The Dealer´s Juggle
The Dealer´s Juggle

The Dealer´s Juggle

Cement dealers all over India are juggling with the same universal issues, low margins, logistical challenges, low demand and competition. The community however, has not yet come together as a strong organisation that could do something about it rather than just bearing with the situation.

Sandeep Gupta VP Marketing, JCl Cement

We are dispatching 5000 to 8000 bags per day from our shop in the northern and western region of New Delhi. We cannot go beyond a radius of 15 Km from our warehouse as it is not economical beyond this point. It is viable to send the material if the cost of transportation is below Rs 15 per bag. Fuel prices, labour cost are restricting our expansion plans.

One of the other challenges is low price of cement. Since, the price is low, the margin too is limited. Dealers make money in only 4 to 5 months in a year. It is the price hike in the peak season that gives us enough opportunities gather revenue and sustain our business in the remaining part of the year. If cement companies do not raise prices in the peak season, then how will they manage in the low-demand period?

Some builders say that the price fluctuation is detrimental to business. But I do not agree with them. I feel it is the best time to do business. When there is price gap at different outlets, customers start exploring new suppliers. It is at this time, when you meet new customers, forge new bonds and do business.

Ajay Kumar General Manager - Marketing, Champion Dealers

We dispatch around 3000 metric tonnes of cement per month in the Mumbai, Pune, Satara, Kolhapur, Solapur and Nagar Districts. We go upto 200 to 300 Km from our warehouses to dispatch cement. It takes two to three days to deliver the material on site. The current margin offered to dealers is very low. Unless the profit margin increases, it is not viable to continue business in an environment where the demand is so low. We have kept multiple brands so as to cater as many as customers that we can.

Murali P L Proprietor, Sri Sai Traders

We are dispatching 2800 Metric tonnes of cement per month to Bidadi, Utharahalli, Rajarajeshwari Nagar and Kengeri city in Bangalore. We do not go beyond 5 to 10 Km from our warehouse. Our biggest challenge is to work with very low profit margins. We take dealership of only those companies that have a good logistical network or offer good discount.

Sunil K Jain Proprietor, Sunaansh Cement

We dispatch around 1000 to 1200 bags per month in Noida and Uttar Pradesh. We sell cement only on cash payment basis. Unless the order is paid for in advance, we do not dispatch material. Already the margins are low in cement commodity. So it does not make sense to keep the money blocked with cement companies. Many dealers deal on credit basis and have to go through the hassles of following up for cash.

Cement dealing happens in an highly unorganised market. Customers are often confronted with variations in price, material quality, supplier, discount schemes while making a buying decision. The variety adds more to the confusion rather than enabling customers to make an appropriate selection. Most deals are done on the basis of so called ´trust factor.´ Discount schemes and marketing gimmickery takes the center stage.

Labour costs and rising land prices have prompted dealers to discontinue cement storage at the shop. They are preferring dispatching material directly from the company to the site. Logistics, naturally becomes another important deciding factor. Perhaps it is time for the dealers to look beyond housing and form tie-ups with government bodies. It is high time where dealers start doing corporate marketing, something, which has not been tried before. A large section of dealer community lacks the necessary skills to push products in this manner, and as a result, is losing good opportunities. These opportunities must be tapped in time. Cement dealing today is more than building a customer rapport. It is about being agile, adaptive and innovative. Growing number of dealers and multibrand shops have taken the competition to the next level. The juggle with logistics, price and discounts has become a daily routine for dealers. ICR spoke with dealers from distant corners of the country to get a pulse of the market sentiment.

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