BusinessPlanPrimer 1

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Business Plan Primer

OrientationWorkshop 2007

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Itinerary
Day1IntroductiontoBusinessPlan[1.5hrs] 30thJuly,2007

ShowcasingofSampleBusinessPlans byProf.RadhaIyer(FacultyforEntrepreneurship) AtalkbytheinhouseteamofSIMSR byPrabalAgarwal,AbhisheshSharmaandPragyaGaur ConcludingRemarks Day2BusinessPlanCaseDiscussion[2hrs] tobedecided

PresentationsbySelectTeamsonCrystalWaterBusinessPlanCase TipsonEffectiveBusinessPlanWriting DiscussiononimportantsectionsofaBusinessPlan Day3SimulationofBusinessPlanCompetition tobedecided

SelectteamswillberunthroughaseriesofmockBusinessPlancompetitionstohelpthemfine tunetheirBusinessPlansandalsotouchupontheirpresentation.

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BusinessPlan

Task(AfterDay1):Eachteamconsistingofnotmorethan3membersareexpectedtoreviewthe followingBusinessPlanandprepareapresentationofnotmorethan5slides,highlightingthestrengths andweaknessesoftheBusinessPlanandhowitcanbefurtherimproved.

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1.0ExecutiveSummary
CrystalWaterSolutions(CWS)isastartupcompanyofferingcompleteandcomprehensivewater solutionstoapartments,midsizecomplexes,schoolsandrestaurants.CWSwillstarttheofferofthese servicesfromChennaiandgraduallyspreaditsoperationstoothercitieslikeHyderabadandBangalore. Inthelongrunthecompanyplanstomoveupthevaluechainbybecomingacompanyprovidingtotal consultancyrelatedtowaterneedsofindividuals,communitiesandcities. 1.1 TheConcept CWSdifferentiatesitselffromregularwaterpurificationproductprovidersbyprovidingintegrated solutionatthesourceofsupplyandallowingresidentstodrinkwaterdirectlyfromtap.CWSwill procurepurifiercomponentsfromvendors,integratethem,brandthemandsellacompletesolutionkit. CWSwillgraduallyincreaseitsserviceportfoliotoaddwaterconservationandrecyclingservicestooffer customized,betteranduniquesolutionstocustomers.CWSplanstoacquirethesecompetencieswithin ayearofthestartoftheoperation.InthelongrunCWSplanstobecomeacompleteconsultantforthe waterandrelatedservices.Thiswilldifferentiatethecompanyfromitscompetitorsandkeepitaheadof them.Theserviceportfoliowillenablethecompanytodevelopstrongcustomerrelationsandbuilda consistentrevenuebase. CWSwillattractandmaintainaloyalcustomerbasethroughtheircustomerorientedfocusonbusiness. Allemployeeswillbetrainedandheldresponsibleforprovidingsuperiorservice,developingalong lastingrelationshipwithcustomers.Thisisveryimportant,especiallyinanindustrywhichisfragmented, fastgrowingandwherecustomerslacktrustontheproducts. 1.2 Team Highlyqualifiedteamwithstrongtechnicalbackgroundandclearunderstandingofthetechnologies involved.TheteamsaffiliationtopremierinstitutesinIndia(ISB,IITandREC)boastsofitsfoundationin strongbusinessfundamentals.Theprofessionalbackgroundofeachteammemberisaproofof adequatediversitynecessarytorunabusiness. Member1:Hasafamilybusinessofcommoditiestrading.Experiencesinsoftwareindustry,worked withcompanieslikeInfosysandCognizant.Hecomeswithrichexperienceinmanagingsmall business/startupsandwithindepthinsightsinhowfirmsmanageinhighgrowthindustrieslikeIT. Member2:HasovereightyearsexperienceasDeputyManagerinSAILBokaro.Hecomeswith extensiveexperienceinmanaginglargeteamsandlargeoperations.Hisexperienceasanoperations expertisanassettoasmallbusiness/startupfirm.

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Member3:HasaroundsixyearsexperienceinITindustryworkingwithSatyamComputers.His experiencevariesfrommanagingaccounts,handlingteamstocustomerrelationshipmanagement.He alsohasexposuretoSalesinIT. 1.3 TheBusinessContext PortablewatersupplyathomesincitieslikeChennaiisamajorconcernwithaveragespendingonwater rangingbetweenRupees10002000amonth.InChennaithegroundwaterlevelhasdeteriorated tremendouslyandinmanyplacesthewaterisextremelybrackishandnotfitfornormaluse.While drinkingwaterismainlypurchasedonadailybasisin20litrecan,thereisasyetnomeansofnormal portablewaterinplaceforusageinotherdomestichouseholdpurposes. Thereisanurgentneedtofindimmediateandlongtermsolutionsfortheproblem.Whileimmediate solutionsarebasedonthepurificationsystemsthatareavailableinthemarket,thelongtermsolution tothewaterproblemcanonlybefoundatthecommunityandthecitylevelthroughtechniqueslike WaterHarvestingandtheTotalWaterManagement.CWSrealizedthelatentimmediateneedandthe requirementforsomekindoflongtermsustainablesolutionslikeWasteWaterRecycling,Water Harvesting,etc. ThegrowingapartmentcultureincitieslikeChennaicoupledwithdeterioratingqualityofgroundwater supplyopensupanimmenseopportunityinprovidinganintegratedcustomizedandcosteffectivewater solutionsforbothdrinkingandbathroompurposes.Theideaistoconstructawaterpurificationsystem attheapartmenttanklevelitselfandsupplyfullytreated(drinkingandbathroomsupplyseparately) watertoalltheapartmentswhilebringingdownthecostsbymorethan50%.Theproductwillbesold underourownbrandname.Thelongtermplanistocovertheentiregamutofwaterserviceslikewater harvesting,wastewatertreatment,etc.andincreaseourpieinaburgeoningindustry. TheevolutionofthecompanyfromaproductcustomizertotheWaterConsultantisshowninthefigure below

ImmediateSolution
Apartmentunits, Recycleofwastewater, Restaurants, WaterHarvesting Expandtoother geographicalareaslike Hyderabad,Bangalore

SustainableSolution
Wastewater Treatment, CommunityTreatment, etc. TotalWaterConsulting totheCorporateand GovernmentAgencies

OneYear 1.4 TheOpportunity

12years

24years

5years

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Withthecompetitioninrealestateintensifyingdifferentiationcomesdowntothequalityofservices provided.Builders/RealEstatedealerswillreapbenefitsifexcellentwaterpurifiersystemsareapartof theirpackage.Hencethesituationcallsforacollaborationwiththeconstructionindustryandmakeita winwinsituationforboth.Thiswillprovideustheinitialtrust. Whatmakesthisindustrymoreinterestingisthattheneeditseekstocatertoisextremelycritical,but thereisalargescalediscontentmentamongthemasseswiththecurrentsolutions.Thecriticality discontentmentmatrixdiagramforpuredrinkingwatersolutionsisshowninFigure2. 1.5 OurSolution Anysolutionforwaterpurificationshouldbebasedonthequalityofwater.Inwatertherearemainly threekindsofimpuritiesindifferentproportions.TheyareSuspendedParticles,DissolvedSolutesand thePathologicalimpurities.ThisissummarizedinFigure3. Discontent

Criticality

Figure2CriticalityDiscontentmentMatrix

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Sus spended Pa articles

Imp purities
Dissolve ed Solutes s Microbial containment t

Typesofimp purities Figure3 Whatweproposeisacustomizedsolutiondependinguponthequalityofwaterpresen ntinthelocat tion. Theadvan ntageoursolutionhasove erthevarious sotheronesi izefitallsolu utionsavailableinthemarket arefollow wing CWSSolution 1. Customizedon nthebasisofthequalityo of water w 2. Cheap,andCo onvenient.Low wcostper ho ousehold 3. Goodqualityw wateravailableforthe ba athroomalso o(speciallyinp placeslike Chennaiwhere ethewateris sbrackishthe e waterisnotfit w tforbathroom musealso) 4. Th hissystemreducesdependencyonthe e qualityofmun nicipalwatera andthebore wellwaterand w dprocessbothfordrinking g an ndforotherh householdpu urposes heProduct 1.6 Th Them mainproducttoprocureistheROmem mbranewhichaproprietary ytechnologywithcertains select comp panies.Thisishightechnologyproductb beingmanufa acturedbyfewcompanies s.CWShas Cur rrentSolution ns 1. Nocustomiz zationandthatiswhyman ny placestheequipmentare enoteffectiv veat all 2. Highcostpe erunithouseh hold tisavailableis 3. Thevolumeofwaterthat lessandthebathroomw waterscarcityis stillthere 4. Stronglydep pendantonth hequalityoft the municipality ywaterorgro oundwatersu upply

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consultedaleadingIndianmanufacturerofROmembranewhoisanindustrialsupplier.The companyisveryenthusiasticaboutenteringtheconsumermarketandnecessarysynergiescanarise withtheirtechnologyandoutknowledgeofthemarketandoperations. Whileresidentialapartmentaretheprimarytargetsinitially,otherinstitutionslikeschools,office, hotelswillbetargetedinthelongrun.Theindividualcomponentswillbeprocuredfromsuppliers andourtechnicalteamwillassembletheplant.Wewillalsohavenecessarymaintenancecontracts toprovidepostimplementationwarrantyandservicessupport.Asimplecalculationofthecost benefitisshownbelow 1.7 CostEffectivenessofCWSSolution Totalno.offlats Averageno.ofoccupantsperflat Averagedrinkingwaterconsumption/perperson/perday Totaldrinkingwaterconsumption/day Plantcapacity(litres/hr) Costoftheplant(Rupees) Onetimecostperflat(Rupees) Annualmaintenancecostperflat(Rupees) Averagemonthlydrinkingwaterbillforeachflatforthefirstyearincludingthe fixedcosts(Rupees) Averagemonthlydrinkingwaterbillforeachflatfromthesecondyearonwards (Rupees) 20 4 10litres 500 50 200,000 10,000 1,000 850 <150

Therearestrongeconomiesofscaleinthisproduct.Asthenumberofhouseholdsincreasesthecost perunithousecomesdown.Thisisclearlydepictedinthegraphbelow.

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Current solutionis profitable

Oursolutionis effective

Numberofapartments

1.8 ProfitabilityProjections NoofUnitssold EstimatedSales (Rupees) NetProfit(Rupees) Year1 210 3,50,00,000 42,98,000 Year2 294 11,55,00,000 1,84,24,7000 Year3 714 23,25,00,000 3,33,61,200

Theinitialinvestmentsarenotgreatconsideringthatwewillnotbemanufacturingtheunits.The businessismoreofsalesandamarketingeffortandthereturnsifrealizedaregreatcomparedto initialinvestments.Foramoredetailedfinancialanalysisrefertotheattachedfinancialprojection report.

2.0

MarketAnalysis

CWShasafocusonmeetingthedemandofaregularlocalresidentcustomerbase,mainlythoseof apartmentsandlargescalehousingcomplexes.CWSthenplanstoscaleupoperationstotarget hotels,officecomplexes,schools,etc.Thecompanyestimatesthat100%ofitsrevenuewillcome fromtheapartmentsandindependenthousesinitsfirstyearofoperation. 2.1 MarketProspects:

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Themarketprospectscanbeseparatedintothreedistinctcategories: 1. Theusersofmineralandbottledwaterwhichisregularlysuppliedtothehomesinthe20 litrejars.ItcostsamiddleclassfamilybetweenRupees10002000amonthwhichisvery expensive. 2. Thosewhofilterthemunicipalwaterorgroundwaterforbasichumanconsumption.Thisis asourcewhichisofteninadequate,notreliableandsubstandard.Alargesectionofthe populationarenotinapositiontogotforthecostlymineralwatersolutionshavetorelyon itandtheyusesomehometreatmentsolutionslikeAquaguard.Howeverthissolutionis beingrenderedineffectiveoflateinChennaibecauseofthedegradationofthesupply water. 3. Oflatewaterinsomeareasisbeingrenderedunusableevenforbathroompurposes becauseofthesaltytasteofthewaterandotherimpuritiesthatitcontainswhicharenot goodforhumanusage. 4. PlaceslikeChennaiarestrongmarketsforrecycledwaterforbasicdomesticpurposesdue tothediminishingwatertableandacuteneedforwaterconservation.Hencerecycling opportunitiesareimmenseincitieslikeChennai. 5. WiththegovernmentsmakingwaterharvestingcompulsoryinChennai,itgivesan opportunitytoexpandourscopeofwaterservices. Hencewearelookingatgraftingacompletesetofwatersolutionsforapartmentsandhighend housestostartwith.Therangeofservicestobeofferediscompletelyendtoendwithdrinking water,bathroomwaterandwaterforotherdomesticpurposescomingtothehousesthrough anintegratedsupplymechanismviadifferentpipingsystems.

3.0 MarketSizeEstimation
3.1 Targetsegments Theinitialtargetsegmentwillbetheapartmentsandindependenthouses;lateronwewill reachouttoothersegmentslikeofficecomplexes,schools,hotels,restaurants. 3.2 MarketSize AbriefestimationoftheChennaimarketsizeislistedbelow. 3.3 ChennaiMarket: Totalpopulation:59lakhs Noofhouseholdsbasedongrowthratessince1991:12lakhs

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PuccahouseholdsbasedonaverageurbanratesinIndia:12*0.80=9.6lakhs Middleclassandupperclasshouseholds2.4lakhs(25%approx) Assuming20flatsperapartment(avg)=4800apartments Schools3000(approx) Hotels500(approx) Restaurants500(approx) Officecomplexes2000(Noofficialdata) TotalMarketSize2,50,800(approx) Wehavetakentheapproximatenumbersofapartments,upperendhouseholds,schools,office complexesandhotelsintheChennaicitybasedonsomeavailablerealestatefiguresfromthe internet.Thecurrentnumbersinthedifferentsegmentsandthegrowthpatternoverthenext fewyearsisshowninthetablebelow. Potential Customers Apartments Upperend Households Schools Office complexes Hotels Total Current Percentage Number Growth 3500.00 20% 9600.00 5% 3000.00 2000.00 500.00 18600.00 0% 10.00% 5% 2005 4200 10080 3000 2200 525 20005 2006 5040 10584 3000 2420 551 21595 2007 6048 11113 3000 2662 579 23402 2008 7258 11669 3000 2928 608 25462

Inthefirstyearofoperation,wewilltakeaconservativeapproachandtargetonlythe apartments,individualhousesandtoalesserextenttheofficecomplexes.Thetargeted percentageforeachcategoryisenlistedbelow. Targetpercentageofdifferentsegments PotentialCustomers Apartments UpperendHouseholds Schools Officecomplexes Hotels 2005 5.00% 1.00% 0.00% 1.00% 0.00% 2006 10% 3% 1% 5% 1% 2007 20% 3% 3% 10% 5% 2008 30% 5% 5% 15% 7%

Basedonthefiguresabove,wecalculatethetotalnumberofcustomersthatcanbetargetedin thedifferentsegmentsliketheapartments,theupperendhouseholds,schools,office complexesandthehotels.Thenumbersareshowninthetablebelow.

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Segmentwisemarketbasetargeted PotentialCustomers Apartments Upperend Households Schools Officecomplexes Hotels Total 2005 210 101 0 22 0 333 2006 294 217 30 99 6 645 2007 714 101 60 143 22 1040 2008 959 165 60 175 15 1,375

Hencethetotaltargetednumberinthefirstyearofoperationsis333,whichisaveryattractive propositionbyanystandards.Wehavearrivedatthisnumberbasedonveryconservativehit ratesof5%fortheapartmentsand1%forupperendindependenthouseswhichwethinkis definitelyachievable. 3.4 CompetitivePositioning CurrentlytheindustryiscompletelydominatedbyEurekaforbeswith75%ofthemarketshare. OtherdominantplayersareIonExchange,SoftelMachinesandSintexIndustries.Otherslike Usha,CromptonGreaveswiththeirproductsareverysmallplayers.Soweanalyzeourproducts onlyincomparisontoAquaGuard. AppendixIshowsthedetailsofvariousproductsavailableforthehouseholdunits.Thereare reallynoestablishedplayerscateringtotheneedsoflargeapartments.Itseemsthisisapartof thecompanysstrategynottotargettheapartmentsbecausethatwillcannibalizetheirexisting productssales. AquaGuard 1. Toocostlyifthenumberofusersgrow large 2. Productsarenotcustomizable accordingtothecustomerneeds 3. Productscannotbeadoptedtothe variationinthewaterquality 3.5 MarketEntryBarriers: OurSolution 1. Itbecomescheaperandcheaperas thenumberofusersgrowlarge 2. Itiscustomizableaccordingtothe needsofthecustomers 3. Itcanadopttothevariationinthe waterqualityandprovidebetter solutiontotheproblem

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Theentrybarriersarelowinthisindustryasthetechnologyisnotpatentedandthetechnology iseasilyavailable.ItishighthoughforaplayerlikeAquaguardsinceitwillendupcannibalizing itsexistingmarket. Entrybarrierswecanestablish Brandname:ThereisalessontobelearntfromAquaGuardinthisrespect.Aquaguardhas moreorlessmonopolizedthewaterfiltermarketpurelybywayofanaggressivemarketingand salesstrategy.Sincethisisnotapatentedtechnologycreatingastrongsenseofbrandinthe shortesttimepossiblebecomesabsolutelynecessary.HenceCWSmarketingwillbevery aggressiveinthefirstyearofoperations. Servicereliability:ThisshouldbethefirmsUSPinthelongrunasitispredominantlyaservice orientedindustry.Regularcashflowscanbeensuredifservicequalitylevelsofthehighest standardsaremaintainedandthiswillbecomeastrongentrybarrierforothercompaniesto followsuit. Immediatepriceadvantage:Pricingshouldbecarefullydoneandsincethesolutionweare offeringisprettyuniqueinitself,wecancashinontheproductininitialstages,butthepricing hastobedoneratherconservativelytoensurecustomerretentionandloyaltyinthelongrunas mostourpotentialcustomerswillbebuilderswhocangiveusrepeatbusiness. CostAdvantage:SincewearesourcingthehightechnologyproductfromanIndiancompany, wecanhavecompetitiveadvantagewhencomparedtootherfirmswhoaremostlyimporting productsfromothercountries.WeareworkingonacontractwithPermionicstosupplythe requisitetechnologyandinitialtraininginserviceandmaintenance.Theresponsehasbeenvery positiveandthedealwillputusinatremendouscostadvantagepositionasthereverseosmosis technologyismostlyimportedcurrently. Customizedwaterservicesolutions:Providingcustomizedwatersolutionsforlargescale customerslikeapartmentsisveryimportantasthequalityofinputwaterindifferentareas differssubstantially.Thisisthefirststeptowardsbuildingcompetencyintheconsultingarm whichisoneofthelongtermobjectivesofCWS.

4.0 StrategyandImplementation
4.1 Alliancesandpartnerships InitiallythecompleteproductwillbesourcedfromaqualityIndianmanufacturer,Permionics. Wewillbrandtheproductandsellit.ThevaluepropositionforPermionicsiseconomiesofscale, widerrangeofsolutionsandentryintodifferentpurposeswithlittleornofocusinthedomestic

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se egment.They yhavethetec chnologyinplacetodelive erhighquality yreverseosm mosissolution nsfor do omesticpurp posesandthis scanbelever rageduponquiteeasilyby yusbecauseo ofourgood understanding goftheunder rlyingmarket tconditions. .2 veedge 4. Competitiv CW WScompetitiveedgedefinitelyliesinp providingacu ustomizeden ndtoendsolu utionsfordiff ferent se egmentsiden ntified.Eviden ntlythiskindofwatersolu utioniscurren ntnotseenin nIndiaandwe ecan ha avethefirstm moveradvant tagewhichca anbeleverag geupon. 4. SalesStrat .3 tegy Th hesegmentw wisemarkets salestargetbreakupisdep pictedinthegraphbelow. .Apartmentswill be eprimarytar rgetthrougho outtheprojectedperiodfollowedbyhighendhouseholdsandoffice co omplexes. Th heproductsh havebeenpri icedbasedon ndifferentcapacitylevelsasperthereq quirementso ofthe differentsegm ments.Thepricingofthein ndividualprod ductsfordiffe erentsegmen ntsislistedinthe ta ablebelow.

Segeme entwisem marketbas setarget

400,0 000 350,0 000 300,0 000 250,0 000 200,0 000 150,0 000 100,0 000 50,0 000 0 PriceinRupees

2005 5 2006 6 2007 7 2008 8

Priceofintegr ratedsystems s: Priceofintegrated dsystems Potentialcustomers Apartments UpperendHou useholds Sc chools Officecomplex O xes 200 05 200,000 100,000 200,000 300,000 2006 220,000 110,000 220,000 330,000 2007 242,00 00 121,00 00 242,00 00 363,00 00 2008 8 266,200 133,100 266,200 399,300

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Hotels 300,000 330,000 363,00 00 399,300

abovepricingmethodologies,thetarge etedsales(inrupees)forth hedifferent Basedonthea egmentsarel listedbelow. se To otalprojectedsales Po otentialCust tomers Apartments A UpperendHouseholds U Sc chools Officecomplex O xes Hotels To otal 200 05 42,00 00,000 10,08 80,000 0 6,60 00,000 0 58,68 80,000 2006 64,680,000 6 23,839,200 2 6,600,000 32,670,000 3 1,819,125 12 29,608,325 2007 172,788,00 00 12,196,80 00 14,520,00 00 51,909,00 00 8,004,15 50 259,417,95 50 2008 8 255,360,336 21,977,871 15,972,000 69,969,339 5,981,601 369,261,148

Total lSales
400,00 00,000 350,00 00,000 300,00 00,000 250,00 00,000 200,00 00,000 150,00 00,000 100,00 00,000 50,00 00,000 0 20 005 2006 6 Year 2007 2008

Rupees

Total

heprojectedsalesfortheyear2005isaroundRs5c croresandto ouchesRs37c croresbytheyear Th 20 008growingatmorethan n100%ineveryyearfrom 2005to2008 8.

5.0 Roll 5 outPlan n

5. Technolog .1 gy Weproposeth W heuseofaco ombinationof fthevarioust technologiesliketheadva ancedRO te echnology,UV Vandothers simplefiltratio onmechanism msdepending gonthequalityofthesupply p

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water.Allthiswillbeunderasingleinstallationroof,inordertoprovidecustomizedwater suppliesforvariousdomesticpurposesathome. 5.2 People Installationpersonnel/TechnicalStaff:Currentlyweplanforatwopersonstaffinthis departmentfortheinitialrollout.Thestaffwouldalsoberesponsibleforattendingtocustomer complaintsandservicerequests. AdministrativeStaff:Weforeseetheneedforanaccountant,areceptionistandastewardin theinitialrollout. SalesStaff:Initiallyweplanforfivesalespersonnel.Weexpectabusinessturnoutratioof1:10. Thenumberofstaffwouldberevisedifweenvisageaneedforit.Futuregrowthandexpansion planswouldalsonecessitateanincreaseofstaffineachdepartment. 5.3 Production Wehavenoproductionplansasofnow.Weplantooutsourcetheplumbingdutiestoa contractor.Infuturetocutcostswemayplantointegratetheplumbingstaffintoourcompany. 5.4 Distribution Noexternaldistributionchannelisneededcurrently. 5.5 Communication Thestrategyinvolves: PersonalSales:Itinvolvespromotionbysalespersonnelanddistributionofproductbrochures. Media:NewspaperadsandFlyerstobedistributedinapartments. Packaging:Costsforlabelingandtrademark. 5.6 Milestones Tocreateandsustaincompetitiveadvantageinthismarketwehavetoexpandfastand simultaneouslybroadenourofferingsrange. SecondHalfoffirstyear: Weplantotapintoothersegmentslikeschoolsandrestaurants.Thiswouldenableusto increaseourmarketsizeandreduceourdependencyonasinglecustomersegment. SecondYear: WeplantoexpandtoanothercityHyderabadinIndiaandoffercustomizedsolutionsbasedon

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thewaterqualityandneedsofcustomersinHyderabad.Establishmentcostswouldbelesser thaninitialrolloutcostsofChennaibecauseofexperienceeffects. Leveragingontheacquiredexpertiseofofferingservicesfortwodifferentwatertypeswefirst plantoexpandintocitiesofsimilarwaterquality.Basedonthesuccessofourexpansion strategyweplantoreplicateoutmodel,expandintoothercitiesanddiversifyourofferings.

6.0RiskEvaluation
6.1ReverseOsmosiscanbeslowandcostlyprocess TheROpurificationprocess(ifused)resultsineliminationofaround2025%ofinputwaterasa waste.Thiswastewatercannotbeusedfortoilerpurposeseither.Hence2025%morequantity ofwaterhastobepumpedthantheactualrequirement.Tomitigatethis,wastewaterhastobe divertedtoasoakingsumpwhichhelpsinconservingwater.Thisconservationprocesshelpsin reducingthewaterwasteto1015%. 6.2Marketflooding:Sincethereisadesperateneedforhighendwatersolutions,thereisa threatofthemarketgettingfloodedwithalotoflocalplayers,mainlydistributorsofimported products.Theymaynotunderstandtheunderlyingtechnologyingreatdetailthoughandhence thisriskcanbemitigatedbyorganizingtheindustryandputtingacostefficientprocessinplace withhighservicestandards. 6.3Politicalinterference:Sincewaterisanessentialcommodity,theincreasingscarcityof waterresourcesanddecreasingqualityofavailablewaterisbecomingapoliticalissuetothe extentofevenelectiondebates.Hencepoliticalinterferencemaybeapotentialthreattothe industryasawhole.Howeveramiablerelationshipswithpeopleinpowerwillgivethenecessary politicalclouttosailsmoothly.

7.0ProjectedFinancials
Theprojectedfinancialsforthecompanyareprovidedinthenextsheets (AllfiguresinRupeesexcepttheunitssold) 1 year 2ndyear 3rdyear 4thyear Noofunitssold 210 294 714 959 TotalRevenue SaleofUnits 58,680,000 129,608,325 259,417,950 369,261,148 2,100,000 2,940,000 7,140,000 SubTotal 58,680,000 131,708,325 262,357,950 376,401,148 Costofgoodssold 26,250,000 36,750,000 89,250,000 119,910,000 Costofinstallation 2,100,000 2,940,000 7,140,000 9,592,800 GrossMargin 30,330,000 92,018,325 165,967,950 246,898,348
st

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SG&A Salaries SalesForce Officestaff Subtotal Officeoverheads Rent Vehicle Furniture Stationeryand Promotional Literature Subtotal InventoryCost Warehouse Unitholdingcost Subtotal OperatingMargin Tax@30% IncomeafterTax 3,760,000 250,000 4,010,000 132,000 132,000 20,000 120,000

800,000 100,000 900,000 120,000 120,000 150,000 100,000

2,640,000 180,000 2,820,000 132,000 132,000 15,000 110,000

5,360,000 100,000 5,460,000 120,000 120,000 68,333 130,000

490,000 120,000 350,000 470,000 28,470,000 8,541,000 19,929,000

389,0000 120,000 350,000 470,000 88,339,325 26,501,798 61,837,528

404,000 120,000 350,000 470,000 161,083,950 48,325,185 112,758,765

301,667 120,000 350,000 470,000 240,666,681 72,200,004 168,466,677

(AllfiguresinRupeesexcepttheno.ofunitssold) SalesForceManagement Year1 Year2 Numberofsalesforce 5 15 Numberofdaysinayear 220 220 Numberofvisitsmadeperday 3 3 Totalnumberofvisitsmade 3,300 9,900 Conversionrateassumption 1in15 1in15 NumberofsaleinYear 200 660 Conservativetargetof 200 625 Salaryofthesalespersons 600,000 1,980,000 Commissiontothesalesperson 200,000 660,000 Totalexpensesonsales 800,000 2,640,000

Year3 20 220 3 13,200 1in15 880 850 2,880,000 880,000 3,760,000

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SuggestedReading
ThesebooksareavailableintheSIMSRLibrary.

Title
30Minutes...ToWriteABusinessPlan BusinessPlan BusinessPlanSoftware BusinessPlanning HowToWriteABusinessPlan BusinessPlanningAPracticalGuideToManagement BusinessPlanningPocketbook MasteringBusinessPlanningAndStrategyAPower OfStrategicThinking

Author
FinchBrian WestAlan OnCd ForsythPatrick CregoEdwinT., SchiffrinPeter HalfordD.R.C. RusselJones ElkinPaul

Classification No.
658.4 658.4012 658.4012 658 658.4012 658.4012

AdditionalreadingliteraturewhichwillbemadetostudentswhoattendedDay1oftheOrientationin softcopyare: 1. 2. 3. 4. 5. 6. [HBR]HowtowriteagreatBusinessPlanSahlman,WilliamA. [HBR]HowtowriteawinningBusinessPlanRich,StanleyR.,andGumpert,DavidE. WritinganEffectiveBusinessPlanbyDeloitte&Touche [HBR]HowtopitchaBrilliantIdeaElsbach,KimberlyD. [HBR]The5StagesofSmallBusinessGrowthChurchill,NeilC.,andLewis,VirginiaL. SomesampleBusinessPlanTemplates

HelpandSupport Forfurtherassistancepleasefeelfreetocontactusthroughecell@pathfinderonline.inor alternativelycontactinganyoftheStudentCoordinators: PGDBABatchof2009 RanjithaSridharan:ranjitha.capri@gmail.com NavinMotwani: navin811@gmail.com AashutoshNSane: aashutoshnsane@gmail.com PGDBABatchof2008 AgnesKulathenal: agnes.a.k@gmail.com VirendraKaramsot:vkaramsot@gmail.com

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