Manila Water Company Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION

Manila Normal water operates in the East zoom of Neighborhood Manila that encompasses 1 city and also municipalities spanning approximately 1400 rectangular kilometers and is a home to approximately 5.3 trillion people. Manila Water’s 1997 bet was developed and won by way of a consortium led with the Ayala Institution - among the oldest and also largest organization conglomerates in the Philippines - in partnership with United Utilities, the greatest private driver of drinking water and wastewater systems in Great Britain. Mitsubishi Institution (Japan) and also Bechtel Corporation (USA) have been investors in the consortium. Manila Water has been publicly traded about the Philippine Stock market since Drive 2005. Even so, the Ayala Institution remains the most important shareholder (30 percent), accompanied by United Utilities (12 percent).

Manila water Company, Inc. (Manila Water) can be a provider of water along with wastewater concessionaire operating from the east program zone of Metro Manila. Because assuming businesses in 1997, Manila Normal water has connected over 160,000 low-income households towards piped drinking water system along with provided entry to clean drinking water to around 860, 000 low-income folks. At duration, Manila water has enhanced water along with wastewater solutions throughout their particular entire program area when it comes to service insurance coverage, reliability, customer service and drinking water quality. The truth examines these special challenges and prospects of offering water along with wastewater services towards urban poor plus, the innovative methods that Manila Normal water has acquired to increase coverage along with this, it prevents watershed from where the drinking water is found.

CHALLENGES

Beyond the challenges encountered by MWSS total, there was a much worse crisis with improving use of water along with wastewater services for the poor. Poor people were disproportionately underserved because of the MWSS Water network along with relied on alternative Water providers, public standpipes or maybe illegal connections because of their water. Many alternative water suppliers charged larger tariffs for each liter, as a consequence of higher exchange costs inside the provision of their service.

TARIFFS AND CONNECTION FEES

Accelerating prohibit tariff design – the initial 20 cubic feet’s of drinking water is lowest priced, the purchase price boosts having greater volumes ingested.

Maximum price arranged pertaining to installing of a family group network.

Installment payment plans acceptable pertaining to completely new contacts.

PERFORMANCE INDICATORS


	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
Non-revenue water	63.0%	55.2%	53.0%	51.0%	52.0%	54.0%	50.7%	43.4%	35.5%	30.0%
Billed volume (mld)	440	594	645	706	758	751	767	825	864	948
Households connected ('000)	325	352	383	413	457	526	595	663	708	909
Continuity of supply for the Central Distribution System	26%			56%	60%	69%	83%	89%	95%	98%
Employee / 1000 connections	6.3	5.1	4.8	3.8	3.6	3.2	2.9	2.8	2.6	1.8
Revenue (US$ '000)	10,504	25,289	32,496	28,954	31,065	49,130	66,347	73,908	104,383	132,327
Net Income (US$ '000)	-947	-1,703	2,493	2,454	3,117	10,485	20,698	23,634	37,889	48,827
Total assets (US$ '000)	37,781	64,545	82,922	91,247	111,996	147,328	174,192	226,177	337,715	489,007
Long-term debt (US$ '000)	0	0	20,000	36,994	46,257	68,966	82,887	89,511	75,760	146,828

Wastewater products and services have improved upon, that has a doubling involving sewerage associations as well as sewerage treatment ability given in the year 1997. Manila Drinking water is actually tackling sterilizing products and services by simply providing free of charge septic reservoir dislodging thus, to their buyers – pretty much 20, 000 given in the year 1997.

These kinds of business changes were attained while retaining an excellent personal report. Manila Drinking water ended up being lucrative because of the 3rd season of functioning and has formulated any status as being a successful and useful corporation. Due to the Company’s history, Manila Drinking water appreciates by providing assistance of intercontinental traders and the finance is not available from the federal (MWSS),nor from the actual West zoom concessionaire (Maynilad).

ASSUMPTIONS

Risk Free Rate	2.79%
Risk	1.12
Market Risk Premium	5%
Cost Of capital	8%
Discount rate	10.40%
Tax Rate	32.00%
Growth Rate	8.00%

Risk free rate has been assumed 2.79% as per current market scenario, market risk 1.12 and market risk premium 5% has been assumed in the case. The Cost of Capital has been calculated through above data which is 8%. Apart from this, discount rate 10.40% has been given in the case with a growth rate of 32% has been assumed to evaluate terminal value of Manila Water Company.......................

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In 1997, the Philippine government to privatize their water supply in the capital Manila. East Zone concession was won by the Manila Water Company and West concession zone Maynilad water services. Over the next decade, Manila Water has become a lucrative and impressive performance, while Maynilad failed. The procedure for the management of water Manila and raises the question of whether and how they should apply for the vacant West concession area.
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by V. Kasturi Rangan Source: Harvard Business School 21 pages. Publication Date: August 9, 2007. Prod. #: 508004-PDF-ENG