Microsoft Word - Montessori School. Standardize V-1Pre-Feasibility StudyPrime Ministers Small Business LoanScheme(Montessori School)Small and Medium Enterprises Development AuthorityMinistry of Industries & Production Government of Pakistan www.smeda.org.pkHEAD OFFICE4th Floor, Building No. 3, Aiwan e Iqbal, Egerton Road, LahoreTel 92 42 111 111 456, Fax 92 42 36304926-7helpdesk@smeda.org.pkREGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH REGIONAL OFFICE KPK REGIONAL OFFICE BALOCHISTAN3rd Floor, Building No. 3, Aiwan e Iqbal, Egerton Road Lahore,Tel: (042) 111-111-456Fax: (042)6304926-7 helpdesk.punjab@smeda.org.pk 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi.Tel: (021) 111-111-456Fax: (021) 5610572 helpdesk-khi@smeda.org.pk Ground Floor State Life Building The Mall, Peshawar.Tel: (091) 9213046-47Fax: (091) 286908 helpdesk-pew@smeda.org.pk Bungalow No. 15-A Chaman Housing SchemeAirport Road, Quetta. Tel: (081) 831623, 831702Fax: (081) 831922 helpdesk-qta@smeda.org.pkSeptember 2013Pre-Feasibility Study(Montessori School)September 2013Table of Contents1. DISCLAIMER........................................................................................................................................... 32. PURPOSE OF THE DOCUMENT ......................................................................................................... 43. INTRODUCTION TO SMEDA .............................................................................................................. 44. INTRODUCTION TO SCHEME............................................................................................................ 55. EXECUTIVE SUMMARY....................................................................................................................... 56. BRIEF DESCRIPTION OF PROJECT & PRODUCT......................................................................... 67. CRITICAL FACTORS ............................................................................................................................ 68. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 79. POTENTIAL TARGET MARKETS/CITIES........................................................................................ 810.PROJECT COST SUMMARY ......................................................................................................... 810.1PROJECT ECONOMICS .................................................................................................................... 910.2PROJECT FINANCING .................................................................................................................... 1010.3PROJECT COST............................................................................................................................. 1010.4LAND REQUIREMENT .................................................................................................................... 10I.BUILDING RENT ................................................................................................................................. 11II.SUITABLE LOCATION.......................................................................................................................... 1110.5OFFICE EQUIPMENT DETAILS ....................................................................................................... 1210.6FURNITURE ................................................................................................................................... 1310.7HUMAN RESOURCE REQUIREMENT.............................................................................................. 1410.8KEY PERSONNEL .......................................................................................................................... 1410.9REVENUE GENERATION ................................................................................................................ 1510.10OTHER EXPENSE .......................................................................................................................... 1611.CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS ....................................................... 1612.ANNEXURE 1 .................................................................................................................................. 1712.1INCOME STATEMENT..................................................................................................................... 1712.2BALANCE SHEET ........................................................................................................................... 1812.3CASH FLOW STATEMENT.............................................................................................................. 1913.USEFUL LINKS ............................................................................................................................... 2014.KEY ASSUMPTIONS...................................................................................................................... 211. DISCLAIMERThis information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data/information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof. 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, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant/technical expert before taking any decision to act upon the information.For more information on services offered by SMEDA, please contact our website:www.smeda.org.pk2. PURPOSE OF THE DOCUMENTThe 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, marketing, finance and business management.The purpose of this document is to facilitate potential investors in Montessori School by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions.The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and its successful management.Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision.3. INTRODUCTION TO SMEDAThe Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs).With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs", SMEDA has carried out sectoral research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives.Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA.Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.4. INTRODUCTION TO SCHEMEPrime Ministers Small Business Loans Scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).Small business loans with tenure upto 7 years, and a debt : equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).5. EXECUTIVE SUMMARYThe 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 dweller. 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, resulting in high demand for Montessori schools in metropolitan cities. The growing population has somewhat exhausted the limited capacity of existing private as well as public primary school systems. Private sector with its investment capacity to provide adequately equipped and qualified staffed school systems is well positioned to capitalize on this opportunity for establishing viable school systems in the country.Montessori school education is the first formal learning stage for a child. This pre- feasibility provides information on establishing a Montessori school in any metropolis of Pakistan, starting classes from Play-group to Class II (aged 3 7) focusing on middle income tier of the society. The school will provide quality education starting at the Elementary level, charging an affordable fee structure. Advanced educational procedures will be practiced teaching an extensive curriculum, using modern teaching methodology at par with international standards.The Montessori school will have sophisticated infrastructural facilities, spacious classrooms, and wide-ranging learning material from books to toys for a meaningful educational experience.The Montessori school business venture entails a total investment of about Rs.2.20 million. This includes a capital investment of Rs. 1.72 million and a sum ofRs.0.47 million as initial working capital. The project is financed through 90% debtand 10% equity. The Net Present Value (NPV) of the project is around Rs. 3.46 million with an Internal Rate of Return (IRR) of 48% and a payback period of 3.29 years.The project will generate direct employment opportunity for 16 persons. Higher return on investment and a steady growth of business is expected with the entrepreneur having some prior experience in the related field of business. This pre feasibility encompasses essential information regarding various aspects of starting a Montessori school business in Pakistan. This pre feasibility will encompass essential information regarding various aspects of starting a Montessori school business in Pakistan.6. BRIEF DESCRIPTION OF PROJECT & PRODUCTSchools with high reputation have a stringent admission selection process, for which Montessori schools provide the necessary training. This has given rise to a high demand for Montessori school systems that prepare children for admission to reputable primary schools providing necessary educational training starting at an early age. With the growing population and a limited number of schools, establishment of elementary schools has become a potent business opportunity. The overall proposed capacity of the Montessori school is for 170 students. However, the school will start with 86 students initially in year 1, gradually increasing to 170 students in year 8. Each class level from Playgroup, KGI, KGII has two sections while class I and II will have one section each. The maximum number of enrolments per class is limited to 20 students from Playgroup till KG II and 25 students for class I and II.The proposed building for the project will be acquired on rent, covering an approximate area of 1.5 Kanals to accommodate the proposed student strength.The total project cost for setting up this school is estimated at Rs. 2.20 million out of which the Capital cost is estimated at Rs. 1.72 million and working capital of Rs.0.47 million. The project is financed through 90% debt and 10% equity. The project NPV is around Rs. 3.46 million with an IRR of 48% and payback period of 3.29 years.7. CRITICAL FACTORS At a Montessori school level, teachers/attendants play a critical role in the success of the learning process. Therefore, it is suggested that staff employed by the school should be highly educated and properly trained for Montessorieducation. Before starting education services, it is recommended that teacher training program should be imparted. 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. Higher return on investment and a steady growth of business is closely associated with continuous training and capacity building of the entrepreneur. Prior experience/education in the related field of business can be a big advantage8. INSTALLED & OPERATIONAL CAPACITIESIt is proposed that students be admitted for Playgroup to Class II. There are 8 proposed classrooms for the school having a total capacity of 170 students. (The school will start with 86 students initially in year 1, gradually increasing to 170 students in year 8). The maximum number of enrolments per class is limited to 20 students from Playgroup till KG II and 25 students from Class 1 till Class 2. However, this capacity may not be achieved in the initial years of operations. The building will be acquired on rent, covering an approximate area of 1.5 Kanals to accommodate the proposed student strength. Year wise capacity utilization details are mentioned in the table below:Table 1 - Year Wise Number of Students (Maximum Utilization)ClassStudents Per YearYear 1Year 2Year 3Year 4Year 5Play Group2026283133KG-I2026283133KG-II2026283133Class I1316181921Class II1316181921Total861101201311419. POTENTIAL TARGET MARKETS/CITIESAll major cities in the country are 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. Other than Lahore, Karachi & Islamabad, 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.A suitable location will depend upon the target market. It is recommended that the Montessori school should be located in an easily approachable location in line with the selected target market.10. PROJECT COST SUMMARYA detailed financial model has been developed to analyze the commercial viability of Montessori School under the Prime Ministers Small Business Loan Scheme. Various cost and revenue related assumptions along with results of the analysis are outlined in this section.The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendix.10.1 Project EconomicsIt is proposed that students be admitted for Playgroup to Class II. There are 8 proposed classrooms for the school having a total capacity of 170 students. The maximum number of enrollments per class is limited to 20 students from Playgroup till KG II and 25 students from Class 1 till Class 2. However, this capacity may not be achieved in the initial years of operations. The building will be acquired on rent, covering an approximate area of 1.5 Kanals to accommodate the proposed student strength. The year wise capacity utilization details are mentioned in the table below:Table 2 - Year Wise Number of Students (Maximum Utilization)ClassStudents Per YearYear 1Year 2Year 3Year 4Year 5Play Group2026283133KG-I2026283133KG-II2026283133Class I1316181921Class II1316181921Total86110120131141The following table shows internal rate of return, payback period and net present value:Table 3 - Project EconomicsDescriptionDetailsInternal Rate of Return (IRR)48%Payback Period (Yrs)3.29Net Present Value (NPV)3,460,510Returns on the scheme and its profitability are highly dependent on the entrepreneur having some practical knowledge about advanced educational procedures, teaching an extensive curriculum and using modern teaching methodology in sync with international standards along with qualified and experienced faculty to be hired.10.2Project FinancingFollowing table provides details of the equity required and variables related to bank loan;Table 4 - Project FinancingDescriptionDetailsTotal Equity (10%)Rs. 220,168Bank Loan (90%)Rs. 1,981,509Markup to the Borrower (%age/annum)8%Tenure of the Loan (Years)710.3Project CostFollowing requirements have been identified for operations of the proposed business.Table 5 - Capital Investment for the ProjectCapital InvestmentAmount (Rs.)Land-Building/Infrastructure-Furniture & fixtures932,500Schools Office Equipment253,700Computer & Equipment490,500Pre-operating Cost49,977Total Capital Costs1,726,677Initial Working Capital475,000Total Project Cost2,201,67710.4 Land RequirementFor a batch of 170 students, 1.5 kanals of land comprising double story building would be sufficient. A purpose built building may also be acquired on rent. The covered area should have 8 classrooms, 1 room for principal, 1 for teachers coordinator and 1 room for the administration staff. Appropriate numbers of washrooms are suggested for teachers, principal, children and administration staff. A big hall should be allocated with proper divisions for 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 6 - Covered Area RequirementsSpace RequirementsRequired Area (Sq. ft)Class Rooms (8 rooms)1,920Entertainment Room376Admission Office100Principal Office150Admin Room100Computer Class300Washrooms, Store & Kitchen554Grounds aprox.3,250Total Covered Area Requirement6,750It 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.i.Building RentMonthly rent for the proposed 1.5 Kanal building in the middle or upper middle income group area is estimated at Rs. 100,000 and total building rent during year1 would be approximately Rs. 1,200,000.ii.Suitable LocationThe 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. Other than Lahore, Karachi & Islamabad, 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.10.5Office Equipment DetailsThe details of the different equipment required for the project is given in the following tables:Table 7- Office Equipment CostsEquipmentQuantityCost perUnit (Rs.)Total Cost(Rs.)Computers325,00075,000Computers Lab1025,000250,000Networking Cost120,00020,000Printer17,5007,500Scanner15,0005,000Server135,00035,000Fax Machine112,00012,000Telephone Sets41,5006,000UPS 3.0 KVA240,00080,000Total Equipment490,500Table 8 - Electrical & Other Equipment CostsDescriptionQuantityCost perUnit (Rs)Total Cost(Rs)Air conditioners (in principal room)145,00045,000Ceiling fans262,50065,000Exhaust fans42,0008,000Energy Saver7420014,700Water coolers120,00020,000Refrigerator125,00025,000Microwave17,5007,500Electric Kettle12,5002,500Fire extinguisher215,00030,000Vacuum cleaner115,00015,000Telephone/facsimile112,00012,000Wall clock127509,000Total253,700Table 9 Playing Equipment CostsDescriptionQuantityCost perUnit (Rs)Total Cost(Rs)Play EquipmentSee Saw112,00012,0004 Feet Slide115,00015,0006 Feet Slide117,00017,0008 Feet Slide120,00020,000Monkey Bars 6x6112,00012,000Zig Zag Bridge110,00010,000Monkey Jumping115,00015,000Total101,00010.6FurnitureAs this business is related to education sector therefore there is exclusive requirement of furniture and fixtures. Following furniture will be required atMontessori School:Table 10 - Furniture CostsDescriptionQuantityUnit Cost(Rs)Total Cost(Rs)Principal OfficeTable & Chair120,00020,000Visitors Chairs33,0009,000Cupboard17,5007,500Admin OfficeTable15,0005,000Chairs22,5005,000Cupboard17,5007,500Class RoomsRound tables for Play Group to KG II203,00060,000Chairs for Play Group to KG II1201,500180,000Student Table & Chair for Class 1 & 2504,500225,000Teacher Table & Chair85,00040,000Cupboards & Book shelves85,00040,000White Boards82,50020,000Children Books / Toys / Entertainment equipment100,000Computer LabComputer Chairs202,50050,000Computer Tables103,50035,000Cupboard17,5007,500Soft board12,5002,500White board12,5002,500Reception Area Furniture115,00015,000Total Furniture & Fixture Cost831,50010.7Human Resource RequirementFollowing human resource is estimated for the Montessori School which will be required during the first year:Table 11 - Human Resource required for the first yearPositionNumberSalary/month(Rs.)Annual Salary(Rs.)Principal125,000300,000Teachers Coordinator115,000180,000Computer Teacher115,000180,000Games Teacher115,000180,000Teacher Play Group212,000288,000Teacher KG-I212,000288,000Teacher KG-II212,000288,000Class I112,000144,000Class II112,000144,000Accountant115,000180,000Guard110,000120,000Student Attendent110,000120,000Cleaner110,000120,000TOTAL162,532,000Salaries of all employees are estimated to increase at 10% annually.10.8Key Personnel i. PrincipalThe 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.ii. Teachers CoordinatorAn 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 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.iii. AccountantThe accountant will be responsible for book keeping and maintaining accounts, salaries, and other administrative expenditures.iv. TeachersExperienced 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.v. Student AttendantThe students in the elementary institutes are very young and may also need attendants or baby-sitters.vi. Computer TeacherThe teacher should be responsible for the introduction of information technology to the young students and for proper arrangement of students games and basic computer learning.10.9 Revenue GenerationExpected revenue generation by the number of students admitted in the school during the first year is given in the table below:Table 12 - Expected Revenue Generation during Year-IYear - INumber ofClasses Total Number ofStudents in each Class Class NameFee PerStudent Qty.RupeesRegistration Fee2,50086215,000Admission Fee7,50086645,000240Playgroup3,50020840,000240KG I4,00020960,000240KG II4,300201,032,000125Class I4,80013748,800125Class II5,30013826,800170 Net Fee of School 865,267,600Table 13 - Revenue AssumptionsStudents fee growth rate7.5%Production capacity utilization during Year 150%September 201310.10 Other ExpenseOther than salaries, following operating expenses are assumed to be incurred during Year 1:Table 14 Other Operating Expense during Year 1Other Operating Expenses:Rs.Teacher training expense36,000Utilities - elec, gas, telephone318,142Internet & communication expense30,000Stationary & printing90,000Newspaper, books & periodicals30,000School events & programmes60,000Consultancy charges & audit fee36,000Computer lab expenses30,000Postage36,000Advertisement60,000Plantation expense30,000Transportation & travelling24,000Medical & first aid30,000Repair & maintenance90,000Misc. Office expense30,000Office supplies30,000Janitorial expense60,000Rental expense1,200,000Total2,220,14211. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS Punjab Education Foundation78-B1, Gulberg III, Lahore, Pakistan. Ph: 042-99268114-7Fax: 042-99268118 Directorate of Staff Training DevelopmentWahdat Colony, Wahdat RoadLahoreTel # 042 9926010816Pre-Feasibility Study(Montessori School)September 201312. ANNEXURE 112.1Income StatementIncome Statement Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Revenue 5,267,600 6,350,010 7,274,372 8,499,746 9,840,583 11,363,832 13,028,539 14,663,684 15,631,140 16,800,336Faculty Salary 1,992,000 2,191,200 2,410,320 2,651,352 2,916,487 3,208,136 3,528,950 3,881,844 4,270,029 4,697,032Total cost of sales 1,992,000 2,191,200 2,410,320 2,651,352 2,916,487 3,208,136 3,528,950 3,881,844 4,270,029 4,697,032Gross Profit 3,275,600 4,158,810 4,864,052 5,848,394 6,924,095 8,155,696 9,499,590 10,781,839 11,361,111 12,103,304General administration & selling expensesAdministration expense540,0001,174,8001,292,2801,421,5081,563,6591,720,0251,892,0272,081,2302,289,3532,518,288Building rental expense1,200,0001,320,0001,452,0001,597,2001,756,9201,932,6122,125,8732,338,4612,572,3072,829,537Utilities - elec, gas, telephone318,142349,957384,952423,448465,792512,372563,609619,970681,967750,163Internet & communication expense30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Teacher training expense36,00037,80039,69041,67543,75845,94648,24350,65653,18855,848School events & programmes60,00063,00066,15069,45872,93076,57780,40684,42688,64793,080Computer lab expenses30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Consultancy charges & audit fee36,00037,80039,69041,67543,75845,94648,24350,65653,18855,848Newspaper, books & periodicals30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Stationary & printing90,00094,50099,225104,186109,396114,865120,609126,639132,971139,620Postage36,00037,80039,69041,67543,75845,94648,24350,65653,18855,848Transportation & travelling24,00025,20026,46027,78329,17230,63132,16233,77035,45937,232Advertisement60,00063,00066,15069,45872,93076,57780,40684,42688,64793,080Office supplies30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Medical & first aid30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Misc. Office expense30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Plantation expense30,00031,50033,07534,72936,46538,28840,20342,21344,32446,540Repair & maintenance90,00094,50099,225104,186109,396114,865120,609126,639132,971139,620Janitorial expense60,00063,00066,15069,45872,93076,57780,40684,42688,64793,080Depreciation expense216,720216,720216,720216,720216,720243,823243,823243,823243,823243,823Amortization of pre-operating costs 9,995 9,995 9,995 9,995 9,995 - - - - -Subtotal2,986,8583,808,5724,129,9034,481,5244,866,3725,304,7815,766,0796,271,2686,824,6237,430,844Operating Income288,742350,238734,1501,366,8712,057,7232,850,9153,733,5104,510,5724,536,4884,672,460Gain / (loss) on sale of office equipment- - - - 196,200- - - -Earnings Before Interest & Taxes288,742 350,238 734,150 1,366,871 2,253,9232,850,915 3,733,510 4,510,572 4,536,4884,672,460Interest expense on long term debt (Debt facility : Bank 1)150,569132,305112,52691,10567,90642,78215,572- - -Subtotal150,569132,305112,52691,10567,90642,78215,572- - -Earnings Before Tax138,174217,933621,6231,275,7662,186,0172,808,1333,717,9384,510,572 4,536,488 4,672,460Tax--20,14899,013237,253340,939521,587680,114685,297712,492NET PROFIT/(LOSS) AFTER TAX138,174217,933601,4761,176,7531,948,7642,467,1943,196,3503,830,4583,851,1913,959,96812.2Balance SheetBalance SheetAssetsCurrent assets Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Cash & Bank 375,000 400,858 447,199 833,846 1,686,170 3,188,234 5,141,785 7,742,773 11,290,353 14,872,799 18,826,729Accounts receivable 119,718 264,037 309,645 358,503 416,826 481,919 554,372 629,369 688,519 737,079Pre-paid building rent 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795 - Total Current Assets 475,000 630,576 832,236 1,276,591 2,191,083 3,766,111 5,800,859 8,492,017 12,134,081 15,797,113 19,563,808Fixed assetsLand - - - - - - - - - - - Building/Infrastructure - - - - - - - - - - - Machinery & equipment 253,700 228,330 202,960 177,590 152,220 126,850 101,480 76,110 50,740 25,370 - Furniture & fixtures 932,500 839,250 746,000 652,750 559,500 466,250 373,000 279,750 186,500 93,250 - Office vehicles - - - - - - - - - - - Office equipment 490,500 392,400 294,300 196,200 98,100 626,016 500,813 375,610 250,406 125,203 - Total Fixed Assets 1,676,700 1,459,980 1,243,260 1,026,540 809,820 1,219,116 975,293 731,470 487,646 243,823 -Intangible assetsPre-operation costs49,97739,98229,98619,9919,995- - - - - -Total Intangible Assets49,97739,98229,98619,9919,995- - - - - -TOTAL ASSETS2,201,6772,130,5382,105,4822,323,1223,010,8994,985,227 6,776,152 9,223,487 12,621,727 16,040,936 19,563,808Liabilities & Shareholders' EquityCurrent liabilitiesAccounts payable45,27395,073104,580115,038126,542139,196153,116168,427185,270203,797Total Current Liabilities- 45,27395,073104,580115,038126,542139,196153,116168,427185,270203,797Other liabilitiesDeferred tax (34,543) (89,027) (224,285) (444,213) (753,465) (1,114,560) (1,522,457) (1,969,985) (2,418,810) (2,874,433)Long term debt (Debt facility : Bank 1)1,981,5091,761,4671,523,1621,265,077985,571682,867355,038- - - -Total Long Term Liabilities1,981,5091,726,9241,434,1351,040,792541,358(70,598)(759,521)(1,522,457) (1,969,985) (2,418,810) (2,874,433)Shareholders' equityPaid-up capital220,168220,168220,168220,168220,168846,184846,184846,184846,184846,184846,184Retained earnings138,174356,106957,5822,134,3354,083,0996,550,2949,746,64413,577,10217,428,29221,388,260Total Equity220,168358,341576,2741,177,7502,354,5034,929,2837,396,47710,592,82814,423,28518,274,47622,234,444TOTAL CAPITAL AND LIABILITIES2,201,6772,130,5382,105,4822,323,1223,010,8994,985,2276,776,1529,223,48712,621,72716,040,93619,563,808September 201312.3Cash Flow StatementCash Flow StatementOperating activities Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Net profit 138,174 217,933 601,476 1,176,753 1,948,764 2,467,194 3,196,350 3,830,458 3,851,191 3,959,968Add: depreciation expense 216,720 216,720 216,720 216,720 216,720 243,823 243,823 243,823 243,823 243,823 amortization of pre-operating costs 9,995 9,995 9,995 9,995 9,995 - - - - -Deferred income tax (34,543) (54,483) (135,258) (219,929) (309,252) (361,095) (407,897) (447,529) (448,825) (455,623) Accounts receivable (119,718) (144,318) (45,608) (48,858) (58,323) (65,093) (72,454) (74,997) (59,150) (48,560) Pre-paid building rent (100,000) (10,000) (11,000) (12,100) (13,310) (14,641) (16,105) (17,716) (19,487) (21,436) 235,795Accounts payable 45,273 49,800 9,507 10,458 11,504 12,654 13,920 15,312 16,843 18,527Other liabilities - - - - - - - - - - Cash provided by operations (100,000) 245,900 284,646 644,732 1,131,830 1,804,768 2,281,379 2,956,027 3,547,580 3,582,446 3,953,930Financing activitiesDebt facility : Bank 1 - principal repayment(220,042)(238,305)(258,085)(279,506)(302,704)(327,829)(355,038)- - -Additions to Debt facility : Bank 11,981,509-------- - -Issuance of shares220,168----626,016--- - -Purchase of (treasury) sharesCash provided by / (used for) financing activities2,201,677(220,042)(238,305)(258,085)(279,506)323,312(327,829)(355,038)- - -Investing activitiesCapital expenditure(1,726,677)- - - - (626,016)- - - - -AcquisitionsCash (used for) / provided by investing activities(1,726,677)- - - - (626,016)- - - - -NET CASH 375,000 25,858 46,341 386,647 852,324 1,502,064 1,953,550 2,600,989 3,547,580 3,582,446 3,953,93019Pre-Feasibility Study(Montessori School)September 201313. USEFUL LINKSPrime Ministers Office, www.pmo.gov.pkSmall and Medium Enterprise Development Authority, www.smeda.org.pkNational Bank of Pakistan (NBP), www.nbp.com.pk First Women Bank Limited (FWBL), www.fwbl.com.pk Government of Pakistan, www.pakistan.gov.pk Ministry of Industries & Production, www.moip.gov.pkMinistry of Education, Training & Standards in Higher Education http://www.mopttGovernment of Punjab, www.punjab.gov.pkGovernment of Sindh, www.sindh.gov.pkGovernment of Khyber Pakhtoonkhwa, www.khyberpakhtunkhwa.gov.pkGovernment of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk Government of Azad Jamu Kashmir, www.ajk.gov.pkTrade Development Authority of Pakistan (TDAP), www.tdap.gov.pkSecurity Commission of Pakistan (SECP), www.secp.gov.pkFederation of Pakistan Chambers and Commerce and Industries (FPCCI)www.fpcci.com.pkState Bank of Pakistan (SBP), www.sbp.org.pkAll Pakistan Private Schools Welfare Association (APPSWA)www.appswa.com.pk14. KEY ASSUMPTIONSTable 15 - Operating AssumptionsOperational Days Per Month22Months Operational12Table 16 - Capacity Utilization AssumptionsCapacity Utilization (First Year)50%First Year Student Enrollment85Student Drop-out Ratio5%Students addition in Year - 225 Nos.Students addition in Year 3 and onwards10 Nos.Table 17 - Economic AssumptionsElectricity Growth Rate10%Salary Growth Rate10%Rent Growth Rate10%Student Fee Growth Rate7.5%Admission Fee Growth Rate5%Misc. Expense Growth Rate5%Table 18 - Expense AssumptionsOffice Expense (Stationary, Entertainment etc.)Rs. 90,000 per annumCommunication ExpenseRs. 30,000 per annumAdvertisement ExpenseRs. 60,000 per annumTeachers Training ExpenseRs. 36,000 per annumRepair & Maintenance ExpenseRs. 90,000 per annum