MIGRATORY MODULAR HOUSING

WANGERU PVT LTD

Introduction

Wangeru Pvt.Ltd. endeavors to provide high quality, comfortable, state of the art living conditions with the additional advantage of portability.

It maintains competitive market prices by harnessing the advances in modular housing, while working toward expanding the number of units owned, and increasing total profits earned

Current Construction Practice

Present construction practices entail two major different investments, time and money.

In- situ construction doesn’t guarantee quality

Almost all critical events in the network have precedence events. Concurrent events are minimal.

Limits the pace of construction because of inherent time limitations imposed by the materials and methods.

Inflexible after being put into use.

Technology

The structural frame is a steel frame with a The structural frame is a steel frame with a requisite treatment for fire protection.requisite treatment for fire protection.

The apartment blocks are not fabricated out of The apartment blocks are not fabricated out of brick and mortar but are essentially treated brick and mortar but are essentially treated lightweight boards lightweight boards

The structural frame is erected first and The structural frame is erected first and apartment blocks are concurrently manufactured in apartment blocks are concurrently manufactured in a factory environment.a factory environment.

The frame would contain the vertical circulation The frame would contain the vertical circulation corridors like lifts and stairwells. corridors like lifts and stairwells.

It will also contain the ducts for essential services It will also contain the ducts for essential services like electricity and plumbing.like electricity and plumbing.

Technology

The apartment blocks are then assembled at a The apartment blocks are then assembled at a assembling point which could be either on site or assembling point which could be either on site or off site and transported to the siteoff site and transported to the site

The erection would require a crane or a The erection would require a crane or a helicopter to lift the apartment and put it in place in helicopter to lift the apartment and put it in place in the structural socket where it will be suitably the structural socket where it will be suitably connected in the socket via bolts, and rivets and connected in the socket via bolts, and rivets and welding if necessarywelding if necessary

It is then connected to the services like It is then connected to the services like plumbing and sanitation. plumbing and sanitation.

The whole modular unit can be dismantled to The whole modular unit can be dismantled to the last wall if necessary and transported very the last wall if necessary and transported very easily over a single truck. The dismantling easily over a single truck. The dismantling operation takes less than a dayoperation takes less than a day ..

Market Conditions

Market in Banglore has been growing at a rate of 4.8% last few years.

The demand is mainly restricted to Kormangala, Airport Road and Palace Orchards

Aggressive efforts of the state government to project Chennai as main center for manufacturing ( auto etc) as well as IT will create a demand for high quality housing in the near future.

Demand for housing in Taramani area will increase with the advent of the hugely successful TIDEL Park.

Operational Summary

Wangeru will

• Acquire expertise to build modular housing.

• Acquire land in both cities of operations

• Construct the basic structural frame in both cities

• Design and develop the modular housing blocks.

• Commission the production of the housing blocks.

• Assemble and fix the blocks to make them full fledged living units

• Market the apartment blocks to companies who intend to provide housing.

• Provide services like maintenance and transfer of the entire living units

CITY A ( CHENNAI) CITY B ( BANGALORE)

CLIENTS AND CUSTOMERS

BUILDING FRAME

BUILDING FRAME

WANGERU WANGERU

Services

Satisfying the housing need of the clients through Satisfying the housing need of the clients through lease and renting of the apartment blocks.lease and renting of the apartment blocks.

    One stop shop for procurement, maintenance, and One stop shop for procurement, maintenance, and disposal of housing in cities of operation on a very short disposal of housing in cities of operation on a very short notice (less than a week).notice (less than a week).

Dismantling, assembling and transportation of units.Dismantling, assembling and transportation of units.

Provides the client with maintenance and upkeep of Provides the client with maintenance and upkeep of the apartments.the apartments.

There will always be an open line of communication There will always be an open line of communication between the clients and the management via a web page between the clients and the management via a web page and a 24-hour, call-in answering service.and a 24-hour, call-in answering service.

Future Services

        A strong network and connection between A strong network and connection between cities which will facilitate a wide variety of inter-cities which will facilitate a wide variety of inter-city movementcity movement

  Regular up gradation in the housing units Regular up gradation in the housing units which will cater to the changing needs of the which will cater to the changing needs of the families residingfamilies residing

A different pricing strategy to suit the A different pricing strategy to suit the individuals and families.individuals and families.

Intra-city movement is also possible to Intra-city movement is also possible to accommodate needs of the families with the accommodate needs of the families with the growth of the company within the citygrowth of the company within the city

WANGERU

WANGERU

C I T Y A

C I T Y B

C I T Y CBUILDING FRAME

CLIENTS AND CUSTOMERS

Positioning

We intend to cater to the housing needs of the population, which is We intend to cater to the housing needs of the population, which is techno savvy and is quite comfortable in experimentation. techno savvy and is quite comfortable in experimentation.

We intend to provide flexibility and safety both in the location as well as We intend to provide flexibility and safety both in the location as well as internal arrangement. internal arrangement.

We also intend to adapt adequately to the changing needs of the tenants We also intend to adapt adequately to the changing needs of the tenants over a period of time with out undue expenses.over a period of time with out undue expenses.

Need and Market Scenario

Demand for skilled professionals to shuttle between cities of operationsDemand for skilled professionals to shuttle between cities of operations

Companies lease/ buy apartments which at times lie vacant in anticipation Companies lease/ buy apartments which at times lie vacant in anticipation of future need. of future need.

As such the holding costs become very high in terms of maintenance and As such the holding costs become very high in terms of maintenance and rent. rent.

Incase of surge in demand for housing at a particular location and the Incase of surge in demand for housing at a particular location and the company doesn’t have enough leases, the real estate brokers step in to company doesn’t have enough leases, the real estate brokers step in to make a kill. make a kill.   

Also house is normally regarded as a permanent asset incase of Also house is normally regarded as a permanent asset incase of individuals, doesn’t effectively take care of the changing needs of the individuals, doesn’t effectively take care of the changing needs of the family. family.

The modular housing will be considered as a model for disposable housing The modular housing will be considered as a model for disposable housing where parts of the house can be upgraded easily.where parts of the house can be upgraded easily.

Implementation

Start UpStart Up

Wangeru Pvt.ltd will start its operations in Chennai and BangloreWangeru Pvt.ltd will start its operations in Chennai and Banglore

Acquire land and start constructing the structural frame which has a Acquire land and start constructing the structural frame which has a capacity to hold 180 units each.capacity to hold 180 units each.

Financing is done by housing finance corporations like HDFC , LIC and Financing is done by housing finance corporations like HDFC , LIC and HUDCO HUDCO

Marketing StrategyMarketing Strategy

Client is our major marketing tool. Client is our major marketing tool.

Customer satisfaction, quality and comfort goes a long way in making the Customer satisfaction, quality and comfort goes a long way in making the revolutionary product acceptable to the masses.revolutionary product acceptable to the masses.

Initial target customers are companies which are committed to provide for Initial target customers are companies which are committed to provide for the housing needs of its employees.the housing needs of its employees.

Gradually we increase our customer base through referrals and Gradually we increase our customer base through referrals and recommendationsrecommendations

Build a brand name for Wangeru in the real estate market.Build a brand name for Wangeru in the real estate market.

Competitive EdgeCompetitive Edge..

There are no apartment units that offer the same level of quality and There are no apartment units that offer the same level of quality and flexibility as Wangeru properties.flexibility as Wangeru properties.

High regard for customer service, which is unparalleled in the industry.High regard for customer service, which is unparalleled in the industry.

Promotion StrategyPromotion Strategy

Word of mouth publicity is the key to the success of the enterprise.Word of mouth publicity is the key to the success of the enterprise.

Need to educate the masses on the enormous potential of the housing Need to educate the masses on the enormous potential of the housing through mass media.through mass media.

Priority to the local markets and promotion with in themPriority to the local markets and promotion with in them

Seminars and Talk shows to gain wider acceptability for the product.Seminars and Talk shows to gain wider acceptability for the product.

AssumptionsAssumptions

We assume a healthy growth trend in the local real We assume a healthy growth trend in the local real estate market, along with a continued strong local estate market, along with a continued strong local economy. economy.

    High-rise housing blocks to take care of the demand High-rise housing blocks to take care of the demand and scarcity of land best solve the problem of housing.and scarcity of land best solve the problem of housing.

The existing legal framework will be amended/ The existing legal framework will be amended/ suitably interpreted to take care of the novel construction suitably interpreted to take care of the novel construction methods and ownership issues that may arise. methods and ownership issues that may arise.

The basic assumption of this business model is that The basic assumption of this business model is that the companies arethe companies are committed to provide housing to their committed to provide housing to their employeesemployees

General Assumptions

  2001-02 2002-03 2003-04

Short-term Interest Rate %

15.00% 15.00% 15.00%

Long-term Interest Rate %

12.00% 12.00% 12.00%

Tax Rate % 35.00% 35.00% 35.00%

Expenses in Cash % 10.00% 10.00% 10.00%

Other Expenses % 15.00% 15.00% 15.00%

Start Up

30%

20%

41%

9%

Expenses

Assets

Investments

Loans

Financial Plan

Start up expenses cover

• Investment to set up operational offices in both the cities

• Initial payment for land and legal services

• Initial payment for production of housing modules

010,000,00020,000,00030,000,00040,000,00050,000,00060,000,00070,000,000

2001-02 2002-03 2003-04

Years

Expenses Incurred

Cost of Sales

OperatingExpensesGross Profit

Total Expense incurred during the year 2001-02 is Rs. 5,18,00,000

Profit in the first year of operation 1,07,00,000

Sources of Income

Sale of the apartments Sale of the apartments

Rent of the apartment Rent of the apartment

PremiumPremium

Service charge Service charge

020,000,00040,000,00060,000,00080,000,000

100,000,000120,000,000140,000,000

2001-02 2002-03 2003-04

Year

Total Revenues

Income from premiumand rent

Sales

• Sunken CostsSunken Costs   

Cost of landCost of land

The cost of structural frame The cost of structural frame

Vertical circulation corridors.Vertical circulation corridors.

Plumbing and other services.Plumbing and other services.

Development costs.Development costs.

Construction cost distribution

59%17%

19%3% 2% Modular Units

Structural Frame

Land

Consultants

Others

The total sunken cost per structure in one city is around 65 lacsThe total sunken cost per structure in one city is around 65 lacs

Variable costVariable cost

The cost of commissioning The cost of commissioning each apartment module is each apartment module is Rs 103,611.Rs 103,611.

The price of each basic module The price of each basic module is Rs171,661is Rs171,661

4 such modules will form a 4 such modules will form a normal apartment of built up normal apartment of built up area of 750 sqm.area of 750 sqm.

The price of the apartment The price of the apartment block is much less compared to block is much less compared to the housing built using the housing built using

conventional technology.conventional technology.

  

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

2001-02 2002-03 2003-04

Year

Sales and Profit Chart

Sales

Gross Profit

Net profit

Operational Expenses

51%

14%

13%

13%9% Overheads

Handling

Equipment

Transportation

Others

Total Operational expenses in the first year of operation including maintenance and transportation Rs.1,45,00,000.

Income Statement (in Rs)

  2001-02 % 2002-03 % 2003-04 %

Sales 4,80,00,000 - 7,20,00,000   9,50,00,000 -

Cost of Sales 3,73,00,000 77.7 5,10,00,000 70.8 60,600,000 63.8

Gross Profit 1,07,00,000 22.3 2,10,00,000 29.2 3,44,00,000 36.2

Expenses 1,45,00,000 30.2 1,80,00,000 25.0 2,17,00,000 22.8

Interest 16,65,000 3.5 22,75,000 3.2 27,25,000 2.9

Depreciation 6,14,000 1.3 10,25,000 1.4 14,35,000 1.5

Other Income 1,38,00,000 28.8 1,95,00,000 27.1 2,81,00,000 29.6

Net Profit

(Before taxes)

77,21,000 16.1 1,92,00,000 26.7 3,66,40,000 38.5

Corporate Taxes 46,32,600 - 1,15,20,000 - 2,19,84,000 -

Net profit 30,88,400 - 76,80,000 - 1,46,56,000 -

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2001-02 2002-03 2003-04

Year

Cash flow and Balance

Cash flow

Cash Balance

Net profit

Balance Sheet (in Rs)

  2001-02 2002-03 2003-04

Assets      

Short-term Assets      

Cash 40,13,200 1,00,88,200 2,04,87,200

Total Short-term Assets 84,95,800 2,39,90,800 5,35,73,800

Long-term Assets 33,50,000 82,50,000 1,48,50,000

Accumulated Depreciation 1,04,000 1,20,000 1,36,000

       

Total Assets 85,09,200 1,26,52,600 3,64,51,200

       

Liabilities and Capital      

Subtotal Short-term Liabilities 10,12,500 17,27,500 27,26,700

Long-term Liabilities 25,00,000 25,00,000 25,00,000

Total Liabilities 35,12,500 42,27,500 52,26,700

       

Retained Earnings 18,35,000 23,65,000 32,25,000

Earnings 63,21,000 1,71,00,000 3,38,40,000

Net Worth 49,96,700 84,25,100 3,12,24,500

Net Worth

05000000

10000000150000002000000025000000300000003500000040000000

2001-02 2002-03 2003-04

Year

Assets

Liabilities

Net Worth

Net worth of Wangeru Pvt.ltd after the first year of operation is Rs.49,76,000.

Break Even Summary

Initially we are operating at expense of 30.85 lacs

In atmost 4 months we finish the construction with an additional cost of 96.5 lacs.

Assuming we sell at a rate of 30 units per month we sell / lease all our produce within 5 months we will break even in the seventh month of operation.

However since the main revenue source of the company is sales we will incurr losses if we don’t expand at a fast rate.

At the end of 3 years however our operational setup is large enough to generate revenues from services rather than sales to cover our operational expenses.

Growth Strategies

Wangeru Pvt. Ltd. will start its operations in Chennai and Banglore. Wangeru Pvt. Ltd. will start its operations in Chennai and Banglore. Gradual Gradual expansion into various other cities.expansion into various other cities.

Custom made to model’s specifications.Custom made to model’s specifications.

Open standards at a later stage.Open standards at a later stage.

Expanding the customer base to include individuals interested in Expanding the customer base to include individuals interested in temporary housing at a reasonable costtemporary housing at a reasonable cost

Custom made houses.Custom made houses.

Taking over the production of modular housing to ensure better supply Taking over the production of modular housing to ensure better supply and cohesion.and cohesion.

Introduce enhanced models of the housing units for easy up Introduce enhanced models of the housing units for easy up gradation.gradation.

Risks

    Revolutionary nature of the product may be well ahead of its times.Revolutionary nature of the product may be well ahead of its times.

      The materials used in the construction may not go well with the psyche of the The materials used in the construction may not go well with the psyche of the Indian family. Indian family.

      Since there is no established market for lightweight prefabricated construction in Since there is no established market for lightweight prefabricated construction in India, assured supply of the materials is not promised.India, assured supply of the materials is not promised.

    The weather conditions may limit our scope of expansion in various cities with the The weather conditions may limit our scope of expansion in various cities with the current technology.current technology.

Cost effective methods of production and distribution network that is adaptable Cost effective methods of production and distribution network that is adaptable are not in place to take care of the rapid advances in research and development of are not in place to take care of the rapid advances in research and development of the pre- fabricated construction.the pre- fabricated construction.

Exit Strategy

Wangeru endeavours to achieve sale and rental of almost all units for sale Wangeru endeavours to achieve sale and rental of almost all units for sale in a city. However if the sales and rentals are not as per the projections then the in a city. However if the sales and rentals are not as per the projections then the company can exit the plan bycompany can exit the plan by

The land can be sold or leased.The land can be sold or leased.

The structural frame which could then very well be developed into commercial, The structural frame which could then very well be developed into commercial, housing or office spaces using the current practises.housing or office spaces using the current practises.

The modular units may be dismantled and used in other prefabrication The modular units may be dismantled and used in other prefabrication construction technology in current real estate developments for partition walls etc.construction technology in current real estate developments for partition walls etc.