FEASIBILITY STUDY
on
WATER REFILLING
STATION
INTRODUCTION
The demand at the water refilling stations – water stores that sell purified water – is
now increasing. The quality of purified water conforms to the national standards for drinking
water and is even better than the quality of water produced by traditional water supply
systems in terms of removed impurities.
Over the years, as the demand for cleaner water becomes higher, the price of
household water purifiers and bottled water has become prohibitive. Water refilling stations
managed by private entrepreneurs offer a cheaper and more convenient solution to the
public’s drinking water needs than bottled water or the use of household filters.
At present, about 20 water refilling stations have proliferated in Nasugbu, Batangas.
They sell purified water of comparable quality with bottled water at a lower price. For
example, the current price per gallon of refilled purified water in Nasugbu ranges from P 20
to P 30 per 5-gallon container.
In Nasugbu, most of the water refilling stations is connected to the pipes of Nasugbu
Water District for their source of raw water while in other areas they opt to use private deep
wells. The “potable water” supplied by the providers is then further purified by utilizing a
combination of water treatment equipment, such as sediment filters, carbon filters, water
softeners, reverse osmosis membranes, ultra-violet lamps, and ozone generators. Typical
water refilling stations can produce 3,000 to 12,000 liters of purified water per day. In
previous years, most of the people were bringing a container to a water refilling station to buy
purified water.
Nowadays, because of convenience on the part of the consumers, purified water in 5gallon (22.7 liters) containers is delivered by the station directly to the people’s home.
Proponent:
CADP CONSUMERS COOPERATIVE
Proposed Location:
Brgy. Lumbangan, Nasugbu, Batangas
Objectives:
A. Provide a potable drinking water for the community.
B. Increase the income of the cooperative as it helps the community.
Nature of the Business
CADP Consumer Cooperative is an organization established by the employees
of Central Azucarera Don Pedro, Inc. (CADPI). Its purpose, just like any other
cooperative is to serve the members and provide them their immediate needs and
help the members attain economic stability. Thus, the cooperative operates a
consumer store to provide the members their basic needs at affordable prices.
The water refilling station; “Aqua Kabayan” as it would be named is going to
provide additional services and benefits to the members as well as other residents in
the community (Barangay Lumbangan). Potable water will be more accessible as it
will be located at the center of Barangay Lumbangan (besides the Consumer Store)
where almost all of the employees pass by on their home.
“Aqua Kabayan” will also offer additional services like free delivery and the
product can also be availed on credit (for members only).
MARKETING ASPECT
Target Market
•
Members of the cooperative
•
Local Residents
Demand
The CADP Consumer Cooperative has a total membership of 523, working on
three shifts a day and there are an estimated 100 families residing nearby the store
who are neither members nor employee of CADPI.
On the average, a family of four members consumes three 5-gallon purified
water every week or 12 containers a month. Using this data the projected demand for
water refilling station in the specified area is:
Target Market
Population
Estimated Weekly
Consumption (in 5
gallon containers)
Cooperative
members
523
1,569
6,276
Local Residents
100
300
1,200
623
1,869
7,476
9,345
37,380
TOTAL
Demand in Gallons
Estimated Monthly
Consumption (in 5
gallon containers)
Table 1 Demand Chart
Market Share
It is assumed that since the targeted market is members of the organization, 80% of
the member will opt to buy from “Aqua Kabayan” (members buying in the cooperative earns
dividends and refunds at the end of the year). While considering the accessibility factor, 80%
of the local residents are also going to consider getting their purified water supply from the
store.
Target Market
Estimated
Weekly
Consumption
(in 5 gallon
containers)
Cooperative
members
1,569
1,255
6,276
5,020
Local Residents
300
240
1,200
960
1,869
1,495
7,476
9,345
7,475
37,380
TOTAL
in Gallons
Market Share
Estimated
Monthly
Consumption (in
5 gallon
containers)
Market Share
5,980
29,900
Table 2 Market Share
Proposed Marketing Strategy
Product Strategy – Refilling Station will be constructed with transparent glass and
according to prescribed standards so that the customers will be able to see how
carefully and cleanly the products are being processed. Excellent quality will be
maintained by giving the workers training and guidance on good manufacturing
practices.
Distribution Strategy – A delivery vehicle will be purchased to shorten waiting time
of customers. Customers can order thru phone call or text and 20 minutes waiting time
will be observed. It will also be assured that products will be handled properly and will
maintain its quality during delivery.
Promotion Strategy – Information dissemination will be done so that target
market will be aware of the existence of the water refilling station. Members will
be informed of the benefits and importance of drinking clean water and the
added benefits of buying it from the cooperative
Pricing Strategy – Being a new entrant, “Aqua Kabayan” will offer an affordable
price of 25.00 per container.
SALES PROJECTIONS
YEAR 1
YEAR 2
71,76
YEAR 3
78,93
in units of 5 gal containers
0
Selling Price
25
25
25
1,794,000.0
1,973,400.0
2,170,725.0
0
0
0
Total Sales
Table 3 Three Year Sales Projection
6
86,82
9
MARKETING BUDGET
Delivery Vehicle
There is a need to purchase a delivery vehicle to ensure the fast and timely
delivery of products. Consumers prefer to buy products that are readily available and
with minimal waiting time. Water is a basic need and there should be no delays in the
delivery. Estimated cost of a delivery vehicle is at Php 75,000.00. Estimated Useful
Life is five (5) years.
Fuel Consumption in the delivery of goods is estimated at 500.00 per day.
Information Dissemination
The awareness campaign will entail costs of printing flyers (for distribution) and
tarpaulins (to be placed at strategic locations). Cost of these materials is estimated at Php
10,000.00.
Packaging and Labeling
Initially, 100 units of containers (5 gal) will be purchased. Since most of the
consumers already have containers, the said containers will be replaced every
delivery. Empty containers will be refilled and delivered to other customers so that
consumers will only have to pay for the contents and not the containers.
All containers should have labels, bearing the name of Aqua Kabayan and all
containers should all be sealed to ensure that the product reaches the end consumer
with utmost quality. Fifteen thousand pieces of labels and seals will be printed on a
quarterly basis. Estimated cost is Php 3.00 per container.
Manpower
There will be 2 persons handling the delivery, both of which should know how to drive
the delivery vehicle so that they can work alternately on the tasks to be assigned to them.
They are going to receive salaries of Php 4,500 a month or Php 150.00 daily.
Account Title
Amount in Pesos
Delivery Vehicle
75,000.00
Fuel and Lubricants
15,000.00
Promotions
10,000.00
Packaging (containers)
15,000.00
Materials and Supplies (stickers) and
45,000.00
seals (quarterly)
Salaries and Wages
9,000.00
TOTAL
169,000.00
Table 4 Marketing Budget
MARKETING EXPENSES
Account Title
Delivery Vehicle
Depreciation)
YEAR 1
( Amount of
YEAR 2
15,000.0
0
15,000.0
0
180,000.0
Fuel & Lubricants
0
0
Packaging (containers)
0
198,000.0
0
5,000.0
180,000.0
0
TOTAL
0
0
217,800.0
0
118,800.0
0
498,000.0
Table 5 Marketing Expenses (three years)
5,000.0
0
198,000.0
108,000.0
Salaries and Wages
10,000.0
0
0
0
217,800.0
0
10,000.0
5,000.0
Materials and Supplies (stickers) and
seals (quarterly)
15,000.0
0
0
10,000.0
Promotions
YEAR 3
130,680.0
0
544,800.0
0
596,280.0
0
PRODUCTION ASPECT
Production Process (water filtration & purification system)
1st unit
Stage 1
Stage 2
Stage 3
Stage 4
2nd unit
Stage 5
Stage 6
Stage 7
3rd unit
Stage 8
Stage 9
Stage 10
Multimedia sediment process
The water first passes through the 1st stage which makes up of a course
gravel that traps solid particles of about 100 micron
Consists of sand filters that removes sediment of 50 micron ratings
Consists of fine sand that eliminates solid particles of 25 micron
Consists of fine clear slit that eliminates solid particles down to 5 micron
Multi media carbon process
Makes use of a lignite carbon that removes foul taste and odor
Makes use of bituminous carbon that eliminates yellowish and brownish
discoloration brought by inorganic contaminants
Makes use of granular activated carbon (GAC) as the last multi media carbon
stage. This stage is where the water undergoes longer contact time with the
carbon to eliminate other contaminants that might cause foul smell or taste
Water conditioning and softening process
Makes use of resin beads that attract mineral contents that convert hard water
to soft water
Makes use of ion exchange beads to condition water by extracting the organic
and inorganic chemicals present in the water
Makes use of another carbon that eliminates any ferrous iron (dissolved iron) in
water
Stage 11
4th unit
Stage 12
5th unit
Stage 13
6th unit
Stage 14
7th unit
Stage 15
8th unit
Stage 16
Makes use of fine gravel that serves as a sieve which eliminates any residue
that might come out during regeneration time. This is a cleansing agent.
Ultra micron process
Consists of a one (1) big blue housing that includes 1 micron cartridge that
eliminates any microscopic residue that might go to the reverse osmosis
membrane. This stage stands as a protection for the membrane against
premature clogging
Reverse osmosis
It is the most important system in any water filtration and purification process.
This makes use of reverse osmosis equipment which has semi-permeable
membrane that only allows pure water to pass through and pushes the unpure
water out of the system to the reverse side or the reject drain line.
Polishing process
Includes one (1) big blue housing that consists of a carbon cartridge that
serves as a polishing stage to make the water crystal clear and shiny
Anti-microbial process
This stage eliminates cyst micro organism that has a micron rating of 1 and has
a very thick cell wall where UV light sometimes cannot penetrate; however a
micron rating of 0.5 will eliminate such kind of micro organisms. Cyst causes
diarrhea and gastro enteritis.
Water sterilization process
This last and final stage is the second most important system in a water
filtration and purification system. This is the stage that kills all microorganisms
and other diseases causing bacteria from infiltrating into the product water,
thereby assuring safe and pure water.
Table 5 Production Process
Fixed Assets Required:
Item
Amount
Useful Life in Years
Annual Depreciation
Land
50,000.00
Machineries & Equipment
300,000.00
15
20,000.00
Building (25 sq meters)
150,000.00
20
7,500.00
TOTAL
500,000.00
***Repairs and maintenance of equipment is assumed at 2.00 per month.
Table 6 Schedule of fixed Assets Required
FACTORY LOCATION AND LAY OUT
27,500.00
COST OF LABOR
There will be 2 workers tasked in refilling and cleaning of containers. The
cooperative manager will be the one to oversee the production and help in the
operation whenever it is needed. The two workers will be receiving Php 4,500 a
month.
MATERIALS AND SUPPLIES
Materials and Supplies are estimated at Php 6,000.00 monthly (water is the
major raw materials needed).
FACTORY OVERHEAD
Overhead expenses are composed of Utilities, Telephone Bills and
Depreciation. Electric consumption is assumed at Php 7,500.00 monthly and
telephone bills are at Php 1,000.00 per month. Please refer to Depreciation table
for depreciation expenses.
PRODUCTION COST
Account Title
YEAR 1
108,000.0
Direct Labor
0
Materials & Supplies
0
YEAR 2
118,800.0
0
72,000.0
0
79,200.0
0
0
Depreciation (Machineries &
Equipment
0
Utilities
0
7,500.0
0
20,000.0
0
0
20,000.0
0
112,200.0
0
309,500.0
0
7,500.0
20,000.0
102,000.0
TOTAL
87,120.0
0
7,500.0
Depreciation (Building)
YEAR 3
130,680.0
123,420.0
0
337,700.0
0
368,720.0
0
Table 7 Production Cost (three years)
PRODUCTION COST PER UNIT
YEAR 1
309,500.0
TOTAL PRODUCTION COST
0
MARKETING EXPENSES
0
Units Produced
0
PC PER UNIT
5
YEAR 2
337,700.0
0
498,000.0
YEAR 3
368,720.0
0
544,800.0
0
71,76
596,280.0
0
78,93
6
11.2
86,82
9
11.1
8
11.1
1
Table 8 Production Cost per unit (three years)
ORGANIZATION AND MANAGEMENT ASPECT
1.
Form of Business
Multi-Purpose Cooperative
2.
Business name
CADP Multi-Purpose Cooperative under the brand name: “Aqua Kabayan”
3.
Organizational Chart
Board of Directors
Coop. Manager
Worker 1
4.
Worker 2
Worker 3
Worker 4
Key Personnel and Responsibilities
Cooperative Manager – In charge of the overall operation of the business. Acts as the
marketing officer and represents the business in all external concerns. The manager will
oversee the entire operation of the business and collects cash sales for remittance to the
cooperative treasurer.
Worker 1 & Worker 2 – will handle the plant operation. They will be in charge of
cleaning and refilling containers. They will also observe proper sanitation of the plant and
maintain excellent quality of the product.
Worker 3 and Worker 4 –
will be tasked in the delivery and distribution of the
products. They will ensure that all deliveries are done at the shortest possible time. They
will also handle collection of payments and issuance of receipts during delivery.
FINANCIAL ASPECT
TOTAL CAPITAL REQUIREMENTS
Account Title
Amount
Fixed Assets:
Land
50,000.00
Machineries & Equipment
300,000.00
Building (25 sq meters)
150,000.00
Delivery Vehicle
75,000.00
Total Fixed Assets Required
575,000.00
Workling Capital:
Salaries & Wages
54,000.00
Returnable Containers
15,000.00
Materials & Supplies
45,000.00
Fuel, Gas & Lubricants
45,000.00
Promotions
10,000.00
Raw Material Supply (Water)
18,000.00
Utilities
25,500.00
Total Working Capital (first 3 months of operation)
212,500.00
TOTAL CAPITAL REQUIREMENTS
787,500.00
Table 9 Total Capital Requirements
INCOME STATEMENT
Year 1
1,794,000.0
Sales
0
Year 2
1,973,400.0
0
Year 3
2,170,725.0
0
Less: Cost of Sales
108,000.
Direct Labor
00
118,800.
00
00
72,000.
Materials & Supplies
00
Factory Overhead Expenses
Depreciation Expense
(Building)
79,200.
00
7,500.
00
00
20,000.
00
00
112,200.
00
00
139,700.
00
00
337,700.
00
1,484,500.0
Gross Profit on Sales
0
150,920.
00
309,500.
Cost of Goods Available for Sale
123,420.
00
129,500.
Total FOE
20,000.
00
102,000.
Utilities
7,500.
00
20,000.
Depreciation Expense (M & E)
87,120.
00
7,500.
00
130,680.
368,720.
00
1,635,700.0
0
1,802,005.0
0
Less: Operating Expenses
Marketing Expenses
180,000.
Fuel, Gas & Lubricants
00
198,000.
00
00
10,000.
Promotions
00
10,000.
00
00
5,000.
00
00
198,000.
00
118,800.
00
15,000.
00
00
00
00
00
15,000.
544,800.
986,500.
Net Operating Profit
130,680.
00
15,000.
498,000.
Total Marketing Expenses
217,800.
00
108,000.
Salaries & Wages
00
Depreciation Expense Delivery
Vehicle
00
5,000.
00
180,000.
Materials & supplies
10,000.
00
5,000.
Packaging (containers)
217,800.
596,280.
00
1,090,900.0
0
1,205,725.0
0
Table 10 Income Statement
CASH FLOW STATEMENT
Cash Inflows
Initial Capital
Year 1
787,500.0
0
Year 2
Year 3
Sales
Total Cash Inflows
1,794,000.0
0
2,581,500.0
0
1,973,400.0
0
1,973,400.0
0
2,170,725.0
0
2,170,725.0
0
198,000.0
0
198,000.0
0
237,600.0
0
10,000.0
0
79,200.0
0
112,200.0
0
835,000.0
0
1,138,400.0
0
1,231,500.0
0
2,369,900.0
0
217,800.0
0
217,800.0
0
261,360.0
0
10,000.0
0
87,120.0
0
123,420.0
0
917,500.0
0
1,253,225.0
0
2,369,900.0
0
3,623,125.0
0
Cash Outflows
Purchase Land
Purchase & Installation of
Machineries & Equipment
Construction of Building
Purchase of Delivery Vehicle
Purchase Returnable
Containers
Purchase of Labels & Stickers
Fuel, Gas & Lubricants
Payment of Salaries & Wages
Promotions Expense
Payment of Raw Material
Supply
Payment of Utilities
Total Cash Outflows
Net Cash Inflows
50,000.0
0
300,000.0
0
150,000.0
0
75,000.0
0
15,000.0
0
180,000.0
0
180,000.0
0
216,000.0
0
10,000.0
0
72,000.0
0
102,000.0
0
1,350,000.0
0
1,231,500.0
0
Add: Cash Balance Beg.
Cash Balance, end
1,231,500.0
0
Table 11 Cash Flow Statement
BALANCE SHEET
Year 1
Assets
Year 2
Year 3
Cash
1,231,500.00
2,369,900.00
3,623,125.00
50,000.00
50,000.00
50,000.00
Building
142,500.00
135,000.00
127,500.00
Machineries & Equipment
280,000.00
260,000.00
240,000.00
Delivery Vehicle
60,000.00
45,000.00
30,000.00
Returnable Containers
10,000.00
5,000.00
-
1,774,000.00
2,864,900.00
4,070,625.00
787,500.00
1,774,000.00
2,864,900.00
986,500.00
1,090,900.00
1,205,725.00
1,774,000.00
2,864,900.00
4,070,625.00
Land
Total Assets
Liabilities & Capital
Coop Investments
Add: Net Income from Operation
Total Liabilities & Capital
Table 12 Balance Sheet
FINANCIAL RATIO NALYSIS
PROFITABILITY RATIOS
Return on Assets
(ROA)
1)
Net Income
2)
=
=
986,500.0
0
1,774,000.0
0
=
=
986,500.0
0
1,794,000.0
0
=
Total Assets
Return on Equity
(ROE)
Net Income
3)
=
986,500.0
0
1,774,000.0
0
Owner's Equity
Net Profit
Margin
Net Income
Sales
Table 13 Financial Ratio Analysis
0.5
6
0.5
6
0.5
5