PROJECT REPORT

Of

HEALTH & FITNESS CENTRE

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Health & Fitness Centre.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : info@udyami.org.in
Contact : +91 7526000333, 444, 555
1. PROJECT PROFILE

Introduction and Importance of Physical Fitness

India is one of those countries where awareness about health and importance of
regular exercise is minimal. Statistics show that inactivity combined with poor diet is
second only to tobacco use in causing preventable deaths in the world. The answer to
protect from the fatal diseases is not to have treatment, rather to adopt preventive
measures through exercise and movement. The evidence in this case is indisputable;
Lifelong participation in physical activity has a significant, positive impact on the
health and wellbeing of individuals.

The sedentary lifestyle is a major underlying cause of death, disease and disability.
About 2 million deaths every year are attributable to physical inactivity. A WHO
study on risk factors suggested that sedentary life style was one of the 10 leading
causes of death and disability in the world. The inactivity also increases the risk of
colon a n d b r e a s t cancer, high b l o o d p r e s s u r e , l i p i d d i s o r d e r s ,
o s t e o p o r o s i s , depression and anxiety.

Recent studies have shown that children around the world are also becoming
increasingly sedentary especially in poor urban areas. Time and resources devoted to
physical education are being cut and computer games and televisions are replacing
physically active pastime ignoring the fact that the inadequate physical activity in
children could have lifelong health consequence. Regular physical activity or
exercise with good eating habits, avoiding smoking, monitoring a reasonable body
weight and avoiding stress could improve one's health and help prevent from many
diseases.

Most of the newspapers have no regular columns on health, besides very few
programs on physical activity are carried out by the radio and television. Moreover
the health sector is also not involved in the promotion of physical exercise. So there
is great need to promote activities regarding exercise and fitness.
Good health habits are very important at any age and it is never too late to change
habits in ways that will improve health. One of the key factors for increasing health
is exercise. A regular program of exercise can:
 Aid in weight management
 Lower risk of heart disease and certain types of cancer
 Increase life span and quality of life
 Helps control hypertension and diabetes
 Increase and maintain flexibility
 Reduces muscles tension
 Promotes increased circulation
 Aids in relaxation, stress reduction
 Develops body awareness

1.2 Opportunity Rationale

The factor that leads to the development of this pre-feasibility study is the fact that
currently limited people have access to health and fitness clubs under qualified
instructors/trainers. Great scope for these types of clubs exist in India especially in
urban areas where life is busy and people have less physical activity.

1.3 Project Brief

A health and fitness club provides services to its members to improve their physical
condition or appearance through exercise. The proposed health and fitness club will
provide indoor facilities of Gymnasium, Exercise halls, and a Gym shop & Cafe to
male and female members and will offer services of personal training by qualified
instructors. Project should be centrally located within a residential town to provide
easy access to the inhabitants.
1.4 Proposed business legal status

Legal status is recommended to be a sole proprietorship/partnership because it

requires less legal requirements. Also the proposed club is a small-scale set-up and
almost all such clubs in existing industry are sole proprietorships. Similarly a lower
rate of tax is applicable to sole proprietorship than that of companies.

1.5 Project Capacity and Rationale

The proposed health club will have an area of 4500sq ft hall having indoor facilities.
The club will operate in different sessions of the day like morning, afternoon,
evening and night. The club will have a capacity to cater 450 members, spread over
in the following different sessions of the day:

Operational sessions
Time Slots Duration
Gym
6:00 am to 10:30 am (Males only) 4.5 hours
11:00 am to 5:00 pm (Females only) 6 hours
5:30 pm to 10:00 pm (Males only) 5 hours
Exercise (Females Only)
11:00 am – 12:00 pm 1 hour (Pilates session)
3:30 pm – 4:30 pm 1 hour (Yoga session)
The fee package will range from Rs. 1,500 for exercise session and Rs. 3,000 for
gymnasium. The fee is higher due to the reason that proposed club is fully air-
conditioned having full range of imported equipment. In addition to these monthly
fees each member will pay Rs. 2,000 a non-refundable registration fee and Rs. 5,000
as refundable security.

Project Invest ment

Sr.# Description Rupees
1. Capital cost 4,678,250
2. Working capital 2,266,792
Total 6,945,042
1.6 Product mix

The proposed health club will provide the following services to its members:
 Gymnasia
 Slimming center
 Indoor games like table tennis, snooker
 Gym shop & Cafe
Recommended project parameters
Capacity Human Resource Technology/machine Locations
450 members 17 Local and foreign New Residential
Areas
Project cost IRR NPV Payback period
6.94 Million 45.75% 18.15 Million at 18% 3.58 Years

1.7 Proposed Location

Health club should be centrally located within a developed/developing residential

society in any of the big cosmopolitan cities to provide easy access to
inhabitants. The rates should be set according to the affordability of people who
live in these neighborhoods.

1.8 Key success factors/Practical Tips for success

 To obtain a good average of profits it is necessary to provide state of art facilities

to members.
 The proprietor should himself has technical know how of all the services being
offered.
 The services of qualified instructors and physician should be hired as “supervised
workouts improve results”.
 Utmost priority should be to provide members a lifestyle that encourages fitness
through the safest and latest means. Products like heart-rate monitors, calorie
expenditure display units etc should be used to enhance client motivation.

1.9 Strategic Recommendations

1.9.1 Marketing

At the initial stage heavy marketing would be required to attract members. After
establishing a clientele it is advisable to continue marketing the club services to
ensure its sustainability. The important marketing channels in this case would be
flyer distribution and Cable TV.
People normally consider the following factors while selecting a health club:
 Convenience
For new fitness clubs to be a success, it has to be conveniently located. People are
more likely to use a facility if it is close to home or work. Also the fitness facility
should have hours and class times that work within client’s busy schedule.
 Type of Facility
There are many different types of fitness facilities, each being the perfect
motivational tool for a specific type of person.
 Pricing
Price levels should be set at affordable levels considering income brackets of people
who live in the vicinity and also after considering the competitor’s price levels.

2 SECTOR AND INDUSTRY ANALYSIS

2.1 National Analysis

Commercial Health club industry is emerging as one of the good business ventures
in India. People are getting conscious and aware about their health and feel the
importance of exercise in the busy life. Currently health club industry is segmented
and unorganized excluding few health clubs. There is neither an association of these
clubs which is working actively for the development of this industry nor government
or health department/ministry has collected any data about the quantity and quality
of these clubs. Neither have the authorities set any quality standards for such clubs
like in developed countries. A lot of people are venturing into this trade, as it is a
flourishing business. Competition is healthy but these gyms do not cater to health
needs that can be a risk. A lot of people after discontinue the gyms after having
complaints of joint pain and other related health issues.
This industry has gone through many technological developments. Some clubs use
products like heart-rate monitors, calorie expenditure display units etc, to enhance
client motivation. They have a complete lifestyle evaluation, which includes
blood pressure measurement, resting pulse rate measurement, and body fat
assessment before they recruit the new member into the program. Their instructors
are certified to give first aid and CPR (cardio pulmonary resuscitation), so member’s
safety is ensured.

2.2 Legal issues regarding industry

No approval from any provincial government or health department is required in

India for operating a health and fitness club. Health Clubs like any other
business activity must be registered with Services tax, income tax department and
sales tax department.
3MARKET INFORMATION
3.1 Market potential

The market for health clubs in India has been developing steadily over the last
decade and a mushroom growth of Gym and clubs is being observed in all the
cities. But still a good potential exists for quality health clubs. India is emerging
as a newly health conscious society. Location and amenities are some of the most
vital factors in the success of a health club.
Customers usually conduct research before choosing a fitness facility because
choosing a fitness facility that is right for them is crucial to their success. Fitness
facilities can vary greatly not only in price but also in size, amenities and
programs offered, hours, convenience and most importantly, motivational
atmosphere. Many join a fitness facility with the greatest of intentions but end up
discouraged and unmotivated due to bad management by the clubs.

3.2 Target customers

The target customers for health clubs are the population of big cities having
age group of 18 to 50 years. Population of urban areas of India is 33% of total
population out of which 50% falls in the targeted customers’ age group.

4 EXERCISE EQUIPMENT REQUIREMENT

The success of this project is depended on the quality of machines so selection of
machinery is the most important aspect of this project. The exercise equipment is
available in various varieties. Both local and imported equipment is available in the
market. Existing clubs in the market are using a blend of imported (which is locally
available) and local equipment. Following is the detail of machinery required for this
project.

Exercise and sports machines required

Cost per Units Total Cost
Description unit (Rs.) (Rs.) Availability
Slimming, Warm up & Waist
Electric jogger power fit 80,000 4 320,000 Imported
320,000
Exercise Bicycle
Air Resistance Dual Action 10,000 2 20,000 Local
Heavy Duty Dual Action 15,000 2 30,000 Local
50,000
Stepper
Mini Stepper With handles 14,000 2 28,000 Local
28,000
Twister
Twister- Double with handles 15,000 2 30,000 Local
Twister- Single 8000 1 8,000 Local
38,000
Belt Massager 16,000 1 16,000 Local
Crunch 12,000 1 12,000 Local
Vertical Knee Raise 13,000 1 13,000 Local
Roman Chair 12,000 1 12,000 Local
Hyper Extension (Adjustable) 12,000 1 12,000 Local
Sit-up Bench 4,500 2 9,000 Local
Abdominal Board with stand 25,000 2 50,000 Local
(Multi and Adjustable)
Total 5,60,000

Chest Exercise
Bench Press (with plate holder) 9,500 2 19,000 Local
Incline Press (with plate holder) 9,500 2 19,000 Local

Exercise and sports machines required

Cost per Units Total Cost
Description unit (Rs.) (Rs.) Availability
Slimming, Warm up & Waist
Electric jogger power fit 80,000 4 320,000 Imported
320,000
Exercise Bicycle
Air Resistance Dual Action 10,000 2 20,000 Local
Heavy Duty Dual Action 15,000 2 30,000 Local
50,000
Stepper
Mini Stepper With handles 14,000 2 28,000 Local
28,000
Twister
Twister- Double with handles 15,000 2 30,000 Local
Twister- Single 8000 1 8,000 Local
38,000
Belt Massager 16,000 1 16,000 Local
Crunch 12,000 1 12,000 Local
Vertical Knee Raise 13,000 1 13,000 Local
Roman Chair 12,000 1 12,000 Local
Hyper Extension (Adjustable) 12,000 1 12,000 Local
Sit-up Bench 4,500 2 9,000 Local
Abdominal B o a r d with 25,000 2 50,000 Local
stand
Total 5,60,000

Chest Exercise
Bench Press (with plate holder) 9,500 2 19,000 Local
Incline Press (with plate holder) 9,500 2 19,000 Local
Decline Press 9,500 1 9,500 Local
(with plate holder)
Butter fly Machine (with 60 Kg 32,000 1 32,000 Local
weight)
Sitting Bench Press Machine 30,000 2 60,000 Local
(with 50 Kg weight)
Multi Smith machine Bench 45,000 2 90,000 Local
Press
Flying Machine (with 60 kg) 35,000 1 35,000 Local
Pull Over Machine 35,000 1 35,000 Local
Cable cross over Machine with 48,000 1 48,000 Local
chin-up bar (with 100 kg)
Total 347,500

Legs & Thigh Exercise

Leg Extension(with 60 Kg 35,000 1 35,000 Local
weight)
Hack Squarts 50,000 1 50,000 Local
Power line leg press 50,000 1 50,000 Local
Leg Curl Machine(with 50 Kg 45,000 1 45,000 Local
weight)
Leg Stand 15,000 1 15,000 Local
Standing calves machine(with 50,000 1 50,000 Local
100 Kg weight)
Sitting calves machine 20,000 1 20,000 Local
Total 265,000

Arm Exercise
Preacher Curl Bench(manual) 12,000 1 12,000 Local
Preacher Curl Bench (machine) 35,000 1 35,000 Local
Bent Over Lever row: T-Bar 18,000 1 18,000 Local
Standing Curl Stand 4,000 1 4,000 Local
Triceps Dip 8,000 1 8,000 Local
Shoulder Press Machine (with 35,000 1 35,000 Local
50 kg weight)
Total 112,000

Multi Gymnasium
Multi four Station 65,000 1 65,000 Local
(200 Kg weight) with Cable
rowing, Lat pull, Twister & T-
bar extension
Total 65,000

Multi Six Station 125,000 1 125,000 Local

(350 Kg weight) with Cable
rowing, Peck deck, Triceps
extension, Lat pull, Chin up bar,
Preacher cable machine
Total 125,000

Rods Dumbles and Weights

Rods (Chrome Coated)
Olympic rod(6 Ft) 3,500 3 10,500 Local
Curling rod(4 Ft) 2,500 2 5,000 Local
Rod 5-feet 3,000 2 6,000 Local
EZ Curl Bar 4,000 2 8,000 Local
Rod 7-feet 4,000 1 4,000 Local
Total 33,500

Dumbles
Chrome Coated @ Rs. 250 per
Kg:
6 kg 1,500 10 15,000 Local
8 kg 2,000 10 20,000 Local
10 kg 2,500 6 15,000 Local
12 kg 3,000 6 18,000 Local
14 kg 3,500 6 21,000 Local
16 kg 4,000 4 16,000 Local
18 kg 4,500 4 18,000 Local
20 kg 5,000 6 30,000 Local
24 kg 6,000 4 24,000 Local
28 kg 7,000 2 14,000 Local
32 kg 8,000 2 16,000 Local

40 kg 10,000 2 20,000 Local

Total 227,000
Chrome Coated @ Rs. 250 per
Kg:
2.5 kg 625 10 6,250 Local
5 kg 1,250 12 15,000 Local
10 kg 2,500 12 30,000 Local
15 kg 3,750 12 45,000 Local
20 kg 5,000 12 60,000 Local
Total 156,250

Dumble and weight racks

Multi Dumble Rack 15,000 2 30,000 Local
Multi Weight Rack 10,000 2 20,000 Local
Total 50,000

Yoga & Pilates equipment

Yoga mats 5,000 15 75,000
Pilates Equipment 100,000
Total 175,000

TOTAL 2,116,250
Machine maintenance

Generally these machines require less maintenance except regular oiling and
occasional replacement of broken wires and bent rods. All parts are easily available.

5.LAND AND BUILDING REQUIREMENT

5.1Land Requirement

The proposed health and fitness club requires an area of approximate 4,000 sq ft. It
is recommended to start the club in rented premises instead of owned premises to
avoid huge investment.

5.2Covered area

Area Utilization
Description Sq. ft. Units Area
Owner’s Office 120 1 120
Accounts & Admin. Office 100 1 100
Changing/Locker Room 450 1 450
Washrooms 48 3 144
Showers 120 2 240
Gymnasia 2150 1 2,100
Exercise Hall 735 1 735
Refreshment center4 110 1 110
Total Area (Approx.) 4,000
5.3 Construction cost

Current construction cost of club is approx Rs. 1,000 per sq.ft. Total construction
cost of 4000 sq.ft. Area will be Rs. 40,00,000. To minimize the cost of the project it
has been assumed that the building for the health and fitness club will be taken on
rental basis.

5.4 Rent cost

The building required for the project will be of commercial nature. The rent of the
building will depend on not only the vicinity of the club as well as the floor on which
it would be located. The club can also be established in an independent house unit
that can be used for commercial purposes For this particular pre-feasibility the
rent amount has been taken at Rs1,21,500 per month (calculated at the nominal
commercial rate of Rs. 15 per sq.ft.)

5.5 Utilities requirement

The necessary utilities are electricity, telephone and water. A three-phase

commercial electricity connection is required. Current rate of electricity for these
connections is Rs 6.00 per kilowatt-hour.
 6 HUMAN RESOURCE REQUIREMENT
The total human resource requirement of the health and fitness club is 17. Skilled
instructors are easily available at competitive salaries. Number of workers required
for each department is as follows
Human resource required
Department/Positions Number Salary/month Annual
(Rs.) salary Rs.
Manager 1 25,000 300,000
Instructors (Male/female) 4 15,000 720,000
Gym Helpers 4 6,500 312,000
Admin/Accountant 1 10,000 120,000
General physician 1 15,000 180,000
Cleaners 4 6,500 312,000
Security guard 2 7,000 168,000
Total 17 2,112,000

7.CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR

INVESTMENT

7.1 SWOT Analysis

A SWOT Analysis is a strategic planning tool used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or business venture.
Strengths and weaknesses are internal to the company whereas the opportunities and
threats originate from the external environment. A SWOT analysis is usually
performed early in the project development process, and helps organizations evaluate
the environmental factors and internal situation facing a project.

7.1.1 Strengths and opportunities

 Easy availibility of resources/equipment
 Easy availibility of instructors
 Growing population
 Expanding cities
 Growing health conciousness and awareness

7.1.2 Weaknesses and threats

 Heavy taxes in the form of sales tax and income tax
 High fees of the clubs make it difficult to afford by midlle and low income group
 Availibility of portable machines that one can easily use at home without an
instructor
 Costly imported equipment
 8 FINANCIAL ANALYSIS

8.1 Project Cost

Capital investment for purchase of equipment is the major component of total project
cost of a Health and Fitness club. Following table shows the detail of the Project
cost:

Capital Costs
Capital Investment Units Cost per Rs
unit
Equipment 2,116,250
Air conditioners 10 35,000 350,000
Computer with UPS 2 35,000 70,000
Furniture & fixtures 300,000
Printer 1 12,000 12,000
Sound system 2 30,000 60,000
Water dispenser 1 15,000 15,000
Generator 1 925,000 925,000
Refrigerator 2 35,000 70,000
Pre-operating costs 710,000
Total Capital Costs 4,678,250
In addition to capital investment, the project will also require working capital.

Working Capital
Rs.
Pre-paid building rent 729,000
Building Security 400,000
Cash 1,137,792
Total Working Capital 2,266,792
Total Investment 6,945,042
8.2 Financing Arrangement

The project is based on following debt to equity ratio.

Financing Plan
Debt (Rs) 50% 3,472,521
Equity (Rs) 50% 3,472,521
6,945,042
Pre-Feasibility Study Health & Fitness Club

8.3 Project Economics

A comprehensive financial analysis & projections of the project show that the project has a potential to bring healthy positive
returns to the investors. All estimates are conservative with minimal number of members in the initial phase
IRR 45.75%
NPV Rs. 18,145,000
Payback Period (yrs) 3.58

9 FINANCIAL STATEMENTS

9.1 Income statement

Income Statement Rupees

(000)
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Revenue* Members
fee Refreshment 6,060 9,515 12,152 14,628 17,091 19,810 22,967 26,464 30,413 34,974
counter 180 198 218 240 264 290 319 351 386 424
6,240 9,713 12,370 14,867 17,354 20,100 23,286 26,814 30,799 35,399

Operating Expenses: 6,548 7,059 7,144 7,596 8,095 8,945 9,596 10,200 10,963 11,693

Operating Profit (308) 2,654 5,225 7,272 9,260 11,155 13,690 16,614 19,836 23,706
Financial Charges 528 417 306 194 83 - - - - -
Profit before Taxation (836) 2,237 4,920 7,077 9,176 11,155 13,690 16,614 19,836 23,706
Taxation - 559 1,230 1,769 2,294 2,789 3,422 4,154 4,959 5,926
Profit after Taxation (836) 1,678 3,690 5,308 6,882 8,367 10,267 12,461 14,877 17,779

Acc. Profit b/f - (836) 842 4,532 9,840 16,722 25,089 35,356 47,816 62,694

Un-appropriated Profit c/f (836) 842 4,532 9,840 16,722 25,089 35,356 47,816 62,694 80,473
* NOTE The figure of re venue are exclusive of sales tax

1
9.2 Balance sheet

Projected Balance Sheet

Rupees (000)
Year - 0 Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Tangible Fixed Assets 3,968 3,571 3,214 2,893 2,604 2,343 2,109 1,898 1,708 1,537 1,384

Preoperational expenses 710 568 426 284 142 - - - - - -

Current Assets:
Security deposit 400 400 400 400 400 400 400 400 400 400 400
Advance rent 729 - - -
Cash in Hand / Bank 1,138 875 2,358 5,817 10,861 17,451 26,052 36,530 49,181 64,229 82,162
2,267 1,275 2,758 6,217 11,261 17,851 26,452 36,930 49,581 64,629 82,562

6,945 5,415 6,398 9,394 14,007 20,195 28,561 38,828 51,289 66,166 83,946

Owners Equity:
Capital 3,473 3,473 3,473 3,473 3,473 3,473 3,473 3,473 3,473 3,473 3,473
Accumulated Profit - (836) 842 4,532 9,840 16,722 25,089 35,356 47,816 62,694 80,473

Long Term Loan 3,473 2,084 1,389 695 - - - - - - -

Current Liabilities:
Current Portion
of Long Term Loan - 695 695 695 695 - - - - - -
Accounts Payable - - - - - - - - - -
- 695 695 695 695 - - - - - -

6,945 5,415 6,398 9,394 14,007 20,195 28,561 38,828 51,289 66,166 83,946

2
9.3 Cash flow

Projected Cash Flow

Rupees (000)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Profit before Financial

Charges & Taxation - (308) 2,654 5,225 7,272 9,260 11,155 13,690 16,614 19,836 23,706
Amortization 142 142 142 142 142 - - - - -
Depreciation - 397 357 321 289 260 234 211 190 171 154
- 231 3,153 5,689 7,703 9,662 11,390 13,901 16,804 20,007 23,859
Working Capital Change - 729 - - - - - - - - -
- 960 3,153 5,689 7,703 9,662 11,390 13,901 16,804 20,007 23,859
Cash form other Sources
Owners 3,473 - - - - - - - - - -
Bank Finance 3,473 - - - - - - - - - -
6,945 - - - - - - - - - -

Total Sources 6,945 960 3,153 5,689 7,703 9,662 11,390 13,901 16,804 20,007 23,859

Applications: Fixed
Assets Preoperational 3,968 - - - - - - - - - -
Expenses Working 710 -
Capital 2,267 -
Re -Payment of Loan - 1,222 1,111 1,000 889 778 - - - - -
Tax - - 559 1,230 1,769 2,294 2,789 3,422 4,154 4,959 5,926
6,945 1,222 1,671 2,230 2,658 3,072 2,789 3,422 4,154 4,959 5,926

Cash Increase/(Decrease) - (262) 1,483 3,459 5,045 6,590 8,601 10,478 12,650 15,048 17,933

Opening Balance 1,138 1,138 875 2,358 5,817 10,861 17,451 26,052 36,530 49,181 64,229

Closing Balance 1,138 875 2,358 5,817 10,861 17,451 26,052 36,530 49,181 64,229 82,162

3
9.4 Fee income

Fee Structure

Y-I Y - II Y - III Y - IV Y-V

Per
Per Per Per Per
No. Rupees No. Rupees No. Rupees No. Rupees Membe No. Rupees
Member Member Member Member
r

Number of Members
New entrants 110% 150 165 182 200 220
Old retainants 45% - 68 105 129 148
150 233 287 329 368
Non-Operating Revenue
Registration Fee 2,000 300,000 2,000 330,000 2,000 364,000 2,500 500,000 2,500 550,000

300,000 330,000 364,000 500,000 550,000

Operating Revenue
Monthly Fee
Gym 3,000 150 5,400,000 3,150 233 8,807,400 3,308 287 11,391,030 3,473 329 13,710,911 3,647 368 16,103,027
Yoga/Pilates 1,500 20 360,000 1,575 20 378,000 1,654 20 396,900 1,736 20 416,745 1,823 20 437,582
170 5,760,000 253 9,185,400 307 11,787,930 349 14,127,656 388 16,540,609
Net Fee 6,060,000 9,515,400 12,151,930 14,627,656 17,090,609

4
9.5 Operating expenses

Operating Expenses
Rupees
Year - I Year - II Year - III Year - IV Year - V Year - VI Year - VII Year - VIII Year - IX Year - X

Administrative Salaries 2,112,000 2,305,200 2,154,720 2,317,920 2,439,360 3,056,097 3,251,355 3,354,749 3,565,159 3,684,739
Rent 1,458,000 1,603,800 1,764,180 1,940,598 2,134,658 2,348,124 2,582,936 2,841,230 3,125,352 3,437,888
Legal & Audit Fee 25,000 27,500 30,250 33,275 36,603 40,263 44,289 48,718 53,590 58,949
Entertainment 62,400 97,134 123,697 148,672 173,541 201,004 232,859 268,144 307,990 353,987
Telephone, Fax and Postage 62,400 97,134 123,697 148,672 173,541 201,004 232,859 268,144 307,990 353,987
Electricity 1,578,720 1,657,656 1,740,539 1,827,566 1,918,944 2,014,891 2,115,636 2,221,418 2,332,488 2,449,113
Generator Cost 342,000 359,100 377,055 395,908 415,703 436,488 458,313 481,228 505,290 530,554
Advertisement 187,200 194,268 123,697 74,336 86,771 100,502 116,429 134,072 153,995 176,994
Repair of equip 119,048 130,952 144,047 158,452 174,297 191,727 210,900 231,990 255,189 280,708
Traveling conveyance 31,200 38,854 37,109 44,602 52,062 60,301 69,858 80,443 92,397 106,196
Printing and stationery 31,200 48,567 61,849 74,336 86,771 60,301 69,858 80,443 92,397 106,196
Depreciation 396,825 357,143 321,428 289,285 260,357 234,321 210,889 189,800 170,820 153,738
Amortization 142,000 142,000 142,000 142,000 142,000 - - - - -
6,547,993 7,059,307 7,144,269 7,595,623 8,094,609 8,945,023 9,596,180 10,200,380 10,962,657 11,693,050

5
10 KEY ASSUMPTIONS

10.1 Revenue Assumptions:

No. of members (First Year) 150
Registration fee (One time) Rs. 2,000
Monthly Fee Rs. 3,000
Monthly fee (growth rate %) 5%
New members growth rate 10%
Old members retain rate 45%
Rent from refreshment center/month Rs. 15,000

10.2 Expense and Growth Rates:

Salary growth rate 10%
Entertainment as % of revenue 1.0%
Telephone fax and postage % of revenue 1.0%
Amortization of pre-operational expenses 20%
Advertisement % of revenue 3%
Electricity growth rate 5%
Traveling and conveyance % of revenue 0.5%
Printing and stationery % of revenue 0.5%
Markup on long term loan 16%
Monthly rent Rs. 121,500
Rent growth rate 10%
Repair and maintenance % of Equip cost 3.0%

10.3 Operating Assumptions:

No of operational days 300 days
Hours operational per day 16 Hrs

10.4 Debt and Equity:

Debt equity ratio 50:50
Debt Tenure 5 Yrs
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