Business Plan

Mineral Water Plant

Company Name: White Wave

Submitted To:
 EXECUTIVE SUMMARY
In a recent research by Ikon Marketing Consultants it has been reported that the Indian
Bottled Water industry is growing a very fast rate of 19% annually and at present it is at a
whopping amount of Rs. 8000 crores annually and is expected to reach 10,000 crores by the end
of 2013 and is expected to grow over four folds to 36,000 crores by 2020. This growth in
demand for mineral water is due to the following factors:

 Increased awareness about drinking water quality and health

 Decreasing water quality and users having to go for ground water
 Environmental pressures on wastewater discharge from government pollution control
boards
 Reducing availability of water forcing users to go for reuse & recycling of water
 General Industrial and Economic Growth particularly in chemical, pharmaceutical, power
plants, food and textile industry

These factors have led many players to enter the mineral water industry and Parle’s Bisleri
holds a leading position with a 36% market share in the organized mineral water industry, with
Coca-Cola’s Kinley and Pepsi’s Aquafina fast catching up. Kinley has 25% and Aquafina
approximately 15% share in the market. Parle Agro's Bailley has a 6% share in the market
among the national players. The rest includes other organized brands such as Kingfisher,
Himalaya, Oxyrich; McDowell’s no 1 together with an 18% share. Industry experts say that
quality controls need to be in place to curb the growth of unorganized players. Still the organized
mineral water Industry is able to tap only 40% of the total demand of mineral water in India and
rest of the demand is fulfilled by the unorganized players at local level.
South India is the biggest consumer of bottled water representing more than 50% of the total
market due to water-starved areas, followed by the western region which is the home ground of
major national players.

To tap this ever increasing demand of mineral water in India we are setting up a mineral
water plant by the name of “White Wave” which we are planning to set up in South India since
it is the largest market of Mineral water in India. Major contributors to the demand in South
India are from unorganized players and organized players have yet not able to penetrate deeply
into south. Looking at this opportunity we will set up our bottling plant in the village of Agara
in southern state of Karnataka, India. It is located in the Bangalore East taluk, on Outer Ring
Road, near Koramangala and HSR Layout. It has a beautiful lake by the name of Agara Lake
situated very close to HSR Layout. This lake will serve to provide water for the mineral water
plant. The head office will be located in Keshvnagar in Bangalore City. Presence in Bangalore
will help to tap the requirement in Bangalore city as well as all the nearby cities like Mysore,
Mangalore, Ooty, Pondicherry etc. and nearby states like Tamil Nadu, Kerala and Andhra
Pradesh.

1
Management Team

Ms. Giteshwari Bisht will be the owner and president of White wave.

The company will apply for certificate of ISI from the Indian Bureau of Standards.

Key managers will be Mr. Girdhar Mohata who will assist in the financial aspects of the
company; Mr. Millan Sahoo will look after the operational aspects. For the expansion of the
company’s human resource and primary customer contact Ms. Chinky Chhiroliya will be
responsible. Mr. Abhishek Mehrotra will look after the Marketing department. Mr. Abhishek
Gupta will handle the distribution network.

The company will look to manufacture bottles of 500ml, 1000ml, 2000ml and 20 liters and will
serve the requirements of clubs, fitness centers, cinemas, department stores, malls, ice-cream
parlors, cafes and retail outlets, besides restaurants, hotels and supermarkets.

PREREQUSITES FOR A MINERAL WATER PLANT

 It is compulsory for all the manufacturers who intend to set up the processing unit, to obtain
the ISI mark from Bureau of India Standards. Unless the inspection is done by the staff, tests
carried out in an independent lab and official confirmation and license number is obtained,
unit can’t commence commercial production.

 Such Lab should be equipped to carry out all physical, chemical and micro biological tests
prescribed as per IS: 3025, 1070, 4905, 5401, 5402, 5403, 5887, 10146 & 10500 and has to
be conducted by expert chemist / micro biologist.

 Only Two Packaged Natural Mineral Water governed under IS: 13428:1998, Amendment 1-5
up to 15th October 2004 and Packaged Drinking Water governed under. IS: 14543:2004

 If the water is drawn from natural source, confirms to composition listed under IS:
13428:1998, Amendment 1-5 up to 15th October 2004 and is bottled WITHOUT
ALTERING the composition, falls under Natural Mineral Water. In packaged drinking water,
any of the processes of filtration / disinfection listed under is: 14543:2004 can be utilized,
altering the composition of subject water & finally, bottling it.

 Under Ministry of Water Resources, Central Ground Water Authority [CGWA] regulates the
use of ground water. Under power conferred to them under section 5 of Environment

2
 [protection] Act, 1986, CGWA has directed all processing units of bottled water to get their
bore well registered with them. The same has to be applied under prescribed Performa.

Vision of White Wave

People: To provide good quality and hygienic product.

Employees: To provide best working environment, future growth and job satisfaction.

Environment: To follow eco friendly practices.

Mission of White Wave

Our mission is enduring. It also serves as a purpose of our company.

 To become India’s most premier consumer product focused on packaged drinking water
 To create values and make difference.

MANUFACTURING STRATEGY
Raw Material: Water will be the raw material for the mineral water plant which will be
sourced from Agara Lake near which the plant will be set up. Plastic Bottles will be used for the
packaging and distribution of mineral water. These bottles will also be manufactured by us:

Production Process:
The first step for setting up a water purification plant is the analysis of source of water. The lake
water from Agara Lake will be fit for purification and consumption by human beings. After the
chemical analysis, the specifications of the purification plant are set. In the purification plant,
source water is stored in the feed water tank, passes through the sand filter for preliminary water
filtration.

Water then passes through the dosing pump-I where chlorine is added to kill the germs in the
water. After the chlorination, water passes through carbon filter. It helps in the maintenance of
proper odor and taste of the water. It also removes chlorine from water.

After this stage water is passed through Ultraviolet disinfection (UV) where water is exposed to
UV light of wavelength 245 nanometers (nm). A dosage of 16000 microwatt/sq.cm at 40˚ C for
effective disinfection.

3
Water is then passed from dosing pump-II, where Sodium Meta Bisulphate is added. It helps in
de-chlorination of water.

Water is filtered next and passes through dosing pump-III, where anti scallant is added. It
prevents scaling of membrane from calcium, magnesium and biological growth. Water then
passes through reverse osmosis module. This stage of the process makes water clear from all
the contaminations and minute particles. Water then passes through dosing pump-IV, where
minerals are added for taste development.

Water then passes through automatic washing, filling and capping plant. Here water is filled
into bottles.

Packaging Process:
Our Mineral Water Packaging and bottling process is performed following the certified
quality standards norms and guidelines of Portable Water Package experts, which will separate
us from unorganized competitors in the same field. We will employ highly qualified and
experienced professionals perform rinsing, filling, capping and labeling operations to ensure
purity and satisfaction of the customers.

Filling: Bottles are fed by an air conveyor from the blowing unit directly into the in-feed of the
RFC. The RFC equipment is neck run and it boasts of a mono block unit, which means that
every bottle is held by the neck automatically while being inverted, rinsed and sprayed with
ozonated water at 2 bar pressure. After draining, the bottles are re-inverted and transferred to
the filler. At the filler, these bottles are straightened up and gradually lifted to the filling valves
which open only when a bottle is placed under them. Filling is then done systematically
through gravity.

Capping: After completion of filling process the bottles are transferred to the capping section.
Here ozonated-water rinsed caps are screwed on the bottle with uniform torque. Since our
water is ozonated all product contact parts are of 316L grade stainless steel and the rubber parts
are of EPDM. (All components are water lubricated above the table top.)

Labeling: From the capping section the bottles are directly sent to the labeling section. All
Mineral Water Bottles are labeled on a hot melt reel feed BOPP labeling machine. This
machine allows each individual bottles to be spaced out and fed to the labeling station where
precisely cut labels with a strip of hot melt glue at the leading and trailing edge, get rolled
around the bottle. These labels are fed into the machine in a roll form too.

Quality Check: For quality testing, the bottles will go through manual check up of each bottle
for any leaks or breakages. They are then packed into sturdy cartons which are dispatched to
the market.

4
Following is the description of Machinery and its quantity that will be required to run the
Mineral Water Plant:

S.No Description Quantity

.
1. Alum doses 3 liter/hr 1
2. 2 No.s Pump 1
3. Activated Carbon Filter Flow rate: 2000 lit./hr 1
4. Pressure sand filter flow rate: 2000 lit./hr 1
5. Softener 1
6. Reverse Osmosis system permeate flow 500 lit/hr consist of 5 micron filter 1
SS-304 PP H.P. Pump with 3 HP Motor Membrane 4 nos.

7. Pressure Vessel 4
8. Ozone generator 1
Capacity – 1 gm/hr
Flow fate – 1000 lit/hr
9. UV disinfectant flow rate-1000 lit/hr 1
10. Storage tank for pure water capacity :1000lit 1

Bottling Section
11. Stainless Steel Conveyor: Made of S.S, 8 meter long for conveying of 1
empty washed bottles onto the filling machine. The different operations like
rinsing, filling, capping are done on the conveyor. Electrical Details: 0.5
H.P. with variable speed drive.

12. Rinsing, Filling, And Capping: This machine is designed to fill 24 bottles 1
per minute for 1 liter bottle & is capable to fill 500 ml, 1000 ml, and 1500
ml bottles. Machine speed is depended on the volume to be filled. The
bottles are hold in groups of 6 & moved on the conveyor together. These
grouped bottles are rinsed by means of spraying pressurized water inside the
bottle. After Ringing the bottles are again placed on the conveyor & are
loaded on the filling & capping machine one by one. Filling & capping takes
place by indexing mechanism. There are total 8 indexes.
13. Change parts for 500 ml and 1000 ml 1 set each 1 set each
14. Shrink Tunnel: This is fitted on the online conveyor to shrink labels and 1
neck sleeves. The labels & neck sleeves are to be manually inserted on the
bottle. Machine will be provided with suitable capacity Heaters, Blower,
Reduction Gear Box and Electric Motor, complete in all respects ready to
use.
15. Printing Machine (for mfg. Date & batch nos.) Semiautomatic machine is 1
proposed. This is a table top coding machine with a printing area of 35 mm
x 25 mm & capable of printing 3 variable line message on labels or caps.

5
 MARKETING STRATEGY
Specifically for attaining the marketing objective of a firm, the firm needs a complete and
an unbeatable marketing strategy. The marketing strategy provides the design for achieving the
linkage between marketing strategies and overall corporate success is indeed direct and vital.
Realizing the marketing objectives is the purpose of two generic categories.

1. Price based

2. Differentiation based

Price based marketing strategy

A business that opts for the price route in its competitive battle will enjoy certain
flexibilities in matter of its product and use prices as main competitive level. It will price its
product to suit the varying competitive demands. It will be enjoying certain inherent cost
advantages, which permits it to resort a price based fight. The major forms where such cost
advantage can occurs are economies of scale, absolute cost advantages.

The Differentiation based strategy

Marketing strategy based on differentiation works on the principle that any aspect of the
offer and any activity of the firm can be made distinctive compared with the competitors offers.
Right from technology, plant location to post sale and service a company can perceptibly
differentiate and many buyer values. Companies usually choose those functions, which give
them the greatest relative advantage.

Different firms adopts different strategy stances as their situational design differ-

Broadly strategy stances can be classified under three heads-

1- Offensive Strategy-

Offensive Strategy also known as confrontation strategy is a strategy of aggression. A firm

that is not presently the leader usually employs it, but it aspires to leadership position in the
Industry.

6
2-Defensive Strategy-

The leader who has the compulsion to defend his position against the confrontation of
powerful existing competitors or to dislodge the leader from his topmost position usually
employs it.

3-Niche Strategy-

A firm practicing the niche strategy neither confronts other nor defends itself. It cultivates a
small market segment for itself with unique products / services supported by a unique
marketing mix.

Formulating the Marketing Strategy-

Formulating the marketing strategy consists of two main steps-

1- Selecting the target market-

It does not fully bring out the importance of the inseparable linkage between the two. When
the selection of the target market is over an important part of the marketing strategy of the
firm is already determined, defined and expressed.

2- Assembling the marketing mix-

Assembling the marketing mix means assembling the four p’s of marketing in the right
combination.

We will be going with the offensive strategy as we have to confront many competitors
like MNCs (Bisleri, Pepsi, Coca-cola) and local players like Flair etc. to get noticed we have
to go for confrontation strategy like price, heavy advertisement etc.

7
 ADVERTISING CAMPAIGN

Every brand needs a good ad campaign to establish itself in the market. So it becomes
very imperative to look at various ad campaigns that WHITE WAVE will undertake to build
itself as a brand. We will start the ad campaign with the punch line “Water without worry”.
We will stress more on the purity and refreshment of the product offered by us. Our ad campaign
will rely on the print media, transit media and radio ads and internet.

Print media

It will include local newspapers, pamphlets; hoardings at the strategic important places, ads in
local magazines, there will be the series of ads in the newspapers and magazines which will be
showing our product portfolio, our commitment towards the society health and our consensus
towards the environment. The ad will portray that we don’t use any harmful chemicals which are
harmful to human health and environment.

Transit media

We will use local city buses on which we will paste our banners to get attention of the customer.
This local city bus will help us to reach every corner of the society and every class of the society.

Radio

The local radio channels will also be used as the mode of advertisement.

Internet

Internet will be also used as a medium different site which is most commonly used by the
peoples; we will be giving ad on them.

Other sources which can be used for the advertisement are:

Free Trials

Company will offer free trial pack to the customer of 500ml. pack. These free trial pack will be
mainly distributed at the Bus stations and Railway stations as the big volume of the packaged
water sale come from there only. Feedback of the customers will also be taken.

8
Trade and Consumer Shows

Attendance and exhibits at local home and mall shows is also planned, to keep the WHITE
WAVE Bottled Water name constantly in front of consumers.

PACKAGING AND DISTRIBUTION

Packaging

Variety is spices of life. Today for any business organization to be successful it has to provide its
customer with the differentiated product that is a value buy for them. In order to cater to the
changing needs of the customer the business has to continuously come out with the variants of
the products so that it can target the maximum segments.

Today Aqua Minerals offers a variety of packaging options: 1 lit, 2 lit, 5 lit, 20 lit. The 5 liter
bottles account for 35 % of sales showing a growing health concern among the Indian society. 1
liter bottles account for 30% of the share.

But we will be offering 500ml, 1litre, 2litre and 20litre Packs initially.

As 500 ml. bottles are also gaining popularity and cost of making them is also reasonable.

Distribution

It’s obvious that availability holds the key to the market .For any product to be successful the
distribution system has to be really good. Large tracts of the country have not been explored by
the national brands, which explain the proliferation of smaller brands.

We will be going for indirect distribution system, all the transportation system will be
outsourced, and contract will be given to those companies those have reach to almost every city
of Karnataka.

The distribution channel will be like these:

Company’s warehouse

Distributor

9
 Retailer

Customer

As well as company will also try to work on establishing B2B channels like:

 Restaurants
 Hotels
 Canteens
 Various private bus service providers

MARKETING MIX

Product:

The main product of the company is the mineral water by the name of WHITE WAVE
Mineral water. The main challenge facing the company or any other player in this mineral water
industry is that there is no scope of invention and innovation in the product, which can be added
as the additional benefits of the product. As for the Indian customer water is water only a
medium to satisfy thirst, so any new innovation or value addition will not be able to generate
curiosity among customer as well as not much innovation is possible with the water.

Place:

In the case of the mineral water industry the distribution network is the important factor
in being competitive and the catch lies in making water available to maximum number of places
in the targeted area. The company has to rely on its distribution model and network as the key
lies in the perfect and strong distribution network once a brand become popular in the targeted
area then we can stretch our boundaries.

Promotion:

Company will follow and use various marketing tools and they have been discussed earlier.

10
Price:

In India, where the majority of the population comprise of the middle-income group and
lower income groups it is not hard to understand that pricing is one of the most important factor
in the buying decisions. Since we are adopting price based strategy, so we have kept the price of
our 2liter and 20liter bottles Re.1 less than the price of competitor’s in the market. White Wave
is following the aggressive pricing:

20 lit. - Rs.79

2 lit- Rs.29

1 lit.-Rs.15

500 ml. - Rs.10

COMPETITION IN MARKET
In a recent research by Ikon Marketing Consultants it has been reported that the Indian Bottled
Water industry is growing a very fast rate of 19% annually and at present it is at a whopping
amount of Rs. 8000 crores annually and is expected to reach 10,000 crores by the end of 2013
and is expected to grow over four folds to 36,000 crores by 2020. These is drawing the big guns
attention, there are various competitors in market:

 Parle bailey

 Parle Bisleri

 Pepsi Aquafina

 Coca cola Kinley

 Nestle

 Mount Everest

 Kingfisher

 Rail Neer

 Qua

 100s of unorganized vendors

11
Market Segmentation: Mineral water comes under impulsive buying i.e. customer
purchases them on an impulse when he is thirsty. So it is very important for this kind of product
to be visible to the consumer wherever it is available. Customer segmentation is based on the
following variables:

Segmentation Variables Data

1. Geographic
 Country India
 Cities All Major Cities of Karnataka & Nearby States
 Density Urban
 Climate Moderate and Dry
2. Demographic
 Age All age groups
 Gender Male and Female
 Family Size Any size
 Family Life Cycle Young and Single ; Young, Married, No
children; Young, Married, with children;
Older, Married, with children; Young, Married
with no children under 18; Older and Single;
etc.
 Income All income groups
 Occupation Any Occupation
 Education Any
 Religion All religions of India
 Race Asian
 Nationality Indian
3. Psychographic
 Social Class Lower class, Working class, middle class,
upper class
4. Behavioral
 Occasions On Impulse
 User Status Any time buyer
 Attitude towards product Positive

12
 Product Segmentation: We offer Bottled Mineral Water, which contains minerals such
as magnesium sulphate and potassium bicarbonate. These minerals are very essential for
healthy living, which maintain the pH balance of the body and also help in keeping you fit
and energetic at all the times. Drinking Mineral Water is best for digestion system and is
important for the healthy bones. It is refreshing and add splash to life. Excellent if it is taken
by people suffering from high blood pressure. Sparkling Mineral Water is supplied for parties
at home or offices. It contains nutrients essential for healthy gems and teeth.
We provide following range of Products:

1. Mineral Water Bottle (500ml): It is difficult find pure and Pure Mineral Water all
around. Keeping this in mind, we will launch Mineral Water Bottle of 500 ml pack @ Rs.
10 per bottle, which is very easy to carry, even in handbags. It is healthy-friendly and
highly effective for those people who are suffering from high blood pressure. White
Wave Mineral Water offers Pure Mineral Water at very cost-effective priecs to ensure
satisfaction of the customers.
2. Mineral Water Bottle (1 & 2 litre): We will manufacture and supply customers
handy Mineral Water Bottle (1 & 2 litre) which will meet their thirst needs while
travelling with family or on a long journey. In order to ensure purity and better taste of
Mineral Water, we conduct multistate purification. Our Mineral Water Bottle (1 & 2 litre)
will be available at very nominal prices of Rs. 15 and Rs. 29 respectively.
3. Mineral Water Bottle (20 litres): Our Company will offer safe family drinking
Mineral Water in form of 20 litre bottles, which will have enjoyable taste and will be
available at minimal price of Rs. 79. Ozonated Mineral Water Bottle is refreshingly
clean, help in eliminating toxin from body and make healthy and energetic to
people. White Wave’s Minerals Water Packaging of 20litre will be mainly used for
household work. It contains mineral, which is good for both brain and heart. For
maintaining purity of water, it has to undergo several purification tests.

SWOT Analysis of White Wave

Strengths
 Quality Standard: Every bottle of White Wave will go through multi stage purification
that will ensure that 99.9% pure water is delivered to the consumers
 Workforce will be guided by good management for good operation of the plant.
 Growing awareness among the people about the importance of mineral water.

13
  Varied skills of all the department heads who are all management graduate in their
respective fields and posses the vision to take the company forward.
 The industry is growing @ 19% annually.

Weakness
 Any local player can start manufacturing which increases the competition with
unorganized players.
 Government laws and regulations are becoming day by day for the manufacturers of
mineral water.
 Rural population is not using packaged water.
 Not very economical as water is available for free in all parts of the country.
 Presence is only in south India at present and that too limited to Karnataka.

Opportunity
 Sustained market growth in coming years.
 Literacy rate is growing, hence awareness of safe drinking water to avoid disease.
 Huge population & untapped market in the Southern part of the country.
 Mass consumption which will result in economies of scale.
 Scope to expand in other parts of the country as many smaller cities have yet not been
tapped by organized players.
 Introduction of 2litre bottles in the second year and 20 litre bottles in the 3 rd year is
expected to increase the revenues and profits to a great deal.

Threat
 Many substitutes are available.
 Too many players will dilute the market.
 Many players entering the race.
 Many big players are already present in the market who will give a huge competition as
they are already well established.

Marketing Research
The Rs. 8000 crore bottled water market is witnessing hectic activity with many players entering
the fray and still more to come. Part of the fast moving consumer goods (FMCG) sector, bottled
water is the segment to have shown phenomenal growth of about 19 per cent in the recent year.

 The market is expected to continue to grow at a healthy clip. In fact, in the last few years,
there has been a doubling of growth. Major players include Parle Bisleri, Parle Agro, Coca

14
 Cola, PepsiCo, and among domestic players UB and Britannia. The success of bottled water
could be attributed to two factors. First, it has been an underdeveloped business for a while
now and, second, soft drink manufacturers have priced themselves out by a long shot. The
prices of soft drinks have, in fact, doubled in the last ten years and this has happened because
the price of concentrates has shot up during this period.
 In fact, soft drink major Coke launched its Kinley brand of bottled water and Pepsi its global
brand Aquafina. PepsiCo is reportedly contemplating two more pack sizes for its bottled
water. Kinley's new product follows the launch of `Chhotu' Bailley, which is a 350 ml bottle
introduced by Parle Agro. Kinley water was launched in August 2000 in one-litre bottles for
Rs.10. The water is produced at Coca-Cola's three Greenfield manufacturing plants at Bidadi
near Bangalore, Dasna in Uttar Pradesh and Goa. The company plans to either add more
water bottling operations or go for contract bottling as it goes national.
 Marketing Consultants, with a current market share of 36%, Bisleri offers the maximum
number of pack sizes. Kinley follows it with a 25% share. The other brands including
Aquafina and Bailley constitute 15% & 6% per cent market share in the bottled water market.
The Samsika survey further says that there are as many as 186 brands in the water market.
Out of this, two are national brands, 17 regional and 167 local brands.
 With over 200 players jostling to be the thirst-quenching favorite of the Indian consumer, the
business is growing at a rate of over 19 per cent annually. The country's bottled water
business is estimated to be around Rs. 10000/- crore, of which the branded market accounts
for Rs. 7000 crore and about 700 million litres in volume. India’s 1 billion plus population
needs between 1-2 billion litres a day. More than 200 brands of bottled water are being
retailed across the country. An estimated 850 million liters of bottled water is bought every
year.
100

90

80

70

60
Rainy
50
Winter
40 Summer
30

20

10

0
Mineral Water Sales Per Year

15
 As we can see from the diagram above that most of the sales of Bottled water comes in the
summer season. Therefore, the right time to launch such type of product is summer season. In
monsoon time also a good response can be generated because there are people who are very
much conscious of their health and this makes them to go for packaged water. Therefore, the
sales are good in rainy season. In winter season the sales are very low because of climatic
conditions.

MANAGEMENT AND STAFFING

There are six owners of this Project who will have equal share and stakes in the company.
M. Giteshwari Bisht will be the Managing Director of the company. In her guidance the other
owners will strive hard to achieve the aims and objectives of the company.

Mr. Girdhar Mohata will be handling the Chief Financial Officer (CFO) position in the company.
His knowledge and skills in the finance department will lead the company to better wealth
management and reduce any chances of risk. He will also be looking after the accounting of the
company.

Mr. Millan Sahoo will be handling the Operations department and in his guidance the operations
department will achieve lean manufacturing and hassle free production.

Ms. Chinky Chhiroliya will be handling staffing and public relations. Any complaints and media
related communications will be handled by her.

Mr. Abhishek Mehrotra will be handling the Marketing department. In his able guidance the
company will look to expand in other parts of South India during the first 5years of operations
and later with the success the company will look to expand in other parts of the company.

Mr. Abhishek Gupta will be handling the distribution channel and will look to expand the
channel in the rural sector as well since that is untapped market for mineral water industry even
today.

Other than these heads other human resource required will be:

S. No Designation No. Salary

1. Clerk cum Typist 1 15000
2. Sweeper 1 7500
3. Lab Assistant 1 15000
4. Supervisor 1 15000

16
5. Skilled Worker in plant 2 15000 each
6. Unskilled Worker 6 7500 each
7. Sales Representatives 3 15000 each
8. Driver 1 7500 each

Human Resource Policy and Employee Welfare:

1. Every Worker appointed in our plant will be properly interviewed and screened before
being employed. There technical skills will be checked before appointment.
2. Every Worker will be given proper training of their job for 15days before they start doing
their work.
3. Management will ensure that every relevant need of the workers is satisfied and they are
given proper working environment in the plant and vice versa for the workers also.
4. Incentive Policy:
 Additional 10% of their daily wage will be given to the workers who complete
their assigned task for the day.
 Additional 15% of the daily wage will be given to the supervisor if he achieves
the set target for his team for that day.
5. Every Employee working in the plant will have a set line of authority and defined
regulations which he must follow.
6. Workers will be evaluated purely on their performance
7. Workers will be given work according to their skills
8. Each subordinate will receive order from only one superior
9. Fair wages will be paid to the employees
10. Stability of employees will be ensured through personnel planning, and if vacancies
arises proper methods of filling them will be arranged by HRM director
11. Chain of command will be maintained, each subordinate will report to his immediate
superior. Cross Communication is also allowed under certain circumstances.
12. Team spirit will be promoted in order to ensure unity in the organization
13. Discipline in the organization will be ensured by fixing working rules and regulations
which will be followed by the entire hierarchy of the organization

17
HR Motive:
Every division in the organization will work in harmony and coordination to
achieve the organizational goals. Group activity will be promoted more than individual
efforts. Every member of the organization should work for a common motive and that is
to take the organization to a higher level. Management will ensure that every employee
working in the organization satisfies his personal objectives and the objectives of the
employees should fall in the zone of indifference.

Employees in the organization will be treated as such that they feel that they are
working in their own organization and not for some individual’s organization. They will
be praised for their good performance and will motivate to improve or raise their
performance through appraisal programs. Time to time interaction sessions will be
organized so that the employees can socialize with other employees of the organization.

18
 FINANCIAL ANALYSIS
1. Total Fixed Assets
SI. Description Amount (Rs.)
No.
1 Land 3500000
2 Building 1500000
3 Plant & Machinery 3500000
4 Furniture 50000
5 Gen Set 500000
6 Bore tube well 150000
7 Start-up cost 100000
8 Delivery van 450000
Total 9750000

2. Working Capital (Yearly)

SI. Description Amount (Rs.)
No.
1 Electricity 1200000
2 Fuel & Others 90000
3 Postage & Stationery 6000
4 Telephone/Fax charges 36000
5 Maintenance & Repairs 60000
6 Advertisement 60000
7 Miscellaneous Expenses 180000
8 Raw Material 21600000
9 Salary & Wages 2340000
Total 25572000

3. Total Capital Investment

SI. Description Amount (Rs.)
No.
1 Capital Expenditure 9750000
2 Working Capital 25572000
Total 35322000

19
 Risk Analysis
 Fixed Cost
SI. Description Amount(Rs.) Yr-I Amount (Rs.) Amount (Rs.)
No. Yr-II Yr-III
1 40% Salary & Wages 936000 936000 936000
2 40% Utilities & Expenses 652800 652800 652800

3 Depreciation 485000 439250 398088

4 40% Raw Material 720000 720000 720000
5 Interest 405000 342000 252000
Total 3198800 3090050 2958888

 Cost of production
SI. Description Amount (Rs.)
No.
1 Working Capital 25572000
2 Depreciation on Building @ 5% 75000
3 Depreciation on machinery @ 10% 350000
4 Depreciation on Furniture @ 20% 10000
5 Depreciation on Gen Set @ 10% 50000
6 Interest on TCI @ 25% 9541903
Total 35598900

 Turnover
SI. Description Amount (Rs.)
No.
1 19.5*493000*12 63591000

 Net Profit Ratio:

SI. Description Amount (Rs.)
No.
1 Profit * 100/ Turnover 44.02%

 Rate of return:
SI. Description Value (%)
No.
1 Profit*100/Total capital investment 73.34

20
  Break-Even Point:
Year Value (%)
1 42
2 37
3 33

 Sensitivity
Particulars Expected Possibility
Initial Outlay 33013200
Optimistic 5851370 (Profit for a sale of 83591000)
Most Likely 4451370 (profit for a sale of 63591000 )
Pessimistic 3051370 (profit for a sale of 43591000 )
Range(Optimistic to Pessimistic) 2800000 (5851370 - 3051370)

Assumptions taken by us:

 40% of the contingent costs are fixed cost.
 Cash flows are on yearly basis.
 Other assets are taken just to tally the balance sheet.
 Loan is 4500000 @ 9% (rest is capital by partners).
 Cost of 1l bottle is rs. 9.5/- (1st year).
 Cost of 0.5l bottle is rs. 6.25/- (1st year).
 Cost of 2l bottle is rs. 19/- (2nd year).
 Cost of 20l bottle is rs. 57/- (3rd year).
 3rd year bottles of 1l, 0.5l, 2l, 20l were sold at rs. 12, 7, 24, and 65 respectively.
 Tax is assumed to be 30%.
 Contingent liability is assumed for any type of risk.
 Retained earnings are at the 3rd year because of the extra surplus.
 Minimum rate expected by us is 10%.
 Depreciation is calculated on the basis of written down value method.
 We have assumed 20% as accounts receivables.

21
 Projected

Projected Profit and Loss/ Income statement for year - I

Particulars Amount (Rs.) Amount (Rs.)
Income
Revenue
For 1 liter Bottle 50715000
For 0.5 liter bottle 12876000 63591000
Total 63591000
Expenditure
Cost of goods sold
For 1 liter bottle 39330000
For .05 liter bottle 11100000 50430000
Operating Expenses
Fixed Cost 3198800
Variable Cost 3463200 6662000
Promoter’s salary 2000000
Net Profit 4499000
Total 63591000

Projected Balance sheet for year – I

Particulars Amount (Rs.) Amount (Rs.)
Assets
Current asset
Cash at hand 15679840
Accounts Receivable 3919960
Inventory 888000
Cash at bank 7794400 28282200
Fixed asset (Note financials 1) 9750000
Less: Depreciation 485000 9265000
Total 37547200
Liabilities
Capital
Owner’s Equity 28822000
Loan 3800000
Net profit 4499000 37121000
Interest on Loan @ 9% 405000
Contingent liability 21200
Total 37547200

22
Projected Profit & Loss/Income statement for year – II
Particulars Amount (Rs.) Amount (Rs.)
Income
Revenue
For 1 liter Bottle 5296000
For 0.5 liter bottle 13230000
For 2 liter bottle 14256000 82782000
Total 82782000

Expenditure
Cost of goods sold
For 1 liter bottle 43776000
For .05 liter bottle 11812500
For 2 liter bottle 11286000 66874500
Operating Expenses
Fixed Cost 3090050
Variable Cost 5417450 8507500
Promoter’s salary 2500000
Net Profit 4900000
Total 82782000

Projected Balance sheet for year – II

Particulars Amount (Rs.) Amount (Rs.)
Assets
Current asset
Cash at hand 15414800
Accounts Receivable 3853700
Inventory 1218000
Cash at bank 5101750 25588250
Fixed asset (Note financials 1) 9265000
Less: Depreciation 439250 8825750
Total 34414000
Liabilities
Capital
Owner’s Equity 26322000
Loan 2800000
Net profit 4900000 34022000
Interest on Loan @ 9% 342000
Contingent liability 50000
Total 344144000

23
Projected Profit & Loss/Income statement for year – III
Particulars Amount (Rs.) Amount (Rs.)
Income
Revenue
For 1 liter Bottle 56592000
For 0.5 liter bottle 13188000
For 2 liter bottle 22752000
For 20 liter bottle 46410000 138942000
Total 138942000

Expenditure
Cost of goods sold
For 1 liter bottle 47160000
For .05 liter bottle 12246000
For 2 liter bottle 18960000
For 20 liter bottle 40698000 119064000
Operating Expenses
Fixed Cost 2958888
Variable Cost 8019112 10978000
Promoter’s salary 3000000
Net Profit 5900000
Total 138942000
Projected Balance sheet for year – III
Particulars Amount (Rs.) Amount (Rs.)
Assets
Current asset
Cash at hand 13217600
Accounts Receivable 3304400
Inventory 1938000
Cash at bank 6856338 25316338
Fixed asset (Note financials 1) 8825750
Less: Depreciation 398088 8427662
Total 33744000
Liabilities
Capital
Owner’s Equity 23322000
Loan 1400000
Retained earnings 2800000
Net profit 5900000 33422000
Interest on Loan @ 9% 252000
Contingent liability 70000
Total 33744000

24
Projected Cash flows for three years
Particulars Year 0 Year 1 Year 2 Year 3
Initial investment :
Capital expenditure 9750000
Working capital (Monthly) 2131000
Total 11881000
Operating cash flows :
Units produced 493000 591000 688500
Sales revenue 63591000 82782000 138942000
Cost of goods sold (50430000) (66874500) (119064000)
Operating expenses (7772000) (10226250) (13327912)
Total cost (58202000) (77100750) (132391912)
EBIDT 5389000 5681250 6550088
Depreciation (485000) (439250) (398088)
EBIT 4904000 5242000 6152000
Interest (405000) (342000) (252000)
EBT 4499000 4900000 5900000
Tax (1349700) (2220000) (1770000)
EAT 3149300 5180000 4130000
Depreciation 485000 439250 398088
CFAT 3634300 5619250 4528088

Projected Net Present Value:

Year Cash flows P. V factor @ 10% Present Value
0 -11881000 - -
1 3634300 0.94 3416242
2 5619250 0.88 4944940
3 4508088 0.82 3696632
Total 12057814

Net Present Value (NPV) = present value of cash inflows – present value of cash outflows

= 12057814 - 11881000

NPV = 176814

Since NPV is positive with the high value, therefore we accept the project.

25
Internal Rate of Return (IRR):
Year Cash Flows
0 -11881000
1 3634300
2 5619250
3 4508088

Calculated on excel = 7%
So, it implies that at 7%, NPV is zero.

Payback period:
2 Years & 4 months.

Profitability Index:
Year Value
1 1.15

BIBLIOGRAPHY:

1. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3084479/
2. http://honeyrich.tradeget.com/Company_Profile.html
3. Project report on Packaged drinking water by MSME, India
4. http://www.mineralwaterplants.net/laboratory-set-up.html

26