B.S Minerals and Industries

Private Ltd. “Brick Project” Demand Estimation Project

Submitted To

B.S Minerals and Industries Pvt. Ltd.

Submitted By

Contents Introduction ......................................................................................................................................3

Objectives of the Project ....................................................................................................................3

Research Methodology ......................................................................................................................4

Product Offering ................................................................................................................................4

Data Analysis .....................................................................................................................................5

Analysis of Data from Brick Manufactures .......................................................................................5

Analysis of Data from Architects .....................................................................................................7

Analysis of Data from Brick Retailers...............................................................................................9

Bricks Demand Estimation ................................................................................................................ 10

From Brick Manufacturers Data set ........................................................................................... 10

From BDA (Bhubaneswar Development Authority) Data Set ...................................................... 10

From Architects Data set........................................................................................................... 12

From Brick Retailers Data Set .................................................................................................... 13

Recommendation……………………………………………………………………………………………………………………………..14

Introduction

Most brick making in India is carried out as small-scale industry. The brick manufacturing

industry consists of nearly 100,000 kilns accounting for an estimated 140 billion bricks per

year1. They are highly unorganized and dispersed throughout the length and breadth of the

country. The status of their technology has remained virtually stagnant over the last 100 years,

with very few improvements in brick making procedures.

At present, brick manufacturing is very labor-intensive, since bricks are usually hand-molded

and sun-dried before firing in the kiln. The firing of the bricks is most often done in traditional

set-ups such as in bull’s trench kilns (BTKs) and in clamps. BTKs are generally the choice of

medium and large projects and account for about 70 percent of the total production in the

country, while clamps are often used in operations with smaller production capacities. Coal and

biomass fuels are used for firing the bricks in the kilns. The estimated coal consumption in the

brick sector of the country is about 24 million tonnes per year1.

An average factory which produces about 4 million bricks per season, usually has a clay pit

measuring about 15 acres (from 5-35 acres). This pit has a lifetime of about 10 brick making

seasons, after which the brick factory is moved and the existing kiln is abandoned. Bricks are

normally produced only during the dry season, which lasts from 4-6 month.

Digging, mixing, molding, etc. are all manual operations. Both men and women are employed

but, in general, the women are only employed for unskilled tasks such as the transport of bricks

to and from the kiln. It has been estimated that, on average on a piece rate basis, one worker

can produce 1,000 bricks per day (over 8 hours), which includes clay digging, mixing as well as

molding.

Objectives of the Project

The chief objective of the Project is estimate the current market of Bricks in Orissa. For Demand

estimation we have analysed the current and near future demand of Bricks in the twin cities of

Bhubaneswar and Cuttack as the cases in point. We have identified four key stakeholders from

whom the demand estimation of Bricks has been done. They are

1. This data has been derived from the report titled “Research on Innovative and Strategic Policy Options

(RISPO)” conducted by Asia-Pacific Environmental Innovation Strategies (APEIS) in 2004-06

1) Architects ( In and around Bhubaneswar and Cuttack)

2) BDA (Bhubaneswar Development Authority Govt. Officials)

3) Brick Manufacturers ( In and around Bhubaneswar and Cuttack)

4) Brick Retailers ( In and around Bhubaneswar and Cuttack)

Research Methodology

The research methodology adopted has been qualitative in nature. We have employed

qualitative interviews with a semi-structured questionnaire for the project. We have used

priority sampling technique for identifying our respondents. We have sampled our data points

from yellow pages data and other official data records. For example, we have gathered leads

and contacts on architects from Bhubaneswar yellow pages data as well as BDA (Bhubaneswar

Development Authority) data.

The semi-structure has been developed by us after many deliberations with the client. We also

ran a pilot testing (pre survey) phase to identify the key variables which would be necessary to

be incorporated in the questionnaire. We have developed separate semi-structured

questionnaires for the all the 4 categories from whom the demand was to estimated. We have

also covered the general perception about the type of bricks existing in the market. We have

been able to capture the felt need of standardized good quality bricks for the market through

our qualitative measures.

To validate our findings through the qualitative interviews, random cross checking method was

employed for each category, wherein a few of the respondents were re interview on a couple

of questions to validate their inputs given earlier.

Product Offering

Our Client B.S Minerals and Industries Pvt. Ltd. has planned to set up a Brick manufacturing

plant in Orissa which would produce standardized KB (Kiln Baked) Bricks. Standardization would

imply that the size of the bricks would conform to the given specifications. The whole process

of Brick making would be less labor intensive and more automated to produce better quality

bricks of uniform standard. Also the brick making process would be independent of any

seasonality, as is the problem with traditional brick manufacturing existing in India. Our client

would be in a position to offer a larger variety of Bricks (in various sizes and types) to the

market.

Location of the plant- The plant is being put up at the following location

Chandrabali- Shyampur

P/O- Mahakalbasta

Distt. Cuttack

Pin. 754029

DATA ANALYIS

The qualitative inputs collected from the different categories of respondents ( viz Architects,

Brick Manufacturers, Brick retailers) have been summarized and analyzed below. The Report

has followed a direct question and answer format, where each question presented below is

considered to be a sub heading for which summarized responses have been provided from the

primary data collected from the survey.

Analysis of Data from Brick Manufactures

What is the daily produce from your factory?

Of the Manufacturers interviewed, some were big manufacturers and some slightly smaller.

The big manufacturers, on an average, manufactured around 30 to 50 lakhs bricks per annum.

The smaller ones produce about 10 to 12 lakhs bricks per annum.A case in point is the survey of

around 11 brick manufacturing units in Baranga,Phulnakhara,Balianta, Kesura and Korana. In

most of the cases the brick manufacturers produced around 20000-30000 bricks per day even

though in peak season most of the bigger brick manufacturers had the capacity to upgrade their

production to meet the seasonal demand.

What is the mode of transport to the retail outlets in the cities?

Considering the volume and the nature of the product, trucks seem to be the best mode of

transport to retail outlets. This has been mentioned by almost all the manufacturers, even the

small ones. In the majority of the cases the onus of transporting the bricks to the retail outlets/

sites of construction was the responsibility of the procurer/ buyer. The brick manufacturers

produced the bricks and the rest is taken care of by the retailers or contractors in which the

brick manufacturer had little to say about.

How is the pricing of the bricks done? How the pricing differ in case of bulk orders?

In most cases, pricing was done mostly in accordance with the quality of the brick. The price

typically ranges from 4000-6000 INR/ 1000 bricks. But we also found certain manufacturers

who priced their bricks at 3000 INR/1000 bricks. The different slabs in prices can be attributed

to the grade of brick manufactured. The bricks produced locally in the above mentioned areas

were predominantly of two kinds i.e. Grade 1 and Grade 2. The pricing typically depends on

this. Since the orders in this case are mostly bulk orders so there is not much differential in

pricing with respect to the order size. For Grade 1 the price typically ranges from 4000-6000

INR/ 1000 bricks and for Grade 2 the price typically range from 2500-3500 INR/ 1000 bricks.

What is the amount of coal used?

In most of the cases no specific calculation was done to find out how much coal is required. The

amount of coal consumed by them for manufacturing the bricks typically depends on the

quality of bricks being manufactured by them. In the brick manufacturing sites the estimate of

coal consumed is based on the trips (the arrangement of bricks for hardening near the

manufacturing site.) For Grade 1 the coal consumed is around 5 tonnes/ trip and for grade 2 the

coal consumed is 2-3 tonnes/ trip. This is a subjective measure and depends on the

arrangement of the bricks for hardening near the brick manufacturing site. The amount

depended on the quality of brick. The total coal used was in the range of 500 to 1000 tonnes.

What is the strength of the brick that they produced and complains if any because of this?

The strength of the bricks usually depends on the Grade of Bricks produced. The bricks

manufactured by the brick manufacturers are basically tested by the retailers/ procurers before

being transported. In most of the cases the quality has a direct relation with the price and the

commodity is highly price sensitive. In most of the cases there are no complains.

What is the type of testing that they do to make sure that quality of the brick produced is

good/ acceptable? Do they have any certification etc.

The bricks manufactured by the brick manufacturers are usually tested by the retailers/

procurers who do stress and strength testing. The manufactures usually test the bricks on the

color of the brick. Some manufacturers also mentioned about lab testing done by Government

Organizations.

In most of the cases there are no official parameters to test the quality. It is tested by the

procurers and the measure for determining the quality of the brick is the degree of red color of

the brick being manufactured. The contractors/ brick retailers do a random sample of

compression testing to determine the quality.

Do they encounter any seasonality in demand and if it is how do they address this issue?

Since most of the brick manufacturing units are open air, monsoon plays a big part in

production cycle. There is not much seasonality in demand but more seasonality in production.

Few of the brick manufacturers have additional capacity to counter seasonal demand. Peak

production is usually during the post monsoon to pre summer season i.e. from November to

mid of April.

Do they have any big builder who is their bulk purchaser and what percentage of their

business is dependent on him?

Very few manufacturers had big builders as bulk purchasers. Most of them usually sold to

retailers as per the orders. In some cases there are big contractors attached to the brick

manufacturers. But in more than 50% of the cases the deals with the brick manufacturers is on

a case to case basis transaction i.e. as the need arises orders are placed.

Analysis of Data from Architects

What are the projects that you are handling currently?

Projects usually handled by them ranges from residential works, commercial works, government and

educational buildings, malls and institutional projects.

What are expected projects that you will be handling in the near future (in the next 3 years?)

Upcoming projects to be handled by them ranges from shopping malls, commercial projects, housing

projects like IIT BHUBNESWAR, International stadium etc

What is the size of each project, he is currently handling or going to handle. (The size can be specified

in terms of square feet or in terms of value or both)

Size of projects varies from the type of projects handled by the architects. It usually ranges from 1 crores

to 600 crores. It depends on the type of contract handles by the customers.

If the standard size of the brick (which is 230*110*70 mm presently) is changed or modified, would

he accept it? Where all can the modified bricks are used.

Response varies from architect to architect. Most had apprehension about change in specification. As

many architects have to comply by standards. Many architects were willing to try new bricks if quality is

good and provides value for money.

What is his perception about the current quality of bricks existing in the market?

Architects opinion is that good quality bricks are not available. Very few manufacturers adhere to the

standards.

Will a uniform size, standardized brick be more in demand than the regular bricks presently in the

market?

Majority of Architects felt that it is good to have standard size bricks. But if quality of brick is good they

are ready to try other bricks as well.

What kind of inputs does the contractor/individual client take from him, regarding raw material for

the building of the house.

Architects believe it depends on the type of project. Many believe it helps them in winning in contracts.

Customers do inquire about quality of brick, source from where it is procured and color and other

properties. It is also observed that architects are a major influencer when it comes to purchase

decisions and bigger the projects more influence he normally has. Thus it will be a good idea to influence

the architects to push our product.

Other general pointers which evolved from primary and secondary research on bricks from the

architect’s survey are:

• Any improvement which increases bonding among bricks or leads to saving of mortar will be in

huge demand

• Uniformity, strength and flexibility are the most important factors

• A sure sign for strength is the breakability of a brick

• The “soundability” of a brick is also very important

• Bricks that are frogged or specially shaped can create mechanical interlocking which leads to

improved bonding

• The brick needs to be adaptable to climatic conditions

• The major factors influencing the strength of the bricks are the purity of clay and the firing

temperature

• Maximum fire ratings(resistance to fire) will be a selling point

• People nowadays tend to also look at the ‘aesthetic appeal’ in bricks (uncatered in Bhubaneswar

so far)

• The bricks should be of zero maintenance cost

• There should be good thermal and acoustic insulation

• New kind of blocks eg:Tera blocks are considered better

• Bigger constructions look for new environment friendly bricks

• Appearance is also important so that the consumer can reduce on the plastering cost.

Analysis of Data from Brick Retailers

Peak Period

Late January to April. Post pujas (Durga puja and Diwali), October to November. Rainy season the

demand is extremely low, and at the same time supply is also hit.

Payment Option

Weekly payment on a credit basis, in few cases upfront payment, retailers having good relation with the

manufacturers get credit for a week.

Customers

Out of the retailers surveyed, 38% catered to B2B as well as B2C customers, whereas the 62% focussed

on B2C only.

All the retailers, except one, sell standard clay bricks, few also sell Fly Ash bricks.

Price: Price per brick ranges from Rs. 2.80 Rs 3.5 for lower quality bricks and Rs 3.5 to Rs. 5.50 for higher

quality. Pricing points have also been given in the demand estimation tables below.

Bricks are ordered in quantity sets of 2500

Price Fluctuation

Price per brick is costliest in the summer season, that’s the time when demand is highest

Demand is lowest in rainy season.

Commission

50p per brick is given by the supplier on sales. Over and above this, the retailer may make additional

profit on sale of each brick on selling price as there is no concept of MRP.

Bricks Demand Estimation

From Brick Manufacturers Data set

Brick

Manufacturers

Data

Maximum ( In lakhs) Minimum ( In Lakhs)

Number of

Manufacturers

Surveyed

Type No of Bricks

Manufactured/Annum/

Manufacturer

No of Bricks

Manufactured/Annum/

Manufacturer

Some of the Regions Covered

20 Large 50 20 Balianta,

Kesura,Koradakanta,phulnakhara

20 Small 10 4 Balianta, Kesura,Koradakanta,

phulnakara

From BDA (Bhubaneswar Development Authority) Data Set

BDA Data

Projects During the Period 2008-2009 Cost in Lakhs

Name of the Project Cost in Rs. Lakh

Kalyan Mandap at Khordha 43.44

Development of Mukteshwar Temple at Bhubaneswar 23.88

Construction of Decoration Wall at Dhauli 62.88

Construction of Compound Wall at Paikarapur 22.61

Construction of Compound Wall at C.S. Pur 3.28

Shifting of EI (33KVA) 11 KV LTQH Line and DP Structure for

Widening of road at Kalinga Nagar NH-5 to PDS K7

32.18

Construction of concrete road in K-6 Subudhipur 57.52

Construction of Compound wall on open spaces at Aiginia 10

Construction of Laterite Stone machinery compound wall

around open spaces at different places under BDA

Bhubaneswar

104.48

Construction of concrete road at K-4 Kalinga Nagar 53.82

Construction of 45 HIG Duplex (Finished) Houses at

Pokharipur, Phase II

1065

Netaji Subhash Enclave at Gadakan (Apartment) 500

Integrated Housing Scheme at Sanapalla, Khorda 103.33

Construction Development of Guru Kelucharan Park at

Gadakan

100

Construction of 45 HIG Duplex Houses at Pokharipur, Phase II 1065

Improvement of Road Network at K4, K5, K7 and K8. 800

Construction of concrete road at K-4 and K-6 Kalinga Nagar 112

Construction of Utkal Gaurav Madhusudhan Park at

Pokharipur

260

Total Value ( In Lakhs) 4419.42

Number of Bricks Used/Required 11048550

In Lakhs 110.48

BDA Future Projects

Housing Scheme at Sankarpur Construction of Multi- storied residential

Housing scheme at K6, subudhipur, Phase-1

Construction of Kalyan Mandap at IRC Village, Nayapalli Construction of Multi- storied residential

Housing scheme at K6, subudhipur, Phase-2

Housing Scheme at Arya Vihar, Ph-II Construction of 20 HIG Duplex Houses at

Pokhariput, Ph-II

Housing Project over plot No. 1560 K4, Kalinga Nagar Housing Project at Baragarh

Housing Project over Plot No. 1531 ( P) at Paikarapur Integrated Housing & Commercial projects

over 25.00 acres at Gadakana on PPP

Housing Project over Plot No. 1604 ( P) at Paikarapur Integrated Commercial Complex on 10.76

acres on PPP at Gadakana

From Architects Data set

Architects Data Maximum Average

Number of Architects

Surveyed

Category Type Size of the

projects

10 Firms 600Cr 30Cr

30 Individual Residential

Buildings

1 Cr (6000 sq. ft) 20-25 lakhs ( 1500

sq. ft)

Commercial

Buildings

2.5 Cr ( 15,000

sq.ft)

50 lakhs

Engg. Colleges 25 Cr ( 2.5 lakh

sq.ft)

10 Cr

Hotels 5-6 Cr

Converting the Average Value of the Projects (from the table above) into Quantity of Bricks Required

Architects Data Type of Projects Average Number of Bricks per project(in lakhs)

Firms 75

Individual Residential Buildings 0.625

Commercial Buildings 1.25

Engg. Colleges 25

Hotels 15

From Brick Retailers Data Set

Brick Retailers Data

Number of Brick Retailers Annual Sales ( Average in

lakhs)

Brand Names of

Bricks

Various Price

Points 30 71 Agni ( Site

Delivery)

Rs.5200 per 1000

bricks

Chandi Rs.2500 per 1500

bricks

Strong Rs. 3500 per 1500

bricks

MRBA Rs. 4500 per 1000

bricks

SUPPLY DEMAND GAP ESTIMATION The supply demand gap estimation has been done for the Bhubaneswar/Cuttack and the adjoining

region .

SUPPLY SIDE (From Brick Manufacturers Data)

Brick

Manufactur

ers Data

In Lakhs In lakhs

Maximum Minimum Average

Number of

Manufactur

ers

Surveyed

Type No of Bricks

Manufactured/

Annum

No of

Bricks

Manufact

ured/Ann

um

No of Bricks

Manufacture

d/Annum/M

anufacturer

Estimated Number of

Manufacturers

Total Supply

20 Large 50 20 35 100 3500

20 Small 10 4 7 250 1750

Total

( In Lakhs)/Annum

5250

Demand Side (From Architects Survey Data)

Type of

Projects

Average Number

of Bricks per

project(in

lakhs)

Average Number of

Projects/year/Architect

Annual

Average

Demand (

Annual,

In Lakhs)

Estimated Number

of

Firms/Individuals

Total

Estimated

Demand

(In

Lakhs)

Firms 75 5 375 15 5625

Individual Residential

Buildings

0.625 0.8 0.5 160 80

Commercial

Buildings

1.25 0.25 0.3125 160 50

Engg.

Colleges

25 0.1 2.5 160 400

Hotels 15 0.1 1.5 160 240

Total

(InLakhs)/Annum

6395

Estimated Demand Supply Gap = 1145 Lakhs of Bricks/Annum