Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
KPK
REGIONAL OFFICE
BALOCHISTAN
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
August 2015
Pre-Feasibility Study
Table of Contents
1 DISCLAIMER .................................................................................................... 3
2 EXECUTIVE SUMMARY ................................................................................... 4
3 INTRODUCTION TO SMEDA ........................................................................... 4
4 PURPOSE OF THE DOCUMENT ..................................................................... 5
5 BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................ 5
5.1
INSTALLED AND OPERATIONAL CAPACITIES ................................................... 6
6 CRITICAL FACTORS ....................................................................................... 6
7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ....................................... 7
8 POTENTIAL TARGET CUSTOMERS / MARKETS .......................................... 7
9 PROJECT COST SUMMARY ........................................................................... 7
9.1
PROJECT ECONOMICS ................................................................................. 7
9.2
PROJECT FINANCING ................................................................................... 8
9.3
PROJECT COST ........................................................................................... 8
9.4
SPACE REQUIREMENT ................................................................................. 9
9.5
MACHINERY & EQUIPMENT REQUIREMENT .................................................. 10
9.6
FURNITURE & FIXTURES REQUIREMENT ...................................................... 10
9.7
OFFICE EQUIPMENT REQUIREMENT ............................................................ 11
9.8
HUMAN RESOURCE REQUIREMENT ............................................................. 11
9.9
UTILITIES AND OTHER COSTS ..................................................................... 12
9.10 REVENUE GENERATION ............................................................................. 12
10 CONTACT DETAILS....................................................................................... 13
10.1 SCHOOL FURNITURE SUPPLIERS ................................................................ 13
11 USEFUL WEB LINKS ..................................................................................... 13
12 ANNEXURES .................................................................................................. 15
12.1 INCOME STATEMENT.................................................................................. 15
12.2 BALANCE SHEET ....................................................................................... 16
12.3 CASH FLOW STATEMENT ........................................................................... 17
13 KEY ASSUMPTIONS ...................................................................................... 18
13.1 OPERATING COST ASSUMPTIONS ............................................................... 18
13.2 REVENUE ASSUMPTIONS ........................................................................... 18
13.3 FINANCIAL ASSUMPTIONS .......................................................................... 18
August 2015
Pre-Feasibility Study
1 DISCLAIMER
This 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.pk
Document Control
Document No.
PREF-NO 50
Revision
Prepared by
SMEDA-Punjab
Revision Date
For information
August 2015
August 2015
Provincial Chief Punjab
janjua@smeda.org.pk
Pre-Feasibility Study
2 EXECUTIVE SUMMARY
Education plays a vital role in the progress of any nation and is responsible for its
advancement towards success. This Pre-Feasibility Study is about setting up the
venture of a High School (Franchise) in small cities of Pakistan. The motive to
propose small city is due to market saturation in metropolitan cities of Pakistan
and unavailability of quality education institutes in semi urban areas or small cities.
The proposed school will offer its services from the classes of primary to
matriculation. The school will be catering to children of middle to low-income
economic stratum, recognizing the need for a high caliber yet low-cost institute.
The proposed capacity of High School (Franchise) is 480 Students in one year.
Initial capacity utilization is estimated at 60% with a growth rate of 15% per
annum. This production capacity is estimated to be economically viable and
justifies the capital as well as operational cost of the project. However,
entrepreneurs knowledge of education industry, experienced management,
qualified faculty and location of franchise are key factors for the success of this
project.
Total project cost is estimated as Rs. 5.801 million with capital investment of Rs.
5.121 million and working capital Rs. 0.680 million. Given the cost assumptions
IRR, Payback and Net Present Value are 33%, 3.62 years and Rs. 4.526 million
respectively. The project will provide employment opportunities to 27 people
including owner CEO. The legal business status of this project is proposed as
Sole Proprietorship.
3 INTRODUCTION TO SMEDA
The 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
August 2015
Pre-Feasibility Study
August 2015
Pre-Feasibility Study
The total installed capacity of the project is assumed at 480 students in a year.
The initial operational capacity of the project will be 60% with an annual growth of
15%. Maximum capacity utilization of the project is assumed at 90%.
Table 1: Installed and Operational Capacity
Description
Total Capacity
Operational
Capacity 60 %
(Year 1)
No. of Students
480
288
Maximum Operational
Capacity 90% (Year 3)
432
6 CRITICAL FACTORS
Good working relations with Parent company for on time official work.
Experienced and well-qualified school-teachers are the most important
factor for success.
Proactive administration department is necessary in order to do all
administrative work.
Effective marketing campaign of franchise through different media like local
newspapers, cable networks and social media.
Campus location is key to success. If the location of campus is not easily
reachable for target market; franchise wont be able to achieve sales
targets.
August 2015
Pre-Feasibility Study
Project Economics
All the figures in this financial model have been calculated for estimated sales of
Rs. 6.654 Million in the year one. The capacity utilization during year one is
worked out at 60% with 15% increase in subsequent years up to the maximum
capacity utilization of 90%.
The following table shows internal rate of return, payback period and net present
value of the proposed venture.
August 2015
Pre-Feasibility Study
Details
33%
3.62
4,526,588
Project Financing
Following table provides details of the equity required and variables related to
bank loan:
Table 3: Project Financing
Description
Details
Rs. 2,900,771
Rs. 2,900,771
16%
9.3
Project Cost
Following fixed and working capital requirements have been identified for
operations of the proposed business.
Table 4: Project Cost
Description
Amount Rs.
Capital Cost
Machinery & Equipment
185,500
1,656,240
Office Equipment
1,559,500
1,047,000
Building Security
180,000
Pre-operating Cost
493,303
August 2015
5,121,543
Pre-Feasibility Study
Working Capital
Cash
500,000
180,000
680,000
5,801,543
Space Requirement
The space requirement for the proposed high school (franchise) is estimated
considering various facilities including management office, staff room, class
rooms, store room and open space, etc. It is compulsory to have a campus of
minimum 2 kanals for a high school from most of the franchisers. Franchisers
normally check the map of building before granting the permission to start
business in order to make sure that the building is suitable for a school campus.
The Details of space requirement related to land & building is given below:
Table 5: Space Requirement
Description
No.
Principal Office
250
Admin Office
250
Staff Room
400
Computer Lab
500
Science Lab
400
12
3,600
Canteen
200
216
Store Room
500
2,684
Total
9,000
It is proposed to use a rental building in order to avoid high capital cost and risk.
The proposed monthly rent for the building of school is taken at Rs. 60,000/month.
August 2015
Pre-Feasibility Study
9.5
Machinery and equipment for the proposed project are stated below:
Table 6: Machinery & Equipment Requirement
Description
Quantity
Unit Cost
(Rs.)
Water Cooler
Security Equipment Set
01
01
Total Cost
(Rs.)
35,500
150,000
35,500
150,000
Total
9.6
185,500
Details of the furniture and fixture required for the project are given below:
Table 7: Furniture & Fixture Requirement
Description
Quantity
Furniture:
Principal Office
Table & Chair
Visitor Chairs
Sofa Set
Cupboard
Admin Office
Tables & Chairs
Visitors Chairs
Cupboard
Staff Room
Long Table
Unit Cost
(Rs.)
Total Cost
(Rs.)
01
04
01
01
25,000
3,000
20,000
12,000
25,000
12,000
20,000
12,000
03
06
02
10,000
3,000
10,000
30,000
18,000
20,000
01
25,000
25,000
Chairs
12
3,000
36,000
Cupboard
01
10,000
10,000
12
6,000
72,000
480
1,500
720,000
White Boards
14
1,200
16,800
Class Rooms
August 2015
10
Pre-Feasibility Study
Fixtures:
Soft Board
02
1,000
2,000
Fans
37
2,500
92,500
Exhaust Fans
27
2,200
59,400
74
210
15,540
06
45,000
270,000
Renovation of Building
01
200,000
200,000
1,656,240
Quantity
Unit Cost
(Rs.)
Total Cost
(Rs.)
32
35,000
1,120,000
Computer Printers
03
20,000
60,000
Telephone Sets
03
1,500
4,500
01
01
50,000
325,000
50,000
325,000
Total
9.8
1,559,500
Human Resource Requirement
No. of Employees
Monthly Salary
per person (Rs.)
CEO/Principal
01
35,000
01
18,000
Accounts Officer
01
15,000
August 2015
11
Pre-Feasibility Study
Admission Officer
01
15,000
Teachers
15
16,000
IT Lab In-Charge
01
14,000
01
14,000
Electrician
01
13,000
Security Guards
02
13,000
Office Boys
03
13,000
Total
27
9.9
An essential cost to be borne by the project is the cost of electricity. The electricity
expenses and direct electricity for year one are estimated to be around Rs.
145,155 and Rs. 580,618, respectively. Furthermore, promotional expense being
essential for marketing of High School (Franchise) is estimated as 03% of
revenue.
9.10 Revenue Generation
Based on the capacity utilization of 60%, sales revenue during the first year of
operations is estimated in below table. Student drop out ratio is estimated at 5%.
Table 9: Revenue Generation (Year 1)
Revenue Generation from Admission Fee
Description
No. of
Students
Admitted
Admission
Fee
264
2,500
Total Revenue
(Rs.)
660,000
No. of
Students*
Nursery to Class 3
Class 4 to Class 5
Class 6 to Cass 10
Tuition Fee
115
46
92
Total Revenue
2,760,000
1,214,400
2.760,000
7,394,400
739,440
Net Revenue
6,654,960
August 2015
2,000
2,200
2,500
Total Revenue
(Rs.)
12
Pre-Feasibility Study
10 CONTACT DETAILS
In order to facilitate potential investors, contact details of private sector Service
Providers relevant to the proposed project be given.
10.1 School Furniture Suppliers
Name
Address
Telephone
Decora Furniture
47-Ferozpur Road,
Lahore
+92-42-37554862
Interwood Mobel
117-E-1, GulbergIII,Lahore
+92-42-358702226549123
29130-Nishter Road,
Lahore
+92-42-37653007
Koncept Furniture
+92-300-6233455
www.pakistan.gov.pk
www.moip.gov.pk
Ministry
of
Federal
Professional Training
Education
and http://moent.gov.pk
Government of Punjab
www.punjab.gov.pk
Government of Sindh
www.sindh.gov.pk
www.khyberpakhtunkhwa.gov.pk
Government of Baluchistan
www.balochistan.gov.pk
www.gilgitbaltistan.gov.pk
www.ajk.gov.pk
www.secp.gov.pk
www.sbp.org.pk
http://schools.punjab.gov.pk/
August 2015
13
Pre-Feasibility Study
http://www.sindheducation.gov.pk/
Secondary
Education http://www.kpese.gov.pk/
http://balochistan.edu.pk/
http://www.educators.edu.pk/
http://tks.edu.pk/
August 2015
14
Pre-Feasibility Study
12 ANNEXURES
12.1 Income Statement
Calculations
SMEDA
Income Statement
Revenue
Cost of sales
Operation costs 1 (direct labor)
Operating costs 3 (direct electricity)
Total cost of sales
Gross Profit
General administration & selling expenses
Administration expense
Administration benefits expense
Building rental expense
Electricity expense
Water expense
Education Department Fee
Travelling expense
Communications expense (phone, fax, mail, internet, etc.)
Office expenses (stationary, entertainment, janitorial services, etc.)
Promotional expense
Professional fees (legal, audit, consultants, etc.)
Depreciation expense
Amortization of pre-operating costs
Amortization of legal, licensing, and training costs
Subtotal
Operating Income
Earnings Before Interest & Taxes
Interest on short term debt
Interest expense on long term debt (Project Loan)
Interest expense on long term debt (Working Capital Loan)
Subtotal
Earnings Before Tax
Tax
NET PROFIT/(LOSS) AFTER TAX
Balance brought forward
Total profit available for appropriation
Dividend
Balance carried forward
August 2015
Year 1
6,654,960
Year 2
9,170,496
Year 3
12,123,859
Year 4
13,147,192
Year 5
14,461,911
Year 6
15,908,102
Year 7
17,498,913
Year 8
19,248,804
Year 9
21,173,684
Year 10
23,291,053
3,636,000
580,618
4,216,618
2,438,342
3,999,600
638,680
4,638,280
4,532,216
4,399,560
702,548
5,102,108
7,021,750
4,839,516
772,803
5,612,319
7,534,873
5,323,468
850,083
6,173,551
8,288,360
5,855,814
935,092
6,790,906
9,117,196
6,441,396
1,028,601
7,469,997
10,028,916
7,085,535
1,131,461
8,216,996
11,031,808
7,794,089
1,244,607
9,038,696
12,134,988
8,573,498
1,369,068
9,942,566
13,348,487
1,512,000
45,360
720,000
145,155
1,663,200
49,896
792,000
159,670
1,829,520
54,886
871,200
175,637
2,012,472
60,374
958,320
193,201
2,213,719
66,412
1,054,152
212,521
2,435,091
73,053
1,159,567
233,773
2,678,600
80,358
1,275,524
257,150
2,946,460
88,394
1,403,076
282,865
3,241,106
97,233
1,543,384
311,152
3,565,217
106,957
1,697,722
342,267
9,000
15,120
15,120
15,120
199,649
33,275
340,124
98,661
104,700
3,253,283
(814,941)
(814,941)
51,762
388,529
51,586
491,877
(1,306,818)
(1,306,818)
9,900
16,632
16,632
16,632
275,115
45,852
340,124
98,661
104,700
3,589,014
943,202
943,202
51,762
326,501
43,350
421,613
521,588
12,159
509,430
10,890
18,295
18,295
18,295
363,716
60,619
340,124
98,661
104,700
3,964,838
3,056,912
3,056,912
253,936
33,716
287,652
2,769,260
414,815
2,354,446
11,979
20,125
20,125
20,125
394,416
65,736
340,124
98,661
104,700
4,300,356
3,234,517
3,234,517
169,046
22,445
191,491
3,043,025
483,256
2,559,769
13,177
22,137
22,137
22,137
433,857
72,310
340,124
98,661
104,700
4,676,044
3,612,317
3,612,317
69,737
9,259
78,997
3,533,320
605,830
2,927,490
14,495
24,351
24,351
24,351
477,243
79,541
340,124
104,700
4,990,639
4,126,557
4,126,557
4,126,557
760,467
3,366,091
15,944
26,786
26,786
26,786
524,967
87,495
340,124
104,700
5,445,220
4,583,696
4,583,696
4,583,696
897,608
3,686,087
17,538
29,465
29,465
29,465
577,464
96,244
340,124
104,700
5,945,260
5,086,548
5,086,548
5,086,548
1,048,464
4,038,084
19,292
32,411
32,411
32,411
635,211
105,868
340,124
104,700
6,495,304
5,639,685
5,639,685
5,639,685
1,214,405
4,425,280
21,222
35,652
35,652
35,652
698,732
116,455
340,124
104,700
7,100,352
6,248,136
6,248,136
6,248,136
1,409,347
4,838,789
(1,306,818)
(1,306,818)
(1,306,818)
(797,389)
(797,389)
(797,389)
1,557,057
1,557,057
1,557,057
4,116,826
4,116,826
4,116,826
7,044,317
7,044,317
7,044,317
10,410,407
10,410,407
10,410,407
14,096,494
14,096,494
14,096,494
18,134,578
18,134,578
18,134,578
22,559,858
22,559,858
22,559,858
27,398,646
27,398,646
15
Pre-Feasibility Study
Calculations
SMEDA
Balance Sheet
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
500,000
180,000
680,000
546,983
198,000
744,983
50,059
650,361
217,800
918,220
2,326,299
875,110
239,580
3,440,989
4,579,885
1,038,536
263,538
5,881,959
7,153,643
1,134,621
289,892
8,578,155
10,822,106
1,248,083
318,881
12,389,070
14,796,321
1,372,891
350,769
16,519,981
19,106,862
1,510,180
385,846
21,002,888
23,787,363
1,661,198
424,431
25,872,992
29,329,287
1,827,318
31,156,605
180,000
185,500
1,656,240
1,559,500
3,581,240
180,000
166,950
1,490,616
1,403,550
3,241,116
180,000
148,400
1,324,992
1,247,600
2,900,992
180,000
129,850
1,159,368
1,091,650
2,560,868
180,000
111,300
993,744
935,700
2,220,744
180,000
92,750
828,120
779,750
1,880,620
180,000
74,200
662,496
623,800
1,540,496
180,000
55,650
496,872
467,850
1,200,372
180,000
37,100
331,248
311,900
860,248
180,000
18,550
165,624
155,950
520,124
180,000
180,000
493,303
1,047,000
1,540,303
5,801,543
394,642
942,300
1,336,942
5,323,041
295,982
837,600
1,133,582
4,952,794
197,321
732,900
930,221
6,932,078
98,661
628,200
726,861
8,829,563
523,500
523,500
10,982,275
418,800
418,800
14,348,366
314,100
314,100
18,034,453
209,400
209,400
22,072,536
104,700
104,700
26,497,816
31,336,605
Assets
Current assets
Cash & Bank
Accounts receivable
Pre-paid building rent
Total Current Assets
Fixed assets
Building Security
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets
Intangible assets
Pre-operation costs
Legal, licensing, & training costs
Total Intangible Assets
TOTAL ASSETS
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable
Short term debt
Total Current Liabilities
Other liabilities
Security (Refundable)
Long term debt (Project Loan)
Long term debt (Working Capital Loan)
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES
August 2015
2,560,771
340,000
2,900,771
2,900,771
2,900,771
5,801,543
609,477
609,477
632,500
2,195,596
291,515
3,119,611
846,225
1,768,392
234,794
2,849,411
1,037,187
1,268,625
168,438
2,474,250
1,037,187
683,967
90,812
1,811,966
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
1,037,187
2,900,771
(1,306,818)
1,593,953
5,323,041
2,900,771
(797,389)
2,103,383
4,952,794
2,900,771
1,557,057
4,457,828
6,932,078
2,900,771
4,116,826
7,017,598
8,829,563
2,900,771
7,044,317
9,945,088
10,982,275
2,900,771
10,410,407
13,311,179
14,348,366
2,900,771
14,096,494
16,997,266
18,034,453
2,900,771
18,134,578
21,035,349
22,072,536
2,900,771
22,559,858
25,460,629
26,497,816
2,900,771
27,398,646
30,299,418
31,336,605
16
Pre-Feasibility Study
Calculations
SMEDA
August 2015
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
(180,000)
(180,000)
(1,306,818)
340,124
98,661
104,700
(546,983)
(18,000)
(1,328,317)
509,430
340,124
98,661
104,700
(103,378)
(19,800)
929,736
2,354,446
340,124
98,661
104,700
(224,749)
(21,780)
2,651,401
2,559,769
340,124
98,661
104,700
(163,426)
(23,958)
2,915,870
2,927,490
340,124
98,661
104,700
(96,084)
(26,354)
3,348,537
3,366,091
340,124
104,700
(113,462)
(28,989)
3,668,463
3,686,087
340,124
104,700
(124,808)
(31,888)
3,974,215
4,038,084
340,124
104,700
(137,289)
(35,077)
4,310,542
4,425,280
340,124
104,700
(151,018)
(38,585)
4,680,501
4,838,789
340,124
104,700
(166,120)
424,431
5,541,924
2,560,771
340,000
2,900,771
5,801,543
(365,175)
(48,485)
632,500
218,839
(427,204)
(56,721)
(609,477)
213,725
(879,677)
(499,768)
(66,355)
190,962
(375,161)
(584,658)
(77,626)
(662,284)
(683,967)
(90,812)
(774,779)
(1,109,477)
500,000
(609,477)
(609,477)
-
50,059
50,059
50,059
50,059
2,276,240
50,059
2,326,299
2,326,299
2,326,299
2,253,586
2,326,299
4,579,885
4,579,885
4,579,885
2,573,758
4,579,885
7,153,643
7,153,643
7,153,643
(5,121,543)
(5,121,543)
500,000
500,000
500,000
500,000
17
3,668,463
7,153,643
10,822,106
10,822,106
10,822,106
3,974,215
10,822,106
14,796,321
14,796,321
14,796,321
4,310,542
14,796,321
19,106,862
19,106,862
19,106,862
4,680,501
19,106,862
23,787,363
23,787,363
23,787,363
5,541,924
23,787,363
29,329,287
29,329,287
29,329,287
Pre-Feasibility Study
13 KEY ASSUMPTIONS
13.1 Operating Cost Assumptions
Description
Details
3% of Administration Cost
1% of Administration
expenses
Communication Expenses
1% of Administration Cost
Promotional Expenses
3% of Revenue
Professional Fee
0.5% of Revenues
Depreciation Method
Accelerated depreciation
Depreciation Rate
10% on Machinery
10% on Office Equipment
10% on Furniture & Fixture
10%
10%
10%
Details
10%
330
480 Students
60%
15%
90%
05%
Details
Debt
Equity
Interest Rate on Debt
Debt Tenure
Debt Payment / Year
August 2015
50%
50%
16%
5 Years
4
18