dmc sparkle water refilling
DESCRIPTION
Feasibility Study on Student-Facilitated Water REfilling StationTRANSCRIPT
FEASIBILITY STUDYFEASIBILITY STUDY
OnOn
DMC SparkleDMC Sparkle
WATER REFILLINGWATER REFILLING
STATIONSTATION
INTRODUCTION
The demand at the water refilling stations – water stores that sell purified water – is
now increasing. The quality of purified water conforms to the national standards for drinking
water and is even better than the quality of water produced by traditional water supply
systems in terms of removed impurities.
Over the years, as the demand for cleaner water becomes higher, the price of
household water purifiers and bottled water has become prohibitive. Water refilling stations
managed by private entrepreneurs offer a cheaper and more convenient solution to the
public’s drinking water needs than bottled water or the use of household filters.
At present, about 15 water refilling stations have proliferated in Dipolog City. They sell
purified water of comparable quality with bottled water at a lower price. For example, the
current price per gallon of refilled purified water in Dipolog City ranges from P 20 to P 3 per
5-gallon container when bought on store site, while prices ranges between 25 to 35 when
delivered within Dipolog City..
In Dipolog City, most of the water refilling stations is connected to the pipes of Dipolog
City Water District for their source of raw water while in other areas they opt to use private
deep wells. The “potable water” supplied by the providers is then further purified by utilizing a
combination of water treatment equipment, such as sediment filters, carbon filters, water
softeners, reverse osmosis membranes, ultra-violet lamps, and ozone generators. Typical
water refilling stations can produce 3,000 to 12,000 liters of purified water per day. In
previous years, most of the people were bringing containers to a water refilling station to buy
purified water.
Nowadays, because of convenience on the part of the consumers, purified water in 5-
gallon (22.7 liters) containers is delivered by the station directly to the people’s home.
Proponent:
DMC- COLLEGE FOUNDATION – SCHOOL OF BUSINESS STUDENTS
Proposed Location:
DMC – College Foundation CampusFr. Patangan Road, Mibang, Dipolog City
Objectives:
A. Provide a potable drinking water for the community.B. Service the drinking water needs of DMCCF students, and Concha Croup of
Companies employees and their familiesC. Empower students taking up Business and Accountancy to develop their
entrepreneurial skills and expose them to an actual business venture.
Nature of the Business
The School of Business and Accountancy focuses on real industry based learning, thus, the department always explore ways to develop the knowledge and skills of its students when it comes to business incubation, launching and operation. Empowering its students through actual exposure to existing business operation will develop their entrepreneurial spirit and gain confidence to venture into business, that will propel them to financial success in the future.
The water refilling station; “DMC Sparkle” will provide DMCCF staff and students, clear, sparkling, clean drinking water at very affordable prices. The DMC Sparkle Water will be available is various refillable sizes of containers to cater to the needs of different demographics and market. .
“DMC Sparkle” will also offer additional services like free delivery and the product can also be availed on credit for DMC-College Foundation faculty and staff and all employees of the Concha Group of Companies, wherein payment arrangement will facilitated through salary deduction from their paychecks among their respective offices.
MARKETING ASPECTMARKETING ASPECT
Target Market
Students, Faculty and Staff of DMC-College Foundation, Dipolog Medical Center, Mennen’s Gift Mart Corporation, Zanorte Industries, Concha Construction, Zanorte General Services and Rizal Rural Bank.
Local Residents of Dipolog City
Demand
The Concha Group of Companies, including the DMC-College Foundation has a total employees of more than 500, and students living within the vicinity of the DMC Campus is about 300, while during classes most students prefer drinking from purified water and on any given day, DMC has more than 1,200 students in its campus.
The area within the DMC campus, where DMC Sparkle Water Refilling Station will be located, has a population of more than 1,500 households on the two barangays namely Sta. Isabel and Sta. Filomena. And with only one existing refilling station situated in the area.
On the average, a family of four members consumes three (3) 5-gallon purified water every week or 12 containers a month. Students were surveyed and revealed that they consume one (1) 5 gallon container a week Using this data the projected demand for water refilling station in the specified area is:
Target Market PopulationEstimated Weekly Consumption (in 5 gallon containers)
Estimated Monthly Consumption (in 5 gallon containers)
DMCConcha Group of
Companies500 1500 6,000
Local Households 1500 4500 18,000Students 300 300 1200
TOTAL2,300 6,300 25,200
Demand in Gallons31,500 126,000
Table 1 Demand Chart
Market Share
It is assumed that since the targeted market is members of the Concha Group of
Companies and DMC Hospital; and DMC-College Foundaiton, 50% of the member will opt to
buy from “DMC Sparkle” (and since this can be acquired through credit, and subject to salary
deduction). Since DMC Sparkle is located within DMC, students can readily access the
products and a assumption of 80% is valid. While considering the accessibility factor, 10% of
the local residents are also going to consider getting their purified water supply from the
store.
Target Market
Estimated Weekly
Consumption (in 5 gallon containers)
Market Share
Estimated Monthly
Consumption (in 5 gallon
containers)
Market Share
DMCConcha Group of
Companies1500 750 6,000 3000
Local Households 4500 450 18,000 1800Students 300 240 1200 960
TOTAL6,300 1440 25,200 5,760
in Gallons31,500 7,200 126,000 28,800
Table 2 Market Share
Proposed Marketing Strategy
Product Strategy – Refilling Station will be constructed with transparent glass and according to prescribed standards so that the customers will be able to see how carefully and cleanly the products are being processed. Excellent quality will be maintained by giving the workers training and guidance on good manufacturing practices.
Distribution Strategy – A delivery vehicle will be purchased to shorten waiting time of customers. Customers can order thru phone call or text and 20 minutes waiting time
will be observed. It will also be assured that products will be handled properly and will maintain its quality during delivery.
Promotion Strategy – Information dissemination will be done so that target market will be aware of the existence of the water refilling station. Target markets will be informed of the benefits and importance of drinking clean water and the added benefits of buying it DMC Sparkle, that offers salary deduction options for employees of the Concha Group, including DMCCF and DMC Hospital.
Pricing Strategy – Being a new entrant, “Aqua Kabayan” will offer an affordable price of 25.00 per container, free of delivery charge
SALES PROJECTIONS
YEAR 1 YEAR 2 YEAR 3
in units of 5 gal containers 69,120 76,032 83,635
Selling Price 25 25 25
Total Sales 1,728,000.00
1,900,800.00
2,090,875.00
Table 3 Three Year Sales Projection
MARKETING BUDGET
Delivery Vehicle
There is a need to purchase a delivery vehicle to ensure the fast and timely
delivery of products. Consumers prefer to buy products that are readily available and
with minimal waiting time. Water is a basic need and there should be no delays in the
delivery. Estimated cost of a delivery vehicle is at Php 75,000.00. Estimated Useful
Life is five (5) years.
Fuel Consumption in the delivery of goods is estimated at 500.00 per day.
Information Dissemination
The awareness campaign will entail costs of printing flyers (for distribution) and
tarpaulins (to be placed at strategic locations). Cost of these materials is estimated at Php
10,000.00.
Packaging and Labeling
Initially, 100 units of containers (5 gal) will be purchased. Since most of the
consumers already have containers, the said containers will be replaced every
delivery. Empty containers will be refilled and delivered to other customers so that
consumers will only have to pay for the contents and not the containers.
All containers should have labels, bearing the name of Aqua Kabayan and all
containers should all be sealed to ensure that the product reaches the end consumer
with utmost quality. Fifteen thousand pieces of labels and seals will be printed on a
quarterly basis. Estimated cost is Php 3.00 per container.
Manpower
There will be 2 persons handling the delivery, both of which should know how to drive
the delivery vehicle so that they can work alternately on the tasks to be assigned to them.
They are going to receive salaries of Php 4,500 a month or Php 150.00 daily.
Account Title Amount in Pesos
Delivery Vehicle 75,000.00
Fuel and Lubricants 15,000.00
Promotions 10,000.00
Packaging (containers) 15,000.00
Materials and Supplies (stickers) and
seals (quarterly)45,000.00
Salaries and Wages 9,000.00
TOTAL 169,000.00
Table 4 Marketing Budget
MARKETING EXPENSES
Account Title YEAR 1 YEAR 2 YEAR 3
Delivery Vehicle ( Amount of Depreciation)
15,000.00
15,000.00
15,000.00
Fuel & Lubricants 180,000.00
198,000.00
217,800.00
Promotions 10,000.00
10,000.00
10,000.00
Packaging (containers) 5,000.00
5,000.00
5,000.00
Materials and Supplies (stickers) and seals (quarterly)
180,000.00
198,000.00
217,800.00
Salaries and Wages 108,000.00
118,800.00
130,680.00
TOTAL 498,000.00
544,800.00
596,280.00
Table 5 Marketing Expenses (three years)
PRODUCTION ASPECTPRODUCTION ASPECT
Production Process (water filtration & purification system)
1st unit Multimedia sediment process
Stage 1The water first passes through the 1st stage which makes up of a course gravel that traps solid particles of about 100 micron
Stage 2 Consists of sand filters that removes sediment of 50 micron ratings
Stage 3 Consists of fine sand that eliminates solid particles of 25 micron
Stage 4 Consists of fine clear slit that eliminates solid particles down to 5 micron
2nd unit Multi media carbon process
Stage 5 Makes use of a lignite carbon that removes foul taste and odor
Stage 6Makes use of bituminous carbon that eliminates yellowish and brownish discoloration brought by inorganic contaminants
Stage 7Makes use of granular activated carbon (GAC) as the last multi media carbon stage. This stage is where the water undergoes longer contact time with the carbon to eliminate other contaminants that might cause foul smell or taste
3rd unit Water conditioning and softening process
Stage 8Makes use of resin beads that attract mineral contents that convert hard water to soft water
Stage 9Makes use of ion exchange beads to condition water by extracting the organic and inorganic chemicals present in the water
Stage 10Makes use of another carbon that eliminates any ferrous iron (dissolved iron) in water
Stage 11Makes use of fine gravel that serves as a sieve which eliminates any residue that might come out during regeneration time. This is a cleansing agent.
4th unit Ultra micron process
Stage 12
Consists of a one (1) big blue housing that includes 1 micron cartridge that eliminates any microscopic residue that might go to the reverse osmosis membrane. This stage stands as a protection for the membrane against premature clogging
5th unit Reverse osmosis
Stage 13
It is the most important system in any water filtration and purification process. This makes use of reverse osmosis equipment which has semi-permeable membrane that only allows pure water to pass through and pushes the unpure water out of the system to the reverse side or the reject drain line.
6th unit Polishing process
Stage 14Includes one (1) big blue housing that consists of a carbon cartridge that serves as a polishing stage to make the water crystal clear and shiny
7th unit Anti-microbial process
Stage 15
This stage eliminates cyst micro organism that has a micron rating of 1 and has a very thick cell wall where UV light sometimes cannot penetrate; however a micron rating of 0.5 will eliminate such kind of micro organisms. Cyst causes diarrhea and gastro enteritis.
8th unit Water sterilization process
Stage 16
This last and final stage is the second most important system in a water filtration and purification system. This is the stage that kills all microorganisms and other diseases causing bacteria from infiltrating into the product water, thereby assuring safe and pure water.
Table 5 Production Process
Fixed Assets Required:
Item Amount Useful Life in Years Annual Depreciation
Land 50,000.00
Machineries & Equipment 300,000.00 15 20,000.00
Building (25 sq meters) 150,000.00 20 7,500.00
TOTAL 500,000.00 27,500.00
***Repairs and maintenance of equipment is assumed at 2.00 per month.
Table 6 Schedule of fixed Assets Required
FACTORY LOCATION AND LAY OUT
COST OF LABOR
There will be 2 workers tasked in refilling and cleaning of containers. The
cooperative manager will be the one to oversee the production and help in the
operation whenever it is needed. The two workers will be receiving Php 4,500 a
month.
MATERIALS AND SUPPLIES
Materials and Supplies are estimated at Php 6,000.00 monthly (water is the
major raw materials needed).
FACTORY OVERHEAD
Overhead expenses are composed of Utilities, Telephone Bills and
Depreciation. Electric consumption is assumed at Php 7,500.00 monthly and
telephone bills are at Php 1,000.00 per month. Please refer to Depreciation table
for depreciation expenses.
PRODUCTION COST
Account Title YEAR 1 YEAR 2 YEAR 3
Direct Labor 108,000.00
118,800.00
130,680.00
Materials & Supplies 72,000.00
79,200.00
87,120.00
Depreciation (Building) 7,500.00
7,500.00
7,500.00
Depreciation (Machineries & Equipment
20,000.00
20,000.00
20,000.00
Utilities 102,000.00
112,200.00
123,420.00
TOTAL 309,500.00
337,700.00
368,720.00
Table 7 Production Cost (three years)
PRODUCTION COST PER UNIT
YEAR 1 YEAR 2 YEAR 3
TOTAL PRODUCTION COST 309,500.00
337,700.00
368,720.00
MARKETING EXPENSES 498,000.00
544,800.00
596,280.00
Units Produced 69,120 76,032 83,635
PC PER UNIT 11.68 11.60 11.58
Table 8 Production Cost per unit (three years)
ORGANIZATION AND MANAGEMENT ASPECT
1. Form of Business
Corporation
2. Business name
DMC Sparkle Water Refilling Station
3. Organizational Chart
4. Key Personnel and Responsibilities
Board of Directors
General Manager
Worker 1 Worker 2 Worker 3 Worker 4
AccountingStudents
General Manager – In charge of the overall operation of the business. Acts as the marketing officer and represents the business in all external concerns. The manager will oversee the entire operation of the business and collects cash sales for remittance to the cooperative treasurer.
Accounting Students – will monitor daily sales and operation cost and will handle weekly audits.
Worker 1 & Worker 2 – will handle the plant operation. They will be in charge of cleaning and refilling containers. They will also observe proper sanitation of the plant and maintain excellent quality of the product.
Worker 3 and Worker 4 – will be tasked in the delivery and distribution of the products. They will ensure that all deliveries are done at the shortest possible time. They will also handle collection of payments and issuance of receipts during delivery.
FINANCIAL ASPECTFINANCIAL ASPECT
TOTAL CAPITAL REQUIREMENTS
Account Title Amount
Fixed Assets:
Land 50,000.00
Machineries & Equipment 300,000.00
Building (25 sq meters) 150,000.00
Delivery Vehicle 75,000.00
Total Fixed Assets Required 575,000.00
Workling Capital:
Salaries & Wages 54,000.00
Returnable Containers 15,000.00
Materials & Supplies 45,000.00
Fuel, Gas & Lubricants 45,000.00
Promotions 10,000.00
Raw Material Supply (Water) 18,000.00
Utilities 25,500.00
Total Working Capital (first 3 months of operation) 212,500.00
TOTAL CAPITAL REQUIREMENTS 787,500.00
Table 9 Total Capital Requirements
INCOME STATEMENTYear 1 Year 2 Year 3
Sales 1,728,000.00 1,900,800.00 2,090,875.00
Less: Cost of Sales
Direct Labor 108,000.00
118,800.00
130,680.00
Materials & Supplies 72,000.00
79,200.00
87,120.00
Factory Overhead Expenses Depreciation Expense (Building)
7,500.00
7,500.00
7,500.00
Depreciation Expense (M & E) 20,000.00
20,000.00
20,000.00
Utilities 102,000.00
112,200.00
123,420.00
Total FOE 129,500.00
139,700.00
150,920.00
Cost of Goods Available for Sale 309,500.00
337,700.00
368,720.00
Gross Profit on Sales 1,418,500.00
1,563,100.00
1,722,155.00
Less: Operating Expenses
Marketing Expenses
Fuel, Gas & Lubricants 180,000.00
198,000.00
217,800.00
Promotions 10,000.00
10,000.00
10,000.00
Packaging (containers) 5,000.00
5,000.00
5,000.00
Materials & supplies 180,000.00
198,000.00
217,800.00
Salaries & Wages 108,000.00
118,800.00
130,680.00
Depreciation Expense Delivery Vehicle
15,000.00
15,000.00
15,000.00
Total Marketing Expenses 498,000.00
544,800.00
596,280.00
Net Operating Profit 920,500.00
1,018,300.00
1,125,875.00
Table 10 Income Statement
CASH FLOW STATEMENT
Cash Inflows Year 1 Year 2 Year 3
Initial Capital 787,500.0
0
Sales 1,728,000.00 1,900,800.00 2,090,875.00
Total Cash Inflows 2,515,500.0
0 1,900,800.00 2,090,875.00
Cash Outflows
Purchase Land 50,000.0
0 Purchase & Installation of Machineries & Equipment
300,000.00
Construction of Building 150,000.0
0
Purchase of Delivery Vehicle 75,000.0
0 Purchase Returnable Containers
15,000.00
Purchase of Labels & Stickers 180,000.0
0 198,000.0
0 217,800.0
0
Fuel, Gas & Lubricants 180,000.0
0 198,000.0
0 217,800.0
0
Payment of Salaries & Wages 216,000.0
0 237,600.0
0 261,360.0
0
Promotions Expense 10,000.0
0 10,000.0
0 10,000.0
0 Payment of Raw Material Supply
72,000.00
79,200.00
87,120.00
Payment of Utilities 102,000.0
0 112,200.0
0 123,420.0
0
Total Cash Outflows 1,350,000.0
0 835,000.0
0 917,500.0
0
Net Cash Inflows 1,165,500.0
0 1,065,800.0
0 1,173,375.0
0
Add: Cash Balance Beg. 1,165,500.0
0 2,231,300.0
0
Cash Balance, end 1,165,500.0
0 2,231,300.0
0 3,404,675.0
0
Table 11 Cash Flow Statement
BALANCE SHEET
Year 1 Year 2 Year 3
Assets
Cash 1,165,500.00 2,231,300.00 3,404,675.00
Land 50,000.00 50,000.00 50,000.00
Building 142,500.00 135,000.00 127,500.00
Machineries & Equipment 280,000.00 260,000.00 240,000.00
Delivery Vehicle 60,000.00 45,000.00 30,000.00
Returnable Containers 10,000.00 5,000.00 -
Total Assets 1,708,000.00 2,726,300.00 3,852,175.00
Liabilities & Capital
DMC Sparkle Investments 787,500.00 1,708,000.00 2,726,300.00
Add: Net Income from Operation 920,500.00 1,018,300.00 1,125,875.00
Total Liabilities & Capital 1,708,000.00 2,726,300.00 3,852,175.00
Table 12 Balance Sheet
FINANCIAL RATIO NALYSIS
PROFITABILITY RATIOS
1)Return on Assets
(ROA)
Net Income=
920,500.00
= 0.5
4 Total Assets
1,708,000.00
2)Return on Equity (ROE)
Net Income=
920,500.00
= 0.5
4 Owner's Equity
1,774,000.00
3)Net Profit Margin
Net Income=
920,500.00
= 0.5
3 Sales
1,728,000.00
Table 13 Financial Ratio Analysis
Prepared by:
RAUL T. NOCETE
COORDINATOR
SCHOOL OF BUSINESS AND ACCOUNTACY
DMC – COLLEGE FOUNDATION