SMEDA Day Care Center

Pre-Feasibility Study

DDaayy CCaarree CCeenntteerr

Small and Medium Enterprise Development AuthorityGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

6th Floor, LDA Plaza, Egerton Road, Lahore.Tel: (042) 111-111-456, Fax: (042) , 6304926, 6304927

[email protected]

REGIONAL OFFICE PUNJAB

REGIONAL OFFICE SINDH

REGIONAL OFFICENWFP

REGIONAL OFFICE BALOCHISTAN

8th Floor, LDA Plaza, Egerton Road, Lahore.

Tel: (042) 111-111-456Fax: (042) 6304926, 6304927

[email protected]

5TH Floor, BahriaComplex II, M.T. Khan Road,

Karachi.Tel: (021) 111-111-456

Fax: (021) [email protected]

Ground FloorState Life Building

The Mall, Peshawar.Tel: (091) 9213046-47

Fax: (091) [email protected]

Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.Tel: (081) 2831623,

2831702Fax: (081) 2831922

[email protected]

June, 2007

Pre-feasibility Study Day Care Center

BAL-PREF-03/June 2007/Rev 2

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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. PREF-03

Revision 2

Prepared by SMEDA-Balochistan

Issued by Library Officer

Issue Date April, 2004

Revision Date June, 2007



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Table of Contents

1 Purpose of the document .....................................................................................................52 Project Profile .....................................................................................................................5

2.1 Project Brief ................................................................................................................52.2 Opportunity Rationale..................................................................................................52.3 Market Entry Timing ...................................................................................................52.4 Proposed Business Legal Status ...................................................................................62.5 Project Capacity and Rationale ....................................................................................62.6 Project Investment .......................................................................................................62.7 Proposed Product Mix .................................................................................................62.8 Recommended Project Parameters ...............................................................................82.9 Proposed Location .......................................................................................................82.10 Key Success Factors/Practical Tips for Success ...........................................................82.11 Regulations..................................................................................................................92.12 Strategic Recommendations.........................................................................................9

3 Current Industry Structure ...................................................................................................93.1 Current Scenario in Quetta City .................................................................................10

4 Market Information ...........................................................................................................104.1 Target Customers.......................................................................................................104.2 Market Potential ........................................................................................................10

5 Project Requirements.........................................................................................................115.1 Day Care Center Requirement ...................................................................................115.2 Equipment Details .....................................................................................................115.3 Furniture and Equipment Maintenance.......................................................................12

6 Human Resource Requirement ..........................................................................................127 Building Requirement .......................................................................................................13

7.1 Covered Area Requirement........................................................................................137.2 Recommended Mode .................................................................................................137.3 Suitable Location.......................................................................................................137.4 Utilities and Infrastructure Requirement ....................................................................13

8 Project Economics.............................................................................................................148.1 Project Cost ...............................................................................................................148.2 Project Returns ..........................................................................................................148.3 Project Financing.......................................................................................................14

9 Financial Analysis .............................................................................................................159.1 Project Cost ...............................................................................................................159.2 Projected Income Statement.......................................................................................169.3 Projected Balance Sheet.............................................................................................179.4 Projected Cash Flow Statement..................................................................................18

10 Key Assumptions ..........................................................................................................1910.1 Capacity Utilization Assumptions ..............................................................................1910.2 Economic Assumptions .............................................................................................1910.3 Expense Assumptions ................................................................................................1910.4 Depreciation Expense Assumptions ...........................................................................19



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10.5 Cost of Goods Sold....................................................................................................2010.6 Student Capacity Assumptions...................................................................................2010.7 Revenue Assumptions................................................................................................2010.8 Cash flow Assumptions .............................................................................................2010.9 Financing Assumptions..............................................................................................20



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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.1

Since its inception in October 1998, SMEDA had adopted a sectoral SME development

approach. A few priority 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 recommending changes in the regulatory environment by taking into

consideration other important aspects including financial aspects, niche marketing, technology

upgradation and human resource development.

SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables,

marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical

instruments, urban transport and dairy. Whereas the task of SME development at a broader scale

still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of business development services is also 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 business

guidance through its 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 exploit viable business opportunities in a better way.

This document is in the continuation of this effort to enable potential investors to make well-

informed investment decisions.

1 For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk



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11 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

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, finance and business management.

22 PPRROOJJEECCTT PPRROOFFIILLEE

The project is about starting a Day Care Center for infants and children of age up to 5. The proposed plan is to offer programs ranging from Infant Care for infants of more than 6 months of age to Kindergarten for children of age up to 5 years.

22..11 PPrroojjeecctt BBrriieeff

The study provides information regarding investment opportunity for setting up a Day Care Center in Quetta city. However, such a project could also be feasible for other metropolitan citiesof Pakistan i.e. Lahore, Islamabad, Peshawar, Karachi and smaller cities but initial market research/survey would be required to identify its need.

22..22 OOppppoorrttuunniittyy RRaattiioonnaallee

Day Care Center is the place where learning and fun become one and the primary place where young children learn social and pre-academic skills necessary for success in school.

The Day Care’s infant program is centered on the natural curiosity and energy of very young children. Childcare programs and pre-school curriculums integrate a wealth of intriguing and engaging learning activities that stimulate brain development in children.

The fast paced life of the 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 any Metropolitan city. As a result of these social changes, the trend of sending children to Day Care Centers at a much earlier age is gaining rapid grounds.

The workingwomen will prefer a day care center to a nanny at home because a day care center can provide proper grooming and prepare the youngsters for admission at school in coming years. Also, the whole institution is responsible for the child rather than a single nanny. Parents are very much worried as there are no institutes, which can help children blossom intellectually and emotionally, while having a lot of purposeful fun along the way.

22..33 MMaarrkkeett EEnnttrryy TTiimmiinngg

In Quetta, the admissions in all the educational institutions start right after the summer vacations.Therefore it is recommended that the admissions/registrations of the Day Care center should be started at least one week prior to the start of regular schools/colleges to make the process easy both for parents and center’s registration staff. This will also ensure that students complete this program at appropriate timing for getting further admission in regular schools.



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22..44 PPrrooppoosseedd BBuussiinneessss LLeeggaall SSttaattuuss

It is recommended that this project should be started as sole proprietorship or partnership as this does not involve heavy investment. Moreover, less complications and costs are involved in forming, administering and running the sole proprietorship or partnership business. The tax rates applicable for sole proprietorship are lower than private or public limited.

22..55 PPrroojjeecctt CCaappaacciittyy aanndd RRaattiioonnaallee

It is proposed that infants of more than 6 months of age to children of 5 years of age be admitted in the center. There are five (5) proposed classrooms for the Day Care Center. Two class rooms would be for Infant Care program, one for two year olds, one for Play Group for children of age between 3-4 years, and one for Kindergarten for children of age 4-5 years old. Each class room would have capacity of 22 students. The project would have total capacity of 110 students. However, this capacity may not be achieved in the initial years of operations.

TTaabbllee 33..55 YYeeaarr WWiissee NNuummbbeerr ooff SSttuuddeennttss

Programs Offered Year 1 Year 2 Year 3 Year 4 Year 5

Infant Care Program 15 21 27 35 43

Two Year Olds 8 12 15 19 22

Play Group (3-4 years old) 8 11 15 17 20

Kindergarten (4-5 years old) 8 11 15 17 20

Total 39 55 72 88 105

22..66 PPrroojjeecctt IInnvveessttmmeenntt

The total investment required for this project is 1.2 m. The investment mainly covers capital costs of 0.8 m and working capital requirement of 0.4 m.

22..77 PPrrooppoosseedd PPrroodduucctt MMiixx

The Day Care Center will offer different programs for different age groups. The details are described as follows:

22..77..11 IInnffaanntt CCaarree PPrrooggrraamm

The infant care program is centered on the natural curiosity and energy of very young children. It will provide infants with lots of attention, a variety of appropriate activities, and abundant conversation and nurturing to make the world for a baby fun, interesting, safe, and loving. Children will be with his/her caregiver (nanny) in one of the center’s special nook areas where he/she will experience an array of experiences especially designed to meet an infant's needs.



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Sleeping Nook

This would be the area of the classroom where infants sleep during the day. As infants are all on different schedules, this nook is used throughout the day for sleeping infants.

Feeding Nook

The Feeding Nook would be used for baby feeding.

Movement Nook

Infants would be able to practice their motor skills such as rolling over, sitting up, crawling, puling up, climbing and walking in the Movement Nook.

Curiosity Nook

Infants would be given opportunities for multi-sensory plays where Infants would begin to explore different materials and begin to understand them.

Diapering Nook

The Diapering Nook will be used for diaper changing. Extra clothing and materials would also be stored. It would also offer opportunities to interact individually with babies.

Outdoor Play Nook

When weather conditions would be appropriate, this open air play nook would provide a safe and interesting place for babies.

Comfort Nook

The Comfort Nook would be soft and cozy place that would provide a sense of security and a place to rest before babies move on to a more active nook.

22..77..22 FFoorr ttwwoo--yyeeaarr--oollddss::

The curriculum for two-year-olds will provide an enriching environment with activities that are designed to enhance child's total development in a quality early childhood education environment. The daycare curriculum will allow two-year-old children to spend busy and fun-filled days engaged in activities that would promote learning.

Teachers assigned for the two-year-old student group will be trained to incorporate appropriate literature, educational materials, music, and other specially selected materials and resources, all with the goal of enhancing the rapid changes that occur in a child's brain development in the earliest stages of life.

22..77..33 PPllaayy GGrroouupp ((33 aanndd yyoouunngg 44--yyeeaarrss--oolldd))

Studies have found that learning improves when children are engaged in enjoyable and meaningful activities. That is why every curriculum will include a variety of intriguing activities that can stimulate early brain development with a focus on creative plays. This will be a better place where learning with activities will be focused.



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22..77..44 KKiinnddeerrggaarrtteenn ((44 aanndd yyoouunngg 55--yyeeaarr--oollddss))

Kindergarten Program will be filled with fun and educational activities that will be carefully designed to help bring out a child's natural curiosity and encourage a lifelong joy of learning. The curriculum will use themed learning units that incorporate reading, writing, math, science, social studies and more.

22..88 RReeccoommmmeennddeedd PPrroojjeecctt PPaarraammeetteerrss

Capacity Human Resource Location

110 students 18 Areas within Quetta city.

Financial Summary

Project Cost IRR NPV Payback Period Cost of Capital

1.2 million 27% 1,213,942 4.82 16%

22..99 PPrrooppoosseedd LLooccaattiioonn

It is recommended that the proposed project be installed in such area of Quetta city so that it could become easily accessible for parents.

22..1100 KKeeyy SSuucccceessss FFaaccttoorrss//PPrraaccttiiccaall TTiippss ffoorr SSuucccceessss

The location plays an important role so that the facility/center should easily be accessible byparents.

The center should target mainly workingwomen and business community because they are the ones who are potential customers for such a facility.

The teacher student ratio should be kept at a well-researched optimum level as indicated in this report.

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

Continuous teacher parent interactions should also be a regular feature of the center’s day care and education system.

It is suggested that visual and other teaching tools should be used.

The center should be started at least one week prior to the ending of winter vacations so that proper promotion and management of admissions are conducted.

A well-trained/experienced head/principal of the center would teach the new staff and well manage the daily affairs of center.



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The role of the owner should be in line with the mission of the day care center to provide guidelines and facilities to children at the grass root level and spread standardized and cost-effective education far across the country.

22..1111 RReegguullaattiioonnss

No formal registration is required for the Montessori and elementary schools with the Education Directorate Schools2. 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 thedepartment.

22..1122 SSttrraatteeggiicc RReeccoommmmeennddaattiioonnss

It is recommended that the proposed project should be established in a rented building to reduce the project cost.

33 CCUURRRREENNTT IINNDDUUSSTTRRYY SSTTRRUUCCTTUURREE

Change in Life Style

Some of the evolving trends of Quetta city residents are associated with life that is becoming busy, and hectic. People find it difficult to provide better training/attention to their children at home as they have to go to offices/work. As most of the people have started living separately (opposed to the joint-family system) therefore, many of them face financial problems and women have started working in order to support their families. A facility that could provide day care during office/working hours would make their hectic lives easy.

Avoidance of Responsibilities

Today’s parents could not find enough time to give proper attention to their children because of their daily busy and hectic office/working routines. Most of the high income family women are involved in other social and extra curricular activities such as clubs and gymnasiums therefore, find it very difficult to take out time for their children. A day care facility would give ease of mind to such parents.

Day Care Center Provide Better Training

Today many people are of the view that day care centers and pre-schools can provide children better training and education because they have trained and educated staff, better training equipment, and toys. This is why they have decided to start early schooling for their children.

2 Education Directorate Schools



10

33..11 CCuurrrreenntt SScceennaarriioo iinn QQuueettttaa CCiittyy

Currently there are no private Day Care Centers in Quetta. The provisional government has established two Day Care Centers in Quetta to facilitate working women. One center is located at Patel Raod Quetta the other center is located at Wahdat Colony Brewery Road Quetta.. SBK Women University also has established a day care center to facilitate its staff. Children of age 3 months to 4 years are admitted in these centers which clearly indicates the demand for such a project proposed for Infants of more than 6 months of age to children of age up to 5 years.

There are 267 primary schools for boys while 147 primary schools for girls at Quetta3 with a total enrollment of 29,023 boys and 17,433 girls respectively. The above mentioned figures clearly indicate the requirement of day care center in the private sector.

Following are the suitable locations for the proposed institution:

Main City

Quetta Cantt

Near B.M.C Complex, Brewery Road

44 MMAARRKKEETT IINNFFOORRMMAATTIIOONN

44..11 TTaarrggeett CCuussttoommeerrss

The Day Care Center has targeted the workingwomen and the business community having infants of age more than 6 months to children of age up to 5 years. The target population of the working women consists of the women with pre-school going children, and the women with children older than the pre-school age. The business community also has positive response since they too are very much involved in their daily routines and therefore can be targeted as potential customers.

44..22 MMaarrkkeett PPootteennttiiaall

The normal school going age of children is around 3 years. Many parents having children of agebetween 3-5 years in Quetta city have not admitted their children in pre-schools. One reason is as they think it is too early to send them to schools and is also wastage of time and money. The daycare aims to provide such an environment in which new ways of learning would beintroduced. Children are more likely to retain information learned when they are engaged in enjoyable and meaningful activities. The childcare programs and pre-school curriculums integrate a wealth of intriguing and engaging learning activities that stimulate brain development in children at pre-school stages.

3 Development Statistics of Balochistan 2006



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55 PPRROOJJEECCTT RREEQQUUIIRREEMMEENNTTSS

55..11 DDaayy CCaarree CCeenntteerr RReeqquuiirreemmeenntt

The basic requirements for a daycare center includes Staff, Educational Tools for children, Class Rooms, Teachers’ Room, Library/Entertainment Room, Principal & Administration Room, Washrooms & Kitchen, Grounds, furniture, seesaw and other such items for physical activities, soft board and white boards etc. These materials are readily available in the local market.

55..22 EEqquuiippmmeenntt DDeettaaiillss

The details of the different equipment required for the project are given as below:

55..22..11 EEdduuccaattiioonnaall TTooooll

The proposed educational tool for the center includes TV set, VCR, movies and other Montessoriequipments (toys, puzzles, colored blocks and colored cylinders, books etc). All these equipments are easily available in the local market.

TTaabbllee 55..22--11 MMaacchhiinneerryy RReeqquuiirreemmeenntt DDeettaaiillss ((eedduuccaattiioonnaall ttoooollss))

Description Total Amount (Rs.)

Equipment (Educational Tools) 250,000

TTaabbllee 55..22--22 OOtthheerr EEqquuiippmmeenntt DDeettaaiillss

Other Equipment Details Qty Cost/Unit Total Cost

Seesaw (9 feet) 1 2,800 2,800

Slide 4 Feet 1 2,500 2,500

Monkey Bar (6x6) 1 5,000 5,000

Monkey Bar (4x4) 2 2,400 4,800

White Boards 10 700 7,000

Refrigerator 1 11,000 11,000

Soft boards 10 600 6,000

Misc. Kitchen Utensils 5,000

Total Equipment Cost 44,100



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TTaabbllee 55..22--33 FFuurrnniittuurree && FFiixxttuurree DDeettaaiillss

Description Qty Cost/Unit Total Cost

Round Tables for Play Group 6 2,500 15,000

Chairs for Play Group 20 350 7,000

Round Tables for KG 6 2,000 12,000

Chairs for KG 20 350 7,000

Teacher Chairs for KG 2 550 1,100

Student Chair & Table for Younger Pre-schoolers 40 750 30,000

Student Chair & Table for Older Pre-schoolers 40 750 30,000

Cupboards & Book shelves 10 6,500 65,000

Carpet 3,500/ Sq.Ft 30 /Sq.Ft 105,000

Furniture for Principal & Admin Staff 40,000 40,000

Air Conditions 2 21,000 42,000

Heaters 6 1,500 9,000

Total Furniture & Fixtures 363,100

55..33 FFuurrnniittuurree aanndd EEqquuiippmmeenntt MMaaiinntteennaannccee

The furniture and equipment maintenance process will be conducted on yearly basis during the seasonal vacations.

66 HHUUMMAANN RREESSOOUURRCCEE RREEQQUUIIRREEMMEENNTT

The manpower required for operating the Day Care Center is as follows:

TTaabbllee 66--11 HHuummaann RReessoouurrccee RReeqquuiirreemmeenntt DDeettaaiillss

Description Qty Salary Total Monthly Salary

Principal 1 18,000 18,000

Accounts Officer 1 8,500 8,500

Teachers 6 8,500 51,000

Nannies 3 4,500 13,500

Guard 1 4,500 4,500

Helper/Peon 1 4,500 4,500

Total Cost 100,000

It is highly recommended that the nannies should be qualified females of age range from 18 to 30 to ensure the parents about their child’s proper care and safety. The nannies should be at least



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matriculates and should go from a proper child care training program before having the job responsibilities.

77 BBUUIILLDDIINNGG RREEQQUUIIRREEMMEENNTT

77..11 CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt

The covered area details for the proposed project are given in the table below:

TTaabbllee 77--11 CCoovveerreedd AArreeaa RReeqquuiirreemmeenntt DDeettaaiillss

Description Sq .ft Required

Class Rooms 2,000

Teachers’ Room 144

Library/Entertainment Room 500

Principal & Administration Room 244

Washrooms & Kitchen 180

Grounds 5,532

Total Building Area 8,600

TTaabbllee 88--22 RReenntt CCoosstt

Monthly Rent (Rs.) Annual Rent (Rs.)

Building rent cost 35,000 420,000

77..22 RReeccoommmmeennddeedd MMooddee

It is recommended that the proposed project should be established in a rented building to reduce project cost. In case a purpose built building is purchased, project cost will increase.

77..33 SSuuiittaabbllee LLooccaattiioonn

After careful market survey/research of Quetta city, the suitable location for the project could be in main city, Quetta Cantt, or near BMC Complex Saryab Road. However such a project can also be feasible for other metropolitan cities of the country like Lahore, Karachi, Islamabad and other smaller cities but initial market survey and research is required to find out its need.

77..44 UUttiilliittiieess aanndd IInnffrraassttrruuccttuurree RReeqquuiirreemmeenntt

Basic utilities like electricity, gas and water are required for operating the daycare center.



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88 PPRROOJJEECCTT EECCOONNOOMMIICCSS

88..11 PPrroojjeecctt CCoosstt

Description Amount in (Rs.)Machinery & Equipment 44,100Furniture & Fixtures 363,100Educational Tools 250,000Pre-operating costs 136,000Total Capital Cost 793,200Working CapitalUpfront building rent (10 Months) 350,000Cash 50,000Total Working Capital 400,000Total Project Cost 1,193,200

88..22 PPrroojjeecctt RReettuurrnnss

Description Equity ProjectIRR 40% 27%MIRR 26% 17%Pay Back Period (Yrs) 4.0 4.82Net Present Value (NPV) 1,363,065 1,213,942

88..33 PPrroojjeecctt FFiinnaanncciinngg

Description Percentage Amount in RsEquity Financing 70% 835,104Debt Financing 30% 358,096Total 1,193,200


BAL-PREF-03/April, 2004

15

99 FFIINNAANNCCIIAALL AANNAALLYYSSIISS

99..11 PPrroojjeecctt CCoosstt

Statement SummariesInitial Investment

Capital Investment Rs. in actualsLand - Building/Infrastructure - Machinery & equipment 44,100 Furniture & fixtures 363,100 Office equipment 250,000 Pre-operating costs 136,000 Total Capital Costs 793,200

Working Capital Rs. in actualsUpfront building rent 350,000 Cash 50,000 Total Working Capital 400,000

Total Investment 1,193,200

Initial Financing Rs. in actualsDebt 358,096 Equity 835,104



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99..22 PPrroojjeecctteedd IInnccoommee SSttaatteemmeenntt

Statement Summaries SMEDAIncome Statement

Rs. in actualsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 1,197,350 1,651,650 2,233,424 2,869,390 3,563,513 3,758,051 3,942,104 4,135,359 4,338,277 4,551,341Cost of goods sold 468,000 491,400 687,960 722,358 948,095 1,194,600 1,254,330 1,317,046 1,382,898 1,452,043

Gross Profit 729,350 1,160,250 1,545,464 2,147,032 2,615,418 2,563,452 2,687,774 2,818,313 2,955,379 3,099,298General administration & selling expenses

Administration expense 438,780 460,719 483,755 507,943 533,340 560,007 588,007 617,408 648,278 680,692 Rental expense 420,000 441,000 463,050 486,203 510,513 536,038 562,840 590,982 620,531 651,558 Utilities expense 87,600 92,568 97,825 103,389 109,278 115,511 122,107 129,090 136,481 144,305 Travelling & Comm. expense (phone, fax, etc.) 34,080 35,784 37,573 39,452 41,424 43,496 45,670 47,954 50,352 52,869 Office expenses (stationary, etc.) 34,080 35,784 37,573 39,452 41,424 43,496 45,670 47,954 50,352 52,869 Promotional expense 11,974 16,517 22,334 28,694 35,635 37,581 39,421 41,354 43,383 45,513 Professional fees (legal, audit, etc.) 11,974 16,517 22,334 28,694 35,635 37,581 39,421 41,354 43,383 45,513 Depreciation expense 90,720 90,720 90,720 90,720 90,720 107,631 107,631 107,631 107,631 107,631 Amortization expense 27,200 27,200 27,200 27,200 27,200 - - - - -

Subtotal 1,156,407 1,216,808 1,282,365 1,351,746 1,425,170 1,481,339 1,550,769 1,623,726 1,700,391 1,780,951Operating Income (427,057) (56,558) 263,098 795,285 1,190,249 1,082,112 1,137,005 1,194,587 1,254,988 1,318,346Other income 3,650 - 540 8,859 24,826 43,507 65,214 88,325 112,839 139,402 Gain / (loss) on sale of assets - - - - 100,000 - - - - - Earnings Before Interest & Taxes (423,407) (56,558) 263,638 804,144 1,315,075 1,125,620 1,202,219 1,282,912 1,367,828 1,457,748Interest expense 37,614 39,340 37,285 19,413 5,221 - - - - - Earnings Before Tax (461,021) (95,898) 226,353 784,731 1,309,854 1,125,620 1,202,219 1,282,912 1,367,828 1,457,748Tax - - - - 123,128 233,288 261,235 291,612 324,542 360,762 NET PROFIT/(LOSS) AFTER TAX (461,021) (95,898) 226,353 784,731 1,186,726 892,332 940,984 991,301 1,043,285 1,096,987

Balance brought forward (461,021) (556,919) (330,566) 454,165 1,640,891 2,533,223 3,474,207 4,465,508 5,508,793Total profit available for appropriation (461,021) (556,919) (330,566) 454,165 1,640,891 2,533,223 3,474,207 4,465,508 5,508,793 6,605,780Dividend - - - - - - - - - - Balance carried forward (461,021) (556,919) (330,566) 454,165 1,640,891 2,533,223 3,474,207 4,465,508 5,508,793 6,605,780



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99..33 PPrroojjeecctteedd BBaallaannccee SShheeeett

Statement Summaries SMEDABalance Sheet

Rs. in actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

AssetsCurrent assets

Cash & Bank 365,000 - - 53,970 831,915 1,650,689 2,700,029 3,821,354 5,011,168 6,272,778 7,667,432 Accounts receivable - 32,804 39,027 53,220 69,902 88,122 100,295 105,482 110,650 116,077 121,776 Pre-paid building rent 35,000 36,750 38,588 40,517 42,543 44,670 46,903 49,249 51,711 54,296 -

Total Current Assets 400,000 69,554 77,615 147,707 944,360 1,783,481 2,847,228 3,976,084 5,173,529 6,443,152 7,789,208 Fixed assets

Machinery & equipment 44,100 39,690 35,280 30,870 26,460 22,050 17,640 13,230 8,820 4,410 - Furniture & fixtures 363,100 326,790 290,480 254,170 217,860 181,550 145,240 108,930 72,620 36,310 - Office equipmentEducational Tools 250,000 200,000 150,000 100,000 50,000 334,556 267,645 200,734 133,823 66,911 -

Total Fixed Assets 657,200 566,480 475,760 385,040 294,320 538,156 430,525 322,894 215,263 107,631 - Intangible assets

Pre-operation costs 136,000 108,800 81,600 54,400 27,200 - - - - - - Total Intangible Assets 136,000 108,800 81,600 54,400 27,200 - - - - - - TOTAL ASSETS 1,193,200 744,834 634,975 587,147 1,265,880 2,321,638 3,277,753 4,298,978 5,388,791 6,550,783 7,789,208 Liabilities & Shareholders' EquityCurrent liabilities

Short term debt - 196,407 233,513 - - - - - - - - Total Current Liabilities - 196,407 233,513 - - - - - - - - Other liabilities

Deferred tax - - - - 3,307 3,307 2,646 1,984 1,323 661 (0) Long term debt 358,096 187,823 149,095 105,333 55,881 - - - - - -

Total Long Term Liabilities 358,096 187,823 149,095 105,333 59,188 3,307 2,646 1,984 1,323 661 (0) Shareholders' equity

Paid-up capital 835,104 835,104 835,104 835,104 835,104 835,104 835,104 835,104 835,104 835,104 835,104 Retained earnings - (474,500) (582,737) (353,289) 371,588 1,483,226 2,440,003 3,461,889 4,552,364 5,715,018 6,954,104

Total Equity 835,104 360,604 252,367 481,815 1,206,692 2,318,330 3,275,107 4,296,993 5,387,468 6,550,122 7,789,208 TOTAL CAPITAL AND LIABILITIES 1,193,200 744,834 634,975 587,147 1,265,880 2,321,638 3,277,753 4,298,978 5,388,791 6,550,783 7,789,208

- - - - - - 0 (0) 0 (0) 0



18

99..44 PPrroojjeecctteedd CCaasshh FFllooww SSttaatteemmeenntt- - - - - - 0 (0) 0 (0) 0

Statement Summaries SMEDACash Flow Statement

Rs. in actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activitiesNet profit - (474,500) (108,237) 229,448 724,877 1,111,639 956,777 1,021,886 1,090,475 1,162,653 1,239,086 Add: depreciation expense - 90,720 90,720 90,720 90,720 90,720 107,631 107,631 107,631 107,631 107,631 amortization expense - 27,200 27,200 27,200 27,200 27,200 - - - - - Accounts receivable - (32,804) (6,223) (14,193) (16,681) (18,220) (12,173) (5,186) (5,169) (5,427) (5,698) Pre-paid building rent (35,000) (1,750) (1,838) (1,929) (2,026) (2,127) (2,233) (2,345) (2,462) (2,586) 54,296

Cash provided by operations (35,000) (391,134) 1,622 331,246 827,397 1,209,211 1,049,339 1,121,325 1,189,814 1,261,611 1,394,654

Financing activitiesChange in long term debt 358,096 (170,273) (38,728) (43,763) (49,452) (55,881) - - - - - Change in short term debt - 196,407 37,106 (233,513) - - - - - - - Issuance of shares 835,104 - - - - - - - - - -

Cash provided by / (used for) financing activities1,193,200 26,134 (1,622) (277,276) (49,452) (55,881) - - - - -

Investing activitiesCapital expenditure (793,200) - - - - (334,556) - - - - -

Cash (used for) / provided by investing activities (793,200) - - - - (334,556) - - - - -

NET CASH 365,000 (365,000) - 53,970 777,945 818,774 1,049,339 1,121,325 1,189,814 1,261,611 1,394,654

Cash balance brought forward 365,000 - - 53,970 831,915 1,650,689 2,700,029 3,821,354 5,011,168 6,272,778 Cash available for appropriation 365,000 0 - 53,970 831,915 1,650,689 2,700,029 3,821,354 5,011,168 6,272,778 7,667,432 Dividend - - - - - - - - - - - Cash carried forward 365,000 - - 53,970 831,915 1,650,689 2,700,029 3,821,354 5,011,168 6,272,778 7,667,432



19

1100 KKEEYY AASSSSUUMMPPTTIIOONNSS

1100..11 CCaappaacciittyy UUttiilliizzaattiioonn AAssssuummppttiioonnss

Total Students Capacity 110

No. of students per class 22

No. of Classes 5

Maximum Attainable Capacity in Percentage 95%

Capacity Utilization (1st Year) 35%

Growth in Capacity 15%

Fee per month/student is Rs. 2,300

Annual Fee Growth Rate 5%

1100..22 EEccoonnoommiicc AAssssuummppttiioonnss

Electricity Price Growth Rate 6%

Gas Price Growth Rate 6%

Water Price Growth Rate 3%

Salary Growth Rate 5%

Rent Growth Rate 5%

Student Fee Growth Rate 5%

1100..33 EExxppeennssee AAssssuummppttiioonnss

Communication Expense 8% of administration expense

Promotional Expense 1% of revenue

Professional Fee (Legal, Audit etc) 1% of revenue

Administration Benefit Expense 3% of administration expense

Office Expense (Stationary, Entertainment, Janitorial 8% of administration expense

Pre-Operational Expense Rs. 136,000

1100..44 DDeepprreecciiaattiioonn EExxppeennssee AAssssuummppttiioonnss

Depreciation Method Straight Line

Equipment 10%

Furniture & Fixtures 10%



20

1100..55 CCoosstt ooff GGooooddss SSoolldd

It is assumed that cost of goods sold would be the direct labor cost which in this project is the salary cost of teachers and nannies only. All the other heads in the human resource are indirect labors (management staff).

1100..66 SSttuuddeenntt CCaappaacciittyy AAssssuummppttiioonnss

Description No. of Classroom Maximum Student/Class Total Capacity

Infant Care Program 2 22 44

For Two Year Olds 1 22 22

Play Group (3-4 year olds) 1 22 22

Kindergarten(4-5 years) 1 22 22

Total 5 110

1100..77 RReevveennuuee AAssssuummppttiioonnss

Description Monthly Fee

Infant Care Program 2,300

For Two Year Olds 2,300

Play Group (3-4 year olds) 2,300

Kindergarten(4-5 years) 2,300

Admission Fee 3,500

1100..88 CCaasshh ffllooww AAssssuummppttiioonnss

Accounts Receivables Cycle (In Days) 10

Accounts Payable Cycle (In Days) 15

Initial Cash in Bank 50,000

1100..99 FFiinnaanncciinngg AAssssuummppttiioonnss

Debt 30%

Equity 70%

Long Term Debt Interest Rate 13%

Short Term Debt Interest Rate 12%

Tax Treatment Sole proprietorship

Discount Rate for NPV (WACC) 16%

SMEDA Day Care Center

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