Address 31-619B POLAR AVENUE, NEAR MEDICAL COLLEGE, MANJERI, MALAPPURAM-676121
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Index Sl Part Page No
1
Prelude
3
2
Executive summary
4
3
Location and demographic advantages 5
4
Background of the promoter 6
5
Project requirement and cost 7
6
Means of finance 10
7
Assumptions to the projected financial statements 10
8
Projected Profitability statement 23
9
Projected Balance Sheet 24
10
Projected Fund Flow statement 25
11
Debt Service Coverage ratio
26
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SYNOPSYS OF DNA LAB PROJECT, MANJERI PRELUDE
Heightened physician awareness to better clinical outcomes and increasing patient requirement to avail of high quality care, have made it imperative for providers to deliver targeted therapy. This has been made possible by the availability of sensitive and specific diagnostic tests, along with technologically advanced medical devices and equipments. These further enable healthcare providers to utilize material and human resources optimally.
Overall, the Indian healthcare industry is estimated to grow at a rate of 23 percent per annum. This growth will be driven by healthcare facilities, private-public projects, medical diagnostic and pathological laboratories, and the health insurance sector. The diagnostics sector is projected to contribute USD 3.5 billion, by 2014. An overview of the medical diagnostics and devices market, shows that as of FY 2013, the diagnostic and pathological laboratory (path lab) test services market holds 52.1 percent of share, followed by devices. Demand for these sectors has been spurred by a steady rise in:
1. Healthcare spending, which accounts for over 5 percent of GDP. Of this, public spending will approximate 3.5 percent by 2014, compared to the existing level of 2.5 percent. 2. Increasing consumerism. With economic growth augmenting incomes of the middle and upper classes, their demand for accurate and timely medical care, is likely to increase. As a result, healthcare expenditure will command a greater share of the wallet. Indians are becoming more aware of their health, due to the improved availability and accessibility of better health related information. Current trends include continuous monitoring of health status through regular checkups, and of health information by patients 3. The dynamic healthcare landscape in the country will further augment the demand for effective therapeutic modalities. Trends include increasing incidence of lifestyle related diseases, greater awareness of health related concerns, growth of medical tourism, increasing penetration of health insurance in the country. Statistics indicate that there has been an approximately 25 percent increase in laboratory business due to screening and follow up for lipid profile3, blood glucose levels, glycosylated heamoglobin, speciality tests for thyroid hormone levels and basic cancer markers.
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EXECUTIVE SUMMARY DNA Lab is a start-up venture committed to provide the most convenient, friendliest diagnostic testing service to people in and around Manjeri. DNA Lab is constituted in the form of a proprietorship by Mr. Rasheed Ali who brings in his several years of expertise in medical industry.
M/s DNA Lab has identified three market segments that they will serve. First segment is the large number of patients of Manjeri Medical College, Malappuram, who will be attracted by giving quality testing at reasonable cost. The second group of patients is expected from physicians having private medical practices in the nearby palces. The third group of patients are expected locally, who come for routine health check-up.
M/s DNA Lab offers comprehensive clinical tests for potential patients. Several tests will be done in-house including: Clinical Pathology, Biochemistry, Hematology and Microbiology.
M/s DNA Lab will serve patients with fast, accurate, private, reasonably priced clinical testing services. M/s DNA Lab will exceed all of their customer's expectations. M/s DNA Lab is also planning for providing home collection of samples, which will be unique for the customers in Manjeri locality.
M/s DNA Lab offers a comprehensive clinical test for potential patients under one roof. The tests include: Clinical Pathology:- Laboratory chemical analysis of bodily fluids, such as blood, urine Biochemistry:- Testing of proteins, carbohydrates, lipids, nucleic acids and other bio-molecules Hematology:- Testing of blood cells, hemoglobin, blood proteins in blood Microbiology:- Analysis of microorganisms including bacteria, viruses, fungi and parasites A detailed list of tests offered by M/s DNA Lab is given in the later parts of this project report.
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LOCATION AND DEMOGRAPHIC ADVANTAGES
The proposed lab is located very near to Manjeri Medical College in Malappuram district. There is only one medical college in Malappuram and patients who cant afford treatment in costly private hospitals are expected to come from all parts of Malappuram for treatment to Manjeri Medical College.
Demography of Malappuram Area: 3000 km 2
Population: Based on social audit report 2011- 41,11,000/- Population Density: 1158/ km 2
Demography of Manjeri Area: 53.06 km 2
Population: Based on social audit report 2011- 97,104/- Population Density: 1800/ km 2
Though the lab is located in Manjeri, it is expected to attract customers from all parts of Malappuram District due to its close proximity to Manjeri Medical College.
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BACKGROUND OF THE PROMOTER
Mr. Rasheed Ali, who is the Promoter and Managing director of M/s Anglade Diagnostics Limited ( A public Limited company registered with ROC, Eranamkulam) has more than 7 years of experience in medical equipment and service field.
Personal Profile Name Mr. Rasheed Ali Fathers Name Mr. Moideen Kutty Age 42 years No of years experience in similar field More than 7 years hands on experience Other business ventures Managing Dirctor at Anglade Diagnostics Ltd Address Kallidumbil House, Edakkara Post, Malappuram- 679 331 Phone +91 9447291182
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PROJECT REQUIREMENT AND COST
PROJECT COST AND MEANS OF FINANCE
Rs. in lakhs A PROJECT COST 1 Machinery and Equipments
48.16 2 Room Deposit
2.0 3 Preliminary Expense
0.50 4 Working capital
3.28 TOTAL
53.94 B MEANS OF FINANCE 1 Capital
15.42 2 Bank Loan 38.52 TOTAL
53.94
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1. Machinery, Equipments and other fixed cost List of equipments and Machinery required for the Project Description Qty Rate Amount Computer 3 26,040.00 78,120.00 AC 1.5 3 34,700.00 104,100.00 Stabilizer type 1 3 2,750.00 8,250.00 AC 1 1 28,900.00 28,900.00 Stabilizer type 2 1 1,900.00 1,900.00 Digital display with software and technology 1 7,00,000.00 7,00,000.00 Fridge 2 19,500.00 39,000.00 Stabilizer type 3 1 1,000.00 1,000.00 Anglade ads 301 Fully Automated 1 18,44,456.30 18,44,456.30 Anglade Haematology Analyzer 1 930,249.60 930,249.60 Mini genset 1 175,000.00 175,000.00 Laser Printers 20,000.00 20,000.00 Fans and Lights NA 50,000.00 50,000.00 Interior and exterior decoration and furniture NA 550,000.00 550,000.00 Laboratory data management and accounting software NA 15,000.00 15,000.00 Other Equipments NA 254,948.00 254,948.00 Total 48,16,924.60
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2. Room Deposit The proprietor has paid Rs.200,000/- as security deposit for room taken on lease.
3. Preliminary Expense Preliminary expense include registration charges, travelling expense, initial publicity expense, and other miscellaneous expense incurred to set up the laboratory.
4. Working capital The working capital requirement is estimated as below;
Direct Expenses Amount in Rs Chemicals, reagents, sensitivity discs, culture media and stains 50,000.00 Biochemical regents 200,000.00 Salary Technician (2 X 10,000.00) 20,000.00 Lab Assistant (2 X 6000.00) 12,000.00 Receptionist and computer operator (2 X 7000.00) 14,000.00 Sales and canvassing executive 7,000.00
53,000.00 Electricity 15,000.00 Other expense (Contingency ) 10,000.00 Total 328,000.00
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MEANS OF FINANCE
The promoter will bring in enough cash for meeting all the working capital requirement and part of fixed cost, and the promoter intends to finance the purchasing cost of equipments and machinery as explained in the table above (page No 8) by availing a term loan. Intended Bank Finance
Machinery, Equipments and other fixed cost 48.16 lakhs Bank Finance 38.52 Lakhs Margin 09.64 Lakhs
ASSUMPTIONS TO THE PROJECTED FINANCIAL STATEMENTS 1. Income from Laboratory
The average test price per patient is estimated to be Rs. 250/- per test. Average test price is calculated by finding the mean average of 111 commonly done tests. The computation and retail pricing chart is given below;
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Common Laboratory Test Retail Pricing Chart TESTS Sample Volume Price CBC EDTA BLOOD 3 ml 250.00 HB EDTA BLOOD 2 ml 50.00 PCV EDTA BLOOD 2 ml 60.00 TC EDTA BLOOD 2 ml 60.00 DC EDTA BLOOD 2 ml 60.00 ESR CITRATE BLOOD 2 ml 60.00 PLATELET EDTA BLOOD 2 ml 100.00 RBC EDTA BLOOD 2 ml 60.00 AEC EDTA BLOOD 2 ml 50.00 BT /CT - 2 ml 60.00 BLOOD GROUPING EDTA BLOOD 2 ml 50.00 DIRECT COOMBS TEST EDTA BLOOD 2 ml 200.00 INDIRECT COOMBS TEST SERUM 1 ml 250.00 PHERIPHERAL SMEAR EDTA BLOOD 2 ml 100.00 MALARIAL PARASITE ( MP ) EDTA BLOOD 2 ml 60.00 MANTOUX -
60.00 PROTHROMBINE TIME CITRATE PLASMA 3 ml 250.00 APTT CITRATE PLASMA 3 ml 300.00 ANTI THROMBIN CITRATE PLASMA 1 ml 600.00 FIBRINOGEN CITRATE PLASMA 1 ml 400.00 CA-125 SERUM 1 ml 600.00 CROSS MATCH
150.00 LE CELLS EDTA BLOOD 3 ml 250.00 12
RETICULOCYTE EDTA BLOOD 2 ml 120.00 BLOOD SUGAR EDTA BLOOD 2 ml 60.00 GLUCOSE CHALLENGE TEST EDTA BLOOD 2 ml 200.00 GTT EDTA BLOOD 2 ml 250.00 SUGAR SPOT TEST EDTA BLOOD 2 ml 60.00 UREA SERUM 1 ml 100.00 CREATININE SERUM 1 ml 100.00 LIPID PROFILE SERUM 1 ml 400.00 TOTAL CHOLESTEROL SERUM 1 ml 100.00 HDL CHOLESTEROL SERUM 1 ml 100.00 TRIGLYCERIDES SERUM 1 ml 150.00 LIVER FUNCTION TEST SERUM 1 ml 500.00 SGOT SERUM 1 ml 100.00 SGPT SERUM 1 ml 100.00 GGTP SERUM 1ml 100.00 ALP SERUM 1 ml 100.00 TOTAL PROTEIN SERUM 1 ml 100.00 ALBUMIN SERUM 1 ml 100.00 BILIRUBIN (T & D) SERUM 1 ml 150.00 BILIRUBIN TOTAL SERUM 1 ml 100.00 CALCIUM SERUM 1 ml 150.00 URIC ACID SERUM 1 ml 100.00 SERUM ELECTROLITE SERUM 1 ml 400.00 SODIUM & POTASSIUM SERUM 1 ml 200.00 CHLORIDE SERUM 1 ml 100.00 PHOSPHOROUS SERUM 1 ml 100.00 HBA1c EDTA BLOOD 2 ml 300.00 CPK SERUM 1 ml 500.00 CK-MB SERUM 1 ml 500.00 ACID PHOSPHATASE SERUM 1 ml 200.00 CHOLINESTERASE SERUM 1 ml 650.00 URINE SUGAR URINE
10.00 URINE ALBUMIN / SUGAR URINE
30.00 13
MICRO ALBUMIN URINE
250.00 TROP - I SERUM 2 ml 1200.00 AMYLASE SERUM 1 ml 300.00 VITAMIN B12 SERUM 1 ml 600.00 ANTI ds DNA SERUM 1 ml 600.00 BETA HCG SERUM 1 ml 400.00 C- Peptide SERUM 1 ml 450.00 FSH SERUM 1 ml 250.00 LH SERUM 1 ml 250.00 HCV SERUM 1 ml 350.00 HIV SERUM 1 ml 250.00 INSULIN (Fasting) SERUM 1 ml 400.00 LEPTOSPIRA IgM EDTA BLOOD 1 ml 400.00 PROLACTIN SERUM 1 ml 250.00 CD4/CD8 COUNT EDTA BLOOD 3 ml 900.00 TFT SERUM 1 ml 450.00 FREE TFT SERUM 1 ml 500.00 T3, T4, (EACH) SERUM 1 ml 150.00 TSH SERUM 1 ml 250.00 PSA SERUM 1 ml 400.00 TESTOSTERONE-TOTAL SERUM 1 ml 350.00 HIV SERUM 1 ml 250.00 HbsAg SERUM 1 ml 150.00 VDRL SERUM 1 ml 100.00 ASO SERUM 1 ml 150.00 RA SERUM 1 ml 150.00 CRP SERUM 1 ml 200.00 WIDAL SERUM 1 ml 100.00 TB IgM SERUM 1 ml 400.00 IgE TOTAL SERUM 1 ml 450.00 DENGUE-IgM SERUM 1 ml 450.00 CHICKENGUNYA SERUM 1 ml 500.00 A NA SERUM 1 ml 500.00 TPHA SERUM 1 ml 250.00 14
HSV - I ( IgG / IgM ) SERUM 1 ml 650.00 HSV - II ( IgG / IgM ) SERUM 1 ml 650.00 BENCE JONES PROTEIN URINE
Average price = Rs.27,710.00/ 111 tests = Rs.250/- per test (rounded off)
It is estimated that during the first year on an average 25 patients will visit the lab per day with an average no of 4 tests per patient. Monthly no of tests = 25 Patients X 4 tests X 25 days = 2500/- tests Yearly expected revenue = 2500 tetst per month X 12 months X Rs.250/- = Rs. 75 Laks 15
A 20% year to year increase has been expected and provided for in the projected profitability statement.
2. Bio Chemical reagents, testing materials and consumables
The average cost of chemicals and consumables used for test is estimated to be Rs. 100/- per test. Average test cost is calculated by finding the mean average of cost of materials used in the 111 commonly done tests. The computation is given below;
Tests Sample Volume Cost CBC EDTA BLOOD 3 ml 100.00 HB EDTA BLOOD 2 ml 20.00 PCV EDTA BLOOD 2 ml 25.00 TC EDTA BLOOD 2 ml 30.00 DC EDTA BLOOD 2 ml 30.00 ESR CITRATE BLOOD 2 ml 30.00 PLATELET EDTA BLOOD 2 ml 45.00 RBC EDTA BLOOD 2 ml 30.00 AEC EDTA BLOOD 2 ml 20.00 BT /CT - 2 ml 20.00 BLOOD GROUPING EDTA BLOOD 2 ml 25.00 DIRECT COOMBS TEST EDTA BLOOD 2 ml 80.00 INDIRECT COOMBS TEST SERUM 1 ml 100.00 PHERIPHERAL SMEAR EDTA BLOOD 2 ml 40.00 MALARIAL PARASITE ( MP ) EDTA BLOOD 2 ml 30.00 MANTOUX 30.00
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PROTHROMBINE TIME CITRATE PLASMA 3 ml 70.00 APTT CITRATE PLASMA 3 ml 140.00 ANTI THROMBIN CITRATE PLASMA 1 ml 250.00 FIBRINOGEN CITRATE PLASMA 1 ml 180.00 CA-125 SERUM 1 ml 220.00 CROSS MATCH
55.00 LE CELLS EDTA BLOOD 3 ml 100.00 RETICULOCYTE EDTA BLOOD 2 ml 60.00 BLOOD SUGAR EDTA BLOOD 2 ml 25.00 GLUCOSE CHALLENGE TEST EDTA BLOOD 2 ml 80.00 GTT EDTA BLOOD 2 ml 110.00 SUGAR SPOT TEST EDTA BLOOD 2 ml 20.00 UREA SERUM 1 ml 40.00 CREATININE SERUM 1 ml 55.00 LIPID PROFILE SERUM 1 ml 135.00 TOTAL CHOLESTEROL SERUM 1 ml 40.00 HDL CHOLESTEROL SERUM 1 ml 60.00 TRIGLYCERIDES SERUM 1 ml 50.00 LIVER FUNCTION TEST SERUM 1 ml 185.00 SGOT SERUM 1 ml 45.00 SGPT SERUM 1 ml 40.00 GGTP SERUM 1ml 45.00 ALP SERUM 1 ml 45.00 TOTAL PROTEIN SERUM 1 ml 45.00 ALBUMIN SERUM 1 ml 30.00 BILIRUBIN (T & D) SERUM 1 ml 60.00 BILIRUBIN TOTAL SERUM 1 ml 40.00 17
CALCIUM SERUM 1 ml 100.00 URIC ACID SERUM 1 ml 50.00 SERUM ELECTROLITE SERUM 1 ml 125.00 SODIUM & POTASSIUM SERUM 1 ml 80.00 CHLORIDE SERUM 1 ml 40.00 PHOSPHOROUS SERUM 1 ml 65.00 HBA1c EDTA BLOOD 2 ml 150.00 CPK SERUM 1 ml 240.00 CK-MB SERUM 1 ml 260.00 ACID PHOSPHATASE SERUM 1 ml 80.00 CHOLINESTERASE SERUM 1 ml 210.00 URINE SUGAR URINE
5.00 URINE ALBUMIN / SUGAR URINE
15.00 MICRO ALBUMIN URINE
115.00 TROP - I SERUM 2 ml 300.00 AMYLASE SERUM 1 ml 130.00 VITAMIN B12 SERUM 1 ml 220.00 ANTI ds DNA SERUM 1 ml 220.00 BETA HCG SERUM 1 ml 180.00 C- Peptide SERUM 1 ml 185.00 FSH SERUM 1 ml 110.00 LH SERUM 1 ml 90.00 HCV SERUM 1 ml 110.00 HIV SERUM 1 ml 80.00 INSULIN (Fasting) SERUM 1 ml 180.00 LEPTOSPIRA IgM EDTA BLOOD 1 ml 180.00 PROLACTIN SERUM 1 ml 80.00 CD4/CD8 COUNT EDTA BLOOD 3 ml 510.00 TFT SERUM 1 ml 200.00 18
FREE TFT SERUM 1 ml 200.00 T3, T4, (EACH) SERUM 1 ml 70.00 TSH SERUM 1 ml 135.00 PSA SERUM 1 ml 280.00 TESTOSTERONE-TOTAL SERUM 1 ml 180.00 HIV SERUM 1 ml 120.00 HbsAg SERUM 1 ml 80.00 VDRL SERUM 1 ml 40.00 ASO SERUM 1 ml 70.00 RA SERUM 1 ml 100.00 CRP SERUM 1 ml 80.00 WIDAL SERUM 1 ml 50.00 TB IgM SERUM 1 ml 160.00 IgE TOTAL SERUM 1 ml 150.00 DENGUE-IgM SERUM 1 ml 150.00 CHICKENGUNYA SERUM 1 ml 180.00 A NA SERUM 1 ml 200.00 TPHA SERUM 1 ml 80.00 HSV - I ( IgG / IgM ) SERUM 1 ml 215.00 HSV - II ( IgG / IgM ) SERUM 1 ml 210.00 BENCE JONES PROTEIN URINE
Average cost of chemicals per test = Rs.11,125/ 111 = Rs.100/- (Rounded off) Yearly cost = Rs. 100 X 30,000 tests = Rs.30.00 Laks
A 25% year to year increase in cost is expected at provided for in the projected Financial Statement.
3. Referral Commission It is expected that 20% of total revenue will have to be shared in the form referral commission to doctors who refer patients to DNA Lab.
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4. Salaries Break up of salary is given below Salary Technician (2 X 10,000.00) 20,000.00 Lab Assistant (2 X 6000.00) 12,000.00 Receptionist and computer operator (2 X 7000.00) 14,000.00 Sales and canvassing executive 7,000.00
53,000.00
A 10% increase in salary expense is provided for in the projected Financial Statement.
5. Electricity
The estimated electricity expense during first year is expected to be Rs.15000/- per month during 1 st year of operation. A 20% increase in electricity expense is expected and provided for in the profitability statement. 6. Rent Rent per month is Rs.30,000/-. A 10% increase in rent is expected and provided for in the profitability statement.
7. Insurance Insurance expenses is estimated to be Rs.20,000/- per month. No increase in insurance cost is expected in the next forgeable years of operation 8. Marketing and Advertisement Marketing and advertising expense during first year is expected to be Rs. 20,000/-. A 20% increase in marketing expense is expected and provided for in the projected profitability statement.
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9. Travelling Expense Travelling expense during first year is expected to be Rs. 6,000/- per month. A 20% increase in travelling expense is expected and provided for in the projected profitability statement.
10. Miscellaneous Expense Miscellaneous expense includes, cleaning charges, general office expense and all unplanned and unprompted expense related to the functioning of the lab. Rs.12,000/- per month has been provided for in this category and 20% year to year increase has been expected and provided for in the projected financial statement.
11. Telephone Expense Telephone expense during first year is expected to be Rs. 2,000/- per month. A 10% increase in telephone expense is expected and provided for in the projected profitability statement.
12. Printing and Stationery
Printing and Stationery expense during first year is expected to be Rs. 15,000/-. A 20% increase in expense is expected and provided for in the projected profitability statement.
13. Preliminary Expense written off The total preliminary expense of Rs.50,000/- is written off in 5 equal proportions during the first 5 years of operation.
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14. Interest on term loan Interest rate is taken as 14%. Interest computation table is given below.
PRINCIPAL AND INTEREST REPAYMENT SCHEDULE Year Principal Principal Repayment Interest 1st Year 38.52 5.50 5.42 2nd Year 33.02 5.50 4.59 3rd Year 27.52 5.50 3.76 4th Year 22.02 5.50 2.92 5th Year 16.52 5.50 2.09 6th Year 11.02 5.50 1.25 7th Year 5.52 5.52 0.42
15. Depreciation Depreciation has been computed as per the rates applicable under the Income Tax Act, 1961
16. Income Tax Income Tax has been provided as per the rates applicable under the Income Tax Act, 1961
17. Other Assumptions
a. The Lab will hold one months chemical reagents required for tests as closing stock. b. Referral commission will be settled in two months period. Debtors has been worked out accordingly.
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PROJECTED PROFITABILITY STATEMENT FOR THE FIRST SEVEN YEARS OF OPERATION (Rs in Lakhs) PARTICULARS 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year I. INCOME 1. Lab test charges 75.00 90.00 108.00 129.60 155.52 186.62 223.94 Closing stock 2.50 3.13 3.91 4.88 6.10 7.63 9.54
Total A 77.50 93.13 111.91 134.48 161.62 194.25 233.48
PARTICULARS 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year
A. NET PROFIT
3.12
7.48
11.30
15.10
19.07
23.26
27.47 B. DEPRECIATION
7.37
6.04
5.06
4.28
3.64
3.11
2.65 C. PRELIM EXP WRITTEN OFF
0.10
0.10
0.10
0.10
0.10
-
- D. FINANCIAL EXPENSES
5.42
4.59
3.76
2.92
2.09
1.25
0.42
E. TOTAL
16.01
18.21
20.22
22.40
24.90
27.62
30.54
F. FINANCIAL EXPENSES
5.42
4.59
3.76
2.92
2.09
1.25
0.42 G. REPAYMENT OF LOAN
5.50
5.50
5.50
5.50
5.50
5.50
5.52
F . TOTAL
10.92
10.09
9.26
8.42
7.59
6.75
5.94
DSCR
1.47
1.80
2.18
2.66
3.28
4.09
5.14
Average DSCR = 2.95
CONCLUSION From the above project report it can be easily concluded that the project is technically viable and financially feasible provided the requisite loan is made available.
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CONFIDENTIALITY AND DISCLAIMER This project report has been prepared by Rajeev K.M, Chartered Accountant, Nilambur, at the request of Mr. Rasheed Ali for the exclusive use by their management. This report has been prepared as an internal tool to assist the management to obtain necessary funding required. As the project is in start-up phase, the financial projections have been prepared based on assumptions and information compiled from the management. Reasonable steps has been taken to ensure that information incorporated in the report is accurate and that the assumptions are fair in the light of the information currently available. Even if the events anticipated under the assumptions occur, actual results are still likely to be different from the projection since anticipated events frequently do not occur as expected and the variation may be material. Consequently, readers are cautioned that this projection may not be appropriate for purposes other than that described above. This document is intended for use for the above purpose and mere possession of this document does not convey a right of reliance, nor may any party place reliance on it, for any purpose other than that for which it was prepared. While the information included herein is believed to be accurate and reliable, by delivery of this document, Rajeev K.M, Chartered Accountant, does not make any representations of warranties, expressed or implied, as to the accuracy or completeness of such information. Each recipient of this document agrees to treat all information contained herein confidentially and that the recipients will not, directly and indirectly, disclose, distribute or reproduce such information or any part thereof without the written consent of the management of M/s DNA Lab.