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HERBELLAAN 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. ORGANISATIONAL PLAN

11. RISKS AND ASSUMPTIONS

12. SOCIO ECONOMIC IMPACT

13. EXIT STRATEGY

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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 bio-

active 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 Vetiveria zizanioides Stress, Heart problem and throat pain2 Puncture Vine Reduce stress

3 Sapan wood Jaundice, Cough, Respiratory systems

4 Mimosa catchu Sore throat

5 Coriander seeds Blood sugar levels, Bad Cholesterol, Allergies and Cancer

6 Cloves Respiratory Ailments

7 Cardamom Good Digestion

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8 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 ideathat 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 tapwater 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 waterunits 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 anew structure in the Herbal waters.

PRICING AND GROWTH:

Plant Capacity litersper day

15,000 Gallons

Production per year (liters) 1,87,11,000

Ratio of 1 liter and 0.5 liter

bottle

80:20

Production of 1 liter bottle 99,79,200

Production of 0.5 liter bottle 74,84,400

Total annual production 1,74,63,600

Sale price of 1 liter bottle

(Rs.)

15

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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 theherbal water can help them to recover from the stress. So overall it is completely covering all thesegments.

COMPETITORS:

Sale price of 0.5 liter bottle

(Rs.)

8

Capacity utilization in first

yr

60%

Sales price growth rates 10%

Production capacity

utilization growth rate

10%

Maximum Capacity

utilization

95%

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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 labelsupplier.

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 followedby Coca- Cocas Kinley (around 25 per cent) and PepsiCos Aquafina (around 10 per cent). Thetop 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 activitiesto 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, thepackaged 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 retailchannels in a focused manner.

MARKETING AND PROMOTIONAL :

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We at Herbella offer a free amount of product or service delivered door to door sent inthe 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.

FINANCIAL

PLAN:OPERATIONA

L DATAThe 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 COSTThe fixed cost is expected to be Rs 12.7 Million as described below.

Land 12,30,000

Building / Infrastructure 10,57,500

Machinery & Equipment 62,40,000

Furniture & Fixture 1,08,500

Office Vehicles 20,56,360

Office Equipment 2,02,500

Pre-operating Cost 18,16,268

T.V and Advertisement and SITE 40%

Newspapers 10%

Magazines 30%

Other activities 20%

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Total Capital Costs (Including Working

Capital)

1,27,11,128

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

OVERHEAD COSTSIn 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

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SUMMARY OF FINANCE:Sales : Rs 20 crores per annum

Gross profit Margin : 30%Payback period : 2.2 Years

Net Profit Margin

Before tax : 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. Safe, Healthy And Happy Workplace2.

Open Book Management Style

3. Performance Linked Bonuses4. 360-Degree Performance Management Feedback System5. Fair Evaluation System For Employees6. Knowledge Sharing7. Highlight Performers8. Open House Discussions And Feedback Mechanisms9. Reward Ceremonies10. 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.

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3. PERFORMANCE LINKED BONUSES

We design the bonus in such a way that people understand that there is no payoutunless the company hits a certain level of profitability.

4. 360 DEGREE PERFORMANCE MANAGEMENT FEEDBACK SYSTEMWe 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.

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RENUMERATION:DESIGNATION NO. OF

SHIFTS

MONTHLY

SALARY

ANNUAL COST

CEO 1 40000 4,80,000

Admin and

Accounts

Manager

1 25,000 3,00,000

Ayurvedic

Analyst

1 30,000 3,60,000

Sales supervisor 3 20,000 2,40,000

Sales Rep 5 25,000 3,00,000

Driver 3 25,000 3,00,000

Washer 1 8,000 96,000

Filler 2 15,000 1,80,000

Loader 2 15,000 1,80,000

Plant Helper 1 6,000 72,000

Packaging

Supervisor

1 8,000 96,000

Marketing

Manager

1 20,000 2,40,000

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Marketing

Officer

1 15,000 1,80,000

Watchman 2 20,000 1,80,000

Total 25 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 pump-

II, where Sodium Meta Bisulphate is added. It helps in dechlorination of water.

Water is filtered next and passes through dosing pump-III, where anti scallant is added. It

prevents scaling of membrane from calcium, magnesium and biological growth. Water then passes

through reverse osmosis module. This stage of the process makes water clear from all the

contaminations and minute particles. Water then passes through dosing pump-IV, where minerals are

added for taste development.

After this stage, water undergoes Ultra Violet treatment to avoid any contamination from bacteria

and other micro organisms. Water then passes through automatic washing, filling and capping plant. Here

water is filled into bottles. After filling bottles are taken into the warehouse or shipped to the retailers.

COLLECTION OF RAW MATERIALS:

The Ayurvedic Ingredients are collected from the Kerala Ayurvedic Limited from thevery 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 andclean. 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 containerfor 72 hours. At last the water is sent to the Filling section. The Final Product will come from

there.

RISKS AND ASSUMPTIONS:

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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 thehospitals 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 wewould still be able to pay back the loan by selling our ancestral property.