Dealers must come together in order to be heard.
Tell us about the association and its role in serving the dealers community.
The association was formed in 1990 to serve the dealers` community by understanding their problems and communicating their issues in a formal manner to the concerned authorities. The objective was to serve as a communication channel between dealers and the cement manufacturers. We resolve issues such as non-payments to dealers by contacting the defaulting party and asking them to kindly release the payment.
Do you also communicate with the government on behalf of dealers?
No, we do not communicate with the government. Our intervention is mainly required to monitor activities of cement manufacturers and their impact on dealers. In cement selling, the dealers doesn´t know the invoice price of the product that he is selling. He sells the material based on the market rate and receives the payment for it later from the company. However, dealers are not aware of the cement price that they will have to pay to the company later. Neither does the company instruct the dealers about the price that they should sell the cement at.
What leads to this uncertainty?
The business is done on the basis of credit notes. On several occasions, the selling price is less than that of the buying price. We dealers don´t make profit on such deals, our loss has to be accommodated in the tax system. However, we face a lot of difficulty in getting the tax returns. We are not happy with the snail- paced workings of the tax department.
What are the other challenges?
One major area of concern is the volume of cement sold via non-trade transactions. The manufacturers seem to have no discrimination in accepting the orders irrespective of the order size. They are picking up deals as low as of 25 tonnes. And that too, at the non-trade rates. Today, the trade market is fast vanishing. Earlier, it was 90 per cent trade and 10 per cent non-trade. In cities like Mumbai, only 5 per cent deals take place at trade rates, the rest is at non- trade rates. Pune too, is now on the same track.
Do companies give commission to dealers in non-trade transactions?
Yes, they do, but the amount is very low. Cement price has increased but the commission has remained the same for last 25 years. When it was at Rs 100 per bag, we were getting Rs 3 per bag. Today, cement is sold at around Rs 300 per bag but the commission is still Rs 3 per bag. So we are making less per bag now.
Are dealers active enough about coming together as an association?
It is a big challenge to get dealers on a single platform. All of us are in the same boat, but they are not coming together to fight this. In my association we are around 140 dealers, while there is scope of adding around 400 to 500 more members to the group. Dealers must come together in order to be heard.