Project Finance and Long term Funding for Mineral Water Bottling Plants

Project Finance and Long term Funding for Mineral Water Bottling Plants

Project Finance and Long term Funding for Mineral Water Bottling Plants

Published Aug 5 

In every day life, was have become a source of living and globally, No living creature lives without water. Water is one of the basic necessities of human life. Potable mineral water is good for health because its free of impurities and optimal for drinking.

Havelet Finance Limited has raised over €500 Million in project finance and long-term funding for the construction of mineral water bottling plant around the globe. We are ready to offer a customized funding for all related mineral bottling water business in a flexible term rate.

The role of project finance in Mineral Water Bottling Plants

Simply put, The allocation of financial resources for investment projects without recourse to the borrower is what remains the financial trending called Project finance. It is also a method of financing based solely on the cash flows generated by the project itself. In other words, the cash flows and assets of the future plant are used as a guarantee of repayment of the loan. This serves as a guarantee to compensate for losses in adverse technical or economic scenarios that may occur throughout the life cycle of the project. In contrast to traditional lending, in this case the lenders assume most of the risk, being fully responsible for the success or failure of a particular project.

It is worthy to note here that Mineral water business is considered one of the most capital-intensive industries. The cost of constructing a large mineral water bottling plant amounts about €70-80 million, When developing such project, it is important to plan access to a good sum of money.

The listed remains the plant components that require the highest investment costs:

1. Mineral Water Processing Machine / Bottled Water Processing Machine.
2. Automatic Bottle Washing, Filling and Capping for 1/2, 1, 11/2 & 2 Litres.
3. Automatic Bottle Washing, Filling and Capping for 20 Liters Poly Carbonate Bottle (20 Ltr Jar).
4. PET Bottle making Machine for manufacture of bottles from 60ml to 5 Liters.
5. Automatic Carbonated Water washing, Filling and Capping machine (Sparkling water Pet Soda).
6. Pet Jar Making machine up to 20 Ltr Jar.
Bottled Water “Mineral Water” Processing Machine

Project Finance and long term funding for the construction of Mineral Bottled water plants requires a thorough analysis of the market situation and forecasting scenarios for its development in the coming years.

Number of common features of project finance in the Mineral Bottling Plant:

•The application of project finance of only viable to long term projects with a good numbers of chances of commercial success.

•Generation by the project of cash flows sufficient for the company to pay the main part of the debt and interest on the borrowed funds.

•Consistent implementation of the project, aimed at optimizing and streamlining the cash flows after the launch of the facility.

•Creation of a legally and economically independent company (SPV), be it a joint venture, a public company. This is an independent form established to manage the project, responsible for contracting, obtaining funds, controlling project development and repayment of debts. The shareholders fully control the SPV.

•SPV owns all project assets, manages their maintenance and proper use, and ensures that they retain their maximum value. SPV signs the entire chain of contracts required to build the facilities, purchase and supply materials and equipment, operate the facility, maintain and sell the cement products.

•In its purest form, project finance assumes that shareholders risk only their contribution, although most contracts contain collateral requirements for debt repayment (limited recourse to the borrower).

•Project Finance requires an initial contribution from the initiator, which will depend on several factors, but above all on the requirements of the sponsors. For example, Havelet Finance Limited for up to 90% of the investment cost of a project, and in some cases we cover all of the initiator’s costs.

Advantages and Disadvantages of using Project finance in the Mineral Bottling Water Plant

As stated earlier, Project Finance is associated with high number of risk and alongside very expensive due to the high risk for investors and the need for numerous studies, expertise and consultations. Not all projects can be financed through project finance scheme, a number of advantages make project finance a very attractive option for the construction of Mineral Bottled Water plants.

In the lead instance, project finance cultivates a large numbers of risk to its participants. It is not one company that takes the risk of the project and is responsible to the lenders with all its assets. SPV brings together all the stakeholders, including the project initiator, financial and strategic investors, investment funds, venture capital, banks, and construction companies. Without this distribution of risk, it is unlikely that a single company would have been able to implement such a project quickly, given the scale of the investment to be made. Indeed, few companies would be able to build a large cement plant worth 200 million euros using only internal financial resources. The creation of an SPV means that the financing is removed from the project initiator’s balance sheet. The SPV as the “owner” of the project is a debtor, so the initiator does not worsen his balance sheet and can continue borrowing.

Again, long-term funding remain complex in many countries because of the immaturity of the local market. For this reason, large investment projects with a long payback period can be implemented only in the case of project finance. Where one company or country gets credit only for 5-10 years, some projects, if properly organized, can attract financing for 13-15 years under more favorable conditions.

Advantages of Project finance: Having listed the numerous reasons for using project finance in the construction of cement plants, we would like to take a closer look at the main advantages and disadvantages of this concept for each stakeholder.

Disadvantages of Project Finance: Unfortunately, there is no one right way to finance projects that works for all industries and companies. Project finance also has a number of drawbacks that limit its use. In particular, it is far from being the best option for small businesses.

Long-Term Loans for the construction of Mineral Bottling Water Plants

The best and popular methods financing the construction or modernization of mineral water Bottle plants remains debt financing and a corporate loan. In corporate finance, the terms of debt repayment and the interest rate depend on the project scale, repayment terms, project risk, market situation, creditworthiness of borrowers and many other factors. The more risky the investment in a particular project, the higher the interest on the loan and the tougher the repayment terms.

An analysis of the statistical reports of the global Mineral Bottled water business shows that bank loans is steadily the most important source of external financing for companies in this sector. It is on record that a bank loan is one of the most preferred sources of external financing, also due to its high availability and standardized procedures. Investment credit refers to the relationship between a lender and a borrower regarding the financing of investment activities on a repayment basis, usually with interest. Investment lending is related to real investment, which refers to an increase in fixed capital and an increase in inventories.

Initial cost for operating a Mineral Bottling Water Plant

Investment cost of construction a large Mineral bottled water plant can be capital intensive. That includes equipment as storage tanks, filling machines, water treatment machines, filters, conveyors, sealers, water sterilizers, water dispensers, bottle loaders, trucks, and employees to work in the plant.

A large construction /Startup costs can range from $5Million and above for a “bare bones” plant. However, some plants may require more capital, up to $10 million, or more, depending on the size of your operation.

Project Finance for the construction of Mineral Bottling Water plants: Our Core Service.

Havelet Finance Limited in their capacity provide a full range of project finance, engineering and construction services. Our services in financing investment projects include:

• Project finance
• Long-term lending
• Professional financial modeling and financial consulting.
• Providing credit guarantees and more. We also provide large funds to implement your ideas, while continuing to advise and support your specialists throughout the life cycle of the project.

We provides large business with the necessary financial, legal, engineering and construction solutions for the realization of the most ambitious investment ideas in the Mineral Bottling water plants other sectors.

Financing Options for Mineral Bottling Water Plant

To raise financing to start up a construction of large Mineral Bottling Water Plant can be complex and difficult due to some challenges associated with finding funds. entrepreneurs already have great and lofty ideas of how to start and run profitable businesses, but there is almost always a snag in these well thought out ideas.

The below listed option remain the only way out to find funding options to finance your projects.

Family and Friends: The easiest methods to find funding for a startup project or business is through family and friends. Many startup owners look to friends and family for initial funding if their business is taking off from the very scratch. It would be helpful to find a friend or relative who can offer business guidance as well as cash.

Online lending: Online lenders have become a popular alternative to traditional business loans. These platforms have the advantage of speed, as an application takes only about an hour to complete, and the decision and accompanying funds can be issued within days. A good number of entrepreneurs have utilized this method to provide finance for their business.

Angel investors: An angel investor is an individual who lends capital to others who need to raise capital to run their business. Angel investors invest in startup companies in exchange for a return on their investment. These investors have helped to startup many prominent companies in the united states today, and they still remain a great source of finance for small businesses.

Personal Savings: This is generally the first small business financing option for most people who find that they don’t qualify for credit cards, microloans, or any other type of bank financing. Before you take this route, you have to consider certain things such as what percentage of your personal savings you should use. Should you pour all your savings into your budding business? Should you use 50 percent less? You need to be thorough with your business plans so you do not lose your ‘rainy day shield.

CrowdFunding: Crowdfunding involves raising funds to run a business from a large number of people. The funds can be considered as donations, loans or investments. Typically, crowdfunding works by people contributing a fixed amount of cash to the business, idea or project, for which they may receive a reward.

This industry has been doubling almost every year, becoming a multi-billion dollar institution that has helped entrepreneurs from every walk of life introduce new ideas to the marketplace. Crowdfunding is proving to be the go-to funding method for great business ideas.

Havelet Finance Limited is ready to offer the most suitable solutions for industrial and commercial projects of any type.

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