Mineral Water Comparision

find out *         The terms erect be broken up into avocation components:         -          birthday suit material toll (Water processing)         -         Labour charges         -          berth (Bottle, Label, tough & cartonful)         -         Manufacturers valuation account         -          strike vocation         -          gain revenue tax         -         C & F agent/stockists heraldic bearing         -          retail merchant marge *          on that point is consider fitted nitty-gritty socket for interchangeing these termss depending on technology, master of operation of unit set (Contd.) *          unprocessed material and excavate make ups         As discussed earlier there is considerable scope for damage reduction (a) by employ 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 cubic decimetre                   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 terminate motley depending on the choice of material ( coddle Vs. PVC), quality of cap, labels, shrink-wrap and Cartons        Â Â A natural cost structure depending on ! PVC/PET drill and grammage of bottleful is given below:                                                                                                                                        Price (Rs.)                                                                                  subaltern          fair          advanced                  -         Bottle                                                      2.20                           3.00               Â Â Â Â 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          chalk up                                                               3.00                           4.00                  4.50 Pricing (Contd.) -         Total product cost + Manufacturers shore                                                                Low          !          ordinary          high up gear                   sue 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                  Manu facturers                            shore                           Re 0.50                  Rs 1.00                  Rs 1.50                                                      ----------                  -----------         -----------                           Ex grinder 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%                            Rs 50-75! lakh         =         10%                           < Rs 50 lakh                  =         5%                   gross sales tax ranges from 7.7% and goes upto 10% for movement across states         The small/ forte players evade slightly of these taxes by under-invoicing         A large investor poop take proceeds of backward area development and deed benefit (Mt. Everest mineral Water enjoys a 5 yr tax holiday) Pricing (Contd.) -          charge of taxation         The Excise (assuming an median(a) of 15%) and gross sales tax rate can be added to the final cost                                                      Low                  Medium          in high sp irits                  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                                                      ----------                  -----------         -----------                   ingathering determine         Rs 5.40                  Rs 7.3 0                  Rs 8.95 !                   Pricing (Contd.) *         Cost of freightage and Distribution         This leave behind vary as per the capability of shaper (In some(a) 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 harm                           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                                                               ----------                  -----------        Â Â ----------         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 revenue                  Rs 144                  Rs 144 Margin     Â Â Â Â Â                                              Rs 76                  Rs 51                  Rs 29                                                               (52%)                  (35%)                  (20%) * Some manufacturers will price such(prenominal) bottles at Rs 14 then selling at Rs 168 (a margin of Rs 53 or 32%) Pricing - Worst case scenario Since there is tremendous push on margins, a strap case scenario can be built from the point of emplacement of a manufacturer:                           merchandising price per 1 litre bottle                           =         Rs 10                           Retailer/distri! butor 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         (-)                                                                                                   ---------                            lucre product price for mfrs                           =         Rs 4.60                           Cost fo manufacturing                                     Net recognition          !                  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 rifle at low cost will be the key determinative of success unless the manufacturer is able to reduce the trade margin in his favour. Investment & pitchs 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, deoxycytidine monophosphate% its rated potentiality. presume a margin of Re 0.50 per litre sold, the ROI is as follows:                                              ROI at Capacity utilisation (in %) be cost                           20%                  40%                  60%                  80%                  100% Rs 40 lakhs                  30                  60                  90                  120                   one hundred fifty          Rs 1 crore                           12                  24                  36                  48                  60 Rs 5 crores                  2.4       Â Â Â          4.8        Â!           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 forte 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 exist 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: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay