Business Plan on Mineral Water.

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 40 30 20 10 0

sales

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 38%

Bailley 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

BAILLEY 19%

BISLERI 11%

BISLERI

A'FINA 18%

KINLEY A'FINA

KINLEY 52%

BAILLEY

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

9%

4%

36%

Bisleri Kinleys

21%

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