transparency
80% of profits after tax* for the whole company is put back into Community projects. We do this by supporting our sister organisation and NGO (charity) "Reality Gives.
What this means in reality is that between 25% and 35% of the income generated by Reality Tours is used for Reality Gives's activities. The reason why it's between 25% and 35% (and we're trying to make it higher) is that there are some years when the tour company's expenses are higher than others. Also, there are some years we need to invest in fixed assets, pay for deposits on lease agreements etc and so our cashflow is less.
In the chart below you can see our expenditure up to date. Up to now (31 March 2011), the total income of Reality Tours has been Rs 14,479,695. We have spent Rs 3,951,781- 27% of that. All of that income has been for "frontline services"- ie no many has been apportioned to admin salaries. Reality Gives was only formed in August 2009 which explains why in the initial years the expenditure was less.
If you have any further queries please go the FAQs section. Otherwise please feel free to contact us.
calculation of profits
We understand that it's all well and good saying that we are going to put back 80% of profits into the Community,
but if the owners are drawing a big salary, then this rule has little value! Hence we pledge that 80% of all
profits from Reality Tours will be paid to Reality Gives or other NGOs after the payment of the following:
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- A reasonable salary to the two owners- Chris Way and Krishna Pujari- for conducting the slum tours. At the moment this is Rs 30,000 monthly (they currently receive no other salary). This amount has increased since we started (see accounts for details). Although this amount has increased considerably in percentage terms, this is still a lot less than what an owner of a tour and travel company would earn
- Tour company expenses
- Payments for the running of any activities of Reality Gives (Community Centre and kindergarten) which go through Reality Tours' books. We put the expenses through Reality Tours where we can because it is more tax efficient
- Tax payable on profits
ACCOUNTS
The accounts are audited by a registered auditor and put online here. We do this because we are open and
honest and have nothing to hide.
*With regards to our policy of donating 80% of profits, as mentioned above there are some years where our cashflow
is less as we have to invest in
fixed assets and pay for deposits on lease agreements etc. This means that our accounting profit is
significantly higher than money available for that year, although over time the two will come together.
Because of this problem, we ensure that no more than 20% of the accounting profit is withdrawn in dividends to the
shareholders, and we will use this proof to show that our claims are met.
Up to the year ended 31 March 2011, because we needed money for our projects, in reality 100% of the profits
after tax were put back into Community projects. No money has been taken out by the directors as dividends
and directors salaries have been less than the market rate.
The figures are complicated because up to 31 March 2011, most of the expenses for the Community Projects
went through the accounts of Reality Tours and Travel and not our sister NGO Reality Gives. This will change
in subsequent years.
Year ending 31 March 2011 (See audited accounts)
The company made a profit after tax of Rs 521,996 for the year ending 31 March 2011. The cumulative profit
at 31 March 2011 was Rs 1,152,540. These amounts are artificially high and should be a loss because of the
money spent on the kindergarten (see below).
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The company spent Rs 796,367 on the Community Centre, and this was debited as an expense in the profit and loss account
The company spent Rs 1,418,691 on the kindergarten. This figure was capitalized on the Balance Sheet, and depreciation of Rs 187,511 was debited as an expense on the profit and loss account.
Krishna Pujari received a salary of Rs 240,000 and Chris Way received a salary of Rs 480,000 for the year. The reason why Chris Way’s salary was so high was to comply with visa regulations. Assuming a salary of Rs 20,000 each, the excess salary paid was Rs 2,40,000. This excess salary will be paid into Reality Gives when it obtains the 12A income tax exemption.
None of the cummulative accounting profit was paid out to Community Projects primarily because of the capitalization of the kindergarten costs (leading to an inflated profit figure). Otherwise, 100% of profits after tax were retained within the company and no dividends were paid.
Reasons for loss:
- The kindergarten expenses were exceedingly high compared to prior years. This is because we were expecting to move into the local government school in June 2010, and in expectation of this we employed a lot more staff from April 2010. At March 2010, we had 8 teachers and one senior member of staff yet by March 2011, we had 15 teachers and 2 senior members of staff. These teachers had intense training while we were waiting to move in, but the move never materialised.
- In June 2011, we did move into the government school, but in a different capacity, providing English language support.
Year ending 31 March 2010 (See audited accounts)
The company made a profit after tax of Rs 511,657 for the year ending 31 March 2010. The cumulative profit at 31 March
2010 was Rs 630,544.
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The company spent Rs 423,135 on the Community Centre, and was debited as an expense in the profit and loss account.
The company also spent Rs 773,837 on the new kindergarten. This figure was capitalized on the Balance Sheet. Depreciation of Rs 89,352 relating to this was debited as an expense on the profit and loss account.
Krishna Pujari received a salary of Rs 120,000 and Chris Way received a salary of Rs 480,000 for the year. The reason why Chris Way’s salary was so high was to comply with visa regulations. Assuming a salary of Rs 20,000 each, the excess salary paid was Rs 1,20,000. This excess salary will be paid into Reality Gives when it obtains the 12A income tax exemption.
None of the cummulative accounting profit was paid out to Community Projects primarily because of the capitalization of the kindergarten costs (leading to an inflated profit figure). Otherwise, 100% of profits after tax were retained within the company and no dividends were paid.
Reasons for loss:
- Although turnover increased by 63%, salaries increased by 151%. This is because we employed more staff, including an additional full time driver and secretary, and salaries paid increased considerably. We also had the problem that although all guides and drivers were busy during the peak season, a lot of the time they were idle during the off season. This issue is difficult to address as we want to keep our staff on throughout the year.
Year ending 31 March 2009 (See audited accounts)
The company made a profit after tax of Rs 462,346 for the year ending 31 March 2009. The cumulative profit after tax as at 31 March 2009 was Rs 118,886.
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The company spent Rs 282,746 on the Community Centre.
The cummulative accounting profit after tax was forwarded to the year ended 31 March 2010. (It wasn't paid immediately because we were going to use if for our own projects, paid for within the company). No dividend was paid to the directors and salaries of directors Krishna Pujari and Chris Way (Rs 150,000 each per year) were reasonable.
Reasons for profit:
- Turnover more than doubled from Rs 1,141,135 to Rs 2,512,333 spent yet expenditure on the Community Centre only increased by Rs 25,741
Year ending 31 March 2008 (See audited accounts)
The company made a loss of Rs 27,982 for the year ending 31 March 2008. The cumulative loss as at 31 March 2008 was Rs 343,460.
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The company spent Rs 257,005 on the Community Centre.
Krishna Pujari received a salary of Rs 100,000 for the year and Chris Way has not received any salary during this period. Neither have accrued any further amounts
The company paid no dividend throughout the year and the salaries paid to the directors were reasonable.
For auditors confirmation of this loss, amount spent on Community Centre and shareholders' salary details, please see the independent report.
Reasons for loss:
- We wouldn't have made a loss for the year if we hadn't spent Rs 257,005 on the Community Centre.
Year ending 31 March 2007 (See audited accounts)
The company made a loss of Rs 204,312 for the year ending 31 March 2007. The cumulative loss as at 31 March was Rs 315,477.
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Krishna Pujari received a salary of Rs 89,759 for the year and Chris Way has not received any salary during this period. Neither have accrued any further amounts
The company paid no dividend throughout the year and the salaries paid to the directors were reasonable.
For auditors confirmation of this loss and shareholders' salary details, please see the independent report.
Reasons for loss:
- Promoting the tours was difficult as in period ending 31 March 2006. We did receive a lot publicity in the national and international press which helped a lot, although we still were not in any guide books
- Depreciation was a major expense again (Rs 155,475) and we didn't use the second car enough to justify this expense.
- We still kept the prices very competitive, probably too low, for reasons explained before.
Period ending 31 March 2006 (See audited accounts)
The company made a loss of Rs 111,166 for the period ending 31 March 2006.
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Neither of the owners Krishna Pujari or Chris Way have received nor have accrued any salary during this period.
For auditors confirmation of this loss and that none of the owners or shareholders have received or accrued a salary, please see the independent report.
Reasons for loss:
- We had no idea of what the customer demand would be like. We thought that it would be prudent to purchase two vehicles, which in hindsight was a mistake. The main expense was the car depreciation, which was just over Rs 45,000.
- The sales of Rs 24,164 was a lot less than we had expected. We had problems promoting the tours- tourists were skeptical and in some cases a little hostile to receiving flyers, and hotels were not interested- a lot of them run their own sightseeing tours.
- The company was set up in September 2005, but we had a lot of problems in obtaining a tourist permit for the two cars- we obtained these in January 2006. Yet we still incurred some costs during this period, such as office rent and some staff salaries.
- We had initial start up costs such as printing flyers and brochures, and staff training.
- We run the tours and charge the same amount per person if there is one person or five people (not for private tours). We also don′t want the price to be a hindrance- both backpackers and 5 star holidaymakers are charged the same. Financially this might be a mistake but we want as many people as possible to come on the tour.
- The loss has been mitigated by the fact that neither of the owners Krishna Pujari or Chris Way received or accrued a salary during the period.
- Since we state that 80% of profits after tax from slum tour activities are donated to NGOs (charities), we realize that some customers will be concerned that no money has of yet been donated, and will probably not be donated for the accounts ended 31 March 2007. We can only say that sales have been increasing (nearly Rs 70,000 for December 2006) and we are confident that this figure will continue to rise. We had a lot of publicity in 2006, most of it very positive, and we continue to get very good reviews from our customers that go on the tour.
