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.
rainy winter summer
0102030405060708090100
sales
sales
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 PERCENTAG
E
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
Bisleri38%
Kinley28%
Aquafina11%
Bailley6%
Others17%
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
BISLERI11%
KINLEY52%
A'FINA18%
BAILLEY19%
BISLERI
KINLEY
A'FINA
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
36%
30%
21%
9%4%
Bisleri
Kinleys
AquaFina
Bailey
Others
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 forthis 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 the100 % 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