SAC Homes is an innovative modular house that is designed by a team of Imperial and RCA students led by Prabhu Subramanian. Follow us on @sachomesuk

1. SACAffordable, Customisable
HOMES
Sustainable,
W5
Rafael Fernandes
Biswanath Ghose
Amrita Kulkarni
Ajay Pahwa
Khurram Qayam
Prabhu Subramanian

2. Empathic design

3. Concept directions

4. Concept directions

5. Concept directions

6. Market research
- Primary Research
Census Data
Statistics from Department of Rural Development
Interviews and reports on the internet.
- Secondary Research – Work in Progress
Expert interviews – Mahindra Finance, Team Everest (Charity)
Survey Questionnaire
- Cost estimation from suppliers.

7. Questionnaire
- Family size.
- Typical income and expenses.
- Awareness about the government grants.
- Willingness to spend over and above the grant.
- Other funding options – awareness.
- Ideal requirements for their dream house.

8. Material pallette
Materials Cost
Polycarbonate sheets (Roof) $2-3/sq meter
FRP Roof sheets $2-15/sq meter
FRP wall panel $4-16/sq meter
FRP honeycomb panel $30-150/sq meter
Solar panels $0.9-$1.1 per watt (65 watts)
Solar battery $80-100
FRP I-beam $20-40 per meter
Bamboo beam Work in progress
LooWatt $70 + $0.05 per month
Concrete Canvas Work in progress
Other components Work in progress

9. Market Size
Tamil Nadu:
Coimbatore Avinashi Mettupalayam Udumalaipet Tirrupur
Huts 507 7,406 1,348 18
Sub-standard 49,570 22,615 60,470 30,418
house
Household 734 796 462 818
shops
Source : 2011 Census data

10. Product/ market matrix
Hut Shop Typical Elderly
dwellers cum house village family community
SAC Home 9,279 - survey -
SAC Home 172,352 2,810 survey -
Power
SAC Home later stage -
Water
SAC Home - - - survey
Anand

11. Pricing
- Work in progress.
- Recommended price based on limited expert interviews is around $1500.
- Margin of $35 or less in year1.
Scope to improve margins from year 2 due to scale.

12. Profit/ Loss projection

13. Value chain
Types of players
Upstream Downstream
Financial
Research – Product & Suppliers – Suppliers – Assembly /
institutions Marketing
market & services raw compliment Production Distributors
design /Govt. & sales
materials materials ary assets house
grants
Index
• The SACs
• Other players

14. Value chain
Value chain and the players
•Design
SAC •Special
•Suppliers
Home promotion
•Raw •Financial s - fairs •Transport
/module
R materials D •Services P institutio M •Charities D •Other
•Market ns / grants agencies
& Overall / NGOs
•Assembly
Package •Media
Design
Research Development Production Marketing Distribution
Index
• The SACs
• Other players

15. Value chain
Value package and delivery to customer
Product Design & Services
Material Suppliers
Customers
Assembly/Production
House
Financial Institutions
Index
• The SACs
• Other players

16. Value Chain
What is the customer paying for?
Value Addition Players
(or holders of complimentary assets)
Sustainable homes Designers (The SACs)
(durable & sanitized) Raw material suppliers
Affordable homes Designers (The SACs)
(via grants & private finance) Financial institutions / Government
grants
Complimentary assets Designers (The SACs)
(loo-watt, community, additional revenue Complimentary asset suppliers
source)
Brand Name Marketing
(on-going purchase & growth)
Availability Distributors – Work in progress

17. Value Chain - conclusions
- Significant initial capital investment
- High dependency on raw material suppliers
- Albeit a number of suppliers are available in Indian market
- Complimentary assets are not available locally in India
- Market acceptance challenges
- Surveys in progress to close this gap
- More research needed on financial options and distributors.
- More thinking and research needed!

18. Competitive factors
SWOT of Porter’s 5 forces
Supplier Power
 Many suppliers
available locally
 Complimentary assets
not available locally
 Can supply to
competitors
Threat of New Entrant Internal Rivalry Substitutes
 Uniqueness of product  Less competition  Product differentiation
 Protection  Price sensitivity of  Quality and perceived
mechanisms customers value-additions
 Relationship with  Specialised market –  Competitive price
suppliers high ‘barriers to exit’
 Complexity
 High capital
Buyer Power
 Potentially large
volume
 Potentially contribute
to design
Index
 Switching cost
• The SACs
 Customer Loyalty
 Price sensitivity
• Other players


19. Competitive factors
- Threat of new entrants (Low)
The barriers to entry is high but we bring value addition by product differentiation
and patented innovative designs.
Complexity and modest margins make the venture unattractive for an entrant but
there is huge potential of economies of scale.
- Supplier Power (Low to medium)
Many local suppliers of raw materials available. However, complimentary assets
are not available locally. Collaborative partnerships with suppliers will promote
exclusive arrangements.
- Buyer Power (Medium)
Buyers can choose a competitor over SAC Homes; but switching costs are high.
We propose to involve our buyers to customise and contribute in design development.
Also, affordable financial arrangements can incentivise a buyer.
- Threat of substitutes (Low)
Continue to live in huts or sub-standard houses or choose a competitor.
Perceived value-additions offered by SAC Homes will make it more attractive
proposition.
- Internal Rivalry (Medium)
Only one direct competitor identified (WorldHaus).
SAC Homes will provide a unique product.
There can be a potential price pressures but the huge market volume provides economies of scale.

20. Protection mechanism
TYPE PROS CONS Comments
Patents • Novel Idea • Long time before patent is granted Cost might be a
• Long duration of Protection • High cost of getting a patent deterrent in the short
• Attractive to Banks & term but patents are
Investors critical for funding and
• High Valuation long term protection
Trade • Easily distinguished
• Right to prevent unauthorised
Marks use of Trade Mark.
• Indefinite subject to renewal
• Low Costs
Trade • NDA with suppliers & • Once lost, it is lost forever.
Manufacturers • Susceptible to independent
Secrets • Negligible cost discovery
• Can be protected with patents
Complexity • Low protectatbility as Idea can No clear advantage
easily be imitated for SAC homes
Speed to • Sufficient Critical Mass in short • Different ways of offering the Unfavourable due to
time product . large capital
Market • Fast pull effect with low cost and • Large capital required during requirement during
easy finance early phase early phases
• Friendly and customisable
solution

21. Business model - Teece analysis
Complementary Assets
Free available or unimportant Tightly held and important
Difficulty to make Profits Holders of Assets Profits
H
I
G
H
Imitability
INNOVATORS Highest Bargaining Power
L PROFIT PROFITS
O • Create entry barriers via IPR • Create entry barriers via
partnering with the supplier
W • Direct supply of materials to
us for assembly of SAC • Profit sharing depends on
Homes negotiation with the partner
Competition Strategy Collaboration Strategy
- Outsource building blocks - Partner with suppliers, eg
(loo watt, solar panels etc) Ikea leveraging their marketing,
- In-house design and assembly distribution channels and deep
- In-house marketing, pockets
service and support - Shared risks leading to dilution
in profits

22. Business model - Teece analysis
Joint Venture Vs. Strategic Alliance
Joint Venture
- Significant investment from all partners
- Creation of a a new separate company
Strategic Alliance
- Gaining Capabilities
- Easy acess to target markets
- Sharing the Financial Risk
- Wining the Political obstacle
- Achieving synergy and competitive advantage

23. Thank you.

24. Appendix
FACTS AND FIGURES:
- Ministry of Rural development website - http://rural.nic.in/
- Annual Reports - http://rural.nic.in/sites/annual-report.asp
- Explanation of schemes under Rural housing -
http://rural.nic.in/sites/programmes-schemes-rural-housing.asp
http://census2001.tn.nic.in/pca2001.aspx
COMPETITORS:
- Worldhaus - http://worldhaus.com/
- MIT 1K house - http://web.mit.edu/1khouse/contents.htm
- $300 house - http://www.300house.com/
POTENTIAL RAW-MATERIAL SUPPLIERS
- Everest - http://everestfibre.com/
- Concrete Canvas - http://www.concretecanvas.co.uk/

25. Cost analysis
Variable cost : SAC Home Power
$
Raw Materials 1,000 Work in progress
Assembling 150
Solar battery 100
Solar panels 55 14w energy saver bulb, mobile charger, mini-fan
Loo Watt 70
Logistics 50
Marketing 20
Support 20
Cost 1,465
Sale price 1,500
Margin 35
Variable cost : SAC Home
$
Raw Materials 1,000 Work in progress
Assembling 150
Loo Watt 70
Logistics 50
Marketing 20
Support 20
Cost 1,310
Sale price 1,350
Margin 40

26. P/L - normal case
Year 1 1
Year Year 2 2
Year Year 3 3
Year Year 44
Year
Unit sales 300
250 1,600
1,400 3,500
2,750 8,000
4,500
Contribution Margin per unit 3535 38
37 43
42 47
46
Total Contribution 10,500
8,750 60,800
51,800 150,500
115,500 376,000
207,000
Fixed Costs
Salary
Salary 16,000
16,000 19,000
19,000 22,000
22,000 25,000
25,000
ITIT 20,000
20,000 15,000
15,000 10,000
10,000 5,000
5,000
Others
Others 3,000
3,000 5,000
5,000 7,000
7,000 10,000
10,000
Finance Cost @@ 12%
Finance Cost 12% 2,400
2,400 3,000
3,000 2,400
2,400 2,400
2,400
Prototyping
Prototyping 37,500
37,500 30,000
30,000 25,000
25,000 20,000
20,000
Inventory
Inventory 20,000
20,000 25,000
25,000 20,000
20,000 20,000
20,000
Regulatory
Regulatory 10,000
10,000 5,000
5,000 5,000
5,000 2,000
2,000
Total Fixed Costs 108,900
108,900 102,000
102,000 91,400
91,400 84,400
84,400
Break Even Point 3,111
3,111 2,684
2,757 2,126
2,176 1,796
1,835
Revenue from Homes 450,000
375,000 2,400,000
2,100,000 5,250,000
4,125,000 12,000,000
6,750,000
Revenue from other Modules 00 00 142,500
123,750 382,500
311,250
Total Revenue 450,000
375,000 2,400,000
2,100,000 5,392,500
4,248,750 12,382,500
7,061,250
Cost Of Sales - Homes 439,500
366,250 2,339,200
2,048,200 5,099,500
4,009,500 11,624,000
6,543,000
Cost Of Sales - Modules (30% margin) 00 00 99,750
86,625 267,750
217,875
Total Cost Of Sales 439,500
366,250 2,339,200
2,048,200 5,199,250
4,096,125 11,891,750
6,760,875
Total Contribution 10,500
8,750 60,800
51,800 193,250
152,625 490,750
300,375
Total Fixed Costs 108,900
108,900 102,000
102,000 91,400
91,400 84,400
84,400
Net Profit / Loss before tax -98,400
-100,150 -41,200
-50,200 101,850
61,225 406,350
215,975

27. P/L - worst case
Year 1
Year 1 Year 2
Year 2 Year 3
Year 3 Year 4
Year 4
Unit sales
Unit sales 200
300 1,200
1,600 2,000
3,500 3,000
8,000
Contribution Margin per unit
Contribution Margin per unit 35
35 37
38 41
43 42
47
Total Contribution
Total Contribution 7,000
10,500 44,400
60,800 82,000
150,500 126,000
376,000
Fixed Costs
Fixed Costs
Salary
Salary 16,000
16,000 19,000
19,000 22,000
22,000 25,000
25,000
IT
IT 20,000
20,000 15,000
15,000 10,000
10,000 5,000
5,000
Others
Others 3,000
3,000 5,000
5,000 7,000
7,000 10,000
10,000
Finance Cost @ 12%
Finance Cost @ 12% 2,400
2,400 3,000
3,000 2,400
2,400 2,400
2,400
Prototyping
Prototyping 37,500
37,500 30,000
30,000 25,000
25,000 20,000
20,000
Inventory
Inventory 20,000
20,000 25,000
25,000 20,000
20,000 20,000
20,000
Regulatory
Regulatory 10,000
10,000 5,000
5,000 5,000
5,000 2,000
2,000
Total Fixed Costs
Total Fixed Costs 108,900
108,900 102,000
102,000 91,400
91,400 84,400
84,400
Break Even Point
Break Even Point 3,111
3,111 2,757
2,684 2,229
2,126 2,010
1,796
Revenue from Homes
Revenue from Homes 300,000
450,000 1,800,000
2,400,000 3,000,000
5,250,000 4,500,000
12,000,000
Revenue from other Modules
Revenue from other Modules 0
0 0
0 105,000
142,500 240,000
382,500
Total Revenue
Total Revenue 300,000
450,000 1,800,000
2,400,000 3,105,000
5,392,500 4,740,000
12,382,500
Cost Of Sales -- Homes
Cost Of Sales Homes 293,000
439,500 1,755,600
2,339,200 2,918,000
5,099,500 4,374,000
11,624,000
Cost Of Sales -- Modules (30% margin)
Cost Of Sales Modules (30% margin) 0
0 0
0 73,500
99,750 168,000
267,750
Total Cost Of Sales
Total Cost Of Sales 293,000
439,500 1,755,600
2,339,200 2,991,500
5,199,250 4,542,000
11,891,750
Total Contribution
Total Contribution 7,000
10,500 44,400
60,800 113,500
193,250 198,000
490,750
Total Fixed Costs
Total Fixed Costs 108,900
108,900 102,000
102,000 91,400
91,400 84,400
84,400
Net Profit // Loss before tax
Net Profit Loss before tax -101,900
-98,400 -57,600
-41,200 22,100
101,850 113,600
406,350

28. P/L - best case
Year 1
Year 1 Year 2
Year 2 Year 3
Year 3 Year 4
Year 4
Unit sales
Unit sales 200
300
300 1,200
1,600
1,600 2,000
3,500
3,500 3,000
8,000
8,000
Contribution Margin per unit
Contribution Margin per unit
Contribution 35
35 37
38
38 41
43
43 42
47
47
Total Contribution
Total Contribution
Total 7,000
10,500
10,500 44,400
60,800
60,800 82,000
150,500
150,500 126,000
376,000
376,000
Fixed Costs
Fixed Costs
Fixed
Salary
Salary 16,000
16,000 19,000
19,000 22,000
22,000 25,000
25,000
IT
IT 20,000
20,000 15,000
15,000 10,000
10,000 5,000
5,000
Others
Others 3,000
3,000 5,000
5,000 7,000
7,000 10,000
10,000
Finance Cost @ 12%
Finance Cost @ 12% 2,400
2,400 3,000
3,000 2,400
2,400 2,400
2,400
Prototyping
Prototyping 37,500
37,500 30,000
30,000 25,000
25,000 20,000
20,000
Inventory
Inventory 20,000
20,000 25,000
25,000 20,000
20,000 20,000
20,000
Regulatory
Regulatory 10,000
10,000 5,000
5,000 5,000
5,000 2,000
2,000
Total Fixed Costs
Total Fixed Costs
Total 108,900
108,900 102,000
102,000 91,400
91,400 84,400
84,400
Break Even Point
Break Even Point
Break 3,111
3,111 2,757
2,684
2,684 2,229
2,126
2,126 2,010
1,796
1,796
Revenue from Homes
Revenue from Homes
Revenue 300,000
450,000
450,000 1,800,000
2,400,000
2,400,000 3,000,000
5,250,000
5,250,000 4,500,000
12,000,000
12,000,000
Revenue from other Modules
Revenue from other Modules
Revenue 0
0 0
0 105,000
142,500
142,500 240,000
382,500
382,500
Total Revenue
Total Revenue
Total 300,000
450,000
450,000 1,800,000
2,400,000
2,400,000 3,105,000
5,392,500
5,392,500 4,740,000
12,382,500
12,382,500
Cost Of Sales - Homes
Cost Of Sales - Homes
Cost 293,000
439,500
439,500 1,755,600
2,339,200
2,339,200 2,918,000
5,099,500
5,099,500 4,374,000
11,624,000
11,624,000
Cost Of Sales - Modules (30% margin)
Cost Of Sales - Modules (30% margin)
Cost 0
0
0 0
0
0 73,500
99,750
99,750 168,000
267,750
267,750
Total Cost Of Sales
Total
Total Cost Of Sales 293,000
439,500
439,500 1,755,600
2,339,200
2,339,200 2,991,500
5,199,250
5,199,250 4,542,000
11,891,750
11,891,750
Total Contribution
Total
Total Contribution 7,000
10,500
10,500 44,400
60,800
60,800 113,500
193,250
193,250 198,000
490,750
490,750
Total Fixed Costs
Total
Total Fixed Costs 108,900
108,900
108,900 102,000
102,000
102,000 91,400
91,400
91,400 84,400
84,400
84,400
Net Profit // Loss before tax
Net Profit Loss before tax
Net -101,900
-98,400
-98,400 -57,600
-41,200
-41,200 22,100
101,850
101,850 113,600
406,350
406,350