Business Development Plan

Himalaya Water Pvt. Ltd

Submitted by:
Prasun Shakya
Term-4, MBA

Submitted to:
Ace Institute of Management
Pokhara University

Submitted for the course assessment of

Master in Business Administration

Kathmandu
January, 2014

Disclaimer
The author is confident that the result of the research and the result presented in the report
will be taken as guidance for a more comprehensive study on a future date for the
concerned store. The author is not responsible or liable, legally against the results and
consequence decisions based on the response received from the interviews. The views
expressed in this report are those of the author only.

Prasun Shakya

II

Acknowledgement

Foremost, I would like to express my deep and sincere gratitude to my instructors Mr.
Ashish Tiwari, Mr. Ajay Shah, Mr. Kumar Thapa and Mr. Anand Tuladhar for sharing their
knowledge and supporting me in every step towards developing the business plan. Their
support expanded my horizon to understand the process and complexities involved in the
process.
I would like to extend my appreciation to the staff of Glacier Food and Beverage Industries
Pvt. Ltd. Badikhel, Godawari, Lalitpur for sharing their expertise on the process of water
purification, bottle sterilization and packaging.
Furthermore, I would like to thank Ace institute of management and Pokhara University for
giving such an opportunity that will enrich the learning of the MBA program.
Lastly, I would like to thank all my friends who helped me to complete the project.

Thanking you,

Sincerely,
Prasun Shakya

III

Executive Summary
Himalaya Water business will produce high quality sparkling water bottle for the first time in
Nepal. Some of the features of our product will be
1. It will have many health benefits
2. It will the first sparkling water produced in Nepal
3. It will be one of best in quality compare to other locally produced bottled water
Currently water supplied by Water Corporation is not suitable for drink. Even though there
are many bottled water industry in Nepal, they are more focus on reducing cost rather than
quality of water. Hence bottle water quality has been in decreasing trend and demand for
good quality is very high. Premium bottled water such as Himalaya On Top and Imported
sparkling bottle water like san Pellegrino, Evian etc. are very high price and most of
consumers cannot afford it. This is where the opportunity to produce a good quality
sparkling water at an affordable price exists.
One of the most attractive aspects is that our product will be different from our competitors
and it will help to attain a strong cash position and achieve profitability in the early year of
operation. Due to demand for good quality drinking water is always in the increasing trend,
our projection of quick profitability is attainable.
There will be a supervisor employed who will also supervise the entire process. Moreover, a
marketing officer and finance officer will help in the day to day functioning of the firm. The
workers will be trained on the proper way to do various activities which will increase the
efficiency and effectiveness of the overall process.
Marketing will be a crucial task as it not only involves selling but begins with spreading
awareness about sparkling water and its various health benefits. There is also a need to
change people perception towards our product that it is just not an ordinary bottle of water
but it is natural medication for prosperous health and life.
The firm will be located in Godawari, Lalitpur and established by the equity investment of
two investors at a ratio of 50% - 50% respectively. This amount will equate 60% of the entire
investment required and the other 40% will be covered by bank loan. If activities follow as
planned, the pay back is expected on the first quarter of third year. The company will
declare and pay dividends from second year onwards. The dividend will account to 70% in
net profit till year four and 80% in year five.

IV

Contents
Chapter 1: Introduction .......................................................................................................................... 1
1.1

Background ............................................................................................................................. 1

1.2 Vision............................................................................................................................................. 1
1.3 Mission .......................................................................................................................................... 1
1.4 Objectives...................................................................................................................................... 1
1.5 Key success factors........................................................................................................................ 2
1.6 Registration ................................................................................................................................... 2
1.7 Organisational Structure ............................................................................................................... 2
Chapter 2: The Industry and the Company ............................................................................................. 3
2.1 The Industry .................................................................................................................................. 3
2.2 The Company ................................................................................................................................ 4
2.3 Product and Service ...................................................................................................................... 4
2.4 Entry and Growth Strategy ........................................................................................................... 4
Chapter 3: Market research and analysis ............................................................................................... 5
3.1 SWOT Analysis............................................................................................................................... 5
3.2 Porters five competitive forces ..................................................................................................... 6
Chapter 4: Strategy and Implementation ............................................................................................... 7
4.1 Value Proposition .......................................................................................................................... 7
4.2 Competitive edge .......................................................................................................................... 7
4.3 Marketing Strategy ....................................................................................................................... 7
4.4 Positioning Statement................................................................................................................... 8
4.5 Pricing Strategy ............................................................................................................................. 8
4.6 Sales Strategy ................................................................................................................................ 8
4.7 Web Plan Summary ....................................................................................................................... 9
4.8 Distribution Strategy ..................................................................................................................... 9
4.9 Sales Forecast.............................................................................................................................. 10
Chapter 4: Manufacturing and Operations ........................................................................................... 11
5.1 Process and capacity design........................................................................................................ 11
5.2 Scheduling ................................................................................................................................... 15
5.3 Layout design .............................................................................................................................. 15
5.4 Human resource design .............................................................................................................. 15
5.5 Inventory Management .............................................................................................................. 16
5.6 Location Strategy ........................................................................................................................ 16
V

5.7 Maintenance ............................................................................................................................... 16

5.8 Time and action plan................................................................................................................... 17
Chapter 6: The Financial Plan................................................................................................................ 18
6.1 Assumptions ................................................................................................................................ 18
6.2 Proforma Income Statement ...................................................................................................... 19
6.3 Cash Flow Statement .................................................................................................................. 20
6.4 Proforma Balance Sheet ............................................................................................................. 21
6.5 Financial Ratios ........................................................................................................................... 22
6.6 Payback Period ............................................................................................................................ 22
6.7 Net Present Value ....................................................................................................................... 22
6.8 Retained Earnings ....................................................................................................................... 23
6.9 Break Even Analysis..................................................................................................................... 23
Chapter 7: Exit Strategy ........................................................................................................................ 24
Bibliography .......................................................................................................................................... 25
Annex .................................................................................................................................................... 26
Annex 1: Production Plant Cost ........................................................................................................ 26
Annex 2: Advertisement rates in Healthy Life Magazines ................................................................ 27
Annex 3: Price of Vehicle .................................................................................................................. 28
Annex 4: Price of Multifunction Printer ............................................................................................ 29
Annex 5: Price of Table ..................................................................................................................... 29
Annex 6: Price of Office Chairs .......................................................................................................... 30
Annex 7: Price of Bookcase ............................................................................................................... 30
Annex 8: Price of Cabinet .................................................................................................................. 31
Annex 9: Price of Desktop ................................................................................................................. 31
Annex 10: Price of Inverter ............................................................................................................... 32
Annex 11: Price of Telephone Handset............................................................................................. 32
Annex 12: Salary................................................................................................................................ 33
Annex 13: Fixed Assets...................................................................................................................... 34
Annex 14: Administrative expenses .................................................................................................. 35
Annex 15: Depreciation .................................................................................................................... 36
Annex 16: Loan Amortization ........................................................................................................... 36
Annex 17: Sales Revenue .................................................................................................................. 37
Annex 18: Total Investment Requirement ........................................................................................ 37
Annex 19: Purchase Budget .............................................................................................................. 38
VI

Annex 20: Cost of Raw Materials ...................................................................................................... 38

Annex 21: Price of Laptop ................................................................................................................. 39
Annex 22: Fees for Registering a Company ...................................................................................... 39
Annex 23: Website Design Quotation............................................................................................... 40
Annex 24: FNCCI Cost of Construction of Building............................................................................ 41
Annex 25: MRP Calculation ............................................................................................................... 41
Annex 26: Cost of Production per bottle .......................................................................................... 42
Annex 27: Approximation Fuel Consumption Chart for Generator .................................................. 42
Annex 28: Import Duty...................................................................................................................... 43

VII

List of Tables
Table 1: Sales forecast .......................................................................................................................... 10
Table 2: Human Resource Design ......................................................................................................... 16
Table 3: Employees roles and responsibilities ...................................................................................... 16
Table 4: Time and action plan ............................................................................................................... 17
Table 5: Income Statement ................................................................................................................... 19
Table 6: Cash flow Statement ............................................................................................................... 20
Table 7: Balance Sheet .......................................................................................................................... 21
Table 8: Financial Ratios........................................................................................................................ 22
Table 9: Payback period ........................................................................................................................ 22
Table 10: Net Present Value and IRR .................................................................................................... 22
Table 11: Retained Earnings.................................................................................................................. 23
Table 12: Break even analysis ............................................................................................................... 23
Table 13: Total Cost of Production Plant .............................................................................................. 26
Table 14: Salary ..................................................................................................................................... 33
Table 15: Details of fixed assets ............................................................................................................ 34
Table 16: Administrative expenses ....................................................................................................... 35
Table 17: Calculation of Depreciation ................................................................................................... 36
Table 18: Loan amortization ................................................................................................................. 36
Table 19: Sales revenue ........................................................................................................................ 37
Table 20: Total Investment requirement .............................................................................................. 37
Table 21: Purchase Budget ................................................................................................................... 38
Table 22: Cost of Raw materials............................................................................................................ 38
Table 23: Price of raw materials ........................................................................................................... 39
Table 24: MRP calculation..................................................................................................................... 41
Table 25: Cost of production per bottle ............................................................................................... 42

VIII

List of Figures
Figure 1: Organisational Structure of Himalaya Water........................................................................... 2
Figure 2: Porters five competitive forces ................................................................................................ 6
Figure 3: Prime International distribution network ................................................................................ 9
Figure 4: Sparkling Water Production Process...................................................................................... 11
Figure 5: Water Treatment System ....................................................................................................... 11
Figure 6: Water Chiller Tank ................................................................................................................. 12
Figure 7: Packing System....................................................................................................................... 14
Figure 8: Film Shrink-wrapping machine .............................................................................................. 14
Figure 9: Factory Layout........................................................................................................................ 15
Figure 10: Gantt Chart of Business execution....................................................................................... 17
Figure 11: Quotation for water production plant ................................................................................. 26
Figure 12: Advertisement tariff of ECS Media ...................................................................................... 27
Figure 13: Quotation of Van ................................................................................................................. 28
Figure 14: Quotation for MFC printer ................................................................................................... 29
Figure 15: Quotation for Table.............................................................................................................. 29
Figure 16: Quotation for Office Chairs .................................................................................................. 30
Figure 17: Quotation for Bookcase ....................................................................................................... 30
Figure 18: Quotation for Cabinet .......................................................................................................... 31
Figure 19: Quotation for Desktop Computers ...................................................................................... 31
Figure 20: Quotation for Inveter ........................................................................................................... 32
Figure 21: Quotation for Telephone ..................................................................................................... 32
Figure 22: Registration fees for a company .......................................................................................... 39
Figure 23: Website design quotation .................................................................................................... 40
Figure 24: Estimation of Construction cost........................................................................................... 41
Figure 25: Fuel consumption chart ....................................................................................................... 42
Figure 26: Import Duty Charges ............................................................................................................ 43

IX

Chapter 1: Introduction
1.1 Background
The situation of drinking water brings to the forefront two issues first, there is insufficient
supply in the valley and second, the water supplied by the government needs to be treated
before it can be consumed. In this backdrop, mineral water has become one of the fastest
growing businesses in the last few years. Today, there are more than 400 mineral water
brands available in the market, which is natural due to the growing demand. While the
mineral water market is saturated with both national and international brands, it is the
domestic brands that are enjoying the larger market share. Almost all of the companies that
are producing bottle water with strategy of cost minimization with little or no differentiation
and quality as secondary strategy. This is where opportunity to produce good quality
sparkling water exists in the market where the product itself is first of its kind in the
Nepalese market.
Sparkling water is water that contains carbon dioxide or hydrogen sulphide gas, whether
naturally occurring or introduced on purpose to create an effervescent drink. Sparkling
waters are often consumed on their own and can be served either plain or with a twist of
lemon or lime as garnish. They may also be used as the base for various cocktails or sodas,
and are sometimes recommended as a home remedy for an upset stomach.

1.2 Vision
To make every person in World to drink and experience Himalaya Water and consequently
feel inspired and uplifted physically, emotionally, spiritually and mentally.

1.3 Mission
Himalaya Water mission is to become the global sparkling water of choice for every home
and business and to be acknowledged as a brand of excellence and supreme quality.

1.4 Objectives

To raise a higher level of consciousness in humankind through various campaign

about health benefits of sparkling water.
To establish a facility near Godawari, Lalitpur.
To strive for sustainability in all its endeavours.
To have strong customer base.
To provide good working condition for employees.
To differentiate our product from others in the market.
1

1.5 Key success factors

Increasing the trend of drinking sparkling water raising awareness about health
benefits.
Matching the taste of Sparkling water with palette of Nepalese Consumers.
Marketing campaign to support the use of Sparkling water as base for various
cocktails and drinks as substitute to bottle water.
Offering high quality Sparkling water in an affordable price.
Effecting implementation of its operation strategy to lower the cost of production.

1.6 Registration
The following legal procedures should be followed in order to register the company as
Himalaya Water Pvt. Ltd. We should make an application to the Company Registrars Office
in the prescribed legal format, along with the prescribed official fee which is Rs. 43,000,
along with the following documents:
I.
II.
III.
IV.
V.

Memorandum of Association
Article of Association
Copy of the consensus agreement
Approval or license from a competent authority, if required
A Certified copy of the citizenship certificate

After making necessary inquiries, the Company Registrars Office will register such company
within 15 days and grant the company registration certificate

1.7 Organisational Structure

General
Manager

Finance
Department

Marketing
Department

Operation
Department

Workers
Figure 1: Organisational Structure of Himalaya Water

Chapter 2: The Industry and the Company

2.1 The Industry
Beverage is a big industry associated directly with the publics food and drinking habit.
Todays consumers are more or less health conscious and equally needs the refreshment in
their daily life. Beverage products are basically for the refreshments and enjoyments from
the daily drinking habit. People also want their health upgrade or in proper condition while
they enjoy or refresh themselves by drinks. And many of the beverages have fulfilled this
demand though some alcoholic drinks are not good for health. So, beverage industries and
their products has been an inevitable essence of modern society.
Traditional drinks like tea, coffee and traditional wines are taken the symbols of human
civilization and they are being used in almost every society around the globe from the very
ancient periods. These drinks are the part of our daily drinking habit. Non-alcoholic soft
drinks and alcoholic hard drinks are the modern concept of drinking habit which is used all
over the world in very wide range. These all type of drinks has been a civilization symbol
today. This signifies the scope of beverages industries and their product. Fluid intake is very
essential for health. Water makes up the 70% of bodys weight and contributes towards
many of the bodily function. Vitamins and minerals are equally important for good health.
The beverages like juices and soft drinks, mineral waters are designed to upgrade the health
of the consumers while providing the refreshment as they consist of vitamins and minerals.
Hence these all symbolize the scope of beverage industries and their products.
The worlds bottled water industry recorded a yearly growth rate of 4% in 2010 to exceed
$99 billion. The market is expected to expand by more than 27% in the five-year period
ending 2015 to generate more than $126 billion in revenue. In 2010, the market had a
volume in excess of 152 billion litres, forecast to reach close to 183 billion litres in 2010,
representing a 20% increase in five years.
Contaminated water in taps, a scarcity of drinking water, higher urban living standards and
the tourism industry have all combined to boost the production of bottled drinking water in
Nepal. Bottled water is now an industry with a very high turnover of more than Rs. 200
million a year and market is still growing by about 50% a year. With new export markets
being tapped it could one day have the same stature as the carpet industry once had.
Nepal has one of the lowest figures for access to safe drinking water among developing
countries. Some would say that the water supplied in Kathmandu taps by the Nepal Drinking
Water Supply Corporation is the real "mineral" water since it is contaminated with so much
chemical and organic pollutants. It is the poor quality of tap water along with shortage of
water that has led the people to start buying water.

There are more than 400 bottle water companies in Nepal and many unregistered
companies as well. The fast-growing bottled-water industry is highly unregulated as studies
have shown that one fourth of the water distributed in the market is contaminated. About
25 per cent of the bottled-water companies based in the Kathmandu Valley have been
flouting the standards set by the Department of Food Technology and Quality Control.

2.2 The Company

One of the most essential things for any living beings in the world is water and to human
beings drinking water is essential for its survival. Due to mass globalization, modernization
and industrialization, water is being polluted. There is scarcity of hygienic water around the
world and it is even worse in Kathmandu Valley. Research has shown that 90% of human
diseases are water borne. The demand of quality and hygienic drinking water is increasing
and also many bottled water companies are being established to meet this demand.
Initially our company will be producing sparkling water which will be hygienic, high quality
and having lots of health benefits compare to other bottled drinking water in the market.
The production facility will be located in Godawari, Lalitpur.

2.3 Product and Service

The product will name as Himalaya Sparkling Water because Nepal is known around the
world for its great Himalayan ranges. This name will represent our sparkling water as pride
of Nepal. Compared to the bottle water available in the market, the drinking sparkling water
brought about significant reductions in the level of low density lipoprotein (LDL) cholesterol
(generally regarded as a risk factor for heart disease), as well as a significant increase in
levels of high density lipoprotein (HDL) cholesterol (generally taken to reduce heart disease
risk). These and other biochemical changes induced by drinking sparkling water were
estimated to reduce the womens risk of developing heart disease over the next decade by
about a third. The water will be packaged in clean and sterilized plastic bottles of 1000ml (1
litre).

2.4 Entry and Growth Strategy

Increasing urbanization has increase air and water pollution in towns and cities in Nepal. In
most part of urban areas, there is even scarcity of drinking water and people are having
difficulty finding quality drinking water. Due to scarcity of quality drinking water, there is
increase rate of water borne diseases in Nepal and people are being conscious about the
safe and hygienic drinking water. There are more than 400 bottled water companies across
the Nepal but only few of companies maintain their quality in production. Almost all of them
are producing spring bottled water as there is not much differentiation among the products.
The Sparkling Water will be first of its kind in Nepal and will enter the market with a strong
marketing campaign to raise awareness about the product and its health benefits.
With the help of our distribution partner, we will focus on distributing our product around
the country and in the future to export to international market.
4

Chapter 3: Market research and analysis

3.1 SWOT Analysis
There are factors internal and external that affects the competencies of any business.
Internal factors are the management capability and resources that provide strength to the
company. On the other hand, challenges and threats provided by the external factors of the
business will also be abundant. The know strength and weakness will help the business
opportunity to face challenges and quantify threats.
Strength

There will be a goodwill generation by providing hygienic and quality water.

Provide water that is health beneficial.
Lower cost product than other imported product
Impart not only products but also awareness and effective use.

Weakness

Getting the skilled and dedicated manpower

Getting funding as its a new start-up

Opportunity

The market for sparkling have not yet been met, therefore there is a larger market
Establishment of goodwill by providing quality and health beneficial sparkling water
Increasing awareness about health issues related with unhygienic water

Threat

Wider availability of cheaper spring water

The unstable political environment
The increasing unionization
Changing government policies (e.g. increment in minimum wage)

3.2 Porters five competitive forces

Porters five competitive forces can be used to analyse following factors

Figure 2: Porters five competitive forces

Threat of new entrants in the market:

Threat of new entrants in the market for Sparkling water is very low as it requires high
investment which will be barrier for new entrants.
Threat of Substitutes:
The exact substitute products are expensive imported products which customers are not
buying due to high price. There are many spring bottled water in the market which can be
substitute for sparkling water but increasing awareness about product benefits compare to
other spring water could minimize the threat of substitutes.
Bargaining power of consumers:
Consumers have alternative to go for cheaper spring water in the market due to which there
is high bargaining power of consumers and setting price of product that will match the
consumers ability and willingness to pay for the product will help to increase the sale of this
product.
Bargaining power of suppliers:
Firms can switch between suppliers very quickly and easily. Suppliers for the bottle water
industry do not hold much competitive pressure. Suppliers to the industry are bottling
equipment manufacturers and secondary packaging suppliers which can be found in
abundance hence decreasing their bargaining power.
6

Chapter 4: Strategy and Implementation

4.1 Value Proposition

We offer a sparkling water that is pure and high quality product with a price lower
than other imported sparkling water in the market.
We offer a product that is health beneficial when comparing it to locally available
bottled water.

4.2 Competitive edge

The following are the summarized competitive edge of our product

Health Benefits: There are many health benefits of sparkling water compare to
bottled water in the market.
Price: The price of our sparkling water will be much lesser imported sparkling water.
Differentiation: Our sparkling water will first one to be produced locally and differs
from all locally bottled water in market.
Quality Water: There are only few companies in Nepal that supply high quality
drinking water in the market. Therefore we can establish our product as a top quality
provider of sparkling water.
Superior customer service: Company will provide superior customer service in all
aspects of the company operations.
Environment Friendly: All of bottles will be recyclable hence helps minimize the
environment degradation.
Base for cocktails and hard drinks: The sparkling are best used as base for cocktails in
bars and restaurants and for those people who drink whiskies with water or soda,
sparkling water is best complement for them to enjoy their drinks rather than using
water or soda.

4.3 Marketing Strategy

In order to effectively and quickly build its customer base, Himalaya water will use multitude
of marketing strategies to promote and expand the product in the market.
Free Trials
Free Trials marketing approach has been found to be extremely effective in enticing
consumers to try sparkling bottled water and taste the difference among other bottled
water. Free trials will be conducted in various departmental stores, restaurants, fitness
centre, pharmacy, hospitals and malls.

Advertising
The Company will create marketing campaigns within local newspapers Kantipur and
Healthy Life magazine of ECS media, social media platform like Facebook, twitter, Google + ,
and promote the business through word of mouth advertising.
Trade and Consumer Shows
Attendance and exhibits at local home and mall shows is also planned, to keep the Sparkling
Bottled Water name constantly in front of consumers.
Placements
The company will be focusing on placing sparkling bottled water in two places

Hospital and Clinics: People who are sick and who are health conscious are main
stream people coming to hospitals and clinics. Since sparkling water has additional
health benefits; it will be able to meet demand of the consumer visiting hospitals.
Restaurants, Pubs and Hotels: Sparkling water is one of good base for cocktails and
whiskies hence these areas will be heavily targeted with different promotional
campaigns in these areas.

4.4 Positioning Statement

Himalaya Sparkling water will be of highest quality pure drinking water that will have health
benefits that cannot be matched by competitor product in Nepal at our price.

4.5 Pricing Strategy

The price of our product will be lower than imported sparkling water available in the market
whereas it will be higher than the most of bottle water produce in Nepal except Himalaya
on Top Mineral water. Since the product is of high quality and has lot of health benefits, it
justifies its higher price compared to bottle water produce in Nepal. The average price of 1
litre of imported sparkling water such as San Pellegrino cost around Rs. 200 in the market
and Himalaya on Top mineral water market price for 500ml is around Rs. 40. Average price
of bottle water in the market is Rs. 15. We would be offering our Sparkling water with MRP
of Rs.55 in the market. (Annex 25 for calculation of MRP)

4.6 Sales Strategy

Our sales force will be outsourced to the Prime International which is member of ICTC
group. The company has been very successful in the past dealing with beverage products
and has very highly motivated, trained and groomed sales professionals.

4.7 Web Plan Summary

Our website will be designed by Nepal Media Network and website will be our virtual
business card and portfolio of the company. The website will be a simple, well designed
website that provides information to the customers on our products and services. Our
website will be an important means by which we can educate potential customers about
health benefits and the potential uses of our products and services. Outsourcing our
website design with Nepal Media will help us in following ways
Build Help design and host attractive and very effective web site for our business
Market Help us attract people to our web site
Convert Help convert the visitors to our site into our customers.

4.8 Distribution Strategy

Our distribution will be exclusively contracted to ICTC Group Company Prime International
who is specialized in promoting, marketing and distribution of different kinds of Consumer
products all over the country.
To deliver its products to customers/CONSUMER located anywhere in Nepal, Prime
International has established a robust distribution network covering the whole country. It is
at the moment dealing with products like Confectionaries, Liquor, Beer, Detergents.

Figure 3: Prime International distribution network

4.9 Sales Forecast

The total sales of bottle water per day in Kathmandu Valley is estimated around 25,000
cases of 1 litre bottles which is equivalent to 3,00,000 bottles per day. In a year total no. of
bottle sales will be estimated around 10,95,00,000. The market share of Himalaya Water is
estimated to be 3%. Thus, market demand for sparkling water is as follows.
Our market is 3% of 109500000 litres of bottle of water in a year
Total market share = 3% of 10,95,00,000
Year
1
2
3
4
5
6

Target Sales
30%
40%
60%
70%
90%
90%

= 5760000
Projected Sales( Bottle)
17,28,000
23,04,000
34,56,000
40,32,000
51,84,000
51,84,000

Table 1: Sales forecast

10

No. of Cases
1,44,000
1,92,000
2,88,000
3,36,000
4,32,000
4,32,000

Chapter 4: Manufacturing and Operations

5.1 Process and capacity design

Water Treatment System

Processing System

Filing System

Packing System
Figure 4: Sparkling Water Production Process

1) Water Treatment System

Figure 5: Water Treatment System

Water is pumped through raw water pump and store in the raw water tank
When water come through the machine, silica sand filter will stop suspend
substance, protect the machine, clean the water and cleanses the equipment
itself which will prolong the life of machine.
11

After silica sand filter it passes through active carbon filter for further
filtration.
Precision filter is made of stainless steel as a small tank which contains
precision filter membrane, which allows only un-treated water go through
the membrane, and does not allow any liquid go through another part, so it
can filter the un-treated water.
Reverse osmosis is made up of pre-process part, 1st reverse osmosis and
ozone process and so on, and applied to unit structure.

2) Processing System
The processing system includes following parts

Beverage Pump
Mixing Tank
Water Chiller Tank: The tank contains compressor using Freon F-12 as
refrigerant and pressure sensor, and temperature regulator for automatic
controlling

Figure 6: Water Chiller Tank

Beverage mixing machine: It is used for mixing and improving the proportion
of water and carbon dioxide. It adopts foreign advanced technologystatic
mixer to lighten water layer, increase carbonizing time, assure mixing result
and deoxying. It adopts high-quality water pump and SEIMENS electrical
equipment and other parts to form complete automatic control system.

Pipes and valves

Control Cabinet
12

3) Filling System
The filling system compromises of following parts and equipment

Bottle platform table

Washing filling capping machine: This machine works harmoniously with airconveyor belt. It holds the bottles by the neck, thus, reducing the possibility
of bottles falling over during conveying process. This machine is used to fill
carbonated drink into pet bottle and with screw caps capping function. This
machine integrated three function: 1. rinse the empty pet bottle, 2. filling
the rinsed bottles, 3.capping the filled bottles

Rinser Station: Rinser station contains 304 stainless steel rinser heads, water
spray style inject design, more save water consumption & more clean, 304
Stainless steel Gripper with plastic pad to ensure minimal bottle crash during
washing and 304 stainless steel washing pumps.

Filling Station: It has accurate, high precision filling nozzle together with
vacuum pump regurgitant system, to ensure the high filling precision, ensure
same filling level with adjustable filling temperature. When there is no bottle
there will be no filling.

Capper Station: Place & capping system, electromagnetic capping heads, with
burden discharge function, make sure minimum bottle crash during capping
and when there is no bottle no capping and automatic stop when there is
lack of caps.
o Auto cap elevator: The machine mainly includes cap storage case,
conveyor pipeline, drive device and appliance control.
o Electric Part & Safe Device & Automation
o Machine Base & Machine Construction
o Conveyer system
o Air conveyer
o Light checker

13

4) Packing System
The packing system contains following parts

Drying machine: It is used to dry the bottle that feeding from the Rinser Filler
Capper with pressured air, make them suitable to the post-packaging
Automatic sleeve shrink labeling machine

Figure 7: Packing System

Ink jet printer: It is used for automatic printing for date of manufacture, batch
numbers, shift numbers.
Film Shrink-wrapping machine

Figure 8: Film Shrink-wrapping machine

14

5.2 Scheduling
Effective scheduling is required for smooth operation of the factory. During the first year of
operation, in the summer season where demand is high for water, the factory will be
schedule to run from 7am to 7pm 7 days a week and in off season where demand is less, the
factory will be schedule to run from 9am to 5pm 7 days a week. This will make effective and
efficient use of our resources. We will be making decision on increasing the production
hours on the basis of sales forecast from second year.

5.3 Layout design

Figure 9: Factory Layout

5.4 Human resource design

Human resources is the most basic and fundamental part of our operations. We need
people to fulfil our missions, goals and objectives like any other organization. Most
importantly we need an expert who can monitor and supervise on the day to day operations
and improvise for better and faster production. We also need qualified technician for
regular maintenance of all the machineries. There will be 10% increment in salary every year
for all employees.
We have planned on the following number of employees on different post for year 1:

15

Human Resources
General Manager
Finance Manager
Marketing Manager
Supervisor/Technician
Workers
Sweeper

Staff
1
1
2
2
6
1

Year 1
Salary
(each)
25,000
15,000
15,000
15,000
8,000
8,000

Total
/month
25,000
15,000
30,000
30,000
48,000
8,000

Table 2: Human Resource Design

Human Resources

Roles & responsibilities

Responsible for recruiting staffs, employee leave management,

monitoring the operations, assigning jobs to analysts, job evaluation,
finding if there is a need of external contractors etc.
Finance and Marketing Responsible for maintaining financial statements, employee benefits,
incentives, marketing activities, promotional activities, brand
Officer
management etc.

General Manager

Expert / Supervisor

Responsible for providing training to the workers and supervising day

to day workings.

Workers

Responsible for operating plants and machineries

Table 3: Employees roles and responsibilities

5.5 Inventory Management

Our inventories consist of plastic bottles, bottle caps, labels and cartons and quantity of
these inventories will be kept on the basis of sales projection for next months. Inventory of
bottle of sparkling water will be 200 cartons and usually inventory are stored in FIFO basis
and usually store for not more than 2 days as its shelf life is around 3 months.

5.6 Location Strategy

Location largely affects the productivity and efficiency of the manufacturing unit. Being a
water producing company, the location we have chosen is where there is plenty of water
and where there is proper road for distribution to the dealers. With this prospective in mind
we have chosen Godawari, Lalitpur as our location for the factory. The advantageous of
Godawari over other location in Kathmandu valley is its geological formation which is
famous for its spring water.

5.7 Maintenance
Maintenance is a crucial part of our continued operations of plant. All necessary office
equipment, web site and machinery needs periodic tune up. For this purpose we will hire an
external technician for quarterly service fee.

16

5.8 Time and action plan

Activity

Duration
(Weeks)
6
2
24
3+1(Training)

Preparing the business plan

Registration of Business
Factory layout and establishment
Hiring professionals and supporting staffs
Table 4: Time and action plan
Weeks

10 12 14 16 18 20 22 24 26 28 30 32 34 36

(worked)

Activity
Preparing
Business Plan
Registration
of business
Factory
layout

&

establishment
Hiring
professionals
& supporting
staffs

Figure 10: Gantt Chart of Business execution

17

Chapter 6: The Financial Plan

6.1 Assumptions

Costs of Goods Sold: Cost of production includes all the costs of raw materials such
as water, gases, bottles, labels, cartons, electricity and direct labour.
Salary: Salary of the employees is increased by 10% from the second year. Since the
company starts earning profit from the second year, we decided to increase the
good amount of income for the employees as well as number of employees. The
details of the salary to be distributed to the staffs according to their positions are
shown in Annex 12.
Advertisement: The advertisement expenses are assumed to grow every year by 20%
and would be expanded depending upon the growth of business. The detail of
calculation of advertisement expense is shown in Annex 14.
Lease: A 3 ropani land will be lease for 10 years at Godawari, Lalitpur and the facility
is built. The yearly lease will amount to Rs. 300,000. The rate of lease of land and
building is calculated using data provided by Glacier Food and Beverage.
Construction cost of building data from FNCCI is used to calculate the cost which is
shown in Annex 24. Construction cost of factory building is Rs.1200 per sq. ft. and
since we will be built on 2 Ropani of Land which will equate to 10952 sq. ft. The total
cost of construction of building will be Rs. 1200 x 10952 = Rs. 13142400
Depreciation: The assets of the store are depreciated under diminishing balance
method at the rate of 5% for building, 15% for machinery and 25% for furniture and
office equipment. The calculation is shown in Annex 15.
Interest on loan: The interest rate on loan is 15%, which will be paid annually in 5
years. The loan amortization schedule is shown in Annex 16.

18

6.2 Proforma Income Statement

Particulars
Revenue from
Sales
Total Re ve nue
Less: Cost of
Raw Materials
Less: Direct
Labor
Gros s Profit
Le s s Expe ns e s :
Salary
Administrative
Expenses
Generator Fuel
Preliminary exp
W/O
Total Expe ns e s
EBIT
Less:
Depreciation
Less: Interest @
15%
EBT
Tax @ 25%
Ne t Profit

Ye ar 1
6,04,80,000

Ye ar 2
8,06,40,000

Ye ar 3
12,09,60,000

Ye ar 4
14,11,20,000

Ye ar 5
18,14,40,000

6,04,80,000

8,06,40,000

12,09,60,000

14,11,20,000

18,14,40,000

3,38,16,000

4,50,48,000

6,75,12,000

7,87,44,000

10,12,08,000

78,000

85,800

1,29,250

1,61,563

2,68,555

2,65,86,000

3,55,06,200

5,33,18,750

6,22,14,438

7,99,63,445

19,50,000

21,45,000

34,81,500

43,51,875

66,58,008

1,33,54,000
32,13,600

1,47,14,800
33,74,280

1,71,85,980
35,42,994

1,97,62,118
37,20,144

2,08,93,878
39,06,151

2,92,967
1,88,10,567
77,75,433

2,92,967
2,05,27,047
1,49,79,153

2,92,967
2,45,03,441
2,88,15,309

2,92,967
2,81,27,103
3,40,87,334

2,92,967
3,17,51,003
4,82,12,442

54,09,715

46,51,721

40,07,028

34,58,117

29,90,257

27,59,458
75,67,975
18,91,994
56,75,981

22,06,834
2,26,01,448
56,50,362
1,69,51,086

15,71,317
2,90,57,900
72,64,475
2,17,93,425

8,40,472
4,43,81,714
1,10,95,428
3,32,86,285

32,40,000
(8,74,282)
(2,18,570)
(6,55,711)

Table 5: Income Statement

19

6.3 Cash Flow Statement

Particular
A. Revenue:
Beginning Balance
Equity Financing
Loan financing
Revenue from sale
Total receipts
B. Disbursement:
Preliminary expenses
Fixed assets
Purchase
Dividend paid
Payment of loan
administrative expenses
Salary expenses
Generator fuel
Interest payment
Tax payment
Total Disbursement
Surplus/Deficit (A-B)
Less: Investment
Ending cash balance

Year 0
3,24,00,000
2,16,00,000
5,40,00,000

Year 1

Year 2

Year 3

Year 4

Year 5

77,58,767

58,48,121

69,12,632

1,09,90,930

1,22,91,140

6,04,80,000
6,82,38,767

8,06,40,000
8,64,88,121

12,09,60,000
12,78,72,632

14,11,20,000
15,21,10,930

18,14,40,000
19,37,31,140

3,75,70,000
32,03,616
1,33,54,000
20,28,000
32,13,600
32,40,000
(2,18,570)
6,23,90,646
58,48,121

4,69,20,000
40,00,000
36,84,158
1,47,14,800
22,30,800
33,74,280
27,59,458
18,91,994
7,95,75,490
69,12,632

6,84,48,000
1,20,00,000
42,36,782
1,71,85,980
36,10,750
35,42,994
22,06,834
56,50,362
11,68,81,702
1,09,90,930

8,06,16,000
1,75,00,000
48,72,299
1,97,62,118
45,13,438
37,20,144
15,71,317
72,64,475
13,98,19,790
1,22,91,140

10,12,08,000
2,67,00,000
56,03,144
2,08,93,878
69,26,563
39,06,151
8,40,472
1,10,95,428
17,71,73,636
1,65,57,504

58,48,121

69,12,632

1,09,90,930

1,22,91,140

1,65,57,504

14,64,833
4,47,76,400

4,62,41,233
77,58,767

Table 6: Cash flow Statement

20

6.4 Proforma Balance Sheet

Ye ar
ASSETS
Curre nt As s e ts
Cash and cash equivalents
Inventory
Total Curre nt As s e ts
Fixe d As s e ts
Land lease
Building
Less: Accumulated Depreciation
Machinery & Equipments
Less: Accumulated Depreciation
Furniture and Fixture
Less: Accumulated Depreciation
Office equipment
Less: Accumulated Depreciation
Vehicle
Less: Accumulated Depreciation
Investments
Total Fixe d As s e ts
Intangiable Fixe d as s e t:
Preliminary expenses
TOTAL ASSETS
LIABILITIES
Long Te rm Liabilitie s
Bank Loan
Total Long Te rm Liabilitie s
Capital & Equity
Equity
Retained Earning
Total Equity
TOTAL LIABILITIES AND EQUITY

Ye ar 1

58,48,121
37,54,000
96,02,121
300000
13142400
(6,57,120)
3,06,34,050
(45,95,108)
55,350
(13,838)
2,94,600
(73,650)
3,50,000
(70,000)
3,93,66,685

Ye ar 2

69,12,632
56,26,000
1,25,38,632
300000
12485280
(6,24,264)
2,60,38,943
(39,05,841)
41,513
(10,378)
2,20,950
(55,238)
2,80,000
(56,000)
3,47,14,964

Ye ar 3

1,09,90,930
65,62,000
1,75,52,930
300000
11861016
(5,93,051)
2,21,33,101
(33,19,965)
31,134
(7,784)
1,65,713
(41,428)
2,24,000
(44,800)
3,07,07,936

Ye ar 4

1,22,91,140
84,34,000
2,07,25,140
300000
11267965.2
(5,63,398)
1,88,13,136
(28,21,970)
23,351
(5,838)
1,24,284
(31,071)
1,79,200
(35,840)
2,72,49,819

Ye ar 5

1,65,57,504
84,34,000
2,49,91,504
300000
10704566.94
(5,35,228)
1,59,91,166
(23,98,675)
17,513
(4,378)
93,213
(23,303)
1,43,360
(28,672)
2,42,59,562

11,71,867
5,01,40,673

8,78,900
4,81,32,496

5,85,933
4,88,46,800

2,92,967
4,82,67,925

4,92,51,066

1,83,96,384
1,83,96,384

1,47,12,226
1,47,12,226

1,04,75,444
1,04,75,444

56,03,144
56,03,144

0
0

3,24,00,000
(6,55,711)
3,17,44,289
5,01,40,673

3,24,00,000
10,20,270
3,34,20,270
4,81,32,496

3,24,00,000
59,71,356
3,83,71,356
4,88,46,800

3,24,00,000
1,02,64,781
4,26,64,781
4,82,67,925

3,24,00,000
1,68,51,066
4,92,51,066
4,92,51,066

Table 7: Balance Sheet

21

6.5 Financial Ratios

Particulars
Return on Investments (%)
Return on Assets (%)
Debt-to-Equity Ratio
Return on Equity (%)

Year 1
-1.29
-1.31
0.57
-2.02

Year 2
12.05
11.79
0.45
17.52

Year 3
39.54
34.70
0.32
52.32

Year 4
57.35
45.15
0.17
67.26

Year 5
102.74
67.58
0.00
102.74

Table 8: Financial Ratios

6.6 Payback Period

Year
0
1
2
3
4
5

Investment
(5,40,00,000)

Cashflow
0
47,54,004
1,03,27,702
2,09,58,114
2,52,51,543
3,62,76,542

Payback Period in Years

Cumulative CF
(5,40,00,000)
(4,92,45,997)
(3,89,18,295)
(1,79,60,181)
72,91,361
4,35,67,904
3.29

Table 9: Payback period

6.7 Net Present Value

Year 0
Year 1
Cash Flow (5,40,00,000) 47,54,004

Year 2
1,03,27,702

Year 3
2,09,58,114

Year 4
2,52,51,543

Year 5
3,62,76,542

NPV
Rs. 89,53,119.56

IRR
17%

Table 10: Net Present Value and IRR

The Net Present Value is positive for the business, which means business will be in profit. So, it would be better to start the business. The
Internal Rate of Return (IRR) is 17%.
22

6.8 Retained Earnings

Particulars
Opening balance
Net income (profit)
Less: Dividend
Closing balance (RE)

Year 1
(6,55,711)
(6,55,711)

Year 2
(6,55,711)
56,75,981
40,00,000
10,20,270

Year 3
10,20,270
1,69,51,086
1,20,00,000
59,71,356

Year 4
59,71,356
2,17,93,425
1,75,00,000
1,02,64,781

Year 5
1,02,64,781
3,32,86,285
2,67,00,000
1,68,51,066

Table 11: Retained Earnings

Dividend is distributed from 2nd year and In 2nd and 3rd year, around 70% of Net Profit is distributed as dividend and around 80% in the 4th and
5th year.

6.9 Break Even Analysis

Particulars

Year 1

Sales
Fixed Cost
Variable Cost
BEP (%)
VC/Revenue
1-VC/Revenue
BEP in Rupees

6,04,80,000
1,16,44,682
4,64,69,600
0.83
0.77
0.23
5,02,67,683.09

Table 12: Break even analysis

The companys break even sales for first year is Rs. 5,02,67,683.09

23

Chapter 7: Exit Strategy

There are many constraints for a business of this nature to succeed in Nepal as the
competition is too high. Hence, if the company suffers tremendous loses and needs to be
shut down, two alternatives will be considered:
The first alternative is that the company will try to tie up with other similar company,
prioritizing the outside investors.
The next alternative is to sell all the assets of the company such as machineries, equipment,
generator, computers, laptops, furniture and so on.

24

Bibliography
Nepali

Times.
(2000,
August).
Retrieved
December
http://nepalitimes.com/news.php?id=11264#.UtGFsvQW1at

The

Himalayan
Times.
(2011).
Retrieved
December
5,
2013,
from
http://www.thehimalayantimes.com/perspectives/fullnews.php?headline=for+quality+contr
ol&newsid=MTI0NQ==

Cooking

Stackexchange . (2013, January 14). Retrieved December 2013,

http://cooking.stackexchange.com/questions/30055/how-much-co2-does-it-take-tocarbonate-water-using-a-household-soda-siphon

from

Soda

Stream.
(n.d.).
Retrieved
November
http://www.sodastreamusa.com/

USA:

25

2013,

from

24,

Soda

2013,

Stream

from

Annex
Annex 1: Production Plant Cost

Figure 11: Quotation for water production plant

Description
Price
Import Duty(5%) Total Cost
Water Production Plant
23961000
1198050
25159050
CO2 Production Plant
2560000
128000
2688000
Cost with Import Duty
27847050
Installation
55000
Air Ticket for Installer
32000
Accomodation
100000
Shipping Cost of Plants
1100000
Total Cost of Production Plant
29134050
Table 13: Total Cost of Production Plant

26

Annex 2: Advertisement rates in Healthy Life Magazines

Figure 12: Advertisement tariff of ECS Media

27

Annex 3: Price of Vehicle

Figure 13: Quotation of Van

28

Annex 4: Price of Multifunction Printer

Figure 14: Quotation for MFC printer

Annex 5: Price of Table

Figure 15: Quotation for Table

29

Annex 6: Price of Office Chairs

Figure 16: Quotation for Office Chairs

Annex 7: Price of Bookcase

Figure 17: Quotation for Bookcase

30

Annex 8: Price of Cabinet

Figure 18: Quotation for Cabinet

Annex 9: Price of Desktop

Figure 19: Quotation for Desktop Computers

31

Annex 10: Price of Inverter

Figure 20: Quotation for Inveter

Annex 11: Price of Telephone Handset

Figure 21: Quotation for Telephone

32

Annex 12: Salary

Human Resources
General Manager
Finance Manager
Marketing Manager
Supervisor/Technician
Workers
Sweeper

Total Staffs
Total Expenses per
month
Total Expenses /year

Year 1
Salary
Staff
(each)
1 25,000
1 15,000
2 15,000
2 15,000
6
8,000
1
8,000

Year 2
Total
Salary
Staff
/month
(10%
25,000 1
27,500
15,000 1
16,500
30,000 2
16,500
30,000 2
16,500
48,000 6
8,800
8,000
1
8,800

Total
Staff
/month
27,500 1
16,500 2
33,000 3
33,000 2
52,800 8
8,800
1

Year 3
Salary
(10%
34,375
20,625
20,625
20,625
11,000
11,000

Total
Staff
/month
34,375 1
41,250 2
61,875 3
41,250 2
88,000 8
11,000 1

Year 4
Salary
(10%
42,969
25,781
25,781
25,781
13,750
13,750

Total
Staff
/month
42,969 1
51,563 2
77,344 4
51,563 3
1,10,000 10
13,750 1

Year 5
Salary
(10%
53,711
32,227
32,227
32,227
17,188
17,188

13

13

17

17

21

1,56,000

1,71,600

2,77,750

3,47,187.50

5,32,813

20,28,000

22,30,800

36,10,750

45,13,438

69,26,563

Table 14: Salary

33

Total
/month
53,711
64,453
1,28,906
96,680
1,71,875
17,188

Annex 13: Fixed Assets

Items
Land and building:
Land lease
Building
Machinary:
Production System
GI Pipe
Generator
Furnitures:
Table
Chair
Plastic chairs
Bookcase
Cabinet
Office equipment:
Computers
Printer/
Scanner/Photocopier
Invertor/UPS
Laptops
Telephone set
Other
Vehicle
Total Fixed Assets

Year 1
Rate

Qty
3 ropani
1

Total
3,00,000
1,31,42,400

2,51,48,000

14,70,000

2,91,34,050
30,000
14,70,000

4
4
15
2
2

3,990
1,990
990
3,290
5,000

15,960
7,960
14,850
6,580
10,000

25,000

50,000

1,17,000

1,17,000

1
1
1

70,000
48,600
9,000

70,000
48,600
9,000

3,50,000
4,47,76,400

3,50,000

Depriciation per year

Balance after depreciation

Qty

Year 2
Rate

Total

Qty

Year 3
Rate

300000

Total

Qty

Year 4
Rate

300000

Total

Qty

Year 5
Rate

300000

300000

3,96,66,685

3,53,14,964

3,16,07,936

2,84,49,819

54,09,715

46,51,721

40,07,028

34,58,117

29,90,257

3,93,66,685

3,50,14,964

3,13,07,936

2,81,49,819

2,54,59,562

Table 15: Details of fixed assets

34

Total

Annex 14: Administrative expenses

Particular
Electricity
Telephone @3000
Internet @ 1500
Office expense@ 2000
Stationary @1000
Registration
Fuel for Vehicle
Website maintenance
Total Operating Cost
Marketing:
Advertisement in ECS Media (Half Page)
(20 % annual increment)
Business cards@5
Advertisement in kantipur (180cc*800)
(20% annual increment)
Trade and Consumer Shows
Placements
Free Trials
Total marketing cost
Machine Servicing
Ronash Testing
Social Organization
Godawari Club
Auditors Fee (20% increment)

Total Miscelleneous expenses

Total

Year 1

Year 2

Year 3

9440000
10280000
11960000
36,000
39,600
43,560
18,000
19,800
21,780
24,000
26,400
29,040
12,000
13,200
14,520
43,000
2,000
2,000
1,56,000
1,71,600
1,88,760
2,000
2,400
2,880
97,31,000 1,05,55,000 1,22,62,540

Year 4
13640000
47,916
23,958
31,944
15,972
2,000
2,07,636
3,456
1,39,72,882

Year 5
13640000
52,708
26,354
35,138
17,569
2,000
2,28,400
4,147
1,40,06,316

5,46,000
7,000

6,55,200
7,000

7,86,240
7,000

9,43,488
7,000

11,32,186
7,000

25,92,000
2,00,000
1,00,000
1,00,000
35,45,000
12,000
6,000
15,000
25,000
20,000

31,10,400
1,00,000
1,00,000
1,00,000
40,72,600
13,200
6,000
16,500
27,500
24,000

37,32,480
1,00,000
1,00,000
1,00,000
48,25,720
14,520
6,000
18,150
30,250
28,800

44,78,976
50,000
1,00,000
1,00,000
56,79,464
15,972
6,000
19,965
33,275
34,560

53,74,771
50,000
1,00,000
1,00,000
67,63,957
17,569
6,000
21,962
36,603
41,472

78,000
87,200
97,720
1,09,772
1,23,605
1,33,54,000 1,47,14,800 1,71,85,980 1,97,62,118 2,08,93,878

Table 16: Administrative expenses

35

Annex 15: Depreciation

Particulars
Building@ 5%
Depreciation
Machinery@ 15%
Depreciation

Year 1
Year 2
Year 3
Year 4
Year 5
1,31,42,400 1,24,85,280 1,18,61,016 1,12,67,965 1,07,04,567
6,57,120
6,24,264
5,93,051
5,63,398
5,35,228
3,06,34,050
45,95,108

2,60,38,943
39,05,841

2,21,33,101
33,19,965

1,88,13,136
28,21,970

1,59,91,166
23,98,675

55,350
13,838

41,513
10,378

31,134
7,784

23,351
5,838

17,513
4,378

Office equipment @ 25%

Depreciation

2,94,600
73,650

2,20,950
55,238

1,65,713
41,428

1,24,284
31,071

93,213
23,303

Vehicle @ 20%
Depreciation

3,50,000
70,000

2,80,000
56,000

2,24,000
44,800

1,79,200
35,840

1,43,360
28,672

Furniture @ 25%
Depreciation

Table 17: Calculation of Depreciation

Annex 16: Loan Amortization

Year
1
2
3
4
5

Beginning Balance
2,16,00,000
18396384
14712226
10475444
5603144

Scheduled Payment
6443616
6443616
6443616
6443616
6443616

Principal
3203616
3684158
4236782
4872299
5603144

Table 18: Loan amortization

36

Interest
3240000
2759458
2206834
1571317
840472

Ending balance
18396384
14712226
10475444
5603144
0

Annex 17: Sales Revenue

Sources of
Revenue

1st year
Price per
Quantity
bottle

No. of Bottles 17,28,000

Total
Revenue

35

Year 2
Total

6,04,80,000

6,04,80,000

Quantity

Year 3

Price per bottle

23,04,000

Total

35

8,06,40,000

Quantity

34,56,000

8,06,40,000

Price per bottle

35
12,09,60,000

Table 19: Sales revenue

Annex 18: Total Investment Requirement

Fixed assets required in the first year
Preliminary Expenses
Salary Expenses for the first six months

4,47,76,400
1464833.333
10,14,000

Administrative Expenses for the first six

months
Contengency
Total Investment Requirement

66,77,000
67,767
5,40,00,000

Table 20: Total Investment requirement

37

Total

Quantity

12,09,60,000 40,32,000

Year 4
Price per
bottle

Total

Year 5
Price per
Quantity
bottle

35 14,11,20,000 51,84,000
14,11,20,000

Total

35 18,14,40,000
18,14,40,000

Annex 19: Purchase Budget

Year 1

Particulars
Opening Stock
Cost of goods sold
Closing Stock
Purchase

3,38,16,000
37,54,000
3,75,70,000

Year 2
37,54,000
4,50,48,000
56,26,000
4,69,20,000

Year 3
56,26,000
6,75,12,000
65,62,000
6,84,48,000

Year 4
65,62,000
7,87,44,000
84,34,000
8,06,16,000

Year 5
84,34,000
10,12,08,000
84,34,000
10,12,08,000

Year 6
84,34,000

Table 21: Purchase Budget

Annex 20: Cost of Raw Materials

Year
Unit
Description
1 Litre Plastic Bottles (Rs. 4)
Bottle Caps (Rs. 1)
Labels (Rs. 1.5)
Cartons (Rs. 3)
Carbon Dioxide (Rs. 10)
Water
Total Raw material Cost

17,28,000

23,04,000

34,56,000

40,32,000

51,84,000

51,84,000

69,12,000
17,28,000
25,92,000
51,84,000
1,72,80,000
1,20,000
3,38,16,000

92,16,000
23,04,000
34,56,000
69,12,000
2,30,40,000
1,20,000
4,50,48,000

1,38,24,000
34,56,000
51,84,000
1,03,68,000
3,45,60,000
1,20,000
6,75,12,000

1,61,28,000
40,32,000
60,48,000
1,20,96,000
4,03,20,000
1,20,000
7,87,44,000

2,07,36,000
51,84,000
77,76,000
1,55,52,000
5,18,40,000
1,20,000
10,12,08,000

2,07,36,000
51,84,000
77,76,000
1,55,52,000
5,18,40,000
1,20,000
10,12,08,000

Table 22: Cost of Raw materials

38

Annex 21: Price of Laptop

Table 23: Price of raw materials

Annex 22: Fees for Registering a Company

Figure 22: Registration fees for a company

39

Annex 23: Website Design Quotation

Figure 23: Website design quotation

40

Annex 24: FNCCI Cost of Construction of Building

Figure 24: Estimation of Construction cost

Annex 25: MRP Calculation

Profit
Himalaya Water Pvt. Ltd.
Prime International Distributer
Wholesaler
Retailer

35
43.75
48.125

Table 24: MRP calculation

41

Selling Price
8.75
4.375
4.8125

35
43.75
48.125
52.9375

Annex 26: Cost of Production per bottle

Monthly Raw Material Cost
Monthy Direct labour cost
Monthly Factory OH cost
Total Cost of Production
Total Production/Month
Cost of Production Per Unit
Monthly Administrative expenses
Monthly Marketing expenses
Monthly Intererest on Loan
Total
Per unit Cost
Final Cost

28,18,000.00
78,000.00
8,10,609.58
37,06,609.58
1,44,000.00
25.74
8,03,416.67
2,95,416.67
2,70,000.00
13,68,833.34
9.51
35.25

Table 25: Cost of production per bottle

Annex 27: Approximation Fuel Consumption Chart for Generator

Figure 25: Fuel consumption chart

42

Annex 28: Import Duty

Figure 26: Import Duty Charges

43