Reach Out Water Solutions

8/17/2019 Reach Out Water Solutions

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THE SLUM

WATER

BUSINESS PLAN

PROGRAM

A SUSTAIN ABLE WATER SOLUTION FOR

MARGINALIZED SLUM COMMUNITIES

BRIAN BELL

KARTHIKEYAN BHARATH KUMAR

MARK LUNDGREN

TONY SCHREMPP


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TABLE OF CONTENTS

1 Executive Summary

3 Background

5 Market Description

6 Slum Water Program

8 Organizational Structure

9 Implementation Strategy

10 Competition

11 Risks

12 Conclusion and Recommendations

13 Appendix A

14 Appendix B

Acknowledgements

MENTORS

Leo Sharkey

Anshuman Sharma

Raj Bharadwaj

PROJECT SUPPORT

John Gulliver

Linda Pulik

Fred Rose

Erin Binder

IIT-BOMBAY

Vivek Sharma

Bholu Ram Yada

Shikha Pandey

Jayendra Jadhav

BMC

Mr. Anan Jagtap


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IN MUMBAI, INDIA, INADEQUATE WATER SUPPLY is a daily reality for 10 million slum residents. TeBrihanmumbai Municipal Corporation (BMC)simply does not have the capacity to meet the water quantity, quality, access, and managementneeds of the residents. o address the water needsof Mumbai slum residents, a sustainable andcomplete water solution is required. But, how canthe Mumbai’s slum water dilemma be effectivelysolved and who has the capability to solve this

complex problem? Tis business proposal outlinesthe Slum Water Program (SWP); the compre-hensive, community driven, de-centralized waterprogram ReachOut Water Solutions (ROWS)has developed to answer the water needs ofMumbai slum residents.

Te 10 million slum residents of Mumbai, Indiamake up a large consumer market in need ofenhanced water supply for both potable andnon-potable uses. ReachOut Water Solutions, anon-profit development consultant, has createda solution for de-centralized, managed waterservices based on a proven business model already

in place in Mumbai. o date 800,000 payingslum customers utilize sustainable inf rastructureservice nodes located throughout the slums ofMumbai for sanitation. Tis successful demand-driven program, the Slum Sanitation Program(SSP), has begun to fill the sanitation gap for thenearly 9 million people who lack basic sanitationservices in Mumbai. Initiated with cooperationbetween the BMC and enterprising community-based organizations (CBOs), the Slum SanitationProgram has built 550 toilet blocks. With 4.4million Mumbai slum residents still in need of water services, including nearly all the 800,000

sanitation customers, the customer base of thSlum Sanitation Program offers an existing areliable market for provision of water infrastture services. ReachOut Water Solutions wilmeet the needs of Mumbai’s slum residents bexpanding the de-centralized water infrastruservices. Te need, and the solution, consist ofour primary components.

Te first identified need of slum dwellers is t

need from increased quantity of water. Te wsupply provided by the municipality in Mumat 30 liters per capita per day, is not adequatemeet daily needs. Te World Health Organiztion (WHO) recommends 20 liters of potab water and 30 liters of non-potable treated wper person per day. Te Slum Water Program will provide 20 liters of treated municipal waand 30 liters of treated groundwater to SWPmembers, as well as a 10 liter pay-per-use pooption for non-SWP members. Te second nof slum dwellers is a need for improved qualof water. Of the total municipal water sup-ply reaching Mumbai slums, 13 percent of th

piped water is contaminated with illness-caubacteria which leads to over 6 million instan water borne illness each year, nearly 6,000 deper year, and thus hundreds of millions of hoof lost productivity. Te Slum Water Program will serve the market needs by removing 99.percent of bacteriological contamination utila small ultraviolet (UV) treatment device whis already in use throughout rural India. Tethird identified need of slum dwellers is the to improve access to water. Te water that doreach the slums is not readily accessible to thslum residents. Te municipality does not ha

EXECUTIVE SUMMARY

The Slum Water Program

will provide 20 liters of

treated municipal water

and 30 liters of non-

potable treated water per

person per day.


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resources to pipe water to the slum homes andbottled pay-per-use water is often too expensivefor the average slum resident at $0.25 per liter. Te Slum Water Program will have two customertypes, SWP members and pay-per-use customers. We will use a delivery system, with sealed andcompressible plastic containers, to provide waterto both types of customers by allowing themto either collect the water from the SWP, or tohave water delivered directly to their home for a

small fee. Finally, the BMC is simply not capableof providing water services to all the residentsof Mumbai, especially to the slum residents.By partnering with the BMC and establishedcommunity based organizations, the Slum WaterProgram will provide a water services solutionmanaged by the community utilizing an exist-ing customer base that already pays for improvedinfrastructure services.

We realize that starting small is important beforebuilding up a full-scale water solution for theslums. Tus, we have developed a dynamic businessmodel that allows for phased implementation and

investment in our solution through pilot, franchise,and services expansion phases. For the pilot phase,ReachOut Water Solutions will establish a singleSWP for 1,500 daily community users and 200Slum Water Program pay-per-use customers. Weexpect a total capital cost of $37,000, a monthlyoperational cost of $1,300, and a monthly incomeof $2,600, returning a monthly profit of $1,300. Te pilot phase will require an initial investment of$37,000 to cover the capital costs. Te profits fromthe initial SWP installation will pay for operatingcosts and provide the investor with a 30 percentreturn on the initial investment within 3.0 years.

After proving the business success of the initiSWP and learning from the experience of runa single water services center, the franchising will begin. Tis phase will require an additioncapital investment of $2.0 million to build 25SWPs and of operating costs for the first 5 yeof large-scale operation. We predict being ablreturn this investment with a 30 percent retur within six years. ReachOut Water Solutions wreach a final goal of establishing 1,500 Slum W

Program locations within 13 years of full-scaloperation, providing water to 2.2 million slumresidents of Mumbai. Te final phase is the exsion of infrastructure services to install electric waste collection and disposal, recycling, commnications, and other de-centralized, communibased services for Mumbai’s slum residents. Tbusiness solution will promote community-bainfrastructure services that are locally owned amaintained, and that will empower the commnity and create jobs. We believe the Slum WaProgram can be implemented quickly within current system of de-centralized service deliveMumbai, be adaptable to future changes of slu

settlements, provide an adequate supply of safaccessible water at an affordable price, and bemodel of self-sustainability and cost recovery cipals for future business developments in slummarkets throughout India and the world.

ReachOut Water

Solutions will reach a

nal goal of establishing

1,500 Slum Water

Program locations within

13 years of full-scale

operation, providing

water to 2.2 million slum

residents of Mumbai.


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THE CIT Y O F M UMB AI HAS A P OPULATION OF 19 million people and is the world’s fifth larg-est metropolis. Mumbai is India’s economic andfinancial capital at a time when the nation isbecoming a major player in the world market. Withrapidly expanding industry, an influx of India’s rural

population is relocating to Mumbai to find workand support the expanding economy. Tis influx oflabor, in combination with high housing costs, hasled to a major housing crisis in Mumbai and theexpansion of semi-permanent slum settlements. Teslums of Mumbai have been in existence for manydecades. Considered a necessary evil, this populaceprovides for a large work force, skilled and unskilled, which powers the formal and informal industry inMumbai. Tis intense urbanization places extremestresses on an already overstretched municipal watersupply infrastructure. Institutionally, Mumbai failsto provide sufficient urban water supplies to itsinhabitants due to aging water infrastructure, poor

cost recovery practices, poor operation and mainte-nance of existing systems, and insufficient controlson water quality. Te city receives 5 hours of waterper day, forcing its citizens to turn to householdlevel water supply alternatives. Te poor do not havethe financial resources for costly alternatives and areforced to share overcrowded communal taps andstore water haphazardly.

Current water and sanitation coverage In the city as a whole, 5.5 million people or 30percent of the population are without accessto in-home piped water. Of that 5.5 million,4.5 million of those live in the slums. Te

sanitation picture for the city is much worse.In Greater Mumbai, 12 million people or 63percent of residents do not have access to in-home sanitation. Within the slums, this figureis lower. Only 15 percent of slum residentshave in-home sanitation. Tis leaves some 8.7million people without formal sanitation.

Current sources of water

Currently, 56 percent of Mumbai slum resi-dents have piped in-home water. Of the 4.4million without in-home water, 3 million or30 percent get water from communal or publictaps. Much of the remainder of the population

buys water from vendors and neighbors, orsteals water from municipal supply lines.

The issues with water

Tis coverage data highlights the failure of tra-ditional, municipal services to meet the needs ofslum residents. o understand how to best fulfillthese unmet needs, it is important to frame theissues surrounding water supply. We have identi-fied four key areas where the current water supplyfails slum residents. A sustainable, effective watersolution must address all four issues of quantity,quality, access, and management.

1. QUANTITY OF WATER Currently, the aver

age slum resident gets 30 liters per capita

per day. The World Health Organization

(WHO) has set 50 liters as the guideline fo

human water needs, including 20 liters fo

drinking and cooking, and 30 liters for bat

ing, laundry, and household cleaning. The

water supply of an average Mumbai slum

resident falls well below the standard of 5

liters per capita per day.

2. QUALITY OF WATER The second major i

sue with water supply in Mumbai is quali

The Brihanmumbai Municipal Corpora-

tion (BMC), the organization responsible

for provision of infrastructure services,

estimates that 13 percent of slum taps

are contaminated with disease vectors

like viruses and bacteria. Every year, wat

borne disease causes 6,300,000 cases

of illness which leads to 5,600 deaths.Put in economic terms, Mumbai loses

220 million dollars every year through los

economic productivity due to water relate

illness and death.

3. ACCESS The responsibility for collecting

water falls on the women and children in

the slums of Mumbai. Since the BMC is o

able to provide 5 hours of water service p

day, women and children are forced to wa

up to three hours in line to collect water

from communal or public taps. This result

in lost work time for women and missed

education for children. In addition, pay-peuse water is too expensive for the average

slum dweller at $0.25 per liter of water.

4. MANAGEMENT The BMC currently fails t

provide in-home water access to 4.4 millio

slum residents for a number of reasons.

First, it is innately difcult to provide service

to the slums due to the high population

density and organic nature of slum settle-

ments. Second, it is a failure in cost recove

practices. Currently the BMC only recovers

47 percent of what it spends on water. This

is due to high levels of lost and stolen wate

(16 percent or 86 million gallons per day),low tariff levels, and overstafng. This lead

to little will to pay and minimal revenue to

improve water services to the slums. Finall

within the slums, there are illegal water

middle men who sell BMC water to slum

residents at increased rates, siphoning

prots that would normally go to the BMC o

a legitimate water service provider.

BACKGROUND

We have identied four

key areas where the

current water supply

fails slum residents. A

sustainable, effective

water solution mustaddress all four issues of

quantity, quality, access,

and management.


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Slum Sanitation Program (SSP)

Understanding the four primary issues with water service provision raises the question ofhow do you make services work for Mumbaislum residents in the face of these obstacles?One model that has been effectively addressingthe issues for sanitation service provision in theslums is the Slum Sanitation Program (SSP). Te SSP was started in 1995 by a loan from the World Bank and has proven an effective and

sustainable model for serving the sanitationneeds of slum residents. o date, the SSP hasbuilt 550 community toilet blocks in the Mum-bai slums which serve 800,000 customers. TeSSP is a community-based demand driven ap-proach for serving the needs of slum residents.

SSP Process

o have a SSP toilet block installed in a slum,a community must express demand for acommunity toilet and willingness to pay. Oncedemand is established, the community toilet isconstructed with help from the BMC and anNGO who organizes the contractor and helps

with paperwork. Te BMC establishes a com-munity based organization (CBO) which isresponsible for management of the system. TeCBO hires staff to service and maintain thetoilets and collect payment from the commu-nity. Tis system has proven cost effective andsustainable. Te SSP has been so effective inproviding toilets, it is now looking to provideadditional services to residents. ReachOut Wa-ter Solutions wants to expand on the successof the Slum Sanitation Program by providingde-centralized, community-run water servicesfrom these existing infrastructure centers.

Benets of using the SSP

We see a number of distinct benefits fromproviding water services through the SSP.

1. SSP HAS EXPRESSED A DEMAND FOR A

WATER SYSTEM This means that we have

expressed institutional support from the

BMC, the World Bank, and the community

based organizations for a water program.

2. EXISTING INFRASTRUCTURE The SSP to

let blocks, which serve as an infrastructur

services center, have already been built,

reducing our up-front capital costs. Many

the SSP blocks already include bore holes

3. EXISTING CUSTOMER BASE The SSP toi

lets already have 800,000 people who are

currently paying monthly fees for improved

services and make at least one trip a day

to slum sanitation facilities. We hope to

tap into these people as our initial target

market.

4. PROVEN BUSINESS MODEL ReachOut W

ter Solutions can make use of the reliable

and proven management system and bus

ness model in place at SSP toilet blocks.

ReachOut Water Solutions wants to

expand on the success

of the Slum Sanitation

Program by providing

de-centralized,

community-run water

services from these

existing infrastructure

centers.


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OUR INITIAL TARGET MARKET FOR THE SALE OF water will be the 800,000 current SSP customers.Our ultimate goal is to meet the water needs ofthe at least half of the 4.4 million people in theslums who do not have in home piped water, orapproximately 2.2 million people, by 2025.

Market demographics

Te average Mumbai slum household consistsof a family of 4.2 people. Tis household

makes a combined average of $100 per monthor roughly $3.32 per day. Tey are largelyuneducated (78.4 percent without any formaleducation), but not unskilled (72.6 percent ofslum residents are considered skilled labor-ers). 48.7 percent of families live in squattersettlements. Tese are the informal huts andshacks that characterize the slums. Despitethe poor housing, many slum residents arepermanent residents of the slums. 40.7 percentof slum residents have lived in the slums sincebirth and an additional 34.9 percent of slumresidents have lived in their current residencefor more than 10 years. Tis suggests that

while the housing quality may be poor, ROWSis looking at a stable, skilled base of customersfor our water market, if we can develop a solu-tion that fits within their modest income whilecreating an attractive product that sells basedon more than just price.

The market for water

Based on the issues related to water supplyand the demographics of the slum commu-nity, ROWS has identified a viable marketfor a water solution. Of the $100 a Mumbaislum household currently makes in income,

they spend on average $1.5 per householdper month on water. Our goal at ROWS iaddress the four major issues of water sup while keeping the cost of water at least thsame level as slum residents are currently ping. By doing so, ROWS will add significa value to water provision without increasincost of water. Tis is the core approach to water supply solution.

Specifically, we claim that the Slum WateProgram will provide 50 L of water per caper day, increasing the amount of water slresidents receive and improving their quallife. Tis water will achieve 100 percent difection and lead directly to health benefitsthe user. Te SWP completely eliminates time spent by women and children waitin water which leads to increased opportuniteconomic productivity by women and bettschool attendance rates from children. Finit will do so using 100 percent cost recoveprincipals and good management practiceleading to long-term program sustainabili

Tis approach directly addresses the needpotential water customers, creating a prodthat saves the user time, improves the heaof the user, and provides a greater quantity water to the user, all while maintaining thamount of money the user is currently speing on water.

MARKET DESCRIPTION

ReachOut Water

Solutions will provide

Mumbai slum residents

with enhanced access

to increased quantity

and quality of water

through an improved

management system

while maintaining an

affordable cost of water.


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Municipal

SOURCE STORAGE TREATMENT DISTRIBUTION20,000 Liters

Potable

Water

Non-Potable

Water

UV Waterworks Water Taxi Delivery

SWP Pick Up30,000 LitersBorewell S

SLUM WATER PROGRAM

Slum water program description

Te Slum Water Program is ROWS’s programto provide sustainable, low-cost water supplyto the slum residents of Mumbai. Tere willbe two types of customers. On a daily basis, we are targeting to serve 1500 communityresidents and 200 pay-per-use customers. TeSlum Water Program combines source waterstorage with UV water treatment and a noveldistribution system to supply 50 L of clean,

low-cost water to SWP community partici-pants and 10 L of potable water to pay-per-usecustomers at a reasonable rate. Te SWP ac-complishes this utilizing a proven managementsystem. Te SWP will be housed in the SSPbuilding, utilizing its preexisting customer baseand infrastructure.

Source water

Te SWP will receive water from two differ-ent sources. Te first source is the BMC. Wehave received confirmation that the BMC isinterested and willing to install higher qualitylines to our SWP locations. Te supply would

be sufficient to provide the SWP community with 20 L of drinking water per person perday. Te second source of water will comefrom a bore well. Te bore well utilizes thegroundwater that is readily available fromthe high groundwater table of Mumbai. Tisgroundwater is brackish due to the influenceof the sea and is not for drinking, but can beused for bathing and cleaning purposes, aspoor and wealthy Mumbai residents alreadydo regularly. We will provide 30 L per personper day of brackish water for non-potableuses to community water users, which will

allow us to meet our stated program goal50 L per person per day. Additionally, weprovide 10 L of potable water to 200 payuse customers each day.

Storage

Once the water enters our system, we wistore it in large tanks located at the SSPbuilding. Tese tanks will each hold enou water to supply the daily demand for wat

Te municipal and bore well storage willseparate. Te municipal storage will incluthree 10,000 liter water tanks to store 30liters of water at one time, which will alloto store all of the 5 hours of municipal sueach day to meet our total need for 32,00ters of municipal water daily. In additionbore well storage will include three 10,00liter water tanks to allow distribution of45,000 liters of non-potable water each dis important to note that the bore well w will be available on demand, so the stor-age will only provide for 2/3 of the quant while storage for municipal water will ne

store nearly the entire quantity since the period is relatively short for a large quant Te quantity of and ability to pipe the wfrom the municipal line has been verifiedour contact at the BMC, Mr. Anan Jagta

Treatment

Once stored, both sources of water (the mnicipal and the bore well water) will be treusing UV water works units. Tese units uUltra-Violet (UV) radiation to safely andfectively eliminate disease causing organisEach unit kills 99.99 percent of disease ca

FIGURE 1

The Slum Water Program

includes two water supplies,

storage for 50,000 L of water,

UV Treatment, and two

methods of distribution.


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organisms and can treat 15 liters of water perminute, or 10,000 liters of water per day. Notonly are these treatment units effective, theyare very low cost. One unit has a capital costof around $300 and an ongoing electricity cost

of $14 per year. Tis treatment step will allowus to meet our stated project goal of provid-ing 100 percent disease free water, as opposedto the BMC’s water of which 13 percent iscontaminated. We will use 4 UV devices forthe municipal water and 6 UV devices for thebore well water. Note that 10 devices will beused to treat the total 77,000 liters of daily water supply to avoid overuse of the treat-ment units and to provide backup units incase of a unit failure. Because the systems aresimple, several of the staff members will betrained to maintain the devices and fix anytechnical malfunction.

Distribution

Te final step in the process is the distributionof water. Users will have a variety of distribu-tion options to choose from to meet theirbudget and delivery demands. One group ofcore users, the community customers, will signup for a monthly water plan and can choose tohave water delivered to their home via watertaxi or they can pick water up at the SWP in10 or 20 liter bottles, depending on how muchthey want that day. Te community custom-ers will have the opportunity to receive the50 liters of water per day either by delivery

or pick up from the SWP. Te water taxis will be the three-wheel auto rickshaw, butequipped for water container transport. Temonthly subscribers will make up the coreof our business and pay a lower monthly fee. A surcharge will be added for delivery. Teother option for purchasing our water will be apay-per-use method. Customers can buy waterfrom a street vendor in 10 liter bottles or theycan come to SWP locations and purchase the water in 10 or 20 liter bottles. Te pay-per-use fee will be higher than the monthly fees with a surcharge added to the vendor water.Having a pay-per-use option is important for

slum residents that may not be able to coverthe monthly fee, but can afford to buy daily water. Te containers used for distribution aresealed, plastic containers that are compressibleand easy to carry and transport. Tey will beavailable in 10 and 20 liter sizes. Te commu-nity customers will trade bottles every day, so we can then clean the used bottles at the Slum Water Program. Te pay-per-use customers will be required to place a $.40 deposit oneach bottle, which they will receive back uponreturning the container. A payment summarycan be found in Appendix A.

SWP management and staff

Te various components of the Slum WatProgram require efficient management toensure consistent, quality service for our c

tomers. Able individuals within the commnity will be appointed in consultation withCBO, and trained by ROWS to perform various tasks involved. Te employees incl

1. THE MANAGER The manager is in charg

of overall management of the technical

system, operations, nances, and staff.

The manager is a main point of contact

for the community-based organization and

ReachOut Water Solutions. The manager

will work 10-12 hours per day.

2. SALES STAFF The sales staff is trained

customer service and the technical system

They are in charge of the customers that

opt to pick up their water. They will also

share responsibilities of day to day billing

and accounts for all customers, as well as

lling and cleaning the water containers.

The sales staff will work 8-10 hours per da

3. DELIVERY STAFF The delivery staff will b

organized in four teams of two people. Th

will be in charge of the delivery of water to

the customer’s homes for community useand pay-per-use users. They will be traine

to operate and maintain the water taxis,

will assist with lling storage containers,

and will be in charge of regularly sanitizin

the water containers. The delivery staff wi

deliver water for 4 hours each day, and wi

work in the slum water program facility 4-6

hours each day, for a total of 8-10 hours

per day.

4. MAINTENANCE AND SECURITY A full tim

on site staff person is currently employed

by the Slum Sanitation Program for main-

tenance and security. Since he resides inquarters above the toilet facility, we propo

to extend his duties of security and genera

maintenance to include the SWP facilities

While the SWP time requirements would b

just 2-3 hours per day for this employee, h

would provide an adequate salary to ensu

the duties are performed.

The various components

of the Slum Water

Program require efcient

management to ensure

consistent, quality service for our customers.


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THE SWP P LUGS I NTO THE EXI ST ING organizational structure of the SSP. ROWS will work to adapt the SWP structure for the SSP, while taking over the role of the BMC and NGOto manage the multiple agencies and processes involved through a single well-formed organization.

People

Te slum residents must demand water servicesbefore ROWS can step in to help.

CBO

Te paperwork required for establishment of theSWP will be handled by ROWS. In consultation with the CBO, capable individuals will be hiredto operate and maintain the facilities of the SWP.

Sponsor

ROWS will be responsible for procuring a capitalinvestment for the pilot project and ensuring areturn on investment in a predefined time range.

BMC

ROWS will work with the BMC to establish water supply lines to the community toilets aongoing municipal support.

Contractor

ROWS will find contractors to construct thenecessary improvements to the SSP facilities

house the SWP- pumps, storage tanks, interpiping, UV waterworks devices and the dispeing system.

Politicians

Recognizing the importance of political suppfor the smooth implementation and operatioour solution, ROWS will work with local pocians to secure their approval and support.

ORGANIZATIONAL STRUCTURE

FIGURE 2

The Slum Water Program is a

simple solution that requires

involvement of multiple parties,

including the people in the

community, the CBO, ROWS,

the sponsor, the BMC, the

Contractor, and Politicians, to

solve a complex problem.

People

CBO

Politicians

BMC

Contractor

alterations

feasibility

capital investment

water supply

Sponsor

political support

installation

educationworkforce trainingpaperwork

community and

pay per use

customers


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IMPLEMENTATION STRATEGY

THE REACHO UT WATE R S OLUTIO NS BUSINE SS plan builds off the success of the SSP in provid-ing community-based de-centralized services toslum residents. Te Slum Water Program will beimplemented in three phases:

The Pilot Program

Te Pilot Phase of the SWP implements oneSlum Water Program facility. In consultation with the BMC a suitable SSP toilet block willbe chosen as the site for the pilot project. Tis

first facility will serve as a proof of conceptfor the SWP. It will identify areas of concernin the system and allow ROWS to refine itsconcepts and SWP strategy. Furthermore, thepilot project will serve as a demonstration ofthe efficiency of the SWP and as a prototypebusiness model to be adapted to other SWPinstallations in the franchising phase. Te suc-cess of the pilot project will be used as leverageto generate the capital investment necessaryfor following phases. Te total pilot operat-ing costs will be $1,300 per month. Te totalincome will be $2,600 per month. Tus thetotal profit will be $1,300 per month. We are

looking at a time frame of 3.0 years for returnon the capital investment plus 30 percent at aninitial cost of $37,000. Tis initial investment will cover the capital cost of the first pilot in-stallation. In addition to paying back the inves-tor with interest, the profits of the first phase will cover the operational expenses for ROWS.Detailed cost analysis of the pilot phase of theproject is included in Appendix A.

Franchising

When the first SWP installation has provento be successful and sustainable, ROWS will

move into the franchising phase of the businessplan. Te franchising phase aims to build 1,500SWP units in 13 years. During the franchis-ing phase, ROWS will extend the SWP to allSSP buildings (projected at 1500 units for 2025based on current growth of SSP toilet blocks). Tis would mean that the SWP would be serv-ing 2.2 million slum residents through its watersupply system by 2025. o accomplish thisexpansion after the initial pilot phase, ROWS will require a one time capital investment of

$2.0 million. Tis will cover 5 years of ROWSoperating expenses and the installation of 25SWP installations. Once these initial 25 instal-lations are generating income, ROWS projects will be self-sustainable and capable of coveringthe capital costs for the remaining 1475 SWPinstallations. Tis one time capital infusion willbe acquired from venture capitalists and paidback through the course of the expansion plusa 30 percent return on investment. ROWSprojects that this can be completed in 13 yearsafter pilot study closure.

o generate this income ROWS will require

an ongoing franchise fee from SWP units. Tisfranchise fee will start once a SWP unit hassuccessfully paid back the initial capital costs ofthe loan. Tis fee will be used to cover the insti-tutional costs to maintain ROWS as a centralfinancial, support, and institutional organization. Te fee will cover the capital costs of financingnew SWP installations and will be lower thanthe capital cost repayment fee. Te savings willbe passed on to monthly SWP users (averagedecrease in user fees of 20 percent). Detailedfranchising income, expense and expansionprojections are detailed in Appendix B.

Expansion and Diversication of Servic

In the third phase of the program, the SW will expand its community driven, de-cenized approach to service provision to otheservices such as garbage disposal, electricitcommunication, and others. Tis will buildthe success of the SWP and increase the qity of life for all slum residents.

SOCIAL VALUE OF THE

SLUM WATER PROGRAM

In addition to the nancial prot that the

Slum Water Program will produce, the

social return that will result from this clea

managed water supply is also of signi-

cant value. While estimating the true cost

savings due to the Slum Water Program is

challenging, it is simple to recognize the

benets and potential returns in health an

time. For instance, with reduction of wate

borne disease to zero for the users of the

Slum Water Program, less time will be spe

sick. This means more time for adults to

work and make money. In addition, wome

and children, who are often required to

spend one to three hours per day waiting

in line for and transporting water, would

no longer need to do so. Collectively the

women and children of Mumbai would sav

millions of hours each year in time spent

collecting water.

FIGURE 3

Water Program

Expansion of

Decentralized

Infrastructure Services

Following full-scale

implementation of the Slum

Water Program, we hope to

expand services to include

utilities such as electricity,

communications, and

garbage disposal.


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IN ORDER TO BETTER UNDERSTAND HOW THE SWP will fit into the water market, a competitionanalysis was undertaken. Te five main com-petitors included in this section are the Brihan-mumbai Municipal Corporation, Bottled Water,the Water Mafia, Point of Use reatments, andRainwater Harvesting.

Brihanmumbai Municipal Corporation Te BMC is able to provide water to slum

residents at unit rates that are lower thanthe SWP can offer. However, the high costof extension of in-home piping poses asignificant financial barrier to slum residents. Tis barrier is what currently stops the 4.4million slum residents in our target marketfrom having in-home piped water. Tus wedo not see the BMC as a significant com-petitor unless they are able to offer a lowercost of entry for service.

Bottled Water

Bottled water companies are a strong com-petitor to the municipal supply because their

products are treated and sold at a reasonably lowcost. Tere are currently at least 15 bottled watercompanies in Mumbai. Troughout Mumbai,these companies distribute the supply and oneliter of water costs approximately 12 Rs, orabout $0.25 per liter. ROWS will overcomebottled water companies through our pay-per-use option by charging $0.25 per 10 liters.

Water Maa

Te Water Mafia is a class of merchants whobuy water from the BMC illegally and sell itinformally to slum residents at increased prices

up to several hundred percent inflated. WROWS will never completely drive these ers out of the market, we will certainly be pricing them on a per unit basis. Additiononce the ROWS brand becomes establishand trusted as a clean water source, few slresidents will be interested in using these vendors.

Point of Use Treatment

Point-of-use treatment options improve tquality of water. Tese are not in direct cotition with ReachOut Water Solutions be we will provide a multifaceted treatmentand quantity solution. However, these macompete indirectly. Because we treat our wfor such a low cost using UV water works,do not believe that point of use treatmentinterfere with our business model.

Rainwater Harvesting

Rainwater harvesting systems essentiallyprovide free water to the users. Te maindrawback to rainwater harvesting is the la

of rain during the majority of the year andthe difficulties with safe storage of the waafter the monsoons. Rainwater harvestingaffect ROWS during the monsoon, but camatch the year round stability in safe suppthat the SWP can provide.

COMPETITION


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RISKS OF THE SLUM WATER PROGRAM

IMPLEMENTATION OF THE SWP IS NOT without risks. ROWS sees 4 major risks involved with our system and has taken care to mitigatethese risks.

Government Cooperation

Working with government of Mumbai pres-ents a potential challenge. Te BMC is a largeorganization with a history of slow response toneeds of customers. However, we have already

established support of the BMC for our proj-ect and they have been working in support ofthe Slum Sanitation Program already for over10 years. One of our most important resourceshas been the main BMC point of contact forthe SSP, Mr. Anan Jagtap, who is in support ofthe SWP as well.

Variable Water Supply Rate

Since we are relying on the BMC to provideour drinking water supply, the SWP is subjectto the same daily variation in supply as the restof Mumbai. o address this, we will providesufficient water storage to collect all water

available to us. By maintaining a managedsystem, supply will be controlled and we willalways obtain an adequate reserve supply. Inthe case adequate supply was not possible forthe entire community, we would decrease thetotal number of customers and still maintainquality services to all of the slum dwellers wecould serve.

Unknown willingness to

pay for this specic service

SSP customers have exhibited willingnessto pay for infrastructure services and have

expressed interest paying for de-centralize water services provided through these infrstructure nodes. Trough the use of the piphase of our program, ROWS will be ableclearly demonstrate user willingness to pay

Drinking water vs. multi-use water

One possible area for concern is that the Sprovides two sources of water: one that issafe to drink and one that is not. o mitig

possible risks associated with this, it is critto clearly label the containers and providecommunity-based hygiene education.

SSP customers have

exhibited willingness to

pay for infrastructure

services and have

expressed interest in

paying for de-centralized

water services

provided through these

infrastructure nodes.


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CONCLUSION AND RECOMMENDATIONS

AS CLEARLY DETAILED IN THE REP ORT, T HE slums of Mumbai deal with four critical issues of water supply: quantity, quality, access, and poor water management. ReachOut Water Solutionssees these four issues as areas of unmet need. Tisneed, in-turn, is our entry point into the marketas a water service provider. By mitigating thenegative impacts of these issues while maintain-ing accepted payment amounts slum dwellers cur-rently spend on water, ReachOut Water Solutions

positions itself to become a major player in theMumbai water market.

Investing in ReachOut Water Solutions will provide the sustainable, low-cost water solution theslums of Mumbai need. Te careful planning andestablishment of our business will not only repaythe initial investment, but will allow our programto self perpetuate into the future. Te expansionof our programs will enable us to serve millionsof slum dwellers in the greater Mumbai area by2025, improving the overall quality of life forgenerations to come. Trough our passion for thisproject and our confidence in this proposal, we

look forward to bringing this solution to reality inpartnership with investors who share our visionfor the future of improved services and quality oflife for Mumbai slum residents.

Investing in ReachOut

Water Solutions will

provide the sustainable,

low-cost water solution

the slums of Mumbai

need.


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APPENDIX A: PILOT PHASE COST BREAKDOW

TABLE A.1:

Pilot Phase Capital Cost Summary

TABLE A.2:

Pilot Pilot Phase Operational Cost Summary

TABLE A.2:

Pilot Phase Income Summary

MONTHLY PROFIT = $1334.10

TIME TO RETURN INVESTMENT + 30% ON PILOT PHASE = 3 YEARS


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APPENDIX B: FRANCHISING PLAN DETAILS

TABLE B.1:

Franchising Business Summary

TABLE B.2:

Franchising Operational Summary

o model the expansion the SWP from the initial pilot phase through the 13 year plan, a detailed calculation was performeFirst, it was assumed that each SWP would pay back the capital cost at a higher rate for the first two years following its creation. After two years, the SWP would pay a franchising fee that was 50 percent less than the capital cost fee to ROWS. Trepresents the ongoing income to ROWS. Te start up fees are assumed. Te first covers the installation of 1 SWP. Te secocomes after the installation of the first SWP and covers the installation of 25 SWPs and ROWS operating costs for 5 yearsBase operating costs are detailed below in able B.2. o these base operating costs, 5 percent of the total ROWS income waadded to operating costs to cover the increased amount of responsibility ROWS would have as the number of SWP installaincreased over time. At the end of every year, the total income left after operating costs was used to create more SWP instaltions. From this model it is predicted that in 15 years, our goal of 1500 installations would be met.

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