The path to success is never easy, but Magicrete has carved a special niche in the Indian construction industry today with its innovative green building materials like AAC Blocks, Block Joining Adhesive (MagicBond), MagicPlast (gypsum plaster), Precast Concrete and more. The AAC blocks are environment-friendly substitutes for traditional red clay bricks, and they make construction processes faster. Magicrete has also been very successful in producing steel-reinforced AAC walls. The company’s turnover is more than Rs. 100 crores presently, and a skilled and knowledgeable team of 300 professionals is taking it forward every day.
Though we already enjoy a significant customer base, appearing on the Zee News and Zee Business program Reliance Commercial Finance “Kissey Kamyabi Ke – Season 2 was a major milestone! Hosted by the famous actor Mr. Annu Kapoor, this show is a great platform for successful startups, entrepreneurs and businesses to share their journey and story. It gives them a chance to share their struggles, risks, profits and hopes and successes in front of millions. And it has worked wonders for Magicrete too.
Magicrete Director Mr. Sourabh Bansal’s story
Mr. Sourabh Bansal, our young yet extremely enterprising and creative director was the first to engage in an enlightening conversation with Mr. Annu Kapoor. Mr. Bansal said that the housing sector in India is almost as big as energy or agriculture and very important. Moreover, besides steel and cement, bricks are the third major cost component of a construction project. Bricks are a Rs. 50,000 crores worth sector, but unfortunately unorganized. Till now, there were no branded players in the market for bricks. Mr. Bansal said that while establishing Magicrete, his aim was to introduce something that would be completely unique and much better than clay bricks.
He said that since traditional bricks have been used for ages in India, it was naturally challenging to bring in a unique product as that would involve convincing both builders and end users or homeowners about the advantages of any new technology. Hence, Magicrete’s product would have to be extraordinary. These blocks are 10 times better than bricks, according to Mr. Bansal.
Funding was the first challenge faced by Magicrete though. Luckily, Mr. Sourabh’s younger brother Sidharth, who is an IIM graduate, helped prepare a promising business plan. Fortunately, some Angel investors offered the seed money for the company and some debt fund was also raised from banks. The venture was then started with a debt and equity combination.
Mr. Annu Kapoor then asked how Magicrete penetrated the traditional brick market for the first time. Mr. Bansal said that he first tried to convince investors with the green or eco-friendly property of their product, AAC blocks. But that was not enough. So, he created a marketing collateral showing comparison between a 9-inch brick wall and 9-inch AAC wall. Through this, he showed how AAC blocks are 70% lighter than bricks, which leads to a significant saving in the amount of steel used. Hence, this would be a great benefit for developers.
Mr. Bansal also convinced developers with the thermal insulation property of AAC blocks. Houses made with these blocks stay cool in summers and warm in winters, providing adequate comfort to end customers.
Mr. Kapoor then questioned Mr. Bansal about the stability of these AAC blocks, as earthquakes are recurring incidents nowadays. Mr. Bansal explained that an earthquake’s impact is proportional to the weight of a building. Since AAC blocks are much lighter than bricks, they are more earthquake-resistant.
Mr. Bansal also mentioned that in 2008, Magicrete was the third AAC block producing plant in India. The total industry was worth Rs. 50 crores. And today, AAC blocks worth Rs. 2500 crores are being sold in the country! The government is also promoting the use of AAC or flyash bricks, and in future, these blocks might completely replace clay bricks.
According to Mr. Bansal, since builders these days have strict timelines for finishing buildings, they are increasingly adopting the use of AAC blocks. And Magicrete has many repeat customers due to the satisfaction their products deliver.
Magicrete’s co-founder Mr. Puneet Mittal’s story
Mr. Mittal is a successful CA and CS, and a huge help for Mr. Bansal. He started helping Magicrete from the very beginning, Mr. Mittal believed in commercializing the innovative product and convincing the end user that the use of AAC was budget-friendly.
Mr. Mittal also emphasized that word-of-mouth of publicity had helped them to grow phenomenally in a short span of time, when one builder benefited from the use of AAC and recommended it to others. Almost 75 to 80% projects in Western India are using this product now. Many large projects in Delhi NCR have started to adopt AAC blocks and the usage is spreading to some rural areas as well.
Reliance Commercial Finance Marketing Head Mr. Tapan Sampat’s opinion
Mr. Sampat finds Mr. Sourabh Bansal’s story or Magicrete’s story and journey very inspiring. Mr. Sampat said that most SMEs don’t or can’t avail funding from traditional lenders like banks. He also said that without proper financing, no brilliant idea can be realized. And that is what he appreciates about Mr. Bansal in the way he approached different investors and banks for funding. Mr. Sampat also offered some advice for startups when they approach venture capitalists or Angel investors, and said that the different pros and cons of each lender must be considered. While some lenders limit the amount they lend, others expect higher stakes. Mr. Sampat also suggested that small and medium businesses can approach NBFCs like Reliance Commercial Finance for loans at attractive rates to boost their business. Mr. Sourabh Bansal was felicitated at the end of the show by Mr. Sampat, making it a memorable moment for Magicrete.