A Proposal to make $300 house communities a

reality in India

Tuck $300 House India Team

We come from varied backgrounds and
nationalities

Gaurav
Nitin Antoine Sophie Felipe
Thapan-
Sharma Brousse Roux Valdez
Raina
(India) (France) (France) (USA)
(India)

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Our sincere THANKS to…

Prof. Vijay Govindarajan

Christian Sarkar

Prof. Richard McNulty

Pat Palmiotto and the

Prof. Jack Wilson

Kim Keating

Penny Paquette

MBAPO

And many others

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We have been involved in the project
since September 2010
Key Milestones:

Sep 13, Jan 2011: April 4,

2010: Team starts 2011:
First researching Mar 4, Contact May 4
Meeting on $300 2011: from 2011:
with house First blog potential Tenth
Prof. VG project goes live clients blog live

Nov Feb Mar 5, April 24,

2010: 2011: 2011: 10- 2011:
Team First day India Entry
comes meeting trip; 3 cities, into
together with Jack 15+ design
Wilson meetings contest

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Our goals were more than a business plan

The optimism
towards life and Affordable and
sheer strength of practical housing
people we met gives Business solution
us hope Empathy Plan

Humility

Before providing any solutions,

we learned a lot about India and
ourselves
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THE HOUSING CHALLENGE IS ACUTE

400M INDIANS HAVE UNDER-

SERVED HOUSING NEEDS
Slums have developed organically and in
an ad-hoc way
New high-rise
buildings coming up
Ad-hoc slums just
beside these new
constructions

The builders and residents want these slums to be replaced by fancier building
complexes, posing a challenge to an existent economy.
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Living conditions are unhygienic and
dangerous

Stray animals, accumulated trash, and dirty sewage water are just outside the
residence.
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Our KEY findings from the project
• Potential Indian market size of $40B
Addressable market

• Retail cost of $1538

Recommended price

• Simple designs that raise the living standard of

Design criteria residents
• Focus on building housing communities and not
Community focus individual houses
• Start small by operating in two states of Gujarat and
Geographies Maharashtra
• The challenge can’t be met alone; a strong set of
Alliances alliances needed including substantial GOI support
• Land procurement is a huge hurdle, and could pose
Biggest hurdle: land potential risk to project implementation
• Proactive and consistent execution is KEY for success
It’s all about execution
* GOI: Government of India

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Existing constraints and our assumptions
Constraints identified Assumptions

Willingness To Pay (WTP)
Unit price is set at $1,538 (Rs. 68,000)
representing the lower limit of Government
grants for housing for EWS

Customers’ Emotional Attachment
Houses should be constructed using strong

brick-like materials, and sanitary facilities
should be made available to the community

Houses should be built on land that belongs

Land Availability
to customers or group of customers
(villagers) and/or Government

Materials (~70% of total house cost)
Compressed Stabilized Earth Block (CSEB)

Labor (~30% of total house cost)
Prospective owners can be employed in the
construction of the house helped by a
supervisor, hence providing employment
opportunities to the community
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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 10
ITS ALL ABOUT THE EXECUTION

BUSINESS & EXECUTION PLAN

The low income housing market in India is
booming
Map of low income housing projects in 2010 Key findings for this market

25 developers building or planning to
Biadi, Rajasthan Bawal, Haryana
build low income houses across 7 states
2 projects 1 project

Meerut, UP

Prices range from Rs. 3 to 7 Lakhs i.e.
1 project from $6,800 to $15,900

Ahmedabad, Gujarat
Target customers are households

6 project earning between $170 and $340 per
month
— Civil servants
— Office clerks
Nagpur, Maharashtra — Shop owners
1 project
Mumbai, Maharashtra

Gross margins are between 20% and
10 projects
Pune, Maharashtra Chennai, Tamil Nadu 30%
2 projects 2 projects

Projects’ returns between 40% and 50%

Source: Monitor Inclusive markets

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 12
Total Addressable Market is huge and
underserved
Urban income pyramid in India Total estimated market potential

> $2,800 0.1% Potential demand : 2 MHH

Unit Price: > $55,000
Monthly household income (USD)

$1,400 - $2,800 3% Total Market size: US$ 133bn

Potential demand : 4 MHH
$900 - $1,400 2% Unit Price: $20,000 – $55,000
Total Market size: US$ 127bn
$570 - $900 4%
Potential demand : > 21 MHH
$340 - $570 8%
Unit Price: $7,000 - $20,000
$140 - $340
Total Market size: US$ 244bn
37%
Numerous projects underway
Potential demand : 23 MHH
< $140 = EWS
Unit Price: < $2,000
46%
Total Market size: US$ 41bn
Largely underserved
Source: Monitor Inclusive markets, Indian Ministry of housing and Urban Poverty Alleviation
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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 13
Gujarat and Maharashtra (excl. Mumbai)
represent approx. 20% of the total market
Number of Households targeted Market sizing
46%
4.1m HHs facing housing shortage
71.4 (Maharashtra excl. Mumbai, Gujarat)

69%
18% Average WTP1 = $1,800 (Rs. 79,000)
32.9 (e.g. Rajiv Aawas Yojana Scheme)
22.7

4.1 Market size: $7.4bn

(Maharashtra: $4.6bn, Gujarat: $2.8bn)
Total # of EWS HHs in EWS HHs EWS facing
urban HHs in India facing house house
India shortage in shortage in 2
India target states
Source: Indian Ministry of housing and Urban Poverty Alleviation, Pratham
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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 14
Typical community layout
12-house-communities sharing sanitary units

House 1 House 4 House 7 House 10

(30m2) (30m2)

House 2 House 5 House 8 House 11 Total requirements

~30,000 blocks
— 413 tons of soil
— 41 tons of
cement
House 3 House 6 House 9 House 12

~5 roofs

Equipment for 2
sanitary units only
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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 15
Our execution model
Time 1 week 1 month 1 week

Finish
Send 5 machines
Buy 25 machines to Let the blocks construction
on site to make
make CSEB dry up with
the blocks
supervisors

12 units in 5 days
Capacity: 7 people / machine 1 month to get
with the help of 3
1,500 blocks / day 5 to prepare site 100% of strength
supervisors

Source: Hydraform, Our estimates

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 16
Price Breakdown (USD)
Total cost of house : $1,250 GM=19%

288 1,538

220
2,250
blocks @ 53 61
23cts/block 396

1/12 of total
521 sanitary cost of
Machine $2,600
operators +
Incl. roof supervisors
at $226

Cost of blocks Other Cost of fuel Labor Sanitary unit Gross margin Price
(house only) equipment (incl. (1/12 of total
roof) cost)

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 17
Revenue and cash flow sequence
# of houses units built Cash flow sequence ($’000)
76% 80%
72% Purchase of 25
400 426
68% new machines 375
64% 2,400 + facilities 324
60% 2,280 267
2,160
2,040 160
1,920
1,800
40% (41)
1,200 (123)

15% Replacement of
450 the 25 machines
after 5 years
0%
- (698)
2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 2013 2014 2015 2016 2017 2018 2019 2020
Houses built % capacity Initial investment FCF

Return on investment (IRR) is over 30% p.a.

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 18
PROTOTYPES, BLOGS, DESIGN CONTEST …

SUSTAINING THE MOMENTUM...

Our priority was to build awareness and
sustain the momentum
Media 40+ minutes
1000+
10+ Blogs of usable
Content pictures
videos

Promotional Tuck PR Tuck Today Video

content

Dartmouth- Studio Art Thayer

Dartmouth
Allwin with Jack Engineering
wide Effort SIGE
Wilson Students

Awareness Engagement Met with Interacted

Met with
with Non- government with students
in India companies
profits officials & faculty

Design Publish
We have a
insights from
Contest submission
India

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 20
Our submission to the design contest

A $300 House A $300 House Community

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 21
Interaction with Jack Wilson’s architecture and
design students at Thayer

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 22
ALLIANCES ARE KEY FOR THE SUCCESS OF THIS PROJECT

BUY-IN FROM PARTNERS IS ESSENTIAL

We need partnerships with multiple
sectors

Government Civil Society Private

• Central • Non-profits Sector
• State • Architects • Investors
• Panchayats • Prospective • Suppliers
(Village Heads) Owners

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 24
Role of each partner
• Both at Central and State level; Subsidies through
Government of India Rajiv Aawas Yojana; Constructions Permits

• Easier to negotiate with village heads regarding WTP

Panchayats (village heads) and # of houses to be built in a village

• Prospective owners can get employment to construct

Prospective owners their own houses

• Their involvement with communities is valuable to

Non-profits understand local conditions

• Simple, aspirational design with the right materials is

Architects critical for success

• Consistent access to raw materials will help achieve

Suppliers economies of scale

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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 25
A LOT HAS BEEN ACCOMPLISHED…

… BUT THIS IS ONLY THE BEGINNING

Critical next steps

• A prototype is KEY in convincing

Prototype prospective owners

• Find entrepreneurs ready to push this

Execution idea from prototype to pilot

• Avail subsidies from Government of

Alliances India to scale this project

• Continue to raise awareness and build

Momentum momentum around the project
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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 27
Summary of our KEY findings from the project
• Potential Indian market size of $40B
Addressable market

• Retail cost of $1538

Recommended price

• Simple designs that raise the living standard of

Design criteria residents
• Focus on building housing communities and not
Community focus individual houses
• Start small by operating in two states of Gujarat and
Geographies Maharashtra
• The challenge can’t be met alone; a strong set of
Alliances alliances needed including substantial GOI support
• Land procurement is a huge hurdle, and could pose
Biggest hurdle: land potential risk to project implementation
• Proactive and consistent execution is KEY for success
It’s all about execution
* GOI: Government of India
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Challenge | Business Plan | Awareness Campaign | Alliances | Next Steps 28
VIDEO PRESENTATION

OUR JOURNEY
KEEP THE CONVERSATION GOING AT:
http://www.300house.com
info@300house.com

QUESTIONS?