Business Development Plan

Himalaya Water Pvt. Ltd

Submitted by:Prasun ShakyaTerm-4, MBA

Submitted to:Ace Institute of Management

Pokhara University

Submitted for the course assessment of

Master in Business Administration

KathmanduJanuary, 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

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

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 benefits2. It will the first sparkling water produced in Nepal3. 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.

ContentsChapter 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

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

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

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

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

Chapter 1: Introduction

1.1 BackgroundThe 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 MissionHimalaya 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.

1.5 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 RegistrationThe 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 Registrar’s Office in the prescribed legal format, along with the prescribed official fee which is Rs. 43,000, along with the following documents:

I. Memorandum of AssociationII. Article of Association

III. Copy of the consensus agreementIV. Approval or license from a competent authority, if requiredV. A Certified copy of the citizenship certificate

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

1.7 Organisational Structure

Figure 1: Organisational Structure of Himalaya Water

General Manager

Finance Department

Marketing Department

Operation Department

Workers

Chapter 2: The Industry and the Company

2.1 The IndustryBeverage is a big industry associated directly with the public’s food and drinking habit. Today’s 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 body’s 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 world’s 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 CompanyOne 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 ServiceThe 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 women’s 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 StrategyIncreasing 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.

Chapter 3: Market research and analysis

3.1 SWOT AnalysisThere 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 it’s 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 forcesPorter’s 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.

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 edgeThe 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 StrategyIn 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 StatementHimalaya 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 StrategyThe 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 StrategyOur 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 SummaryOur 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 StrategyOur 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 ForecastThe 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 = 5760000

Year No. of Cases1 1,44,000 2 1,92,000 3 2,88,000 4 3,36,000 5 4,32,000 6 4,32,000 90% 51,84,000

90%

17,28,000 23,04,000 34,56,000 40,32,000 51,84,000

30%40%60%70%

Target Sales Projected Sales( Bottle)

Table 1: Sales forecast

Chapter 4: Manufacturing and Operations

5.1 Process and capacity design

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.

Water Treatment System

Processing System

Filing System

Packing System

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 technology—static 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

3) Filling System

The filling system compromises of following parts and equipment

Bottle platform table Washing filling capping machine: This machine works harmoniously with air-

conveyor 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

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

5.2 SchedulingEffective 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 designHuman 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:

General Manager 1 25,000 25,000Finance Manager 1 15,000 15,000Marketing Manager 2 15,000 30,000Supervisor/Technician 2 15,000 30,000Workers 6 8,000 48,000Sweeper 1 8,000 8,000

Human ResourcesYear 1

Staff Salary (each)

Total /month

Table 2: Human Resource Design

Human Resources Roles & responsibilities

General ManagerResponsible 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 Officer

Responsible for maintaining financial statements, employee benefits, incentives, marketing activities, promotional activities, brand management etc.

Expert / Supervisor Responsible for providing training to the workers and supervising day to day workings.

Workers Responsible for operating plants and machineriesTable 3: Employees roles and responsibilities

5.5 Inventory ManagementOur 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 StrategyLocation 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 MaintenanceMaintenance 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.

5.8 Time and action planActivity Duration

(Weeks)Preparing the business plan 6Registration of Business 2Factory layout and establishment 24Hiring professionals and supporting staffs 3+1(Training)Table 4: Time and action plan

Weeks (worked)

Activity

2 4 6 8 10

12

14

16

18

20

22

24

26

28

30

32

34

36

Preparing Business PlanRegistration of businessFactory layout & establishmentHiring professionals & supporting staffs

Figure 10: Gantt Chart of Business execution

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.

6.2 Proforma Income StatementParticulars Year 1 Year 2 Year 3 Year 4 Year 5Revenue from Sales 6,04,80,000 8,06,40,000 12,09,60,000 14,11,20,000 18,14,40,000 Total Revenue 6,04,80,000 8,06,40,000 12,09,60,000 14,11,20,000 18,14,40,000 Less: Cost of Raw Materials

3,38,16,000 4,50,48,000 6,75,12,000 7,87,44,000 10,12,08,000

Less: Direct Labor

78,000 85,800 1,29,250 1,61,563 2,68,555

Gross Profit 2,65,86,000 3,55,06,200 5,33,18,750 6,22,14,438 7,99,63,445 Less Expenses:Salary 19,50,000 21,45,000 34,81,500 43,51,875 66,58,008 Administrative Expenses 1,33,54,000 1,47,14,800 1,71,85,980 1,97,62,118 2,08,93,878 Generator Fuel 32,13,600 33,74,280 35,42,994 37,20,144 39,06,151 Preliminary exp W/O 2,92,967 2,92,967 2,92,967 2,92,967 2,92,967 Total Expenses 1,88,10,567 2,05,27,047 2,45,03,441 2,81,27,103 3,17,51,003 EBIT 77,75,433 1,49,79,153 2,88,15,309 3,40,87,334 4,82,12,442 Less: Depreciation 54,09,715 46,51,721 40,07,028 34,58,117 29,90,257 Less: Interest @ 15% 32,40,000 27,59,458 22,06,834 15,71,317 8,40,472 EBT (8,74,282) 75,67,975 2,26,01,448 2,90,57,900 4,43,81,714 Tax @ 25% (2,18,570) 18,91,994 56,50,362 72,64,475 1,10,95,428 Net Profit (6,55,711) 56,75,981 1,69,51,086 2,17,93,425 3,32,86,285

Table 5: Income Statement

6.3 Cash Flow StatementParticular Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

A. Revenue:Beginning Balance - 77,58,767 58,48,121 69,12,632 1,09,90,930 1,22,91,140

Equity Financing 3,24,00,000 Loan financing 2,16,00,000

Revenue from sale - 6,04,80,000 8,06,40,000 12,09,60,000 14,11,20,000 18,14,40,000 Total receipts 5,40,00,000 6,82,38,767 8,64,88,121 12,78,72,632 15,21,10,930 19,37,31,140 B. Disbursement:

Preliminary expenses 14,64,833 Fixed assets 4,47,76,400

Purchase 3,75,70,000 4,69,20,000 6,84,48,000 8,06,16,000 10,12,08,000 Dividend paid 40,00,000 1,20,00,000 1,75,00,000 2,67,00,000

Payment of loan 32,03,616 36,84,158 42,36,782 48,72,299 56,03,144 administrative expenses 1,33,54,000 1,47,14,800 1,71,85,980 1,97,62,118 2,08,93,878

Salary expenses 20,28,000 22,30,800 36,10,750 45,13,438 69,26,563 Generator fuel 32,13,600 33,74,280 35,42,994 37,20,144 39,06,151

Interest payment 32,40,000 27,59,458 22,06,834 15,71,317 8,40,472 Tax payment (2,18,570) 18,91,994 56,50,362 72,64,475 1,10,95,428

Total Disbursement 4,62,41,233 6,23,90,646 7,95,75,490 11,68,81,702 13,98,19,790 17,71,73,636 Surplus/Deficit (A-B) 77,58,767 58,48,121 69,12,632 1,09,90,930 1,22,91,140 1,65,57,504

Less: InvestmentEnding cash balance 58,48,121 69,12,632 1,09,90,930 1,22,91,140 1,65,57,504

Table 6: Cash flow Statement

6.4 Proforma Balance SheetYear Year 1 Year 2 Year 3 Year 4 Year 5

Cash and cash equivalents 58,48,121 69,12,632 1,09,90,930 1,22,91,140 1,65,57,504 Inventory 37,54,000 56,26,000 65,62,000 84,34,000 84,34,000 Total Current Assets 96,02,121 1,25,38,632 1,75,52,930 2,07,25,140 2,49,91,504

Land lease 300000 300000 300000 300000 300000 Building 13142400 12485280 11861016 11267965.2 10704566.94

Less: Accumulated Depreciation (6,57,120) (6,24,264) (5,93,051) (5,63,398) (5,35,228) Machinery & Equipments 3,06,34,050 2,60,38,943 2,21,33,101 1,88,13,136 1,59,91,166 Less: Accumulated Depreciation (45,95,108) (39,05,841) (33,19,965) (28,21,970) (23,98,675) Furniture and Fixture 55,350 41,513 31,134 23,351 17,513 Less: Accumulated Depreciation (13,838) (10,378) (7,784) (5,838) (4,378) Office equipment 2,94,600 2,20,950 1,65,713 1,24,284 93,213 Less: Accumulated Depreciation (73,650) (55,238) (41,428) (31,071) (23,303) Vehicle 3,50,000 2,80,000 2,24,000 1,79,200 1,43,360 Less: Accumulated Depreciation (70,000) (56,000) (44,800) (35,840) (28,672) Investments - - - - - Total Fixed Assets 3,93,66,685 3,47,14,964 3,07,07,936 2,72,49,819 2,42,59,562

Intangiable Fixed asset:Preliminary expenses 11,71,867 8,78,900 5,85,933 2,92,967 -

TOTAL ASSETS 5,01,40,673 4,81,32,496 4,88,46,800 4,82,67,925 4,92,51,066

Bank Loan 1,83,96,384 1,47,12,226 1,04,75,444 56,03,144 0 Total Long Term Liabilities 1,83,96,384 1,47,12,226 1,04,75,444 56,03,144 0

Equity 3,24,00,000 3,24,00,000 3,24,00,000 3,24,00,000 3,24,00,000 Retained Earning (6,55,711) 10,20,270 59,71,356 1,02,64,781 1,68,51,066 Total Equity 3,17,44,289 3,34,20,270 3,83,71,356 4,26,64,781 4,92,51,066

TOTAL LIABILITIES AND EQUITY 5,01,40,673 4,81,32,496 4,88,46,800 4,82,67,925 4,92,51,066

Capital & Equity

ASSETSCurrent Assets

Fixed Assets

LIABILITIESLong Term Liabilities

Table 7: Balance Sheet

6.5 Financial RatiosParticulars Year 1 Year 2 Year 3 Year 4 Year 5Return on Investments (%) -1.29 12.05 39.54 57.35 102.74Return on Assets (%) -1.31 11.79 34.70 45.15 67.58Debt-to-Equity Ratio 0.57 0.45 0.32 0.17 0.00Return on Equity (%) -2.02 17.52 52.32 67.26 102.74

Table 8: Financial Ratios

6.6 Payback PeriodYear Investment Cashflow Cumulative CF

0 (5,40,00,000) 0 (5,40,00,000) 1 47,54,004 (4,92,45,997) 2 1,03,27,702 (3,89,18,295) 3 2,09,58,114 (1,79,60,181) 4 2,52,51,543 72,91,361 5 3,62,76,542 4,35,67,904

3.29 Payback Period in Years

Table 9: Payback period

6.7 Net Present ValueYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 NPV IRR

Cash Flow (5,40,00,000) 47,54,004 1,03,27,702 2,09,58,114 2,52,51,543 3,62,76,542 Rs. 89,53,119.56 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%.

6.8 Retained EarningsParticulars Year 1 Year 2 Year 3 Year 4 Year 5

Opening balance - (6,55,711) 10,20,270 59,71,356 1,02,64,781 Net income (profit) (6,55,711) 56,75,981 1,69,51,086 2,17,93,425 3,32,86,285 Less: Dividend - 40,00,000 1,20,00,000 1,75,00,000 2,67,00,000 Closing balance (RE) (6,55,711) 10,20,270 59,71,356 1,02,64,781 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 6,04,80,000Fixed Cost 1,16,44,682Variable Cost 4,64,69,600BEP (%) 0.83 VC/Revenue 0.77 1-VC/Revenue 0.23 BEP in Rupees 5,02,67,683.09

Table 12: Break even analysis

The company’s break even sales for first year is Rs. 5,02,67,683.09

Chapter 7: Exit StrategyThere 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.

BibliographyNepali Times. (2000, August). Retrieved December 24, 2013, from

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+control&newsid=MTI0NQ==

Cooking Stackexchange . (2013, January 14). Retrieved December 2013, from http://cooking.stackexchange.com/questions/30055/how-much-co2-does-it-take-to-carbonate-water-using-a-household-soda-siphon

Soda Stream. (n.d.). Retrieved November 2013, from Soda Stream USA: http://www.sodastreamusa.com/

Annex

Annex 1: Production Plant Cost

Figure 11: Quotation for water production plant

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

Table 13: Total Cost of Production Plant

Annex 2: Advertisement rates in Healthy Life Magazines

Figure 12: Advertisement tariff of ECS Media

Annex 3: Price of Vehicle

Figure 13: Quotation of Van

Annex 4: Price of Multifunction Printer

Figure 14: Quotation for MFC printer

Annex 5: Price of Table

Figure 15: Quotation for Table

Annex 6: Price of Office Chairs

Figure 16: Quotation for Office Chairs

Annex 7: Price of Bookcase

Figure 17: Quotation for Bookcase

Annex 8: Price of Cabinet

Figure 18: Quotation for Cabinet

Annex 9: Price of Desktop

Figure 19: Quotation for Desktop Computers

Annex 10: Price of Inverter

Figure 20: Quotation for Inveter

Annex 11: Price of Telephone Handset

Figure 21: Quotation for Telephone

Annex 12: Salary

General Manager 1 25,000 25,000 1 27,500 27,500 1 34,375 34,375 1 42,969 42,969 1 53,711 53,711Finance Manager 1 15,000 15,000 1 16,500 16,500 2 20,625 41,250 2 25,781 51,563 2 32,227 64,453Marketing Manager 2 15,000 30,000 2 16,500 33,000 3 20,625 61,875 3 25,781 77,344 4 32,227 1,28,906Supervisor/Technician 2 15,000 30,000 2 16,500 33,000 2 20,625 41,250 2 25,781 51,563 3 32,227 96,680Workers 6 8,000 48,000 6 8,800 52,800 8 11,000 88,000 8 13,750 1,10,000 10 17,188 1,71,875Sweeper 1 8,000 8,000 1 8,800 8,800 1 11,000 11,000 1 13,750 13,750 1 17,188 17,188

Total StaffsTotal Expenses per

monthTotal Expenses /year

Human ResourcesYear 1 Year 2 Year 3 Year 4 Year 5

Staff Salary (each)

Total /month

Total /month

Staff Salary (10%

Total /month

Staff Salary (10%

Salary (10%

1,56,000 1,71,600 2,77,750 3,47,187.50 5,32,813

13 13 17 17 21

Total /month

Staff Salary (10%

Total /month

Staff

20,28,000 22,30,800 36,10,750 45,13,438 69,26,563

Table 14: Salary

Annex 13: Fixed Assets

Qty Rate Total Qty Rate Total Qty Rate Total Qty Rate Total Qty Rate TotalLand and building:

Land lease 3 ropani 3,00,000 300000 300000 300000 300000Building 1 1,31,42,400

Machinary:Production System 1 2,51,48,000 2,91,34,050

GI Pipe 30,000 Generator 1 14,70,000 14,70,000

Furnitures:Table 4 3,990 15,960 Chair 4 1,990 7,960

Plastic chairs 15 990 14,850 Bookcase 2 3,290 6,580

Cabinet 2 5,000 10,000 Office equipment:

Computers 2 25,000 50,000 Printer/

Scanner/Photocopier1 1,17,000 1,17,000

Invertor/UPS 1 70,000 70,000 Laptops 1 48,600 48,600

Telephone set 1 9,000 9,000 Other

Vehicle 1 3,50,000 3,50,000 Total Fixed Assets

Depriciation per year

Balance after depreciation 3,93,66,685 3,50,14,964 3,13,07,936 2,81,49,819 2,54,59,562

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

3,96,66,6854,47,76,400

ItemsYear 1 Year 2 Year 3 Year 4 Year 5

Table 15: Details of fixed assets

Annex 14: Administrative expenses Particular Year 1 Year 2 Year 3 Year 4 Year 5Electricity 9440000 10280000 11960000 13640000 13640000Telephone @3000 36,000 39,600 43,560 47,916 52,708 Internet @ 1500 18,000 19,800 21,780 23,958 26,354 Offi ce expense@ 2000 24,000 26,400 29,040 31,944 35,138 Stationary @1000 12,000 13,200 14,520 15,972 17,569 Registration 43,000 2,000 2,000 2,000 2,000 Fuel for Vehicle 1,56,000 1,71,600 1,88,760 2,07,636 2,28,400 Website maintenance 2,000 2,400 2,880 3,456 4,147 Total Operating Cost 97,31,000 1,05,55,000 1,22,62,540 1,39,72,882 1,40,06,316 Marketing:

Advertisement in ECS Media (Half Page) (20 % annual increment) 5,46,000 6,55,200 7,86,240 9,43,488 11,32,186

Business cards@5 7,000 7,000 7,000 7,000 7,000 Advertisement in kantipur (180cc*800)

(20% annual increment) 25,92,000 31,10,400 37,32,480 44,78,976 53,74,771 Trade and Consumer Shows 2,00,000 1,00,000 1,00,000 50,000 50,000

Placements 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000 Free Trials 1,00,000 1,00,000 1,00,000 1,00,000 1,00,000

Total marketing cost 35,45,000 40,72,600 48,25,720 56,79,464 67,63,957 Machine Servicing 12,000 13,200 14,520 15,972 17,569 Ronash Testing 6,000 6,000 6,000 6,000 6,000 Social Organization 15,000 16,500 18,150 19,965 21,962 Godawari Club 25,000 27,500 30,250 33,275 36,603 Auditors Fee (20% increment) 20,000 24,000 28,800 34,560 41,472Total Miscelleneous expenses 78,000 87,200 97,720 1,09,772 1,23,605Total 1,33,54,000 1,47,14,800 1,71,85,980 1,97,62,118 2,08,93,878

Table 16: Administrative expenses

Annex 15: DepreciationParticulars Year 1 Year 2 Year 3 Year 4 Year 5Building@ 5% 1,31,42,400 1,24,85,280 1,18,61,016 1,12,67,965 1,07,04,567 Depreciation 6,57,120 6,24,264 5,93,051 5,63,398 5,35,228

Machinery@ 15% 3,06,34,050 2,60,38,943 2,21,33,101 1,88,13,136 1,59,91,166 Depreciation 45,95,108 39,05,841 33,19,965 28,21,970 23,98,675

Furniture @ 25% 55,350 41,513 31,134 23,351 17,513 Depreciation 13,838 10,378 7,784 5,838 4,378

Office equipment @ 25% 2,94,600 2,20,950 1,65,713 1,24,284 93,213 Depreciation 73,650 55,238 41,428 31,071 23,303

Vehicle @ 20% 3,50,000 2,80,000 2,24,000 1,79,200 1,43,360 Depreciation 70,000 56,000 44,800 35,840 28,672

Table 17: Calculation of Depreciation

Annex 16: Loan AmortizationYear Beginning Balance Principal Interest Ending balance

1 2,16,00,000 3203616 3240000 183963842 18396384 3684158 2759458 147122263 14712226 4236782 2206834 104754444 10475444 4872299 1571317 56031445 5603144 5603144 840472 0

64436166443616

Scheduled Payment644361664436166443616

Table 18: Loan amortization

Annex 17: Sales Revenue

Quantity Price per bottle

Total Quantity Price per bottle Total Quantity Price per bottle Total Quantity Price per bottle

Total Quantity Price per bottle

Total

No. of Bottles 17,28,000 35 6,04,80,000 23,04,000 35 8,06,40,000 34,56,000 35 12,09,60,000 40,32,000 35 14,11,20,000 51,84,000 35 18,14,40,000

Total Revenue

6,04,80,000 8,06,40,000 12,09,60,000 14,11,20,000 18,14,40,000

Year 5Sources of Revenue

1st year Year 2 Year 3 Year 4

Table 19: Sales revenue

Annex 18: Total Investment RequirementFixed assets required in the first year 4,47,76,400Preliminary Expenses 1464833.333Salary Expenses for the first six months 10,14,000

Administrative Expenses for the first six months 66,77,000Contengency 67,767Total Investment Requirement 5,40,00,000

Table 20: Total Investment requirement

Annex 19: Purchase BudgetYear 1 Year 2 Year 3 Year 4 Year 5 Year 6

- 37,54,000 56,26,000 65,62,000 84,34,000 84,34,000 3,38,16,000 4,50,48,000 6,75,12,000 7,87,44,000 10,12,08,000

37,54,000 56,26,000 65,62,000 84,34,000 84,34,000 3,75,70,000 4,69,20,000 6,84,48,000 8,06,16,000 10,12,08,000 Purchase

Closing StockCost of goods sold

Opening StockParticulars

Table 21: Purchase Budget

Annex 20: Cost of Raw MaterialsYear 1 2 3 4 5 6Unit 17,28,000 23,04,000 34,56,000 40,32,000 51,84,000 51,84,000 Description1 Litre Plastic Bottles (Rs. 4) 69,12,000 92,16,000 1,38,24,000 1,61,28,000 2,07,36,000 2,07,36,000 Bottle Caps (Rs. 1) 17,28,000 23,04,000 34,56,000 40,32,000 51,84,000 51,84,000 Labels (Rs. 1.5) 25,92,000 34,56,000 51,84,000 60,48,000 77,76,000 77,76,000 Cartons (Rs. 3) 51,84,000 69,12,000 1,03,68,000 1,20,96,000 1,55,52,000 1,55,52,000 Carbon Dioxide (Rs. 10) 1,72,80,000 2,30,40,000 3,45,60,000 4,03,20,000 5,18,40,000 5,18,40,000 Water 1,20,000 1,20,000 1,20,000 1,20,000 1,20,000 1,20,000 Total Raw material Cost 3,38,16,000 4,50,48,000 6,75,12,000 7,87,44,000 10,12,08,000 10,12,08,000

Table 22: Cost of Raw materials

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

Annex 23: Website Design Quotation

Figure 23: Website design quotation

Annex 24: FNCCI Cost of Construction of Building

Figure 24: Estimation of Construction cost

Annex 25: MRP CalculationProfit Selling Price

Himalaya Water Pvt. Ltd. 35Prime International Distributer 35 8.75 43.75Wholesaler 43.75 4.375 48.125Retailer 48.125 4.8125 52.9375

Table 24: MRP calculation

Annex 26: Cost of Production per bottleMonthly Raw Material Cost 28,18,000.00 Monthy Direct labour cost 78,000.00 Monthly Factory OH cost 8,10,609.58 Total Cost of Production 37,06,609.58 Total Production/Month 1,44,000.00 Cost of Production Per Unit 25.74 Monthly Administrative expenses 8,03,416.67 Monthly Marketing expenses 2,95,416.67 Monthly Intererest on Loan 2,70,000.00 Total 13,68,833.34 Per unit Cost 9.51 Final Cost 35.25

Table 25: Cost of production per bottle

Annex 27: Approximation Fuel Consumption Chart for Generator

Figure 25: Fuel consumption chart

Annex 28: Import Duty

Figure 26: Import Duty Charges