We hold on to customers by offering timely delivery and better service.

We hold on to customers by offering timely delivery and better service.

Selling a single brand in the shrinking cement market is tough. Diversification is the key. Diversification in brands and in products is the way to go forward, feels
Lalit Agrawal, Goyal Agencies,Business Development Manager.
Here, he speaks with ICR about the pitfalls of having only one brand in the basket. Excerpts from the interview.

How long have you been in this business?
Our agency has been serving the cement market from the last 18 years. We supply cement in Mumbai, Bangalore, Pune, Nasik and Sholapur.

Usually dealers are restricted to a smaller area. How come your network is that wide?
I work with only one company, Vasavadatta Cement, and so have been able to develop a strong relationship with them. They help me in selling cement at any location and dispatch it to the requested location.

How much do you stock and what is the dispatch size?
Normally, I stock only around 1,000 metric tonnes. Apart from sending material directly from the company, I pick up 10,000 metric tonnes of cement per month.

Has the economic slowdown affected your business in any way?
Yes, because if I compare the business to the past, like that in 2007-2010, my sales have dropped. At that time I used to sell 20,000 bags per month but now I am selling only 15,000 per month.

What factors have reduced the cement demand in the market?
At that time, there were only two to three companies in Pune like ACC and Coromandel. Now there are 15 to 20 companies. So, obviously the competition has increased significantly. There are all kinds of players with a range of sizes. Also, the number of dealers has increased significantly; this leads to competition in rates to grab deals. If I am quoting Rs 300, someone else is quoting Rs 280, a gap of Rs 20. When someone is buying in huge quantities, the gap matters. One can oversee a difference of Rs 5 and pay extra for a premium brand but as the gap widens, the worth of the brand starts going down. For some of the brands, the prices are hovering around Rs 250. We hold on to customers by offering timely delivery and better service, etc.

What are your plans to sustain the business?
We are thinking of diversifying and we have now started our steel business along with cement. We are also exploring the construction sector.

Is the RMC market impacting your business?
Yes, it is. When I started in the RMC business, I used to sell 6,000 metric tonnes of cement per month. Then later, when companies started taking RMC contracts directly from customers, our sale volume was immediately reduced to half.

So, do you feel that having only one brand to sell will be a good strategy in future?
Actually, having multiple brands is better. Customers vary, their choices vary; they want options in brands and in cost. And we have to provide to those choices if we have to stay in the business. Those with a single brand in the bucket will find their business shrinking every year.

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