2011

BUSINESS PLAN TO DEVELOP AN AUTOMATED DRINKING WATER BOTTLING PLANT

DEVELOPED BY: Mr. CHANDAN CHOWDHURY

AQUA PURE
Karsa agro-vet Aqua industries

ACKNOWLEDGEMENT

I am pleased to record my gratitude and sincere thanks to Mr. Rupam Goswami, from Analytica Ltd. and Mr.Rajiv Bhattacharya Company Project Guide, Karsa agro-vet Aqua Industries, for their sincere guidance and valuable assistance for completing this report. I would like to express my sincere thanks to Mr. Nihit Mathur, my colleague from UIMS, Jaipur for lending me a helping hand to carry out the project.

___________________________
CHANDAN CHOWDHURY

Date: 17.08.2011

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INDEX

SL. NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14
INTRODUCTION PROJECT AT A GALANCE ABOUT THE PROJECT

TOPIC

PAGE NO. 4 6 7 9 10 11 13 15 17 19 20 21 28 30

STANDARDS OF DRINKING WATER TREATMENT SCHEME BASIC PRINCIPAL OF REVERSE OSMOSIS FACTORS WHICH AFFECT THE PERFORMACE R.O. SYSTEM DESIGN LOCATION & MARKET RAW MATERIAL AND ESSENTIAL SERVICES ASSESSMENT OF WORKING CAPITAL STATISTICAL PROJECT REPORT FINANCIAL ANALYSIS MARGINAL ANALYSIS

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INTRODUCTION

The Vital of water in everyday life is well recognized Mans needs for clear, safe supply of potable water led him even in ancient times to search for better methods of water treatment. The need for fresh water for drinking purpose has been ever increasing in the past three decades. Population and industrial growth indicate that there will be no let in the increasing demand for fresh water in the years to come. These factors account for the concern over water shortage that exists in many areas of the country and also more serious shortages that are projected in near future. In the modern urban civilization, the need of good and safe drinking water has come to stay. The need increases in importance because of :

1.

The increasing pollution of important water sources.

2.

The use of undesirable sources due to water shortage.

Mineral water which for some time has been in the upper bracket of society has become an every day essential for the common man too. In this health conscious society mineral and safe drinking water has received other whelwing response. Further, domestic consumption, foreign tourists and Indian travellers have made it a habit to consume mineral water to stay free from water-borne diseases.

In view of the above we plan to make debut with a unit in our city with the objective of contributing to the Indian and foreign public and to grow into a responsible corporate citizen of Indian Economy.

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About Drinking Water

Drinking water or potable water is water of sufficiently high quality that can be consumed or used with low risk of immediate or long term harm. In most developed countries, the water supplied to households, commerce and industry is all of drinking water standard, even though only a very small proportion is actually consumed or used in food preparation. Typical uses include washing or landscape irrigation.

Over large parts of the world, humans have inadequate access to potable water and use sources contaminated with disease vectors, pathogens or unacceptable levels of toxins or suspended solids. Such water is not wholesome, and drinking or using such water in food preparation leads to widespread acute and chronic illnesses and is a major cause of death and misery in many countries. Reduction of waterborne diseases is a major public health goal in developing countries. Water has always been an important and life-sustaining drink to humans and is essential to the survival of all organisms.[1] Excluding fat, water composes approximately 70% of the human body by mass. It is a crucial component of metabolic processes and serves as a solvent for many bodily solutes. The United States Environmental Protection Agency in risk assessment calculations assumes that the average American adult ingests 2.0 litres per day. Drinking water of a variety of qualities is bottled. Bottled water is sold for public consumption throughout the world.

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PROJECT AT A GLANCE
Name of the Company:

Aqua pure Ltd.

Nature of the Industry Products to be manufactured Raw Material required Power Manpower

: : : : :

Manufacture of Packaged Drinking Water Mineral water in Bottle & Jar Bottles & Jar 65 HP 20

Factory Supervisors Skilled Workers Helpers 2 6 4

Office/Admn. Managers Staff Peons 1 2 1 Chemist 1 Microbiologist 1 Operator 2

FINANCIAL IMPLICATIONS a. b. Project cost Promoters contribution : : : Garbeta, West Midnapore, W.B.

c. Location

d. e. g.

Promoter Installed Capacity Bankers

: : : : 40,000 Ltr./day 25,000 Ltrs./day

f. Projected Operating Capacity

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THE PROJECT
THE COMPANY

The Proposed Company taking up this project named Aqua pure Ltd.(Karsa agro vet) The promoters plan to concentrate fulltime in the business of manufacture and sale of mineral water. This product will be made out of Ground water available at site. The State of Art Technology available for the treatment of ground water to convert in to packaged Drinking Water is proposed to be used. The product and process are discussed in full detail in the sub-chapter The Product. The project will initially cater to the needs of the domestic & commercial market.

In view of the low investment and overheads, the promoters are confident of ending the year with a healthy profit. In the next three years to come the promoters do not plan any drawings and all the profits shall be ploughed back with a view to financing and strengthening the company and to fund the additional working capital requirements.

In the last few years this Industry witnessed phenomenal growth rate and is expected to grow further. With the volume of business increasing, the promoters do not envisage any profits Squeeze and good profitability will be maintained.

THE PARENT

Established in 2004, we Aqua Pure Technologies are engaged in manufacturing water purification (R O Systems UF Systems), Water Softeners products in India. We are involved in providing innovative options to our clientele by providing them with technological break-through advancement in our production unit. We also conduct stringent quality checks to maintain international standard in our product range.
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We endeavor to offer customized products and services to our esteemed customers. Our companys motto is to provide our customers with quality and standard products at competitive prices. Prompt delivery, installation and demonstration, after-sales-service, prompt handling of customer complaints and consumer education has helped us in winning the confidence of the customers. Due to prompt customer services we have been able to develop a wide client network.

COMPANY PHILOSOPHY:

The philosophy of the company is to successfully develop, produce and market high quality water treatment products across the globe, which ensures in the development of healthy environment thereby giving better quality of life. Aiming towards attainment of our goal, our endeavors are directed towards offering state-of-the-art water technology to the country but all over the world.

THE PRODUCT

The Packaged Drinking Water is used for human consumption. Both World Health Organization and our Indian Government and specified prescribed standards of limits for drinking water. The packaged Drinking water, through it comes under drinking category, has much striker controls on the mineral composition. We are bringing below the details of various specifications laid on by Different agencies.

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STANDARDS OF DRINKING WATER

As per IS 14543

WHO

Tubidity pH Total Hardness mg/1 as CaCo3 Dissolved Solids mg/1 Calcium mg/1(as Ca) Magnesium Iron (as Fe) mg/1 Chlorides (as C1) mg/1 Sulphate as (So4) mg/1

10 6.5 - 8.5 300

5.25 7-8.5 No Specific Limit

250 75 30 0.3 200 100

500 - 1500 75-200 -----

The Ground water normally contains the following parameters under worst conditions.

pH Total Dissolved Solids Total Hardness Total Alkalinity Chlorides Sulphates Silica ppm ppm ppm ppm ppm ppm

: : : : : : :

7.25 800 500 150 140 100

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TREATMENT SCHEME As it can be seen from the above analysis, the raw water available at site requires both physical and chemical treatment to bring it to the standards of packaged drinking water. The following is the treatment scheme considered for the above process.

The raw water from the Ground is pumped to a storage tank from which it is drawn for further processing. A filter pump will pressurize the water through a sand filter followed by carbon filter. Prior to filtration to water is dosed with chlorine using electric dosing pumps. The pressure filter has a of anthracite over a layer of sand and under bed materials. The choice of two media Offers an in-depth filtration and ensures good quality treated water through out the service run.

The carbon filter removes all the organic and coloring matter from the water and absorbs Excess chlorine. The filtered water is fed to micron filters. The micron filters remove all suspended impurities up to two microns and make the water crystal clear. This process enhances the shell life of packaged drinking water. Downstream of micron filters a scale inhibitor is dosed by means of electronic dosing pump. And finally the organization will kills all Bacteria.

The R.O. unit consist of pressure tubes in single stage. As feed water under high pressure Enters the pressure tubes and passes through the membrane elements, two streams are Formed. Purified water travels through the semi-permeable membranes while nearly all of the Dissolved solids are rejected and held back in a prime concentrate stream. The purified water is stored in a storage tank and will be filled in bottle automated machine.

We are installing Bottle Filling Machine Jar Filling automatically.

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BASIC PRINCIPLE OF REVERSE OSMOSIS

The detailed process flow diagram is enclosed.

When pure water and salt solution are on opposite sides of semi permeable, the pure Water diffuses permeates through the membrane and dilutes the salt solution. This is Phenomenon of natural osmosis. Because of the difference in salt concentration, pure waterflows through the membrane as through a pressure was being applied to it. The effective driving force causing the flow is the osmotic pressure, the magnitude of which is a function of salt concentration and temperature. By applying pressure on the salt solution is greater than the Osmotic pressure, water permeates through the membrane in the opposite direction, i.e., from salt solution to the pure water, thereby recovering fresh water from salt solution.

Thus a semi-permeable membrane may be considered to be a selected separator - some Substances pass through it relatively freely under certain conditions, but for the other substances it acts as the effective barrier.

The essential components of R.O. System are, a high-pressure pump to provide sufficient Driving force for permeation to take and a pressure vessel in which are encased the semi permeable membranes. Fresh water diffuse through the membranes and is collected as Product or Permeate and Concentrated solution termed as Reject or Concentrate is led to the drain. The essential Instructions include flow and pressure indicators, pH indicator, conductivity, to measure the Treated water quality.

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Let us now consider the membrane materials and membrane configurations that are used in Industrial Reverse Osmosis Plants. The essential characteristics, which a membranes must Posses are:

i) ii) iii) iv)

High water flux combined with high degree of salt rejection. The polymer material must have capability of forming thin barriers with high strength. It must be capable of being fabricated with high surface to volume ratio. It must have wide operating range with respect to ionic species in water, pressure, temperature, pH etc.,

v) v)

Resistant to chemical and biological attack. Long service life and low cost.

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FACTORS WHICH AFFECT THE PERFORMANCE

i. Applied Pressure : The pressure is the driving force for space osmosis to take place. Hence, increase in Applied pressure increases the water flux. The principle resistance to flow is osmotic pressure which depends on concentration of solute and temperature. Typical osmotic Pressure is about 10 psi per 1000 ppm TDS. However, to obtain economic flow rates, the Applied pressure has to be in the range of 10-30 kg/cm2 for brackish water and as 65 kg/cm2 for sea water.

ii.

Feed Concentration:

As the concentration differential increase, the salt passage is also high. The higher the Feed concentration, the higher is the osmotic pressure and consequently water flux is also reduced.

iii.

Temperature:

Increased temperature raised both KW and KS resulting in high fluxes and higher salt Passages. As they both increase approximately at the same rate, the net effect on permeate quality is not very significant.

iv.

Membrane Fouling:

Scale and deposits can from on the membrane surface reducing the flux and resulting in deterioration of permeate quality. It is usually necessary, therefore, to pre-treat. The Feed solution to reduce this formation and to allow for periodical chemical cleaning.

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v.

Membrane Age :

The membrane material undergoes plastic creep during operation, which leads to reduction in both K1 and K2 with time.

The rate of change depends in temperature and pressure. It also undergoes a gradual chemical change which reduces the performance and is a function of operating pH and temperature.

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R.O. SYSTEM DESIGN

Feed water enters the system through the cartridge filter to the high pressure pump. Pressure gauges should be installed upstream and downstream of filter as the pressure drop across the filter will be 0.5 kg/cm2. The pressure pump can be either centrifugal or reciprocating plunger type. The later is usually a triplex pump and an accumulator should be used to dampen the Pulsation. Pressure can be controlled by installing a back pressure valve in a by pass line from pump discharge to suction. A pressure relief valve should be installed. A low-pressure switch is installed in pump suction to cut-off is provided in the delivery line to protect the down-stream R.O. device.

From the pump, water flows to the feed inlet connection of the R.O. device. The product stream Leaves essentially at atmosphere pressure. Any backpressure in the product stream will reduce the productivity as the net driving force is reduced, unless the feed pressure is increased by an equal amount. Concentrate leaves as a separate stream at fed pressure minus the pressure loss in the system. Reject water flow rate is controlled by the reject flow control valve. Pressure gauges should be installed between high pressure pump and the permeate or in the reject line Between permeate or and flow control valve. Product and reject flow meters are required to adjust and control the conversion.

Design of mulitple permeates or system would follow the same guidelines as described above. A single stage system can be operated at conversion of 500 or less for obtaining higher conversion, reject staging is practiced.

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In this system, the concentrate from first stage is used as feed for the next stage and so on the product streams from individual stages (normally two or three) are blended, thereby achieving higher conversion up to 8.5% Product staging is used the permeate or quality required is higher than that obtained from single stage.

Feed water quality is important and fouling must be carefully evaluated while designing R.O. System. Membrane fouling can result from one or more of the following factors, which can ultimately reduce productivity, deteriorate permeate quality and reduce service of life membranes.

a.

Membrane Scaling : Caused by pressurization of salts dissolved in feed water and can occur if solubility limits of such salts, e.g. calcium are exceeded.

b. c. d. e.

Fouling by precipitation of oxides of metals, such as iron and aluminum. Device plugging caused by suspended impurities in water. Colloidal fouling caused by particles in sub micron range. Bacterial fouling

Although cleaning can be carried out to remove foul ants, it is best to remove them from water before treatment by R.O. Plant. Proper pretreatment of feed water in one of the key factors in trouble-free operation of the R.O. Plants. The major raw material is ground water and is available in a good quantity at the proposed place.

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MARKET
The awareness among people for using mineral water is increasing day by day owing to non availability of pure drinking water. Hitherto, it is being used by a common man also, hence the market potential is further widened by making the product available at reasonable price.

OUR MAJOR CUSTOMERS ARE :

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Hotels Hospitals Restaurants Railway Stations and Railway Catering Bus Stands Pilgrim Centers Medical Shops Departmental Stores Offices / Factories / Residential purpose Marriage & All kind of Functions Super Markets Shopping Malls

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The above-mentioned places are the major mineral water consuming places. We are proposing to cater water in Pouches, Bottles, cans and dispensers.

The Bottle will be moved in Hotels, Railway Stations, Bus Stands, General Stores, Super Markets and shopping malls etc.,

1500 ml container have the market at Airports, Airlines, Railways and other public places etc. The 20 litres can will be useful for homes, hospitals, Corp. Office, Banks etc., The above classification will work at in all cities and towns. Initially we propose to concentrate in city & near by towns. The total estimated consumption will be more than 5,00,000 litres per day but we are preparing to produce only 25,000 litres per day. Thus we have enough market for our products.

This product is universally accepted product and also very essential product. We can market this anywhere in the country and abroad. At present there are only couple of manufactures of packaged drinking Water in our city and the demand is also very high. Since we are planning to produce only 5% of the requirement in our town, we see no difficulty in marketing our product.

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RAW MATERIALS AND ESSENTIAL SERVICES

The main Raw Material is water, which is proposed to be drawn from the Ground by digging the required bores. Secondly, the unit requires containers in Plastic Bottles and Satchels. There are several units marketing the bottle and polythene film which is used to make satchels. The required power of 65 HP for the unit is drawn from West Bengal State Electricity Board.

The plastic bottles 1, 2 Ltrs and & 600 ml will be Manufactured in Factory . The packaging Raw Materials can also be purchased locally.

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ASSESSMENT OF WORKING CAPITAL

The Unit requires Working Capital Finance on Packing Materials and Book Debts. The cost of Packing Materials Comprising of bottles is high compared to the cost of producing the Mineral Water. It is estimated that the unit requires holding of stocks of Packing Materials for one months consumption. The Credit Sales are projected to be 50% of total sales and the average credit period is assessed at 30 days.

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STATISTICAL PROJECT REPORT FOR PACKAGED DRINKING WATER

QUALITY AND STANDARDS : As per BIS specifications (IS14543)

1.0 PRODUCT AND ITS APPLICATIONS Most of the water borne diseases emanate from unclean water. Packaged drinking water ensures safe, clean, potable water for human consumption.

2.0 MARKET POTENTIAL Though a large number of manufacturers have recently taken up production of packaged drinking water, yet there exists a wide gap between demand and supply. A number of units can be set up in North Eastern Region to meet the local demand in institutions, hotels, restaurants, offices, tourist and household.

3.0 BASIS AND PRESUMPTIONS a) The unit will work for 300 days per annum on single shift basis. b) The unit can achieve its full capacity utilization during the 2nd year of operation. c) The wages for skilled workers are taken as per prevailing rates in this type of industry. d) Interest rate for total capital investment is calculated @ 12% per annum. e) The entrepreneur is expected to raise 20-25% of the capital as margin money. f) The unit would construct its own building. g) Costs of machinery and equipment are based on average prices of machinery Manufacturers.

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4.0 IMPLEMENTATION SCHEDULE

Project implementation will take a period of 8 months. Break-up of the activities and relative time for each activity is shown below:

Scheme preparation and approval : 01 month SSI provisional registration : 1-2 months Sanction of financial supports etc. : 2-5 months Installation of machinery and power connection : 6-8 months Trial run and production : 01 month

5.0 TECHNICAL ASPECTS

5.1 Location The plant can be located at any suitable place where availability of clean water, power, PET bottles and market access is ensured.

5.2 Process of Manufacture

The flow chart of the process is as follows: Raw water from Source Raw Water Storage Raw Water Lifting Pump Sand Filter Activated Carbon Filter Micron Filters Micro Filtration System High Pressure Pump System Desalination through RO SYSTEM
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OZONATION Storage of Treated Water Polishing Filtration UV Disinfection System Filling, Sealing & Capping M/C Automaric Automatic Bottle Blowing Machine

5.3 Quality Control and Standards : As per BIS requirements

6.0 POLLUTION CONTROL

There is no major pollution problem associated with this industry except for disposal of waste water which should be managed appropriately. The entrepreneurs are advised to take No Objection Certificate from the State Pollution Control Board.

7.0 ENERGY CONSERVATION Suitable measures shall be taken to conserve electricity.

8.0 PRODUCTION CAPACITY Quantity : 45 lakh liter/annum (15,000 L/day) Installed capacity : 40,000 L/day Optimum capacity utilization : 60% Working days : 300/annum (1 shifts) Manpower : 20

Utilities Motive Power : 50 kW (average) Water : 15,000L/day (average)

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9.0 FINANCIAL ASPECTS:

9.1 Fixed Capital 9.1.1 Land & Building Amount (Rs. lakh)

Land 2000 sq.m(lease) Built up Area 700 sq. m. Total cost of Land and Building

: 10.00 : 22.00 : 32.00

9.1.2 Machinery and Equipment

Description Amount (Rs. lakh) R.O. system(2000ltr/hr) SS Heat shrink tunnel SS Pipeline SS Tank(2000 ltr.) Blowing machine Compressor Boring machine Generator Printer(Ink jet) Laboratory Equipment Computer Dice(1litter,2 litter, 600ml) Electrification & Civil Works @ 10% of machinery cost Office furniture & fixtures : 1.20 : 6.20 : 8.75 : 3.00 : 1.00 : 9.00 : 3.00 : 2.50 : 4.00 : 2.35 : 2.50 : 0.50 : 1.00 : 3.87

Total

: 43.87

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9.1.3 Pre-operative Expenses

BIS fee, GOVT. Charges

: 2.00

9.1.4 Total Fixed Capital

: 77.87

9.2 Recurring expenses per annum

9.2.1 Personnel Designation No. Salary Per month Amount(Rs.lakh)

Factory Manager Production Manager/Chemist Supervisory staff Office Assistant Skilled workers Unskilled workers 10.2 Perquisites @ 8% Total :

1 1 6 2 4 5

15,000 10,000 5,000 4,500 3,000 2,000

1.8 1.2 3.6 1.0 1.4 1.2

0.80

18

11.00

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9.2.2 Raw Material including packaging materials

Particulars Pet bottles including caps,labels, 1L size Chemicals Corrugated boxes For bottles Total:

Qty.(Liter) 45 lakh

Rate 3.00 each

Amount (Rs.lakh) 135.00

-LS1,88,000

-LSRs. 7.00

006.00 013.16

------

-------

154.16

9.2.3 Utilities

Amount (Rs. lakh)

Power 120,000 kW Water 15,000L/day Total:

4.92 0.28

5.20

9.2.4 Other Contingent Expenses

Amount (Rs. lakh)

Repairs and maintenance@10% Consumables & spares Transport & Travel Publicity Postage & stationery Telephone Insurance Total:

3.20 1.20 0.40 0.05 0.08 0.13 0.44

5.50

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9.2.5 Total Recurring Expenditure Amount (Rs. lakh) (9.2.1+9.2.2+9.2.3+9.2.4) 170.36

9.3 Working Capital Recurring Expenditure for 3 months 42.50

9.4 Total Capital Investment Fixed capital (Refer 9.1.4) Working capital (Refer 9.3) Total:

Amount (Rs. lakh) 77.87 42.50 120.87

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10.0 FINANCIAL ANALYSIS

10.1 Cost of Production (per annum) Recurring expenses (Refer 9.2.5) Depreciation on building @5% Depreciation on machinery @10% Depreciation on furniture @20% Interest on Capital Investment @12% Total: 185.29 Amount (Rs. lakh) 170.36 1.15 2.52 0.15 11.11

10.2 Sale Proceeds / Annual turnover

Item (Liter) per bottle

Qty.

Rate (Rs. lakh)

Amount

Sale of packaged drinking Water in PET bottles cap. 1L, packed in cartons of 24 bottles each

45 lakh

6.00

270.00

270.00

10.3 Net Profit per year = Sales Cost of production = 270 185.29 = Rs. 84.71 lakh

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10.4 Net Profit Ratio

= Net profit X 100 Sales = 84.71X 100 270 = 31.37%

10.5 Rate of Return on Investment = Net profit X 100 Capital Investment = 84.71 X 100 120.87 = 70%

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MARGINAL COST ANALYSIS

Total Fixed cost = 1.2087 Cr.

Variable cost:

Bottle= 24.20 lacs(600ml) + 22.27 lacs(1 liter) + 18.97 lacs(2 liter) = 65.45 lacs

Chemicals= 3.85 lacs

Cartoon = 16.04 lacs(600 ml) + 18.33 lacs(1 liter) = 34.37 lacs

Transportation = 38.50 lacs

Total variable cost (TVC) = 142.17 lacs

Total Cost (TC) = 263.04 Lacs

SALES:

600 ml (30 %) 1650000 liter 2750000 units 4/- per unit 11000000/-

1 L (40%) 2200000 liter 2200000 units 6/- per unit 13200000/-

2 L (30%) 1650000 liter 825000 units 10/- per unit 8250000/-

TOTAL SALES: 3, 24, 50000/-

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Contribution( C) : (SALES - VC) = 1.87 Cr.

PROFIT : 66.95 Lacs.

Contribution / units = 4/-

BREAK EVEN POINT (BEP) : FC/C = 1.208/0.00000004 =3.02 Cr. Units

600 ml bottle(30%) = 0.906 Cr. (approx) 1 liter bottle (40%) = 1.208Cr. (approx) 2 liter bottle (30%) = 0.906 Cr. (approx)

Time to reach the break even point:

.45 Cr. units produced in 300 day 3.02Cr. Units will be produced by: 6 years 8 months 15 days

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