BOOK LENDING LIBRARY A. INTRODUCTION Despite the advent of TV and other visual media, the reading habit of the people has not been affected adversely. The text books, novels, comics and other educational books have been popular among all students and others alike. Housewives also constitute a major target group for novels in regional languages and weeklies. The Lending Library in a residential area very well attracts many readers and it has regular customers. B. SERVICES & SPECIFICATION The Lending Library should have a large collection of all readable books and magazines in different languages. The Library should be equipped with good staff for attending to the customers requirements. C. MARKET POTENTIAL Literacy is a reasonably good indicator of development in a society. Spread and diffusion of literacy is generally associated with essential trait of today's civilization such as modernization, urbanization, industrialization, communication and commerce. For the purpose of census, anyone aged seven and above, who can both read and write with a reasonable level of understanding in any language, is treated as literate. As per 2001 Census, the overall literacy rate of India is 65.38%. The male literacy rate is 75.96% and female literacy rate is 54.28%. The literacy rate in the country has been increasing year after year. The population growth rate and literacy growth rate had been as under. 1971 1981 1991 2001 Population (in million) 548 683 846 1037 Literacy rate 34.5% 43.6% 52.2% 65.4% 1
The urbanisation rate also has been increasing year after year and as a result the reading habit and requirement of books and periodicals in urban areas have been increasing. 1971 1981 1991 2001 Rural Population (in million) 439 524 629 752 Urban Population (in million) 109 159 218 285 With several states implementing schemes on total literacy, the literate population will be increasing year after year and reading habit among population will also improve to acquire new knowledge, update knowledge and have entertainment through reading books. Therefore, there is a tremendous scope for several book lending libraries to be set up in different parts of the country. All major residential areas housing middle and upper class families need presence of book and magazine lending libraries. If the library is located closer to schools & colleges, novels, comic and supplementary educational reading text books have to be collected and stored. If it is in middle of residential area, women magazines, weeklies, novels should be larger in number. D. TECHNICAL ASPECTS 1. Installed Capacity To start with, Book Lending Library can enroll about 1200 Members. From each member an initial non-refundable deposit of Rs.300 can be collected. The monthly rental charges can be collected on an average of Rs.10 per book. At this rate the Lending Library will have a total income of Rs.3.84 lakhs per annum. 2. Equipments The Library requires several books to be purchased in different languages. A mix of old books and new books can be purchased. The following services are essentially required. 2
3. Books & Periodicals (initial) To start with, to serve 1000 members initially the book lending library will have about 3 books per customer in reserve. A mix of old books and new books have to be purchased. This will cost about Rs.150 per book on an average (Rs.50 per old book and Rs.250 per new book). The initial book cost will be about Rs.4,50,000. Every year additional books have to be purchased and accumulated. 4. Equipments The following equipments are required. Rs. Racks, Book Shelves 40,000 Books 4,60,000 Lights & Fans 6,000 Bicycle for home delivery 3,000 Name Board & Misc. Expenses 4,000 5,13,000 5. Land and Building An area of 500 sq.ft is sufficient to start with. This can be taken on rental basis at Rs.5 per sq.ft monthly rent is considered Rs.2500 per month. The Advance will be about Rs.25,000. 6. Utilities Power The Electricity is required only for lights & fans. Water Water is required for human consumption only. 3
Manpower Library Assistants 2 4000.00 8000.00 Delivery Boy 1 3000.00 3000.00 11000.00 Salaries per Annum 132000.00 7. Implementation Schedule If financing arrangements are available, the project can be implemented within a month s time. 8. Assumptions The Lending Library can be started with own capital and later by enrolling members, deposits can be collected which will be sufficient to pay back part of promoter s initial contribution. o To start with 1200 members have to be enrolled. o The income is estimated at Rs.10 per 10 days (Rs.30 per member per month for 3 rotations of books). o Power charges works out to Rs.2000/- per month. o Wages & Salaries works out to Rs.11000/- per month. o Subscriptions to Magazines & periodicals is estimated to Rs.3000 p.m. o Travelling & Conveyances is estimated at Rs.1000 p.m. o Repairs & Maintenance is assumed at Rs.3000 per annum. o Depreciation calculated @ 20% on Books & Equipments on WDV method. o Office Rent assumed at Rs.4000/- p.m. o Every year, out of profits, fresh books have to be procured and new members have to be enrolled to increase the income. 4
F. LIST OF BOOKS & EQUIPMENT SUPPLIERS Books & equipments, which are required for library are readily available in local market. 1. COST OF PROJECT Rs. lakhs Land & Building-Rental Advance (500 sq.ft) 0.40 Books & Equipments 5.13 Pre-Operative Expenses 0.30 Margin for Working Capital 0.10 Total 5.93 2. MEANS OF FINANCE Capital 2.08 Deposits from Members 3.85 Total 5.93 3.COST AND PROFITABILITY Rs. Lakhs Year 1 2 3 No. of Members 1200.00 1320.00 1452.00 Income from Lending Library 4.32 4.75 5.23 Power 0.24 0.25 0.26 Wages & Salaries 1.32 1.39 1.46 Rent 0.48 0.49 0.50 Subscription of Magazine & periodicals 0.36 0.38 0.40 Travelling & Conveyance 0.12 0.13 0.13 Repairs & Maintenance 0.03 0.03 0.03 Administration Expenses 0.30 0.32 0.33 Depreciation 1.03 0.82 0.66 3.88 3.80 3.77 Total 3.88 3.80 3.77 Profit Before Tax 0.44 0.95 1.46 Provision for Taxes 0.00 0.32 0.50 Profit After Tax 0.44 0.63 0.96 Add: Depreciation 1.03 0.82 0.66 5
Total Cash Accruals 1.47 1.45 1.62 4. PROFITABLITY RATIOS BASED ON 80% Profit Before tax 1.46 Sales 5.23 28% Profit before Interest & Tax 1.46 Total Investment 5.93 25% Profit after Tax 0.96 Promoters Capital 2.08 46% 5. CALCULATION OF BREAK EVEN LEVEL FIXED EXPENSES Power 0.26 Wages & Salaries 1.46 Rent 0.50 Subscription of Magazine & periodicals 0.40 Travelling & Conveyance 0.13 Repairs & Maintenance 0.03 Depreciation 0.66 3.44 Profit Before tax (P) 1.46 BREAK-EVEN LEVEL = FC X FC+P 80% 70% of installed capacity 6