RES-NOVA FLOATING HOUSE (BUSINESS PLAN)

BANGLA BADI YOJNA

Sub mitted By:

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Kavya Joshi (8156) Charchit Jain (8147) TABLE OF CONTENTS

Acknowledgement........................................................................ .......................... 3 Executive Summary..................................................................................... ............ 4 Description of Venture....................................................................................... ..... 6 Company Details................................................................................. ......... 6 Problem Statement........................................................................... .......... 6 Mission Statement........................................................................... ........... 7 Feasibility Analysis....................................................................................... ........... 8

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Market analysis............................................................................... ............ 9 Technical Analysis............................................................................... ........ 10 Financial Analysis............................................................................... ......... 12 Economic Analysis............................................................................... ........ 15 Legal and Administrative Analysis............................................................... 16 Assessment of Risks........................................................................................... .... 17 Marketing Plan............................................................................................ ........... 18 Competitive Advantage................................................................................... ....... 19 Scalability and sustainability............................................................................... .... 20

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ACKNOWLEDGEMENT

We would like to express our gratitude to our teacher, Ms. Neha. Without her constant, untiring & unfailing, support and guidance, we would not have been able to complete this project. We would also like to take this opportunity to thank our friends & family for their constant support & encouragement and also our respondents for bearing all the questions we asked them.

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EXECUTIVE SUMMARY
In recent years the frequency of abnormal floods in Bangladesh has increased substantially, causing serious damage to lives and property. The most crucial question that needs to be addressed is: as active members of society what can be done to minimize the impact of these havoc-creating floods or at least provide preventive and curative solutions to diminish the aftermath of floods. The heavy monsoon downpour and synchronization of flood-peaks of the major rivers are generally considered to be the main causes of the floods. Some underlying factors also deserve serious consideration as possible contributors to the recent floods: change in the base level of the rivers due to local sea level rise and subsidence, inadequate sediment accumulation on flood plains, a possible increase in the watershed area due to seismic and neotectonic activities in the region etc. Thus, without regional cooperation among nations, flood control measures would remain ineffective. Though it is not possible to control the flood disaster totally, by adopting suitable structural and non-structural measures the flood damages can be minimized. Among other solutions to overcome the problem of over flooding in Bangladesh, this paper provides an anticipatory solution by our company, which provides standardized, pre- designed movable houses in high risk, flood prone areas of Bangladesh. In the absence of existing individual infrastructure which can withstand the impact of immediate flooding, these floating and movable houses will replace existing structures to provide portable, homogenous houses which are equipped with basic facilities to tackle problems of rehabilitation, food storage and electricity backup. These houses are targeted at populations in rural and semirural areas which are most affected by floods and other natural disasters. Since this house does not require any high end technology, by employing individuals from rural areas itself, and using their skills in producing these floating houses; our companys services also aim at generating employment in Bangladesh and community mobilization, apart from providing a sustainable solution to the problem of excessive flooding. Each house is anchored to the ground with piers and the concrete pads on which the chassis sits along with the piers are constructed on-site, using local labor and conventional construction techniques. Each house incorporates use of ecofriendly materials such as wood or bamboo with hollow concrete base to provide 5|Page

water resistant, ship-like buoyancy. Based on the Archimedes principle, the volume and weight of the house will be such that it will float once the flood water level rises to a height of 3 feet. The easy availability of these raw materials would also reduce cost of construction. Each house would consist of 4 basic rooms of size 10 * 10 with a common bathroom, thus capable of supporting 4 families at once. This would further reduce the average housing cost per family. The house would also be provided with facilities for storage of dry food, clothing and maximum of 24 hours battery power in post flood conditions, until communication can be established. With 28% of the population lying below the poverty line, the rehabilitation services of our company will provide greater security, through a convenient financing scheme. The average per unit cost of construction is INR 24000/- (Tier 1) and INR 37000/(Tier 2). The above figure is based on estimated price determined through our research. Payable in 40 equal monthly installments of Rs. 500/-. Subsidies and tax benefits from the government will enable our company to sustain the rehabilitation services for an initial gestation period and maintain financial feasibility. Such benefits will also reduce our production cost further reducing the installments for the residents. Our company is likely to fund this large scale project across Bangladesh through grants received from the Asian Development Bank, World Bank and Government of Bangladesh. Further strategic partnerships with micro financing institutions such as the Grameen Bank will be established to provide assistance to the residents for repayment of the installment amount regularly. Hence, though the concept of a floating house coupled with easy financing schemes, we not only aim at providing a sustainable housing solution to the flood affected residents of Bangladesh, but also assist them in getting financial help while increasing their employment and thereby giving a boost to their economy.

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DESCRIPTION OF THE VENTURE

COMPANY DETAILS
Name of the Company: Res Nova Floating Homes Project Name: Bangla-Badi Yojna Nature of Business: Providing a sustainable life support to flood stricken areas in Bangladesh. Name of Existing Partners: Kavya Joshi and Charchit Jain

PROBLEM STATEMENT
INTRODUCTION
Bangladesh is a low-lying, riverine country located in South Asia with a largely marshy jungle coastline of 710 km on the northern littoral of the Bay of Bengal. Formed by a delta plain at the confluence of the Ganges (Padma), Brahmaputra (Jamuna), and Meghna Rivers and their tributaries, Bangladesh's alluvial soil is highly fertile, but highly vulnerable to flood and drought. Natural calamities, such as floods, tropical cyclones, tornadoes, and tidal boresdestructive waves or floods caused by flood tides rushing up estuariesravage the country, particularly the coastal belt, almost every year.

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Annual monsoon flooding results in the loss of human life, damage to property and communication systems, and a shortage of drinking water, which leads to the spread of disease. For example, in 1988 two-thirds of Bangladesh's 64 districts experienced extensive flood damage in the wake of unusually heavy rains that flooded the river systems. Millions were left homeless and without potable water. Half of Dhaka, including the runways at the Shahjalal International Airportan important transit point for disaster relief supplieswas flooded. About 2,000,000 tons of crops were reported destroyed, and relief work was rendered even more challenging than usual because the flood made transportation of any kind exceedingly difficult. There are no precautions against cyclones and tidal bores except giving advance warning and providing safe public buildings where people may take shelter. Adequate infrastructure and air transport facilities that would ease the sufferings of the affected people has not been established.

The problem statement can be divided into natural and man-made causes as below: 1. NATURAL CAUSES:

70% of the total area is less than 1 metre above sea level 10% of the land area is made up of Lakes and Rivers Snowmelt from the Himalayas takes place in late spring & summer Bangladesh experiences heavy monsoon rains, especially over the highlands Tropical storms bring heavy rains and coastal flooding The main cause was the above average & long period of heavy rain which caused all 3 rivers to have their peak flow at the same time.

2. MAN MADE: CONTROLLABLE Poorly maintained embankments (levees) leak & collapse in times of high discharge

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 Inept infrastructure of current houses due to lack of technology and finance. Lack of knowledge of good alternatives for solid, compact houses.

NON-CONTROLLABLE Deforestation in Nepal and the Himalayas increases run off and adds to deposition and flooding downstream Urbanization of the flood plain has increased magnitude & frequency of floods The building of dams in India has increased the problem of sedimentation in Bangladesh Global warming is blamed for sea level rise, increased snow melt & increased rainfall in the region

MISSION STATEMENT

In recent years the frequency of abnormal floods in Bangladesh has increased substantially, causing serious damage to lives and property. The most crucial question that needs to be addressed is: as active members of society what can be done to minimize the impact of these havoc-creating floods or at least provide preventive and curative solutions to diminish the aftermath of floods. Mission statement of RES NOVA Floatable House Ltd can be stated as:

TO PROVIDE A SUSTAINABLE LIFE SUPPORT SYSTEM FOR THE FLOOD-STRICKEN RURAL POPULATION OF BANGLADESH

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FEASIBILITY ANALYSIS

1.

MARKET ANALYSIS

Floods in Bangladesh are a fact of life that its denizens have embraced, and are always prepared to concede their lives, not because of anything but a tacit admission that the current and prevalent infrastructure is not adept at handling such frequent disasters. RES NOVA shall enter the market with a brand new promise at defeating this notion and infusing a fresh sense of confidence that even under such bleak circumstances; man can be a step ahead of nature and ensure survival. Talking of numbers, about 28% of the countrys populace lives below the poverty line, and an even larger percentage resides in the highly vulnerable rural areas. 10 | P a g e

The price of our product (as mentioned subsequently) in comparison with the price of human lives that it would save is next to negligible. Add to that our consumer-friendly financing schemes and our marketing plans, new markets are bound to develop and latent markets shall definitely get animated. Further the biggest opportunity can be accredited to the fact that RES NOVA gets the first mover advantage by implementing this innovative yet sustainable living solution. No other company in Bangladesh has undertaken such a project, hence from the companys point of view; there exists no competition in this regard. These houses are targeted at populations in rural and semi-rural areas which are most affected by floods and other natural disasters. Also, bamboo, which is our primary raw material, is readily available in Bangladesh, and this combined with the skills of the abundant and cheap local human labor, makes it a very economically viable option. The project does not require any import of technology but uses the very basic skills of the existing labor, which puts the production of this house in absolute sync with the technological status quo of Bangladesh. Further, such a labor intensive industry is sure to increase employment manifold and give an incessant boost to the economy.

2. TECHNICAL ANALYSIS

THE CONCEPT:
RES NOVA Floatable Houses aims at arresting the trend of the ever-decreasing price of human life in the rural areas of Bangladesh that has been triggered by regular flooding in the plains of the east- Asian nation. Since, it is not possible to stop natures course of action be it floods, earthquakes or any other natural disaster, therefore, the approach used here is to minimize the possible impact of the disaster. The immediate damage 11 | P a g e

caused by flooding is destruction of houses, food shortage, electricity and communication which further plays havoc with the economy. Hence, our prime priority is to address these immediate concerns by providing the flood affected Bangladeshi residents with economic floatable houses. Though it is not possible to control the flood disaster totally, by adopting suitable structural and non-structural measures the flood damages can be minimized. The product aims at creating a sustainable model that will be, in the long run, able to take on the macabre implications of flooding and facilitate not only flood-combat, but also ensure quicker and smoother restoration in the post-flood scenarios Among other solutions to overcome the problem of over flooding in Bangladesh, this paper provides an anticipatory solution of our company, which provides standardized, pre- designed movable houses in high risk, flood prone areas of Bangladesh. In the absence of existing individual infrastructure which can withstand the impact of immediate flooding, these floating and movable houses will replace existing structures to provide portable, homogenous houses which are equipped with basic facilities to tackle problems of rehabilitation, food storage and electricity backup. Each house is anchored to the ground with piers and the concrete pads on which the chassis sits along with the piers are constructed on-site, using local labor and conventional construction techniques. Each house incorporates use of eco- friendly materials such as wood and bamboo with hollow concrete base to provide water resistant, ship-like buoyancy. Based on the Archimedes principle, the volume and weight of the house will be such that it will float once the flood water level rises to a height of 3 feet. The house would also be provided with facilities for storage of dry food, clothing.

THE STRUCTURE:
Houses would be constructed of bamboo and tin. The base and pillars of the floatable house would be constructed of bamboo and sheets of tin would work as the roof and walls of the house. The bamboo would be strongly tied with the tin sheets with the help of jute ropes and wood. 12 | P a g e

Features of the floatable house include the following: Sturdy, Eco-friendly & light- weight Easy floatability, Anchorage facilities 8 years of sustainability Facility for food storage Availability of gas lamps

There would be two categories of houses- Type I and Type II Type I : One room, 10 * 10, supporting one family Type II : Two rooms, 10 * 10 each, supporting two families

3. FINANCIAL FEASIBILTY AND PLAN

FINANCIAL FEASIBILITY:
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Costs (Per Unit Cost): 1. Bamboo : Rs. 20/stick 2. Tin: Rs. 8/sq. feet 3. Plywood: Rs. 12/sq. feet 4. Labour: Rs. 3,000/wall (for a solitary wall, cost to go down number of walls increases) as

a) Type 1: 325 Bamboo Sticks: Rs. 6500 136 sq. feet Tin: Rs. 1085 Labour + Anchorage + Miscellaneous: Rs. 12,415 Total Cost: Rs. 20,000 Profit: Rs. 5000 (TC-SP) Selling Price: Rs. 25000

b) Type 2: 534 Bamboo Sticks: Rs. 10,680 220 sq. feet Tin: Rs. 1,760 100 sq. feet Ply Wood for separation: Rs. 1,200 Labour + Anchorage + Miscellaneous: Rs. 23,360 Total Cost: Rs. 37,000 Profit: Rs. 8000 (TC-SP) CONVENIENT FINANCING SCHEME:
COMPANY: Initial capital required Rs. 500,000/- through a combination of Debt (bank loans) and equity (personal investment) in the ratio of 60:40 i.e. Rs. 300,000/- from 14 | P a g e

Selling Price: Rs. 45000

Bank and Rs. 200,000/- (Rs. 1 lakh contributed by each partner) by way of personal investment. CUSTOMERS: 1. Type I (1 Room): Price: Rs. 25000/ During harvest season: Down payment = Rs 5000/Monthly installments= Rs. 500/Payback duration: 40 months During lean season: down payment = 2500 Monthly Installments= Rs. 563/Payback duration: 40 months

2. Type 2 (2 Rooms): Price: Rs. 45000/ During Harvest season: Down payment = Rs. 15000/Monthly Installments= Rs. 750/Payback period: 40 months During Lean Season: Down Payment: 7500 Monthly Installments= Rs. 940/Payback Duration: 40 months Subsidies and tax benefits from the government will enable our company to sustain the rehabilitation services for an initial gestation period and maintain

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financial feasibility. Such benefits will also reduce our production cost further reducing the installments for the residents. Our company is likely to fund this large scale project across Bangladesh through grants received from the Asian Development Bank, World Bank and Government of Bangladesh. Further strategic partnerships with micro financing institutions such as the Grameen Bank will be established to provide assistance to the residents for repayment of the installment amount regularly.

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4. ECONOMIC FEASIBILITY

On conducting the Cost benefit Analysis of this project we can conclude that the despite the cost/unit of a floatable house being low the profit margin of the investors is not large. This may put a question the viability of the house. However the below mention factors and strategies can make the venture profitable and viable or the investors. We know that: Profit= Revenue Cost Hence, in order to be economically and commercially viable it is essential for the company to either increase revenue; this can be done by increasing the selling price or the sale of hoses, or decreasing the costs.

The scope of increasing the selling price of the houses is limited. This is because, this project is primarily aimed at people living in rural and semi-rural areas of Bangladesh and hence they would not have the resources to pay exorbitant prices. However, according to the market research conducted by the company, despite low paying capacity of people in Bangladesh, the demand and acceptance of such a product with convenient EMI schemes would be readily accepted by people.

The strategies that should be adopted by the company are:

It is essential for Res Nova to keep its costs (especially labor and miscellaneous expenses since raw materials are already available cheaply in bulk) low Maximizing Sales

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5. LEGAL AND ADMINISTRATIVE ANALYSIS

Form of Organisation: Preferred form of organization is Partnership. Partnership form of organization allows pooling of resources, expertise, skills. A detailed written agreement would be signed between partners in the form of a partnership deed which would contain the details of partners, contribution of capital, age and address of the partners, profit sharing ratio etc. The partnership should also be registered in the office of Registrar. Since it is a service company catering primarily to the rural and semi-rural areas we will, through our efforts, directly be in contact with the people of these areas. We would not need to open an office and hence save costs in respect of electricity, rent etc. Clearances and Approvals: The biggest hurdle would be to convince people especially since our potential customers would be illiterate. The best option for Res Nova is to contact and convince the Panchayat and Local Bodies and obtain the required No Objection Certificate (NOC) from them before commencing business to avoid complexities at a later stage. Also, the project needs to be backed by the central government by obtaining the required clearances from the Home Ministry and approved by International Organizations like Red Cross etc. to obtain greater value. Management: The company is required to hire people with a variety of backgrounds. Technical people who will be responsible for innovation and application of the concept of Floating Homes People responsible to liaison with the local bodies, government etc.

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Marketing and sales specialists People with financial background to assess the companies profitability, accounts management (responsible for discharging salaries of employees, claims etc)

Assessment of Risks
Risks and weaknesses faced by the company and which need to be addressed include the following:

Low level of acceptance and recognition by the people Non performing assets: Since the company offers financing schemes with pay back duration as large as 40 months. Hence, there is always a fear that the people may stop paying the EMI. New Technology: Since the company offers a new technology and hence there is always an uncertainty attached with the success of the venture. Risks Associated with start-ups: There are a large number of risks associated with start ups which include: low growth, bad management, in-efficiency of staff, wrong positioning of product, financial problems etc. Disparity between the results of the market research conducted and the actual reality New entrants: with the success of the company it is logical to expect new companies to enter this market and erode profits. Hence it is required of Res Nova to constantly innovate in order to sustain their market share.

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MARKETING PLAN

Our Company firmly believes, WE DONT SELL DREAMS TO YOU. WE SAFEGUARD THEM FOR YOU. In essence, this is what drives our endeavors to provide quality habilitation services to our customers. Therefore, the objective of our marketing strategy is to create effective outreach through awareness about our companys services.

Marketing Strategies:

Partnering with government institutions (dealing with housing, rural planning, social security etc.) to enable our customer base to have sufficient trust in the services of our brand; promotion and subsequent purchase of our floatable houses by incentivizing customers with government bonds or any other financial encouragements. Partnerships with NGOs such as OXFAM and international organizations such as Red Cross, to spread awareness about disaster management through the medium of local community activation projects or roping in known personalities (such as village panchayat heads, social workers, prominent entertainment personalities etc.) especially in rural and semi-rural areas, would also promote our brand further.

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 Partnerships with well-established FMCG companies would also provide mutual benefits- FMCG companies can provide food products, a major concern in flood prone areas, at subsidized rates or free of cost for certain time duration, on purchase of our floating houses; and our brand can benefit from the association with such credible names in the market. Other Above the Line marketing strategies include: Advertisements in local newspapers Conducting seminars or panchayats in the rural areas to spread awareness among people about this product.

Therefore, our holistic widespread approach of consumer- centric strategies will ensure us competitive marketing, advertising and branding success with twin results- community welfare and provision of alternative housing facilities in Bangladesh.

COMPETITIVE ADVANTAGE
Our company is providing, intrinsically a unique and adoptive approach to withstand the pressures of a flood by using indigenous knowledge, technology and resources. Also, our company has pioneered the first economic model of such floatable houses- A First Mover advantage, keeping in perspective the demographics of Bangladesh and our consumer base. Essentially, the first mover advantage that we are likely to receive coupled with our strategy to efficiently utilize the natural resource base of the local areas, has enabled us to achieve costeffectiveness without compromising on provision of quality amenities. This will be achieved by sourcing of raw materials (i.e. Bamboo) from villages itself; and since the construction of these houses requires use of technology in sync with the current technology readily available in Bangladesh, we will be able to keep our fixed costs under control. Moreover, construction being largely a labor intensive activity, we will be able to provide employment to local residents itself, and achieve our goal of keep our cost structure constant.

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SCALABILITY AND SUSTAINABILITY (FUTURE PLANS)

Once the uniqueness of our services combined with the expected stability of our brand has been well established in Bangladesh, we intend to widen and expand the scope our services, while still keeping our core architectural principles intact. We seek expansion in the form of floating dispensaries, grocery or kiryana shops, and even floating classrooms. Expansion in foreign markets such as other flood prone countries of the AsiaPacific region such as the Philippines, Thailand, and Malaysia etc. is also on the cards within the next 5 to 7 years. With raw material prices expected to only increase in the long run and alternative technology likely to advance further, we propose to further incorporate eco-friendly technology such as solar panels to provide continuous power backup (for more than 24 hours) in flood like conditions; solar heaters etc.

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Ultimately, sustainability along with acclimatization to changing environmental conditions is what our company aims to provide through our floating houses model.

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THANK YOU

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