1.1 Feasibility Study-
This feasibility study is to analyze the opportunities available for AAC Block plant in Kolhapur region. The research started off with a literature survey and interactions with local real estate builders. The growth of the construction industry in the in Kolhapur region analyzed and has been presented in the report. Distinguished professionals from the construction industry were approached, to know their opinion and suggestions about the study and its scope. Subsequently, depth interviews were conducted with experts from the construction industry. This comprises the qualitative study such as Delphi method. Inputs from the industry leaders and accomplished academicians helped to form a fair sketch of the construction industry and its prospects in Kolhapur region.
The study also focused on the requirements of the industry, its expectations from the market such as building material which is readily available in market . With the objective of listening to according to experts Quality & Quantity study was conducted. Based on the inputs received from the experts, a questionnaire was designed and an face to face survey was initiated. Since the main focus of the study was an investment decision and feasibility of plant in long term. All members from construction industry were approached for the survey. The study findings show the various factors which can affect a compans investment decision. It also tried to capture the industry perception about real estate growth of Kolhapur region.
1.2 Market for Autoclaved aerated concrete blocks
Fly ash is easily available with satisfactory quality. Users are of the opinion that strength, durability, finish, availability & price is the important ingredients in blocks. Willingness is observed among traditional brick users regarding use of fly ash based products for the projects. Technical assistance & product awareness are considered important for promoting the shift in the brick users. Increased awareness about the Environmental & policies from government are considered key elements to increase utilization of fly ash bricks & blocks. The current price of fly ash blocks are in the same range of cement blocks & bricks. But comparatively fly ash blocks are having more strength, fire resistance, earthquake resistance, light weight; lesser breakage .Since 60% of country electricity based on coal power station, the country has a huge stock of fly ash amounting to 60 million tons annually. Despite the efforts the present scenario is not too encouraging as only 5% of country total ash has been consumed in different sectors. With the rise in population and increase in constructional activities &considering the improvement in the standard of living the demand for building bricks is increasing.
1.3 Problem statement-
In today era because of IT boom tier-2 cities are in more focus due to rise in real estate. We are looking towards the Kolhapur as One of the well known and upcoming IT destination. Due to low ticket size of real estate available in Kolhapur, more projects are launched in city. Due to sustainable and environmentally favorable structures. AAC block is recent trend in real estate market but due to non availability of such blocks in Kolhapur builders tend to buy AAC block from Bhigwan plant resulting in high price of the product.
To overcome high price of AAC block my research is focused on checking feasibility of AAC plant in Kolhapur region itself.
1.4Objective 1.To develop a feasibility report for a product such as AAC block in a Kolhapur region by analyzing the market potential for the product
2. To check the business potential by applying Market research and various financial Tools
3. To Prepare a Proposal for financial assistance for the project.
Review of Literature
W Mackenzie  et al in his paper reported that in his paper The Use and Abuse of Feasibility Studies the feasibility study process demonstrates that the technical issues have been satisfactorily addressed, but also the broader commercial, economic and social issues have been considered in the development of a comprehensive business plan, which includes an assessment of the risk-reward profile of the proposed development.
This research paper will present a framework for conducting of feasibility studies and provide guidance. In the authors experience, feasibility studies: are regularly portrayed as being much more comprehensive and accurate& they often do not fit for their intended purpose, and they tend to focus on technical business and project delivery issues. This paper is set out to present:
1. A frame work for improvement in the study process.
2. A guideline for the conducting of feasibility studies; and guidance on proposed project evaluations.
Bayu Aditya et al  in his paper aims to know the feasibility of project investment by calculating the risk factors and treatment Risk probability matrix is used for the risk priority, which is then continued with financial analysis for the feasibility study. The study shows investment value will increase when treatment is done on risk. Feasibility study analysis done with calculating risk factors cause a decrease in investment feasibility parameters and if the treatment is done against the risk the parameter increases. The economic factors also have high sensitivity towards investment feasibility which are loan interest rate and increment of sales.etc. Meanwhile, the factors that have low sensitivity are inflation changes and equity percentage
Khalied Hyari etal  in his paper states that Feasibility studies are normally conducted to justify investment done in infrastructure projects. Despite the vital importance of feasibility studies in supporting decisions related to public spending on infrastructure projects, there are no attempts made to evaluate such studies after construction of facilities. An analysis of a previous feasibility study for a highway construction project is presented in this paper with an emphasis on the estimate and the forecast presented in the study in order to compare the expected benefits from the project against expected cost..
The forecasted numbers are compared with actual data collected during the operation phase & about the usage of the facility. The comparison reveals a huge difference between estimated numbers and actual numbers. Feasibility study calculations are also repeated using the actual data to examine the impact of forecasting errors on the outcome of the feasibility study. Based on the lessons learned from the analyzed case study, recommendations are presented to improve feasibility studies for infrastructure projects. Decision makers are advised to take the outcomes of feasibility studies for infrastructure projects with extreme caution as some studies may provide misleading input.
Ze Wu Fu, San Hai Zeng reported that through the mix ratio optimization test, the appropriate autoclaved aerated concrete block may be prepared for the production demand,. Furthermore, the research throws a light on the property of autoclaved aerated concrete block for mix ratio, the strength of AAC block decrease with the increase of total porosity among the pore diameter from 0.5mm to 1.5mm.
He also presents that the autoclaved aerated concrete block possess capability of absorbing water, so the volume water absorption rate increased quickly at first and then went down furiously, which could make the shrinkage of the augment because of the decrease of its water absorption rate.
Andress stumm in his paper cement and sulphate free autoclaved aerated concrete reported that how the sulphate content in AAC concrete affects its strength. He tries to conduct an experiment with different mixture ratio with cement and sulphate. Technological solutions and methods were found to produce cement and sulphate free in AAC with low bulk densities in the mould with the size 5.4 cum. it was show that cement free AAC leads to fewer transportation damages to less brittle surfaces.
Soofia Tahira illustrated in this paper how a hybrid wall construction can take advantage of the various desirable properties of different materials in order to improve its over-all performance. Combining the high thermal insulation property of straw bales with the weather proofing property of AAC blocks and the humidity regulating property of mud plaster in hybrid wall constructions can help us to produce buildings that are thermally comfortable, cheaper to build and easier to maintain. However, due to the considerable wall thickness such as construction would be more suitable for rural areas.
Aim of this study was to compare the thermal performance of three buildings which are located at the Kerkenes Eco-center in Yozgat, Turkey. The first of these was constructed with strawbales rendered with mud plaster; the second with aerated autoclaved concrete (AAC) blocks and cement plaster; and the third with straw bales rendered with mud plaster inside and with a layer of thin AAC blocks on the outside.
Chavan P.Gillustrated in his paper manufacturing of AAC Blocks by using solid waste. Solid wastes are being generated as bi-product which create major environmental problem as well as they occupy a large land for disposal. To overcome from this major problem solid waste is used in the production of construction material such as AAC blocks.A paper is based on the reuse of solid waste for manufacturing of blocks in which various types of admixtures are used such as glass fiber to increase its strength.
Vikas P. Jadhao reported that seismic performance of AAC blocks & conventional bricks infill panel in RC frames are compared using SAP2000. The behavior of in-filled reinforced concrete (R/C) frames has been studied experimentally and analytically. The study of the effect of types of infill materials used (lightweight versus conventional brick masonry) on the behavior of in-filled R/C frames is however still limited. Study has concluded that the R/C frame in-filled with AAC blocks exhibited better performance under lateral loads than that in-filled with conventional clay bricks. In the present paper an investigation has been made to study the behavior of RC frames with AAC block and a conventional clay bricks infill when subjected to seismic loads.
In this study the influence of masonry infill on the seismic response of multi-storied building under seismic loading is illustrated through typical examples. It has been found that the Indian standard code provisions do not provide any guidelines for the analysis and design of RC frames with infill panels. It has been also found that the presence of infill reduces the displacement capacity of structure and modifies the structural force by distributing it significantly. The best shared experienced by models with AAC blocks was significantly smaller than with conventional clay bricks which results in reduction in member forces which leading to reduction in required amount of reinforcement to resist member forces. So economy in construction can be achieved by using AAC blocks instead of conventional clay bricks. The performance of AAC block infill was superior to that of Conventional brick infill in RC frame. Therefore, the ALC block material can basically be used to replace conventional bricks as infill material for RC frames built in the earthquake prone region. If we compare the performance of frame with full infill as conventional clay bricks and AAC blocks were significantly superior to that of bare frame.
Wenyi Hu en all  in his paper presents the results of an investigation on the strength properties of autoclaved cellular concrete (ACC) blocks, a building material that can contain up to 70% w/w of electric utility fly ash. The scope of this investigation covers three phases: (I) a brief literature review; (2) a selection of optimum strength testing methods suitable for ACC materials; and (3) a determination of physical properties of ACC made with U.S. electric utility fly ash, and comparison of such properties to European ACC materials made with sand as the silica source. Optimum laboratory testing methods were selected based on a comprehensive literature search that included American, European, and Chinese standards. The properties examined had compressive, tensile, and flexural strengths. Results showed that block recipe and density influence the compressive, tensile, and flexural strength values. The investigation indicated that the compressive strength of the blocks increases with dry weight density and decreases as their moisture content increases
J. D. Bapat1 en all .in his research is to study the engineering properties of ACC blocks made from U.S. fly ash and to compare such results, to the extent possible, with published information for conventional sand-based materials as made in Europe. The engineering properties include density, compressive strength, tensile strength, and flexural strength A laboratory testing program on strength properties of ACC. The lagoon ash was successfully used, in high volumes, to make concrete with low strength. The development of early strength 1,3 days was found low. The mixtures were workable without using super plasticizer or air-entraining age.
Naiqian, F., “Properties of Zeolite as an Air-Entraining Agent in Cellular Concrete,” Cement, Concrete, and Aggregates This paper describes a new type of lightweight concrete using zeolite as an air-entraining agent. The cement paste expands in the presence of the zeolite powder, and after setting and hardening a cellular concrete is formed. The compressive strength of concrete after standard curing for 28 days is 4.5 to 5.5 MPa, and the density is about 750 to 850 kg/m 3. The zeolite in concrete can also react with the cement paste during its hydration, and therefore the strength of concrete can increase further.
Matthys, J. H. and Nelson, R. L. “Structural Properties of Autoclaved Aerated Concrete Masonry,” Masonry: Materials, Testing, and Applications are reported that conducted a series of tests to determine some of the basic structural properties of this product. This paper presents the findings of those investigations events the findings of those investigations
Mathey, R. G. and Rossiter, W.  Jr., “A Summary of the Manufacture, Uses, and Properties of Autoclaved Aerated Concrete,” In this paper many properties are reviewed including density, fire resistance, moisture expansion and shrinkage, strength, structure, and thermal conductivity. With regard to energy considerations, the review points out that, for energy-efficient applications under severe climatic conditions, the autoclaved aerated concrete unit alone may be insufficient to provide the targeted minimum value of thermal resistance
This chapter updates on various sections and stresses new applications of the material.
Cellular concrete has a variety of unique properties that makes it suitable for a large number of specialized applications. The ability to introduce a large volume of macroscopic, discrete air cells uniformly distributed throughout the matrix is the key factor that provides cellular concrete with its distinctive properties. Whenever a lightweight, inert, and cost-effective material is desired, it is possible that a specific density and mixture of cellular concrete could be designed for the application.
Experimental Research on Properties of High-Strength Foamed Concrete by Chen Bing, Ph.D1; Wu Zhen; and Liu Ning, PhD reported aim of this study is to develop structural foamed concretes by using silica fume, fly ash, and polypropylene fiber. The study presents the use of fly ash for fully replacing sand to produce foamed concrete. Fine silica fume and polypropylene (PP) fiber were used to improve properties of foamed concrete. Lightweight foamed concretes with a wide range of concrete densities (8001500 kg=m3) were studied mainly for compressive strength, splitting tensile strength, and drying shrinkage. The results indicate that foamed concrete with a density of 8001; 500 kg=m3 and compressive strength of 1050 MPa can be made by using silica fume and PP fiber. Fine silica fume and PP fiber greatly improved the compressive strength of foamed concrete. In addition, adding PP fiber significantly improved the splitting tensile strength and drying shrinkage resistance.
Rob Holland  says Break-even analysis can be very helpful in the evaluation of a new venture. In most instances, success takes time. Many new enterprises and products actually operate at a loss (at a point below break-even) in the early stages of development. Knowing the price or volume necessary to break-even is critical to evaluating the time-frame in which losses are permissible. The break-even is also an excellent benchmark by which a company short-term goal s can be measured. Break-even does the cost analysis It also keeps a focus on the connection between production and marketing.
Tetyana Kuzhda  in her article begins with a formulation for predictive learning called multiple regression model. Theoretical approach on construction of the regression models is described. The key information of the article is the mathematical formulation for the forecast linear equation that estimates the multiple regression models. Calculation the quantitative value of dependent variable forecast under influence of independent variables is explained. This paper presents the retail sales forecasting with multiple model estimation. One of the most important decisions a retailer can make with information obtained by the multiple regressions. Recently, a changing retail environment is causing by an expected consumer income and advertising costs. Checking model on the goodness of fit and statistical significance are explored in the article. Finally, the quantitative value of retail sales forecast based on multiple regression models is calculated.
Kynda R. Curtis stated in his paper stated that Market research is often conducted to address one or more of the marketing (product, price, place, and promotion). The purpose of market research should be clearly defined prior to conducting the research. This means the problem that needs to be solved and the information necessary to find the solution should be outlined before undertaking any research .In the case of food and agricultural producers seeking to identify customers for their products.
Matthew R. Hallowell  et al gives the following are the guidance from his paper 1) understand the merits, appropriate application, and appropriate procedure of the traditional Delphi process 2) identify and qualify potential expert panelists according to objective guidelines; 3) select the appropriate parameters of the study such as the number of panelists, number of rounds, type of feedback, and measure of consensus; 4)identify potential biases that may negatively impact the quality of the results; 5) appropriately structure the surveys and conduct the process in such a way that bias is minimized or eliminated
According to Arash Habibi et al Delphi technique can be used for qualitative research that is exploratory and identifying the nature and fundamental elements of a phenomenon is a basis for study. It is a structured process for collecting data during the successive rounds and group consensus. This study aimed to present a comprehensive theoretical framework for the application of Delphi technique in qualitative research. In this theoretical framework, the application and consensus principles of Delphi technique in qualitative research were clearly explained in this paper. it also give the idea about how to proceed with determining the level of Consensus by using Kendall?? coefficient of concordance (Kendall W).
Husam D. Al-Jawhar and Sedki E. Rezouki in his study, a Delphi method adopted to develop selection criteria in the construction industry in Iraq. Three Delphi rounds were conducted for this study. A set of exclusive criteria for the selection of the procurement system was identified by using the first two rounds of the Delphi. The last round of the Delphi was to derive a statistically significant consensus on the weighting of the utility factors The aim of round three and four, if required is to measure the degrees of consistency between experts and to reject the criteria that do not get the level of significant.
Gene Rowea and George Wrightb systematically reviews empirical studies looking at the effectiveness of the Delphi technique, and provides a critique . It is concluded that a different focus of research is required to answer questions on Delphi effectiveness, focusing on an analysis of the process of judgment change within nominal groups. This paper reviews research conducted on the Delphi technique. In general, accuracy tends to increase over Delphi rounds, and hence tends to be greater than in comparative staticized groups, while Delphi panels also tend to be more accurate than unstructured interacting groups. The technique has shown no clear advantages over other structured procedures.
Yu-Fen Chen et al aimed to investigate both the motives of insurance companies that engage in campus exhibitions and the structural relationships between those motives and the training of exhibition staff. The study involved a survey comprising two sets of questionnaires concerning exhibitors”?? motives and training requirements when undertaking campus exhibitions and Yu-Fen Chen et al also have believed that research has shown that three rounds are adequate for the Delphi technique
3.0 Research methodology
Research always starts with a question. is question its purpose is to answer this question by applying research tool.
Feasibility analysis of the this project with regard to
1. Market analysis.
2. Technical analysis
3. Financial analysis
Feasibility literally means whether the proposed idea will work or not whether there exists a sizeable market and from where to get the funding, and from where the necessary technical know-how to convert the idea into a tangible product may be available? In other words, feasibility study involves an examination of the operations like finance other marketing aspects of project (Before the venture comes into existence) basis. Present hereunder is a brief outline of the issues impinging upon the various aspects of the feasibility of the proposed project.
3.1 Method of collecting data
3.1.1 Primary data:
For primary data collection, the questions which are given in questionnaires are informally discussed with the materials department of the company. Questionnaire is made contains some questions related to the material aspects. Questionnaire is prepared only to take the analysis for the demand for AAC block
3.1.2 Secondary data:
It is collected through the websites, journal, books, previous research, and municipal records
3.2 Market analysis-A market is place or is the arena for interaction among buyers& sellers is primarily concerned with the aggregate demand of the proposed product/service in future and the market share expected to be captured. Success of the proposed plant is on the continuing support of from the customers. It is very difficult to judge the market for one”??s product. It will have to carefully select the market according to some criteria such as capacity of the potential customers etc. It is a study of knowing who comprise your customers.
– Consumption trends.
– Past and present supply position.
– Production and constraints
– Imports and Exports
– Cost structure
– Elasticity of demand
– Consumer behavior and other requirements
– Administrative, technical and legal constraints impinging on the marketing of the product
3.3 Market and demand analysis is done by using following method
1. Demand forecast methods
2. Delphi method
3. SWOT analysis
3.4 Technical Analysis- In this project technical parameter is investigated by using studying the manufacturing process of AAC block plant & product Mix, various quotation from material suppliers, by studying the development plan of Kolhapur city,.
3.5 Financial Analysis The objective of financial analysis is to ascertain whether the proposed project will be financially viable in the sense of being able to meet the burden of servicing debt and whether the proposed project will satisfy the expectations of those who are providing the capital to project such as financial institutions like banks. by calculating the working capital , analyzing the profit ratios financial feasibility of project calculated. Other method studied such as IRR method, Payback method for the proposed plant.
Demand analysis by using forecasting methods for AAC block
4.1 Market and demand analysis- Basic objective of market analysis is to estimate the potential size of the market the proposed product or service is likely to capture once it is launched or initiated
Market and Demand analysis depend on-
1. Pattern of consumption.
2. Income and price elasticity based on demand.
3. Composition of market.
4. Nature of competition.
5. Availability of substitutes.
6. Reach of distribution channels
It is necessary for understanding relationship between product and the market. It focuses on identification of type & nature of resources required for manufacture of the product/service. It also covers the potential reserve stock of the resource required, identification of industries located in the area also using the same resource, their growth pattern, productivity pattern, future plans etc
Market survey is conducted to ascertain the following
Total demand -rate and growth.
Different segments demand in of the market.
Income and price.
Motives of buying.
Purchasing plans and intentions.
Satisfaction levels with existing product range.
Attitudes towards various products.
Steps in market survey
1. Define Target Population.
2. Select sampling scheme and sampling size.
3. Development of questionnaire.
4. Analysis of response obtained from field survey
4.2 Market Research and survey Method for analyzing the demand-
Market research is follows the ”?4 Ps”? of marketing (product, price, place, and promotion). The purpose of market research should be clearly defined problem that needs to be solved and the information collected must be used to find the solution & it should be outlined before undertaking any research. For the producers seeking to identify the customers for their products, the following questions need to be answered:
Who are the potential customers?
What are their demographic characteristics attitudes, or concerns?
What products appeal to customers?
When are customers purchasing products?
How potential customers purchase similar product in market? How should products be distributed to reach these customers?
Which promotional channels suitable to reach these customers?
Surveys are perhaps the most common method of primary data collection. There are a variety of different survey collection methods, such as mail surveys, telephone surveys, face-to-face interviews, Internet surveys, and dot surveys. Formal surveys methods may also include observation and informal interviews. The choice of which survey method to use depends on many factors, for example the surveyor desires, the time based data collection, Target population to be surveyed. It is important to note that with all of these data collection methods, the collected data is hypothetical in nature. Means that an individual may say that he or she is willing to pay a certain price for something in the market which they value a certain product.
4.2.2 In-person interviews -in-person interview can be an effective way to get completed surveys, and the responses can be analyzed immediately. On the negative side, in-person interviews are costly to conduct, and some individuals may not be willing to reveal some information about themselves to a stranger. However, another potential benefit is that a very specific population can be targeted using in-person interviews.
4.3 Sales Forecasting methods
The forecasting of sales is one of the most important information tools for every management. In a company lot of units use the sales forecast for example top management, finance dept, production dept, purchasing and marketing units. Top management allocates resources among functional areas by using the sales forecast. The companys finance unit uses the sales forecasting to decide on capital requirement, to project cash flows for the plant, and to establish budgets. Production department uses it to decide the companies to target production and to control inventories. Human resource units use the sales forecasting to plan recruitment .Purchasing unit uses it to plan materials required for production Marketing units of firms find sales forecasting very useful for to plan marketing and sales programs .Mostly decision makers use one or another forecasting methods and their decision will depend on technical knowledge and available previous sales data of product.
4.3.1 Quantitative Forecasting Method
22.214.171.124 Moving average Method
Moving average is a quite simple method of forecasting, it considers the previous years sales data to be the forecast for the next year. Moving averages are considered to be the easiest method of quantitative forecasting. To develop this particular method of forecasting is essentially a smoothing model needed, which makes forecasts more suitable and accurate. The basic behind the use of moving averages is to take data averages from x periods in order to forecast demand for the upcoming period. The formula for calculating a moving average is as follows
2 Exponential smoothing
Exponential smoothing is a type of moving average method. Instead of weighing all observations equally, exponential smoothing method weighs the most recent observations heaviest, for good reason. The most recent observations contain the most information about what is likely to happen in the future, and they should be given more weight. The formula that the exponential smoothing approach is based on can be expressed
Given that, t is time, Ft is the forecast at time t, and ‘? is a smoothing constant (a value between 0.0 and 1.0 inclusive), and Ft, where Dt denotes the actual observation at time t,
From above equation it can be seen that the new forecast, Ft+1, is equal to the previous forecast, Ft, plus an adjustmentFt )). Specifically, the forecast for period t+1 is obtained
by adjusting the forecast in period t by a fraction of the forecast error. For a time series with small variability a larger value of alpha is preferred so the forecast can quickly adjust when forecasting errors due occur and therefore allow the model to react faster to changing conditions. Overall, a it should choose an alpha value that minimizes the error of the model
Linear Regression Method
A regression which includes both cross sectional and time series data. Regression method are used to explain differences across observations in a single period. if there are not enough observations in a single Period to generate reliable results we can add samples according to time period.regression methods may handle models in which the dependent variable is continuous, discrete, limited, or based on count. Linear regression is a method of forecasting that is used by firms operating in a stable environment and which have access to historical data. Regression analysis is used to test the relationship between two or more variables. More specifically, linear regression is designed to estimate the conditional expected value of the variable or interest Y i.e dependent variable and variables X i.e the independent variable. The goal of linear regression is to find the best straight line that will predict X and Y when the values of X and Y are known. One important parameter in simple linear regression is the slope of the line.. If the slope is negative, the line slopes downward from left to right. Conversely, if the line is positive the line will slope upward from left to right. Simple linear regression analysis is relatively easy to calculate using Microsoft Excel”??s Data Analysis Package.
4 MAD (MEAN ABSOLUTE DEVIATION) – For forecasting error measures used to judge forecasting performance are mean absolute deviation (MAD) a lower absolute value is preferred as compare to higher absolute value of MAD. It is the difference between the actual sales data and the forecasted sales value, absolute values are calculated over a period of time, and the mean is derived from these absolute differences.
Overall, three forecasting models have been presented: first one moving average method, second is exponential smoothing, and last one is linear regression. Simply comparing MAD across all three models given below in table, it can concluded that the linear regression model tend to predict sales with more accuracy. In addition, the rules of thumb regarding regression performance all indicate the regression model is performing well
5 Qualitative Methods
Qualitative Forecasts consider the range of factors which influence the demand of the product. Qualitative methods of forecasting are: a. SWOT Analysis b. Delphi technique. It is discussed in Next chapters
5.0 Delphi Method-
The Delphi technique involves an iterative process in which expert opinions are processed and used as a feedback for further refinement of opinions generated in the earlier round. The Delphi approach typically elicits a high response rate because the respondent receives almost immediate feedback. If the topic area is perceived to be of high importance, high participation is also likely. The Delphi technique is not intended to replace or substitute for statistical and model-based techniques or human judgment, but it is intended for use where objective decisions are not possible in the absence of historic, economical, or technical data pertinent to the subject. The Delphi technique captures decisions related to a specific issue made by a group having diverse experience and interest. In this research, the Delphi group is represented by design, construction experts and people having experience in different expertise such as reality developers, architect, engineers as well as representatives from the construction industry.
Delphi analysis allows synthesis of the collective opinion of experts when the issues are more of strategic nature and difficult to numerically quantify. The Delphi process consisted of four steps toward group decision-making. The overall process involved the following steps:
1) Assembling the Delphi group,
2) Developing and administrating the questionnaire,
3) Processing the responses,
4) Providing controlled feedback to the participating experts to review their judgment until convergence is achieved, and finally
5) Processing and summarizing the outcomes of the survey. A flow chart of the Delphi process adopted for the research is presented in Figure.
The first step toward Delphi decision-making is formation of the expert group. While the Delphi method doesnt have a specific requirement for the number of participants, for a successful implementation of the method, it is critical to have an appropriate selection of Experts group. The participants should be experts in the field that is being analyzed. The key to a successful Delphi study lies in the selection of participants. Since the results of a Delphi depend on the knowledge and cooperation of the panelists, it is essential to include persons who are likely to contribute valuable ideas.
5.2 selection of expert panel
One of the vital considerations when carrying out Delphi study is to identify and select potential members to constitute the panel of experts. The selection of members or panelists is important because the validity of the study is directly related to this selection process. In this Delphi survey, the researchers attempted to identify panelists who meet all the following selection criteria:
(1) Having sufficient working experience or knowledge in the building and construction field,
(2) Working in relevant organizations in the building industry
5.3 determining the level of consensus
One of the more difficult aspects of the Delphi process is the appropriate method of measuring consensus. While it is common to use variance as a measure of consensus, guidance that describes the level of variance that represents consensus is not available in literature.
Kendalls coefficient of concordance W, represents criteria level of consensus between the participants was calculated along with the mean rank and standard deviation. Kendall”?s coefficient of concordance ranges from 0 to 1, indicating the degree of consensus reached by the panel (strong consensus for W > 0.7; moderate consensus for W = 0.5; and weak consensus for W < 0.3). This coefficient of concordance is also a scale for determining the level of coordination and agreement between several ranks of n phenomenon. All the experts have sufficient experience and expertise in building projects.
The sufficient working experience, senior job positions and relevant organizations of the selected experts ensure the validity of this Delphi research
5.4 The Questionnaires in each round are as follows:
Questionnaire 1: Mention at least five most important parameters of AAC block demand in construction market of Kolhapur region.
Questionnaire2: Please give ratings to the according to most important parameters require boosting or sustained the AAC block demand.
Questionnaire3: Please re-rate the in the light of the results from round 2
5.4.1 ROUND 1: LISTING THE FIVE IMPORTANT PARAMETERS REQUIRED FOR SUSTAINED DEMAND FOR AAC BLOCK IN KOLHAPUR REGION
The first round of the Delphi questionnaire survey was conducted as the exploration process and was of crucial importance. Every expert was required to list at least five important parameters required for Sustained demand for AAC block in Kolhapur region for walling material and their different types for their building projects. The findings in the literature review were also provided for their reference. All the experts returned their responses. After the completion of first round survey, parameters suggested by the experts were carefully analyzed and a list of indicators was formed. Finally, 7 demand indicators were consolidated, which is shown in table 2.Only the measures that have been selected/proposed by 30% of experts or above will be selected for further consideration. Which include 1) New Project Launching and real estate growth in Kolhapur region 2) Promotion and Advertisement cost 3) Location of the plant near by area.
5.4.2 Round-2Delphi questionnaire survey: ratings obtained from the experts
In qualitative research, which aims to determine the importance or screening of items, Likert scale can be used to gather the experts opinions. After gathering the opinions, the mean score is calculated, if there is no consensus, the experts will be provided with the calculated mean as a controlled feedback with questionnaire. The purpose of the second round Delphi survey was to begin the process of building the consensus among the panelists regarding the importance of each parameter. A list of three parameters with their explanations and experts-frequency was provided to experts for their reference. Finally 10 experts returned their responses. At this stage, a 5-point Likert rating scale was used, which ranges from 1=not important, 2=somewhat important, 3=important, 4=very important, and 5=extremely important or essential. In this research, the mean score of 3.0 was adopted as a cut-off point.Only the Parameter regarded as IMPORTANT to demand of AAC Block remains for the re-evaluation in round 3. Table no.3 shows the results of round 2 of the Delphi questionnaire survey.
Ri=total rank factor
m= number of rank sets or judges
n= number of ranked factors or phenomenon
For given data Number (n) =3 and calculated Kendall Coefficient of Concordance (W) =0.75
All the indicators pass the cut-off point. A preliminary series of weighted demand indicators was developed based on the mean ratings advocated by the 10 experts. The weighting for each of the
W CMi represents the importance weighting of a particular top three demand indicators.
M CMi represents the mean rating of a particular top three demand indicators.
M CMi represents the summation of mean ratings of the top three demand indicators
in order to obtain a measure of consistency, the Kendall Coefficient of Concordance (W) was calculated by using formula. The Kendall coefficient of concordance indicates the current degree of agreement among the panel members on the ordered list by taking into account the variations between the rankings. It can be concluded that a significant amount of agreement among the respondents has been reached
5.4.3 Round 3 Delphi questionnaire: re-assessing the ratings
In the round 3 Delphi survey, the experts were asked to re-assess their ratings in the light of the consolidated results obtained in round 2. Finally, 10 experts retuned the questionnaire. Most experts had reconsidered their ratings and had made adjustments to their ratings. However, Table 3 shows that the rankings of all the variables remain unchanged when compared with the consolidated results in Round 2 .The weighting for each of the top three demand indicators was again computed by using the following equation:
Number (n) =3 Kendalls Coefficient of Concordance (W) =0.79.
In order to compile a composite indicator to evaluate the demand of AAC block in Kolhapur region
A equation for demand (Y) of AAC block is developed which can be represented by the following formula.
Y=0.39 X (Promotion and Advertisement cost) + 0.34 X (New Project Launching) +0.26 X( Location of the plant near by area)
5.5 identified indicators of demand of aac block in kolhapur region
5.5.1 promotion and advertisement cost-
For AAC blocks promotion is one of the elements of marketing and advertisement of product. Promotion decisions are taken simultaneously with other decisions like finding target customers, budgeting for promotion and advertisment, distribution etc. Promotion is one of the variables through which information regarding products or services is being communicated to customers to change their attitude and behavior. Methods of promotion include advertising direct site selling, publicity, sales promotion via exhibition. It will directly influence the buyers to buy products and increase sales in Kolhapur region.
As per survey findings most of the end users are only reality developers and most of the end users prefer the conventional brick over the AAC block are unknown because of lack of knowledge and awareness in market about the product. Increased in advertisement and promotion leads to spared the awareness in the market about the product.
5.5.2 new project launching in kolhapur region
It is one of the key and important parameter for the increase in the demand of AAC blocks in Kolhapur region. More the projects are coming in market more the demand for walling material such as AAC blocks for its advantage such as faster rate of construction and its other advantages .developers are prefer the AAC blocks because of its light weight as compare to conventional bricks.
Low-priced real estate is a major contributory factor for the gravitation of IT companies towards Kolhapur. The same needs to be promoted by Local body KMC through policy initiatives such as –land to be offered with suitable fiscal incentives and subsidy, tax exemptions, etc. KMC will also have another role to play — providing proper quality road network to the IT zone and within the city, developing an efficient local transport system, etc. Kolhapur an ideal Destination-Kolhapur has a distinct culture developed as a result of rich history and its quality of people who Have been front-runners in various fields.
5.5.3 location of the plant near by area-
Currently the main supply of AAC block is done to Kolhapur by Builtech, Ecolight and Xtralite. Builtech has its plant in Bhigwan (250 km Away), Ecolight has its plant in Nasik (500 km away) and Xtralite has its plant in wada (500 km away) Kolhapur has an location advantage because main raw material fly ash is available in cheap rate at Jindal power plant located near Rantnagiri (155 Km from Kolhapur). Setting up plant in Kolhapur can fulfill the need of AAC block demand of nearby cities such as Sangli, Satara, Karad & Belgaon
Technical Feasibility of AAC blocks
6.0Technical Feasibility- The key raw material ingredients of the AAC building blocks are fly ash, lime, gypsum, cement, and aluminum .These materials are available in the form of wastes, by-products from industrial activities and are available in adequate quantities in market. Technical feasibility aim the following
1. Manufacturing process, resource and technology to be adopted.
2. Technical Arrangements.
3. Materials and Inputs.
4. Product Mix.
5. Plant Capacity.
6. Location and Site.
7. Machineries and Equipments.
8. Structures and Civil Works
Main ingredients included are cement, water, flyash, quicklime, gypsum and aluminum powder. The block strength is achieved by cement and instant curing mechanisms like Autoclaving in which Gypsum acts as long term strength. The chemical reaction takes place due to the aluminum powder paste and other raw materials which creates pores and gives the blocks the structure. These pores constitute the major part of the block due to which they become lightweight and has the good insulating property. The finished product is lighter as compared to conventional bricks. The specific gravity of the block is in the range of 0.6 to 0.65. Use of these blocks reduces the dead load of the building structure, which helps us reduce the steel requirements in the range of 10 to 20 percent.
This plant uses flyash as the major raw material which contributes to around 70 percent of the composition of the final product i.e AAC blocks.
6.2 Indian Standard for AAC blocks
Bureau of Indian Standard Code no- 2185(Part-3):1984 discusses in details regarding the AAC blocks specifications in India. The prime requirements for AAC blocks (of ISI standards) in India as per the above said code are as follows.
3 Manufacturing process-Manufacturing process of AAC has many similarities to producing precast concrete. This process contains 5 main steps which are as follows.
1) Mixing of raw materials.
2) Addition of expansion agent.
3) Pre curing, cutting.
4) Curing process with autoclave.
5) Packing and transporting
6.3.1 Mixing of Raw Materials-The fly ash is then transferred to the slurry by a wheel loader to prepare the required concentration of fly ash and water slurry. This mixture is then sent to slurry storing tank and used as required. Then quicklime powder will be sent into the powdered silo for storage with the help of bucket elevator, after coming into the factory. The gypsum in the storage shed will be added into slurry pond according to the required proportion, while preparing the slurry.
The cement reaches the factory by a special truck which is capable of pumping the cement in the respective silo. Fly ash is then measured with electronic scale in the building used for batching by a pump. This scaled slurry is poured into a large mixer. Lime and cement will be sent to the batching building by single screw conveyer at the bottom of their silos to be measured by a electronic scale. After measuring at the required quantity, will be sent to casting mixer by screw conveyer.
6.3.2Addition of expansion agent
The aluminum powder is stored in the storeroom, whenever required it is sent to the batching building so that it can be measured and poured into the aluminum mixer. Here a 5% suspension of aluminium and water is prepared. Aluminum powder will be measured& added manually, into an aluminum mixer to be prepared suspending liquid one by one for each mould. The finished suspending liquid can be directly added into the casting mixer..
6.3.3 Pre-curing and Cutting-Pre curing process starts after concrete mix is poured into metal moulds with dimensions of 6000 mm ‘ 1200 mm ‘ 600 mm. In these moulds, concrete will be pre cured after it is poured into mould to reach its shape and after this pre curing process cutting will take place. After pre-curing when the green block reach enough strength; they are taken to the cutting section with the help of a crane. After removal mould from pre-curing section the green block is cut as per requirements. The green block after cutting will be moved to the curing trolleys with the bottom plate by crane in front of autoclave for grouping.
6.3.4 Curing process with autoclave
In this step the green block is sent to the autoclave for initiation of curing process. The entire period of curing is of approximately 12 hours during which the green block subjected to pressure of 1.2 Mpa and temperature of approximately 1850 degree Celsius after which the product will be extracted from the autoclave, and then sent to the packaging section or to be stacked on wooden planks specially designed to hold the blocks. The side plate returns to the position where it is combined with the remaining mold. This mold is then sent back to the station where its cleaning and oiling takes place. The mold is now again ready to be poured with the mix.
6.3.4 Packing and transporting.
After completion of processes, blocks are ready for packing and transportation, but the important factor that must be carefully considered for this process is that; the material should be cooled down for packing and transporting.
Raw Materials required in production of AAC block
Fly-Ash: The flyash is readily available as a waste of Thermal Power plants. The flyash is tax free. The only cost the buyer has to pay is the transport charges charged for trip from power plants to the buyer”??s site.
Lime: Lime which is active in nature is used for aeration process. Lot of varieties and qualities of lime are available in market. Initially lots of trials are carried out to decide which lime to be finally used for the production process.
OPC: Ordinary Portland cement is used as a binding material for AAC block. This material gives the required strength to the blocks. The cement is readily available in market and can be purchased on credit too.
Gypsum: Gypsum is also readily available product as it is one of the by-products of a fertilizer manufacturing plant. It gives the property of durability and strength.
Aluminum Powder: Very fine powdered aluminium is used. It is aluminium which reacts with the lime and also silica so that aeration occurs and a porous structure is achieved which in turn reduces the weight of the final product.
Plant Location- The proposed project activity will be set-up in western India i.e in kolhapur, preferably near the major raw material source The project site is very close to the main source of fly ash a pollutant waste of thermal power station, used as one of the major ingredients of AAC blocks, available at JINDAL Thermal Power Project located at Rajgad Rantnagiri 120 kms away from the project site
6.4.1 Demographic profile of Kolhapur-Kolhapur city is one of the growing cities in Maharashtra, with an area of 66.82 sq km. and a population of nearly 561,841 residents (Census 2011). The population of the city increased rapidly from 1941 to 1981; this growth can be attributed to the flourishing agricultural sector.
Though the population showed an increase in 1981-1991, the growth rate fell from 31.26% to 19.51%. The decadal growth rate has not increased much. Industrial developments on the outer boundary of the city have not contributed to the citys increase in population. This may be due to the fact that large group of industrial workers are from adjoining areas. The population density stands very high at 7261 persons/sq.kms., which is 25 times the state density and 17 times that of the district. This is because the boundaries of KMC have not been expanded since 1977.
6.4.2 Linkages and connectivity
Kolhapur is recognized as an important religious and commercial centre of the region and is well connected by road, rail and air. It is located at a distance of 395 km. from Mumbai, the capital of Maharashtra and 235 km from Pune. The city is well-connected by a road network with the NH4 passing through it. Kolhapur terminus station is also the centre of southern railways. It has an airport at Ujalaiwadi, located near NH-14. The city is popularly known as the Door of Konkan?? with the western coastal line only 75km. away. It is an important linkage between Konkan and the rest of the state. The city of Kolhapur is well-connected through rail and road transport facilities and also has a few flights connecting it to Belgaum and Mumbai. It acts as a point for interstate transport routes between Maharashtra, Goa, Karnataka and the southern states, and serves as a key transport location. It is regionally well-connected to Pune, Sangli, Miraj, Ratnagiri and Nagpur. Its location on the National Highway (NH-4), which has been recently converted into four lanes and may be converted to six lanes, provides ample opportunity for tour and travel services. It is a well-developed city and is steadily developing into an investment zone in the last few years. A five star MIDC, textile industries, an IT park, a silver park are now being planned in nearby areas within the district. The dominant public mode of transport is road transport with shorter routes connected through the public transport and longer routes being applied by the intermediate public transport.
The routes most used and which generate the maximum income are: Kolhapur Mumbai, Kolhapur Pune, Kolhapur ‘ Solapur, Kolhapur?? Bangalore, Kolhapur Nagpur, Kolhapur Hyderabad, Kolhapur Panaji (Goa), Kolhapur Ahmedabad and Kolhapur Indore
There is an existing IT park developed by MIDC covering an area of 10 acres with a built up area of 27,662 sq.ft. There is a proposed IT park being developed by the Promoters and Builder”??s Association of Kolhapur (PBAK) covering, in the first phase, an area of 22 Acres. Moreover the members of PBAK collectively have a land bank totaling 700 acres, which they intend to pool into the IT Park in subsequent phases depending upon the feedback from the first phase. These two facts lead us to infer that at present, land is not a constraint to the growth of IT sector in Kolhapur.
6.4.4 Direction for Growth-
The future growth of the city depends on its adoption of the following strategies:
a. Creating new economic drivers by exploring the tourism potential of the city and providing a strong IT base in the city.
b. Building on its present strengths in the areas of engineering industry, agriculture and agro-based industries and the arts and handicrafts industry.
c. Consolidating and retaining its position in the fields of engineering, agriculture, trade and agro processing industries.
6.4.5 Real estate development in Kolhapur-Low-priced real estate is a major contributory factor for the gravitation of ITES companies towards Kolhapur. The same needs to be promoted by KMC through policy initiatives –land to be offered with suitable fiscal incentives and subsidy, tax exemptions, etc. KMC will also have another role to play — providing proper quality road network to the IT zone and within the city, developing an efficient local transport system, etc. Kolhapur an ideal Destination-Kolhapur has a distinct culture developed as a result of rich history and its quality of people who Have been front-runners in various fields. Agriculture is the main contributor for the economy of Kolhapur. Its sugarcane industry contributes to over 5% of the sugarcane produced in the country and accounts to a significant share of sugar, jaggery and baggage produced. It is fast becoming an industrialized district as well and already a front-runner in agro-based industries. Kolhapur has an innate potential to become a center for Information Technology and provides a relatively inexpensive alternative to Pune and Bangalore. Other than that, the city is also famous for its art and handicrafts and silver jewellery. The city attracts around 30 lakhs of religious tourists every year with an average due to presence of Mahalaxmi godess.
Advantages of AAC blocks-AAC have many advantages in building construction because of its lightweight and porous structure which allows this material to have excellent insulation properties. Some main properties of autoclaved aerated concrete are as following:
1. Structural capability
2. Sound insulation
3. Thermal insulation
4. Minimizes supplementary material utilization and waste
5. Precise dimension
6. High construction speed
Structural Capability-Considering the lightweightness of autoclaved aerated concrete, low compressive strength is predictable, but experiments show that AAC compressive strength is acceptable for using as load bearing wall units for residences up to three storey. Compressive strength of AAC varies with density of concrete which is 2.5 N/mm for average of 450’109 kg/mm3 density and 5 N/mm2 for average of 650 ‘109 kg/mm3 density. Compressive strength for average density is of 700’109 kg/mm3 is reported to be 7.5 N/mm2.
Sound Insulation Autoclaved aerated concrete has excellent noise reducing ability and causes reduction in sound pollution. Porous structure of AAC contains millions of air bubbles which restrict sound penetration inside the wall and because of this property autoclaved aerated concrete has better sound insulation capacity than the normal concrete. Thermal Insulation -Thermal insulation of autoclaved aerated concrete allows energy savings more than other available materials. AAC has good thermal insulation property because of air bubbles inside the material which play a key role in making it satisfactory for thermal insulation.
Minimizes supplementary material utilization and waste -Structure of autoclaved aerated concrete contains 70% to 75% air voids, which allow saving in raw materials consumption during production. Recycled material is used for manufacturing which reduces production cost.
Precise Dimension – Since autoclaved aerated concretes cutting procedure is carried out with wire cutting method, it minimizes variations in size and causes walls to have smooth surface that every coating material could be applied easily.
High Construction Speed – Constructing walls with autoclaved aerated concrete needs less time than other concrete masonry blocks, AAC walls can be erected easily by using small number of labor. This will reduce the cost of building compared to other types of tradition wall construction materials.
The following are the eco logical green building qualities and characteristics of AAC blocks
Lower energy consumption per cum during production process
Best thermal insulation, 6 to 10 times better than regular concrete
Non-toxic, environmentally friendly
Un-suppressed fire resistance
Excellent sound absorption
No waste of raw materials AAC blocks
AAC blocks are a high quality product with high insulating capabilities their use would lead to lower energy consumption at the air conditioning end of the construction building and would partly help the building in achieving the green building status.
7.0 SWOT Analysis
Data analysis: Data were analyzed after the completion of collecting data and dept-interview In Kolhapur Region. SWOT analysis were employed to analyze the competition condition, and overall market situation in Kolhapur region.. The collected data collected from users and sellers were analyzed using SWOT analysis to study demand of AAC Blocks.
7.1 The bargaining power of customers-
The results revealed that the consumers prefer to buy the product after laboratory testing satisfying the IS code Stanandard specified for AAC blocks. The first time for trying, customer will purchase the product for the project for economic reason. Study specified that the product price should not exceed the current supplier. Sales promotion can be one factor that persuades the customer to buy the product. There are three brands in kolhapur market which supplying AAC blocks consumers would select the product whether price or product is low. It means that there is the opportunity that consumers will switch or try the new product but also still they select their existing brand. Most of consumer can get the information from mass media, news paper advertising since it is the effective way to reach consumer widely. While other advertising such as magazine, mouth publicity and direct reach from franchise located in market. Strong advertising and sales promotion when launching the new brand will make them want to try it.
7.2 The bargaining power of supplier.
Suppliers concentrate in the volume of purchasing after getting order from construction site. if we order low volume of materials, we have to carry higher costs because the supplier lacks of confident for running business in this market. The supplier, therefore, might switch to new company or competitors which is readily available with the zero lead time and minimum transportation cost. Currently two franchises are handling the total supply of Blocks in Kolhapur region. i.e. Builtech and Ecolight
7.3 The threat of new entrants. In general, most consumers of AAC blocks are loyal to their existing brands. Competitors might be the cut the price to prevent their market share and braking.. The distribution channels those are good for selling the product with project order. The fees charged by the above distribution channel may be varying rates that will result in the price difference and finally will cause higher transportation cost and lead time. The new comer has to learn the regulations and laws that apply on consumer products with regard to ingredient, product standardization, lead certification, in order to gain the competitive advantages.
7.4 The threat of substitute products.
Consumers believe in brand and price of products because they are sensitive in price and quality of those products. Particularly, this product is used for construction walls only; it can be replaced by other wall techniques such as Mivan or aluform technology if we could not manage marketing strategy in the good way. We have planned to launch a new brand, other producers may also have plan about getting involve in the delivering brick quantity in quick time by reducing the lead time in market that could be substituted to our products.
7.5 The intensity of competitive rivalry.
In this market, there are many competitors whether Ecolight, Builtech, Siporex brands, or we can state that the competition is high. Biltech is the market leader. In could be concluded that consumers and competitors are the major barriers in launching the new Product into the market. The new comer has to prepare well about their marketing strategies that are suitable for the target consumers to try its product and hast to make them to appreciate in the product and then to create the strategies to protect the market from competitors attacks.
7.6 Segmenting, Targeting, and Positioning (STP)The results from this study found that suitable segment for the new lunching projects Positioning of the new product is in time delivery, less breakage, and reasonable price. The aforementioned factors are quick delivery with less transportation cost main variables that all of focused group respondents select in the survey questionnaires. The results also shows that the customers are willing to switch for a new product which having the less lead time and less breakage.
7.2 SWOT Analysis: Competitor
7.2.1 Strength of competitors.
Product: Findings from SWOT analysis found that competitors including Builtech, Siprolex, and Ecolight brands are big companies that have a lot of capital to invest, develop, and to run business. Their products are attractive which are packaging, brand name, and positioning in the market. They are in this market long time and gain brand loyalty from consumers
Price: The price is set up by them because of less number of manufacturers. Respondents dont have any idea about the price, but they use the market leader prices to be standard price when comparing prices with other brands.
Place: For channel, competitors distributed their products in many places where consumers can easily buy. Builtech,and Siprolex used most of channels available to distribute their products.
Promotion: Builtech, and Siprolex spent a lot of money for sales promotion at their distributors with higher margins.
7.2.2 Opportunities of competitors.
Builtech, and Siprolex were large and firm companies with strong financial support for their operations. In the economic down turn the companies could spend more budgets on their marketing promotion activities. Also, their strong relationships with distributors could create strong support to their sales.
7.2.3 Threats of competitors.
Indian real estate market especially in tier I & II cities was forecasted to be slow down in the year 2012-13 due to policy paralysis and higher interest rates for loans and political unrest. Large size companies with large size of costs may have disadvantages results from the economic slowdown. However the new brand with small scale expenses and costs may gain advantages and can set the price at a more attractive level than the market leaders.
7.3SWOT Analysis Results of New Brand
7.3.1 Strength of the new brand.
Product: Consumers will pay attention to the new brand and create the business opportunity. The product was recognized good quality; new product is in time delivery, Less breakage, and reasonable price.
Price: Pricing for the new brand could be flexible and could be set up a little bit lower than the market leaders due to lower operation and marketing costs7.3.2 Weakness of the new brand.Product: New brand is new & only few consumers know the brand name. Sometimes they are afraid to try. In the first stage of new brand, there”??s low brand awareness and low trial rate. Market already has the brand leader and other players already have a brand awareness and high trial rate. Also the company size is small and had less financial support for marketing promotion activities. Distribution channel was a major factor to be considered as a weakness of the new brand since it was hard to approach distributors to carry out the new brand products on their shelf.7.3.3 Opportunities of the new brand.
Product: The new product gets a chance to develop& to meet the need of consumer. Most of the consumers have an open mind to try the new brand that depends on its effective marketing promotion activities.
Price: The new brand could to try set price for a suitable level and adjust itself because it is new to the market. The new brand could replace the existing products if it had product innovation and hence be good option for those consumers who are tired with high lead time and be able to get quick delivery response but due to the existing brands the consumers had no chance to switch the brand.
7.4.4 Threats of the new brand.
Consumers lack of brand loyalty because there were no varieties of promotion and distribution channels available & because of limited capital. When a new brand is launched, it is blocked by other existing players.
Financial feasibility Analysis
Financial feasibility analysis is an analytical tool used to evaluate the economical viability of an investment. It consists of evaluating the financial condition and performance of the investment and forecasts its future condition and performance. A financial decision is dependent on two specific factors, expected return and expected risk. A financial feasibility analysis is a tool for examining those two factorsFor investors to engage in a new project which has financially viable. The capital invested must show the potential to generate an economic return to the investor. i.e. the return on investment needs to be equal or higher. For example, an investor expects a manufacturing facility to generate sufficient cash flow to pay for the construction of the facility and operating expenses, For having an attractive interest rate of return. Estimate of the cost of operating and maintaining a manufacturing plant, as well as income generation, is an essential element in determining the financial feasibility of the facility.
A number of reasons to conduct a financial feasibility study are
focuses on the project and outlines its alternatives;
minimizes business alternatives;
Identifies new opportunities through the process of investigation.
Identifies causes for not to proceed with the project;
Success of project totally depends on addressing and mitigating factor that could affect the project.
It provides quality information for making decision;
Provides documentation to prove that the business venture was thoroughly investigated;
It also helps in getting funding from lending institutions and other monetary sources;
Helps to attract equity investment.
8.1 Conducting Financial Feasibility Analysis
Financial feasibility analysis is conducted by developing a base case financial plan, assessing the sensitivity of the profitability of the project and the projected return on the investor”??s equity. When conducting a financial feasibility analysis, the analyst must start by making certain assumptions about the investment project. As the project gets closer to reality, the assumptions should be more accurate reliable and also the analysis. If a reasonable change in an assumption could make the project change from successful to unsuccessful, the assumption should be considered a key element. Hard facts should be clearly distinguished from assumptions and the sources for the facts and assumptions must be noted. The effort spent on taking the critical first steps at the beginning of the analysis will pay off in more focused and meaningful work and results.
Important aspects for conducting a financial appraisal are as follows.
– Investment outlay and cost of project
– Means of financing
– Projected profitability
– Break- even point
– Cash flows of the project
– Investment judged in terms of various criteria of merit
– Projected financial position
Using the following outline when conducting financial feasibility analysis:
Estimate of the total capital requirements ?? seed capital, capital for facilities and equipment, working capital etc.
Estimate of equity and credit needs – identify equity sources and capital availability identifies credit sources, assess expected financing requirements and establish debt to equity levels etc.
”? Budget expected cost and returns ”?? estimate expected the profit margin and expected net profit, break-even point. As seen from this outline, financial feasibility analysis requires detailed information regarding the project operations and financial requirements. Mainly consider the marketability of the project”??s output (price and volume) the primary influencing factor on whether the project will be financially viable or not, given the assumption that the project will be completed on schedule and within budget. It is very important to conduct a market study and use these results as an input for the financial feasibility analysis. The results of a market demand analysis are only reliable as this data is used as input for the financial analysis.
8.2 Criteria for Financial Feasibility
In order to evaluate the financial feasibility of an investment project, relevant criteria needs to be specified. The evaluation methods are categorized in following :
1. Net present value methods;
2. Internal Rate of return methods;
3. Payback methods;
There are several different cash flow based methods that can be used to measure the financial feasibility of investment projects, such as the Net Present Value (NPV), Internal Rate of Return (IRR),. Investors use these quantitative measures to help them decide whether to undertake an investment or not, based on their return requirements.
8.2.1 Payback period
The payback period is defined as the number of years it will take to recover the original investment from the future net cash flows. This was the first formal method developed for evaluating capital investment projects. The easiest way to calculate the payback period is to accumulate the project’s net cash flows and see when they sum to zero. The payback period is another method that is sometimes used in financial feasibility analysis. The method determines when the project will break even, i.e. how much time it takes for revenues to pay investment outlays. However, the method does not measure profitability, as it only measures the time it takes to recover the initial investment outlay but not the profit that is made after paying back the initial investment. . This method ignores all revenues and cost after the payback Period and does therefore not allow for the possible advantages of a project with a longer economic life. Also, the method does not recognize the time value of money, though that can be remedied by using the discounted payback method. Due to these drawbacks, the payback method is not suitable for measuring financial feasibility, and will therefore not be considered further2 Net present value
The net present value (NPV) method is a useful method for evaluating investment projects. The NPV is equal to the present value of future net cash flows discounted at the cost of capital, minus the present value of the cost of the investment. The advantage of this method is that it takes into account the time value of money and takes into consideration the potential of the business over the entire planning period of the investment.
The steps for obtaining the NPV are as follows:
1. Find the present value of each net cash flow, including the initial outflow, discounted at an appropriate percentage rate. The discount rate is based on the cost of capital for the project. The later depends on the level of interest rates in the economy, the riskiness of the project and several other factors.
2. Add up all the discounted net cash flows over a defined planning period; their sum is defined as the project’s NPV.
3. If the NPV is positive, the project can be normally accepted; if negative, it has to be rejected; and if two projects are mutually exclusive, & the one with the higher positive NPV should be chosen. Even though the NPV is a widely used criterion for financial feasibility it suffers from two limitations. First, the NPV assumes that periodic cash flows will be reinvested at the discount rate, which in reality is not always possible. Second, when considering two mutually exclusive projects of unequal size, the criterions ranking of the projects may give different results than from the Internal Rate of Return criterion.
8.2.3Internal rate of return-
Another method of ranking investment proposals is using the rate of return on an asset investment calculated by finding the discount rate “k” that equates the present value of future cash flows to the investment’s cost (or equivalently the discount rate for which the NPV would be equal to zero). This value of discount rate is defined as the internal rate of return (IRR).
8.2.4Break even analysis
The breakeven amount of sales for a business venture is the amount of sales at which business earns neither a profit nor a loss. Annual sales that exceed this breakeven point generate profit. Annual sale that fall short of the breakeven point result in a loss. Managing breakeven sales and conducting sensitivity analysis relative to breakeven sales can help you answer questions such as:
What is the minimum rupee volume of sales needed to cover costs?
How low must variable costs be to break even, based on price and sales forecasts?
How low must fixed costs must be to break even?
How sensitive is breakeven sales volume to changes in prices or costs?
How do changes in price levels affect the breakeven sales volume?
”? What amount of volume of sales is required to not only break even, but to also generate a desired profit amount? Estimating breakeven sales for business venture can help to set goals concerning the sales volume will need to achieve to become profitable. The time invest in doing a breakeven analysis can helps to make better decisions about how to manage new venture.126.96.36.199 Estimating Breakeven Sales.Annual fixed cost: The cost of being in business, is also known as overhead costs.. These costs dont vary with the level of output of the business and would be incurred if production were to cease. They include rent, insurance, depreciation, salaries, property taxes, and other costs that arent directly associated with making or selling your product.
Annual variable cost: the amount it costs to buy or create the product to sell. Variable costs include raw material costs, direct labor, sales commissions, freight costs, packaging, and energy costs (fuel, electricity, natural gas) .To convert the breakeven sales number to the equivalent number of units sold at the breakeven point, divide breakeven sales by the average selling price per unit. Breakeven analysis is a useful tool for developing an understanding of the cost, volume, and profit relationships of a business. It provides some very useful information that will help new business owners make management decisions. It is useful in setting the sales price of the product relative to profit goals and analyzing the effect of changes in business volume and costs.Result & Discussion
The study used depth interview of 20 respondents who are the decision makers or users or both of AAC Block products as a Walling Material. Form the interview, we found that the respondents can be separated two groups that are respondents who have ever trial the AAC blocks product and switched to it already and never trial the new ones for behavior and attitude analysis. Financial analysis was employed to analyze the financial projection of the new product launching.
When regard to the product factors, the results revealed that quality and price influenced the
customers in their decision to purchase. They want to get product that is consistent in quality, easy to install, and reasonable price. Most customers expected that price of the new product to be the as their existing brands. The new brand has to be launched the product with same or lower price with good promotion and quality to be attractive and making them to switch to another brand.
Market survey made with in-person interview with material department and builder show 75% market share of AAC block over conventional brick as it saves money & has higher rate of construction. Growth of real estate in Kolhapur region as confirmed from data collected from town planning department shows around 30% increase. Investment in AAC plant gives a 40% rate of return and goes on increasing. Kolhapur has an location advantage because main raw material fly ash is available in cheap rate at Jindal power plant located near Rantnagiri (130 Km from Kolhapur). Setting up plant in Kolhapur can fulfill the need of AAC block demand of nearby cities such as Sangli, Satara, Karad & Belgaon.
Based on the results from depth interview”??s results, we found that many customers are ready or want to switch to use the AAC blocks but customers need to be educated through campaigns and advertisements through all available media. A three-round of Delphi survey has been conducted to indicators of demand of AAC block in Kolhapur region for building projects in Kolhapur. The descending order of the top three weighted indicators were found to be: (1) Promotion and advertisement cost 0.39 2) New Project Launching in Kolhapur region 0.34 3) Location of the plant near by area 0.26. In identifying the parameters in assessing demand indicators, the Delphi method serves as a self-validating mechanism and provides a valuable framework for tapping expert knowledge on this field. Although Delphi technique cannot fully eliminate the subjectivity of evaluation, the careful Selection of the panel experts ensures the reliability of the research finding.
Based on the results from depth interview”??s results, we found that many customers are ready or want to switch to use the AAC blocks but customers need to be educated through campaigns and advertisements through all available media