Pre-feasibility Study

DAY CARE
CENTER
February 2021

The figures and financial projections are approximate due to fluctuations in

exchange rates, energy costs, and fuel prices etc. Users are advised to focus on
understanding essential elements such as production processes and capacities, space,
machinery, human resources, and raw material etc. requirements. Project
investment, operating costs, andrevenues can change daily. For accurate financial
calculations, utilize financial calculators on SMEDA’s website and consult financial
experts to stay current with market conditions.

Small and Medium Enterprises Development Authority

Ministry of Industries and Production
Government of Pakistan
Pre-Feasibility Study Day Care Center

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 Cost ..............................................................................................8
9.3 Space Requirement ..................................................................................9
9.4 Machinery & Equipment Requirement ....................................................10
9.5 Furniture & Fixtures Requirement ...........................................................10
9.6 Office Equipment Requirement ...............................................................12
9.8 Human Resource Requirement...............................................................12
9.9 Utilities and other costs ...........................................................................13
9.10 Revenue Generation ...............................................................................13
10 CONTACT DETAILS .......................................................................................13
11 USEFUL WEB LINKS .....................................................................................14
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 Capacity Utilization Assumptions ............................................................18

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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
have 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 making any decision to act upon the
information.
For more information on services offered by SMEDA, please contact our website:
[Link]

Document Control

Document No. PREF-NO 03

Revision No. 4

Prepared by SMEDA Punjab - OS

Revision Date February, 2021

For information [Link]@[Link]

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2 EXECUTIVE SUMMARY

Life, today, is characterized by independent family system, need for improved living
standards, quality education for children, etc., resulting in increased pressure on
working women to efficiently manage both their professional and domestic
responsibilities. The demand for day care centers is on the rise, specifically by
working mothers (doctors, businesswomen, government servants, corporate
employees, teachers, etc), and the service is deemed as a profitable
entrepreneurship opportunity. Day Care Center is proposed to be located in major
cities such as Islamabad, Lahore, Karachi, Peshawar, Multan, Gujranwala, Sialkot
and Quetta etc.
The project features a facility and its ancillary services for children aged 6 months to
5 years in a hygienic and activity based educational environment, facilitated through
trained and educated staff. The project can be used for a maximum of 116
enrolments, however, keeping in view the rationale and demand; calculations have
been made on the assumption of 58 enrolments for the first year of operations.
Higher return on investment and a steady growth of business is expected with the
entrepreneur (especially women) having some prior experience in the related field of
business.
Total cost estimate of the project is Rs. 6.059 Million with fixed investment of Rs.
5.359 Million and working capital of Rs. 0.700 Million. Given the cost assumptions,
IRR, Payback period and NPV are 43%, 3.13 years and Rs. 8.502 million
respectively. The project will generate direct employment opportunity for 13 persons.
The legal business status of this project is assumed to be ‘Sole Proprietorship.

3 INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was

established in October 1998 to provide fresh impetus to the economy through the
development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the national
income, through the 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 pre-feasibility studies in key areas of investment
have been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the pre-feasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include identification

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of experts and consultants and delivery of need-based capacity building programs of

different types in addition to business guidance through help desk services.

4 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential

entrepreneurs in project identification for investment. The project pre-feasibility may
form the basis of an important investment decision and to serve this objective, the
document/study covers various aspects of project concept development, start-up,
and production, marketing, finance and business management.
The purpose of this document is to facilitate potential investors in “Day Care Center”
by providing them with a general understanding of the business to support potential
investors in crucial investment decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes such
reports reveal certain thumb rules; best practices developed by existing enterprises
by trial and error, and certain industrial norms that become a guiding source
regarding various aspects of business set-up and it’s successful management.
Apart from carefully studying the whole document one must consider critical aspects
provided later on, which form the basis of any Investment Decision.

5 BRIEF DESCRIPTION OF PROJECT & PRODUCT

The fast-paced life of the cities is significantly influencing the lifestyle of its
inhabitants. Economic pressures are compelling both parents to work towards
achieving and sustaining quality life standards. This has further added to complexity
and competition of any metropolitan cities. As a result of these social changes, the
trend of sending children to Day Care Centres at a much earlier age is gaining rapid
acceptance.

This pre-feasibility study provides basic information for setting-up a day care centre
with modern learning techniques and extracurricular activities. The proposed centre
will offer a hygienic and efficiently managed care facility for children aged 6 months to
5 years. The centre would have the maximum capacity of providing service to 116
children; however, it assumed that 58 enrolments would be made during first year of
its operation.

The proposed centre is recommended to be established on a rented building,

preferably lower portion of two kanal house (7,200 [Link]. area) with a reasonable front
/ back yard. The project is designed according to the latest trends to be followed in

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any Day Care Facilities of renowned centres in Pakistan. The legal status is
proposed to be ‘Sole Proprietorship’.

5.1 Installed and Operational Capacities

The total installed capacity of the project is assumed to enroll 116 children per
annum. However, initial operational capacity of the project will be 50% with an annual
growth of 15%. Maximum capacity utilization of the project is assumed at 95% which
will be achieved in the 4th year of operations.

Table 1: Installed and Operational Capacity

Description Total Operational Maximum

Capacity of Capacity Capacity
Children’s 50 % (Year 1) 95% (Year 4 - 10)
Infants 6 months to two years 44 22 42
Playgroup (2-3 Years) 24 12 23
Nursery (3-4 Years) 24 12 23
Kindergarten (4-5 Years) 24 12 23
Total 116 58 111

6 CRITICAL FACTORS

The following factors need to be considered while operating such venture;

 Secured, hazard free, and kids friendly environment is provided at center.
 Interior of Center should be designed to attract kids attention and promote
learning. Like colorful walls with educational material, pasting theme oriented
chart papers, and any other cost effective mode deem appropriate.
 Developing plan of daily activities of enrolled kids.
 Extra care should be given to keep the place hygienic, and clean.
 Location of the center in a commercial area.
 Opening of center with proper launch and promotional material.
 Hiring of well-trained / experienced care provider for kids.
 Establishment of the Center in a rented building to reduce the initial project
cost.
 Parents are informed immediately in case of any emergency (i.e Strike, fever,
flue, diarrhea, etc.), and any other observation important to child health.

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7 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

The increasing population and high concentration of educated / working class in

major cities like Karachi, Lahore, Islamabad, Peshawar, Quetta, Multan, Gujranwala,
etc., offers a very lucrative business opportunity for opening up a well-planned Day
Care Center. However, it is recommended that the centre should be located in an
easily approachable location, in line with the selected target market (i.e Offices,
Commercial Areas, Government Colonies, etc.).

8 POTENTIAL TARGET CUSTOMERS / MARKETS

The target market for the proposed centre is working couple having infants of age
more than 6 months to children of ages up to 5 years. The business community also
has a positive response towards the idea of day care center due to their busy
schedules and, therefore, can be targeted as potential customers.
Keeping in view the economic and social factors, it is recommended that the
proposed project may be established in major cities such as Islamabad, Lahore,
Quetta, Karachi, Multan, and Peshawar. However the project may also be opened in
other cities and towns after careful market analysis.

9 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of
Day Care Center. Various cost and revenue related assumptions along with the
results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexures.

9.1 Project Economics

All the figures in this financial model have been calculated for the estimated revenue
of Rs. 6.85 million in the year one. The capacity utilization during year one is worked
out at 50%.
The following table shows the internal rate of return, payback period and net present
value of the proposed venture.
Table 2: Project Economics (Equity Financed)

Description Details

Internal Rate of Return (IRR) 43%

Payback Period (yrs.) 3.13

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Net Present Value (Rs.) 8,501,597

Calculation of break-even analysis is as follows:

Table 3: Breakeven (100% Equity-Based)
Break-Even
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Analysis
Break-Even
7,737,363 7,026,415 7,111,404 7,334,187 7,978,222 8,695,734 9,506,307 10,382,098 11,357,559 12,463,699
Revenue
Break-Even (No.
786 679 655 643 667 692 720 749 781 816
of Enrollment)
Margin of Safety -13% 26% 41% 52% 50% 48% 46% 44% 41% 39%

However, for further explanation the Project Economics based on Debt:Equity Model
(i.e. 50:50) has also been computed. Based on Debt:Equity model the Internal Rate
of Return, Payback Period and Net Present Value of the proposed project are
provided in the table below:
Table 4: Project Economics Based on Debt (50%): Equity (50%)

Description Details

Internal Rate of Return (IRR) 39%

Payback Period (yrs.) 3.34

Net Present Value (Rs.) 10,230,147

The financial assumptions for Debt: Equity is as follows:

Table 5: Financial Assumptions for Debt: Equity Model

Description Details

Debt (50%) 3,038,070

Equity (50%) 3,038,070

Interest Rate on Debt 12%

Debt Tenure 5 Years

Debt Payment / Year 1

The projected Income Statement, Cash Flow Statement and Balance Sheet based on
100% Equity-Based Business Model are attached as annexures.
9.2 Project Cost
Following fixed and working capital requirements have been identified for operations
of the proposed business.

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Table 6: Project Cost

Description Amount Rs.

Capital Cost
Furniture & Fixture 3,644,300
Office Equipment 819,500
Building Security 450,000
Machinery & Equipment 276,200
Pre-operating Costs 168,500
Total Capital Cost 5,358,500
Upfront Building Rent 450,000
Cash 250,000
Total Working Capital 700,000
Total Project Cost 6,058,500
9.3 Space Requirement
This project requires around 7,200 square feet of space. The building is proposed to
be acquired on rental basis. The monthly rent of the building is assumed at Rs.
150,000 along with a security deposit equaling to three month’s rent i.e. Rs. 450,000,
which will be paid at the start of the rent agreement.
Table 7: Space Requirements

Description Area (Sq ft)

Principal Office 144

Admin Office 100

Staff Room 168

Classrooms 1,800

Activity & Entertainment Room 400

Kitchen 80

Washrooms 180

Storeroom 100

Open / Playing Area 4,228

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Total 7,200

9.4 Furniture & Fixtures Requirement

Details of the furniture and fixture required for the project are given below;
Table 8: Furniture & Fixture

Description Quantity Unit Cost Total Cost

(Rs.) (Rs.)

Principal Office

Table & Chairs 1 35,000 35,000

Visitor Chairs 4 8,000 32,000

Sofa Set 1 60,000 60,000

Cupboard 1 15,000 15,000

Admin Office

Table & Chairs 1 18,000 18,000

Visitor Chairs 2 6,000 12,000

Cupboard 1 12,000 12,000

Staff Room

Table & Chairs 3 18,000 54,000

Chairs 4 6,000 24,000

Cupboard 1 12,000 12,000

Classroom

Chairs for Teachers 5 4,000 20,000

Kids beds 4 38,000 152,000

Cushions set 4 7,000 28,000

Tables 1 15,800 15,800

Playgroup (2-3 Years):

Cushions set 3 7,000 21,000

Round table for play group 1 9,500 9,500

Nursery (3-4 Years):

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Chairs 24 2,850 68,400

Round tables 2 9,500 19,000

Kindergarten (4-5 Years):

Chairs 24 2,850 68,400

Round tables 2 9,500 19,000

Bookshelves 1 36,500 36,500

Toys & other kids activity equipment 1 250,000 250,000

Carpets 2,800 50 140,000

White Board 3 4,000 12,000

Soft board 1 2,000 2,000

Fans 11 4,500 49,500

Exhaust Fans 4 2,200 8,800

LED Bulbs (18 Watts) 38 300 11,400

LED TV 6 36,500 219,000

Air conditioner (1 ton Split) 3 60,000 180,000

Air conditioners (1.5 ton Split) 6 90,000 540,000

Interior decoration 1 1,500,000 1,500,000

Total 3,644,300

9.5 Machinery & Equipment Requirement

Plant, machinery and equipment for the proposed project are stated below.
Table 9: Machinery & Equipment

Description Quantity Unit Cost Total Cost

(Rs.)
(Rs.)

Security Equipment’s 1 200,000 200,000

Bouncy Castle 2 12,500 25,000

Slide 7ft 1 21,000 21,000

Slide 4ft 1 10,500 10,500

Seesaw 9 ft 1 8,000 8,000

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Monkey Bar 1 6,200 6,200

Seesaw 4.1 ft 1 5,500 5,500

Total 276,200

9.6 Office Equipment Requirement

Following office equipment will be required for the project are given below.
Table 10: Office Equipment Requirement

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)

Generator 1 525,000 525,000

Water Dispenser 3 19,000 57,000
Fridge 1 51,500 51,500
Microwave Oven 1 7,500 7,500
Telephones 1 1,500 1,500
Laptop 1 70,000 70,000
Computer printer (s) 2 25,000 50,000
Computer for staff and lab 3 15,000 45,000
UPS for computers 3 4,000 12,000
Total 819,500

9.7 Human Resource Requirement

In order to run operations of Day Care Centre smoothly, details of human resources
required along with number of employees and monthly salaries are recommended as
under;
Table 11: Human Resource Requirment

Monthly Salary
Description No. of Employees
per person (Rs.)

Principal 1 55,000

Accounts Officer 1 25,000

Teachers 4 24,000

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Student Attendant 4 17,500

Office boy/Peon 1 17,500

Security Guards 1 17,500

Maid 1 17,500

Total 13

9.8 Utilities and other costs

An essential cost to be borne by the project is the cost of electricity. The electricity
expenses are estimated to be around Rs. 73,478 (Direct and In-Direct) per month.
Furthermore, promotional expense being essential for marketing of Day Care Center
is estimated as 0.5% of revenue.

9.9 Revenue Generation

Based on the capacity utilization of 50%, sales revenue during the first year of
operations is estimated as under;

Table 12: Revenue Generation – Year 1

Description First year Fee per Child Sales Revenue

Children (Rs.)
(Rs.)

Infants 6 months to two years 22 8,500 2,244,000

Playgroup (2-3 Years) 12 10,000 1,440,000

Nursery (3-4 Years) 12 10,000 1,440,000

Kindergarten (4-5 Years) 12 12,000 1,728,000

Total 6,852,000

10 CONTACT DETAILS

In order to facilitate potential investors, contact details of private sector Service

Providers relevant to the proposed project be given.
Table 13: Education Toys & Furniture Suppliers

Name of Supplier Phone Website / Address

Inventors Educational 0300-9452275

[Link]
Toys 0333-9452275

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Kinder Kazar 0321-3580358 271 Y (commercial), Phase III,

Furnishers 0320-3580358 DHA, Lahore

11 USEFUL WEB LINKS

Small & Medium Enterprises Development [Link]

Authority (SMEDA)
Government of Pakistan [Link]

Ministry of Industries & Production [Link]

Ministry of Education, Training & Standards in [Link]

Higher Education
Government of Punjab [Link]

Government of Sindh [Link]

Government of Khyber Pakhtunkhwa [Link]

Government of Balochistan [Link]

Government of Gilgit Baltistan [Link]

Government of Azad Jamu Kashmir [Link]

Trade Development Authority of Pakistan (TDAP) [Link]

Security Commission of Pakistan (SECP) [Link]

Federation of Pakistan Chambers of Commerce [Link]

and Industry (FPCCI)
State Bank of Pakistan (SBP) [Link]

Punjab Small Industries Corporation [Link]

Sindh Small Industries Corporation [Link]

Punjab Vocational Training Council (PVTC) [Link]

Pakistan Readymade Garment Technical Training [Link]/prgtti/

Institute
All Pakistan Private Schools Welfare Association
[Link]
(APPSWA),
Montessori Education Pakistan [Link]

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12 ANNEXURES

12.1 Income Statement

Calculations SMEDA
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 6,852,000 9,557,100 11,979,765 15,183,410 15,942,580 16,739,709 17,576,694 18,455,529 19,378,306 20,347,221
Cost of sales
Direct labour Cost 2,652,000 2,850,900 3,064,718 3,294,571 3,541,664 3,807,289 4,092,836 4,399,798 4,729,783 5,084,517
Direct Electricity Cost 705,390 775,929 853,521 938,874 1,032,761 1,136,037 1,249,641 1,374,605 1,512,065 1,663,272
Total cost of sales 3,357,390 3,626,829 3,918,239 4,233,445 4,574,425 4,943,326 5,342,476 5,774,403 6,241,848 6,747,789
Gross Profit 3,494,610 5,930,271 8,061,526 10,949,965 11,368,155 11,796,383 12,234,218 12,681,126 13,136,457 13,599,432

General administration & selling expenses

Administration expense 930,000 999,750 1,074,731 1,155,336 1,241,986 1,335,135 1,435,270 1,542,916 1,658,634 1,783,032
Administration benefits expense 27,900 29,993 32,242 34,660 37,260 40,054 43,058 46,287 49,759 53,491
Building rental expense 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380 2,898,918 3,188,810 3,507,691 3,858,460 4,244,306
Electricity expense 176,347 193,982 213,380 234,718 258,190 284,009 312,410 343,651 378,016 415,818
Water expense 102,780 143,357 179,696 227,751 239,139 251,096 263,650 276,833 290,675 305,208
Communications expense (phone, fax, mail, internet, etc.) 68,520 95,571 119,798 151,834 159,426 167,397 175,767 184,555 193,783 203,472
Office expenses (stationary, entertainment, janitorial services, etc.) 46,500 49,988 53,737 57,767 62,099 66,757 71,764 77,146 82,932 89,152
Promotional expense 34,260 47,786 59,899 75,917 79,713 83,699 87,883 92,278 96,892 101,736
Professional fees (legal, audit, consultants, etc.) 68,520 95,571 119,798 151,834 159,426 167,397 175,767 184,555 193,783 203,472
Depreciation expense 514,710 514,710 514,710 525,687 523,917 559,168 571,875 569,826 569,826 584,536
Amortization of pre-operating costs 33,700 33,700 33,700 33,700 33,700 - - - - -
Repair and maintenance expenses 34,260 47,786 59,899 75,917 79,713 83,699 87,883 92,278 96,892 101,736
Special activities expense 34,260 47,786 59,899 75,917 79,713 83,699 87,883 92,278 96,892 101,736
Miscellaneous expense 1 74,400 79,980 85,979 92,427 99,359 106,811 114,822 123,433 132,691 142,643
Subtotal 3,946,157 4,359,957 4,785,467 5,289,266 5,689,020 6,127,837 6,616,843 7,133,727 7,699,233 8,330,338
Operating Income (451,547) 1,570,314 3,276,059 5,660,699 5,679,135 5,668,546 5,617,375 5,547,400 5,437,224 5,269,094

Other income (interest on cash) 11,263 48,034 134,472 258,593 387,880 493,683 587,221 667,996 733,331 807,115
Gain / (loss) on sale of machinery & equipment - - - - 110,480 - - - -
Gain / (loss) on sale of computer equipment - - 123,900 - - 214,230 - - 292,248 247,127
Earnings Before Interest & Taxes (440,284) 1,618,348 3,534,431 5,919,292 6,177,494 6,376,458 6,204,596 6,215,396 6,462,803 6,323,336
Earnings Before Tax (440,284) 1,618,348 3,534,431 5,919,292 6,177,494 6,376,458 6,204,596 6,215,396 6,462,803 6,323,336

Tax - 132,752 503,608 1,195,788 1,282,123 1,351,760 1,291,609 1,295,388 1,381,981 1,683,167
NET PROFIT/(LOSS) AFTER TAX (440,284) 1,485,596 3,030,824 4,723,504 4,895,371 5,024,698 4,912,987 4,920,007 5,080,822 4,640,168

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12.2 Balance Sheet

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
Assets
Current assets
Cash & Bank 250,000 313,126 2,088,569 4,635,039 8,294,602 11,099,377 13,584,777 15,776,285 17,623,517 19,043,026 21,312,700
Pre-paid building rent 450,000 495,000 544,500 598,950 658,845 724,730 797,202 876,923 964,615 1,061,076 -
Total Current Assets 700,000 808,126 2,633,069 5,233,989 8,953,447 11,824,106 14,381,979 16,653,207 18,588,132 20,104,103 21,312,700

Fixed assets
Building Security 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000
Machinery & equipment 276,200 248,580 220,960 193,340 165,720 490,609 427,738 364,867 301,996 239,125 176,254
Furniture & fixtures 3,644,300 3,279,870 2,915,440 2,551,010 2,186,580 1,822,150 1,457,720 1,093,290 728,860 364,430 -
Computer equipment 177,000 118,590 60,180 206,670 137,283 69,666 239,246 158,922 80,647 276,957 183,972
Office equipment 642,500 578,250 514,000 449,750 385,500 321,250 257,000 192,750 128,500 64,250 -
Total Fixed Assets 5,190,000 4,675,290 4,160,580 3,850,770 3,325,083 3,153,675 2,831,704 2,259,829 1,690,003 1,394,762 810,226

Intangible assets
Pre-operation costs 168,500 134,800 101,100 67,400 33,700 - - - - - -
Total Intangible Assets 168,500 134,800 101,100 67,400 33,700 - - - - - -
TOTAL ASSETS 6,058,500 5,618,216 6,894,749 9,152,158 12,312,230 14,977,781 17,213,683 18,913,037 20,278,135 21,498,865 22,122,927
Shareholders' equity
Paid-up capital 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500 6,058,500
Retained earnings (440,284) 836,249 3,093,658 6,253,730 8,919,281 11,155,183 12,854,537 14,219,635 15,440,365 16,064,427
Total Equity 6,058,500 5,618,216 6,894,749 9,152,158 12,312,230 14,977,781 17,213,683 18,913,037 20,278,135 21,498,865 22,122,927
TOTAL CAPITAL AND LIABILITIES 6,058,500 5,618,216 6,894,749 9,152,158 12,312,230 14,977,781 17,213,683 18,913,037 20,278,135 21,498,865 22,122,927

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12.3 Cash Flow Statement

Calculations SMEDA
Cash Flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit (440,284) 1,485,596 3,030,824 4,723,504 4,895,371 5,024,698 4,912,987 4,920,007 5,080,822 4,640,168
Add: depreciation expense 514,710 514,710 514,710 525,687 523,917 559,168 571,875 569,826 569,826 584,536
amortization of pre-operating costs 33,700 33,700 33,700 33,700 33,700 - - - - -
Pre-paid building rent (450,000) (45,000) (49,500) (54,450) (59,895) (65,885) (72,473) (79,720) (87,692) (96,461) 1,061,076
Cash provided by operations (450,000) 63,126 1,984,506 3,524,784 5,222,996 5,387,104 5,511,393 5,405,142 5,402,141 5,554,186 6,285,781

Issuance of shares 6,058,500 - - - - - - - - - -

Purchase of (treasury) shares
Cash provided by / (used for) financing activities 6,058,500 - - - - - - - - - -

Investing activities
Capital expenditure (5,358,500) - - (204,900) - (352,509) (237,197) - - (274,585) -
Acquisitions
Cash (used for) / provided by investing activities (5,358,500) - - (204,900) - (352,509) (237,197) - - (274,585) -

NET CASH 250,000 63,126 1,984,506 3,319,884 5,222,996 5,034,595 5,274,196 5,405,142 5,402,141 5,279,601 6,285,781

February 2021 17
Pre-Feasibility Study Day Care Center

13 KEY ASSUMPTIONS

13.1 Operating Cost Assumptions

Description Details

Communication expense 1% of Revenue

Promotional Expenses 0.5% of Revenue
Depreciation Method Straight Line
10% on Machinery
Depreciation Rate 33% on Computer Equipment
10% on Furniture & Fixture
Inflation Growth Rate 10%
Electricity Price Growth Rate 10%
Salaries Growth Rate 8%

13.2 Revenue Assumptions

Description Details

Fee growth rate 5%

Maximum capacity utilization 95%

Hours operational / day 8

Days operational / year 300

13.3 Capacity Utilization Assumptions

Description Details

Maximum operational capacity of Children’s (No.) 116

Operational first year capacity utilization 50%
Capacity utilization growth rate per year 15%

February 2021 18
 Small and Medium Enterprises Development Authority
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
[Link], helpdesk@[Link]

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN

3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, 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) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
[Link]@[Link] helpdesk-khi@[Link] helpdesk-pew@[Link] helpdesk-qta@[Link]