The industry has changed a lot in last two decades, says Anshay Sehgal, Proprietor of RN Sehgal. He talks with ICR about the pain points of cement dealers. He feels that the entire construction industry has been affected and the cement industry is not immune to bad times. Excerpts from the interview.
Tell us about your business and the geographical region that you cover.
We have been in the cement dealing business from the last 25 years. We are based in Raipur, which is the state capital of Chhattisgarh, our market area is Raipur and upcountry areas. We supply cement in Raipur district, Raipur city and upcountry areas near Raipur city. We are an exclusive dealer for Birla Gold cement, with sale volumes of around 1,500 metric tonnes per month.
What changes have you seen in the market in the last 25 years?
Lots of things have changed, especially in the recent past. Now cement is sold at FOR prices. Cement companies have become very aggressive in their sales and promotional efforts. New schemes are rampant in the market. They are trying their best to entice dealers and masons. Even bigger places are not shying away from selling small quantities; some even supply it door to door.
How is the market performing these days?
It is a bit low. Although we can see new projects initiated in Chattisgarh, the demand is low. I think this is mainly due to high inflation and mounting cement prices. The industry as a whole is affected.
RMC is also impacting the market to a significant extent. It is mainly used by the builders. As RMC offers several benifits over conventional concrete, more and more developers are opting for RMC. The end users and small consumers do not use RMC but the RMC market cannot be ignored now.
Can dealers be a part of the growing RMC market?
No, we can´t be. The cost of an RMC plant is very high and prohibits our entry in that market. It requires special trucks and space dedicated to RMC manufacture. Contractors get RMC directly from manufacturers and dealers cannot be a part of it.
What is better, exclusive dealership or having multiple brands?
I think having an exclusive dealership is betterbut one should choose a company that has dealer friendly policies. If I go for multi-brand shops, the company will not support me since my loyalty is not with a single company.
So how do you select a company for exclusive dealership?
First comes the brand name, then the goodwill the brands enjoy in the market, the quality and the services provided by the company. For us, the margin offered is not a criterion. It is more or less the same for all companies and their discount structures are also the same, so there is no big difference on this front. It is the service and policy that matters.
What are the issues that bother you?
We generally face a payment problem from the retailer´s side. Many retailers are taking undue advantage of credit schemes and are delaying payments. Delayed payments affect the business.