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MONTESSORI SCHOOL
HEAD OFFICE 6th & 8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (92 042) 111-111-456 Fax: (92 042) 6304926-7 Helpdesk@smeda.org.pk
REGIONAL PUNJAB OFFICE REGIONAL SINDH OFFICE REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk
8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456 Fax: (042) 6304926-7 helpdesk@smeda.org.pk
5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 Helpdesk-khi@smeda.org.pk
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. Revision Prepared by Issue Date Revision Date Issued by PREF-66 2 SMEDA-Punjab August, 2003 September, 2006 Library Officer
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1 2 3
INTRODUCTION TO SMEDA PURPOSE OF THE DOCUMENT PROJECT PROFILE 3.1 3.2 3.3 3.4 PROJECT BRIEF OPPORTUNITY RATIONALE PROJECT COST PROPOSED CAPACITY
4 4 4 4 5 5 5 6 7 7 7 7 8 8 8 9 9 9 9 9 10 10 10 10 10 10 11 11 12 12 12 13 13 14 15 16 17
MARKET ANALYSIS 5.1 5.2 5.3 THE UPPER INCOME GROUP THE MEDIUM INCOME GROUP THE LOWER INCOME GROUP
6 7 8
KEY SUCCESS FACTORS REGULATIONS HUMAN RESOURCE REQUIREMENT 8.1 KEY PERSONNEL 8.1.1 Principal 8.1.2 Teachers coordinator 8.1.3 Accountant 8.1.4 Teachers 8.1.5 Student Attendants 8.1.6 Librarian / Activity Teacher 8.1.7 Computer Teacher
9 10
EQUIPMENT REQUIREMENT LAND & BUILDING 10.1 AREA REQUIREMENTS 10.2 RECOMMENDED MODE FOR ACQUIRING LAND 10.2.1 Building Rent 10.3 SUITABLE LOCATION
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PROJECT ECONOMICS FINANCIAL ANALYSIS 12.1 12.2 12.3 PROJECTED INCOME STATEMENT PROJECTED BALANCE SHEET PROJECTED CASH FLOW STATEMENT
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KEY ASSUMPTIONS
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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. 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 SMEDAs 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.
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.
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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Table 3-1: Year Wise Number of Students (Maximum Utilization) Class Students Per Year Year 1 Year 2 Year 3 Year 4 Play Group 24 27 30 KG-I 12 36 40 KG-II 12 25 40 Class I 6 18 32 Class II 6 13 25 Drop-Outs 0 3 6 Pass-Outs 0 6 13 Total 60 117 171
Year 5
33 40 40 47 39 9 25 218 36 40 40 47 54 11 39 206
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 Elementary (Montessori) Primary Middle Secondary Higher Secondary B.A (Graduate Degree) M.A (Post-graduate Degree) M. Phil/ Ph.D. Classes Admission Age (Year) Playgroup, Kindergarten 3-5 I-V 5 VI-VIII 10 IX-X 13 XI-XII 16 Duration 2 Years 5 Years 3 Years 2 Years 2 Years 2 Years 2 Years 3 Years
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.
MARKET ANALYSIS
Based on the household income. Based on the quality/standard of education offered
There are two broad market-positioning options available to a Montessori School System.
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. selfemployed businessmen, high paid government or private sector executives. Existing
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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.
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.
PREF-66/Rev 2/September, 2006
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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.
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Position
Principal Teacher coordinator Activity Teacher cum Librarian Computer Teacher Teacher Play Group Teacher KG-I Teacher KG-II Class I Class II Games teacher Accountant Student Attendant Guard Peon / Helper Cleaner Gardner TOTAL 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 Teachers 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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effectively. Supervise and monitor the tutoring of students .Coordinate any special projects to increase coaching awareness among teachers including arranging guest speakers, visits and workshops. 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.
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 Computers Printer (Laser) UPS Air condition (1.5 tons) Total Equipment Table 9-2 Other Equipment Requirement Detail Description See Saw 4 Feet Slide 6 Feet Slide
PREF-66/Rev 2/September, 2006
Quantity 3 1 3 4 11
Quantity
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8 Feet Slide Monkey Bars 6x6 White Boards Soft Boards Computer UPS Water cooler Total Table 9-3: Furniture & Fixtures Detail Furniture & Fixtures Round tables for Play group Chairs for Play group Teacher chairs for Play group Round Tables for KG-I Chairs for KG-I Teacher chairs for KG-I Round Table for KG-II Chairs for KG-II Teachers Chair for KG -II Teacher Table & Chair for class-I Student table & Chair for Class- I Teacher Table & Chair for class -II Student Table & Chair for Class -II Cupboards & Book shelves Children Books /toys/Entertainment equipment Computer Chairs Computer Tables Carpet ( sq. ft) Principal and admin staff Total Furniture & Fixture Cost
1 1 10 10 10 10
1
Quantity 6 32 2 6 32 2 6 32 2 2 40 2 40 8
Cost per Unit(Rs) 4,500 500 1,000 4,500 500 1,500 4,500 500 1,500 1,600 1,200 1,600 1,200 6,500
Total Cost(Rs) 27,000 16,000 2,000 27,000 16,000 3,000 27,000 16,000 3,000 3,200 48,000 3,200 48,000 52,000 150,000 16,000 10,000 160,760 100,000 728,160
20 10 4,019 1 4,262
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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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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 Required Area (Sq. ft) 2,400 144 500 575 400 270 6,961 11,250 Space Requirements Class Rooms Teachers Room Library/Entertainment Room Admin Rooms Computer Class Washrooms & Kitchen Grounds Total Covered Area Requirement
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 Building rent cost @ Rs. 5 per square foot 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. Monthly Rent (Rs.) 55,000 Annual Rent (Rs.) 330,000
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FINANCIAL ANALYSIS
11.1 Project Economics Table 11-1 Project Cost/Capital Requirements Total Cost Rs. 391,500 221,500 552,160 226,000 1,391,160 330,761 165,381 500,000 996,142 2,387,302 Fixed Capital Requirement
Machinery & Equipment
Office Equipment Office Furniture & Fixture Pre-Operating Cost Total Fixed Capital Cost Working Capital Upfront Building Rental Rent Security (Refundable) Cash Total Working Capital Total Investment in the Project (Rs.) Table 11-2 Description Equity Debt Table 11-3 Project Returns Equity 6,394,253 87% 3.08 Project Financing Plan 50% 50%
1,193,651 1,193,651
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654,000 660,000 287,629 45,000 9,000 32,700 32,700 47,760 23,880 23,880 104,864 45,200 96,000 48,000 2,110,613 (1,444,613) (1,444,613) 160,987 160,987 (1,605,600) (1,605,600)
719,400 726,000 316,392 79,200 9900 35,970 35,970 103,491 51,746 51,746 104,864 45,200 86,400 52,800 2,419,078 999,872 999,872 291,066 135,086 426,152 573,719 573,719
791,340 798,600 348,031 87,120 10890 39,567 39,567 157,680 78,840 78,840 104,864 45,200 77,760 58,080 2,716,379 3,236,439 3,236,439 218,765 105,432 324,197 2,912,242 376,072 2,536,170
870,474 878,460 382,834 95,832 11979 43,524 43,524 206,348 103,174 103,174 104,864 45,200 69,984 63,888 3,023,259 5,169,870 5,169,870 71,482 71,482 5,098,389 1,019,678 4,078,711
957,521 966,306 421,118 105,415 13176.9 47,876 47,876 246,370 123,185 123,185 104,864 45,200 62,986 70,277 3,335,356 6,646,442 6,646,442 32,612 32,612 6,613,831 1,322,766 5,291,065
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KEY ASSUMPTIONS
Operating Assumptions 22 12 25% 10% 60 5% 10% 10% 10% 5% 7% 5% of Administrative Expense 7% of Administrative Expense 5% of Revenue 1% of Revenue 2% of Revenue
Table 12-1
Operational Days Per Month Months Operational Table 12-2 Capacity Utilization Assumptions Capacity Utilization (First Year) New Students Admission Growth Rate First Year Student Enrollment Student Drop-out Ratio Table 12-3 Economic Assumptions Electricity Growth Rate Salary Growth Rate Rent Growth Rate Student Fee Growth Rate Admission Fee Growth Rate Table 12-4 Expense Assumptions Office Expense (Stationary, Entertainment etc.) Communication Expense Promotional Expense Professional Expense (Legal, Audit etc.) Students Teaching Aid Table 12-5 Depreciation Assumptions Straight Line
10% 10%
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Year 5
36 40 40 47 54 11 39 206
Play Group KG-I KG-II Class I Class II Drop-Outs Pass-Outs Total Table 12-7 Play Group KG 1 KG 2 Class 1 Class 2 Table 12-8
Proportion of New Admission 40% 20% 20% 10% 10% Revenue Assumptions Admission Fee Student Security (Refundable) 3,000 3,000 3,000 3,000 3,000 Monthly Fee 2,500 3,000 3,000 3,500 3,500
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