JAR WATER PLANT

INTRODUCTION

Jar Water Plant in Bangladesh is most booming business now days. The demand of pure drinking
water is increasing year after year. The average per capita consumption of pure drinking water has increased
and given the limited resource of fresh water it is difficult for the countries to make available its population
the fresh water. The crisis of pure drinking water in Bangladesh, keeping this situation in mind many
industries and individual personnel have set up mineral water plant / Jar Water Project / Drinking Water
Pant in order to obtain fresh pure drinking water.

All Water Treatment Plants are designed as per “WHO and BSTI” guidelines, recommended
International code of Hygienic practice for the collecting, processing, and marketing of Packaged Drinking
Water/Natural Mineral Waters / Pure Drinking and confirm to the Standards set by expertise for Mineral
Water.

PLANT CAPACITY

The unit is proposed to produce 2500 jar (20 liter) of drinking water per day.

MARKET & DEMAND ASPECTS

Earlier bottled drinking water was privileged to high class, foreign tourist and highly health conscious people
but the present decade has witnessed increasing popularity among average consumers, increasing living
standards, disposable income, education and awareness among the consumers domestic and foreign tourist,
sophisticated business houses and offices has increased rapidly the sales of bottled water in recent years. The
growing demand for bottled water speaks volumes of the scarcity of clean drinking water and the quality of
tap water. There are around 20 players in the organized market who produce and market drinking water on
a large scale. More 30 companies have area-based market in the capital and elsewhere in the country.
Industry insiders said the bottled water market is growing at a rapid rate of around 20 per cent. At this
growth rate, the 2.5 billion market is estimated to overtake the soft drinks market soon.

Any water manufacturing, bottling and marketing company requires license from the state-
controlled Bangladesh Standards and Testing Institution (BSTI), WASA, commerce ministry, environment
ministry, labor ministry and City Corporation. But most of the jar water producers have been operating their
business only with a trade license obtained from the city corporation.

PROCESS OF MANUFACTURING
The water is processed with multi Eliminates load of total suspended solids in the raw water
stage purification processes such
as – sand filter, activated carbon
filter, ultraviolet disinfection, ultra
filtration, Reverse Osmosis and
Ozonization. Sand filter
Activated carbon filter
Ultraviolet disinfection (UV)
Ultra filtration
Reverse Osmosis
Ozonization
Filtration
Capacity flow rate
Raw water quality (assumed)
Motive power
-02-
This filter removes most of the organic contamination and
pesticide residuals from the water. It also controls taste and
odor of water
Water is exposed to UV light of wavelength 245
nanometers (nm). A dosage of 16000 microwatt/sq.cm at
40˚ C for effective disinfection
A low pressure membrane process that removes dissolved
organic macro molecules, viruses, pyrogen enzymes etc.
This process eliminates dissolved impurities like unwanted
salts and retain minerals which are essential to human body
This is the strongest oxidizer and disinfection agent which
acts on broad spectrum of microbiological organisms.
This pumps water through a microscopic filter that is rated
for a certain size organism. The standard size rating is the
micron
1000 lit/hour
1000 ppm as TDS
1KW

RAW MATERIALS
The main raw material is water which is purified and made into finished product. Also reagent and
chemical are required.

BASIS AND PRESUMPTIONS

This project has been drawn on the basis of following presumptions:
1 Working hours per shift 8
2 No. of shift /day 3
3 No. of working days /annum 300
4 Handling loss of jar per year 5000
5 Capacity Utilization 65%,70%,75%,80%
6 Production per day 2500 jar of 20 ltr
7 Selling Price per Jar Tk 60/-
8 Rate of interest 12% per annum
9 Price of Empty Jar
10 Empty Jar required per annum 50000 pcs
11 Empty Jar price Tk 260/- pc
12 Total Employee & Labor 10
13 Source of water own deep tube-well
14 Handling loss of jar per year 5000
15 Chemicals and Reagents etc. (L.S.
16 Total Cost of the project Tk.140.70 lac
 -03-

Fixed Cost of the Project

Items Tk. in '000'
incurred To be Total Cost
inc
1. Land:
a) Cost of Land (rental premises) and Land Developmemt 0 0 0
b) Transfer of Project Land in Company Name 0 0 0
Sub-Total : 0 0 0

02. Building & other civil works :

Civil Construction (As per Annexure-II) 0 0 0
Sub-Total : 0 0 0

03. Imported Machinery & Equipment :

CFR of Machinery (US$ 5,51,420) (As per Annexure-III) 0 8000 8000
L/C Commission -1% 0 80 80
Clearing & Fording -1% 0 80 80
Freight -Inland - 0 .5% 0 40 40
Pre Shipment inspection -1% 0 80 80
Marine Insurance -1% 0 80 80
Sub-Total : 0 8360 8360

04. Local Machinery:

As per Annexure III/A 0 1500 1500
Sub-Total : 0 1500 1500

05 Installation & Other Cost:

Civil, Mechanical & Electrical 500 500
Transport, Food, Lodging, Local Expenses of the erectors 0 0
Security Deposit for
Electricity 0 0
Electric line connection, pole, cable etc. 0 0
Sub-Total : 0 500 500

06. Vehicles
As per Annexure III/B 0 2000 2000
Sub-Total : 0 2000 2000

07.Office & Factory Furniture, Fixture & Equipments :

As per Annexure III/C 0 200 200
Sub-Total : 0 200 200

08. Consultant's
Fee
Servey,Plan,Design,Drawing, Technology Support etc. 100 400 500
Sub-Total : 100 400 500
 -04-

09. Pre-operating Expense :

Evaluation & Documentation Fee 0 200 200
Different charges, registration fee, VAT etc. 100 200 300
Promational and legal etc. 0 100 100
Construction Period
Insurance 0 0 0
Trial
Run 200 0 200
Sub-Total : 300 500 800

Total Fixed Cost of the project : 400 11460 11860

10. Interest on Grace Period:
On Tk. 35.00 lac Intt. @ 12%
per annum for a period of 06 months 210 210
Sub-Total : 0 210 210

Total Cost of the project : 400 13670 14070

Cost of the Project & Means of Finance

Cost to be Tk. in 000

Items
Cost Incurred incurred Total Cost
Land & Land Development 0 0 0
Civil Works & Building 0 0 0
Imported
Machinery 8360 8360
Local Machinery 0 1500 1500
Cost of Installation 0 500 500
Vehicle 0 2000 2000
Office Equipments & Other Assets 0 200 200
Consultant's Fee 100 400 500
Pre-operating Expense 300 500 800
Interest on Grace Period 0 210 210
--------------- ------------------ --------------
Total Cost of the Project 400 13670 14070
========= =========== ========
 -05-

Means of Finance :
Loans :
Bank's Term Loan 0 3500 3500
Interest on Grace Period 0 210 210
--------------- ----------------- -------------
Total Loans 0 3710 3710
Sponsor's Equity :
----------------------
Sponsor's Investment 400 9960 10360
--------------- ------------------- ------------
Total Equity 400 9960 10360
--------------- ------------------ -------------
Total Loans & Equity 400 13670 14070

========= ========== ==========

Debt : Equity Ratio 26% 74%

Fixed Assets Coverage Ratio 3.52

Assesment of Working Capital

A : Current Assets : Tied up 1st Year 2nd Year 3rd Year 4th Year
Period
Raw materials (Local) 60 days 1209 1302 1395 1488

Work in Process 02 days 119 132 146 160

Finished Goods Stock 10 days 591 677 746 818

Receivables at cost 10 days 572 654 721 790

Stores & Spares 90 days 16 31 47 62

------------- ------------- ------------- ---------------- ---------------
Total Current Assets: 2507 2796 3055 3318

Bank Borrowings:
70% raw materials, WIP, Finished goods, 1755 1957 2139 2323
receivables & spares

Sponsor's Margin 752 839 917 995

 -06-

Assumptions:
Requirement of Local Raw materials:
Unit Price Total Tk.
Items Unit Quantity in Tk. in '000'
Empty Jar 20 ltr 2500 jar per day pc 30000 260.00 7800
Chemical & Reagent 0 1000
Transport Cost 500
Unloading 0 0 0
Total 9300
Raw Materials 1st Year 2nd Year 3rd Year 4th Year
Capacity utilisation 65% 70% 75% 80%
Requirements of RM 6045 6510 6975 7440
Total requirement 6045 6510 6975 7440
Inventory 60 days) 1209 1302 1395 1488

Wages & Salaries

No. of Monthly Total Tk.
Name of the Post Post Salary in '000'
Factory Manager 1 20000 240
Quality Controller 1 15000 180
Skilled Labor 2 12000 288
Non Skilled Lobor 0 0 0
Security Guard 1 10000 120
Driver 2 12000 288
Machine Maintenance Person 1 12000 144
Total : 8 1260

1st Year 2nd Year 3rd Year 4th Year

Salaries 1260 1260 1386 1525
Increment 10% 0 126 139 153
Total 1260 1386 1525 1678
Bonus 2 months basic 210 231 254 280
Total Salary 1470 1617 1779 1958
 -07-

Water :
Sources of Water : Projects own deep tube-well
Annual requirements in litre
Power :
Connected load : 400KW
Maximum : 320KW
Demand
Operation Hour : 16
Cost per kwh (average) : 8.00
Vat : 5.0%
(5%)
Dmand charge per month in Tk. : 80.00
Service Charge per month in Tk. : 360.00
Tk. in '000'
Cost of Power per year at 100% capacity : 12288
Vat 5% : 614
Demand Charge per year : 384
Service Charge per year : 4
Total cost of power : 13290

Fuel Lubricants :
Unit
Price Total Tk.
Items Unit Quantity in Tk. in '000'
Mobil, Grease Kg 200 250 50
Lub. oil Litre 200 250 50
Diesel Litre 500 70 35
135

Requirements 1st Year 2nd Year 3rd Year 4th Year

Water 0 0 0 0
Power 12902 13548 14225 14936
Fuel & Lubricant 135 142 149 156
Capacity Utilisation 65% 70% 75% 80%
Requirements at attainable capacity 8474 9582 10780 12074
Demand Charge (power) 384 384 384 384
Service Charge (power) 4 4 4 4
Total water, fuel & power 8862 9970 11168 12462
 -08-
General & Administrative Expense

Tk. in 000
Items 1st Year 2nd Year 3rd Year 4th Year
Salary (Administration) 308 338 342 342
Post, telephone & fax 60 72 84 96
Stationery & Printing 48 60 72 84
Travelling &
Conveyance 100 120 140 170
Depreciation & Write
off 190 190 190 190
Rent 15000/- per
month 180 180 180 200
Miscellaneous
Expenses 120 150 160 180
--------------- --------------- ------------------ -----------------
Total 1006 1110 1168 1262
Assumptions:

Salary & Allowances:

No. of Monthly Total Tk.
Name of the Post Post Salary in '000'
General Manager 0 0 0
Assistant General Manager 0 0 0
Chief Accountant 0 0 0
Accounts Officer 0 0 0
Office Assistant 1 12000 144
Driver 0 0 0
Office Peon 1 10000 120
Total : 2 264
Items 1st Year 2nd Year 3rd Year 4th Year 5th Year
Salaries 264 264 264 264 264
Increment 10% 0 26 29 29 29
Total 264 290 293 293 293
Bonus 2 months basic 44 48 49 49 49
Total Salary 308 338 342 342 342

2 Depreciation & Write Off

Depreciation Depreciated
Items Amount Rate Amount
Other Assets 200 15.00% 30
Pre-operating Expenses 800 20.00% 160
IDCP 0 20.00% 0
Total : 190
 -09-

02. Sales Revenue :

Item Unit Quantity Unit Total Tk.

Price
in Tk. in '000'
Jer per day 2500 Pcs. 750000 60.00 45000
Total : 45000
Forecast of Earnings

Item 1st Year 2nd Year 3rd Year 4th Year

Net Sales Revenue 28086 31371 33656 35907

Cost of Goods Sold 17148 19633 21626 23715

Gross Profit 10938 11738 12030 12192

General & Administrative Expenses 1006 1110 1168 1262

Profit before Tax & Interest (EBIT) 9932 10628 10862 10930

Financial Expenses 616 559 500 441

Profit Before Tax (EBT) 9316 10069 10362 10489

Income Tax (Tax Holiday) 0 0 0 0

Net profit after tax 9316 10069 10362 10489

Dividend @ 7% on paid up capital 0 725 725 725

Retained earnings 9316 9344 9637 9764

Cummulative retained earnings 9316 18660 28298 38062

Ratios :
Gross Profit to sales 39% 37% 36% 34%
Operating profit to sales 35% 32% 31% 29%
Net Profit to sales 33% 32% 31% 29%
Debt Service Coverage Ratio 8.64 9.61 10.29 10.89
 -10-

Break Even Analysis

Tk. in '000'
01. Sales and Service revenue at 60% capacity ( 4th year) 35907
02. Total Cost : Operational, Administrative and Financial 25504

Item Total Cost Fixed Variable

Cost Cost
Raw Materials 7440 0 7440
Wages & Salaries 1958 392 1566
Stores & Spares 207 104 104
Repairs & Maintenance 207 104 104
Depreciation & Write Off 1226 1226 0
Water, Power & Fuel 12462 2492 9970
Rent, Tax & Insurance 141 141 0
Other Expenses 350 175 175
Salary (Administration) 342 342 0
Postage, telephone & telegraph 96 48 48
Stationery & Printing 84 42 42
Travelling & Conveyance 170 85 85
Rent 200 200 0
Miscellaneous Expenses 180 90 90
Financial Expenses 441 162 279
25504 5602 19902

Contribution Margin (CM)Ratio : Sales-Variable cost/ Sales 0.45

Break Even Point = Fixed Cost/ CM 12567 35% of Attainable capacity
Ratio
28% of Rated capacity