Affordable

Housing H ousing
Prefabricated Manufacturing in India

Toshiki Imai K S Madhavan Rahul Madhavan

Team
Vision
Timeline
Design
Financials
Marketing
Team: Japan and India
Toshiki Imai
Bachelor of Arts in East Asian Studies,
Akita International University (AIU)
 Exchange program at University of Macau, China.
 Intern at Shingo Institute of Japanese Management,
Bangalore, under sponsorship of Ministry of Economy, Trade
and Industry of Japan
 Founder and Captain of AIU Handball Team
 Leader of Liaison Bureau (2009-2010), President (2010-2011)
of Northeast Asian Student Round Table (SRT), a conference
by students from six countries and regions
 2nd Place at Trilateral Cooperation Secretariat (TCS) Group
Presentation Contest, Tokyo
K S Madhavan
Design & Project Management Expert
 Presently Chairman, Shingo Institute of Japanese
Management & Principal Consultant, KSM Associates
 Has assisted in OT (Organisational Transformation),
Implementation of 5S/ TQM/ TPM/ Creativity
Development etc. turning around more than SIX
MAJOR ORGANISATIONS including Gujarat Electricity
Board, NFCL, ITS Bhadrachalam, MCF, Tribi etc and
assists companies like DRL, NTPC, BFW wtc.
 Recognised for his work as Man of the Millennium
from AP by Economic Times (2000) & Indian Express
(2000) and received Rajiv Gandhi Sadbhavana Award.
Rahul Madhavan
Entrepreneur
 Former Investment Banker, Barclays Capital, Nomura
 MBA, IIM Ahmedabad
 Bachelor of Technology, Material Science, IIT Madras
 Awarded by President of India for excellence in school
 Consulted on several projects including small scale
wind energy, tetrapak waste management
 Studied Low Cost Housing In 2011 with inputs from
the government of Gujarat, India and several NGOs
Founding Vision
Indian Context
 Size of Economy : 3rd Largest Economy by PPP, $2trillion nominal GDP, Stated
Target – $4Trillion in 10 years
 Fastest Growing: Fastest growing economy among major nations (8% expected
growth rate for next year)
 New Government and Increased Public Investment : Growth Focussed
Government under Prime Minister Narendra Modi
 Sectors for Growth : “Make in India” Plan – Manufacturing, Construction, Heavy
Industry, Consumer Durables
 Timing : Inflection point in growth of Indian Economy
 Demographics :
 Rural – Urban Shift – Cities/suburbs expanding
 Wage Inflation – More consumption Power
 Aspirational Population – Dreams of lifestyle/House
Vision
 To Create Mass Scale Housing for the majority of Indian Population
in a sustainable, profitable and quality oriented manner
 To be a major organized player in the affordable housing segment
 To not just construct houses but to develop communities for people
 To enable access to employment through provision of wifi and
other amenities in the community
 To create standardization as the norm rather than the exception in
government based rural housing projects
 To increase awareness about prefabrication, and advantages of
standardization in the Indian Market

Housing Market: Need and Size Mission

 Shortfall of Houses: 14.95 mio houses shortfall in India  To leverage the best technologies available to construct exceptional
 Government Plan : Construction of 8 mio houses by 2022 quality houses at affordable cost
 Upgradation of living Standards: 60 mio toilets, Access to health, livelihood for all
 To develop 5,000 houses in the first year of commencement of
 Model villages: Construction of micro health centres and Schools in every village
 Government Planned Schemes: business
 Indira Awas Yojana (IAY)  To reach a) rural customers directly, b) rural customers indirectly
 Valmiki Ambedkar Awaas Yojana (VAMBAY) through government scheme and c) industrial customers in the first
 Rajiv Gruh Kalpa year of business
 Indiramma Housing Scheme  To establish supply chains of companies with similar quality
 Basic Services to the Urban Poor (BSUP)
orientation: 120% customer satisfaction
 Integrated Housing and Slum Development Programme (IHSDP)
 Scaling Solution for Construction - Prefabrication: Standardization of Solution,
 To be able to adapt to customer needs of different consumer
speed of delivery segments by creating differential standardization
 To reach operational breakeven in 3-5 years
Timeline for Execution
Home Design
Figure on the Left:
Plan layout of the
Proposed
Construction.

Surrounding
Images:
3d View of the
Layout post
Completion

Main House Features

 Floor Space: 300 Sq Ft
 Wall Height: 9 Ft
 Net Exterior Wall Surface Area: 630 Sq Ft
 Net Interior Wall Surface Area: 900 Sq Ft
 Structure – Beams and Columns: Steel Frame
 Roofing, Walls: Sandwich Panels
 Flooring, Foundation: RCC/Precast Concrete
Project Financials: Unit Cost
No
Cost
No. Sub of Net
Head Item per Unit Comments
Units Total Sub Cost
Unit
Units
Roof Panel Metal Wool Sandwich Panel (50mm) $9.50 per sq mt 28 $266 1 $266
Flooring Plywood/Particle Board (15mm) $7.50 per sq mt 28 $210 1 $210
Flooring Laminate Plywood/Particle Board (15mm) $2.50 per sq mt 28 $70 1 $70 Unit House
Wall Panel Metal Wool Sandwich Panel (75mm) $5.00 per sq mt 85 $425 1 $425
Column Steel Frame/Reinforced Precast $0.60 per kg 25 $15 7 $105
Cost based
o Number of Holder Beams: 4,
on
Corner Beams 8, Floor Calculations
Beam Steel Frame/Reinforced Precast $0.60 per kg 25 $15 22 $330 Foundation Beams 5 (2 Cross, 3
Parallel), Roof Beams 5 (2
Cross, 3 Parallel)

Door EPS Door/Steel Door $30.00 per door 2 $60 1 $60

Window UPVC window/Aluminium frame (Small) $30.00 per sq mt 0.5 $15 2 $30 USD
UPVC window/Aluminium frame (Large) $30.00 per sq mt 1 $30 2 $60
Décor Outer Wall: Imitation Brick Texture $4.00 per sq mt 58.5 $234 1 $234 2,304
Inner Wall: Paint/ Wallpaper $1.00 per sq mt 84 $84 1 $84
Gutter 1mm PVC Gutter Pipes $2.00 per m 6 $12 1 $12
Rain Pipe and Internal Pipes PVC rain pipe $0.50 per m 20 $10 1 $10
Bathroom and Toilet fittings Shower Set: 1 set $5.00 per set 1 $5 1 $5
Basin and Pipe: 1 set
Commode: 1 set
$10.00
$30.00
per set
per set
1
1
$10
$30
1
1
$10
$30
INR
Electrical Wiring Switch and Socket (CE Standard)
Wiring
$2.00
$0.15
per set
per m
4
30
$8
$5
1
1
$8
$5
1,45,121
Electrical Equipment Fans: Small $40.00 per Fan 2 $80 1 $80
Fans: Large $15.00 per Fan 2 $30 1 $30
Light Bulb plus sockets $3.00 Per Set 5 $15 1 $15
Miscelaneous $15.00 Per Home 5 $75 1 $75
Per
Labour Contractors $10.00 15 $150 1 $150
ManDay
Project Financials: Overall Project
Head SubHead Item Amt in Rupees Heads /Year 2015 2016 2017 2018 2019 2020 2021

Unit Sales 0 5,000 6,000 7,200 8,640 10,368 10,368

Assets
Capital Assets Unit Cost Price (All Prices in Rs. '000s) ₹ 150 ₹ 165 ₹ 182 ₹ 200 ₹ 220 ₹ 242 ₹ 266

Land ₹ 10,000,000 Unit Sales Price ₹ 161 ₹ 177 ₹ 195 ₹ 215 ₹ 236 ₹ 260 ₹ 286
₹ ₹ ₹ ₹ ₹ ₹
Sandwich Panel Machine Line ₹ 25,000,000 Gross Profits 61,875 81,675 107,811 142,311 187,850 206,635
₹ ₹ ₹ ₹ ₹ ₹
Precast Concrete Mixer ₹ 3,000,000 ₹ 3,000
Salaries 20,000 22,000 24,200 26,620 29,282 32,210
Drilling Machine ₹ 1,500,000
Depreciation ₹ 9,300 ₹ 9,300 ₹ 9,300 ₹ 9,300 ₹ 9,300 ₹ 9,300
Boring CNC Machine ₹ 1,000,000 ₹ ₹ ₹ ₹ ₹ ₹
Punching Machine ₹ 1,000,000 Op Ex ₹ 1,000 20,000 22,000 24,200 26,620 29,282 32,210

Miscellanous ₹ 5,000,000 R and D and Capex ₹ 5,000 ₹ 5,500 ₹ 6,050 ₹ 6,655 ₹ 7,321 ₹ 8,053
₹ ₹ ₹ ₹ ₹ ₹
Total Capital
₹ 46,500,000 Marketing 10,000 11,000 12,100 13,310 14,641 16,105
Assets
Interest Expense ₹ 4,769 ₹ 4,769 ₹ 4,769 ₹ 4,769 ₹ 4,769 ₹ 4,769
Current Assets
Cash ₹ 1,000,000
₹ ₹ ₹ ₹
Working Capital ₹ 7,000,000 EBT ₹ -4,000 ₹ -7,194 ₹ 7,106 27,192 55,037 93,256 103,988
Total Current ₹ ₹ ₹ ₹
₹ 8,000,000 ₹ -4,000 ₹ -5,036 ₹ 4,974
Assets Earnings After Tax 19,035 38,526 65,279 72,792
Total Assets ₹ 54,500,000
Liabilities
Equity
Key Financial Metrics
Founders Equity (25% Equity) ₹ 4,087,500
Financed Equity (75% Equity) ₹ 12,262,500
Assumptions
Total Equity ₹ 16,350,000
Expected Rate of Return 25% 1 Growth of sales at 10% per annum until 2020
Payback Period 3-5 years 2 Stagnation of growth post 2020
Debt
Valuation at Expected RoR ₹ 161,881,630 3 Wage inflation and cost inflation at 10%
Bank/Financed Debt ₹ 38,150,000
4 Profit Margin at 7.5%
Total Debt ₹ 38,150,000
5 Depreciation of Machines over 5 years
Total
₹ 54,500,000
Liabilities
 Marketing Plan Market Targeting
1. Building the ecosystem:
o We not just make houses but build customer spaces
o Awareness Campaigns to each buyer segment as described below
2. Marketing to Consumers of the house
Cost Segmentation o Message- Quality at Affordable Price: The look and feel of the
house should be far superior to that obtainable in that segment
i. Low Cost (EWS) : Rs 50,000 - Rs 200,000 – Maximum Need, minimum developer
interest T o First hand Viewing: Building few model homes for viewing and
getting an experience of living in the house
ii. Affordable Housing : Rs 200,000 – Rs 1,000,000 – No Organized Players
o Building support network:
iii. Middle Income Group : Rs 1,000,000 – Rs 2,500,000 – Interest in rural
areas/tier 2 cities
A i. Videos and training guides for building contractors
iv. High Income Group : Rs 2,500,000 – Rs 7,500,000 – Some of the larger players ii. Maintain contractors to service houses
starting to enter this market R o Post Sales Service:
v. Luxury : Rs 7,500,000 and above – Market currently oversupplied i. Strong Warranty clauses to ensure trust of customer
G ii. Put together buyer protection clauses and continuous
improvement procedures
Type Segmentation E iii. Ensure ecosystem is able to service customer for small needs
both in online and offline space
i. Kuccha Houses (Huts/Tenements): Most prevalent in lower income group –
fall under category to undergo upgradation. No organized player interest
T 3. Marketing to Government
o Involve and Engage Government: Maintain contacts with
ii. Cluster Houses: Found in industrial belts/suburbs and older government government officials at all stages of project planning
constructions o Scheme Requirements: Keep their requirements foremost as per
iii. Independent Houses/Villas: Quality expected to be good. Organized and
above mentioned government schemes
unorganized developer interest.
o Work top down in government: impressing the efficiency of
iv. Flats: Majority of new Tier 1 city urban construction. Most development
activity and supply
P production and environment friendly nature of housing
o Work to build communities: Focus on making entire community
R more productive. Ensure all stake holders are happy
o Post Sales service: maintain warranty and support facilities for
Competitors in India E houses/other buildings built
4. Marketing to Industrial Segments
i. Small scale developers
o Unorganized Sector – not taking up large contracts
F o Push Marketing: B2B sales to large scale industrial clients who are
taking up infrastructure projects
o Poor Quality of Construction
ii. Importers from China for prefab A o Mobile Marketing: Keep in mind worker requirements and
temporary/mobile nature of housing
o Good for prefab homes for private sector (factory homes/cabins)

iii.
o Prefab used in specific parts of house rather than for structure
Local Manufacturers of Prefab
B o Leasing/ financing support: Work out scheme for leasing of
temporary structures for smaller clients
o Cater to prefab doors windows toilets rather than whole house 5. Marketing to All segments
o Quality for entire house construction poor o Permanent Housing Exhibition nearby our Factory