business plan on mineral water by RobinSaha

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									INTRODUCTION
                          EXECUTIVE SUMMARY

This proposed project presents an investment opportunity for establishing a

bottled water plant for providing pure drinking water. The proposed product line

will consist of bottles of 0.5 lit.,1.0 lit. , 1.5 liters,10 lit.,20 lit. In the initial phase of

the project only 0.5 lit,1.0 and 1.5 liters bottles will be introduced in the local

market. After successful introduction of the new brand of bottled water the product

line may be extended to 10 and 20 liters cans.



According to a study conducted in 2010. The potential markets for bottled / mineral

water consist of local people,railway station ,pan wala, cinema halls, foreign tourists,

hotel industry, patients and travelers. Moreover, the bottled / mineral water has

been emerging as a daily preference of the elite class.



The Indian market is booming industries for mineral water and is growing at whopping rate of

40 per cent. The total annual bottled water consumption in India had tripled to 10

billion liters in 2011 from 1.5 billion liters in 2000. The project would be set up in kolkata

where all the required infrastructure and amenities are available.
         MINERAL WATER INDUSTRIES IN INDIA:-

.

 According to a national-level study, there are more than 200 bottled water brands in

India and among them nearly 80 per cent are local brands. In fact, making bottled

water is today a cottage industry in the country. Leave alone the metros, where a

bottled-water manufacturer can be found even in a one-room shop, in every medium

and small city and even some prosperous rural areas there are bottled water

manufacturers.

While India ranks in the top 10 largest bottled water consumers in the world, its per

capita per annum consumption of bottled water is estimated to be five litres which is

comparatively lower than the global average of 24 litres.

Today it is one of India's fastest growing industrial sectors. Between 2000 and 2010,

the Indian bottled water market grew at a compound annual growth rate (CAGR) of

28 per cent - the highest in the world. The total annual bottled water consumption in

India has 10 billion liters in 2010 from 1.5 billion liters in 2000.
Start-up Summary

Blue water company is incorporated as HUF.,in which all the investment are made by

company itself , of which ownership owned by karta/ founder and director, Mr.ashok

chauhan

The start-up costs associated with legal expenses, maintaining office and facilities,

salaries, etc are to be financed by company itself.

Objectives

1. Start production of mineral water plant by the end of 2011.

2. Maintain Net Profit Margin 30% with selling price no higher than that of
conventional water.

3. Increase the sales more than double more by the end of the year.

Mission Statement

Blue water is a mineral water company dedicated to provide clean water ,healthy

Water to the society.the main aim of the company is to provide quality product.

& consumer can easily get the product in the market.

Company aim to maintain the taste and quality of the product .so,that the end user can

Get natural taste of the water.
Team Introduction



Ashoke mittal

Indian, 35 year old ,working in mineral water industries past 20 year .he has a
good experience in mineral water industries. he is worked as a production
manager for 5 years, works as distribution manager for 5 years. he has a good
knowledge of the product ,price ,promotion of the product.

Keys to Success

The key success factors in the mineral water are:

      Competitive Prices: Unless the importance of the mineral water
       products is fully understood by consumers, we’ll not be able to sell it
       above market price of conventional water.



      Constant Product Quality: making good reputation and constant
       conformance to performance standards of mineral water are especially
       important.



      High-profile Management Team: products delivered on time, costs
       controlled, marketing budgets managed.
           MARKET RESEARCH OF MINERAL WATER INDUSTRIES


The Rs. 500 crore bottled water market is witnessing hectic activity with many players
entering the fray in the last one-year and still more to come. Part of the fast moving
consumer goods (FMCG) sector, bottled water is the only segment to have shown
phenomenal growth of about 50 per cent in the last one year.

Hindustan Lever (HLL), the consumer goods giant, has initiated plans to enter this
sector. The company is considering whether to set up its own facilities for bottled water
or go in for an acquisition.

Nestle India is the latest to enter this market with the launch of its brand `Pure Life' in
New Delhi last week. It plans to grab a 50 per cent market share in the next two years
and emerge as a strong player. The company has not ruled out acquiring existing
brands. The product will be available in other cities as well soon. The water is bottled at
Nestlé’s new plant at Samalkha in Haryana. Nestle has already launched two of its global
premium mineral water brands `Perrier' and `San Pellegrino' which are targeted at
niche markets.
The market is expected to continue to grow at a healthy clip. In fact, in the last two years, there
has been a doubling of growth. Major players include Parle Bisleri, Parle Agro, Coca 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 38%, Bisleri offers the maximum number
of pack sizes. Kinley follows it with a 28% share. The other brands including Aquafina and
Bailley constitute 11% & 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.
Apollinaris, a natural sparkling mineral water brand, has been introduced close on the heels of
Nestle coming out with its sparkling water brands - Perrier and San Pellegrino. The product is
being imported and distributed by the Mumbai based company, Veekay Food & Beverages. It is
now available at restricted retail outlets in Mumbai and Delhi and a separate sub-brand is
simultaneously being launched to take care of institutional sales.

It is also being launched under the sub-brand of Big Apple and Lemon. But the product is in a
different price bracket altogether with the 750 ml Apollinaris Big Apple pegged at Rs. 99 and the
one litre Apollinaris Classic sparkling water at Rs. 90.

With over 200 players jostling to be the thirst-quenching favorite of the Indian consumer, the
business is growing at a rate of over 50 per cent annually. The country's bottled water
business is estimated to be around Rs. 1,100/- crore, of which the branded market
accounts for Rs. 700 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.




                                     sales




    100
     90
     80
     70
     60
     50                                                                   sales
     40
     30
     20
     10
      0
                 rainy             winter           summer




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.
                           BRANDS AVAILABLE :


Various brands that are available in KOLKATA. Few of them are as follows:-

BRANDS             LITRES - 1 LITRE. ETC                  20 LITRES

Bisleri            Yes                                    Yes

Kinley             Yes                                    Yes

Aquafina           Yes                                    No

Bailley            Yes                                    Yes

Brilliant          Yes                                    Yes

Hello              No                                     Yes

Spakel             Yes                                    Yes

Harnil             No                                     Yes

Apurva             No                                     Yes

Bally              No                                     Yes

Krishna            No                                     Yes
                                RETAIL OUTLETS



There are above 1,00,000 retail outlets in KOLKATA.

SR. NO         CLASSIFICATION                         PERCENTAGE

1              GROCERY & GENERAL STORES               40%

2              DEPARTMENTAL STORES                    03%

3              COLD DRINK HOUSE                       02%

4              HOTELS & RESTAURANTS                   5%

5              BEER BARS                              02%

6              PAN BIDI SHOPS                         28%

7              OTHERS                                 20%
                BRAND WISE SHARE




                      Others
                       17%


                                          Bisleri
            Bailley                        38%
              6%


          Aquafina
            11%




                               Kinley
                                28%




BRAND WISE MARKET SHARE %

The ORG-MARG survey conducted recently shows that the market leader Bisleri is having 37.6%
market share followed by Kinley, Aquafina, Bailley and others with 28.2%, 11.11%, 5.7% and
17.4% respectively.

One thing is very clear from the two surveys conducted that the market leader is Bisleri with
Kinley, Aquafina, and Bailley are the trailers, and now with Manikchand into mineral water,
the competition is becoming tough.
                              MARKET CATEGORISATION



The market of packaged drinking water is categorized as follows:

1. Theatres / cinema halls/ multiplexes.

2. Corporate.

3. Caterers.

4. Hotels, Resorts.

5. College canteens.

6. General Stores etc.
                                           CINEMAS

Brand Share:

MARKET SHARE OF VARIOUS BRANDS IN CINEMA HALLS IN 1 LITRE PACK


                                     BISLERI
               BAILLEY
                                       11%
                 19%




                                                                BISLERI
            A'FINA
                                                                KINLEY
             18%
                                                                A'FINA
                                                                BAILLEY
                                           KINLEY
                                             52%




Findings:

   Price closely followed by Brand Name, Convenience, & Service are the important factors that
     affect the buying decision process
   Cinema halls, Cyber Cafes, Bowling Alleys, Video game parlors are some places where people
     generally go to   have a nice time.
   The above centers already have the kiosks of the cola companies like Coke, & Pepsi along with
     the vending machine of Nescafe. Thus there definitely is a potential for the introduction of a
     kiosk vending pure water in these categories of outlets
                       HOTEL AND RESTAURANT




                                  4%
                            9%


                                                  36%         Bisleri

                     21%                                      Kinleys
                                                              AquaFina
                                                              Bailey
                                                              Others


                                   30%




Findings:

    Price closely followed by Service, Taste of water and Ease of operation are the important
      factors that affect the buying decision process.
    Hygiene is a very important factor when a customer decides to snack/eat in a particular
      outlet. More so when we interviewed food stalls in Juhu Chowpatty a majority of the food
      stall owners said that they now provide their customers with the 1 liter Bisleri bottle as
      many customers refuse to accept the water offered to them.
                           BRAND WISE DETAILS:-


PARLE BISLERI PRIVATE LIMITED




Company: Parle Bisleri Private Limited.

Brand: Bisleri

Address: Parle Bisleri Pvt. Ltd., Western Eastern Highway, saltlake(E).

Product: Packaged Drinking Water

Design:




Quality: ISI Marked.

Packaging: Pet Bottles

Target Market Segment: Health Conscious people

Positioning: Safe Water
Distribution:       Bottling plant (saltlake)




For 1 Litre, etc.

The Company directly approaches the retailer. They have tracked kolkata through various routes
and accordingly they service. Their major hub is kalighat,ravindra sarovar,park street.

Schemes:

        One Litre

                    One Box free on 5 Box

        Half Litre

                    One Bottle free on 1 Box

For 20 Litre. jar

Bisleri sell their product through their own network and they have also appointed Distributors
for each area to sell their product.




         Bisleri-DISTRIBUTOR Details for 20 Ltr.- South kolkata
Distributor: Nos. 16

Average sales per Distributor: 110 Jar per day.

Vehicle: Nos. 7 (for Distributor)

MRP: Rs. 60

Net Cost Price (for Distributor): Rs. 43

Margin of Rs. 17 (39.53%)

Service Frequency: Alternate days

Vehicle: Nos. 12

Distribution Weakness: Company is not addressing the compliant from distributor and end user.

Company does not use Polycarbonate Jars in 20 Litre, which result in loss of face value and

ultimately losing customer.
HINDUSTAN COCA COLA BEVERAGES PRIVATE LIMITED



Company: Hindustan Coca cola Beverages Private Limited

Brand: Kinley

Product: Packaged Drinking Water

Design:




Quality: ISI Marked.

Packaging: Pet Bottles, Polycarbonate Jars

Target Market Segment: Health Conscious people

Positioning: Safe Water

Trade Promotion: Effective TV ads (Boond Boond mein vishwas), Banking on Parent Brand,
   Mobile Van.
Distribution: For 1 Litre. etc.

The Company directly approaches the retailer. They have tracked kolkata through various routes
and accordingly they service.

Schemes:

   One Litre

   One Box free on 2 Box (Net Rs. 80 per Box)

    Half Litre

    No scheme

For 20 Litre. Jar

Kinley sell their products through their own network only. They have appointed HDA (Home
delivery Agent) for some area to sell their product.

Service Frequency: Alternate days

MRP: Rs. 65

Lowest Selling Price to Corporate Rs. 50.

Distribution Weakness: Not been able to penetrate in interior area since they have not appointed
Distributors in most of the area.
                       COMPANY: PEPSICO INDIA LIMITED



Brand: Aquafina

Product: Packaged Drinking Water

Quality: ISI Marked

Packaging: Pet Bottles

Target Market Segment: Health Conscious people

Positioning: Safe Water

Trade Promotion: Banking on Parent Brand, Banners.

Distribution:




            Bottling plant (Chembur, Roha)



            Distributor for catering kolkata Market



         o   v        kalighat
         o   v        tollyganj
         o   v        m.g.park
            Resources
         o   v        Large Vehicle (Soft Drink Vehicle
For 1 Ltr. etc.

The Company directly approaches the retailer. They have tracked kolkata through various routes
and accordingly they service.

        Schemes:

        One Litre

                  One Box free on 3 Box (Net Rs. 80 per Box)

        Half Litre

                  No scheme

For 20 Ltr jar

The Company has not entered the 20-litre Packaged water Market




‘Distribution Weakness:

It seems that the Company is not pushing their packaged water brand “Aquafina” and
    concentrating on Beverages market. Many times their products are not available in the
    market. Aquafina packaged Bottles water is given in a scheme to promote their Beverages
    brand.
SWOT ANALYSIS OF THE PACKAGED WATER INDUSTRY

STRENGTH
  1. The industry is growing @ 40%.

  2. In India the market is huge & untapped.

  3. Growing awareness among the people about the importance of mineral water.




WEAKNESS
 1. Many players entering in the race.

 2. Any local person can start manufacturing.

 3. Rural population is not using the packaged water.

 4. Not very economical

 5. Quality not properly maintained e.g. Bisleri & hence has bad effect on the whole
OPPORTUNITY


  1. Sustained Market growth increase in coming years

  2. Literacy rate growing and hence the awareness of safe drinking water to avoid the
     diseases.

  3. Huge population & untapped market.




THREAT


  1. Many substitutes available

  2. Too many players will dilute the market & the profit margin
                        MANUFACTURING PROCESS

BUSINESS PLAN

High quality goods to taste bottled water will be processed/produced for the end user. The
plant will start its operation from 60% capacity and finally reach 100% capacity by the end
of 2 years. There is also anticipated growth of 20 % in sale price of the product.

PRODUCT SALES

Plant Capacity liters per day                 15,000 Gallons
Production per year (liters)                  18,711,000
Ratio of 1.5 liter and 0.5 liter bottle       80:20
Production of 1.5 liter bottle                9,979,200
Production of 0.5 liter bottle              7,484,400
Total annual production                       17,463,600
Sale price of 1.5 liter bottle                (Rs.) 15
Sale price of 0.5 liter bottle                (Rs.) 8
Capacity utilization in first yr                        60%
Sales price growth rates                                10%
Production capacity utilization growth rate           25%
Maximum Capacity utilization                            95%
Sales 100% capacity                         209,563,200
RAW MATERIALS

There are many sources of natural water from spring or ground water in Ravindra sarovar,

the project shall be located at site where require water is available.


PRODUCTION PROCESS


The first step for setting up a water purification plant is the analysis of source of water.
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.


Water is then passes from dosing pump-II, where Sodium Meta Bisulphate is added. It helps
in dechlorination 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.
After this stage, water undergoes Ultra Violet treatment to avoid any contamination from
bacteria and other micro organisms. Water then passes through automatic washing, filling
and capping plant. Here water is filled into bottles. After filling bottles are taken into the
warehouse or shipped to the retailers. The complete process flow diagram is as under.
DISTRIBUTION CHANNELS


Branding and marketing of bottled water is as essential as water for the survival of the
human body. The traditional marketing tools include site advertisement, TV and print
media advertising and brochures. This study allocates 10% of the revenue for advertising
and promotional purposes.
Apart from the traditional marketing tools, this study suggests to focus more on other
marketing magnets that include interactive marketing, interactive marketing may include
educating the general public about the importance of water and its daily consumption
requirements for human body through the participation in seminars and in general public
gatherings (e.g. College and University gatherings). One of the marketing options is to
sponsor public events like cricket matches or hospital campaigns, distributing free
brochures about water and its daily consumption, water requirements in different age
brackets.
The interactive marketing may be designed through seminars and workshops
about the daily human consumption requirements and diseases originating from the lack of
pure water. Overall marketing strategy may change with the change of target market. A
market research study is recommended to design the different dynamics of marketing
before launching the new brand. Marketing expense has been included in the total project
cost and it has been estimated around Rs.5 million. The entrepreneur may decide to
increase or decrease the amount of marketing expense depending upon this choice of
promotion activities and type of media used.
Following table gives the breakup of the marketing expense.




.
Distribution is very important for the success of the new brand. The stronger the
distribution
the more successful will be the new brand. The distribution strategy should be designed
after a careful study of the market for going for regional distribution or for nation wide
distribution.
HUMAN RESOUCE REQUIRMENT

The following requirement of staff along with their levels and monthly salary is foreseen for
this project.
Marketing Strategy

1. Emphasize inherent qualities of water and focus on target markets.

We must differentiate our mineral water with other brand. We need to establish our
business offering as a clear and viable alternative for our target markets.

2. Produce high quality water.

3. Offer competitive price at the level of the conventional mineral water.

4. Create strong distribution channels to ensure stability of production.

5. Emphasize key advantages of our product.

6. Build a relationship business: long-term relationships, not single-transaction deals
with customers.

7. Focus on water distributors and big consumers as key target markets .
                             PROJECT FINANCIALS

OPERATIONAL DATA

The plant will be operated in the first year at 60% capacity and as the expertise develops the
100 % pant capacity will be attained by the end of SECOND year.



FIXED COST

The fixed cost is expected to be Rs 12.7 Million as described below.
Land                                                  1,230,000
Building / Infrastructure                             1,057,500
Machinery & Equipment                                 6,240,000
Furniture & Fixture                                   108,500
Office Vehicles                                       2,056,360
Office Equipment                                      202,500
Pre-operating Cost                                    1,816,268
Total Capital Costs                                   12,711,128

WORKING CAPITAL


The investment in the initial working capital is of          Rs 3,580,000
OVERHEAD COSTS

In the first year following overhead cost are estimated.

Administration Expenses                                    12,854,400

Utility expenses                                           428,292

Traveling                                                  624,000

Office Vehicle and running                                 102,800

Office stationary                                          124,800

Promotional expenses                                       12,049,884

Insurance expenses                                         186,491

Depreciation                                               1,119,697

Amortization expenses                                      363,254

Miscellaneous expenses                                     3,614,965

Total                                                      31,468,583

								
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