25 BEDED NURSING HOME

Introduction
Good Medical facilities have always been in demand for the massive population of North East India.
There is tremendous need to provide excellent health care facilities. Moderate size hospitals/ Nursing
home of 25 bed capacity can be set up at sub -district head quarters, well connected with road and rail.
These hospitals equip[ed with modern medical equipments offer excellent services for the patients
suffering from various diseases.
This report is prepared with an objective to provide basic information about Hospital / Nursing home
project for entrepreneurs, who may or may not have a medical background. It covers extensively on
various points as under
Services offered in the hospital
Details of hospital equipments
Supportive facilities
Elaborated list of medical equipments
Various fixed assets required
No. of medical/ paramedical/ non-medical staff required
Cost of suppliers and consumables
Revenue details
Estimation of cost of project and means of financing
Estimates of profitability
Estimates of pay-back period & Break even point etc.
The report establishes the economic viability of the project. Ensuing sections of this report discuss
various aspects of the project.
Capital Outlay of the Project and Means of Finances
The estimated project cost is Rs. 200 Lakhs. The debt: equity ratio considered for this project is 1:1. It is
proposed that the project has equity of Rs. 100 Lakhs and a loan/debt component of Rs 100 Lakhs which
can be raised as long term loan from the financial institutions. The project cost and means of finance is
presented in Table below
S. No

Cost (in Rs. Lakhs)

1.
2.
3.
4.
5.
6.
7.

Details
Land and Land development
Buildings
Equipments
Miscellaneous Fixed Asset
Preliminary Expenses
Preoperative Expenses
Margin money for working capital

8.

Contingencies

21.70

Total

200.00

39.00
35.00
50.87
28.00
3.00
14.90
7.53

Means of Finance
1

Loan

120

Equity

80

Total

200.00

Estimation of Project Cost

In the estimation of the project cost, the requirements and costs of various fixed assets such as land,
buildings, plant and machinery and other miscellaneous assets is considered. Besides these costs there are
certain preliminary and preoperative expenses which are incurred in the project cost. Once the project is
set up, in order to run it working capital is required. Since bank provides only part of requirements of
working capital, marginal money is required to successfully operate the plant. Since the requirement of
the marginal money is of long term nature, it is also considered as a part of the project cost.
Land and Site Development
Cost of Land and Site development
1. Land 10,000 square meters @ Rs. 350 per square meters
including registration charges
:
Rs 35 Lakhs.
2. Site clearing, levelling and other development cost
:
Rs 4 Lakhs
Total
Rs 39 Lakhs
Building and Structures
Estimates for building and structures covers the cost of construction of various buildings for the hospital,
utilities section, administrative office, Godowns, laboratory, etc. The cost of the building and structures is
estimated on the basis of area and volume and also on the type of foundation to be adopted for various
items of equipment.
Cost of Building and Structures
Building cost
:
Rs. 25 Lakhs
Other Facilities viz; flushing cisterns, sewers, septic tank etc
Boundary wall, parking site, watchmans cabin & Architects fees:
Rs. 10 Lakhs
Total:
Rs. 74 Lakhs
Cost of Equipments
Hospital will have necessary equipments for General Surgery
OPD, O.T. ICU, Emergency, Physiotherapy and required Hospital furniture
Total Cost of Equipments is estimated to be
:
Rs. 50.87 Lakhs
Other Miscellaneous Fixed Assets
Cost of miscellaneous fixed assets includes telephone and fax, office equipment, site office furniture,
vehicles etc. A total of Rs. 28 Lakhs is earmarked for the purpose. The cost involved under various items
is given in Table below.

Other Miscellaneous Fixed Assets

- Electrical & workshop equipments
- Site office furniture and fixtures
- Vehicles
- Other assets
Total

Cost in Rs. lakhs

12.00
10.00
5.00
1.00
28.00

Preliminary and Preoperative Expenses

Apart from the cost of the tangible assets described in earlier sections of this report provision has also
been made towards other categories of expenditure necessary for the establishment of the project. These
expenses are known as preliminary and pre- operative expenses. The preliminary expenses basically
covers the expenses involved in company formation and project identification. They also include capital
issue expenses if the company is to be formed as a public limited company. The pre-operative expenses
cover all other category of expenses that are incurred in the implementation of the project starting from

project identification to commissioning of the project. The preliminary and pre-operative expenses for this
project are estimated as follows.
Preliminary and Capital Issue Expenses
Sr.
No

1
1
2
3

5
(i)
(ii)
(iii)
(iv)
(v)

Rupees Lakhs

Description

Expenses

Preliminary Expenses
Drafting charges payable to CA for drafting the memorandum and articles of
association of the company
Printing charges for memorandum and articles of association of the company
Application fee payable to the Registrar of Companies for Registration of the
company assuming that the

0.15
0.15
0.50

Fees Paid to Consultants for project identification and evaluation , preparation

of project profiles, conducting
market survey and preparing project feasibility studies
Capital Issue Expenses
Advertisement and Publicity
0.75
Printing and Postage
0.50
Underwriters commission and brokerage
(4%)
Fees paid to Managers and registrars to
the issue
Listing fees and other expenses

0.35
0.75
0.50
0.25
0.15
0.20

Total
Rs. 3.00 Lakhs

Pre-Operative Expenses

Sr.
No

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Description

Salaries and Wages

Staff Welfare Expenses
Printing and Stationery Expenses
Postage, Telephone and Telegrams
Electricity and Water Charges
Rent, rates and Taxes
Vehicle Expenses
Repair and Maintenance Expenses
Traveling and Conveyance Expenses
Director's Remuneration and Sitting Fees
Auditor's Remuneration
Advertisement Expenses
Books, Subscriptions and Fees
Insurance Premium
Interest and Commitment Charges
Bank Charges and commission
Recruitment of Personnel

Expenses ( in Rs. lakhs)

3.20
0.50
0.25
0.10
0.20
3.15
0.00
1.00
0.00
0.35
0.00
0.00
0.75
0.50
1.00
0.40

18
19

Legal and Professional Fees

Other Miscellaneous Expenses

0.50
3.00
Rs.

14.90 Lakhs

Working Capital and Marginal Money

Estimates of Working Capital requirements have been worked out on the basis of following cycles of
expenditure involving cash liabilities and other recurring requirements.
1

2
3
4
5
6
7

Stock of Raw Materials in Stores

(i) Imported
(ii) Indigenous
Packing Materials
Work in Progress
Stock of Finished Goods in Stores
Accounts Receivable
Other Recurring Expenses
Electricity Deposits

0.0
0.5
0.5
0.05
0.5
0.1
1
35

Months
Months
Months
Months
Months
Months
Months
Lakhs

Work in progress covers the cost of Raw Materials, Utilities, Labor and Staff Wages. The value of
finished goods for sale is arrived at by taking into consideration, the cost of raw materials, utilities, labor
and staff wages, administrative overheads, maintenance and repairs and insurance. Other recurring
expenses cover utilities, labor and staff wages, maintenance and repairs, insurance, administrative
overheads and sales expenses. The requirements of margin money for working capital requirements are
made on the basis of following norms adopted by all Nationalized Banks in our country.
Margin on Raw Material in stores
Margin on Packing Material
Margin on Work in Progress
Margin on Finished Goods in stores
Margin on Accounts Receivable
Margin on Other Recurring Expenses
Margin on Electricity Deposit

20 %
20 %
30 %
30 %
20.%
100.%
100.%

The requirement of total working capital, bank borrowings and margin money during the first, second,
third and subsequent years of plant operation are estimated in the following table. Assessment of Working
Capital and marginal Money
Assessment of Working Capital & Marginal Money (Rs. Lakhs)
First Year
Sr. No.
1

Description

Capacity Utilization =

80%

No. of
Months

Margin
Money %

Working
Capital

Margin
Money

Bank
Finance

(i) Imported

0.00

20.00%

0.00

0.00

0.00

(ii) Indigenous

0.50

20.00%

0.67

0.13

0.53

Packing Materials

0.50

20.00%

0.00

0.00

0.00

0.67

0.13

0.53

Stock of Raw Materials in Stores

Total 1+ 2
3

Work in Progress

0.05

30.00%

0.25

0.07

0.17

Stock of Finished Goods in Stores

0.50

30.00%

2.81

0.84

1.97

Accounts Receivable

0.10

20.00%

0.93

0.19

0.75

Other Recurring Expenses

1.00

100.00%

4.30

4.30

0.00

Electricity Deposits

100.00%

2.00

2.00

0.00

10.96

7.53

3.42

Total

First Year

Second Year
Sr. No.
1

Description

Capacity Utilization =

90%

No. of Months

Margin Money %

Working Capital

Margin Money

Bank Finance

(i) Imported

0.00

20.00%

0.00

0.00

0.00

(ii) Indigenous

0.50

20.00%

0.75

0.15

0.60

0.50

20.00%

0.00

0.00

0.00

0.75

0.15

0.60

Stock of Raw Materials in Stores

Packing Materials
Total 1+ 2

Work in Progress

0.05

30.00%

0.26

0.08

0.18

Stock of Finished Goods in Stores

0.50

30.00%

2.98

0.89

2.09

Accounts Receivable

0.10

20.00%

1.05

0.21

0.84

Other Recurring Expenses

1.00

100.00%

4.46

4.46

0.00

Electricity Deposits

100.00%

2.00

2.00

0.00

11.51

7.79

3.71

Total

Second Year

Third Year
Sr. No.

Description

Capacity Utilization =

90%

No. of Months

Margin Money %

Working Capital

Margin Money

Bank Finance

(i) Imported

0.00

0.20

0.00

0.00

0.00

(ii) Indigenous

0.50

0.20

0.75

0.15

0.60

Packing Materials

0.50

0.20

0.00

0.00

0.00

0.75

0.15

0.60

Stock of Raw Materials in Stores

Total 1+ 2
3

Work in Progress

0.05

0.30

0.26

0.08

0.18

Stock of Finished Goods in Stores

0.50

0.30

2.98

0.89

2.09

Accounts Receivable

0.10

0.20

1.05

0.21

0.84

Other Recurring Expenses

1.00

1.00

4.46

4.46

0.00

Electricity Deposits

1.00

2.00

2.00

0.00

Third Year

11.51

7.79

3.71

0.00
Total

Manufacturing Inputs and Costs

Cost of Supplies and Consumables
For operating a 25 bed hospital at 100 % capacity utilization, the annual cost of the consumables is
estimated to be Rs. 20 lakhs
Utilities
The main utilities required for the plant are water, fuel oil and electricity.
Annual Cost of Utilities is thus estimated as follows
Annual cost of coal

Rs 1.00 Lakhs

Annual cost of water

Rs. 1.20 Lakhs

Annual cost of electricity

Rs. 10.00 Lakhs

Annual cost of Fuel oil

Total

Rs. 2.00 Lakhs

Rs. 14.20 lakhs

Manpower Requirement
Based on the Hospital size the total requirement of personnel is estimated at 50 No.s under different
categories. Annual wage bill of the staff works out to be Rs. 32.62 Lakhs.
Administrative Overheads
Administrative overheads include administrative and office expenses such as staff travelling, office
stationery and postage, telephone bills, audit fee, legal fee, bank charges and other sundry expenses.
Annual Administrative Overheads
Description
Professional Fee
Electricity
Post & Telegram
Telephone & Fax charges
Office Supply & Stationary
Staff Welfare
Misc. Expenses
Total Annual Administrative Overheads in Rs. Lakhs

Annual Cost in Rs. Lakhs

1.00
1.00
0.25
0.35
0.15
0.15
0.10
3.00 Lakhs

Maintenance and Repairs

On the basis of norms available from similar plants in actual operation, provision has been made for
annual cost of maintenance and repairs. The maintenance and repairs expenses are estimated at 1% of the
cost of building and structure and 2% of the erected cost of plant and machinery and other miscellaneous
fixed assets. The cost of
Maintenance and repairs is estimated as under:
Type
Maintenance of building and structures
Maintenance of plant & machinery
Maintenance of other miscellaneous fixed assets
Total

Repair and Maintenance Cost in Rs Lakhs

Rs

0.35
0.71
0.42
1.48 Lakhs

Insurance
The building and structures, plant and machinery and other miscellaneous fixes assets of the unit will be
insured against all types of risks. It is estimated at 0 .6% of their total cost which works out to be Rs 0.55
lakhs.
Sales Expenses
The sales expenses generally cover commission, brokerage, discount etc. the annual sales expenses at 100
% capacity utilization are estimated at 3% of the annual sales revenue of Rs 140 Lakhs, which works out
to be as Rs. 4.2 Lakhs annually.
Financial Expenses (interest on short term loan and long term loan)
A. Interest on Short Term Loan
To partially meet the working capital requirements of the project, the company will have to make

arrangements for cash facilities credit facilities with a Nationalised bank. The present rate of interest

taken here is 16 % for short term loans. The following table gives the requirements of short term loans
and anticipated interests payable to the bank during the first 10 years of its operations.
Interest on Short Term Loans (in Rs. Lakhs)
Serial No
1
2
3

Year Of Operation
First
Second
Third & Subsequent years

Bank Borrowings
3.44
3.73
3.73

Interest Payable
0.55
0.60
0.60

B Interest on Long Term Loans

It is proposed to raise the sum of Rs. 100 Lakhs as long term loans from financial institutions to meet the
capital cost of the project. For calculating the interest on long term loans, an interest rate of 13 % is
taken.
Interest on long term loans (Rs. Lakhs)
S.N.
Year
Interest
1
First
13.01
2
Second
13.01
3
Third
11.82
4
Fourth
10.24
5
6
7
8
9
10

Fifth
Sixth
Seventh
Eighth
Ninth
Tenth

8.66
7.08
5.50
3.92
2.34
0.75

Capitalization of Pre-operative expenses and Contingencies (in Rs. Lakhs)

For the purpose of claiming extra depreciation and amortisation the pre operative expenses and
contingencies will be capitalized with the cost of fixed assets. The distribution of pre-operative expenses
and contingencies has been done in proportion to the cost of all the fixed assets (except land and site
development) in the following table.
Name of the Asset
Cost of Land and Site Development
A. Factory Building
B. Non- factory Building
Cost of Plant and Machinery
Electrical and Workshop Equipments
Office Equipments and Furniture
Vehicles
Other Assets

Actual Cost
39.00
15.00
20.00
50.87
12.00
5.00
10.00
1.00

% of Total Cost
25.51%
9.81%
13.08%
33.28%
7.85%
3.27%
6.54%
0.65%

Amount Allocated
9.35
3.60
4.80
12.20
2.88
1.20
2.40
0.24

Captlz.Cost (Rs. Lakhs)

48.35
18.60
24.80
63.07
14.88
6.20
12.40
1.24

152.87

100.00%

36.65

189.52

Total

1.
Deprecation by WDV Method:
For income tax purpose, the depreciation of depreciable assets (all fixed assets except land and site
development) is carried out by written down value method at applicable rate permitted under the income
tax Act and rules. As per the present rules the following rates are applicable for depreciation of different
types of assets.
Rates Applicable on Different Assets

Serial No
1
2
3
4
5
6
7
8

Assets
Cost of Land and Site Development
A. Factory Building
B. Non- factory Building
Cost of Plant and machinery
Electrical and Workshop Equipments
Office Equipments and Furniture
Vehicles
Other Assets

Rate %
0.
10.
5
25
25
10
10
15

Depreciation by WDV Method (Rs. Lakhs)

Description on
Cost of Land and Site Development
A. Factory Building
B. Non- factory Building
Cost of Plant and machinery
Electrical and Workshop Equipments
Office Equipments and Furniture
Vehicles
Other Assets

Rate
0.00%
10.00%
5.00%
25.00%
25.00%
25.00%
10.00%
15.00%
Total

Cost of Land and Site Development

A. Factory Building
B. Non- factory Building
Cost of Plant and machinery
Electrical and Workshop Equipments
Office Equipments and Furniture
Vehicles
Other Assets

0.00%
10.00%
5.00%
25.00%
25.00%
25.00%
10.00%
15.00%
Total

Year-1
0.00
1.86
1.24
15.77
3.72
1.55
1.24
0.19
25.56

Year-2
0.00
1.67
1.18
11.83
2.79
1.16
1.12
0.16
19.90

Year-3
0.00
1.51
1.12
8.87
2.09
0.87
1.00
0.13
15.60

Year-4
0.00
1.36
1.06
6.65
1.57
0.65
0.90
0.11
12.31

Year-5
0.00
1.22
1.01
4.99
1.18
0.49
0.81
0.10
9.80

Year-6
0.00
1.10
0.96
3.74
0.88
0.37
0.73
0.08

Year-7
0.00
0.99
0.91
2.81
0.66
0.28
0.66
0.07

Year-8
0.00
0.89
0.87
2.10
0.50
0.21
0.59
0.06

Year-9
0.00
0.80
0.82
1.58
0.37
0.16
0.53
0.05

Year-10
0.00
0.72
0.78
1.18
0.28
0.12
0.48
0.04

7.86

6.37

5.22

4.31

3.60

Deprecation by Straight Line Method (Rs. Lakhs)

In the estimation of cost of sales and in books of accounts of the company the normally adopted practice
is to depreciate the various assets by straight line method. At present the following rates are applicable for
depreciation by straight line method of various assets.
Depreciation By SLM ( Rs. Lakhs)
Description on
Cost of Land and Site Development
A. Factory Building
B. Non- factory Building
Cost of Plant and machinery
Electrical and Workshop Equipments
Office Equipments and Furniture
Vehicles

Actual Cost
39.00
15.00
20.00
50.87
12.00
5.00
10.00

% Total cost
25.51%
9.81%
13.08%
33.28%
7.85%
3.27%
6.54%

Amt Allocated
10.12
3.89
5.19
13.20
3.11
1.30
2.59

Captlz.Cost
49.12
18.89
25.19
64.07
15.11
6.30
12.59

Rate
0.00%
3.39%
1.64%
9.50%
9.50%
3.39%
9.50%

Depr.
0.00
0.64
0.41
6.09
1.44
0.21
1.20

Other Assets
Total

1.00

0.65%

0.26

1.26

152.87

1.00

39.65

192.52

5.28%

0.07
10.05

Working Results and Profitability

The annual cost of sales is developed from all cost and expenses incurred in the running of Hospital (25
Bed), maintenance of the plant and revenues. The annual cost of services during the first 7 years of
operation is estimated in the following table.
Description
Hospital Occupancy
Variable Costs
Raw Material
Utilities
Packing Materials
Sales Expenses
Interest on Bank
Borrowing
Fixed Costs
Labor & Staff Wages
Repair & Maintenance
Insurance
Admin. Overheads
Interest on Long Term
Depreciation

Cost

Year-1

Year-2

Year-3

80%

90%

90%

Year4
90%

Year-5

Year-6

Year-7

90%

90%

90%

20.00
14.20
0.00
3.68
As Per Limit

16.00
11.36
0.00
2.94
0.55

18.00
12.78
0.00
3.31
0.59

18.00
12.78
0.00
3.31
0.59

18.00
12.78
0.00
3.31
0.59

18.00
12.78
0.00
3.31
0.59

18.00
12.78
0.00
3.31
0.59

18.00
12.78
0.00
3.31
0.59

Total

30.85

34.68

34.68

34.68

34.68

34.68

34.68

32.62
1.48
0.55
3.00
As Per Limit
10.05
Total
Annual Cost

32.62
1.48
0.55
3.00
13.01
10.05
60.71
91.56

32.62
1.48
0.55
3.00
13.01
10.05
60.71
95.39

32.62
1.48
0.55
3.00
11.82
10.05
59.53
94.21

32.62
1.48
0.55
3.00
10.24
10.05
57.94
92.63

32.62
1.48
0.55
3.00
8.66
10.05
56.36
91.04

32.62
1.48
0.55
3.00
7.08
10.05
54.78
89.46

32.62
1.48
0.55
3.00
5.50
10.05
53.20
87.88

Sales Revenues
The Annual sales revenue at 100 % occupancy is estimated to be about Rs 140 lakhs. It includes revenue
from registration, Consultation, room charges, Operation theatre, Surgery, X- rays, Kitchen, Ambulance
services etc.
Estimation of Working Results (Rs Lakhs)
Description
Plant Efficiency
Sales Revenue
Cost of Production
Gross Profit
Financial Expenses
Interest on term Loan
Interest on working Capital
Sub Total
Writing off of Pre Expenses
Depreciation
Net Profit Before Tax
Income Tax
Dividend
Retained Earnings/profit after tax
Depreciation Written back

Year-1
80%
112.00
91.56
20.44

Year-2
90%
126.00
95.39
30.61

Year-3
90%
126.00
94.21
31.79

Year-4
90%
126.00
92.63
33.37

Year-5
90%
126.00
91.04
34.96

Year-6
90%
126.00
89.46
36.54

Year-7
90%
126.00
87.88
38.12

13.01
0.55
13.56
0.30
10.05
20.14
1.39
0.00
18.75
10.05

13.01
0.59
13.60
0.30
10.05
30.31
6.16
0.00
24.15
10.05

11.82
0.59
12.42
0.30
10.05
31.49
7.81
0.00
23.68
10.05

10.24
0.59
10.84
0.30
10.05
33.07
9.28
0.00
23.80
10.05

8.66
0.59
9.26
0.30
10.05
34.66
10.51
0.00
24.15
10.05

7.08
0.59
7.67
0.30
10.05
36.24
11.57
0.00
24.67
10.05

5.50
0.59
6.09
0.30
10.05
37.82
12.49
0.00
25.33
10.05

Nett Cash Accruals

Cash Profit
Reserves & Surplus

28.80
29.10
18.75

34.20
34.50
42.90

33.73
34.03
66.58

33.85
34.15
90.38

34.20
34.50
114.52

34.72
35.02
126.09

35.38
35.68
138.58

Cash Flow Statement

Description

Constant Period

Year-1

Year-2

Year-3

Year-4

Year-5

Year-6

Year-7

Sources of Funds
Balance Bank Finance
Promoters/Equity Capital

4.56

21.56

28.16

22.16

21.99

22.33

22.86

100.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

100.08

0.00

Cash Subsidy
Long Term Loans

0.00

0.00

0.00

0.00

0.00

0.00

Short Term Loans

3.42

0.29

0.29

0.00

0.00

0.00

0.00

Cash Profit

20.44

30.61

31.79

33.37

34.96

36.54

38.12

Depreciation

10.05

10.05

10.05

10.05

10.05

10.05

10.05

200.08

33.92

40.95

42.13

43.43

45.01

46.59

48.17

192.52

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Increase in Curr. Assets

0.00

10.96

0.55

0.00

0.00

0.00

0.00

0.00

Decrease in L.T. Loans

0.00

0.00

6.08

12.16

12.16

12.16

12.16

12.16

Preliminary Expenses

3.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00
12.49

Total A
Application of Funds
Increase in Fixed Assets

Taxation

0.00

1.39

6.16

7.81

9.28

10.51

11.57

195.52

12.35

12.79

19.98

21.44

22.67

23.73

24.66

Opening Balance

0.00

4.56

26.12

54.28

76.44

98.42

120.76

143.61

Surplus(-Deficit)

4.56

21.56

28.16

22.16

21.99

22.33

22.86

23.51

Closing Balance

4.56

26.10

48.17

70.04

92.03

114.36

137.22

160.74

Year-1

Year-2

Year-3

Year-4

Year-5

Year-6

Year-7

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

18.75

42.90

66.58

90.38

114.52

139.20

164.52

100.08

100.08

87.92

75.75

63.59

51.42

39.26

27.09

3.42

3.71

3.71

3.71

3.71

3.71

3.71

200.08

222.25

234.52

246.04

257.67

269.66

282.16

295.33

192.55

192.55

192.55

192.55

192.55

192.55

192.55

192.55

0.00

10.05

10.05

10.05

10.05

10.05

10.05

10.05

182.49

172.44

162.39

152.34

142.29

132.23

122.18

10.96

11.51

11.51

11.51

11.51

11.51

11.51

0.00

0.00

0.00

0.00

0.00

0.00

0.00

26.10

48.17

70.04

92.03

114.36

137.22

160.74

2.70

2.40

2.10

1.80

1.50

1.20

0.90

222.25

234.52

246.04

257.67

269.66

282.16

295.33

Total B

Projected Balance Sheet

Description

Const Period

A) Liabilities
Promoters/Equity Capital
Reserve & Surplus
Long Term Loans
Short Term Loans
Total A
B) Assets
Gross Fixed Assets
Depreciation
Nett Fixed Assets
Current Assets

Inventory

Deposits with IDBI

Cash and Bank Balance

7.53

Preliminary Expenses to the

extent not written off
Total B

Debt Service Coverage Ratio

200.08

The DSCR for the proposed project is calculated in the following table
Description
Debt Service Funds
Nett Cash Accruals
Interest on L.T. Loans
Total A
Debts
Repayment of L.T. Loans
Interest on L.T. Loans
Total B
Debt-Service Coverage
Ratio Total (A)/(B)

Year-1

Year-2

Year-3

Year-4

Year-5

Year-6

Year-7

28.80
13.01
41.81

34.20
13.01
47.21

33.73
12.62
46.35

33.85
11.03
44.88

34.20
9.45
43.65

34.72
7.87
42.59

35.38
6.29
41.67

0.00
13.01

0.00
13.01

0.00
12.62

12.16
11.03

12.16
9.45

12.16
7.87

12.16
6.29

13.01
3.21

13.01
3.63

12.62
3.67

23.20
1.93

21.62
2.02

20.04
2.13

18.45
2.26

Pay Back Period

Pay-back period is defined as the no. of months or years required for the unit to generate cumulative gross
operating surplus equal to the fixed capital investment in the project. The pay-back period for the project
is estimated in the following table
Description

Year-1

Year-2

Year-3

Year-4

Year-5

Year-6

Year-7

Nett Profit Before Taxes

20.14

30.31

31.49

33.07

34.66

36.24

37.82

Depreciation

10.05

10.05

10.05

10.05

10.05

10.05

10.05

Interest on LET. Loans

13.01

13.01

12.62

11.03

9.45

7.87

6.29

Gross Operating Surplus

43.20

53.37

54.16

54.16

54.16

54.16

54.16

Cum. Gross Operating Surplus

43.20

96.57

150.73

204.89

259.05

313.21

367.37

0.482718

0.753439

1.02416

1.2948806

1.565601

1.836322

Pay Back Period = 2.43 Years or 29.19 Month

Break Even Point Efficiency

The break-even point analysis of project is developed from the assumed plant efficiency, fixed
cost of sales, variable cost of sales, and sales revenues.
The BEP for the proposed project is given in table below.
Plant Efficiency
Fixed Cost of sales
Fixed Cost of sales - Depreciation
Sales Revenue
Variable cost of sales
Cash Break Even Point

80.00
60.71
50.66
112.00
30.85
62.43%

Average Cash BEP

50.28%

Break-even efficiency

59.85

90.00
60.71
50.66
126.00
34.68
55.48%

90.00
59.53
49.47
126.00
34.68
54.18%

90.00
57.94
47.89
126.00
34.68
52.45%

90.00
56.36
46.31
126.00
34.68
50.71%

90.00
54.78
44.73
126.00
34.68
48.98%

90.00
53.20
43.15
126.00
34.68
47.25%

59.84

58.67

57.11

55.55

53.99

52.43