BUSINESS PROJECT

TITLE :LUMINOUS HELICOPTER MAINTENANCE

NAME :ABDI ADAN ALI
INDEX NUMBER :
INSTITUTION :EAST AFRIAN SCHOOL OF AVIATION
SUPERVISOR :

BUSINESS PROJECT SUBMITTED TO KENYA NATIONAL EXAMINATION

COUNCIL IN PARTIAL FULFILMENT OF THE REQUIREMENT OF DIPLOMA
IN AERONAUTICAL ENGINEERING (AIRFRAMES AND ENGINES OPTION)

i
 DECLARATION

This business project is my original work and to my best knowledge has not been previously
submitted
For the award a degree, diploma or any certificate of the KNEC examination.

Name : Abdi Adan Ali

Index Number :
Signature :
Date :

Declaration by supervisor:
The business project has been submitted to the Kenya National Examination Council with my
prior approval as EASA business project supervisor.

Name :
Signature :
Date :

ii
 DEDICATION

I dedicate this business plan to my mother and not forgetting the rest of my family too and my
friends who have been walking with me through since I started writing the plan to my business.

To my lecture too for been there in case I needed any question and clarification.

And to the Almighty God for his blessings, knowledge, protection, and guidance in preparing
My business plan.

iii
 ACKNOWLEDGEMENT
This is a sum total of what I have learn from all who have taught me, both great and small.

I am grateful for all the inspiration and encouragement I got from my family and friends and

all who supported me.

To my lecturer, Mr. Anthony Njagi, for his wisdom and patience during my study and writing.

iv
 Contents
1. CHAPTER ONE...............................................................................................................................1
1.1 BUSINESS NAME..........................................................................................................................1
1.2 BUSINESS DESCRIPTION...............................................................................................................1
1.3 BUSINESS LOCATION AND ADDRESS............................................................................................1
1.4 THE FORM OF BUSINESS OWNERSHIP.........................................................................................1
1.5 PRODUCT AND SERVICES.............................................................................................................2
1.6 JUSTIFICATION OF THE OPPORTUNITY.........................................................................................2
1.7 INDUSTRY.....................................................................................................................................2
1.8 ENTRY AND GROWTH STRATEGY.................................................................................................3
2. CHAPTER TWO-MARKETING PLAN................................................................................................4
2.1 CUSTOMERS.................................................................................................................................4
2.2 MARKET SHARE............................................................................................................................4
2.3 COMPETITORS.............................................................................................................................5
2.4 ADVERTISING AND PROMOTION.................................................................................................5
2.5 PRICING STRATEGIES...................................................................................................................6
2.6 SALES AND TACTICS.....................................................................................................................6
2.7 DISTRIBUTION STRATEGY.............................................................................................................7
3. CHAPTER THREE-ORGANISATIONAL PLAN.....................................................................................8
3.1 ORGANISATIONAL STRUCTURE....................................................................................................8
3.2 ORGANISATIONAL CHART............................................................................................................8
3.3 MANAGER AND QUALIFICATIONS................................................................................................9
3.4 RECRUITEMENT, TRAINING AND PROMOTIONS........................................................................11
3.5 LICENCES, PERMITS AND BY LAWS.............................................................................................12
3.6 SUPPORT SERVICES....................................................................................................................13
3.7 OTHERS......................................................................................................................................13
4. CHAPTER 4.
OPERATIONAL PLAN...........................................................................................................................14
4.1 PRODUCT OR SERVICE DESIGN AND DEVELOPMENT.................................................................14
4.2 PRODUCTION OR OPERATIONAL FACILITIES AND CAPACITY......................................................14
4.3 RAW MATERIALS AND SUPPLIES................................................................................................15
4.4 PRODUCTION PROCESS..............................................................................................................15
4.5 PRODUCTION & SERVICE STRATEGIC PLAN................................................................................16
4.6 REGULATIONS AFFECTING OPERATIONS....................................................................................17
4.7 LICENSES AND PERMITS.............................................................................................................17

v
 4.8 ENVIRONMENTAL REGULATION................................................................................................17
4.9 INTERNATIONAL CIVIL AVIATION AUTHORITY (ICAO) REGULATIONS........................................17
4.10 SAFETY REGULATIONS...............................................................................................................17
5. CHAPTER FIVE.............................................................................................................................17
5.1 Operational/Production Plan.....................................................................................................17
5.2 ESTIMATION OF WORKING CAPITAL..........................................................................................18
5.3 LOANS AND INTEREST REPAYMENT...........................................................................................19
PREPERATION PF CASH FLOW PROJECTION.........................................................................20
PREPARATION OF PROFORMA STATEMENTS AND BALANCE SHEET..............................22
PROFORMA INCOME STATEMENT FOR YEAR 1 AND 2........................................................22
LUMINIOUS HELICOPTER MAINTENANCE.............................................................................23
CALCULATION OF BREAK EVEN POINTS................................................................................23
CALCULATION OF PROFITABILITY RATIOS..........................................................................25
5.7 DESIRED FINANCING..............................................................................................................27
5.8 PROPOSED CAPITALISATION...............................................................................................27
5.9 POSSIBLE THREATS TO THE BUSINESS..............................................................................27
REFFERENCES...............................................................................................................................27

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EXECUTIVE SUMMARY
The intended business venture will operate under the name Luminous Helicopter Maintenance.
The firm’s headquarters will be located in Wilson airport Nairobi. The company will focus
On becoming the market leader in the industry in which it operates. The firm will specialize
In offering air maintenance services to individual and institutional customers. The ideal
individual
Customers for the firm include high-end clients. Conversely, institutional customers will
comprise
Different corporate entities such as media houses. The firm will differentiate its operations by
offering unique services. This goal will be achieved by giving customized air maintenance
services.
The firm intends to achieve substantial growth within the target market. This goal will be
Achieved by incorporating effective strategic management practices. Through direct contact
advertisements and posters

vii
 1. CHAPTER ONE
BUSINESS DESCRIPTION

INTRODUCTION
1.1 BUSINESS NAME
Luminous Helicopter Maintenance.

1.2 BUSINESS DESCRIPTION

The business will involve offering aircraft maintenance services. The firm will give aircraft
maintenance services to companies, private companies and government agencies.

1.3 BUSINESS LOCATION AND ADDRESS

The business will be located at Wilson airport which is in Nairobi business district.
It lies approximately 4 kilometers by road south of central district. The location of
this business is because of increase in demand and also nearness to market.
The address will be;
LUMINIOUS HELICOPTER MAINTENANCE.
P O BOX 73129-00200,
NAIROBI
CONTACT: +254719407894
EMAIL;luminious1heli@gmail.com

1.4 THE FORM OF BUSINESS OWNERSHIP

Luminous helicopter maintenance will operate as a corporation. The motive for adopting this
business structure has arisen from the need to ensure smooth operations. Despite the
complexities associated with this business structure, the firm will comply with the stipulations
outlined in the aviation industry. It will offer helicopter maintenance services: overhauling,
inspection, replacement and defect rectification compliance with airworthiness directives.

1
1.5 PRODUCT AND SERVICES
The luminous helicopter maintenance will entail with provision of helicopter maintenance
services. The maintenance will be both scheduled and unscheduled maintenance. The
maintenance services will include overhauling, inspection, replacement and defect rectification.
The firm will seek authorization from respective governments before entering these markets.
Thus the firm will seek licenses from the governments. This move will minimize interference of
the firm’s operation by the relevant authorities.
The table below shows cost of services;
SERVICE TYPE OF SERVICE COST(KSH)
NUMBER
1. Engine (powerplant) maintenance 13,000,000
2. Rotor blade inspection and repair 8,000,000
3. Landing gear maintenance 16,000,000
4. Airframe maintenance 11,000,000
5. Hydraulic system maintenance 12,000,000
6. Flight instruments/ avionics 13,000,000
maintenance
7. Exterior paint jobs 14,000,000
8. Line maintenance 11,000,000
TOTAL 98,000,000

1.6 JUSTIFICATION OF THE OPPORTUNITY

Wilson airport is a strategic place where most of the helicopters operate with very few
companies offering helicopter maintenance services thus a growing demand in the service. The
security of the airport is also enhanced and also the business is strategically located to a wide
market.

1.7 INDUSTRY
The business will be under the aviation industry. The aviation industry started two thousand
years ago. Helicopter tourism is a new dimension of tourism. The tours are offered to the
passengers/tourist by the helicopters over the popular places in a country

2
GOALS OF THE BUSINESS
SHORT TERM GOALS;
1. To provide quality helicopter maintenance services.
2. To compete favorably with other businesses.
3. To satisfy customer demands.

LONG TERM GOALS;

1. To create employment opportunities.
2. To gain profit.
3. To expand and create branches in East Africa.

1.8 ENTRY AND GROWTH STRATEGY

For rapid reach of the market, the service will be advertised through mass media, social media
and billboards advertisements. In order to get market acceptance the business tends to offer free
trips to its customers, also understanding the customers complains and why they would prefer
competitors.

3
 2. CHAPTER TWO-MARKETING PLAN
2.1 CUSTOMERS
The potential customers to the business include media houses, tycoons’ politicians and
tourist coming in the county. The above customers will get the best services regardless of
there religion or gender.

2.2 MARKET SHARE

The potential competitors of this company are Air Kenya Limited, Tropic Air
Maintenance, Helisota Company and Abedair Aviation.

MARKET SHARES

11%

28%

21%

15%

25%

TROPIC AIR ABEDAIR AVIATION LUMINOUS HELICOPTER TOURS

HELISOTA COMPANY AIR KENYA LIMITED

4
2.3 COMPETITORS
Due to the fact the above-mentioned competitors are already established and have gained
market popularity, Luminous helicopter services have strategies in place to counter this.
Such strategies include giving out discounts, well equipped facility, cheap and affordable
Services.
NAME OF THE
BUSINESS STRENGTH WEAKNESSES
AIRWORKS KENYA  Offers high quality services.  Poor working conditions
LIMITED  Offers a variety of discounts  Bad customer relations.
 Good pricing.

HELISOTA  Customer friendly.  Very expensive.

COMPANY  Competent personnel  Poor quality service.
 There is no security.
ABEDAIR AVIATION  Good pricing.  Poor advertising technics
 Well-funded.  Limited to certain
 Customer friendly. destinations.

TROPIC AIR  Offers high quality services.  Very expensive.

COMPANY  Good customer care  Limited to certain
services. destinations.
 Well maintained helicopters.

To win against competitors the following will be done:

 Offering quality and affordable services.
 Offering proper training to the member of staff.
 There will good customer relations.
 There will be enough helicopters to serve the customers.
 Employ good marketable strategies.

2.4 ADVERTISING AND PROMOTION

The business will do advertising through magazines, radios, newsletters, internet,
television, emails and though internet.

5
2.5 PRICING STRATEGIES
This business will practice penetration pricing i.e., setting a low price to enter the market
then raise it later. Price will depend with the destination and distance from Wilson
airport.
The price will fluctuate due to high demand of the services and also according to
government taxation rates.
To maintain a competitive pricing level which will ensure adequate profit to keep
the business running and retain customers, pricing of goods and services will
depend on;
The profit margins
Pricing of competitors
The production and purchasing costs
Demand of the products and services
Government policy.
2.6 SALES AND TACTICS
The company’s main objective is to maximize profits through the services.
The sales tactics to be used will include the following;

NO TACTICS TO BE USED BENEFITS

1. Quality and affordable services  Increased sales (profit).
 Higher number of potential
customers.
2. Advertising  Expansion to the market.
 Increased profits.
3. Special discounts  Fight competitors.
 Increased customers
4. Good customer care services and relations  Attract new customers.
 Maintain current customers.

6
2.7 DISTRIBUTION STRATEGY
The business will offer all helicopter maintenance services. This will include overhauling,
repairs, and replacement of parts. The approved engineers will work together with the
technicians to offer maintenance procedures for helicopter components such as the rotor blades,
power plant, airframe, landing gears, hydraulic systems and the instruments. This will include
visual checks and all tests. This will be other scheduled and unscheduled maintenance. Minor
modifications will also be done under the approval of the Kenya Civil Aviation Authority.

7
 3. CHAPTER THREE-ORGANISATIONAL PLAN
3.1 ORGANISATIONAL STRUCTURE
Luminous helicopter maintenance will focus on entrenching effective organizational
structure and management. Thus, the firm will adopt a flat organizational structure by
establishing some departments. The adoption of the flat by need to establish effective
reporting relationships. The chart below illustrates the firm’s organizational structure.

3.2 ORGANISATIONAL CHART

Chief executive

Officer

Vice President

Human
Finance Engineering Marketing
IT manager resource
manager manager manager
manager

Subordinate Subordinate Subordinate Subordinate Subordinate

employees employees employees employees employees

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3.3 MANAGER AND QUALIFICATIONS.
The management will adopt the transformational leadership philosophy. This philosophy
will be implemented by integrating different aspects such as intellectual stimulation,
inspirational motivation and individual consideration in the leadership process.
The philosophy will enable the organization to achieve the desired goals by
increasing the level of employee motivation.

JOBS AND RESPONSIBILITIES

1. CHIEF EXECUTIVE OFFICER
There will be one chief executive officer.
QUALIFICATIONS
 Masters in degree in airline operations.
 Effective managerial skills.
 Five years of experience in managing air travel company.
 Ability to transform the organization to fit prevailing industry trends.
DUTIES
 Overseeing the overall operation of the firm.
 Managing marketing activities.

2. VICE PRESIDENT
There will be one vice president.
QUALIFICATIONS
 Master’s degree in air transport management.
 Effective transformational managerial skills.
 Five years’ experience in air travel operations.
DUTIES
 Ensuring that subordinates adhere to the stipulated operational procedures
and standards.
 Overseeing the different financing activities such as budgeting.

9
 3. FINANCE MANAGER
There will only be one manager.
QUALIFICATIONS
 Master’s Degree in finance.
 Four years’ experience as a financial manager.
 Registered with local recognized accounting bodies.
DUTIES
 Overseeing the different financing activities such as budgeting.

4. ENGINEERING MANAGER
There will be only one engineer manager.
DUTIES
 Overseeing the safety of the clients by upholding the aircraft safety
and maintenance standards.

5. MARKETING MANAGER
There will be only one marketing manager.
QUALIFICATIONS
 Master’s degree in marketing.
 Three years’ experience as a marketing manager in air transport.
DUTIES
 Managing marketing activities.

6. INFORMATION TECHNOLOGY MANAGER

There will only be one IT manager.
QUALIFICATIONS
 Master’s degree in Information Communication Technology.
 Five years’ experience as an IT manager in air transport.
DUTIES
 Ensuring that the company’s information communication systems are
effective and efficient in facilitating different operations.

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 7. HUMAN RESOURCE MANAGER
There will be only one human resource manager.
QUALIFICATIONS
 Master’s Degree in human resource management.
 Three years’ experience as HR manager in a large company.
DUTIES
 Chairing the formulation of human resource policies.

8. SUBORDINATE EMPLOYEES
The subordinates will be assigned responsibilities by their respective managers.
3.4 RECRUITEMENT, TRAINING AND PROMOTIONS
RECRUITEMENT
Recruitment will be done by the head of human resource management.
Qualifications will be based on academic qualification and working experience.
Advertisement through newspaper, social media will be made when there is need for recruitment.
Applications will be through emails. Shortlisting to be made at an agreed date through the media
as mentioned.
Communication on date of interviews will always be through our company’s website and sums.
Interviews will be done and feedback if one is successful to be made on the same day.

TRAINING
The firm will train its workforce continues to equip them with additional and relevant knowledge
and skills. The firm will be adopt off the job training and on the job training approaches.
On the job training will ensure that employees learn by doing. Conversely, off the job training
will be implemented by undertaking vestibule training by organizing internal training workshops.
These approaches will improve the employees’ efficiency in executing the assigned job roles.
PROMOTION
Promotions of employees will be based on academic qualifications, years of service and
commitment.
REMUNARATION AND INCENTIVES
The employees will have basic salary and allowances as follows;

11
 PERSONNEL(KSH) BASIC ALLOWANCES GROSS
SALARY(KSH (KSH) SALARY(KSH)
)
1. CHIEF EXECUTIVE 60000 House allowance 5000 68000
OFFICER Commuter allowance –
3000
2. VICE PRESIDENT 48000 House allowance – 54000
5000
Commuter allowance –
2000

3. FINANCE 38000 House allowance – 44000

MANAGER 4000
Commuter allowance –
2000

4. MARKETING 36000 House allowance – 42000

MANAGER 4000
Commuter allowance –
2000

5. IT MANAGER 35000 House allowance – 41000

4000
Commuter allowance –
2000

6. HUMAN 33000 House allowance – 38500

RESOURCE 4000
MANAGER Commuter allowance –
1500
7. SUBORDINATE 15000 House allowance – 18000
EMPLOYEES 2000
Commuter allowance –
1000

3.5 LICENCES, PERMITS AND BY LAWS

Single business permit will be obtained from the Nairobi Metropolitan Services offices at the
central business unit.
An AMO will be obtained from the Kenya Civil Aviation Authority. All National Environment
Management Authority rules are regulation to be followed.
The firm will take a health permit from the ministry of health and since all businesses are
required to be fire safety certified, a fire safety will be obtained from the government.

12
3.6 SUPPORT SERVICES
The following business advisers and support services will be incorporated in our firm;
LAWYER
This is set to aid in any legal matters that concern the business entity.
BANKING SERVICES
Banking services will be offered by Equity bank Langata Branch.
3.7 OTHERS
Electrical power supply will be provided by Kenya power and lighting company which is
situated near business premises.

13
 4. CHAPTER
4. OPERATIONAL PLAN.
4.1 PRODUCT OR SERVICE DESIGN AND DEVELOPMENT
The floor plan of the premises with in which the firm operates will be designed masterfully. One
of the issues that the firm will consider in the designing process entails the floor plan. First, the
firm will ensure that the office furniture and computer systems are situated strategically. This
aspect will aid in ensuring that the office space is utilized optimally.
4.2 PRODUCTION OR OPERATIONAL FACILITIES AND CAPACITY
The company will have facilities that will generally help the business to run effectively. The
equipment include:

ITEMS UNIT QUANTITY TOTAL SUPPLIERS

COST(KSH) COST(KSH)
1. Furniture(chairs 20000 20 400000 Victoria
desks and furniture Ltd
tables)
2. Computer 30000 10 300000 Nairobi
computer
shop
3. Cabinets 35000 5 175000 Victoria
furniture Ltd
4. Printer 15000 3 45000 Nairobi
computer
shop
5. Photocopier 80000 1 80000 Nairobi
computer
shop
6. Fire 1000 3 3000 Fireline
extinguisher safety Kenya
7. Maintenance 2000 4 8000 Ali Glaziers
ladders Ltd
8. Ground power 50000 1 50000 Helihub
units company
9. Files 50 20 1000 Officemart
14
 Ltd
10. Telephone 15000 4 60000 Nairobi
computer
shop
11. Stationaries 300 15 4500 Officemart
Ltd
12. Tool box 70,000 3 210,000 Helihub
Company
13. Safety gear (full 1,000 10 10,000 Helihub
kit) Company

14. Lathe machines 25,000 3 750,000 Helihub

Company
15. Hoisting 100,000 2 200,000 Helihub
Machines Company
16. Drilling machines 5,000 4 20,000 Helihub
Company
17. Landing gear 10,000 2 20,000 Helihub
stands Company
18. Maintenance 2,000 3 6,000 Aeromint
ladders Engineering
ltd.

4.3 RAW MATERIALS AND SUPPLIES

The firms’ operations will be facilitated by leasing helicopters from renowned companies.
Leasing will aid in minimizing the cost of purchasing the aircraft. The firm will operate on a 24 –
hour basis to satisfy customers.
The raw materials will include:
ITEMS UNIT COST QUANTITY TOTAL SUPPLIERS
(ksh) COST(Ksh)
1. Hydraulic 200 per litre 800 litres 160,000 Ali Glaziers Ltd
Fluid
2. Oil and 180per litre 300 litres 54,000 Ali Glaziers Ltd
Grease
3. Liquid 250 per litre 600 litres 150,000 Ali Glaziers Ltd
coolant
TOTAL 364,000

4.4 PRODUCTION PROCESS

All the services i.e maintenance, repair and overhaul will be planned by the chief engineer. There
will be scheduled and unscheduled maintenance process.
All maintenance services will be based on the Aircraft maintenance manual.
The business will offer helicopter maintenance services which include;
HYDRAULIC SYSTEM MAITENANCE
15
Procedure;
 Check the hydraulic fluid levels. Add hydraulic of the same viscoucity grade if needed
using portable filters when applicable.
 Check breather caps, filters and fill screens.
 Check retutn/pressure filter indicators and pressure gauges for readings.
 Sample hydraulic fluid for colour, visible signs of contamination.
 Check system temperature using a built-in or spot infrared thermometer.
 Inspect inside the reservoir for any of aeration.
 Inspect hydraulic hoses, tubing and fitting for leakage and frays.
 Inspect servo valves for overheating. High temperatures means that the valve is sticking.
 Listen to the pump for making any unusual noise. The noise could be a sign of cavitation.
 Scan the electric drive motor with a hand-held infrared thermometer for hot spots.

ROTOR BLADES INSPECTION

Rotor blades inspection by use of laser shearography and a vacuum chamber.
 Position the rotor blade inside the vacuum chamber.
 Load the rotor blade with slight pressure changes of less than millibar. The pressure
change in the vacuum chamber will produce slight deformations on the surface of the
rotor blade.
 A laser shearography system can observe these deformations and automatically indicate
defects such as delaminations, debonding etc. which show up by typical deformation
patterns.
 Repair the defects found. If not repairable replace the port.

4.5 PRODUCTION & SERVICE STRATEGIC PLAN.

The firm will differentiate its product by offering a unique service. The business will offer
quality services with approved engineers and a competence maintenance team including
mechanics.
Major modifications will not be done except those approved by the Aircraft Maintenance
Organization Certificate from the Kenya Civil Aviation Authority.
The services will be done at affordable prices to all customers where added free services will be
offered e.g., free internal and external cleaning of the helicopters serviced.
Market surveys will be undertaken to increase inclusivity of the business.

16
The maintenance personnel will undergo training after every five to six months to increase their
competence.

4.6 REGULATIONS AFFECTING OPERATIONS

All regulations by law of Kenya and also International Civil Aviation Authority will affect the
operations of the business.
4.7 LICENSES AND PERMITS
The business will acquire an Aircraft Maintenance Organization license from the Kenya Civil
Aviation Authority.
A single business permit will be obtained from the Nairobi Metropolitan Services.
Engineers working in the maintenance centre will be approved/ certified by the Kenya Civil
Aviation Authority.
A fire protection certificate will also be acquired from the Nairobi Metropolitan Services.
4.8 ENVIRONMENTAL REGULATION.
The business will adhere to all the rules and regulations of the National Environment
Management Authority (NEMA). Cleanliness in the firm will be maintained the all times. All the
waste materials e.g. metal parts must be disposed well.
4.9 INTERNATIONAL CIVIL AVIATION AUTHORITY (ICAO) REGULATIONS.
All ICAO rules and regulations will be adhered to by the business. This includes the
airworthiness of the aircraft and also safety of the maintenance personnel.
All work to be done will follow the aircraft maintenance manual.

4.10 SAFETY REGULATIONS.

The business will offer good working conditions for its employees. This will include: good
house-keeping, proper plant layout, ventilation and illumination.
Fire extinguishers will be installed in the business premises. There will also be a fire assembly
points in case of fire.
The business will offer personal accidents cover to its employees and also insurance cover for
the business in case of accidents.

5. CHAPTER FIVE
5.1 Operational/Production Plan
A production plan is a course of production action which an entrepreneur intends to implement
in order to achieve business objectives and represent the enterprise best.
Pre-Operational Costs
17
 PARTICULARS AMOUNT (Ksh)

Raw Materials 364,000

Rent and Deposit 500,000

Licenses 300,000

Power installation 50,000

Stationary 150,000

Advertisements 300,000

Airport pass 60,000

Water bill 10,000

Insurance 300,000

TOTAL 2,034,000

5.2 ESTIMATION OF WORKING CAPITAL

It is the amount of money that will be required to keep the business running after it started.

DETAILS YEAR 1 (Ksh.) YEAR 2 (Ksh.)

CURRENT ASSETS

Stock 364,000 650,000

Debtors 150,000 450,000

Cash In Hand 2,000,000 2,300,000

Cash At Bank 2,500,000 3,000,000

TOTAL 5,014,000 6,400,000

CURRENT LIABILITIES

Creditors 1,400,000 1,200,000

Bank Loans 1,300,000 800,000

TOTAL LIABILITIES 2,700,000 2,000,000

Working Capital 2,314,000 4,400,000

18
5.3 LOANS AND INTEREST REPAYMENT
The loan will be provided by ABSA bank and will be re-payed within a 24-months period and will have
a 12% interest rate.

FOR 1ST YEAR.

MONTH PRINCIPAL INTEREST BALANCE (Ksh)

INSTALMENT (Ksh)

JANUARY 121,333 12% 1,334,667

FEBRUARY 121,333 12% 1,213,334

MARCH 121,333 12% 1,092,001

APRIL 121,333 12% 970,668

MAY 121,333 12% 849,335

JUNE 121,333 12% 728,002

JULY 121,333 12% 606,669

AUGUST 121,333 12% 485,336

SEPTEMBER 121,333 12% 364,003

OCTOBER 121,333 12% 242,670

NOVEMBER 121,333 12% 121,337

DECEMBER 121,337 12%

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5.4 PREPERATION OF CASH FLOW PROJECTION YEAR
ONE.
January February March April May June July August September October November
Cash balance 0 440,167 264,334 230,501 119,668 142,335 185,002 208,669 -11,664 -10,997 777
Cash Inflow
Cash
Sales(service 1,100,000 300,000 550,000 680,000 1,100,000 1,200,000 1,300,000 850,000 1,000,000 2,000,000 2,500
charges)
Debtors 60,000 13,000 25,000 300,000 150,000 70,000 45,000 30,000 50,000 65,000 10
Total cash
1,160,000 753,167 839,334 1,210,501 1,369,668 1,412,335 1,530,002 1,088,669 1,038,336 2,054,003 3,287
inflow
Cash outflow
Raw Materials 30,000 5,000 90,000 70,000 120,000 180,000 200,000 120,000 80,000 300,000 400
Creditors 25,000 60,000 500,000 100,000 78,000 150,000 60,000 50,000 100,000 90
Salaries 305,500 305,500 305,500 305,500 560,000 640,000 645,000 645,000 640,000 645,000 645
Advertising 10,000 15,000 2,000 45,000 120,000 100,000 85,000 50,000 65,000 45,000 30
Licenses 200,000 0 0 0 0 0 0 0 0 0
Telephone 6,000 10,000 4,000 15,000 25,000 15,000 18,000 10,000 12,000 13,000 21
Stationery 3,000 12,000 6,000 13,000 18,000 43,000 35,000 28,000 12,000 14,000 15
Insurance 12,000 15,000 10,000 15,000 120,000 35,000 42,000 36,000 34,000 40 45
Electricity/
7,000 5,000 10,000 6,000 43,000 15,000 25,000 30,000 35,000 38,000 45
water
Loan
121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,333 121
Installments
Total cash
719,833 488,833 608,833 1,090,833 1,227,333 1,227,333 1,321,333 1,100,333 1,049,333 1,276,373 1,412
outflow
Net Balance 440,167 264,334 230,501 119,668 142,335 185,002 208,669 -11,664 -10,997 777,630 1,875

20
5.5 PREPERATION OF CASH FLOW PROJECTION
YEAR 2.
Februar Novembe
January March April May June July August September October December
y r
267,33
Cash balance 0 443,167 236,501 135,668 160,335 203,002 226,669 6,336 7,003 795,630 1,893,29
4
Cash Inflow

Cash
1,103,00 550,00 1,100,00 1,200,00 1,300,00 2,000,00
Sales(service 300,000 680,000 850,000 1,000,000 2,500,000 2,800,00
0 0 0 0 0 0
charges)

Debtors 60,000 13,000 28,000 300,000 150,000 70,000 45,000 30,000 50,000 65,000 10,000 200,00

Total cash 1,163,00 845,33 1,216,50 1,385,66 1,430,33 1,548,00 2,072,00

756,167 1,106,669 1,056,336 3,305,630 4,893,29
inflow 0 4 1 8 5 2 3

Cash outflow

Raw Materials 30,000 5,000 90,000 70,000 120,000 180,000 200,000 120,000 80,000 300,000 400,000 500,00

Creditors 25,000 60,000 490,000 100,000 78,000 150,000 60,000 50,000 100,000 90,000 120,00
305,50
Salaries 305,500 305,500 305,500 560,000 640,000 645,000 645,000 640,000 645,000 645,000 645,00
0

Advertising 10,000 15,000 2,000 45,000 120,000 100,000 85,000 50,000 65,000 45,000 30,000 50,00

Licenses 200,000 0 0 0 0 0 0 0 0 0 0

Telephone 6,000 10,000 4,000 15,000 25,000 15,000 18,000 10,000 12,000 13,000 21,000 34,00

Stationery 3,000 12,000 6,000 13,000 18,000 43,000 35,000 28,000 12,000 14,000 15,000 12,00

Insurance 12,000 15,000 10,000 15,000 120,000 35,000 42,000 36,000 34,000 40 45,000 62,00

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Electricity/
7,000 5,000 10,000 6,000 41,000 15,000 25,000 30,000 35,000 38,000 45,000 50,00
water

Loan 121,33
121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,333 121,33
Installments 3

Total cash 608,83 1,080,83 1,225,33 1,227,33 1,321,33 1,276,37

719,833 488,833 1,100,333 1,049,333 1,412,333 1,594,33
outflow 3 3 3 3 3 3

236,50
Net Balance 443,167 267,334 135,668 160,335 203,002 226,669 6,336 7,003 795,630 1,893,297 3,298,96
1

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5.6 PREPARATION OF PROFORMA STATEMENTS AND BALANCE SHEET

PROFORMA INCOME STATEMENT FOR YEAR 1 AND 2.

ITEMS YEAR 1 (Ksh.) YEAR 2 (Ksh.)
Sales 15,380,000 15,383,000
Purchases 2,095,000 2,095,000

Gross Profit 13,285,000 13,288,000

Expenses
Salaries 6,287,000 6,287,000
Advertisements 617,000 617,000

Water/Electricity 309,000 307,000

Insurance 426,040 426,040

Licenses 200,000 200,000

Telephone 183,000 183,000

Loan repayment 1,455,996 1,455,996

Stationary 211,000 211,000

Total Expenses 9,376,000 9,208,000

Net profit before tax 3,909,000 4,080,000

Tax Provision on profit 390,900 408,000

Net Profit After Tax 3,518,100 3,672,000

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LUMINIOUS HELICOPTER MAINTENANCE

BALANCE SHEET
AS AT 31ST DEC 2022.
ASSETS Ksh. LIABILITIES Ksh.
Fixed assets Long term liabilities
Tools and equipment 1,800,000 Loans 1,000,000
Rent and deposit 660,000 Shareholders’ Equity 4,010,000

Current Assets Short-Term Liabilities

Cash 2,000,000 Creditors 54,000
Stock 450,000
Debtors 154,000
Total 5,064,000 Total 5,064,000

5.7 CALCULATION OF BREAK EVEN POINTS

It includes calculations at the point where the sales are equal to purchases.

FOR YEAR 1.

FIXED COST (Ksh) VARIABLE COST (Ksh)

Salaries 6,287,000 Electricity/ Water 309,000

Licenses 200,000 Advertisements 617,000

Insurance 426,040 Stationery 211,000

Rent 660,000 Telephone 120,000

Loan 1,455,996
Total 9,029,036 Total 1,257,000

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Total contribution Margin = Total Sales – Variable Cost

=15,380,000– 1,257,000

=14,123,000 Ksh.

Percentage Contribution Margin = (Total Contribution margin / Total Sales) * 100

= (14,123,000 / 15,380,000) * 100

= 91.8%

Break Even Points = (Fixed Assets / Percentage contribution Margin)

=2,460,000 / 91.8

=2,679,739 Ksh.

FOR YEAR 2.

FIXED COST (Ksh) VARIABLE COST (Ksh)

Salaries 6,287,000 Electricity/ Water 307,000

Licenses 200,000 Advertisements 617,000

Insurance 426,040 Stationery 211,000

Rent 660,000 Telephone 183,000

Loan 1,455,996
Total 9,029,036 Total 1,318,000

Total contribution Margin = Total Sales – Variable Cost

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 =15,383,000 – 1,318,000

=14,065,000 Ksh.

Percentage Contribution Margin = (Total Contribution margin / Total Sales) * 100

= (14,065,000 / 15,383,000) * 100

= 91.43%

Break Even Points = (Fixed Assets / Percentage contribution Margin)

=2,460,000 / 91.43

=2,690,582.96 Ksh.

5.8 CALCULATION OF PROFITABILITY RATIOS

It reflects the profit element to determine the proportional status of the business rated against established
standards.

FOR YEAR 1.

Profitability ratios = (Gross Profit / sales) * 100

= (13,285,000 / 15,380,000) *100

=86.4%

Return on Equity = (Net profit after tax / Equity contribution) *100

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 = (3,518,100 / 4,010,000) *100

=87.7%

Return on Investment = (Net profit after Tax / total investment (sum of all assets)) *100

= (3,518,100 / 5,064,000) *100

=69.4

Return on sales = (net profit after tax/sales) *100

= (3,518,100 /15,380,000) *100

=22.9%

FOR YEAR 2

Profitability ratios = (Gross Profit / sales) * 100

= (13,288,000/ 15,383,000) *100

=86.4%

Return on Equity = (Net profit after tax / Equity contribution) *100

= (3,672,000/ 4,010,000) *100

=89.4%

Return on Investment = (Net profit after Tax / total investment (sum of all assets)) *100

= (3,672,000/ 5,064,000) *100

=72.5%

Return on sales = (net profit after tax/sales) *100

= (3,672,000/ 15,383,000) *100

=23.9%

5.7 DESIRED FINANCING

It is the establishment of the amount of money that would sustain and run the business comfortably.

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 Total desired financing = pre-operational cost + working capital

=2,034,000 +2,314,000

=4,348,000

5.8 PROPOSED CAPITALISATION

It consists of the total amount of the capital that will be put in place for the start and operation of the
business.

Proposed capitalization =debt financing + equity capitalization

=1,400,000 + 4,010,000

=5,410,000

5.9 POSSIBLE THREATS TO THE BUSINESS

 High taxation rates
 Government policies
 High cost of approved maintenance organization license
 High cost of energy

REFFERENCES
Hung, Y. Y., and H. P. Ho. "Shearography: An optical measurement technique and applications."
Materials science and engineering: R: Reports 49.3 (2005): 61-87.
Hung, Y. Y., & Ho, H. P. (2005). Shearography: An optical measurement technique and applications.
Materials science and engineering: R: Reports, 49(3), 61-87.
Hung, Y. Y., and H. P. Ho. "Shearography: An optical measurement technique and applications."
Materials science and engineering: R: Reports 49, no. 3 (2005): 61-87.
Hung, Y.Y. and Ho, H.P., 2005. Shearography: An optical measurement technique and applications.
Materials science and engineering: R: Reports, 49(3), pp.61-87.
Hung YY, Ho HP. Shearography: An optical measurement technique and applications. Materials science
and engineering: R: Reports. 2005 Apr 21;49(3):61-87.
Worzewski, T., Krankenhagen, R., Doroshtnasir, M., Röllig, M., Maierhofer, C. and Steinfurth, H., 2016.
Thermographic inspection of a wind turbine rotor blade segment utilizing natural conditions as excitation
source, Part I: Solar excitation for detecting deep structures in GFRP. Infrared Physics & Technology, 76,
pp.756-766.

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