HERBELLA

AN AYURVEDIC HEALTH DRINK

Prepared By S.SHANMUGANATHAN, I MBA. SRI GANESH SCHOOL OF BUSINESS MANAGEMENT METTUPATTI, SALEM 636111. TAMILNADU , INDIA , 805-660-4287

CONTENTS
1. PROJECT SUMMARY 2. PRODUCT DESCRIPTION AND USP 3. MARKET DESCRIPTION 4. PRICE AND GROWTH 5. TARGET CUSTOMERS 6. COMPETITORS 7. MARKETING AND PROMOTIONAL 8. FINANCIAL PLAN 9. OPERATIONAL PLAN 10. 11. 12. 13. ORGANISATIONAL PLAN RISKS AND ASSUMPTIONS SOCIO ECONOMIC IMPACT EXIT STRATEGY

PROJECT SUMMARY:
This proposed project presents an investment opportunity for establishing an Herbal bottled water plant for providing pure herbal drinking water. The proposed product line will consist of bottles of 1 and 0.5 liters. In the initial phase of the project only 0.5 liters and 1 liter bottles will be introduced in the local market. After successful introduction of the new brand of Herbal bottled water the product line may be extended to 13 and 19 liters cans.

PRODUCT DESCRIPTION AND USP:

When a bottle of pure water doesnt make up all your drinking needs. Here comes HERBELLA, a herbal drinking water contained herbal extracts with useful bioactive properties that play a major role in maintaining good health and rejuvenating which boost immune system. This slows down the ageing process, and energizes all organs of the body. As evidenced Ayurveda - the knowledge for long life. Herbella contains herbel ingrediants like Acacia catechu, Sapanwood, Zingiber officinale, Elettaria cardamomum, Vetiveria zizanioides which are the major part in most of the ayurvedic medicines. These to enlist its benefits it helps to enhance mood and relieve stress. Act as Mouth freshener. Lowers cholesterol. Help break fevers by warming the body and increasing perspiration, flavoring and helps in digestion. Suppose to have many properties like action against cancer cell growth, anxiety, stress, heart problems, thyroid problems are the few. In considering a normal drinking habit by having mineral water Herbella are all set to be your part of everyday. The herbal water, to be sold in 1,000 ml and 500 ml pet bottles and competitively priced in the growing mineral water market. The Ingredients and uses are given below,

1 2 3 4 5 6 7

Vetiveria zizanioides Puncture Vine Sapan wood Mimosa catchu Coriander seeds Cloves Cardamom

Stress, Heart problem and throat pain Reduce stress Jaundice, Cough, Respiratory systems Sore throat Blood sugar levels, Bad Cholesterol, Allergies and Cancer Respiratory Ailments Good Digestion

Dry Ginger

Gas pains, Diarrhea, Stomach cramping

MARKET DESCRIPTION:
The bottled water industry has spent billions over the past decade to sell you on the idea that bottled water is better than tap water. Well the short answer is they are both unhealthy. One of the most ironic parts of the bottled water tragedy is that the water bottling industry gets the water free, filters it, bottles it and sells it back to us at 1,900% profit. The ironic part is that tap water is legislated to be 7.0 pH neutral. They first dump a TON of chlorine in the water to kill off all the bad bacteria, this makes it highly acidic. In India around 100 companies sell an estimated 424 million liters of bottled water valued at around Rs 200 crore in the country annually. The national brands -- Bisleri and Bailley (Mumbai and Surat) -- were selected on the basis of their dominant position in the overall market. To conform to international standards for such testing, 21 bottles of each brand were tested in the CERS laboratory against "analytical" and "sensory" parameters as well as for "microbiological" contamination. Again during a surprise inspection by the health committee team at two mineral water units in the Bangalore on January 11, 2011, it was found that mineral water production unit owners were bottling bore well water. The units were also illegally using several branded labels on the bottles to market the water. These are the features of mineral water market. So o one has spoken out a word of healthy drinking water. Thats the reason Herbella is coming out with a new structure in the Herbal waters.

PRICING AND GROWTH:

Plant Capacity liters per day

Production per year (liters) Ratio of 1 liter and 0.5 liter bottle Production of 1 liter bottle Production of 0.5 liter bottle Total annual production Sale price of 1 liter bottle (Rs.)

15,000 Gallons 1,87,11,000

80:20
99,79,200 74,84,400 1,74,63,600

15

Sale price of 0.5 liter bottle (Rs.) Capacity utilization in first yr Sales price growth rates Production capacity utilization growth rate Maximum Capacity utilization

8
60%

10% 10% 95%

TARGET CUSTOMER:
We, at Herbella target the people who are healthy conscious. We also look to supply locally and internationally. As the product is essential for life almost everyone is the target customer. Normally segmentation is the process of dividing the market customer into similar characteristics. Our Herbella target the children for growing, the Old aged people for refreshing and Middle Aged people to control from curing disease. Today due to fast moving corporate sector they wouldnt care about the dieting. So the herbal water can help them to recover from the stress. So overall it is completely covering all the segments.

COMPETITORS:

Herbella knows there are some established brands in field Ayula and mixed power. Some established players will also tempt to enhance their capacity ultimately being a private label supplier. Herbella after a detailed analysis has found that its major competitive advantage is the assured access to good quality raw material at a very reasonable cost and its ability to scale up operation within two by acquiring processing units in strategic location. Herbella is aware that some big players are eying this highly fragment sector for entry through the contract manufacturing route which will put pressure on margins in future. The market leader is Bisleri International, which boasts a 40 per cent share. It is followed by Coca- Cocas Kinley (around 25 per cent) and PepsiCos Aquafina (around 10 per cent). The top players in bottled water industry in India are the major international giants like Coca cola, Pepsi, Nestle and noticeable presence of national players like Mount Everest, Manikchand, Kingfisher, Mohan Meakins, SKN Breweries , Indian Railways so on. With increasing competition, this sector will register a robust growth in 2010, predict industry analysts. To take on rivals in this sector, PepsiCo India is drawing up a fresh game plan which includes, investment in capacity enhancement, packaging initiatives and below-the-line activities to pump up volumes in the over-crowded category. Meanwhile, swadeshi major Parle Agro is extending the manufacturing facility for Bailley from 29 to 60 plants this year. In essence, the packaged water industry in India will soon witness a major tussle between swadeshi and videshi players to gain market and mind share. Top multinational players such as Coca-Cola and PepsiCo have been trying for the past decade to capture the Indian bottled water market. Kinley and Aquafina are fast catching up, with Kinley holding 20-25 per cent of the market and Aquafina approximately 10 per cent. The rest, including the smaller players, have 20-25 per cent of the market share.

MARKET ENTRY AND TARGET SEGMENTS:

Herbella will tie up with two large organized food retailers and armed forced canteens. About 10% to 20% of the production will be used for brand building and testing the local retail channels in a focused manner.

MARKETING AND PROMOTIONAL :

We at Herbella offer a free amount of product or service delivered door to door sent in the mail picked up in store attached to another product or featured in an advertising offer. We also targets at prizes. We also introduce the games that every customer with something every time trust bingo numbers missing letters which might help them wins the prize. We also involve in tie-in promotions where to or more brands or companies team up on coupouns refunds and contests to increase pulling power. T.V and Advertisement and SITE 40%

Newspapers

10%

Magazines

30%

Other activities

20%

FINANCIAL PLAN:
OPERATIONA

L DATA
The plant will be operated in the first year at 60% capacity and as the expertise develops the 100 % pant capacity will be attained by the end of fifth year.

FIXED COST
The fixed cost is expected to be Rs 12.7 Million as described below.

Land Building / Infrastructure Machinery & Equipment Furniture & Fixture Office Vehicles Office Equipment Pre-operating Cost

12,30,000 10,57,500 62,40,000 1,08,500 20,56,360 2,02,500 18,16,268

Total Capital Costs (Including Working Capital)

1,27,11,128

WORKING CAPITAL
The investment in the initial working capital is of Rs 3,580,000

OVERHEAD COSTS
In the first year following overhead cost are estimated.

Administration Expenses

1,28,54,400

Utility expenses

4,28,292

Traveling

6,24,000

Office Vehicle and running

1,02,800

Office stationary

1,24,800

Promotional expenses

1,20,49,884

Insurance expenses

1,86,491

Depreciation

11,19,697

Amortization expenses

3,63,254

Miscellaneous expenses

36,14,965

Total

3,14,68,583

SUMMARY OF FINANCE:
Sales : Gross profit Margin : Payback period : Net Profit Margin Before tax : Rs 20 crores per annum 30% 2.2 Years 15% - 17% (Estimated)

ORGANIZATIONAL PLAN:
We, at Herbella follows the HR Practices that can help you achieve your organizational goals every year.

SUMMARY OF PRACTICES:
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Safe, Healthy And Happy Workplace Open Book Management Style Performance Linked Bonuses 360-Degree Performance Management Feedback System Fair Evaluation System For Employees Knowledge Sharing Highlight Performers Open House Discussions And Feedback Mechanisms Reward Ceremonies Delight Employees With The Unexpected 1. SAFE, HEALTHY AND HAPPY WORKPLACE
Creating a safe, healthy and happy workplace will ensure that your employees feel homely and stay with your organization for a very long time.

2. OPEN BOOK MANAGEMENT STYLE

Sharing information about contracts, sales, new clients, management objectives, company policies, employee personal data etc. ensures that the employees are as enthusiastic about the business as the management.

3. PERFORMANCE LINKED BONUSES

We design the bonus in such a way that people understand that there is no payout
unless the company hits a certain level of profitability. 4. 360 DEGREE PERFORMANCE MANAGEMENT FEEDBACK SYSTEM
We ask every very person in the employee is responsible for giving relevant, positive and constructive feedback. Such systems also help us in identifying leaders for higher level positions in the organization. Our senior managers could use this feedback for self development.

5. FAIR EVALUATION SYSTEM FOR EMPLOYEES

We make Self Evaluation as the main practice in the company. Self rating as a part of evaluation process empowers employees. Evaluation becomes fairer if it is based on the records of periodic counseling & achievements of the employee, tracked over the year.

6. KNOWLEDGE SHARING
We adopt a systematic approach to ensure that knowledge management supports strategy. Store knowledge in databases to provide greater access to information posted either by the company or the employees on the knowledge portals of the company.

7. HIGHLIGHT PERFORMERS
We create profiles of top performers and make these visible though company display boards etc. It will encourage others to put in their best, thereby creating a competitive environment within the company. If a systems approach is followed to shortlist high performers, we can surely avoid disgruntlements.

8. OPEN HOUSE DISCUSSIONS AND FEEDBACK MECHANISM

Ideas rule the world. Great organizations recognize, nurture and execute great ideas. We consider employees are the biggest source of ideas. The only thing that can stop great ideas flooding your organization is the lack of an appropriate mechanism to capture ideas.

9. REWARD CEREMONIES
We have the strong belief that recognizing talent does not work, we couple it with ceremonies where recognition is broadcast.

10. DELIGHT EMPLOYEES WITH THE UNEXPECTED

The last but not least way is to occasionally delight our employees with unexpected things that may come in the form of a reward, a gift or a well-done certificate. Reward not only the top performers but also a few others who are in need of motivation to exhibit their potential.

These are the HR practices which help us in maintaining the Organizational goals.

RENUMERATION:
DESIGNATION NO. OF SHIFTS MONTHLY SALARY ANNUAL COST

CEO Admin and Accounts Manager

1 1

40000 25,000

4,80,000 3,00,000

Ayurvedic Analyst Sales supervisor Sales Rep Driver Washer Filler Loader Plant Helper Packaging Supervisor

1 3 5 3 1 2 2 1 1

30,000 20,000 25,000 25,000 8,000 15,000 15,000 6,000 8,000

3,60,000 2,40,000 3,00,000 3,00,000 96,000 1,80,000 1,80,000 72,000 96,000

Marketing Manager

20,000

2,40,000

Marketing Officer Watchman Total

1 2 25

15,000 20,000

1,80,000 1,80,000 32,04,000

OPERATIONAL PLAN:
The first step for setting up a water purification plant is the analysis of source of water. After the chemical analysis, the specifications of the purification plant are set. In the purification plant, source water is stored in the feed water tank, passes through the sand filter for preliminary water filtration. Water then passes through the dosing pump-I where chlorine is added to kill the germs in the water. After the chlorination, water passes through carbon filter. It helps in the maintenance of proper odor and taste of the water. It also removes chlorine from water. Water is then passes from dosing pumpII, where Sodium Meta Bisulphate is added. It helps in dechlorination of water. Water is filtered next and passes through dosing pump-III, where anti scallant is added. It prevents scaling of membrane from calcium, magnesium and biological growth. Water then passes through reverse osmosis module. This stage of the process makes water clear from all the contaminations and minute particles. Water then passes through dosing pump-IV, where minerals are added for taste development. After this stage, water undergoes Ultra Violet treatment to avoid any contamination from bacteria and other micro organisms. Water then passes through automatic washing, filling and capping plant. Here water is filled into bottles. After filling bottles are taken into the warehouse or shipped to the retailers.

COLLECTION OF RAW MATERIALS: The Ayurvedic Ingredients are collected from the Kerala Ayurvedic Limited from the very Fresh Herbs farm. The waste materials should be removed and washed twice. The crushing process is to be done and made as powder which should mix with water. Then it will be added to the stainless steel where water is stored and it is preheated at most care will be taken care while mixing it into the water. We will have an Ayurvedic experts to analyze, test and mixing process. Machines should not be used for mixing process so that we can avoid any technical errors which cause the wrong composition of ingredients and water. The place where mixing happening need to neat and clean. The person who is handling ingredients in mixing will be using Sterilized masks and Hand gloves for water to make sure the water have the proper composition. As per the Standards of Government, we use the rules which are followed in Ayurvedic companies. After the process of Ozonazation, water s stored in the stainless steel container for 72 hours. At last the water is sent to the Filling section. The Final Product will come from there.

RISKS AND ASSUMPTIONS:

Non acceptability of product and services Excessive political interference by the giants

SOCIO ECONOMIC IMPACT:

As water is the essential part of our life, it is basically helping the people life. When considering the social economical impact about 10% sales of production are given free to the hospitals in Salem.

EXIT STRATEGY:
If the proposed project does not run successfully we would wind it up and payback the loan by selling the machineries, equipments and tools. Moreover we have enough financial backing from our ancestral property in case we are not able to run the business profitability we would still be able to pay back the loan by selling our ancestral property.