However, this capacity may not be achieved in the initial years of operations.

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Table 3-1: Year Wise Number of Students (Maximum Utilization) Class Students Per Year Year 1 Year 2 Year 3 Year 4 Play Group 24 27 30 KG-I 12 36 40 KG-II 12 25 40 Class I 6 18 32 Class II 6 13 25 Drop-Outs 0 3 6 Pass-Outs 0 6 13 Total 60 117 171

Year 5
33 40 40 47 39 9 25 218 36 40 40 47 54 11 39 206

CURRENT INDUSTRY STRUCTURE

The Montessori education in the country is yet at an early stage to absorb the growing demand. However, few school systems have steadily established themselves at least in bigger cities of the country. Some prominent names in Montessori education in Lahore include, The Lahore Pre-School, Kids Campus, Scarsdale, Lahore Grammar School, Lahore Alma and the Lahore Kindergarten within the Lahore city. Karachi is the largest city with well-established private sector education systems. Major Montessori schools in Karachi include Montessori World, Radiant Montessori, PAF Montessori, Head Start and CAS (Center for Advanced Studies). The Education system of Pakistan is divided into the following tiers: Table 4-1: Education System in Pakistan Level Elementary (Montessori) Primary Middle Secondary Higher Secondary B.A (Graduate Degree) M.A (Post-graduate Degree) M. Phil/ Ph.D. Classes Admission Age (Year) Playgroup, Kindergarten 3-5 I-V 5 VI-VIII 10 IX-X 13 XI-XII 16 Duration 2 Years 5 Years 3 Years 2 Years 2 Years 2 Years 2 Years 3 Years

Educational Guide of Pakistan (2000-01)

At present, most of the elementary school systems in the country fall in one of the following two categories. Pre-School/Daycare Nursery/Kindergarten/Montessori/Test Preparation Centers

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4. 1

Pre School/Daycare

The Pre-school/ Daycare Centers admit children ranging from 3 months to 3 years of age. However, on an average a child of two and a half years of age is normally admitted to a Pre-School. At Daycare Centers, children are normally engaged in playful activities with no formal training imparted. Pre-school training includes recognition of numbers and alphabets, introduction to basic shapes, body parts, poems and basic religious knowledge. 4. 2 Nursery/Kindergarten/Montessori

This tier of education system is the first stage of formal learning process for a child. Normally a child of three years of age is admitted to this system of education. Different teaching methods and course work is applied at this level of education. Most school systems adopt their own teaching methodology. At this level of school education, it is the teachers and the school environment that is more important for the pupils than the course work itself. The schools prepare their students to socialize with other children in the same age bracket and familiarize them for a more formal primary level education. In addition, a vast majority of the schools in this tier also adopt their course curriculum to prepare the children for admission in primary level schools, where admission is highly competitive.

MARKET ANALYSIS
Based on the household income. Based on the quality/standard of education offered

There are two broad market-positioning options available to a Montessori School System.

Irrespective of the education services, income based target market will play a crucial role in the overall positioning of the school. Any entrepreneur planning to open up a Montessori school should first decide upon the objective of the venture. Various options available in this regard may include: To plan a Montessori school with emphasis on Daycare services. To establish a school as a Preparatory School for other reputed Primary Level Schools. To establish a Montessori School with incremental expansion of services into primary and high school level.

Based on income level, the school can position itself for any of the following three broad income groups; 5. 1 The Upper Income Group

The upper income group segment is quality and reputation conscious. Most parents of the children enrolled in these schools belong to the different section of the society i.e. selfemployed businessmen, high paid government or private sector executives. Existing

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schools in the category charge a fee ranging from Rs.5,000-10,000 per month. These schools are characterized by large custom built campuses, swimming pools, indoor as well outdoor physical activities areas, and furnished spacious classrooms with heaters and air conditioners. These schools offer well designed modern course work, and employ highly trained Montessori teachers. 5. 2 The Medium Income Group

Schools in this category normally charge a fee ranging from Rs. 1,500-4,000 per month. These schools cater to children of well-educated and professionally employed parents. The important characteristics of these schools include well located school buildings that may be custom built or rented premises, modern course work adopted by other modern school systems, and comfortable class rooms with some provisions for playing area. 5. 3 The Lower Income Group

The concept of Montessori education is not very old in this income bracket, however an increasing number of parents in this category have also now started sending their children to these schools. One of the major reasons is that most of the private schools at primary level now do not accept students directly in Class 1. This category of schools charges a monthly fee up to Rs.800. These schools have small buildings with little or no provisions for physical activities.

KEY SUCCESS FACTORS

At a Montessori school level, teachers/attendants play a critical role in the success of learning process. Therefore, it is suggested that staff employed by the school should be highly educated and properly trained for Montessori education. Before starting education services, it is recommended that teacher training program should be imparted. In addition to the quality of teachers employed, the teacher student ratio should be kept at a well-researched optimum level. 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.
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REGULATIONS

No formal registration is required for the Montessori and elementary schools with the Education Directorate Schools. However, if any expansion is planned, the schools are required to get registered with Provincial Education Department in the office of Education Directorate Schools. The application is to be submitted on a prescribed form which can be obtained from the department. Domestic rates apply on the utility bills if an institution is registered with the department.

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Position

HUMAN RESOURCE REQUIREMENT


Number 1 1 1 1 2 2 2 2 2 1 1 4 2 1 2 1 26 Salary per Annual Salary month (Rs.) (Rs.) 30,000 360,000 15,000 180,000 7,000 84,000 8,500 102,000 7,000 168,000 7,000 168,000 7,000 168,000 8,500 204,000 8,500 204,000 7,000 84,000 10,000 120,000 5,000 240,000 5,000 120,000 4,000 48,000 3,500 84,000 3,500 42,000 2,376,000

Table 8-1: Human Resource required for the business

Principal Teacher coordinator Activity Teacher cum Librarian Computer Teacher Teacher Play Group Teacher KG-I Teacher KG-II Class I Class II Games teacher Accountant Student Attendant Guard Peon / Helper Cleaner Gardner TOTAL 8. 1 Key Personnel

8.1.1 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. 8.1.2 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
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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. 8.1.3 Accountant The accountant will be responsible for book keeping and maintaining accounts, salaries, and other administrative expenditures. 8.1.4 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 co-curricular activities for the children and their performances in the examinations. 8.1.5 Student Attendants The students in the elementary institutes are very young and may also need attendants or baby-sitters. Each class will be having one attendant for the children. 8.1.6 Librarian / Activity Teacher One person is recommended for running the library and for activity room. 8.1.7 Computer Teacher The person should be responsible for the introduction of IT to the young students and for proper arrangement of students games and basic computer learning.

EQUIPMENT REQUIREMENT

The details of the different equipment required for the project is given in the following tables: Table 9-1: Office Equipment Requirement Details Equipment Computers Printer (Laser) UPS Air condition (1.5 tons) Total Equipment Table 9-2 Other Equipment Requirement Detail Description See Saw 4 Feet Slide 6 Feet Slide
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Quantity 3 1 3 4 11

Cost per Unit (Rs.) 25,000 25,000 8,500 24,000

Total Cost (Rs.) 75,000 25,000 25,500 96,000 221,500

Quantity

Cost per Unit (Rs) 2 2,500 1 2,500 1 3,500

Total Cost (Rs) 5,000 2,500 3,500

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8 Feet Slide Monkey Bars 6x6 White Boards Soft Boards Computer UPS Water cooler Total Table 9-3: Furniture & Fixtures Detail Furniture & Fixtures Round tables for Play group Chairs for Play group Teacher chairs for Play group Round Tables for KG-I Chairs for KG-I Teacher chairs for KG-I Round Table for KG-II Chairs for KG-II Teachers Chair for KG -II Teacher Table & Chair for class-I Student table & Chair for Class- I Teacher Table & Chair for class -II Student Table & Chair for Class -II Cupboards & Book shelves Children Books /toys/Entertainment equipment Computer Chairs Computer Tables Carpet ( sq. ft) Principal and admin staff Total Furniture & Fixture Cost

1 1 10 10 10 10
1

4,500 6,000 2,000 500 25,000 8,500 10,000

4,500 6,000 20,000 5,000 250,000 85,000 10,000 391,500

Quantity 6 32 2 6 32 2 6 32 2 2 40 2 40 8

Cost per Unit(Rs) 4,500 500 1,000 4,500 500 1,500 4,500 500 1,500 1,600 1,200 1,600 1,200 6,500

Total Cost(Rs) 27,000 16,000 2,000 27,000 16,000 3,000 27,000 16,000 3,000 3,200 48,000 3,200 48,000 52,000 150,000 16,000 10,000 160,760 100,000 728,160

20 10 4,019 1 4,262

800 1,000 40 100,000

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L AND & B UI L DI NG

10.1 Area Requirements For two hundred and forty students (240), 2.5 kanal of land would be sufficient. A purpose built building may also be purchased. The covered area should have 10 classrooms, one common room for teachers, and one room for principal one for teacher coordinator and one room for the administration staff. Appropriate number of washrooms
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is suggested for teachers, principal, children and administration staff. A big hall should be allocated with proper divisions for library/ 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. Table 10-1 Covered Area Requirements Required Area (Sq. ft) 2,400 144 500 575 400 270 6,961 11,250 Space Requirements Class Rooms Teachers Room Library/Entertainment Room Admin Rooms Computer Class Washrooms & Kitchen Grounds Total Covered Area Requirement

10.2 Recommended Mode for Acquiring Land 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. 10.2.1 Building Rent Average monthly rent for the building required Rs. 50,000 to 60,000. For this study monthly rent is estimated at Rs. 55,000. Table 10-2: Rent Cost Rent Cost Building rent cost @ Rs. 5 per square foot 10.3 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. 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. Monthly Rent (Rs.) 55,000 Annual Rent (Rs.) 330,000

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FINANCIAL ANALYSIS

11.1 Project Economics Table 11-1 Project Cost/Capital Requirements Total Cost Rs. 391,500 221,500 552,160 226,000 1,391,160 330,761 165,381 500,000 996,142 2,387,302 Fixed Capital Requirement
Machinery & Equipment

Office Equipment Office Furniture & Fixture Pre-Operating Cost Total Fixed Capital Cost Working Capital Upfront Building Rental Rent Security (Refundable) Cash Total Working Capital Total Investment in the Project (Rs.) Table 11-2 Description Equity Debt Table 11-3 Project Returns Equity 6,394,253 87% 3.08 Project Financing Plan 50% 50%

1,193,651 1,193,651

Net Present Value Internal Rate of Return Payback Period (Years)

4,291,402 39% 4.07

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11.2 Projected Income Statement


Year 1 Revenue Admission Fee Tuition Fee Sub Total COST OF GOOD SOLD Faculty Staff Salary Total Gross Profit GENERAL ADMINISTRATION & SELLING EXPENSE Administration Staff Salary Building Rent Electricity Expense Water Expense Gas Expense Communication Expense Office Expenses Students' Teaching Aid Entertainment and Events Expense Professional Fee Depreciation expense Amortization of pre-operating costs Promotional Expense Maintenance Cost Total Operating Expenses Operating Income Earning Before Interest & Taxes Interest on short term debt Interest expense on long term debt Sub Total Earning Before Taxes Taxes Net Profit After Taxes 300,000 2,088,000 2,388,000 1,722,000 1,722,000 666,000 Year 2 435,750 4,738,800 5,174,550 1,755,600 1,755,600 3,418,950 Year 3 413,438 7,470,540 7,883,978 1,931,160 1,931,160 5,952,818 Year 4 358,864 9,958,542 10,317,406 2,124,276 2,124,276 8,193,130 Year 5 309,954 12,008,548 12,318,502 2,336,704 2,336,704 9,981,799

654,000 660,000 287,629 45,000 9,000 32,700 32,700 47,760 23,880 23,880 104,864 45,200 96,000 48,000 2,110,613 (1,444,613) (1,444,613) 160,987 160,987 (1,605,600) (1,605,600)

719,400 726,000 316,392 79,200 9900 35,970 35,970 103,491 51,746 51,746 104,864 45,200 86,400 52,800 2,419,078 999,872 999,872 291,066 135,086 426,152 573,719 573,719

791,340 798,600 348,031 87,120 10890 39,567 39,567 157,680 78,840 78,840 104,864 45,200 77,760 58,080 2,716,379 3,236,439 3,236,439 218,765 105,432 324,197 2,912,242 376,072 2,536,170

870,474 878,460 382,834 95,832 11979 43,524 43,524 206,348 103,174 103,174 104,864 45,200 69,984 63,888 3,023,259 5,169,870 5,169,870 71,482 71,482 5,098,389 1,019,678 4,078,711

957,521 966,306 421,118 105,415 13176.9 47,876 47,876 246,370 123,185 123,185 104,864 45,200 62,986 70,277 3,335,356 6,646,442 6,646,442 32,612 32,612 6,613,831 1,322,766 5,291,065

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11.3 Projected Balance Sheet


Const. Year CURRENT ASSETS Cash in Bank Accounts Receivable Rent Security(Refundable) Pre-paid Building Rent Total Current Asset FIXED ASSETS Machinery & Equipment Office Equipment Furniture & Fixtures Total Fixed Assets INTANGIBLE ASSETS Pre-Operational Costs Total Intangible Assets TOTAL ASSETS CURRENT LIABILITIES Short term Financing Students Security Payable Total Current Liabilities OTHER LIABILITIES Long Term Debt Total Long Term Liabilities SHAREHOLDER'S EQUITY Paid-up Capital Retained Earnings Total Equity TOTAL CAPITAL & LIABILITIES 1,193,080 1,193,080 1,014,331 1,014,331 809,681 809,681 575,378 575,378 307,124 307,124 226,000 226,000 2,386,160 180,800 180,800 2,754,835 1,973,024 180,000 2,153,024 135,600 135,600 2,855,802 1,482,921 402,000 1,884,921 90,400 90,400 3,842,747 570,000 570,000 45,200 45,200 7,737,204 654,000 654,000 12,067,145 391,500 221,500 552,160 1,165,160 356,265 201,565 502,466 1,060,296 321,030 181,630 452,771 955,431 285,795 161,695 403,077 850,567 250,560 141,760 353,382 745,702 215,325 121,825 303,688 640,838 500,000 165,000 330,000 995,000 Year 1 500,000 155,739 165,000 693,000 1,513,739 Year 2 500,000 337,471 165,000 762,300 1,764,771 Year 3 1,384,078 514,172 165,000 838,530 2,901,780 Year 4 5,186,044 672,874 165,000 922,383 6,946,302 Year 5 10,139,773 803,381 483,153 11,426,307

1,193,080 1,193,080 2,386,160

1,193,080 (1,605,600) (412,520) 2,754,835

1,193,080 (1,031,881) 161,199 2,855,802

1,193,080 1,504,289 2,697,369 3,842,747

1,193,080 5,583,000 6,776,080 7,737,204

1,193,080 10,874,065 12,067,145 12,067,145

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11.4 Projected Cash flow Statement


Year-0 Operating activities Net profit Add: depreciation expense amortization of pre-operating costs Accounts receivable Pre-paid building rent Rent Security (Refundable) Student Security(Refundable) Cash provided by operations Financing activities Long Term Debt Repayment Short term debt principal repayment Additions of New Long Term Debt Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH Cash balance brought forward Cash available for appropriation Cash balance Short term loan requirement Cash carried forward ` 1,193,080 1,193,080 2,386,160 (1,391,160) (1,391,160) 500,000 500,000 500,000 500,000 (178,749) (178,749) (1,973,024) 500,000 (1,473,024) (1,473,024) 1,973,024 500,000 (204,650) (1,973,024) (2,177,673) (1,482,921) 500,000 (982,921) (982,921) 1,482,921 500,000 (234,303) (1,482,921) (1,717,224) 884,078 500,000 1,384,078 1,384,078 1,384,078 3,801,967 1,384,078 5,186,044 5,186,044 5,186,044 4,953,729 5,186,044 10,139,773 10,139,773 10,139,773 (268,254) (268,254) (307,124) (307,124) (330,000) (165,000) (495,000) 104,864 45,200 (155,739) (363,000) 180,000 (1,794,275) 104,864 45,200 (181,732) (69,300) 222,000 694,752 104,864 45,200 (176,702) (76,230) 168,000 2,601,302 104,864 45,200 (158,702) (83,853) 84,000 4,070,221 104,864 45,200 (130,506) 439,230 165,000 (654,000) 5,260,853 Year 1 (1,605,600) Year 2 573,719 Year 3 2,536,170 Year 4 4,078,711 Year 5 5,291,065

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KEY ASSUMPTIONS
Operating Assumptions 22 12 25% 10% 60 5% 10% 10% 10% 5% 7% 5% of Administrative Expense 7% of Administrative Expense 5% of Revenue 1% of Revenue 2% of Revenue

Table 12-1

Operational Days Per Month Months Operational Table 12-2 Capacity Utilization Assumptions Capacity Utilization (First Year) New Students Admission Growth Rate First Year Student Enrollment Student Drop-out Ratio Table 12-3 Economic Assumptions Electricity Growth Rate Salary Growth Rate Rent Growth Rate Student Fee Growth Rate Admission Fee Growth Rate Table 12-4 Expense Assumptions Office Expense (Stationary, Entertainment etc.) Communication Expense Promotional Expense Professional Expense (Legal, Audit etc.) Students Teaching Aid Table 12-5 Depreciation Assumptions Straight Line

Depreciation Method Equipment Office Furniture & Fixtures

10% 10%

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Table 12-6 Class

Student Capacity Assumptions (Maximum Utilization) Year 1 Year 2


24 12 12 6 6 0 0 60 36 25 18 13 3 6 117

Students Per Year Year 3 Year 4


27 30 40 40 32 25 6 13 171 33 40 40 47 39 9 25 218

Year 5
36 40 40 47 54 11 39 206

Play Group KG-I KG-II Class I Class II Drop-Outs Pass-Outs Total Table 12-7 Play Group KG 1 KG 2 Class 1 Class 2 Table 12-8

Proportion of New Admission 40% 20% 20% 10% 10% Revenue Assumptions Admission Fee Student Security (Refundable) 3,000 3,000 3,000 3,000 3,000 Monthly Fee 2,500 3,000 3,000 3,500 3,500

Play Group KG 1 KG 2 Class 1 Class 2

5,000 5,000 5,000 5,000 5,000

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