Business Plan on Distilled Water Manufacturing and Packaging

Prepared by

SeshaRaja.V (19) ISBE

Sravan kumar (15) IIPM

Saravanan.S (15) ISBE

PGP/SS/10-12/Finance

IIPM

IIPM Tower, 145 Marshall’s Road,

Egmore, Chennai- 600008.

1

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 0.25 to 20 liters. The market for mineral water has been showing a mushroom

growth trend over the last few years. The last three years have shown more growth and

the market have been estimated to grow 70 million liters and the per capita consumption

is 0.5 liter. The annual growth rate for bottled water is 55%. Moreover, the bottled /

mineral water has been emerging as a daily preference of the elite class. The project

can bottle 51000 liters of water per day i.e. 60% of the plants actual capacity during the

initial phase of production; the size of bottles will be .25 Lt and 20 Lt in the name of

“PYAAAS” to make the water convenient and attractive to end users. Therefore the

60% of production capacity would provide a sale of about rupees 99388800/- and also

the project is expected to break even within 5 years i.e. exactly in 4 years and 3 months.

Also as a part of our management ethics the company also cares for the welfare of its

employees by various policies and is also has ESOP.

2

Table of Contents

S NO CONTENTS

PAGE

NO

1 Executive Summary 2

2 Introduction 4

3 Vision and Mission Statements of the business 7

4 Marketing Plans 7

5 Financial Plans 11

6 HR Plans 20

7 Project Report for bank 21

8 Projection after 3,5,10 and 20 years including financials 21

9 Exit Plans 23

10 Conclusion 23

11 Bibliography 24

INTRODUCTION

3

It is needless to mention that water, a compound of Hydrogen and Oxygen is a precious

natural gift which is very essential for survival of mankind including animals. The water

used for potable purposes should be free from Undesirable impurities. The water

available from untreated sources such as Well, Boreholes and Spring is generally not

hygienic and safe for drinking. Thus it is desirable and necessary to purify the water and

supply under hygienic conditions for human drinking purpose. 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 sterilized

conditions.

TECHNICAL ASPECTS

Processing and Bottling Raw water to be processed is collected in tanks. A known

quantity is pumped into the above tank where the water is dozed with alum for

coagulation with heavy metals or insoluble matters. The water after coagulation is

allowed to settle for an hour. The impurities may b e removed by Reverse Osmosis

techniques also. The supernatant water is taken to the chlorination tank where primary

disinfection is brought about by bubbling chlorine gas. The water is then passed through

sand filters for trapping of un-dissolved impurities. The water after sand filtration is

passed through Carbon filters for removal of odour, color and also for dechlorination. It

is then passed through series of micro fillers comprising 5 micron, 1 micron and 0.4

micron filter followed by ultraviolet disinfection system for terminal disinfection. Packing

is done in PET bottles of 1 litre capacity through an automatic rinsing, filling, and

capping machine fitted with an Ozone generator. The bottles after capping are shrink

wrapped (Optional) and packed in corrugated boxes of one dozen each.

PROCESS FLOW

4

5

Raw water from Source

Raw Water Storage

Raw Water Lifting Pump

Sand Filter

Activated Carbon Filter

Base Exchange Softener

Ultraviolet Disinfection

Micro Filteration System

High Pressure Pump System

Desalting

Mixing

Storage of Treated Water

Polishing Filteration

UV Disinfection System

Filling, Sealing & Capping M/C

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). The details of the specification can be obtained from Bureau of Indian Standard,

Manak Bhawan, 9, Bahadur Shah Zafar Marg, New Delhi 110002.

Mission

6

Contribute to make the best product for consumers. Build the positive image about

distilled water. Provide excellent services to consumers. And to produce the best quality

bottled drinking water.

Vision

Strive to grow and increases the market continuously contributes to make healthier

consumers. To become a market leader & to make every consumer to consume our

brand.

Marketing Plans

Introduction

PACKAGED DRINKING WATER INDUSTRY

• Rs.1500 crore packaged water industry

• The industry which is growing at the rate 55% per annum

• Estimated to grow around Rs.1800 crore by 2012

• Approximate 20% brands in organized market & around 80% Local Brands

Segmentation

• Geographic

- City Size: - Mostly Major Cities & Sub Metros

– Climate:- Hot & Humid

• Psychographic

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– Lifestyle:- Travel Freak

– Personality:- Health Conscious

• Demographic

– Family Size:- Mostly Individual & Sometimes Families

– Corporate

• Behavioral

– Benefit:- Thirst & Quality

Brand Loyalty:- Split Loyal

Targeting

• Targets middle segment people

• Price of the Bottle is such that can be affordable to the all segments

• Company planning to target more towards lower segment

Positioning

Top of mind of consumers when it comes to mineral water

8

Product

A range of products that suits all the occasion

– For daily traveling consumption (250ml packets, 250ml & 500ml

bottles)

– For Long traveling consumption (2 & 1 Ltr)

– For Office, Home, Marriage or Meeting use (5 & 20 Ltr. Returnable

packs

Price

• Comparative Pricing

– Competitive Pricing

– Product line pricing

250ml – Rs.3

500ml - Rs.5

1ltr - Rs.10

2ltr - Rs.15

20ltr - Rs.30

Place

The plant can be located at any suitable place where availability of clean water,

power, PET bottles and market access is ensured.

• Intensive Distribution

• A fleet of 10 vehicles.

9

• Retail outlets across the city.

Promotion

• Advertising Campaign

• Bill boards across the city and

• Advertising Boards in front of retail shops

Physical evidence

Attractive bottle design and pure water are the physical evidences

People

Factory Manager -6

Production Manager/Chemist -6

Supervisory staff -6

Office Assistant -6

Skilled workers -30

Unskilled workers -20

SWOT Analysis

Strengths

• Generic name for packaged drinking water.

• Can be spelled by common man also. It’s so important in bottled water.

• Focus on safety.

• Growing market.

• Quoting a lower price to the target customers.

10

Weakness

• New entrant in the market

Opportunities

• Can enter in the market of juices & beverages

• Can enter in the market of water purifier

• Can tab the maximum rural market of the country

• Tie-up with railway canteen, stalls & marriage contractors.

Threats

• From the players like bisleri, Kinley, Aquafina, Himalaya Bailley, & Other local &

rural products

• New enters in the market like Amul

• If government ban on plastic use then company will be in trouble

FINANCIAL STUDY

PROJECT COST

THE PROJECT INVOLVES MACHINERY FOR

PURIFYING WATER

BOTTLE MANUFACTURING.

BOTTLING PURIFIED WATER.

LABELLING 

 

CAPACITY

11

The plant is being designed for minimum economically viable capacity, such that

the capital outlay is optimized. 

The capacity of the various units are as under:

-Purification: 1000 liters / hour i.e. 8000 liters / 8 hour shift.

- Bottle Manufacturing: 550 Bottles per hour per machine. 2 nos. machines will

give 1100 bottles per hour i.e. 8800 bottles per 8 hour shift.

-

Bottling: 24 Bottles per minute of 1000 ml. i.e. 1440 Bottles / hour i.e. 11520

Bottles per 8 hour shift.

- Labeling: Heat Shrink Tunnel would handle 1000 Bottles per hour.

All the 4 capacities have been nearly matched - for any adjustments some of the

machines can be run for longer duration.

BASIS & PRESUMPTIONS

This project has been drawn on the basis of following presumptions.

Working hours : 8 per shift

Number of shift/day: 3

Number of Working days: 300 per annum

Working efficiency: 75%

Total period for achieving from maximum capacity utilization: Third year the date of

12

commencement of production.

Rate of Interest : 15% per annum of Capital

MACHINES / EQUIPMENT OFFERED

Purification Section:

Flow rate : 1000 lit / hour

Raw water quality (assumed) : 1000 ppm as TDS

Description  Quantity

Alum dozer 3 lit/hr dosage 1

2 nos. pump (1W+1S) (SS)  1

Activated Carbon Filter 

Flow Rate : 2000 lit/hr.

MOC : SS 304

1

Pressure Sand Filter 

Flow Rate : 2000 lit/hr.

MOC : SS 304

1

Softener  1

Reverse Osmosis System 

Permeate Flow : 500 lit/hr.

Consist of :

5 Micron Filter SS-304 PP

H.P. Pump with 3 HP Motor

Membrane - 4 nos.

Pressure Vessel (SS-316) - 4 nos.

Instruments & panel

1

Ozone Generator  1

13

Capacity - 1 gm/hr.

Ozone Dissolution Col.

MOC : SS-316

Flow Rate : 1000 lit/hr.

UV Disinfectant 

Flow Rate : 1000 lit/hr.

1

Storage tank for Pure Water 

Capacity : 1000 ltr. SS-316

1

Total Cost 1543500/-

Bottle Manufacturing Section:

To achieve 1100 nos. bottles per hour production.

Description  Quantity

Stretch Blowing Machine:

upto 2 ltr. Capacity

(Preform Manual Loading Machine from

Conveyor to Stretch Blowing Machine)

- 2 cavity bottle upto 2 ltr. (Neck dia upto 46 mm)

- Hydro-pneumatic locking system

- With Infrared heating system conveyor and

separate Control   Panel with Microprocessor.

- Production : 550 Bottle / Hour

- Model No. TPD 2000

2

Refrigeration Unit : (Chiller) 

Cooling Capacity : 1 Ton;

(Standard Make)

2

Air Compressor :

with after cooler and moisture separator

2

Mould sets: 2

14

Double Cavity 1.5 ltr. Round shape mould in

aluminium

Double Cavity 1 ltr. Round shape mould in

aluminium

Double Cavity 500 ml. Round shape mould in

aluminium

Approx. Spares for 1 Year 2

Total Cost 1777500/-

It is possible that the air compressor be bought locally.

We are in a position to offer automatic molding machines also. 

However that would result in higher investment hence is not recommended at the

initial stages.

Bottling Section :

This section receives the empty bottles, rinses them, fills and caps them.

Description  Quantity

Stainless Steel Conveyor:

Made of S.S, 8 meter long for conveying of

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..

1

Rinsing, Filling, Capping:

This machine is designed to fill 24 bottles per

minute for 1 ltr bottle & is capable to fill 500 ml,

1000 ml, 1500 ml bottles. Machine speed is

depended on the volume to be filled.

The bottles are holded in groups of 6 & moved

1

15

on the conveyor together.

These grouped bottles are rinsed by means of

spraying pressurized water inside the bottle.

After Rincing 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.

Change parts for 500 ml and 1500 ml 1 set each 1 set each

Spare for item 2 for 2 years   

   

Total cost 1237500/- 

LABELLING & PACKING SECTION:

Description  Quantity

Shrink Tunnel:

This is fitted on the online conveyor to shrink labels

and 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.

1 

Printing Machine ( for mfg. Date & batch nos.) 

Semiautomatic machine is 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.

1 

16

Total cost 180000/-

TOTAL COST OF THE MACHINERY OFFERED = 4738500/- (for setting up one

plant)

FIXED COST

The fixed cost is expected to be as described below in INR.

Land & building 30000000

Machinery & Equipment (4

plants) 18954000

Furniture & Fixture 750000

Office Vehicles 3000000

Office Equipment 200000

Cost of boring for water 520000

Pre-operating Cost 1500000

Total Costs 54924000

Raw Materials per month

Raw Material Amount

plastics to manufacture and also to

reuse bottle @ 1.90 for 1 liter bottle with

1689600

17

cap

Chemicals and Reagents etc 1000000

Corrugated boxes, strip, tap etc 800000

Total 3489600

Salaries & Remunerations per month

No. of

staff Designation

Amount/Staff Amount

4 factory manager 10000 40000

2 clerk/typist 3500 7000

5 store cum purchase officer 3500 17500

2 Accountant 7500 15000

5 Sweeper 1500 7500

10 skilled workers like chemist 12000 120000

production manager etc

20 unskilled workers 3500 70000

4

remuneration for promoters

equity 25000 100000

Total 377000

Working capital for 1 month

18

Raw materials 3489600

salaries & remunerations 377000

electricity bill & others 500000

Total 4366600

(An working capital of is said to be maintained initially 13099800/- for the first three

months)

Total Capital Investment

fixed assets 54924000

working capital for 3 months 13099800

Total 68023800

Equity of capital investment is 40%=27209520/-

Debt raised through loan from external sources is 60%=40814280/-

ROI

Yea

r

Cash

Flow Cum CF

1

(13,856,09

2)

(13,856,09

2)

2

5,373,138

(8,482,954

)

3

19

9,844,091 1,361,137

4

14,770,890

16,132,027

5

19,569,351

35,701,377

Break – Even takes occurs during 4 years 3 months.

ROI=total profit-investment/investment

=31.2%

Cost of borrowing the loan is 15%.

HR PLANS

The company recognizes that the employees are the core and heart of our business so

as to make our employees feel happy at all points of time and to make them feel that it’s

their company we plan to initiate various measures few of those which shall be

implemented from the word go of our company are as follows

1) All Employees of all positions shall have same uniforms.

2) Holiday Trips shall be initiated (One day Trip every 6 months or yearly once)

3) Tax Planned salary structures

4) All Employees shall be covered under Gratuity Act

5) Children education Allowance & Hostel Allowance of Rs 400/- PM (For Each

Child)

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6) Gratuity shall be paid to employees who are in employment for more than five

years in our company the schedule of calculation for payment of gratuity is given

below:

Sl.N

o

Particulars Amount

1 Salary Means Last Drawn Completed month Salary

for Gratuity Calculation

I Basic Salary XXX

Ii Dearness Allowance XXX

Total XXX

2 Gratuity Calculation

15/26 X last drawn salary X No of completed years

of service or part thereof in excess of Six Months

Subject to a Maximum of Rs 10,00,000/-

XXX

Grand Total XXXX

7) Pension schemes shall be initiated

8) In Exception to the above there shall be various on work facilities they are

a. Medical Facilities

b. Personal Accident Policy

c. Conveyance allowances

d. Tea or Snacks

e. Periodicals and Journals

9) PF shall be contributed to employees at 12% of their salary (Eligible Employees)

10)ESI shall be paid to employees @4.75%(Eligible Employees)

11)For Employees above Floor Lever shall be eligible for Voluntary Retirement

Compensation (Eligible for employees who have been in the organization for

more than 10 years)

12)After 2 years of start of operations the company would announce 1% of their

profits as ESOP.

21

Report to the Bank

The total capital investment required is 68023800/-.

The debt raised through loan i.e. 60% of total capital is 40814280/- @ 15%

interest.

The break even takes place in 4years and 3 months with a Return on Investment

of 31.2%.

The following projected balance sheet would clearly represent about the financial

performance of the company over a period.

PYAAAS water Private Limited

Projected Balance Sheet as on

   

31.03.2013 31.03.201

4

31.03.201

5

31.03.201

6

31.03.201

7

  Particulars Projections

    (1) (2) (3) (4) (5)

A LIABILITIES          

             

 

Equity Share

Capital

27,209,520

27,209,52

0

27,209,52

0

27,209,52

0

27,209,52

0

             

 

Reserves &

Surplus

(19,856,092

)

429,978

5,395,247

10,766,93

0

15,965,78

7

             

  Loans

32,640,000

24,480,00

0

16,320,00

0

8,160,000

-

             

22

  Current Liabilities

20,938,172

5,718,942

6,617,329

7,907,061

10,181,82

2

             

             

  Total Liabilities

60,931,600

57,838,44

0

55,542,09

6

54,043,51

1

53,357,12

9

             

B ASSETS          

             

  Fixed Assets

49,431,600

44,488,44

0

40,039,59

6

36,035,63

6

32,432,07

3

             

  Current Assets

9,000,000

10,350,00

0

11,902,50

0

13,687,87

5

15,741,05

6

             

 

Cash & Bank

Balances

2,500,000

3,000,000

3,600,000

4,320,000

5,184,000

             

  Total Assets

60,931,600

57,838,44

0

55,542,09

6

54,043,51

1

53,357,12

9

Exit Plans

If at all the project does not succeed then the following exit plans are practiced

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Fixed assets such as land & building can be sold at an appreciated price.

Machineries can be sold at a scrap value.

The inventories that are being stored in the warehouses can also be sold to

other manufacturers for a discount price.

Or even the equity raised can be sold to others or transfer of ownership.

Using the amount collected from sale of above assets the debt that has been

acquired can be repaid.

Conclusion

Therefore it is found that the distilled water market is steadily growing every year and

the demand for water in the country can never decrease as it a basic necessity.

Therefore we believe that our project would be an success. And with our management

practice we could easily become market leader within a time span of 10 years.

Thereby we intend to start this project which has an profitability of 31.2% in order to

satisfy the needs of the customers.

Bibliography

Websites

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http://www.aquatech.com/casestudy/%2321%20Tenaska%20Cleburne%20(IC)_20070102132255.pdf

http://www.infoplease.com/cig/science-fair-projects/does-ph-water-affect-growth-bean-plants.html

http://www.sciencemadesimple.com/environmental_projects.html

http://www.pdfarticles.com/topic/distilled+water+plant+project+report.html

http://www.mineralwaterplant.com/mineral-water-autoturnkey-project.html

http://www.builditsolar.com/Projects/Water/Water.htm

http://www.alibaba.com/countrysearch/IN/distilled-water-plant.html

http://www.tradeindia.com/buyoffer/2401533/Distilled-Water-Plant.html

http://www.askme.com/mumbai/distilled-water-plant/listings

http://trade.indiamart.com/details.mp?offer=2476562395

http://meters.tradeindia.com/Exporters_Suppliers/Exporter20508.347624/Distilled-Water-Plant.html

http://www.aquachemsystems.com/services

http://allahabad.quikr.com/distilled-water-plant-equipment-Electronics-Technology/distilled-water-plant-equipment/x18222212656

http://www.sureshtraders.com/distillation-plant.htm

http://www.mapsofindia.com/sponsors/engineering-services/ro-di-water-system-india/

Books

1. The Business of Water: A Concise Overview of Challenges and Opportunities in the water market By Steve Maxwell page no 10.

2. Technology of bottled water By Dorothy A. G. Senior page no 160.

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