Snap shot of UMT for Investors

1. 2010
Transforming Pakistan into
a Knowledge Economy
An Investment Opportunity
University of Management & Technology
P.O. Box 10033, C-II, Johar Town, Lahore-54770, Pakistan
Tel: 0092-42-35212 801-10
UMT-Investment Opportunity E-mail: info@umt.edu.pk, Website: www.umt.edu.pk
1

2. Education in Pakistan above) is 58% (71% for male and 46% for
female) in 2007-08 compared to 56% (68 %
Pakistan has a total population of 163.76
for male and 44% for female) in 2005-06.
million, growing at a rate of two per cent, According to the Ministry of Education, there
with a greater concentration in the rural are currently 227,243 educational institutions
areas of 65 per cent. in the country. The overall enrolment is
The GDP for the year 2009-10 is recorded at 34.49 million with teaching staff
forecasted at three per cent. Pakistan’s per of 1.27 million.
capita real income has risen by 2.5 per cent As part of education reforms, the
in 2008-09 compared with 3.4 per cent last Government is also investing in capacity
year. Per capita income in dollar terms building of local institutions through
rose from $1,042 last year to $1,046 in collaboration and various other initiatives,
2008-09, thereby showing a marginal including faculty exchange and foreign
increase of 0.3 per cent. Real private faculty hiring. Currently, there are 68
consumption is rising by 5.2 per cent public universities and 56 private
compared with negative growth of 1.3 per universities. Eight public and 18 private
cent attained last year. However, gross institutions have degree awarding status.
fixed capital formation could not maintain The average expenditure on education as a
its strong growth momentum and real percentage of GDP has been little more
fixed investment growth contracted by 6.9 than two per cent from 2006 to 2008.
per cent competed with the expansion of
Te budget allocation has increased by
3.8 per cent in the last fiscal year.
8.6% in 2008-09 as against an increase of
Public expenditure on education as a 17% in 2007-08. The budgetary allocation
percentage of GDP is lowest in Pakistan for education since 2000-01 is highlighted
due to the fiscal resources constraint that in the below given table
paved the way to synchronization in terms
of GDP allocation. The trend of
Table: Expenditure on Education1
investment in education in terms of GDP
has been 2.5 per cent and 2.47 per cent in
(In Billion Rs.) Exp. On
the years 2006 -07 and 2007 -08 Education
respectively, whereas it is estimated to be Year Public
As % of
at 2.1 per cent during 2008 -09. According Curre
Dev.
Sector
% of Total
nt Exp. On
to Pakistan Social and Living Education
GDP Exp.
Measurement (PSLM) Survey data 00-01 69.5 6.4 75.9 1.82 10.6
(2007-08), the overall literacy rate (age 10 01-02 70.4 8.5 89.9 1.79 9.5
years and above) is 56% (69% for male 02-03 79.5 10.4 89.9 1.86 10.0
and 44% for female) in 2007- 08 03-04 94.3 29.9 124.2 2.2 13.0
compared to 55% (67% for male and 42% 04-05 106.6 33.4 140.0 2.15 12.5
for female) in 2006-07. Literacy remains 05-06 128.9 41.9 170.8 2.24 12.2
higher in urban areas (71%) than in rural
06-07 159.9 56.6 216.5 2.50 12.0
areas (49%) and more in men (69%)
07-08 190.2 63.5 253.7 2.47 9.8
compared to women (44%).
08-09 200.4 75.1 275.5 2.10 11.5
When analyzed provincially, literacy rate
in Punjab stood at 59 % followed by Sindh For 2007-08 an allocation of Rs. 6508.78
(56%), NWFP (49%) and Balochistan at million was made in Public Sector
46%. The literacy rate of Punjab and Development Programme (PSDP) for
Balochistan has improved considerably
during 2006-07 to 2007-08. The overall 1
Source: Provincial and Federal Budget
school attendance (age 10 years and Documents ,Ministry of education
UMT-Investment Opportunity

3. Ministry of Education. However the with innovative curricula to 3,200 students
original allocation was reduced to Rs. today. The most outstanding feature in
4,384.94 million, whereas Rs. 3,788.06 raising educational standards of the
million were got released. In addition to
this, government has also released Rs. 525
million, which made the total release as
Rs. 4,313.6 million for the financial year
2007-08. PSDP2 allocation for the current
financial year (2008-09) stood at Rs.
6,269.65 million but due to financial
constraints it has been reduced by 33% to
Rs. 4,162 million.
UMT-An overview:
The University of Management and
Technology (UMT) is fast coming up as a
leading top class privately funded
educational institution of higher learning.
Since its establishment in 1990, UMT has
displayed exceptional performance in
building educational and training capacity
on progressive lines. The key objective in Future Plans:
sponsoring such efforts was to create
professional skills among enrolled students On account of its visionary governance
in line with the national policies and the and competent management, UMT is
available indicators of domestic and global capable of growing rapidly and winning
job market conditions. the title of a leading institute. Based on a
vigilant institutional assessment and
The UMT offers a wide range of analysis of the external environment, UMT
educational degree programs in the fields has planned to maximize its outreach by
of management sciences, information introducing diversified portfolio of
technology, commerce and economics, academic programs.
textiles, educational management, media
and communication. These programs are It is essential for UMT to undertake
offered under four Schools and an construction of a purpose-built campus to
Insititute; School of Business and house all academic departments in a
Economics, School of Science and campus worthy of its status as a premier
Technology, and School of Social institution for higher education. The first
Sciences and Humanities, School of phase of the 160 kanals purpose built
Professional Advancement and Institute of campus in Johar Town, Lahore has been
Audit & Accountancy. Apart from degree completed and all academic as well as
programs, UMT has a very well administrative departments and faculties
recognized training institute (Centre for have been shifted to the new campus. The
Management and Development) and a campus master plan incorporates all the
highly professional research and essential features of a modern University
consultancy wing (UMT Consulting). meeting international standards and offers
excellent facilities for teaching and
With a humble start of less than 50 learning. However, University plans to
students’ intake in 1990, this Institution purchase another piece of land (100
has grown to provide quality education kanals) to construct new academic blocks
2 and centers to expand its horizon.
Economic Survey of Pakistan 2008-09
UMT-Investment Opportunity

4. university under multiple educational
programs, for PhD, Business Administration,
MBBS, MBDS, Nursing, Pharmacy, etc.
Investment Schedule:
Particulars Amount (USD)
(Million)
Investment To date 6.52
Land to be purchased 7.11
Cost of New Academic Block 56.60
Construction
Installation of Technology 3.32
Equipments
Medical & Non-medical 13.63
Equipments
Procurement of Resource Facilities 1.18
Staff and Faculty Capacity 5.92
Building Program
Purchase of Vehicles 1.90
Growth in Income
Contingencies 3.82 The project life has been broken down to 5
slabs of equal term to more comprehensively
Total Investment 100.00 understand the underlying trends in income
and its growth. Separate graphs have been
Project Planning & Financial Modeling prepared for Gross Income and Net Income.
Quality knowledge seeker (scholars) As indicated in the graph, gross as well as
net income of the institute will show a
University will attract quality knowledge consistent continuous upward growth. Such
seekers by introducing international best trends have been illuminated in more detail
standards. Quality services will ensure increase in the section of Ratio Analysis. The
in no of knowledge seekers and ultimately it aggregate of Gross income is projected to
will give a positive effect on cash inflows. The Rs. 53 billion and that of Net income is Rs.
below given graphs show that in 2008-09 42 billion.
university had only 3,200 no of students,
however by introducing new education
programs, research laborites and other allied
facilities university is managing 11,984 no of
students at the end of 2024-28.
Knowledge Seekers
2009- 2012-
2016-2 2020-2 2024-2
12 16
Existing 0 After 4 After 8 After
After After
11Year 15Year 19Year
3year 7Year
3,200 5,209 7,594 9,339 10,159 11,984
The below given graph shows that university
will expand the horizon of its existing
educational programs and will attract students
to get admission in various disciplines.
Whereas at the end of 2028 approximately
12,000 students will be studying at the Increase in Faculty members
UMT-Investment Opportunity

5. With the increase in capacity and knowledge under thought is envisaged to generate net
seekers the institute desires to increase its annual cash flows that will eventually result
knowledge economy and human capital. into an IRR as shown above. The cost of capital
Resource mobilization budgets have been over the life of the project would be 8%.
prepared for that purpose and incepted in our Throughout the preliminary 3 years of the
projections. Besides the faculty members, venture, as shown on the graph, negative cash
quantum of management staff and flows represent the capital outlay impact. As
administrative personnel will also amplify to the project flourishes, net cash flows revert to
maintain the existing operations and positive figures and take a stable position by
efficiently manage the intended growth in the end of 6th year. Therefore, a steady net
facility. return can be seen over the rest of the project
life. As indicated, the internal rate of return of
the project is 9%.
Availability & utilization of funds:
Return on Total Average
A sum of Rs. 500 million will be set aside at
inception of the project on account of Research Return on total average investments shows
and Development Fund. These funds would the percentage that is surplus before charging
than be invested in a realm of portfolios to depreciation. As shown on the graph it carries
ensure a secure and risk averse return on the a steady prone growth pattern over the project
available funds. By the end of the forecast life. In initial years, however, the growth has
period, fund is expected to reach a volume of been on the lower side due to the fact that
Rs. 835 million. The rate of return on funds institute would be launching new programs
placed on term and demand deposits is and campus would be in operation at lower
expected to be 8 % per annum on average. than its rated capacity.
However, a reserved rate of only 5% has been
taken into account to represent the transfers to
the R&D fund against surplus for the period on
annual basis. 95% of such returns have been
planned to be utilized for R&D, whilst, the rest
could be credited to the R&D fund account.
Internal Rate of Return
The internal rate of return, received for an
investment consisting of expenditure (capital
outlays) and net annual income. The project
UMT-Investment Opportunity

6. Debt to Equity Ratio:
As the graph shows, capital structure will
transform into that of a pure equity by the end
of the forecast period of 19 years. Debt portion
will be paid off as per the repayment schedule
whereas the residual income from operations
will add to the equity capital. A steep growth in
equity fund can be seen from the graph in the
later stages that is attributable to growth in
income and reduction in financial calculations.
UMT-Investment Opportunity