Mineral Water Comparision

coiffure *         The terms basin be broken up into avocation components:         -          lancinating material toll (Water processing)         -         Labour charges         -          en bailiwick (Bottle, Label, tough & carton)         -         Manufacturers valuation account         -          strike profession         -          unprocessed revenue tax         -         C & F agent/stockists direction         -          retail merchant marge *          on that point is consider able-bodied affection socket for interchangeing these termss depending on technology, master of operation of unit set (Contd.) *          huffy material and excavate apostrophizes         As discussed earlie r at that place is considerable scope for bell reduction (a) by utilize minimum involve processes/equipment (b) by employing casual labour                  Bisleri & Bailley :                  -         Raw material         Re 0.15 to 0.20 per lambert of output                  -         Labour                           Re 0.25 to 0.35 per liter                   contribute                                    Re 0.40 to 0.55 per litre         ICE, Delhi spends Re 1.00 per litre of output set (Contd.) -         Packaging cost         The comportage cost stop motley depending on the choice of material ( fondle Vs. PVC), quality of cap, labels, shrink-wrap and Cartons          A natural cost structure depending on PVC/P! ET drill and grammage of feeding bottle is given below:                                                                                                                                        Price (Rs.)                                                                                  economic crisis          fair          advanced                  -         Bottle                                                      2.20                           3.00                  3.40         -         Cap/shrink-wrap/label                  0.35                           0.50                  0.50         -         Carton (Rs 5-7.5 per pack of 12)         0.45                           0.50                  0.60          append                                                               3.00                           4.00                  4.50 Pricing (Contd.) -         Total product cost + Manufacturers shore                                                                Low        Â!            ordinary          gamey gear                   butt against cost                  Re 0.40                  Re 0.55                  Re 1.00                                    Package cost         Rs 3.00                  Rs 4.00                  Rs 4.50                                                      ----------                  -----------         -----------                  Total cost                  Rs 3.40                  Rs 4.55                  Rs 5.50                   Manufacturers                            shore                           Re 0.50                  Rs 1.00                  Rs 1.50                                                      ----------                  -----------         -----------                           Ex mill cost         Rs 3.90                  Rs 5.55                  Rs 7.00 Pricing (Contd.) *         Tax structure         Excise duty is charged in the following slabs:                           Rs 75 hundred thousand +         =         15%                           Â!  Rs 50-75 lakh         =         10%                           < Rs 50 lakh                  =         5%                  gross revenue tax ranges from 7.7% and goes upto 10% for movement across states         The small/ mean(a) players evade slightly of these taxes by under-invoicing         A large investor sens take proceeds of backward area development and margin call benefit (Mt. Everest mineral Water enjoys a 5 class tax holiday) Pricing (Contd.) -          toll of taxation         The Excise (assuming an honest of 15%) and gross sales tax rate can be added to the final cost                                                      Low                  Medium        Â Â  full(prenominal)                  Ex factory cost         Rs 3.90                  Rs 5.55                  Rs 7.00                  Excise duty                  Re 0.60                  Re 0.85                  Re 1.05                  Sales tax ~                  Re 0.90                  Re 0.90                  Re 0.90                                                      ----------                  -----------         -----------                   convergence determine         Rs 5.40                   Rs 7.30             !      Rs 8.95                   Pricing (Contd.) *         Cost of despatch and Distribution         This get out vary as per the capability of manufacturing business (In most en nationals, manufacturers deliver upto stockists post and in some cases delivery are made ex-factory). Also, the distances to extract will determine costs:                                                               Low                  Medium          High         Product equipment casualty                           Rs 5.40                  Rs 7.30                  Rs 8.95         Freight & Distribution         Re 0.30                  Re 0.45                   Re 0.65                                                               ----------                  -----------         ----------         Total                                             Rs 5.70                  Rs 7.75                  Rs 9.60                  Sale price                                    Rs12.00                  Rs12.00                  Rs12.00                                                               ----------                   -----------         ----------!         Trade margin                           Rs 6.30                  Rs 4.25                  Rs 2.40 Pricing (Contd.

) Thus, a case of 12 will score the following price structure:                                                                        Low                  Medium          High* Cost of case                                              Rs 68                  Rs 93                  Rs 115 selling price                                             Rs gross                  Rs 144                  Rs 144 Margin                                                      Rs 76                  Rs 51                  Rs 29                                                               (52%)                  (35%)                  (20%) * Some manufacturers will price such(prenominal) bottles at Rs 14 thereof selling at Rs 168 (a margin of Rs 53 or 32%) Pricin g - Worst case scenario Since there is tremendous ob! lige on margins, a strap case scenario can be built from the point of emplacement of a manufacturer:                            change price per 1 litre bottle                           =         Rs 10                           Retailer/distributor margin (Rs 40/case)         =         Rs 3.40         (-)                                             Freight etc.                                                      =         Rs 0.30         (-)                                                                                                   ---------                           Product cost to trade                                    =         Rs 6.30                           Excise (15%)                                             =         Rs 0.90         (-)                           Sales tax                                                      =         Rs 0.80         (-)                                                                                                    ---------          !                   lettuce product price for mfrs                           =         Rs 4.60                           Cost fo manufacturing                                    Net fruition                           Low (Rs 3.40 per bottle)                                    + Rs 1.20 per bottle                           Medium (Rs 4.55 per bottle)                           + Rs 0.05 per bottle                           High (Rs 5.50 per bottle)                           - Rs 1.10 per bottle Thus, ability to turn at low cost will be the key determinative of success unle ss the manufacturer is able to reduce the trade margin in his favour. Investment & fall ins A plant of 40,000 lts/day is delusive to cost Rs 40 lakh or Rs 1 crore or Rs 5 crore and is expected to operate in 20, 40, 60, 80, ampere-second% its rated substance. presume a margin of Re 0.50 per litre sold, the ROI is as follows:                                             ROI at Capacity utilisation (in %) set out cost                           20%                  40%                  60%                  80%                  100% Rs 40 lakhs                  30                  60                  90                  120                  cl          Rs 1 crore          !                  12                  24                  36                  48                  60 Rs 5 crores                  2.4                  4.8                  7.2                  9.6                  12.0 The low investment funds to high return indicates the proliferation of small operators even at 20% capacity utilisation. Whereas, the strength sized entrepreneur finds it just almost OK at 25-30% capacity utilisation (which is normally the case and this explains the franchisee operations of Bisleri & Bailley). The high quality entrepreneur cannot conk until he reaches a capacity of 100% and that too can exactly manage to survive                            If you want to get a effective essay, order it on our website: BestEssayCheap.com

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