BUSINESS PLAN ON FLAVORED MINERAL WATER

RAVI PATEL - 094141

AQUENCH
y AQUENCH is an initiative to provide the customers with safe to drink and readily available packaged mineral water. y Our product will be available in four categories: y Premium drinking water: this is the pure mineral water. It is water at its best. y Flavoured drinking water: for the first time in India flavoured drinking water will be launched. The water will have an essence, which will make it delightful experience. The flavours wont effect the quality of the product as after the filtration process is over a small amount of flavour is added which will make drinking water a whole experience.

Industry analysis
y More-than-$100-billion global industry. y In India, the per capita bottled water consumption is less than 5 y y y y y y

litres a year as compared to the global average of 24 litres. India is the 10th largest bottled water consumer in the world. With over a 1000 bottled water producers, the Indian bottled water industry is big by even international standards. Out of more than 200 brands, nearly 80 are local. Most of the small-scale producers sell non-branded products and serve small markets. Making bottled water has become a cottage industry in the country. Bottled Water Market in Gujarat 700 Cr

Industry analysis

Porter s five force model

SWOT analysis

Organization Structure

Marketing
Marketing Strategy and Analysis y Target market
y

Hotels and restaurants, College and School going students, household consumers, Offices and corporates, Health conscious people, tourist places etc. Age Education Geography Income and lifestyle

y Segmentation
y y y y

Advertisement and Promotion

y Go for contract system with key accounts like IRCTC, 5 Star and 3 Star Hotels, airways and corporates y Radio advertisements y Newspaper inserts (English and Gujarati). y Hoardings at 7 prime locations in the city. y Danglers at various grocery stores. y Tie up with schools and canteens, and a flex banner at the ordering counter of the canteens or anywhere from where it is easily viewable, for a minimum period of 1 month.

Distribution channel
y Primary distribution y Direct to institutes like Multiplex, Hotels & Restaurants, Airline Companies etc y Secondary distribution

PROCESS
y THE PROJECT INVOLVES MACHINERY FOR y Purifying water y Bottle manufacturing. y Rinsing - filling - capping y Labelling y Final packing

PROCESS
y CAPACITY
Process Capacity hour machine 2000 litres 1100 bottles 2400 bottles 2000 bottles 2400 bottles per No. per Machines of Total Output per day

Purification Bottle PET Blow Bottling & Filling Labelling (Heat Shrink tunnel) Electronic Batch Code Machine

1 2 1 1 1

16000 17600 19200 16000 192000

y All the 4 capacities have been nearly matched - for any

adjustments some of the machines can be run for longer duration. y Assumption: No. of operating hours in a day would be 8 hours.

PRODUCT COSTING
y RAW MATERIAL y The water source is of critical importance and the continuity of the plant would depend upon it. Apart from water following items are required .
y y y y y y

Preforms. Caps for the bottles. Labels. Neck sleeves. Cartons for final packing. Flavor Essence.

Risk Factor
y Regulatory Risk y Market Risk y Social Risk y Operational Risk

Revenue statement
INSTALLED CAPACITY IN LTR Utilisation rated capacity PRODUCTION ENVISAGED in LTR SALES REALIZATION Total Cost of Production PBT Net Profit Net Cash Accruals 4800000 60% 2880000 19440000 4800000 70% 3360000 22680000 4800000 80% 3840000 25920000 4800000 90% 4320000 29160000 4800000 100% 4800000 32400000

14665144.76 16704675.76 18428718.31 20176712.99 21950781.4 4774855.24 3523714.66 3912439.42 5975324.24 4297237.88 4685962.64 7491281.69 5307006.85 5695731.61 8983287.01 10449218.6 6311818.61 7307329.54 6700543.37 7696054.29

Cash flow, IRR, NPV

Net Cash flow IRR NPV -7029237.33 3107439.42 3880962.64 4890731.60 44.08% 4893071. 1 89 43.36

Cost of project
COST OF PROJECT Land Buildings Plant & Machinery Furniture & Fixtures Other micellaneous assets Preliminary expenses Working Capital@ margin money
Contingency@ % Bank and cash

Proposed Rented 1220000.00 27 0000.00 200000.00 600000.00 2 000.00 494487.32 2397 0.00
1 00000.00

T O T A L (A) Sources of Finance : Equity : Capital Fund Debt: Term Loan Short term loan WCR TOTAL

7029237.33

1 29237.33 4000000.00 1 00000.00 7029237.33

PAYBACK PERIOD PBT D pri tion 4774855 383725 270000 5428580 5428580 Approx 1.4 year 5 75 4 7491282 383725 391500 8266506 20553635 8983287 383725 283500 9650512 30204147 10449219 383725 175500 11008443 41212591

383725 499500 6858549 12287129

Int r st on lon t rm lo ns Gross Op r tin Surplus Cumul tiv Op r tin Surplus P yb k P riod

R turn on tot l ss ts

50.13%

44.06%

54.56%

63.52%

72.06%

Gross profit m rgin N t profit M rgin

29.31% 18.13%

31.43% 18.95%

32.93% 20.47%

34.02% 21.65%

34.81% 22.55%

R turn on Inv stv nt

73.87%

BREAK EVEN ANALYSIS

BEP = Fixed Cost / Contribution Per Unit
Break Even Analysis Sales Variable Cost Raw Material Power Total Fixed Cost Wages & Salary Administrative Exp Int on Term Loan Int on Short term Loan Depreciation Preliminary Exp written off Total Total Cost Contribution Margin Break Even Point Break Even Sales 19440000 9226800 7 0000 9976800 22680000 10764600 7 0000 11 14600 2 920000 12302400 7 0000 130 2400 29160000 13840200 7 0000 14 90200 32400000 1 378000 7 0000 16128000

1680000 2017420 270000 270000 38372 000 462614 1460294 9463200 48.89% 9503366.103

1848000 2118291 499 00 270000 38372 000 124 16 16639116

2032800 2224206 391 00 270000 38372 000 307230 183 9630

2236080 233 416 283 00 270000 38372 000 13721 20103921

24 9688 24 2187 17 00 270000 38372 000 746099 21874099

Exit strategy
y Aquench plans to stay in this business in for long and expand
y

rather than exit. But still it may exit from this business due to the following reasons:
The business is growing fast but the management is not competent enough to sustain the growth. y The management may not be able to bring economies of scale making the product costly and find it difficult to sustain in the market.

y Under any of the above mentioned condition it is in the best

interest of the firm to exit. The firm might undertake the following routes of exiting:
y

The firm might sell the organization to a competitor or some other player who is more competent and willing. y The firm might close down the unit and sell the assets and stock.