M/S. Medi Mart India Private Limited.

PROJECT AT A GLANCE

Particulars Description
1. Name M/S. Medi Mart India Private Limited.
2. Constitution Private Limited Company
3. Date of incorporation 08-10-2008
4. Office Flat No.302 & 303, Classic Court Apartments
Erramanzil, Hyderabad – 500 082.
6. Line of Activity To set up Retail Outlets of Pharmaceuticals

7. Directors Dr. R.Reddeppa Reddy

Ms. N.Bharathi
Mr. D.SudhakarReddy
Mr. P.Chaitanya
Mr. D.Prabhakar Reddy
10. Cost of the Project Rs. 750 lacks
Term Loan (Proposed) Rs. 250 Lacks
11. Finance
Working Capital Rs. 300 Lacks
12. Financial Projections a) Debt equity Ratio : 1.25:1

b) Promoters Contribution : 26.67 %

c) DSCR: Gross : 2.42

DSCR: Net : 2.85

d) B.E.P. : 65.60 %

e) I.R.R. : 24.76 %

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 M/S. Medi Mart India Private Limited.

SCOPE OF THE STUDY

State Bank of Hyderabad, Secretariat Branch, Hyderabad, has entrusted us the task of Conducting
Techno Economic Viability study of M/S. Medi Mart India Pvt Ltd., who have approached
them for financial assistance.

The study is based on the

 Information provided by them.

 Discussions we had with the promoters.
 Information gathered from the present market situation.

We have discussed the contents of the report with the promoters who have confirmed that it does
not contain any material error or fact of omission and fairly set out the state of affairs.

The projections contained in the report are estimates and represent only one possible result
depending upon the assumptions made. Further the projections and the underlying assumptions
may vary depending upon evolving circumstances. There is no representation or assurance that the
new development will achieve the results indicated in the projections as the assumptions upon
which they were based are inherently subject to uncertainty and variation depending upon
evolving events. However, the projections have been conscientiously prepared, based on the
discussions and knowledge of the market and the information supplied to us.

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 M/S. Medi Mart India Private Limited.

INTRODUCTION

M/s. Medi Mart India Private Limited is a private limited company incorporated on 08-10-
2008 by a group of people with diverse backgrounds and experience with a mission to establish a
successful chain of genuine, friendly neighborhood drugstores in South India. After all necessary
clearances and full fledged infrastructure setup, its first store was launched in April 2009 at
V.V.Nagar, Kukatpalli, Hyderabad. As on July 2009, Medimart presently operates 20 stores
across Hyderabad, and proposes to open 350 stores in south India by the end of 2014. Professional
and passionate to the core, the company is moving fast forward into the future.
The main objects of the Company are as follows:

To do the Business of Marketing in Medicines, Drugs, Pharmaceuticals, Cosmetics,

Surgicals, Medical Instruments and Equipments in whole sale, Retail, and to set up chain
stores, Marketing outlets, clinics and Laboratories.
To Carry on the business of Manufacturing, buying, selling or otherwise deal in drugs,
Pharmaceuticals, Medicines, Surgicals, Lab Equipments, Bio-chemicals, Organic and
inorganic Chemicals, biological products, diagnostic agents, immunological agents,
veterinary products, Animal foods, Cosmetics, Fine Chemicals, Dyes and Intermediates,
and all kids of by Products thereof.
To Export, Import, Manufacture, Purchase or Prepare for market and generally deal in
merchandised of every kind and description used in Pharmaceutical, Medical, Surgical,
Diagnostic and Drug Industry.

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PHARMACY RETAIL IN INDIA

The Indian pharmaceutical market is the world’s 13th largest in terms of value and the 4th largest
in terms of volume. The total market size is US $ 5.7 bn (Ref: IMS Health) and includes all the
pharmaceutical products, fast moving healthcare products and some FMCG products sold through
the chemists across the country.

While all the formats of retailing have changed, be it apparel retailing, grocery retailing, fuel
retailing or jewellery retailing, somehow pharmacy retailing has not undergone changes. The
changes in the next 5 years in this business will be more than what has happened in the past 55
years. Earlier shopping was considered a headache involving running from pillar to post. Now
retailing has changed it to leisure and pleasure & it’s become more of an outing for the entire
family.

Pharmacy retailing has seen consolidation world over. 5 pharmacy chains control 40% of the sales
in the US. 7 pharmacy chains control more than 60% of the market in UK. A similar situation
prevails in most developed nations around the world.

This is a need driven business and every family requires medicines / health related goods. So the
scope of educated people getting into the same is higher. Margins are decent and returns are good.
Doctors are getting into this business. An average family spends 20% of its monthly wallet spend
on health care, up from 10% in 1985.

Pharmaceutical Retail just got an image makeover. Much like the beauty products hitherto sold off
dusty shelves promised, it’s a whole new look. For one, new pharmacy stores boast of excellent in
store display. But that’s cosmetic. What is intrinsic is that they also promise better quality,
ambience, convenience and prices. So Indian customers fed-up and resigned to spurious, expired
or poorly stored drugs are offered an option. The pharmacy retail sector is set for a shakeup and
consolidation with many organized players investing long term in it.

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 M/S. Medi Mart India Private Limited.

Some of the change is driven by market characterized by low entry barriers and capital
requirements. It’s a highly lucrative market with high margins that require low investment. The
Rs.48, 000–crore Indian pharmacy sector is dominated by the highly fragmented, unorganized
players, constituting mainly the neighborhood chemist that sells medicines and OTC drugs along
with other medical equipments and accessories.
There are currently over 8, 00,000 medical shops serving the Indian market. Trade associations
and experts opine that nearly 97 – 99% is dominated by unorganized sector. This is high
penetration compared to other similar countries. Number of local pharmacies in India is more than
that of US, Europe and China put together for a pharmaceutical market size which is less than a
percentage of their combined market. When we compare with China, which has approximately 2
lakh outlets for a domestic market of $15 billion, the Indian Pharma retail with approximately 5.5
lakh retailers for $6 billion market appears highly over-proliferated. However the business and the
landscape are changing. There are other serious regulatory and supervisory hurdles to be crossed
before the country can really leverage the benefits of high penetration of medical shops.
1. Prevalence of spurious or counterfeit drugs is high with estimates ranging from 5% to
30% of the market.
2. Standalone medical shops are able to avoid sales tax, this being a cash business
offering fake bills to regular customers.
3. The drugs are stored in sub-optimal store conditions in most places, making the
efficacy of the medicines questionable.

In such a scenario, customers are patronising reputed chains wherever they operate. The organised
pharmacy retail is growing at 100 % per year. Last year, chains like Medicine Shoppe grew almost
by 100%.

With internet being used at a much lower level in India, internet pharmacies may be the order of
the day 5 to 10 years from now. This is going to bring about a big change in the customer’s
perception, cost and service levels in pharmacy retailing.

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 M/S. Medi Mart India Private Limited.

With India becoming a major destination for medical tourism, the retail medicine business cannot
remain unaffected. It has to change and adopt global standards. While India can be considered as a
developed country for IT, Health care and Pharma are still looked upon as developing areas.

How will change happen? Corporates and organized pharmacies will have to drive the change like
Apollo did in 1987 and the ‘Dial for Health’ initiative by the Zydus group. The future of
pharmacy retailing is in for a big shakeout from all the three stakeholders; manufacturers, retailers
and customers Since all are looking at a better value for saving time, costs and delivering a better
value with fast and relevant information, there could not be a better time for the changes in
pharmacy retail

The pharmacy market is growing at 27% annually and revenue from pharmacies is expected to
touch 50,000-crore by 2010. Other experts like murlidharan Nair of Ernst & young say that the
sector is growing at 15% and will double its size in the next 5 years.

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 M/S. Medi Mart India Private Limited.

KEY PLAYERS IN SOUTH INDIA

Apollo Pharmacy:
Apollo Pharmacy, a division of Apollo hospitals enterprises ltd., is India’s largest branded
pharmacy network with over 700 outlets in key locations across 17 states. The pharmacy business
of Apollo is growing at a phenomenal rate of 70% with revenues of Rs.600 crore achieved last
year. The chain has served over one crore customers ever since they started their first store in the
year1983.

Med Plus Pharmacy:

Med plus is a pioneering chain of retail pharmacies based out of Hyderabad. Started in February
2006, it has already opened 500 company owned outlets spread across 6 states. The Rs.100 crore
companies have set a target of opening 1000 stores by the end of this year mainly by franchisee
route.

Hetero Pharmacy:
Hetero Group launched its retail pharmacy chain hetero pharmacy in Hyderabad in the first
quarter of 2008. Presently they have grown to 100 stores in 12 months, with 75 stores in
Hyderabad and the rest in various cities and towns in Andhra Pradesh. Hetero plans to establish
1000 pharmacy stores by 2011 all over India.

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 M/S. Medi Mart India Private Limited.

MISSION

Our mission is to be a successful chain of friendly, neighbourhood drugstores offering quality

genuine medicines. Our knowledgeable, caring staff work together to provide a superior pharmacy
experience, and offer everyday products and services that help our valued customers lead
healthier, happier lives.

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 M/S. Medi Mart India Private Limited.

PROMOTERS OF THE COMPANY

The promoters/ the subscribers to the memorandum of the Company are Mr. R.Reddeppa Reddy
and Ms. N.Bharathi. Sensing the potentials of the retail pharmacy in India, have floated a
company by name M/s. Medi Mart Private Limited to set up retail outlets of pharmaceuticals.

R.Reddeppa Reddy: S/o Sidda Rami Reddy, R/o H.No.08-01-301/41, Laxmi Nagar Colony,
Shaikpetnala, Hyderabad – 500 008.He is aged about 45 years. He is a consultant
anaesthesiologist in medicity hospitals.

Mrs. N.Bharathi: W/o N.Krishna Reddy, R/o H.No.08-01-301/41, Laxmi Nagar Colony,
Shaikpetnala, Hyderabad – 500 008. She is aged about 55 years. She is a house wife.

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 M/S. Medi Mart India Private Limited.

BACKGROUND OF THE DIRECTORS

Mr.D.SudhakarReddy.
Chairman
Mr.Devireddy Sudhakar Reddy is the Managing Director of DSR Infrastructure Pvt. Ltd., one of
the fastest growing Construction companies headquartered in Hyderabad with operations in
Hyderabad and Bangalore. He has over 20 years of varied experience and has carved a separate
`position for himself in the real estate sector and commands a healthy respect in the industry.
Today he is at the helm of affairs, with a highly focused vision. He has been the source of
inspiration for and reason behind the astronomical rise of DSR Group. At Medimart, he provides
hands-on leadership to the Planning and implementation of company's finance, accounting and
generation of high quality reports for decision making.

Mr. R.Reddeppa Reddy

Managing Director
Dr. R .R. Reddy is a Consultant Anaesthesiologist and Intensivist at Mediciti Hospitals,
Hyderabad for the past Ten years. He is also a consultant Anesthesiologist at Wockhardt Genesis
Hospital and pacific Hospitals in Hyderabad. He worked as in charge Emergency Medical officer
at Apollo Hospitals for three and half years. His three months fellowship course in critical care in
U.S.A. helped in upgrading the training and experiencing the management of various medical and
surgical problems. His vision of starting a Retail chain of pharmacy stores dates back to 1994. He
was instrumental in starting a chain of Pharma Retail stores for Apollo Hospitals at Hyderabad
then. Today the company has around 1000 stores across India. But his dream did not last long as
he had to head to USA for further education.

Today, He is back with Medimart Pharmacy. His previous experience with retail Pharma business
and his present professional experience have helped him gain enormous amount of understanding
in the field of Pharma retailing. Mr. Reddy wants to bring in professionalism to an otherwise
unorganized retail Pharma industry. He is responsible for devising business development
strategies, forging strategic alliances, establishing high level contacts in the industry, recruiting
and purchase of genuine medicines from authorized stockiest and distributors.

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 M/S. Medi Mart India Private Limited.

Mr.P.Chaitanya

Executive Director

Mr.Pellakuru Chaitanya is a mechanical engineering graduate having over 10 years of experience

in the field of Construction and pharmaceutical industry. Prior to setting up Medimart Pharmacy,
he worked with an ayurvedic based pharmaceutical company for two years. He was responsible
for Marketing and Operations. His last assignment was with DSR Infrastructure Pvt. Ltd, a major
Infrastructure company based in Hyderabad. He was heading the Bangalore Operations. Some of
the key responsibilities handled by him include operations, Marketing, Organizational
transformation and overseeing the overall business development operations of the company.
At Medimart, he is responsible in overseeing the overall business development operations of the
company and brand building.

Mrs.N.Bharathi
W/o N.Krishna Reddy, R/o H.No.08-01-301/41, Laxmi Nagar Colony, Shaikpetnala, Hyderabad –
500 008. She is aged about 55 years. She is a house wife.

Mr.D.Prabhakar Reddy
S/o Late D.Subba Rami Reddy, R/o H.No.455/1, Road No-19, Jubilee Hills, Hyderabad – 500
033. He is aged about 51 years.

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 M/S. Medi Mart India Private Limited.

ABOUT THE ASSOCIATE CONCERNS

Following are companies /firms with which the directors are associated:

M/s. DSR Infrastructure Pvt Ltd.

M/s. D.S.R Constructions.
M/s. Sri Sreenivasa Constructions.
M/s. Subham Developers.
M/s. D S R Builders & Developers.

M/s. DSR Infrastructure Pvt Ltd: is a private limited company in which Mr.D.Sudhakar Reddy,
Mr.D.Prabhakar Reddy and Mr.P.Chaitanya are the directors. The Company is engaged in the
Construction activity.

A brief summary of the financial performance of the company is given below:

(Rs. in Lakhs)
Year Turnover Net Profit Depreciation Cash Profit
2007-08 15.00 7.11 0.02 7.13
2008-09 2119.51 137.76 21.52 159.28

M/s. D.S.R Constructions: is a Partnership firm in which Mr.D.Sudhakar Reddy and

Mr.D.Prabhakar Reddy are one of the partners of the firm. The firm is engaged in real estate by
constructing and sale of flats.

A brief summary of the financial performance of the firm is given below:

(Rs. in Lakhs)
Year Turnover Net Profit Depreciation Cash Profit
2006-07 5685.11 460.87 18.49 479.36
2007-08 2464.41 195.52 33.48 229.00
2008-09 5512.59 349.52 30.59 380.11

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M/s. Sri Sreenivasa Constructions: is a Partnership firm in which Mr.D.Sudhakar Reddy and
Mr.D.Prabhakar Reddy are one of the partners of the firm. The firm is engaged in real estate by
constructing and sale of flats.

A brief summary of the financial performance of the firm is given below:

(Rs. in Lakhs)
Year Turnover Net Profit Depreciation Cash Profit
2006-07 227.64 22.05 6.68 28.73
2007-08 9058.20 992.03 17.85 1009.88
2008-09 7170.20 434.32 58.10 492.42

M/s. Subham Developers: is a Partnership firm in which Mr.D.Sudhakar Reddy and

Mr.D.Prabhakar Reddy are one of the partners of the firm. The firm is engaged in real estate by
constructing and sale of flats.

A brief summary of the financial performance of the firm is given below:

(Rs. in Lakhs)
Year Turnover Net Profit Depreciation Cash Profit
2006-07 2217.43 218.90 0.51 219.41
2007-08 986.36 96.04 0.39 96.43
2008-09 1051.12 102.37 0.31 102.68

M/s. D S R Builders & Developers: is a Partnership firm in which Mr.D.Sudhakar Reddy is one
of the partners of the firm. The firm is engaged in real estate by constructing and sale of flats.

A brief summary of the financial performance of the firm is given below:

(Rs. in Lakhs)
Year Turnover Net Profit Depreciation Cash Profit
2007-08 35.69 1.22 0.00 1.22
2008-09 99.60 8.06 0.00 8.06

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 M/S. Medi Mart India Private Limited.

ABOUT THE ACTIVITY

 M/s. Medi Mart India Private Limited is a company to do the Business of Marketing in
Medicines, Drugs, Pharmaceuticals, Cosmetics, Surgicals, Medical Instruments and
Equipments in whole sale, Retail, and to set up chain stores, Marketing outlets, clinics and
Laboratories.
 To Carry on the business of Manufacturing, buying, selling or otherwise deal in drugs,
Pharmaceuticals, Medicines, Surgicals, Lab Equipments, Bio-chemicals, Organic and
inorganic Chemicals, biological products, diagnostic agents, immunological agents,
veterinary products, Animal foods, Cosmetics, Fine Chemicals, Dyes and Intermediates,
and all kids of by Products thereof.
 To Export, Import, Manufacture, Purchase or Prepare for market and generally deal in
merchandised of every kind and description used in Pharmaceutical, Medical, Surgical,
Diagnostic and Drug Industry.

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 M/S. Medi Mart India Private Limited.

LOCATIONS OF THE OUTLETS

Presently, Medimart has presence in 35 various locations across Hyderabad city. Medimart Plans
to open 65 more stores in Andhra Pradesh by the end of second quarter of 2010-11.So that the
total out lets become 100 nos.
Some of the strategic locations planned for Hyderabad are:

Alkapuri colony Ameerpet (Durganagar) Ameerpet(gurudwar)

Anand Nagar A.S.Rao Nagar(Brindavan colony) S.R.Nagar-2
Bagh Amberpet Baghameeri, Kukatpalli Balkampet
Balanagar -2 Boduppal(chilakanagar) Boggulakunta
Chaitanyapuri Charminar-2 Chintal
Film nagar, Jubille Hills Gandhi Nagar Golkonda Fort
IDPL colony Huda colony(chanda nagar) Javahar nagar
Jayanagar, kukatpalli Kalian nagar (Dilsukhnagar)-2 Kondapur-2
KPHB 3rd Phase Kamala nagar(Dilshuk Nagar) Krishna Nagar-2
L.B.Nagar Lothukunta Madinaguda
Madhuranagar Mahendra Hills Mothinagar
Moulali-2 Mehdipatnam, Opp. Rythu bazaar Miyapur-2
Nallakunta Namalagundu Srinagar colony
Nizampet Road-2 NGO’s bustand (Vanastalipuram) Pragathi Nagar
Ramkoti Sanath Nagar(Swamy theatre) Ramnagar
Shamshabad-2 Suraram village-2 Tolichowki-2
Uppal(prashanti Nagar) Vengal Rao Nagar Vidya Nagar
West Marredpalli Banjara Hills Rd. No.10 Yakootpura
Banjara Hills Road No.4 Madhapur Main Road Vijaya Nagar colony
Mehdipatnam-2 Sanath Nagar Bus Stop-2 Ayappa Society

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PROPOSED COST OF THE SCHEME AND MEANS OF FINANCE

COST OF THE SCHEME:

Particulars Rs lakhs
Furniture & Fixtures 133.00
Interiors 119.00
Computers & Software 79.00
Vehicles 11.00
Other Assets 67.00
Rent Deposits (1 lack per shop) 105.00
Preliminary & Pre operative Expenses 109.00
Working Capital Margin 127.00
Total 750.00

MEANS OF FINANCE:

Particulars Rs lakhs
Promoters Contribution 200.00
Term Loan 250.00
Unsecured Loans from Promoters 300.00
Total 750.00

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WORKING CAPITAL MARGIN

(Financial figures considered from the F.Y.2010-11)
(Rs. in Lakhs)
Amount
Months Rs in Bank Margin
Particulars Consumption Lakhs % of Loan Loan Money
Stock of Medicines 1 ½ Month 470.00
Less: Creditors 7 days 70.00
400.00 75% 300.00 100.00
Other Current Assets Lump sum 27.00 27.00
Total 427.00 300.00 127.00
Rounded Off To 427.00 300.00 127.00

Total Working Capital Requirement Rs 427.00 Lakhs

Less: Bank Borrowings Rs 300.00 Lakhs
Working Capital Margin 127.00 Lakhs

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 M/S. Medi Mart India Private Limited.

UTILITIES

MEDICINES

Medimart purchases all its medicines from authorised distributors and stockists directly without
having to deal with middlemen. This exercise helps in eliminating the middlemen and also
procuring the material directly at much better margins and quality guarantee.

MAN POWER

Medimart already has 190 plus employee strength and is growing steadily. The strength of the
company lies with the employees and Medimart has been successful in finding the best talent
available for its operations. Medimart employs totally 4 personnel for each store. They are 3
pharmacy aides and 1 Pharmacist. Apart from the store, they employ marketing executives,
projects personnel, and ware house staff on a regular basis.

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MARKETING ASPECT

The Visibility of the store plays an important role in generating more business. Medimart stores
are strategically located with good visibility and income generating locations. The interiors play
an important role in drawing customers inside the store. The Interiors have been planned and
designed by a leading architect who has been successful in giving them the best designs in retail
pharmacy chain store. All are air-conditioned stores with hygiene as the top priority. The company
wants to give different retail experience to customers

Distribution of Pamphlets and customer enrolment:

Medimart has already enrolled more than 3lakh customers through its marketing team. The
marketing team conducts door to door canvassing to cater to the customer needs. Diabetic, cardiac
and various camps are conducted every month across the city to increase customer database. All
the tests are carried out for free of cost to the customers.

Call centre:
Medimart has been successful in getting a fancy call centre number which is easy to remember at
all times. The customer can call on 040-23 44 44 44 for any kind of queries including deliveries
between 7:00am to 11:00Pm. Free home delivery is offered to any customer within city limits.
The dedicated call centre staff calls up the existing customers on a regular basis to find out their
medicine requirements and intimates them the latest offers available. Medimart has developed
unique call centre software to facilitate the company to send out bulk sms to all its customers
regarding its monthly offers.

Tie-up with local doctors and Nursing Homes:

Medimart is in talks with local doctors and nursing homes in and around the outlets for sending
their patients to its outlets for their medicine requirements and also setting up stores inside their
clinics and nursing homes. Presently Medimart has tied up with 4 nursing homes to setup
pharmacy stores inside.

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Tie-up with corporate companies and Hospitals:

Medimart is in talks with various corporate companies to fulfill their monthly medicine
requirements and is also offering additional discounts to corporate employees as a value added
feature. Medimart is also in talks with various corporate hospitals to take over the pharmacy store
in their premises. These stores contribute major revenues for the company.

Tie-up with Old age Homes and NGO’s:

Medimart is pleased to offer special pricing on all medicines for all old age homes and NGO’s in
Hyderabad city. Presently, we supply medicines to various old age homes on a monthly basis in
Hyderabad city.

Tie-up with Banks and Insurance Companies:

Medimart is in talks with banks to introduce a co-branded credit card so that the card holder can
get an additional discount on all medicine purchases at any of the outlets. It is also in talks with
insurance companies to introduce a co-branded Health Insurance card to all customers opting for
health Insurance cover. This exercise helps in immense Brand building and more customer data
which in turn is additional revenue generation to the company.

Introduction of Health plus Membership Card:

Medimart pharmacy Health plus Card is a Reward Programme, which enables the customers to
get discounts and multiple benefits at all our outlets. There is no membership fee. All they need to
do is fill the Customer Enrolment Form & they will be provided with Medimart Pharmacy Health
plus card with their membership number immediately. This card works across all Medimart
pharmacy outlets in India. The benefits of Health plus card are:
1. Discounts Up to 15% on all medicine purchases
2. 5% Discount on all non-Pharma products
3. Free Home Delivery
4. Free Health Camps
5. Free Prescription reminders
6. Free Purchase History

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SWOT ANALYSIS

Strengths:
 Dr.R.Reddeppa Reddy is a consultant Anesthesiologist, is having good contacts
with various hospitals and having knowledge in pharmacy trade.

 The required qualified technicians, managerial personnel and skilled

Man power is easily available.

Weaknesses:

 Any increase in the cost of Medicines has an impact on the selling price of
the product

Opportunities:

 There is a wide demand in pharmacy outlets as population is growing.

Threats:

 Competition from other existing players, which may have effect on selling price
of the medicines.

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SCHEDULE OF IMPLEMENTATION

The Schedule provided below is based upon the project continuing in a logical sequence without
interruption of implementation.
Accordingly the schedule of the setting up of shops is as follows.

No. of Shops
Year Month
Commenced

2009-10 April 0
May 8
June 13
July 15
August 18
September 19
October 19
November 22
December 35
January 40
February 50
March 60

2010-11 April 67
May 74
June 81
July 88
August 95
September 100

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SUMMARY OF OBSERVATIONS

1. The promoters’ contribution is 26.67% of the proposed cost of the scheme.

2. The average Debt Coverage ratio of the project is 2.42 (Gross) and 2.85 (Net), which is
good.
3. It is observed that the scheme of setting up of medical retail outlets is economically viable.

4. SENSITIVITY ANALYSIS: The viability of the projections is verified by making a

Sensitivity analysis by increasing the Medicines cost by 2% and also by decreasing the
Selling price by 2%. The DSCR and Break Even point particulars both normal and after
above said changes are indicated as under:

Parameters Normal 2% increase in 2% decrease in

Cost of Medicines Selling price
DSCR (Gross) 2.42 1.04 1.17
DSCR (Net) 2.85 1.05 1.22
BEP 65.60 % 84.69% 80.10%
IRR 24.76% 16.00% 17.53%

The above analysis indicates that the scheme is viable and can withstand adverse change in
cost of Medicines and Selling price to an extent of 2%.

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ASSUMPTIONS MADE IN PROJECTIONS

1. An increase of 5% per annum is considered in salaries, repairs and maintenance and other
administrative expenses from the third year onwards.

2. Depreciation provided on straight-line method as per companies act, 1956.

3. Income Tax is calculated as per the IT Act 1961.

4. Interest on term loan @ 14.25 % and on working capital worked out at 14.25 %

5. Term loan is assumed to be repaid in 5 years with a moratorium of ½ Year.

6. Credit purchase is considered from 2010-11 onwards.

7. During 2009-10, 20% margin is considered on sales as the cost of Medicines, and 17%
margin is considered from 2010-11 onwards as credit period allowed by the suppliers.

8. Credit sales considered for hospitals sales from 2011-12 onwards.

9. Unsecured loans from the shareholders considered as interest free and interest not charged.

10. An increase of 10% considered on sales.

The various items of expenditure and income as considered in the projections are based on the
prevailing trends in the trade industry.

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