Customers asking for material on credit is a big challenge for us
I have come into the cement business only recently, about two- and- a- half years ago. However, our company has developed a good market base. We are supplying cement primarily in the Chennai region, to builders and for projects around Tamil Nadu. Most of our revenue comes from the Chennai region. Some of the brands that we sell include Chettinad Cement, Priya Cement, Sagar Cement, Parasakti Cement, Mahashakti, etc. The most popular grade here in Chennai is the PPC grade. In PPC, most of our customers prefer cement below 38 to 40 grade. In fact, customers prefer different brands for different grades.
Since we are wholesalers, we supply cement mainly to retailers. Our monthly dispatch is around 2,000 tonnes. As you must be aware, cement stockists have to face challenges arising out of price fluctuations. Fortunately, we are immune to such issues as we do not stock cement and order only when we have a sale order in hand. We obtain and send out cement by transferring it from truck to truck.
Customers asking for material on credit is a big challenge for us. Most of them ask for a credit of 35 days to 40 days. The credit sum may range from Rs 5 lakh to Rs 10 lakh, depending on the customer's background. This is a big sum and businesses like ours cannot afford to have so much cash locked up with various customers. The low margins in the business requires fair amount of liquid cash available.