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BUSINESS PLAN ON FLAVOREDMINERAL WATER

RAVI PATEL - 094141

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AQUENCH

y AQUENCH is an initiative to provide the customers withsafe 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 Indiaflavoured drinking water will be launched. The water will havean essence, which will make it delightful experience. Theflavours wont effect the quality of the product as after thefiltration process is over a small amount of flavour is added

which will make drinking water a whole experience.

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Industry analysisy More-than-$100-billion global industry.

y In India, the per capita bottled water consumption is less than 5litres a year as compared to the global average of 24 litres.

y India is the 10th largest bottled water consumer in the world.y With over a 1000 bottled water producers, the Indian bottled

water industry is big by even international standards.

y Out of more than 200 brands, nearly 80 are local.

y Most of the small-scale producers sell non-branded products andserve small markets.

y Making bottled water has become a cottage industry in thecountry.

y Bottled WaterMarket in Gujarat 700 Cr

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Industry analysis

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Porters five force model

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SWOT analysis

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Organization

Structure

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Marketing

Marketing Strategy and Analysis

y Target markety Hotels and restaurants, College and School going students,

household consumers, Offices and corporates, Health consciouspeople, tourist places etc.

y Segmentationy Age

y Education

y Geography

y Income and lifestyle

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Advertisement and Promotion

y Go for contract system with key accounts like IRCTC, 5 Starand 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 itis easily viewable, for a minimum period of 1 month.

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Distribution channely Primary distribution

y Direct to institutes likeMultiplex, Hotels & Restaurants,

Airline Companies etcy Secondary distribution

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PROCESS

y THE PROJECT INVOLVESMACHINERY FOR

y Purifying water

y Bottle manufacturing.

y Rinsing - filling - cappingy Labelling

y Final packing

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PROCESS

y CAPACITY

y All the 4 capacities have been nearly matched - for anyadjustments some of the machines can be run for longer duration.

y Assumption: No. of operating hours in a day would be 8 hours.

Process Capacity per

hour per

machine

No. of

Machines

Total Output per

day

Purification 2000 litres 1 16000

Bottle PET Blow 1100 bottles 2 17600

Bottling & Filling 2400 bottles 1 19200

Labelling (Heat Shrink tunnel) 2000 bottles 1 16000

Electronic Batch Code Machine 2400 bottles 1 192000

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PRODUCTCOSTINGy RAWMATERIAL

y The water source is of critical importance and the continuityof the plant would depend upon it. Apart from waterfollowing items are required .

y Preforms.

y Caps for the bottles.

y Labels.

y Neck sleeves.

y Cartons for final packing.y Flavor Essence.

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Risk Factory Regulatory Risk

y Market Risk

y Social Risky Operational Risk

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Revenue statementINSTALLED CAPACITY IN LTR 4800000 4800000 4800000 4800000 4800000

Utilisation rated capacity 60% 70% 80% 90% 100%

PRODUCTION ENVISAGED in LTR 2880000 3360000 3840000 4320000 4800000

SALES REALIZATION 19440000 22680000 25920000 29160000 32400000

Total Cost of Production 14665144.76 16704675.76 18428718.31 20176712.99 21950781.4

PBT 4774855.24 5975324.24 7491281.69 8983287.01 10449218.6

Net Profit 3523714.66 4297237.88 5307006.85 6311818.61 7307329.54

Net Cash Accruals 3912439.42 4685962.64 5695731.61 6700543.37 7696054.29

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Cash flow, IRR, NPV

Net Cash flow -7029237.33 3107439.42 3880962.64 4890731.60 89 43.36

IRR 44.08%

NPV 4893071. 1

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PAYBACK PERIOD

PBT 4774855 5 75 4 7491282 8983287 10449219

D pri tion 383725 383725 383725 383725 383725

Int r st on lon t rm lo ns 270000 499500 391500 283500 175500

Gross Op r tin Surplus 5428580 6858549 8266506 9650512 11008443

Cumul tiv Op r tin Surplus 5428580 12287129 20553635 30204147 41212591

P yb k P riodApprox 1.4year

R tur non tot l ss ts 50.13% 44.06% 54.56% 63.52% 72.06%

Gross profit m rgin 29.31% 31.43% 32.93% 34.02% 34.81%

N t profit M rgin 18.13% 18.95% 20.47% 21.65% 22.55%

R tur non Inv stv nt 73.87%

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BREAKEVENANALYSIS

BEP = Fixed Cost / Contribution Per Unit

Break Even Analysis

Sales 19440000 22680000 2 920000 29160000 32400000

Variable Cost

Raw Material 9226800 10764600 12302400 13840200 1 378000

Power 7 0000 7 0000 7 0000 7 0000 7 0000Total 9976800 11 14600 130 2400 14 90200 16128000

Fixed Cost

Wages & Salary 1680000 1848000 2032800 2236080 24 9688

Administrative Exp 2017420 2118291 2224206 233 416 24 2187

Int on Term Loan 270000 499 00 391 00 283 00 17 00

Int on Short term Loan 270000 270000 270000 270000 270000

Depreciation 38372 38372 38372 38372 38372

Preliminary Exp written off 000 000 000 000 000

Total 462614 124 16 307230 13721 746099

Total Cost 1460294 16639116 183 9630 20103921 21874099

Contribution Margin 9463200

Break Even Point 48.89%

Break Even Sales 9503366.103

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Exit strategy

y Aquench plans to stay in this business in for long and expandrather than exit. But still it may exit from this business due to thefollowing reasons:y 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 themarket.

y Under any of the above mentioned condition it is in the bestinterest of the firm to exit. The firm might undertake thefollowing 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.

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