Selecting Vendor For Small Capacity AAC Block Plant
Keen enthusiasts of AAC India will notice that we receive lot of inquiries from entrepreneurs interested in setting up Autoclaved Aerated Concrete block plant. A good number of these inquiries are for small capacity AAC block plant. Usually this capacity falls in range of 60-100 m3/day. Primary reason for this preference is to build a stable and low-risk platform as a foundation to robust and scalable business. Moreover full scale AAC block plants are not viable for any capacity below 160 m3/day as it requires higher capital investment. Even at 160 m3/day it is a stretch. Primary reason for this number being basic capacity is scalability of AAC block plant. In broad terms, difference in capital required for 160 m3/day vs 500 m3/day is around 25-30%. Apart from capital investment, other costs like manpower, marketing, etc. are almost similar. When you consider total production cost and divide it in terms Rs./m3, final figure of production cost for a 500 m3/day plant would be 10-20% lower compared to that of a 160 m3/day plant. Apart from production cost, there are various other factors that help you determine plant capacity. These factors are market acceptance, market maturity, competition, local preferences, etc. Due to these factors, a small capacity AAC block plant may be viable in a smaller market without competition. But such a plant may not be viable in a bigger market with multiple factories manufacturing AAC blocks.
Information shared above is not to discourage anyone, but present the facts to help in long-term planning and decision making. Kindly note that when I say 160 m3/day is minimum feasible capacity; it is meant in context of a full size plant with default configurations. But it does not mean that it is impossible to install and operate small capacity AAC block plant. It is technically and practically possible to design plants for smaller capacity production with good scalability. It may be done by adapting plant equipment to required size in order to bring down entire project cost. But before you sign a contract for a small capacity AAC block plant, care must be taken to ensure that your vendor has prior experience with such a plant and is capable of delivering a functional and reliable plant. I would like to suggest some points that might help you select a good vendor and avoid dubious traders/importers/brokers floating around in the market.
- Ensure that you are directly dealing with the supplier and try to avoid brokers, agents, company representatives, etc. as these guys charge commission for equipment and it would be included in final price. Vendor is not going to pay this commission from his pocket. Indirectly it is the customer who ends up paying it from his own pocket.
- Check if particular vendor has operational plants in India or abroad and try to visit them. Vendor may have operational plants in their country (e.g. China, Russia, Europe, etc.), but may not have an operational plant in India. It is easy to install and support a plant in their home-country, but installing and supporting a plant in India is a different ball game altogether. So while deciding on a vendor it is very essential to visit such operational plants in India and talk to existing customers.
- Visit vendor’s factory/workshop to get an idea of their operations and workmanship. It has been observed that couple of vendors with jazzy websites and glossy brochures didn’t have their own workshop and were hoping to secure an order to help them start their own workshop. Helping people is a noble cause, but this is business we are talking about. It is better to work with existing players rather than funding a non-entity.
- Check with vendors about their after-sales support network in your area. They might have a good after-sales team and willing to extend support. But if this team is in a different country, it would require lot of time and money for them to reach your location in order to provide support. So try to gauge after-sales support capability of a vendor in your area/country.
- See if vendor is willing to let you ‘localize’ your plant by including as much local equipment as possible. This might also include modification to vendor supplied equipment to suit local conditions. Vendor may provide you with specifications for necessary equipment like motors, screw conveyors, conveyors, valves, etc. There are various benefits of having local equipment integrated. Primary benefit is that you can find out best vendors in local market rather than unknown foreign vendors for such equipment. Secondly it would lower the cost of entire project. Your savings will be in terms of total import bill, sea and surface transport as well as customs. Moreover it gives peace of mind and quality assurance since you may reject equipment back to local vendor in case of any defects. You’ll also get much faster after-sales support from vendors of local equipment compared to foreign vendors.
- Try to compare level of technology and automation offered by various vendors. I am not asking to go for fully-automatic plant – that may be a very costly affair – but it should have decent amount of automation. There is no point in having a completely manual plant as it’ll hamper productivity and might prove to be a costly affair in running cost due to increasing labour wages and decreasing availability of labour. Moreover if you have plans to expand your plant in near future, automation will play a major role.
- I am sure that once your plant is running well and you are able to sell entire production at good rates, you’ll be tempted to expand your production capacity. But if your plant does not have expansion options, you might need to set up a completely new production line. This would be a very costly affair in terms of money, resources and time. So, when you select to set up your first plant, ensure that your plant comes with enough expansion options. Generally these options depend on mixer capacity, cutting speed and handling systems. These leaves out moulds and autoclaves. Addition of moulds and autoclaves can be done easily without hampering your routine operations. So while planning, figure in these factors and select a plant with good expansion options.
- Last but not the least is product support from equipment vendor. This may be in form of production know-how, processes, product optimization, growth path, staff training etc. As most of you are aware, recipe (aka product mix) for AAC products is very critical and determines quality of final product. You can check with your vendor if he’s willing to design and supply recipe optimized for raw materials available locally. A good vendor would also help you set up processes to ensure consistent production and recommend you other products that can be produced using same equipment or by adding some extra equipment.
Please note that this list is like a guideline. Although I have tried to cover major points, it is not possible to cover everything. You’ll have to rely on your business acumen and gut instinct before arriving at a decision. As I like to say, in addition to good quality equipment and final product, you also need to have a robust business plan, a good marketing network with a customer-focused approach and grievance addressing mechanism. Remember that Autoclaved Aerated Concrete is a new product in most parts of India. AAC industry will take a direction depending on how you treat and educate your customers and cultivate the market.