Part-2 A Study on Business of Sworgadwari Drinking Water Ghorahi, Dang

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2.5. Capital Invested by other business in same sector 
S.N 
Name of the Business 
Capital (Rs.) 
Total (Rs.) 
Fixed 
Working 
1 
Shree Sairam Drinking Water 
7619000 
1881000 
9500000 
2 
Kharel Mineral Water 
1900000 
600000 
2500000 
3 
Sworgadwari Drinking Water 
2616280 
974100 
3590380 
4 
Rapti Drinking Water 
2725000 
755752 
3480752 

 
Fig: Bar diagram showing the distribution of capital by the business in Dang 
In the above figure, X-axis measures the business tycoon in Dang district whereas Y-axis measures the capital, i.e. Fixed, Working and Total. Here we see that the highest capital invested by the business is Shree Sairam Drinking Water (Rs.9500000/-) and Sworgadwari Drinking Water is the second biggest business in Dang district. We can also conclude that for SDW there are three such businesses which stand for the real competitor/threats for this business. 

2.6. Correlation between the Sales and Profit of Sworgadwari Drinking Water 
Year 
Sales (X) 
(‘00) 
Profit (Y) 
(‘0000) 
X 
XY 
Y 
2065 
100 
-10 
10000 
-1000 
100 
2066 
200 
30 
40000 
6000 
900 
2067 
280 
42.5 
78400 
11900 
1806.25 
2068 
350 
67.5 
122500 
23625 
4556.25 
Total (n=4) 
∑X= 930 
∑Y= 130 
∑ X= 250900 
∑XY= 40525 
∑Y=7362.5 
Now, 
Correlation(r) = 
n∑XY−∑X∑Yn∑X2−∑(X)2n∑Y2−∑(Y)2−−−−−−−−−−−−−−√−−−−−−−−−−−−−−−−−−−−−−−−−−−−−√
=4×40525−930×1304×250900−(930)24×7362.5−(130)2−−−−−−−−−−−−−−−−√−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−√
=1621000−120900√138700×√12550
=4120041722.21
= 0.98 
From the above correlation we can conclude that the profit increases with the increase in the number of sales. As there is positive correlation, the sales leads to the increase in the profit of Sworgadwari Drinking Water, i.e. as the number of sales increase the profit also increases. 

2.7. Testing of Hypothesis 
From the above data and analysis now it’s the time to test whether the generalization that I had made earlier is correct or not. So each and every hypothesis are now tested: 
Hypothesis 1: 
H0: The business of Sworgadwari Drinking Water is growing day by day. 
H1: The business of Sworgadwari Drinking Water is constant. 
According to the table and figure of the total sales of the SDW, we can say that the business of SDW is increasing day by day. So, null hypothesis is accepted. 
Hypothesis 2: 
H0: The business may not have any threats. 
H1: The business may have many threats. 
According to the table and figure of the capital investment of different bottled water business we find that there are three (3) more threats for this business. Therefore, here the alternative hypothesis is accepted. 
Hypothesis 3: 
H0: The proprietor may burrow huge amount of loan from the bank or other lenders. 
H1: The proprietor may not burrow huge amount of loan from the bank or other lenders. 
After analyzing the capital structure of the business shown above only 14% of the total amount is borrowed by the proprietor for the business and other remaining 86% is invested by the proprietor himself. 

Hypothesis 4: 
H0: The business is earning profit constantly. 
H1: The profit is not constant. 
From the figure and table of the profit of the SDW we can say that there is fluctuation in the profit earning of the business. During the starting of the business it was in a loss of Rs. 100000/- but from the next year it earns profit but not in a constant way. Therefore, here also the alternative hypothesis is accepted. 

B. Major Findings 
After observing the business itself, I came to know the purifying process of the water in the company too, which is described and shown in the flow chart below: 
2.8. Purified Process 
The water is purified by crossing different steps like: 
  1. At first, the source water lying about 180 ft underground is pumped out by deep boring pump and stored in overhead tank. 
  1. Then, from the overhead tank, water is passed to high speed filtration, active carbon filtration, softener plant, micron filtration and main reverse osmosis mechanism to remove bacteria and unwanted materials. 
  1. Moreover the water is then passed through ionization chamber to enhance the taste of purified water. 
  1. And then finally, product water ready to be packaged is stored in storage tank and then issued to tap outlets where packing takes place. 
Now, the water, thus processed is most certainly to be free of microbes and organic material, toxic metals, carbon and other undesirable foreign particles. Hence, it is safe to drink. 









Flow Chart of Water Treatment 
ShapeUnderground Source of Water 


Source water pumped up to overhead tank 


High Speed Filtration 


Active Carbon Filtration 


Softener Filtration 


Micron Filtration 


Reverse Osmosis main machine (Model: RO-500LPH) 


Ionization treatment 


Product Water 

Final TDS value and temperature of product water is maintained around 74 and 18 degree centigrade respectively during the time of packaging. 
Also the business structure i.e. overall cost, capital, machineries, production and investment required for this business is also known which is shown in the following tables and format systematically. 


2.9. Fixed Investment 
S.N 
Particular 
Quantity 
Rate 
Amount(Rs.) 
Total(Rs.) 
1. 
Land 
0-0-11 Dhur 
910000/kattha 
500000 
500000/- 
2. 
Building with Store and Lab 
12000Sq. ft 
- 
450000 
450000/- 
3. 
Cemented Tank (5000 ltr capacity) 
1 
- 
50000 
50000/- 
4. 
a. 




b. 

c. 
d. 
e. 
f. 
g. 
Machineries 
RO Plant 500 LPH Capacity (with hi speed filtration, sand, carbon & micron filter, softener feed pump & pipelines) 
Bottle Blowing Machine with compressor & die. 
Ozonator with pump 
SS tank (1000 ltr. Capacity) 
Water Jar (20 ltr Capacity) 
Lab Equipment 
Transportation Custom Duty 

1 




1 

1 
1 
100 
LM 


480000 




664000 

136000 
104000 
300 
80000 
50000 

480000 




664000 

136000 
104000 
300 
80000 
50000 
1544000/- 
5. 
Furniture 
- 
- 
- 
20000/- 
6. 
Pre Operating Cost 
- 
- 
- 
52280/- 
Total Fixed Investment 
2616280/- 
Working Capital Long Term Loan 
500000/- 
Total Investment Fixed & Working Capital 
3116280/- 

2.10. Annual Operating Cost at the 100% Capacity 
S.N 
Particulars 
Rate 
Amount 
Total 
A. 
Fixed Cost 
508200/- 
1. 
Depreciation 
174400/- 
1.a 
Building 
5% 
25000 

1.b 
Machinery 
10% 
146400 

1.c 
Furniture 
15% 
3000 

2. 
Insurance 
30000/- 
3. 
i. 
ii. 
iii. 
Indirect Labor 
Manager (1) 
Accountant (1) 
Helper (1) 

8000×12 
6000×12 
4850×12 

96000 
72000 
58200 
226200/- 
4. 
Interest of Long Term Loan (13%) 
65000/- 
5. 
i. 
ii. 
iii. 
Office Overhead Cost 
Stationery 
Telephone 
Fixed Electricity 

L.M 
1500/month 
500/month 

3600 
18000 
6000 
27600/- 


S.N 
Particular 
Qty 
Rate 
Amount 
Total 
B. 
Variable Cost 
3845400/- 
1. 
a. 
b. 
c. 
d. 
e. 
f. 
Raw Materials 
Neck Seal & Repper 
Preform 1 Ltr Bottle 
Cartoon 
Bottle Cap 
Jar Cap 
Raw Water Cost 

540000 Pcs 
12000 Kg 
45000 Pcs 
540000 Pcs 
7500 Pcs 
3000000 Ltr 

0.50 
125 
12 
1 
2 
0.20 

270000 
1500000 
540000 
540000 
15000 
600000 
3465000/- 
2. 
i. 
ii. 
iii. 
Direct Labor 
Skilled Mechanic 
Unskilled Mechanic 
Helper 

1 
2 
2 

6000×12 
5500×12 
4850×12 

72000 
132000 
116400 
320400/- 




3. 
i. 
ii. 
iii. 
Project Overhead Cost 
Electricity 
Repair & Maintenance 
Misc. Expenses 

300/month 
LM 
LM 

10 
- 
- 

36000 
15000 
9000 
60000/- 
Total Annual Operating Cost4353600/- 


2.11. Annual Finished Goods Production at the 100% Capacity 
S.N 
Particular 
Qty 
Rate 
Amount(Rs.) 
1. 
Drinking Water in 1 Ltr. Bottle 
45000 cartoons (540000 Ltr) 
115 
5175000 
2. 
Drinking Water in 20 Ltr. Jar 
7500 Pcs (150000 Ltr) 
25 
187500 
Total Annual Production 
5362500 
Total Annual Production (A)5362500/- 
Total Annual Operating Cost (B)4353600/- 
Total Annual Income (A-B)1008900/- 

2.12. Estimation of Working Capital Requirement 
S.N 
Particular 
Duration 
Amount(Rs.) 
1. 
Work in Process 
1 Day 
17875 
2. 
Finished Goods Hold 
7 Days 
120817 
3. 
Credit Sales 
45 Days 
804375 
4. 
Salary and Wages 
30 Days 
26700 
5. 
Project Overhead Cost 
30 Days 
4333 
Total Working Capital Requirement 
974100/- 

2.13. Total Investment on the Project 
Particular 
Equity (Rs.) 
Bank (Rs) 
Total (Rs.) 
Fixed Capital 
2616280 
0 
2616280 
Working Capital 
474100 
500000 
974100 
Total 
3090380 
500000 
3590380 
% 
86 
14 
100 

Similarly following things are required for the establishment of this business and for other such type of business too. 
  1. Photocopy of Nepali Citizenship. 
  1. Photocopy of Land owner. 
  1. Letter from the Ghorahi Municipality. 
  1. Recommendation letter from the Office of Drinking Water and Cleanliness about the test of Arsenik. 
  1. Letter of Ghorai Municipality showing the sufficient source of water. 
  1. Scheme. 
  1. Production Chart. 
  1. Letter about the success of drinking water from the Ministry of Food and Quality Maintain. 

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