Pre-Feasibility Study

MONTESSORI SCHOOL

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk

HEAD OFFICE

6th & 8th Floor LDA Plaza, Egerton Road, Lahore.

Tel: (92 042) 111-111-456 Fax: (92 042) 6304926-7
[email protected]

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH NWFP BALOCHISTAN

5TH Floor, Bahria Ground Floor Bungalow No. 15-A

8th Floor LDA Plaza, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road, Lahore. Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 6304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
[email protected] [email protected] [email protected] [email protected]

September, 2006
Pre-Feasibility Study Montessori School

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

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Pre-Feasibility Study Montessori School

1 INTRODUCTION TO SMEDA 4
2 PURPOSE OF THE DOCUMENT 4
3 PROJECT PROFILE 4
3.1 PROJECT BRIEF 4
3.2 OPPORTUNITY RATIONALE 5
3.3 PROJECT COST 5
3.4 PROPOSED CAPACITY 5
4 CURRENT INDUSTRY STRUCTURE 6
4.1 PRE SCHOOL/DAYCARE 7
4.2 NURSERY/KINDERGARTEN/MONTESSORI 7
5 MARKET ANALYSIS 7
5.1 THE UPPER INCOME GROUP 7
5.2 THE MEDIUM INCOME GROUP 8
5.3 THE LOWER INCOME GROUP 8
6 KEY SUCCESS FACTORS 8
7 REGULATIONS 9
8 HUMAN RESOURCE REQUIREMENT 9
8.1 KEY PERSONNEL 9
8.1.1 Principal 9
8.1.2 Teacher’s coordinator 9
8.1.3 Accountant 10
8.1.4 Teachers 10
8.1.5 Student Attendants 10
8.1.6 Librarian / Activity Teacher 10
8.1.7 Computer Teacher 10
9 EQUIPMENT REQUIREMENT 10
10 LAND & BUILDING 11
10.1 AREA REQUIREMENTS 11
10.2 RECOMMENDED MODE FOR ACQUIRING LAND 12
10.2.1 Building Rent 12
10.3 SUITABLE LOCATION 12
11 PROJECT ECONOMICS 13
12 FINANCIAL ANALYSIS 13
12.1 PROJECTED INCOME STATEMENT 14
12.2 PROJECTED BALANCE SHEET 15
12.3 PROJECTED CASH FLOW STATEMENT 16
13 KEY ASSUMPTIONS 17

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

2 PURPOSE OF THE DOCUMENT

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

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

3. 1 Project Brief
The study provides information regarding investment opportunity for setting up a
Montessori school in any metropolitan city of Pakistan i.e. Lahore, Islamabad, Peshawar,
Quetta or Karachi. However, the project may also be started in smaller cities, after careful
market research. It is also recommended that the Montessori school should be located in
an easily approachable location in line with the selected target market.

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3. 2 Opportunity Rationale
Montessori school education is the first formal learning stage for a child. A child learns to
recognize different alphabets, words, sounds and characteristics. It teaches children to
behave in groups, helping them learn socialization at an early stage.
The fast paced life of the metropolitan cities is significantly influencing the life style of
its inhabitants. Economic pressures are compelling both parents to work towards
achieving and sustaining quality life standards. This has further added to complexity and
competition of a Metropolitan city. As a result of these social changes, the trend of
sending children to Daycare Centers or to Montessori schools at a much earlier age is
gaining rapid grounds. This has further added to complication and competition of a
metropolitan city resulting in high demand for Montessori schools in the metropolitan
cities.
Schools with high reputation have a stringent admission selection process, for which
Montessori schools provide the necessary training. This has also given rise to high
demand for Montessori school systems that can prepare children for admission to
reputable Primary schools.
The growing population has exhausted the limited capacity of the existing private as well
as public primary school systems. The growing population has put tremendous pressure
on the existing public sector education infrastructure in the country. Private sector with
its investment capacity to provide well equipped and well staffed school system is
therefore, well positioned to exploit this opportunity for establishing viable school
systems in the country.

3. 3 Project Cost
Total project cost for setting up a Montessori School is estimated at Rs. 2.38million.

3. 4 Proposed Capacity
It is proposed that students be admitted for Playgroup to Class II. There are ten proposed
classrooms for the school having a total capacity of 240 students. However, this capacity
may not be achieved in the initial years of operations.

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Pre-Feasibility Study Montessori School

Table 3-1: Year Wise Number of Students (Maximum Utilization)

Class Students Per Year
Year 1 Year 2 Year 3 Year 4 Year 5
Play Group 24 27 30 33 36
KG-I 12 36 40 40 40
KG-II 12 25 40 40 40
Class I 6 18 32 47 47
Class II 6 13 25 39 54
Drop-Outs 0 3 6 9 11
Pass-Outs 0 6 13 25 39
Total 60 117 171 218 206

4 CURRENT INDUSTRY STRUCTURE

The Montessori education in the country is yet at an early stage to absorb the growing
demand. However, few school systems have steadily established themselves at least in
bigger cities of the country. Some prominent names in Montessori education in Lahore
include, The Lahore Pre-School, Kids Campus, Scarsdale, Lahore Grammar School,
Lahore Alma and the Lahore Kindergarten within the Lahore city. Karachi is the largest
city with well-established private sector education systems. Major Montessori schools in
Karachi include Montessori World, Radiant Montessori, PAF Montessori, Head Start and
CAS (Center for Advanced Studies).
The Education system of Pakistan is divided into the following tiers:
Table 4-1: Education System in Pakistan
Level Classes Admission Duration
Age (Year)
Elementary (Montessori) Playgroup, Kindergarten 3-5 2 Years
Primary I-V 5 5 Years
Middle VI-VIII 10 3 Years
Secondary IX-X 13 2 Years
Higher Secondary XI-XII 16 2 Years
B.A (Graduate Degree) 2 Years
M.A (Post-graduate Degree) 2 Years
M. Phil/ Ph.D. 3 Years
Educational Guide of Pakistan (2000-01)

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

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4. 1 Pre School/Daycare
The Pre-school/ Daycare Centers admit children ranging from 3 months to 3 years of age.
However, on an average a child of two and a half years of age is normally admitted to a
Pre-School. At Daycare Centers, children are normally engaged in playful activities with
no formal training imparted.
Pre-school training includes recognition of numbers and alphabets, introduction to basic
shapes, body parts, poems and basic religious knowledge.

4. 2 Nursery/Kindergarten/Montessori
This tier of education system is the first stage of formal learning process for a child.
Normally a child of three years of age is admitted to this system of education. Different
teaching methods and course work is applied at this level of education. Most school
systems adopt their own teaching methodology. At this level of school education, it is the
teachers and the school environment that is more important for the pupils than the course
work itself. The schools prepare their students to socialize with other children in the same
age bracket and familiarize them for a more formal primary level education.
In addition, a vast majority of the schools in this tier also adopt their course curriculum to
prepare the children for admission in primary level schools, where admission is highly
competitive.

5 MARKET ANALYSIS
There are two broad market-positioning options available to a Montessori School System.
• Based on the household income.
• Based on the quality/standard of education offered
Irrespective of the education services, income based target market will play a crucial role
in the overall positioning of the school.
Any entrepreneur planning to open up a Montessori school should first decide upon the
objective of the venture. Various options available in this regard may include:
• To plan a Montessori school with emphasis on Daycare services.
• To establish a school as a Preparatory School for other reputed Primary Level
Schools.
• To establish a Montessori School with incremental expansion of services into primary
and high school level.
Based on income level, the school can position itself for any of the following three broad
income groups;

5. 1 The Upper Income Group

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

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Pre-Feasibility Study Montessori School

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

5. 2 The Medium Income Group

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

5. 3 The Lower Income Group

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

6 KEY SUCCESS FACTORS

At a Montessori school level, teachers/attendants play a critical role in the success of
learning process. Therefore, it is suggested that staff employed by the school should be
highly educated and properly trained for Montessori education. Before starting education
services, it is recommended that teacher training program should be imparted.
In addition to the quality of teachers employed, the teacher student ratio should be kept at
a well-researched optimum level.
The education curriculum should be well researched and comprehensive. In addition to
paper course work, it is suggested that visual and other teaching tools should also be
optimally used.
Parents are conscious about the well being and safety of their children at schools,
therefore, it is suggested that the school environment ensures security and should be free
from any apparent hazards. The school should preferably not be located in a highly
populated location or at a location with high traffic hazards.
The area of the classrooms should be in line with the number of students in each
classroom. Moreover, the classrooms should either be air-conditioned or at least well
ventilated. Classrooms should also be well equipped with teaching as well as extra
curricular activity aids.
Adequate provisions for physical, either indoor or outdoor or both facilities should be
made available.
Continuous teacher parent interaction should also be a regular feature of the school
education system.

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

8 HUMAN RESOURCE REQUIREMENT

Table 8-1: Human Resource required for the business
Position Number Salary per Annual Salary
month (Rs.) (Rs.)
Principal 1 30,000 360,000
Teacher coordinator 1 15,000 180,000
Activity Teacher cum Librarian 1 7,000 84,000
Computer Teacher 1 8,500 102,000
Teacher Play Group 2 7,000 168,000
Teacher KG-I 2 7,000 168,000
Teacher KG-II 2 7,000 168,000
Class I 2 8,500 204,000
Class II 2 8,500 204,000
Games teacher 1 7,000 84,000
Accountant 1 10,000 120,000
Student Attendant 4 5,000 240,000
Guard 2 5,000 120,000
Peon / Helper 1 4,000 48,000
Cleaner 2 3,500 84,000
Gardner 1 3,500 42,000
TOTAL 26 2,376,000

8. 1 Key Personnel
8.1.1 Principal
The principal should be responsible for coordinating all the activities of the school
including the hiring of teachers, developing liaison with the parents, maintaining and
developing the brand name of the school for appropriate positioning, course design,
admission tests and extra curricular activities.
8.1.2 Teacher’s coordinator
An experienced and trained Montessori school teacher is recommended for this post The
Coordinator would be assisting the principal in all school matters. He/she will be
responsible for teachers’ attendance, their performance and evaluation. He/she has to
collaborate with students, parents, staff and volunteers to ensure that group activities run

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Pre-Feasibility Study Montessori School

effectively. Supervise and monitor the tutoring of student’s .Coordinate any special
projects to increase coaching awareness among teachers including arranging guest
speakers, visits and workshops.
8.1.3 Accountant
The accountant will be responsible for book keeping and maintaining accounts, salaries,
and other administrative expenditures.
8.1.4 Teachers
Experienced teachers or fresh graduates with a natural aptitude for teaching should be
employed. A balanced mix of experienced and fresh teachers is recommended for
efficient running of the school. Each teacher shall be given a class and held responsible
for proper training, imparting knowledge, arranging co-curricular activities for the
children and their performances in the examinations.
8.1.5 Student Attendants
The students in the elementary institutes are very young and may also need attendants or
baby-sitters. Each class will be having one attendant for the children.
8.1.6 Librarian / Activity Teacher
One person is recommended for running the library and for activity room.
8.1.7 Computer Teacher
The person should be responsible for the introduction of IT to the young students and for
proper arrangement of students’ games and basic computer learning.

9 EQUIPMENT REQUIREMENT
The details of the different equipment required for the project is given in the following
tables:
Table 9-1: Office Equipment Requirement Details
Equipment Quantity Cost per Total Cost
Unit (Rs.) (Rs.)
Computers 3 25,000 75,000
Printer (Laser) 1 25,000 25,000
UPS 3 8,500 25,500
Air condition (1.5 tons) 4 24,000 96,000
Total Equipment 11 221,500

Table 9-2 Other Equipment Requirement Detail

Description Quantity Cost per Unit Total Cost
(Rs) (Rs)
See Saw 2 2,500 5,000
4 Feet Slide 1 2,500 2,500
6 Feet Slide 1 3,500 3,500

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Pre-Feasibility Study Montessori School

8 Feet Slide 1 4,500 4,500

Monkey Bars 6x6 1 6,000 6,000
White Boards 10 2,000 20,000
Soft Boards 10 500 5,000
Computer 10 25,000 250,000
UPS 10 8,500 85,000
Water cooler 1 10,000 10,000
Total 391,500

Table 9-3: Furniture & Fixtures Detail

Furniture & Fixtures Quantity Cost per Total
Unit(Rs) Cost(Rs)
Round tables for Play group 6 4,500 27,000
Chairs for Play group 32 500 16,000
Teacher chairs for Play group 2 1,000 2,000
Round Tables for KG-I 6 4,500 27,000
Chairs for KG-I 32 500 16,000
Teacher chairs for KG-I 2 1,500 3,000
Round Table for KG-II 6 4,500 27,000
Chairs for KG-II 32 500 16,000
Teachers Chair for KG -II 2 1,500 3,000
Teacher Table & Chair for class-I 2 1,600 3,200
Student table & Chair for Class- I 40 1,200 48,000
Teacher Table & Chair for class -II 2 1,600 3,200
Student Table & Chair for Class -II 40 1,200 48,000
Cupboards & Book shelves 8 6,500 52,000
Children Books /toys/Entertainment 150,000
equipment
Computer Chairs 20 800 16,000
Computer Tables 10 1,000 10,000
Carpet ( sq. ft) 4,019 40 160,760
Principal and admin staff 1 100,000 100,000
Total Furniture & Fixture Cost 4,262 728,160

10 L AND & B UI L DI NG
10.1 Area Requirements
For two hundred and forty students (240), 2.5 kanal of land would be sufficient. A
purpose built building may also be purchased. The covered area should have 10
classrooms, one common room for teachers, and one room for principal one for teacher
coordinator and one room for the administration staff. Appropriate number of washrooms

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Pre-Feasibility Study Montessori School

is suggested for teachers, principal, children and administration staff. A big hall should be
allocated with proper divisions for library/ entertainment room, and computer section. An
adequate area should be allocated for the playground. The playground should have
seesaws, slides, monkey bars and other playing equipment and tools.
Table 10-1 Covered Area Requirements
Space Requirements Required Area (Sq. ft)
Class Rooms 2,400
Teachers’ Room 144
Library/Entertainment Room 500
Admin Rooms 575
Computer Class 400
Washrooms & Kitchen 270
Grounds 6,961
Total Covered Area Requirement 11,250

10.2 Recommended Mode for Acquiring Land

It is recommended that the proposed project should be established in a rented building to
reduce initial infrastructure cost. In case a purpose built building is purchased,
infrastructure cost will increase.
10.2.1 Building Rent
Average monthly rent for the building required Rs. 50,000 to 60,000. For this study
monthly rent is estimated at Rs. 55,000.
Table 10-2: Rent Cost
Rent Cost Monthly Rent Annual Rent
(Rs.) (Rs.)
Building rent cost @ Rs. 5 per square foot 55,000 330,000

10.3 Suitable Location

The suitable location will depend upon the target market. All major cities in the country
are best suited for starting a Montessori school. However, with the increasing population
pressure and increasing concentration of well reputed Montessori schools in metropolitan
cities, peripheral and smaller cities also present a very lucrative business opportunity for
opening up a well planned Montessori school. Cities like Sargodha, Multan, Faisalabad,
Sheikhupura, Rahimyar Khan, Gujranwala, Sialkot, Gujrat, Hyderabad and Abbotabad
are some of the cities in this category. Moreover, the presence of large middle class
families in major cantonment cities of the country is another opportunity to be tapped.

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11 FINANCIAL ANALYSIS

11.1 Project Economics

Table 11-1 Project Cost/Capital Requirements
Fixed Capital Requirement Total Cost Rs.
Machinery & Equipment 391,500
Office Equipment 221,500
Office Furniture & Fixture 552,160
Pre-Operating Cost 226,000
Total Fixed Capital Cost 1,391,160
Working Capital
Upfront Building Rental 330,761
Rent Security (Refundable) 165,381
Cash 500,000
Total Working Capital 996,142
Total Investment in the Project (Rs.) 2,387,302

Table 11-2 Financing Plan

Description
Equity 50% 1,193,651
Debt 50% 1,193,651

Table 11-3 Project Returns

Equity Project
Net Present Value 6,394,253 4,291,402
Internal Rate of Return 87% 39%
Payback Period (Years) 3.08 4.07

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11.2 Projected Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5
Revenue
Admission Fee 300,000 435,750 413,438 358,864 309,954
Tuition Fee 2,088,000 4,738,800 7,470,540 9,958,542 12,008,548
Sub Total 2,388,000 5,174,550 7,883,978 10,317,406 12,318,502
COST OF GOOD SOLD
Faculty Staff Salary 1,722,000 1,755,600 1,931,160 2,124,276 2,336,704
Total 1,722,000 1,755,600 1,931,160 2,124,276 2,336,704
Gross Profit 666,000 3,418,950 5,952,818 8,193,130 9,981,799
GENERAL ADMINISTRATION &
SELLING EXPENSE
Administration Staff Salary 654,000 719,400 791,340 870,474 957,521
Building Rent 660,000 726,000 798,600 878,460 966,306
Electricity Expense 287,629 316,392 348,031 382,834 421,118
Water Expense 45,000 79,200 87,120 95,832 105,415
Gas Expense 9,000 9900 10890 11979 13176.9
Communication Expense 32,700 35,970 39,567 43,524 47,876
Office Expenses 32,700 35,970 39,567 43,524 47,876
Students' Teaching Aid 47,760 103,491 157,680 206,348 246,370
Entertainment and Events Expense 23,880 51,746 78,840 103,174 123,185
Professional Fee 23,880 51,746 78,840 103,174 123,185
Depreciation expense 104,864 104,864 104,864 104,864 104,864
Amortization of pre-operating costs 45,200 45,200 45,200 45,200 45,200
Promotional Expense 96,000 86,400 77,760 69,984 62,986
Maintenance Cost 48,000 52,800 58,080 63,888 70,277
Total Operating Expenses 2,110,613 2,419,078 2,716,379 3,023,259 3,335,356
Operating Income (1,444,613) 999,872 3,236,439 5,169,870 6,646,442

Earning Before Interest & Taxes (1,444,613) 999,872 3,236,439 5,169,870 6,646,442
Interest on short term debt - 291,066 218,765 - -
Interest expense on long term debt 160,987 135,086 105,432 71,482 32,612
Sub Total 160,987 426,152 324,197 71,482 32,612
Earning Before Taxes (1,605,600) 573,719 2,912,242 5,098,389 6,613,831
Taxes - - 376,072 1,019,678 1,322,766
Net Profit After Taxes (1,605,600) 573,719 2,536,170 4,078,711 5,291,065

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11.3 Projected Balance Sheet

Const. Year Year 1 Year 2 Year 3 Year 4 Year 5
CURRENT ASSETS
Cash in Bank 500,000 500,000 500,000 1,384,078 5,186,044 10,139,773
Accounts Receivable - 155,739 337,471 514,172 672,874 803,381
Rent Security(Refundable) 165,000 165,000 165,000 165,000 165,000 -
Pre-paid Building Rent 330,000 693,000 762,300 838,530 922,383 483,153
Total Current Asset 995,000 1,513,739 1,764,771 2,901,780 6,946,302 11,426,307
FIXED ASSETS
Machinery & Equipment 391,500 356,265 321,030 285,795 250,560 215,325
Office Equipment 221,500 201,565 181,630 161,695 141,760 121,825
Furniture & Fixtures 552,160 502,466 452,771 403,077 353,382 303,688
Total Fixed Assets 1,165,160 1,060,296 955,431 850,567 745,702 640,838
INTANGIBLE ASSETS
Pre-Operational Costs 226,000 180,800 135,600 90,400 45,200 -
Total Intangible Assets 226,000 180,800 135,600 90,400 45,200 -
TOTAL ASSETS 2,386,160 2,754,835 2,855,802 3,842,747 7,737,204 12,067,145
CURRENT LIABILITIES
Short term Financing - 1,973,024 1,482,921 - - -
Students Security Payable 180,000 402,000 570,000 654,000 -
Total Current Liabilities - 2,153,024 1,884,921 570,000 654,000 -
OTHER LIABILITIES
Long Term Debt 1,193,080 1,014,331 809,681 575,378 307,124 -
Total Long Term Liabilities 1,193,080 1,014,331 809,681 575,378 307,124 -
SHAREHOLDER'S
EQUITY
Paid-up Capital 1,193,080 1,193,080 1,193,080 1,193,080 1,193,080 1,193,080
Retained Earnings (1,605,600) (1,031,881) 1,504,289 5,583,000 10,874,065
Total Equity 1,193,080 (412,520) 161,199 2,697,369 6,776,080 12,067,145
TOTAL CAPITAL & 2,386,160 2,754,835 2,855,802 3,842,747 7,737,204 12,067,145
LIABILITIES

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11.4 Projected Cash flow Statement

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

Cash available for appropriation 500,000 (1,473,024) (982,921) 1,384,078 5,186,044 10,139,773
Cash balance 500,000 (1,473,024) (982,921) 1,384,078 5,186,044 10,139,773
Short term loan requirement 1,973,024 1,482,921 - - -
Cash carried forward 500,000 500,000 500,000 1,384,078 5,186,044 10,139,773

PREF-66/Rev 1/September, 2006 16

Pre-Feasibility Study Montessori School

12 KEY ASSUMPTIONS

Table 12-1 Operating Assumptions

Operational Days Per Month 22
Months Operational 12
Table 12-2 Capacity Utilization Assumptions
Capacity Utilization (First Year) 25%
New Students Admission Growth Rate 10%
First Year Student Enrollment 60
Student Drop-out Ratio 5%
Table 12-3 Economic Assumptions
Electricity Growth Rate 10%
Salary Growth Rate 10%
Rent Growth Rate 10%
Student Fee Growth Rate 5%
Admission Fee Growth Rate 7%
Table 12-4 Expense Assumptions
Office Expense (Stationary, Entertainment etc.) 5% of Administrative Expense
Communication Expense 7% of Administrative Expense
Promotional Expense 5% of Revenue
Professional Expense (Legal, Audit etc.) 1% of Revenue
Student’s Teaching Aid 2% of Revenue

Table 12-5 Depreciation Assumptions

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

PREF-66/Rev 2/September, 2006 17

Pre-Feasibility Study Montessori School

Table 12-6 Student Capacity Assumptions (Maximum Utilization)

Class Students Per Year
Year 1 Year 2 Year 3 Year 4 Year 5
Play Group 24 27 30 33 36
KG-I 12 36 40 40 40
KG-II 12 25 40 40 40
Class I 6 18 32 47 47
Class II 6 13 25 39 54
Drop-Outs 0 3 6 9 11
Pass-Outs 0 6 13 25 39
Total 60 117 171 218 206

Table 12-7 Proportion of New Admission

Play Group 40%
KG 1 20%
KG 2 20%
Class 1 10%
Class 2 10%

Table 12-8 Revenue Assumptions

Admission Fee Student Security Monthly Fee
(Refundable)
Play Group 5,000 3,000 2,500
KG 1 5,000 3,000 3,000
KG 2 5,000 3,000 3,000
Class 1 5,000 3,000 3,500
Class 2 5,000 3,000 3,500

PREF-66/Rev 2/September, 2006 18