PROJECT MANAGEMENT Mineral Water Plant

Group Members Vikas Bhatt Chetan Darji Meet Desai Vidyadhar Hegde Gauresh Pathare Pujan Mehta 08 17 18 33 51 PG-10
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INTRODUCTION
The demand for mineral water is increasing at a rapid rate, as people become more health conscious and take precautions against water borne diseases.

Thus it is desirable and necessary to purify the water and supply under hygienic conditions for human drinking purpose The water available from untreated sources such as Well, Boreholes and spring is generally not hygienic and safe for drinking Bottled mineral water provides easy transportability and assured water quality.

 As the name implies, the mineral water is the purified water fortified with requisite amounts of minerals such as Barium, Iron, Manganese, etc. which can be absorbed by human body. It is either obtained from natural resources like spring and drilled wells or it is fortified artificially by blending and treating with mineral salts. The mineral water shall be manufactured and packed under hygienic conditions in properly washed and cleaned bottles in sterilised conditions

MARKET POTENTIAL
Unfortunately sufficient safe potable water is not available everywhere in the country, either harmful chemical substances are found in the layers of earth which enter into water or it may be contaminated due to pathogenic micro-organisms. If such water is consumed, the body suffers from water born diseases. due to this, it has become imperative to process and bottle safe potable water for the mankind in prevailing conditions. Although few companies have already entered in the bottling of safe potable water and mineralised water, but still huge gap is there in between demand and supply at all metropolitan-cities and towns. The product is widely accepted in offices, restaurants, railway stations, airport, bus stands, hospitals and to some extent even in rich house-holds. So there is good scope for establishing the units for processing and bottling plain and mineralised drinking water in different parts of the country.
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Bisleri International 40% Coca- Coca s Kinley 25% PepsiCo s Aquafina 10% Other major players 25% Mount Everest, Manikchand, Kingfisher, Mohan Meakins, SKN Breweries , Indian Railways

Market Share
Bisleri Kinley Aquafina Others

25% 10% 25%

40%

LOCATION
Elixir Mineral water Dhanraj Complex, Shop no 1-8, Mumbai-Banglore Express Highway, Wadgaon Sheri, Pune, Maharashtra, India.

PRICE
1 Ltrs 2 Ltrs 5 Ltrs 20Ltrs Rs. 12/Rs. 20/Rs. 48/Rs. 180/-

SWOT ANALYSIS
STRENGTH
1. 2. 3. 4. 5. 6. Quality standard Marketing Distribution system Bulk segment is useful for households also Growing popularity The break away seal
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WEAKNESS
1. REUSE OF BOTTLE BY LOCAL SELLERS AND ILLEGAL MANUFACTURERS 2. NOT MEETING THE DEMAND OF THE CUSTOMER 3. NEW IN THIS MARKET

OPPORTUNITY
1. 2. 3. 4. FAST GROWING FIELD EXPANSION IN EUROPE INCREASE IN PRODUCTION LAUNCH OF PREMIUM PACK

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THREAT
1. MARKET IS EYED BY THE BIG PLAYERS 2. ENTERING OF NEW PLAYERS 3. WATER FILTER MANUFACTURERS 4. ILLEGAL MANUFACTURERS 5. STRONG DISTRIBUTION CHANNEL OF THE OTHER MANUFACTURERS 6. NEW GOVERNMENT POLICY

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PEST Analysis
Political
There is stable government at the centre with liberal policies. The government has imposed price ceiling on bottled water.

Economical
There is an increase in per capita income. Most of the people are from middle and upper middle class. Expansion of multinationals, IT and BPO companies in Tier 1 and 2 cities. There is no licensing policy adopted in this sector. There is availability of cheap labor. The government is promoting new bottling plants through public-private partnership.

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Social
Bottled water was earlier considered as a status symbol. Bottled water is now the only source of pure drinking water in areas where there is scarcity of water. The bottled water is considered to be safe as compared to ordinary tap water. There in increase in health consciousness of people.

Technological
The bundling of technologies like distillation, reverse osmosis, activated carbon filter, etc helps in better quality of water.

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Legal
Governed by PFA and BIS standard. BIS has provided standards for mineral and drinking water. The BIS approval was made mandatory from 1999. Mineral water should be packed in clean, colorless, transparent, odorless, tamper proof bottles made up of polyethylene.

Environmental
The use of Plastic for bottled water increases environmental pollution. The increase in consumption of bottled water causes depletion of valuable fossil fuels.

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BASIS AND PRESUMPTIONS

This project has been drawn on the basis of following presumptions. 1. 2. 3. 4. 5. 6. Working hours : 8 per shift Number of : 3 shift/day Number of : 300 Working days per annum Total number of working hours : 24 Working efficiency : 75% Total period for achieving from maximum the date of capacity commencement utilisation : Third year of production Margin money : 25% of Capital Investment Rate of Interest : 15% per annum of Capital Construction Cost of Building, Cost of Land, Labour Charges and Cost of Plant, Machinery and Equipment have been considered as per prevailing rates in the market. Cost of Installation and Electrification of Machinery and Equipment has been taken at the rate of 10% of the cost of Plant and Machinery. Operative period of the project has been considered as 7 years.
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7. 8. 9.

10. 11.

IMPLEMENTATION SCHEDULE
It is expected that total time of about 9 months will be taken from the date of approval of the scheme for complete implementation. Break-up of the activities and relative time for each of them is shown below:
Nature Of Activity Preparation of Project and its approval SSI Provisional Registration Sanction of Loan Clearance from Pollution Control Board and taking permission from Municipal Health Authority/BIS etc. Placement Order for machinery of equipment Installation of machinery and equipment Power connection arrangement from Electricity Board Appointment of staff Trial run Commencement of Production and permanent registration/marketing Time Period (in Months) 0-1 month 1-3 month 2-5 month 2-5 month 4-6 month 6-8 month 2-6 month 5-8 month 8-9 month 9 months onwards
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LAYOUT
Water Treatment Packing Line

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TECHNICAL ASPECTS
THE PROJECT INVOLVES MACHINERY FOR 1. PURIFYING WATER 2. BOTTLING PURIFIED WATER. 3. LABELLING

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TECHNICAL ASPECTS
Processing and Bottling
Collection Of Raw Water Stage 1

Separation of heavy metals using coagulation process Stage 2

Stage 3

Impurities are removed using reverse osmosis

Stage 4

The supernatant water is taken to the chlorination tank where primary disinfection is brought about by bubbling chlorine gas.
The water after sand filtration is passed through Carbon filters for removal of odour, colour and also for dechlorination.

Stage 5

Stage 6

Filtration followed by ultraviolet disinfection

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Bottling
Video

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TECHNICAL ASPECTS
Quality Control and Standards The plain drinking water has to be bottled in pet bottle as per IS Specifications (IS:14543:1998: Packaged Drinking Water and IS:13428:1998: Packaged Mineral Water).

Production Capacity Quantity : 45 lakh Bottles per annum Value : Rs. 281.25 millions.

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TECHNICAL ASPECTS
Pollution Control Although this unit will not affect the environment, but the enterpreneurs are advised to obtain, No Objection Certificate from competent authority of State Pollution Control Board. They should develop Kitchen Garden in the factory premises to utilise waste water from the plant. Energy Conservation Suitable measures should be adopted to use appropriate amount of fuel and electricity. There should be periodic auditing of electrical consumption, as the unit will be running in three shifts. Unnecessary operation of machines should be controlled to avoid excess consumption of electricity. Natural ventilation in production premises may be made available to avoid use of electrical power during day hours.
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FINANCIAL ASPECTS
Fixed Capital
Particulars Land and Building Plant & Machinery Other Assets Total Amount (in millions Rs.) 100 80 28.3 208.3

Working Capital
Particulars Raw Materials/Packaging Materials Salary and Wages Utilities Recurring Expenses Total (per month) Total (Quarterly) Amount (in millions Rs.) 17.10 0.77 0.45 0.11 18.43 55.29
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FINANCIAL ASPECTS
Total Capital Investment
Particulars Fixed Asset Working Capital (3 months) Total Amount (in millions Rs.) 180 55.29 235.29

Particulars Total Cost of production Sales Profit Profitability

Amount (in millions Rs.) 244.15 281.25 37.10 13.19%

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PROJECTED PROFIT AND LOSS ACCOUNT

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PROJECTED BALANCE SHEET

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PROJECTED CASH FLOW STATEMENT

Year 1

Year 2

Year 3 Year 4 Year 5

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RATIO ANALYSIS

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Liquidity ratios
Current ratio-

Particulars Current assets Current liabilities Current ratio Acid test or quick ratioParticulars Quick assets Current liabilities Quick ratio

Year 1 91.47 144.32 0.634

Year2 101.72 127.66 0.767

Year3 112.76 121.59 0.927

Year4 128.7 96.05 1.339

Year5 145.25 80.09 1.8134

Year 1 60.47 144.32 0.534

Year2 67.65 127.66 0.53

Year3 75.28 121.59 0.62

Year4 87.47 96.05 0.911

Year5 99.9 80.09 1.247

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Capital structure ratio i) periodic payment of interest during the period of the loan and ii) Repayment of the principal on maturity or in predetermined installments at due dates. Debt equity ratioLong term debt divided by Shareholders equity Year 1 Year2 Year3 Year4 Year5

Particulars

Debt Equity Debt equity ratio

82 56.38 1.454

61.5

41.0 56.88 0.721

20.05 68.94

0 84.49 0
30

54.07 1.14

0.291

Debt Service Coverage Ratio: (DSCR) DSCR = (EAT + interest + Depreciation + Other Non cash expenditure) X Divided by Installments Year 1 Year2 Year3 Year4 Year5

Particulars

Net Cash Accruals Installment

35.66

36.92

41.72

46.86

52.50

20.5

20.5

20.5

20.5

20.5

DSCR

1.74

1.80

2.03

2.29

2.56

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Net Present valueYear Cash Flows (in PV factor @10% millions Rs.) Total present value

1 2 3 4 5 Total PV Less- Initial outlay Net Present Value

35.66 36.92 41.72 46.86 52.50

0.909 0.826 0.751 0.683 0.621

32.414 30.495 31.290 32.005 32.603 162.807 152.5 10.307

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Payback period
Weighted Average Cost = 597.36 / 15 Weighted Average Cost = 39.824

Year

Cash Flows (Millions)

Weights

Weighted average CF s

Pay Back Period =

Initial Investment Weighted average cost

1 2 3 4 5 Total

35.66 36.92 41.72 46.86 52.50

5 4 3 2 1 15

178.3 147.68 125.16 93.72 52.5 597.36

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= 152.5 / 39.824 Pay Back Period = 3.8 years

Contd

..

Year

Cash Flows(millions)

PV factor @10%

Total present value

1 2 3 4 5 Total PV Less- Initial outlay Net Present Value

35.66 36.92 41.72 46.86 52.50

0.909 0.826 0.751 0.683 0.621

32.414 30.495 31.290 32.005 32.603 162.807 152.5 10.307

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Contd

. Year Cash Flows(Millions) PV factor @ 16% Total present value 0.893 0.797 0.712 0.636 0.567 31.84 29.43 29.70 29.80 29.76 150.53 152.53 -1.97

1 2 3 4 5 Total PV Less- Initial outlay Net Present Value

35.66 36.92 41.72 46.86 52.50

10 + 10.307 X (16-10) Internal rate of return = ---------------------10.307-1.97 Internal rate of return = 15.41%
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THANK YOU
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