A Venture to Combat Childhood Malnutrition

Our TeamName Qualifications

Megha Gahlot MBA, Bachelors in Engineering (Information Technology)

Soo Kang Lee Bachelors in Industrial Design

Michael Notton Bachelors in Finance & Accountancy

Murali Venkatesan

Ph.D in Electrical Engineering, Bachelors in Electrical Engineering

Nicholas Watkins

Ph.D in Electrical Engineering, Bachelors in Computer Engineering

Chanda, 6 years old

1,375,000

0

2

4

6

8

10

12

Mill

ions

Worldwide India

Childhood Deaths in 2008

All sourcesMalnutrition

The Problem

Source: UNICEF, 2008

60% of children of lower socioeconomic status suffer from malnutrition in rural India

Mission

5

To sustainably combat child malnutrition for subsistence consumers by:

• Educating children and parents on the importance of proper nutrition• Providing a daily multivitamin to every primary school child

…to serve the people in a sustainable manner

Overview

• Product

• Marketing Strategy

• Why invest?

PRODUCT AND MARKETING STRATEGY

Good morning!Please enter you ID#:

Good morning!Please enter you ID#: B123

You have 21 correct answers.Your score is in the Top 5!

Q30. Protein helps you:(A) Grow stronger (C) See better(B) Sleep less (D) Hear betterMy answer is: _

Q30. Protein helps you:(A) Grow stronger (C) See better(B) Sleep less (D) Hear betterMy answer is: A

Correct answer!Protein helps you grow stronger.Good job!

You now have 22 correct answers!See you tomorrow!

:-)

Marketing Strategy

• “Bottom-up” approach– Local Production– Self Help Groups– Local Entrepreneurs– Local NGOs– Local knowledge

• Endorsements– Doctors– Teachers

Competition

• Indian nutraceuticals market worth Rs 18.75 billion [2007]

• Projected market size of Rs 27 billion in 2009

What Differentiates Us?

• Emphasis on Education

• Product targets specifically schools

• Designed for the subsistence market

WHY INVEST?

Pro forma Income

$ 15

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2009 2010 2011 2012 2013 2014 2015 2016

Mill

ions

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Annu

al D

ispen

ser S

ales

Revenues Net Income Annual Dispenser Sales

Highlights• Gross Margin = 60%• Net Profit Margin = 32%

Competitive Advantage• “Bottom-up” approach• Relationships • Trust• Differentiated product

– Taste– Education

Growth Opportunities• Universal platform• Large market with stable dynamics

• Over 641,095 primary schools in India

$0 $20 $40 $60 $80

Cost to provide $.05 daily vitamin to every citizen

Indirect Costs

Billions

3

Sources: 1. Horton, Kim, Mahal, Popkin, and Shuigao. Nutritional Review. “Trends in Diet, Nutritional Status, and DR-NCD in India and China.” Dec 2001. 2. World Bank publication, August 2005.3. Population from CIA World Factbook

1,2

Economic Savings from

Why invest?

• Profitable• Growth opportunities• Universal platform• Large existing market with good dynamics• Local partners• Ecologically friendly• Improve the quality of life for millions

• Soo’s on it.

24

Chanda’s life with

Chanda, 6 years old

Appendix

25

SWOT Analysis

S WO T

Consider Beware

Inte

rnal

Ext

erna

l

26

Links

• http://www.yummyearth.com/wholesale.html• http://www.indg.in/health/diseases/nutritional-

deficiencies

27

Only includes losses due to manual (e.g. farming) market activities

28

Trends in Diet, Nutritional Status, and Diet-relatedNoncommunicable Diseases in China and India: The EconomicCosts of the Nutrition TransitionBarry M. Popkin, Ph.D., Susan Horton, Ph.D., Soowon Kim, M.S., Ajay Mahal, Ph.D., and Jin Shuigao,Ph.D.

December 2001, Nutrition Review

29

Assumptions

Revenue:Primary Schools in India1 641,095

Primary Schools in Tamil Nadu 31,052 Penetration Rate 5%

Classrooms per school 5

Students per Classroom 40

Weeks students are in school 36

Selling Price per dispenser $ 100.00 Percent of Dispensers sold at cost 35%Selling Price per vitamin candy $ 0.05 Candies sold through other channels (% of school sales) 50%

Cost of Good SoldDispenser Component costs:Total component costs: $ 48.20

Labor costs per dispenser $ 10.00

Total Cost per unit $ 58.20

Miles traveled to refill Dispenser at school 5Miles per gallon 20Fuel cost per gallon $ 2.00 Fuel cost per delivery $ 0.50 Deliveries per dispenser per year 12Annual delivery costs per dispenser $ 6.00

Shipping & Handling per dispenser $ 20.00 Training expense per entreprenuer: $100 Commission Percentage 25%

Multivitamin unit cost: $ 0.02

30

Start-up Timeline

Month0-6 6-12 12-24 24-36 36-48 48-60 60-72 72-84

● Develop nutritional requirements for candies

● Schedule sales & delivery with pilot schools

● Roll out 100 school pilot in Tamil Nadu

● Scale to 5% of schools in Tamil Nadu

● Scale to 10% of schools in Tamil Nadu

● Expand into 2000 more schools. Enter new states if necessary.

● Expand into 3000 more schools. Enter new states if necessary.

● Expand into 4000 more schools. Enter new states if necessary.

● Contact custom nutraceutical manufacturers, obtain price quotes

● Place candy orders with nutraceutical manufacturers

● Collect feedback and customize dispenser, vitamin, and delivery specifications accordingly

● Hire and train additional staff as necessary

● Hire and train additional staff as necessary

● Hire and train additional staff as necessary

● Hire and train additional staff as necessary

● Hire and train additional staff as necessary

● Form LLC ● Hire and train staff (1 sales manager, 2 engineers for product assembly)

● Hire and train additional staff as necessary

● Begin hiring and training local entrepreneur ("commission-only") sales force to expand into communities

● Continue training entrepreneur sales force at rate of 1 per 10 schools

● Continue training entrepreneur sales force at rate of 1 per 10 schools

● Continue training entrepreneur sales force at rate of 1 per 10 schools

● Continue training entrepreneur sales force at rate of 1 per 10 schools

● Begin approval process with regulatory agencies

● Begin assembly of dispensers

● Patent dispenser technology

● Contact material suppliers for price & delivery information

● Test prototype dispenser with sample group

New schools reached: 100 1,443 1,553 2,000 3,000 4,000 Total schools: 1,543 3,096 5,096 8,096 12,096

31

2009 2010 2011 2012 2013 2014 2015 2016No. of Dispensers Sold 0 100 1443 1553 2000 3000 4000

- - 278,537 5,909,439 11,742,580 19,280,740 30,616,110 45,701,480 Less: COGS - - 113,820 2,398,483 4,734,385 7,760,400 12,318,600 18,376,800

- - 164,717 3,510,956 7,008,195 11,520,340 18,297,510 27,324,680 160,000 160,000 216,100 724,736 1,282,666 1,973,076 2,999,576 4,375,676

Earnings before taxes (160,000) (160,000) (51,383) 2,786,221 5,725,529 9,547,264 15,297,934 22,949,004 Taxes - - - 975,177 2,003,935 3,341,542 5,354,277 8,032,151

(160,000) (160,000) (51,383) 1,811,044 3,721,594 6,205,722 9,943,657 14,916,853

Year Ended December 31,

Revenues

Gross Margin

Net Income

Other expenses

32

VitaXplosion Dispenser• Education + Nutrition = Complete solution

• Education– Interactive Q&A (visual/audio)– Supplemental handbook– Enthusiasm from friendly competition

• Nutrition– Daily multivitamin candy– Regulates intake

• Solution– Meets immediate need of providing nutrition– Embeds importance of proper nutrition into society through the children and

into next generations

33

Nature of the ProblemMajor Causes: Overpopulation, poverty, destruction of the environment,lack of education, gender inequality, and inaccessible medical care.

Poverty:

• Average monthly income for lower middle class is 3000-7000 Rs (equivalent to $3 a day)• More than 40% of the population is living off one dollar a day • 25% of the population cannot afford sufficient food for their families

Lack of Education:

• The illiteracy rate is 31.6% of males and 54.6% of females.• No government measures coupling nutrition with education• Integrated Child Development Services

Value Proposition

• 1 dispenser per classroom- $100 full price or at cost to schools in need

• Schools will purchase candy at $.05 (Rs. 2) per unit

• 1 entrepreneur will refill dispensers for 10 schools and sell candy in the surrounding community for a 25% commission

• Local production of candies customized to meet the dietary needs of at-risk children

• Local sourcing of dispensers

• Education + customized multivitamins = healthy children!

35

Marketing Strategy

• Clear market need for a product that addresses nutritional problems in India

• Position the product by emphasizing on

- Health benefits will be provided to a large number of children in a non-intrusive manner

- It will create awareness about general health and hygiene

- The product will be an element of fun for the children and is designed insuch a way that it will promote healthy competition among thesechildren

- The dispenser will monitor daily dosage for each kid, besides the factthat it will be operated under the supervision of a teacher/administrator,and thus over consumption will not be an issue

36