If you read news about Bottled Water , they sometimes say “Mineral Water”. This can be understood as it is not expected that every time public will speak technical language. As we know, it’s Packaged Drinking Water in India , and the issuing authority is the B.I.S. that is Bureau of Indian Standards , under which many critical products are under strict observation and control. This further means , that without a valid ISI license , one can’t produce Packaged Drinking Water. The standard for Packaged Drinking Water is IS-14543. You can read this page for more details about ISI. To clarify the point , we should say “Packaged Drinking Water” plant and not a “Mineral Water Plant”. Yes , there are Mineral Water Plants too , but a very few.
Then what is a Mineral Water Plant ?
For a very very general understanding , Packaged Drinking Water Plant uses the Groundwater through Borewell & purifies it with further technology to produce Bottled Water; whereas Mineral Water Plant uses the mountain spring water (mostly) to produce Bottled Water.
But this is not the point
This is ok, so far it goes out with people. But when Newspapers publish news like “Department of Food Safety to crack down on water bottling plants that lack proper licences” , which Licenses they mean ? Now just have a look at this recent news :-
“Deputy Commissioner D. Randeep, after a meeting with officials here on Monday, gave his nod for sealing plants that are operating without licences and accreditation.“
This is a very recent news from the Hindu (Link Here). The action is a welcome, no doubts; but they say that some 13 out of 20 registered “Plants” are operating without valid licenses. A further light needs to be provided on which are the licenses like. Because, without an ISI , a Packaged Drinking Water Plant may not exist only. If at all, if they mean the “Insulated Jar Unit” like the Cold Jars Plant , it is not legal and not allowed under the BIS. Sooner or later they will be brought under scrutiny. If you own a plant like this ,or know someone owning such a plant, it’s time for him to get converted into an ISI approved plant immediately !
Recent Blast claimed at least 15 lives in Tamilnadu
Vetrivel Explosives Private Limited , a factory in T Murungapatti, near Thuraiyur, 84 km from Tiruchy, Tamilnadu where , the incidence took place was said to be discharging Polluted Water in the surrounding areas. The company is operational from last 15 years, but from last 5 years local activists were demanding closure of the unit.
There are complaints that not enough care is taken towards the workmen & surrounding area health & safety. Groundwater is extracted in this area as it is the only source. But it was contaminated due to untreated water being taken out of the factory. It contains heavy nitrate , this may be the major groundwater contaminant.
Lessons for setting up a Packaged Drinking Water Plant
Already the Pollution Control Boards have strict rules in place while setting up plants, but this should be more closely addresses , because if your water , the groundwater , which is the major source , gets poor quality water like this, you can hardly survive in business.
Consumer affair Minister Mr Ramvilas Paswan declared a mission kind of thing (at least he showed it) against differential pricing been observed , especially in the Packaged Drinking Water. You can read this post for details. So , there was a great confusion over this issue in all the F & B industry as such. Most disturbed were the Hotel & Restaurant owners and Malls , who do sell Packaged Drinking Water at a higher price (Rs.40/- per litre in some cases). Some time after it was made clear that the Hotels can sell at higher price , if the drinks are served at the table, that is after the bottle seal is opened. Read this article
Now one more development …
Now, there seems to be an other development in this (or another confusion ?). According to this article , Govt seems to control the differential pricing within the state. It says that if someone observes two different prices for the same bottle of Packaged Drinking Water , the one with the lower price shall be considered as the Correct MRP. This seems to be an action against the Malls more in particular , where Packaged Drinking Water Producers were giving differentely printed labeled bottles to them. Does it mean this ? probably yes. But still hotels will keep on enjoying higher rates.
Packaged drinking water plants operating without valid ISI license.
As all know very well that almost 80 % diseases are water borne. So, utmost care should be taken while consuming water. No wonder why bottled water is very popular now. But with the emergence of good, there’s also some bad. So, there are people who want to business in a valid way and some want to do the invalid way.
What’s valid and what’s invalid
Whatever done with compliance of law and order, that is with a valid BIS and fssai license, will be a valid way. Otherwise not. Still, people run businesses without this and petitions are filled in support of not getting licenses, this is pity.
We noticed in a news yesterday that an appeal raised in support of certain units operating without a license was raised in 2013. It’s nagpur based case. It’s still pending, that’s the issue. Issues concerning public health should be addressed with top most priority. You can read the details over here.
What’s your opinion?
There are units operating without ISI, but claim their water is of top standard. They supply in jars, the insulated jars, should they be allowed?
As of date, the BIS does not approve them. We also suggest the plant owners to get these plants converted into BIS approved plants. Read this article if you’re willing to convert a plant.
An Illegal Unit of Packaged Drinking Water was closed at Behrampur, Odisha.
Was it an effect of the Total Plastic Ban in Behrampur , or otherwise, it really came as a blessing to the residents of Behrampur, the city of Taratarini Temple , one of the 4 Shaktipeethas. Behrampur is placed in Ganjam District , adjacent to Vishakhapattanam of Andhra.
There was no “License” , but which License ?
The news says that the unit which was sealed (no declaration of name) had no valid licenses. As we all know , the packaged drinking water business needs to possess many licenses , the most important of those are the BIS & the fssia. You can see the list Over Here. If the units were sealed, which of them were not produced ? As the unit was producing pouches & Bottles too (refer this news), it must be publishing certain information on labels & pouches , isn’t it ? What was that ?
Consumers need to check the ISI number – Beware !
The consumers also need to check not just the brand, but also the ISI valid number printed on the Bottle & Pouch Labels. The BIS , which issues the ISI License number to the producer has very stringent norms to produce Packaged Drinking Water. It has a special standard allocated for this purpose. For details , you can refer this special page.
Besides this , there is one more category of Water Suppliers , who supply Water in Insulated Jars. This is also not approved by the B.I.S. If you are thinking that this you can do it officially , without the BIS License, your business will soon get into trouble. Read What you need to do .
Special Info cum Training LIVE Sessions
We also conduct LIVE sessions to educate people on all aspects of the Packaged Drinking Water Plants, one of them is also ISI. Check out our next session.
Today I read a news that in Tamilnadu, the Pepsi & Coke were banned to use River Water for their Cola as well as Packaged Drinking Water Plants. Kinly & Aquafina they must be. The question is how was the River Water Supplied. The Madurai High Court Orders to stop usage of water drawn from the Thamirabarani River , which originates from Western Ghats. You can read the details on this link.
Question is not whether and what happened, but how were the Companies “Drawing” water from River ? It must be supplied & stored. Not directly Drawn. But an additional note of how was the water supplied etc. would be a welcome. The B.I.S. which regulates the working conditions at the Packaged Drinking Water Plants.
We just had been on a leisure trip to Kerala, God’s own country , as they (truly) call it. Kerala is full green , very much plastic -free , pollution less at many places, on top of it : Very Unique Food Culture. This is not a place where you expect me to talk about those foodie things. But experience about Drinking Water worth sharing.
All restaurants serve pinkish looking hot water
It was not in Fort Kochi , where we were put up on our very first day; but started from a small restaurant on the outskirts of Kochi, on the way to Munnar. We asked for water & saw it was pink in colour. As we were not used to this, we asked plain water. But were always curious. First thought it is Potassium Water. But is it edible ? never heard so. So the only waiter who could speak Hindi solved my problem. He said that it is some Ayurvedic Medicinal Water served in Kerala Restaurants.
Served in all parts of the state
We travelled from Kochi to Mumnnar, Munnar to Alleppy & Allepy to Trivendrum. We notice it being served at all parts. So I became very curious on what it is .. I mean “What’s the secret herb” and went to my friend (Google obviously) and found out something :-
It is made with a hard part of the wood of a multipurpose tree ,Pathimugam which is widely used since ancient days and is an excellent herbal medicine.
It is also known by the name sappan wood or EastIndianredwood.
If Pathimugam is Boiled in Water , it cures almost all water based epidemic diseases.
Pathimugam is also usedin many Ayurvedic medicines for its extra ordinary medicinal properties.
Yesterday , I noticed my wife was talking to a friend mentioning 2-3 things about Kerala :-
We didn’t notice a single beggar in Kerala.
We didn’t notice a single person talking to us arrogantly.
We didn’t notice a single (except very old) human being with White Hair.
They say it’s because of the Coconut Oil. But I summed it up like Fish, Coconut Oil & Pathimugam Water. Overall belief in our rich Ayurvedic heritage strengthens the usage of these things. No wonder Kerala is the most abundant state in India. Kudos to the Keralites.
Currently, in India, the packaged drinking water attracts VAT value added tax. Different states have different rates for the VAT. But very recently, the govt of India is strongly holding campaigns for implementation of the uniform GST and it’s almost certain that the GST will be fully operational from 2017 April. Packaged drinking water won’t be an exception it seems.
Some states have some concerns though
States like Tamilnadu does have serious concern on this issue. Tamilnadu alone has 1400 units of packaged drinking water. Currently the state government has exempted the packaged drinking water from VAT. In future too, they are looking for an exemption from the GST as packaged drinking water being a daily necessity. The packaged drinking water manufactures association claims that almost 80 % of the consumers are householders.
If there’s a GST applicable on water, it will be obviously a burden to the already very very competitive industry, hence it has to be passed on to the ultimate consumers. Can they afford the price? This is the debate point the association is putting forward. Read this article to read their full demands.
Reality is different
But in reality, if you see, does the manufacturer issue any bill, where VAT is not exempted? Because if a bill is issued, it will attract VAT and a common man won’t be ready to pay that. But a sad thing here is that these retailers, who ultimately sell the packaged drinking water to people, raise the prices with their will, as per the situation and do malpractice. What about that? We’ve even heard that majority of the packaged drinking water business happens in “Black” currency only.
Will GST bring a full stop to this? No idea, but it’s certainly a good step forward. And what’s the problem if a human being, becomes a tax payer? More tax payers is more stronger nation.
Kolkata Corporation Water is better than Packaged Drinking Water
There was a news in Hindustan Times that Kolkata Municipal Water is better than Packaged Drinking Water Companies. Is this threat to the Packaged Drinking Industry ? No way. Because it is not mainly in the houses , where Packaged Drinking Water is consumed. In houses , people either use direct tap water or if health conscious , will install a Domestic RO system. We have observed that they do not really know what they buy, but buy blindly feeling that they have invested in health. The major purchase happens inspired by their “Fear”. Anyway, that’s not our subject of discussion.
Packaged Drinkin Water Sales ..where exactly ?
Offices : where they buy “health” for employees , in fact many places , it is more convenience than anything else. Every 2 days or 3 days , the Water Fellow comes and replaces jars.
Marriages/Functions : Contractor/ Caterer Handles this task & again offers comfort to the organizers by offering them a feeling that they bought “Health“.
Travel : Travel is the biggest consumer of Bottled Water , where again a traveller buys “Health”
Do you really think , this news threatens the Packaged Drinking Water Industry anyways ?
I’m sure , you know Aquafina. It’s a Packaged Drinking Water Brand owned by Pepsico , U.S. As Pepsico has many franchise arrangements; Varun Beverages owns that in India and has been running that for years now. The Brand Owners like Pepsico are very stringent about the manufacturing setup, the procedures to follow, the guidelines etc. In other words , like all the Brand Owners , Pepsico too is very cautious about their brand.
Is it not profitable to run a Pepsico Franchise ?
We never really dipped into verifying it. But as a Business’s true picture reflects in its financials, it looks like that about Varun Beverages. We are not Financial Statement Analysts , but it was acclaimed by a Firm called Hem Securities, which advises “Not to buy” the Varun Beverages IPO.You can read the detailed post here. They say it’s priced too high and reasons out three things mainly :-
Unstable Performance : In 2013, 2014 company posted losses.Then 2015, it’s showed profits. Though it shows profit during the first half of the current year , the second half is not expected to perform better (trends)
Seasonal Nature of the Business : The Cold Drinks & Packaged Drinking Water Business is seasonal, hence it is never consistent and later half will be always weak.
Danger of Contract Termination : Due to poor performance or other monitors , Pepsico may terminate the agreement with Varun. This is the Threat Hem has expressed.
Our comments :-
We really can’t say whether to “Buy” or not ; at what exact price and whether it is overpriced etc. But can certainly comment on certain issues like :-
Seasonal Nature of Business :
The Business is Seasonal. Why just Varun Beverages , even Pepsico knows it, and whole business strategies are lined up accordingly. As we keep on telling our participants during our training , Packaged Drinking Water is a 100 Days Business, it’s seasonal, but these seasons are fixed. So you may call this business as Cyclical. It’s a Feature , not a Weakness. How Varun Beverages handles this , is the thing we don’t know.
Danger of Contract Termination :
It will be with any company in fact , if they don’t deliver their performances well. Applicable not just to Beverages segment, but any firm, company which runs on the Franchise Model. Other option is to run your own Plant Own Brand Model. This is also shared in our Live Trainings.
Is the Franchise Business better that the Own Plant Own Brand Model ? Or the other way round ? We are looking out for opinions from experts for an answer to this question. If you are one of them, please come forward.
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