2018

Pre-Feasibility Study
©

(Montessori School)
 Pre-Feasibility Study © (Montessori
School)

1 Executive Summary
The main objective of the project is establishing an Montessori School System in Lahore,
starting classes from Play-group to Class V initially. The school will be aimed to target the
children of the age 3 to 7. The school will practice advanced educational procedures –
teaching an extensive curriculum and using modern teaching methodology in sync with
international standards. Qualified and experienced faculty will be hired.

Child education is increasing, resulting in high demand for Montessori

schools in metropolitan cities. Moreover, the competition for admission in
renowned primary to higher education schools has tremendously
increased, forcing parents to invest in early learning and development of
kids to match the admission test requirements. On other end, growing
population in urban cities due to migration from semi-urban areas has
exhausted the limited capacity of existing private as well as public
primary school systems. Thus, the Private
investor with his/her investment capacity is well positioned to capitalize
on this opportunity for establishing adequately equipped and qualified
staffed, viable school systems in the country.

Montessori school education is the first formal learning stage for a child.
This prefeasibility 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 society. The school
will provide quality education starting at the Elementary level, charging an
affordable fee structure

2 BRIEF DESCRIPTION OF PROJECT & PRODUCT

chools 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 montessory schools has become a potent business
opportunity.
The overall proposed capacity of the Montessori school is for 250 students
/ year.
However, the school will start with 90 students initially in year 1, gradually
increasing to 170 students in year 8. Each class level from Playgroup, KG-

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I, KG-II
has two sections while class I and II will have one section each. The
maximum
number of enrolments per class is limited to 25 students for 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. 1.80 million and working
capital of Rs.
0.40 million.

7. KEY FACTORS

 School’s environment should ensure security.

 The school should be preferably located in an area approachable for
parents.
 At a Montessori school, teachers/attendants play a critical role in the
success of the learning process. The staff employed by the school will be
highly educated and properly trained for Montessori education. The
teacher training program should be imparted.
 The education curriculum will 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.
 Classrooms will be well equipped with teaching as well as extra-
curricular activity aids.
 Adequate provisions for physical, either indoor or outdoor or both
facilities will be made available.
 Continuous teacher parent interaction will also be a regular feature of
the school education system.
 The Design layout of school and its furnishing should be attractive for
kids. Attention will be given to both the exterior and interior of the school
to create an impact.
 Emphasis on child development with proper guidance.
 Marketing and promotion through various channels i.e.
catalogues/pamphlets, outdoor advertisement, hoardings/flex signs, cable
ads, digital and sms marketing, coverage in magazines and channels,
promotion through social
media (facebook etc).

8. INSTALLED & OPERATIONAL CAPACITIES

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It is proposed that students be admitted for Playgroup to Class II. There

are 8 proposed classrooms for the school having a total capacity of 250
students. The school will start with 89 students in year 1, gradually
increasing to 250 students in year 8. The maximum number of enrolments
per class is limited to 25 students for Playgroup till Class 2. However, this
capacity may not be achieved in the initial years of operation. 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 (First 5 years)

Stude
nts
Class
Per
Year
Year Year Year Year
Year 1 Year 2 Year 4 Year 8
3 5 6 7
Play
20 25 30 35 40 45 50 50
Group
KG-I 20 25 30 35 40 45 50 50
KG-II 20 25 30 35 40 45 50 50
Class I 15 20 23 25 30 35 40 50
Class II 15 20 23 25 30 35 40 50
Total 90 115 136 155 180 205 230 250

9. Project Economics
It is proposed that students be admitted for Playgroup to Class II. There
are 8 proposed classrooms for the school, having a total capacity of 250
students. The maximum number of enrollments per class is limited to 25
students for Playgroup till KG-II and 25 students for Class 1 till Class 2.
However, this capacity may not be achieved in the initial years of
operations.

Project Financing

Following table provides details of the equity required and variables

related to
bank loan;

Table 3 - Project Financing

Description Details

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Total Equity (10%) Rs. 2,200,000

Bank Loan (90%) Rs. 1,980,000
Markup to the Borrower (%age/annum) 6%
Tenure of the Loan (Years) 8 Years
Grace Period (Year) 1 Year

Project Cost

Following requirements have been identified for operations of the

proposed
business.

Table 4 - Capital Investment for the Project

Capital Investment Amount (Rs.)

Furniture & fixtures 985,000
School’s Office Equipment 270,000
Computer & Equipment 495,000
Pre-operating Cost 50,000
Total Capital Cost 1,800,000
Initial Working Capital 400,000
Total Project Cost 2,200,000
Land Requirement

For a batch of 250 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 room for teachers’ coordinator and 1 room for the administration staff.
Appropriate numbers of washrooms are suggested for both staff and
students. A big hall should be allocated with proper divisions for
entertainment and computer section. An adequate area should also be
allocated for the playground. The playground should
have seesaws, slides, monkey bars and other playing equipment and
tools.

Table 5 - Space Requirements

Space Requirements Required Area (Sq. ft)

Class Rooms (10 rooms) 2,400
Entertainment Room (library, etc.) 376
Admission Office 100
Principal Office 150
Accounts Office 100
Computer Class 300
Washrooms, Store & Kitchen 554
Grounds aprox. 2,770

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Total Space Requirement 6,750

Building Rent

Monthly 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 year 1 would be approximately Rs. 1,200,000.

Office Equipment Details

The details of equipment required for the project is given in the following
tables:

Table 6- Office Equipment Costs

Total
Cost per
Equipment Quantity Cost
Unit (Rs.)
(Rs.)
Computers 3 25,000 75,000
Computers for Lab 10 25,000 250,000
Networking Cost 1 20,000 20,000
Printer 1 9,000 9,000
Scanner 1 5,000 5,000
Server 1 35,000 35,000
Photo Copier 1 15,000 15,000
Telephone Sets 4 1,500 6,000
UPS – 3.0 KVA 2 40,000 80,000
Total Equipment 495,000

Table 7 - Electrical & Other Items Cost

Cost per Total Cost

Description Quantity
Unit (Rs) (Rs)
Air conditioners (in principal
1 45,000 45,000
room)
Ceiling fans 26 2,500 65,000
Exhaust fans 4 2,000 8,000
Energy Savers 74 200 14,800
Water cooler 1 20,000 20,000

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Refrigerator 1 25,000 25,000

Electric Kettle 1 1,200 1,200
Fire extinguisher 2 15,000 30,000
Vacuum cleaner 1 15,000 15,000
Telephone/facsimile 1 12,000 12,000
Wall clock 12 750 9,000
Library Books 1 25,000 25,000
Total 270,000

Table 8 – Playing Equipment Costs

Cost per Total Cost

Description Quantity
Unit (Rs) (Rs)
Play Equipment
See Saw 1 12,000 12,000
4 Feet Slide 1 15,000 15,000
6 Feet Slide 1 16,000 16,000

8 Feet Slide 1 20,000 20,000

Monkey Bars 6x6 1 12,000 12,000
Zig Zag Bridge 1 10,000 10,000
Monkey Jumping 1 15,000 15,000
Total 100,000

Furniture

Details of furniture required are as under:

Table 9 - Furniture Costs

Description Quantity Unit Total

Cost Cost

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(Rs) (Rs)
Principal Office
Table & Chair 1 20,000 20,000
Visitors Chairs 3 3,000 9,000
Cupboard 1 7,500 7,500
Admin Office 0
Table 1 5,000 5,000
Chairs 2 2,500 5,000
Cupboard 1 7,500 7,500
Class Rooms 0
Round tables for Play Group to KG
20 3,000 60,000
II
Chairs for Play Group to KG II 120 1,500 180,000
Student Table & Chair for Class 1 &
50 4,500 225,000
2
Teacher Table & Chair 8 5,000 40,000
Cupboards & Book shelves 8 5,000 40,000
White Boards 8 2,500 20,000
Children Books / Toys /
Entertainment 106,000
equipment
Computer Lab 0
Computer Chairs 20 2,000 40,000
Computer Tables 10 3,500 35,000
Cupboard 1 7,500 7,500
Soft board 1 2,500 2,500
White board 1 2,500 2,500
Reception Area Furniture 1 15,000 15,000
Library 0
Large Tables 2 7,500 15,000
Chairs 10 2,000 20,000
Book Shelf 2 7,500 15,000
Librarian Table & Chair 1 7,500 7,500
Total Furniture & Fixture Cost 885,000

Human Resource Requirement

Following human resource is proposed for the Montessori School which will
be

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required during the first year:

Table 10 - Human Resource required for the first year

Annual
Salary/month
Position Number Salary
(Rs.)
(Rs.)
Principal 1 25,000 300,000
Teachers’ Coordinator 1 15,000 180,000
Computer Teacher 1 15,000 180,000
Games Teacher 1 15,000 180,000
Teacher Play Group 2 12,000 288,000
Teacher KG-I 2 12,000 288,000
Teacher KG-II 2 12,000 288,000
Class I 1 12,000 144,000
Class II 1 12,000 144,000
Accountant 1 15,000 180,000
Guard 1 10,000 120,000
Student Attendant 1 10,000 120,000
Cleaner 1 10,000 120,000
TOTAL 16 2,532,000

Table 11 – Additional Human Resource required for the second

year

Annual
Salary/month
Position Number Salary
(Rs.)
(Rs.)
Lab In charge 1 13,200 158,400
Helper / Peon 1 11,000 132,000
Electrician 1 13,200 158,400
Guard 1 11,000 132,000
TOTAL 4 580,800

Salaries of all employees are estimated to increase at 10% annually.

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Key Personnel

i. Principal

The Principal will be responsible for coordinating all the activities of the
school including staff hiring, developing liaison with parents,
maintaining and developing the brand name of the school for
appropriate positioning, course design, admission tests and extra
curricular activities.

ii. Teachers’ Coordinator

The Coordinator would be assisting the principal in all school matters

and will be
responsible for the teachers’ attendance and their performance
evaluation.

iii. Accountant

The accountant will be responsible for book-keeping and maintaining

accounts, salaries, and other administrative expenditures.

iv. Teachers

Each teacher shall be given a class and will be responsible for proper
training, imparting knowledge, arranging co-curricular activities for
children and their performances in the examinations.

v. Student Attendant

The students in the elementary institutes are very young and may also
need
attendants or baby-sitters.

vi. Computer Teacher

The teacher would be responsible for imparting basic computing skills

in students.

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Revenue Generation

Expected 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-I

Total
Number
Number Fee Per
of Qt
of Class Name Studen Rupees
Students y.
Classes t
in
each Class
Registration
2,500 90 225,000
Fee
7,500 90 675,000
Admission Fee
840,000
2 50 Playgroup 3,500 20 960,000
2 50 KG I 4,000 20 1,080,00
2 50 KG II 4,500 20 0
1 50 Class I 4,800 15
1 25 Class II 5,300 15 864,000
954,000
5,598,0
250 90
00

Table 13 - Revenue Assumptions

Students fee growth rate 7.5%
Number of Students during Year 1 90

Other Expense
Following operating expenses are assumed to be incurred during Year 1:

Table 14 – Other Operating Expense during Year 1

Other Operating Expenses: Rs.

Teacher training expense 36,000
Utilities - elec, gas, telephone 348,142

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Internet & communication expense 60,000

Stationary & printing 90,000
Newspaper, books & periodicals 30,000
School events & programmes 60,000
Consultancy charges & audit fee 60,000
Computer lab expenses 30,000
Postage 36,000
Advertisement 120,000
Plantation expense 36,000
Transportation & travelling 24,000
Medical & first aid 30,000
Repair & maintenance 90,000
Misc. Office expense 30,000
Office supplies 30,000
Janitorial expense 60,000
Rental expens 1,200,000
Total 2,370,142

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2.1 Income Statement

Calculations
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
Revenue 5,598,000 6,724,000 8,393,100 10,245,500 12,790,000 15,733,000 18,675,000 21,796,000

1,992,000 2,191,200 2,410,320 2,651,352 2,916,487 3,248,136 3,572,950 3,,930,245

Faculty Salary
Total cost of sales 1,992,000 2,191,200 2,410,320 2,651,352 2,916,487 3,248,136 3,572,950 3,930,245
Gross Profit 3,606,000 4,532,800 5,982,780 7,594,148 9,873,513 12,484,864 15,102,050 17,865,755

General administration & selling expenses

Administration expense 540,000 1,174,800 1,292,280 1,421,508 1,563,659 1,720,025 1,892,027 2,081,230
Building rental expense 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920 1,932,612 2,125,873 2,338,461
Utilities - elec, gas, telephone 342,142 376,357 413,992 455,392 500,931 551,024 606,126 666,739
Internet & communication expense 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426
Teacher training expense 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656
School events & programmes 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426
Computer lab expenses 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213
Consultancy charges & audit fee 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426
Newspaper, books & periodicals 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213
Stationary & printing 90,000 94,500 99,225 104,186 109,396 114,865 120,609 126,639
Postage 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656
Transportation & travelling 24,000 25,200 26,460 27,783 29,172 30,631 32,162 33,770
Advertisement 120,000 108,000 97,200 87,480 78,732 70,859 63,773 57,396
Office supplies 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213
Medical & first aid 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213
Misc. Office expense 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213
Plantation expense 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656
Repair & maintenance 90,000 94,500 99,225 104,186 109,396 114,865 120,609 126,639
Janitorial expense 60,000 63,000 66,150 69,458 72,930 76,577 80,406 84,426
Depreciation expense 262,500 262,500 262,500 262,500 262,500 280,000 280,000 280,000
Amortization of pre-operating costs 10,092 10,092 10,092 10,092 10,092 - - -
Subtotal 3,176,734 3,988,849 4,302,019 4,646,829 5,026,117 5,450,467 5,908,547 6,411,611

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Operating Income 429,266 543,951 1,680,761 2,947,319 4,847,396 7,034,397 9,193,503 11,454,144

Gain / (loss) on sale of office equipment - - - - 196,200 - - -

Earnings Before Interest & Taxes 429,266 543,951 1,680,761 2,947,319 4,847,396 7,034,397 9,193,503 11,454,144

Interest expense on long term debt (Debt facility : Bank 1) 164,314 150,431 132,184 112,423 91,022 67,844 42,743 15,558
Subtotal 164,314 150,431 132,184 112,423 91,022 67,844 42,743 15,558
Earnings Before Tax 264,952 393,520 1,548,577 2,834,896 4,756,374 6,966,553 9,150,760 11,438,586

Tax
NET PROFIT/(LOSS) AFTER TAX