Contents

1.0 Executive Summary ........................................................................................................................... 1

2.0 Rationale and Background ................................................................................................................ 2
3.0 Distribution ....................................................................................................................................... 3
3.1 Method and cost ........................................................................................................................... 3
3.1.1 Price ....................................................................................................................................... 3
3.1.2 Sales ....................................................................................................................................... 3
3.1.3Place ........................................................................................................................................ 3
3.1.4 Promotion .............................................................................................................................. 4
4.0 Market Overview and Outlook ......................................................................................................... 4
4.1 Market Description ....................................................................................................................... 4
5.0 SWOT Analysis................................................................................................................................... 5
6.0 Financials........................................................................................................................................... 6
6.1 Initial investment source .............................................................................................................. 6
6.2 Financial Statements ..................................................................................................................... 6
6.3 Payback time ................................................................................................................................. 7
6.4 Next Steps ..................................................................................................................................... 7
6.4.1 Timeline.................................................................................................................................. 7
7.0 Responsibilities and key employees ................................................................................................. 8
Appendices.............................................................................................................................................. 9

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1.0 Executive Summary
Areti-Hyflux Ltd. is a social business, since it addresses a social cause of providing the
solution of acute water problems for the people of Dhaka city. So the initial target market
for the company is the urban people of Dhaka. With the payback earned within
approximately five years, the company also plans to expand to the rural areas of Bangladesh
to provide purified water at a low cost (by subsidization) to support usage (such as drinking
and irrigation).

The Company is planned to be formed as a joint collaboration of Areti with a leading

provider of integrated water management and environment solutions worldwide, Hyflux.
The company, Areti-Hyflux Ltd., will provide solar powered water purification system where
electrical power and water treatment are unattainable, or hard to come by, especially
during the summer times.

One third of the world population does not have access to clean water sources and Dhaka
Rivers are the most polluted in the world. Most of these people are not connected to the
electrical grid at the same time. Shortage in supply of electricity due to load-shedding
worsens the situation. The Solar Powered Water Purification System suggests itself to be
one of the solutions in areas of high sun radiation like Bangladesh. Furthermore, the
environment impact of the process can be reduced substantially as no fuel supply is
required. This solution allows one to reuse the water pumped for daily use up to a week.
The whole concept revolves around recycle and reuse of water.

The price of the machine starts from BDT 50,000 depending on the capacity of the machine.
Since this purifier can make use of solar energy and 12 volt power it can be operated in the
field, or on building rooftops, purifying 60 gallons/hour. Areti-Hyfluss marketing efforts
would be towards building relationship and personal selling. The key target group for
promotion of this product includes urban residences, factories, and building developers.
Later the company will target the rural villagers.

The form of the competition in this industry is completely monopoly. Areti-Hyflux would
bring a new concept in Bangladesh and there is no competition. The market has a high
growth potential. The solar powered water purification system will make it highly cost-
effective in the local market. Areti-Hyflux aims to solve 60% of Dhaka Citys water problem
by its innovative water purification system.

In order to sustain the growth, the company intends to take loans from the commercial
banks of Dhaka, along with investments from owners, and there should be a breakeven by
5th year, operating successfully. After payback, the owners will not take any more returns
from the business. The business will rather subsidize expansion to rural areas, as mentioned
before.

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Areti-Hyflux requires a big workforce in order to work efficiently, and hence it will provide
jobs for a big portion of the economy and employ many. The business will work towards its
goals of achieving Vision 2016 (45% of Dhaka out of water crisis) and vision 2020 (providing
water purification to 500 villages for irrigation). Areti-Hyflux Ltd. is looking forward to
making a positive change in the society by achieving an impact. Solving social problems as
this will create history.

2.0 Rationale and Background

Dhaka Rivers are the most polluted in the world. They have three times as many bacteria
from human wastes as the global average and 20 times more lead than rivers in
industrialized countries. Freshwater has become scare in Dhaka and most part of the cities
within 2020 will not get any clean water.

There is an acute crisis of water in Dhaka all year round and the situation aggravates in
summer. WASA produces 160-165 crore liters everyday against a demand of 205 crore liters
out of which 85% is extracted from ground water as the rivers are extremely polluted to be
of any use. Apart from the shortage in supply the electricity problem worsens the situation.
Due to the load shedding every day on average the pumps remain idle 9-10 hours daily.
Although the WASA officials blame the water crisis on the load shedding, this is just one of
the reasons.

This is an immense social problem as people can survive without electricity but clean water
is basic necessary. For the first time in Bangladesh Areti-Hyflux Ltd. brings solar powered
water purification system, where one can reuse the water pumped for daily use up to a
week. The whole concept revolves around recycle and reuse of water. This is a conventional
solution for Bangladesh as its operation is not related to electricity because it will be
powered by solar energy. This would decrease the pressure on ground water as the water
pumped up for use would be purified and re-used.

Areti Ltd., a local company, has partnered with Hyflux, a Singapore based corporation that
specializes in water purification, treatment and desalinization. They possess a proprietary
membrane technology that can be applied on large scales in municipal settings. Areti Ltd. is
in a joint venture with Hyflux for providing water treatment solutions in Dhaka. Our solar
powered water purification system will make it highly cost-effective in the local market.
Areti Ltd. is also undertaking small village water treatment for irrigation as well but they are
soon to be expanded in the 5 year plan depending on the return on investment from urban
areas.

Areti-Hyflux Ltd. will solve the acute crisis of water in Dhaka. This project is not only
sustainable but also environmentally friendly as it will save lots of water and electricity. The
Areti-Hyflux Ltds Solar Powered Water Purification System will be set to hit the market by
last quarter of 2010. The project is divided on a five year plan. In the five years of operation

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Areti-Hyflux Ltds goal is to cover 70% of Dhaka City. By 2015 Areti-Hyflux aims to solve 60%
of Dhaka Citys water problem by its innovative water purification system.

See Appendices for further information (articles and statistics) on how important it is to
solve this social problem that Areti-Hyflux is aiming to.

3.0 Distribution

3.1 Method and cost

3.1.1 Price
Areti-Hyfluxs Solar Powered Water Purification System is an industrial product and is not
intended for personal use. Since this is not a commercial product and the price is
comparatively high, this is affordably by lower-middle class to the affluent families. This
product is aiming towards solving a social problem profitably so it is keeping a 10% profit
margin. The price of the machine starts from BDT 50,000 depending on the capacity of the
machine. Since the purifier can make use of solar energy and 12 volt power it can be
operated in the field, or on building rooftops, purifying 60 gal/hours. To ensure affordability
of this product to all Areti-Hyflux Ltd. will be offering a payment by installment option at a
rate of 5% interest for those who do not want to pay such a huge amount. The payment
plan will be based on the level of income and the zoned locations. This is done to ensure
that the product is available to all.

Since this is a social business it is extremely important that cost is kept at minimum. To keep
the cost minimum marketing and recruitment is outsourced. This ensures that the company
is able to maintain a low cost. The solar panel is made in Bangladesh, and due to the cheap
labor availability, manufacturing costs are really low. The production process is kept at a
minimum cost to ensure that the price of the product is low.

3.1.2 Sales

3.1.3Place
Areti-Hyflux Solar Powered Water Purification System will be available in any hardware
stores and it will also have distribution points in zoned locations. The idea of zoned location
is to help the company divide its target groups and plan the distribution accordingly. Since
this is not a commercial product its availability will be limited to some hardware stores and
mainly marketed in its distribution points.

The main focus of Areti-Hyfluxs Solar Powered Water Purification System is to delight its
customers thus its distribution points is zoned locations will mean that constant customer
relations management. Not only the product will be the available but these distribution
points will act as customer care.

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3.1.4 Promotion
Since the water purification system is not a commercial product its promotion strategy is
mainly focused on relationship building, personal selling. The whole marketing strategy is
devised keeping in mind the type of the product. The key target group for promotion of this
product is the real estate developers and also the owners of buildings. Currently the product
is specifically focused on the residential buildings as they are suffering the worst with the
water crisis.

The idea is to partner with the real estate developers so that they buy the water purification
systems. This will not only solve their problem of further investing in deep tube wells but
also contribute positively to the society and environment.

Another promotion strategy would be to seek government endorsement for this product. If
the government deems the purification system as a solution to the water crisis then it would
be easier to capture the demand. Since this is a high involvement product and buyers will
pose complex buying behavior thus it is of utmost importance that customers feel that they
are not getting a return on their investment.

4.0 Market Overview and Outlook

4.1 Market Description

The form of competition in this industry is absolute monopoly. This is because no other
firms are providing solar powered water purification systems in Bangladesh. For Bangladesh
this is a new concept and hence there is no competition. The market is relatively new and
has a high growth potential. And being a monopoly Areti Ltd. enjoys several benefits.

First of all there are high barriers of entry in the market. It is not easy for potential entrants
to enter this industry because there is a huge sunk cost in terms of capital and also because
it is a technology based company. To open an industry in solar powered water purification
systems require a huge amount of knowledge and technical know-how. Thus Areti Ltd. is
safe from threat of potential competition.

Since Areti Ltd. is a monopoly, it is also easier for the company to invest in Research and
Development (R&D). The company generates enough profits to plough back and spend in
R&D, for further development in this sector. This will not only benefit the company but the
customers as a whole. And thus Areti Ltd. is highly encouraged to be innovative. And
monopoly encourages innovation, so Areti Ltd. is also trying to come up with more
innovative ways to solve customer problems.

And because Areti Ltd. is a monopoly, it would be easier for the company to charge price
discrimination among different customers. However this is not yet practiced. Areti Ltd. is

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currently selling water purifiers to the urban customers only. When the company would
move on to sell these in the rural areas, the company intends to price the products lower
than it is now. In this way Areti Ltd. would be able to cream the maximum profits from
different types of customers based on their ability to pay.

One of the biggest advantages of being a monopoly is economics of large scale production.
Currently Areti Ltd. is not enjoying because of two main prime reasons. Firstly, the
production of water purifiers is limited, since the market is limited to urban only. Secondly,
the production itself does not allow mass production techniques. However, Areti Ltd. is
trying so that in future the company can enjoy economics of scale and thus benefiting the
company and in turn benefiting the customers with lower prices.

5.0 SWOT Analysis

Strengths:
Weakness:
monopoly in solar powered water
purification, industry orientation (not market
orientation) of the company,
environment friendly (use of solar
energy), lack of skilled labour force,
sustainable competitive advantage lack of infrastructure
(technology difficult to imitate),
cost-effective because of materials used

SWOT
Analysis
Opportunities:
government subsidies for companies
investing in renewable energy sources,
availability of cheap labor,
high demand in the market
Threats:
high exit barriers because of huge sunk
cost,
volatile to the economic changes
because of high dependancy of
imported materials,
high government beurocracy in
Bangladesh.

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6.0 Financials
6.1 Initial investment source
Initially Areti-Hyflux Ltd. is going to invest money from its owners who are willing to pay a
total of 100,000,000. In addition to this, a loan of BDT 5,000,000 would be taken from the
local banks.

6.2 Financial Statements

The following are the projected financial statements of the business after the first year of
operation.

BALANCE SHEET
ASSETS BDT in million LIABILITIES & BDT in million
OWNERS EQUITY
Current Assets Current Liabilities
Cash 20 Accounts payable 3.5
Prepaid expenses 5 Unearned revenue 1.5
Accounts receivable 7

Fixed Assets Long-Term Liabilities

and Owners Equity
Property, plant and 75 Loan 5
equipment
(less) accumulated 3 Owners investment 100
depreciation

Total Assets 110 Total Liabilities 110

INCOME STATEMENT
REVENUES BDT in Million
Sales Revenue 80
Cost of goods sold (63)
Total Revenue 17
EXPENSES
Selling, general, and administrative expenses 3.65
Depreciation 3
Operating income 6.65
Interest expenses 0.35
NET INCOME 10

OPERATIONS BDT in MILLION

Operating Cash Flow 9.65

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 CASH FLOW STATEMENT

Capital spending (75)

Net Cash Flow of Firm (65.35)

Financial Activities
Debt 0.35

Net Cash Flow to Investors 0.35

Net Cash Flow (65.7)

6.3 Payback time

PAYBACK PERIOD
YEAR NET REVENUE (BDT In TOTAL (BDT in Million)
Million)
Year 1 17 17
Year 2 17 34
Year 3 17 51
Year 4 17 68
Year 5 17 85

6.4 Next Steps

6.4.1 Timeline
Goal Milestones
Project approval Quarter 2, 2011
Manufacturing Plant Set up Quarter 4, 2011
Product Availability in Market Quarter 4, 2012
Sales Forecast 1400 Water Purification System Sold
Sales Goal 2016 5000 water Purification System Sold
Vision 2016 45% of Dhaka out of Water Crisis
Vision 2020 Providing water purification to 500 villages
for irrigation

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7.0 Responsibilities and key employees
Areti-Hyflux Ltds organizational structure shows this is a flat organization. The main
advantage of a flat organizational structure is increased coordination and timely spread of
information among different departments. The top management is closer to the middle
management which makes it easier for the upper management to communicate effectively
to the lower level management. Flat organizations as contrary to tall structures are more
effective in terms of innovation and empowerment. Areti-Hyflux Ltd. enjoys these benefits
of a flat organization and thus can manage its workforce effectively.

Since Areti-Hyflux Ltd. is a manufacturing company, it has a huge workforce in the lower
management. The company is investing a huge amount of money on the lower management
to make them efficient and effective. As Areti-Hyflux Ltd. is a new company it has
outsourced some of the functional work to another company. The legal issues are also being
outsourced as they would be dealing with the government and so is the recruitment to get a
diverse pool of labors. Areti-Hyflux Ltd. believe in the concept of virtual corporation, thus to
deal with its international clients, the company is doing e-business through its websites
which would be designed and maintained by an IT firm in India.

Currently the company is focusing on finance, human resource; operations and rest are
being outsourced. It also has a Board of Advisors to ensure that the company is reviewing its
mission and working accordingly. The organizational structure shows that each and
everyone has clear job description with clear measures of success so as to not hamper and
collide with other departments.

The company needs labor with technical expertise or work experience in this field. However
in Bangladesh since there is a shortage of skilled labor Areti-Hyfux Ltd. has taken the
initiative to train and educate the workers according the companys needs. It will provide 3
months on the job training for the workers to develop them to work efficiently in the
company. Apart from the labors this industry requires people with background with finance,
human resource, engineers, and law.

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Appendices
Appendix 1
Article: The Daily Star, March 24, 2004 (Vol. 4, num 293) Front Page

Water-starved locals block Dhaka-ctg. Rd at Kajla

Angry residence of Demra suffering from a weeklong water deprivation barricaded the
Dhaka-Chittagong Highway at Kajla yesterday morning. A few hundred agitated locals of
Shanir Akhra, Jatrabari and Kajla blocked the commercially vital national highway for about
two hours from 8:30 am causing long queues of vehicles stretching from Kanchpur Bridge to
Kajla at one side and from Sayedabad on the other. The demonstrators alleged they had
been going without any water supply from the WASA (Water and Sewerage Authority) for
the last one week that made their lives miserable. The pickets however freed the highway
after local lawmaker Salahuddin Ahmed and WASA officials assured them of adequate water
supply. Salahuddin also promised to set up a pump station in the locality to ensure
undisrupted water supply.

Residence of the Dhaka Citys Jatrabari area took out a procession with empty pitchers yesterday demanding
end to the acute water crisis in the area

Appendix 2

(Source: www.thedailystar.net)

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Appendix 3

An extract from Capital Dhaka: Towards an environmental jeopardy?

-by Mahfujur Rahman
Published on: The Daily Star, April 25, 2009
(Source: http://www.thedailystar.net/pf_story.php?nid=85453)

Ground water extraction: Many ponds that worked as runoff reservoir are filled up yielding
space to housing and roads. Being one of the largest mega cities in the world, Dhaka is
facing continuous potable water-related problems over the last few decades. Ground water
extraction poses a great threat to the sustainability of the city itself. Dhaka WASA mainly
depends on ground water extraction to continue its supply to increasing number of
inhabitants in the city. Due to increasing population and industrial growth the demand for
fresh drinking water is rising rapidly. Currently, DWASA is producing around 1200 Ml/day for
the urban water supply from about 423 deep tube wells.

About 82% of the municipal water supply for domestic use comes mostly from the
groundwater sources. In addition, over 500 private tube wells of different depths also exist
in this city, which are estimated to supply about 300 Ml/day, mainly to commercial and
industrial users. In Dhaka city, natural recharge to the aquifer is mainly from two sources --
direct infiltration and deep percolation of rainwater, as well as water accumulated on the
land surface.

Leakages from sewerage system form critical problems for ground water while the recharge
to the aquifer has reduced gradually as the rechargeable areas are being reduced due to
urbanization, covering the ground surface with tarmac or concrete and filling of channels
and depressions. As a result the ground water table is being lowered with time. Low
recharge indicates future unavailability of ground water and risk of land subsidence.

Appendix 4
Dying up of a Riverine Delta
-by Md. Asadullah
Published on: The Daily Star, March 23, 2007 (vol 5, Num 999)
(Source: http://thedailystar.net/2007/03/23/d703231801123.htm)

For centuries water in lakes and rivers has meant purity and life. Sadly true, poisoned waters
in the Uttara and Gulshan-Baridhara lakes now symbolize not life but death. Alas! these
could have been, if properly preserved, pure surface water sources in a country hit by acute
water crisis.

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Dhaka city's ground water aquifers, the veins of water below the ground were emptied so
drastically that polluted water laced with toxins rushed in, destroying them for good.
Reports have it that residents of Wari, Gandaria, Lalbagh and most of older part of the city
fill their pitcher with water that is yellowish. They don't know if they are drinking poison! A
disaster is unfolding all over the 1500 km. Greater Dhaka city area as the recent World Bank
report on Dhaka city water situation reveals.

With pipes drying up, the search for water is frenzied. The first trickle now comes up from a
depth of about 100ft. Dhaka WASA now lifts about 160 crore liter of water per day, about 90
crore liter less than what the citizenry needs. As the WASA supply falls, everyone from the
apartment builders to individual house owners in all parts of the city frantically bore into the
earth for water. But these unseen storehouses are drying up with frightening regularity.

Matters are worse in villages, despite the spread of bore wells in most villages. And so a
great thirst settles over the country every summer. But as the growing desperation of the
towns and villages of the country indicates, we are nearing a catastrophic drying. The
demands for water for drinking, irrigating fields, industries and even power stations -- are
skyrocketing. There are pointers to the fact that we are fast approaching a point of absolute
scarcity.

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