Pre-Feasibility Study
Day Care Center
Small and Medium Enterprise Development Authority
REGIONAL OFFICE
PUNJAB
8th Floor, LDA Plaza, Egerton
Road, Lahore.
Tel: (042) 111-111-456
Fax: (042) 6304926, 6304927
helpdesk@smeda.org.pk
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th Floor, LDA Plaza, Egerton Road, Lahore.
Tel: (042) 111-111-456, Fax: (042) , 6304926, 6304927
Helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
SINDH NWFP BALOCHISTAN
5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 2831623,
Fax: (021) 5610572 Fax: (091) 286908 2831702
Helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk Fax: (081) 2831922
helpdesk-qta@smeda.org.pk
June, 2007
Pre-feasibility Study Day Care Center

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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Pre-feasibility Study Day Care Center

Table of Contents

1 Purpose of the document .....................................................................................................5

2 Project Profile .....................................................................................................................5
2.1 Project Brief ................................................................................................................5
2.2 Opportunity Rationale..................................................................................................5
2.3 Market Entry Timing ...................................................................................................5
2.4 Proposed Business Legal Status ...................................................................................6
2.5 Project Capacity and Rationale ....................................................................................6
2.6 Project Investment .......................................................................................................6
2.7 Proposed Product Mix .................................................................................................6
2.8 Recommended Project Parameters ...............................................................................8
2.9 Proposed Location .......................................................................................................8
2.10 Key Success Factors/Practical Tips for Success ...........................................................8
2.11 Regulations..................................................................................................................9
2.12 Strategic Recommendations.........................................................................................9
3 Current Industry Structure ...................................................................................................9
3.1 Current Scenario in Quetta City .................................................................................10
4 Market Information ...........................................................................................................10
4.1 Target Customers.......................................................................................................10
4.2 Market Potential ........................................................................................................10
5 Project Requirements.........................................................................................................11
5.1 Day Care Center Requirement ...................................................................................11
5.2 Equipment Details .....................................................................................................11
5.3 Furniture and Equipment Maintenance.......................................................................12
6 Human Resource Requirement ..........................................................................................12
7 Building Requirement .......................................................................................................13
7.1 Covered Area Requirement........................................................................................13
7.2 Recommended Mode .................................................................................................13
7.3 Suitable Location.......................................................................................................13
7.4 Utilities and Infrastructure Requirement ....................................................................13
8 Project Economics.............................................................................................................14
8.1 Project Cost ...............................................................................................................14
8.2 Project Returns ..........................................................................................................14
8.3 Project Financing.......................................................................................................14
9 Financial Analysis .............................................................................................................15
9.1 Project Cost ...............................................................................................................15
9.2 Projected Income Statement.......................................................................................16
9.3 Projected Balance Sheet.............................................................................................17
9.4 Projected Cash Flow Statement..................................................................................18
10 Key Assumptions ..........................................................................................................19
10.1 Capacity Utilization Assumptions ..............................................................................19
10.2 Economic Assumptions .............................................................................................19
10.3 Expense Assumptions ................................................................................................19
10.4 Depreciation Expense Assumptions ...........................................................................19
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10.5 Cost of Goods Sold....................................................................................................20

10.6 Student Capacity Assumptions...................................................................................20
10.7 Revenue Assumptions................................................................................................20
10.8 Cash flow Assumptions .............................................................................................20
10.9 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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Pre-feasibility Study Day Care Center

1 PURPOSE OF THE DOCUMENT

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.

2 PROJECT PROFILE
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.

2. 1 Project Brief
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 cities
of Pakistan i.e. Lahore, Islamabad, Peshawar, Karachi and smaller cities but initial market
research/survey would be required to identify its need.

2. 2 Opportunity Rationale
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.

2. 3 Market Entry Timing

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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2. 4 Proposed Business Legal Status

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.

2. 5 Project Capacity and Rationale

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.

Table 3.5 Year Wise Number of Students

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

2. 6 Project Investment
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.

2. 7 Proposed Product Mix

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

2.7.1 Infant Care Program

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.

2.7.2 For two-year-olds:

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.

2.7.3 Play Group (3 and young 4-years-old)

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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2.7.4 Kindergarten (4 and young 5-year-olds)

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.

2. 8 Recommended Project Parameters

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%

2. 9 Proposed Location
It is recommended that the proposed project be installed in such area of Quetta city so that it
could become easily accessible for parents.

2. 10 Key Success Factors/Practical Tips for Success

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

2. 11 Regulations
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 the
department.

2. 12 Strategic Recommendations

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

3 CURRENT INDUSTRY STRUCTURE

 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

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3. 1 Current Scenario in Quetta City

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

4 MARKET INFORMATION

4. 1 Target Customers
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.

4. 2 Market Potential
The normal school going age of children is around 3 years. Many parents having children of age
between 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 be
introduced. 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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5 PROJECT REQUIREMENTS

5. 1 Day Care Center Requirement

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.

5. 2 Equipment Details
The details of the different equipment required for the project are given as below:

5.2.1 Educational Tool

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

Table 5.2-1 Machinery Requirement Details (educational tools)

Description Total Amount (Rs.)
Equipment (Educational Tools) 250,000

Table 5.2-2 Other Equipment Details

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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Table 5.2-3 Furniture & Fixture Details

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

5. 3 Furniture and Equipment Maintenance

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

6 HUMAN RESOURCE REQUIREMENT

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

Table 6-1 Human Resource Requirement Details

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.

7 BUILDING REQUIREMENT

7. 1 Covered Area Requirement

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

Table 7-1 Covered Area Requirement Details

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

Table 8-2 Rent Cost

Monthly Rent (Rs.) Annual Rent (Rs.)
Building rent cost 35,000 420,000

7. 2 Recommended Mode
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.

7. 3 Suitable Location
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.

7. 4 Utilities and Infrastructure Requirement

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

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

8.2 Project Returns

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

8.3 Project Financing

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

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9 FINANCIAL ANALYSIS
9. 1 Project Cost

Statement Summaries
Initial Investment

Capital Investment Rs. in actuals

Land -
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 actuals

Upfront building rent 350,000
Cash 50,000
Total Working Capital 400,000

Total Investment 1,193,200

Initial Financing Rs. in actuals

Debt 358,096
Equity 835,104

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9. 2 Projected Income Statement

Statement Summaries SMEDA

Income Statement
Rs. in actuals
Year 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 4,551,341
Cost 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 3,099,298
General 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 1,780,951
Operating Income (427,057) (56,558) 263,098 795,285 1,190,249 1,082,112 1,137,005 1,194,587 1,254,988 1,318,346
Other 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 1,457,748
Interest 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 1,457,748
Tax - - - - 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 5,508,793
Total 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 6,605,780
Dividend - - - - - - - - - -
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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9. 3 Projected Balance Sheet

Statement Summaries SMEDA

Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current 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
Educational
equipmentTools 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' Equity
Current 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

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9. 4 Projected Cash Flow Statement

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

Statement Summaries SMEDA

Cash Flow Statement
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities
Net 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 activities
Change 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 activities
Capital 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

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10 KEY ASSUMPTIONS
10. 1 Capacity Utilization Assumptions
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%

10. 2 Economic Assumptions

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%

10. 3 Expense Assumptions

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

10. 4 Depreciation Expense Assumptions

Depreciation Method Straight Line
Equipment 10%
Furniture & Fixtures 10%

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10. 5 Cost of Goods Sold

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).

10. 6 Student Capacity Assumptions

Description
Infant Care Program
For Two Year Olds
Play Group (3-4 year olds)
Kindergarten(4-5 years)
Total
No. of Classroom Maximum Student/Class Total Capacity
2 22 44
1 22 22
1 22 22
1 22 22
5 110

10. 7 Revenue Assumptions

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

10. 8 Cash flow Assumptions

Accounts Receivables Cycle (In Days) 10
Accounts Payable Cycle (In Days) 15
Initial Cash in Bank 50,000

10. 9 Financing Assumptions

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%

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