Very few cement dealers have graduated to become RMC suppliers but Bakul is one such organisation that has made a mark in this field. A leading RMC supplier in the Mumbai and Navi Mumbai areas, with more than a decade´s experience in the RMC market, the company is well aware of what it takes to survive and to flourish. Over the years, Bakul has added ready- mix concrete, bulk cement and other building materials into their product mix. Bakul offers Ultratech ready- mix concrete, with over 24 plants in Mumbai alone. ICR spoke with Shubhangi Tirodkar, Director and Amod Tirodkar, Director, Bakul Cement about the RMC sector and the challenges faced by its suppliers. Excerpts from the interview.
Very few cement dealers have moved to RMC. Tell about your entry in the RMC business.
While being in the cement market from 1975, we got into bulk cement supply business from 1995, when one of our cement suppliers had put up cement silos at Navi Mumbai. It was the first time that cement was being used in bulk in India. Construction people were curious to see how it works and had gathered to see the functioning of the system. We explained how a silo works in principle. As time went on, we started getting occasional enquiries about RMC. We strove to meet clients` demands wherever we could and we also realised that the future is in RMC, so we started with this service in 2001. At that time, we supplied RMC to the D Y Patil projects in Navi Mumbai. Some of our clients who had worked in European countries were the first to request RMC. ACC was the first mover in the field; however, it was L&T which made RMC so popular, closely followed by Ultratech, which today is one of the top players in the field.
Tell us about your business model in RMC as a dealer.
Basically there are two main models here. One is, we provide payment guarantee to the company. Here the billing is done by the company directly to the client and we get the commission. This is the model that generally works in Mumbai. The other way is that we buy RMC from the company and then sell it to our client. However, this is a rare case as there are several factors that call for technical interventions by the company. For example, when someone has to order RMC, the company team first comes to the site, to check if the mixer can reach the place and that there is no space constraint to restrict the pouring of concrete. It looks at concrete grade requirements based on the structural characteristics. It takes logistics and other factors such as time of delivery, etc, into consideration before submitting a quote.
How does the system work?
The company has to plan the number of bulkers that it will require to meet the order. The number of transit mixers used will depend on the transport conditions; it will vary with region to region and also based on the time of delivery. When we place the order, it goes to the automated database system of the company. Orders have to be placed in advance and a confirmation has to be obtained. For example, Ultratech takes orders up to 4 pm to deliver the material the next day. A ticket is generated and is issued to us.
So ordering and getting RMC is a systematic process?
Only till you place the order. Once the transit mixer leaves the plant, there are various uncertainties at play. It is difficult to predict traffic conditions. So we have to ensure that we deploy a sufficient number of mixers so that the pouring process goes smoothly.
In RMC, once the order is placed, it is placed. It cannot be cancelled. Sometimes our clients tell us to cancel orders because some unprecedented problems have surfaced at their end. It could be anything from local villagers having objections to neighbours complaining of noise, etc, or some other issues. But RMC once made cannot be stored. Nor can you sell it to someone else as each contractor has different requirement in terms of grade and other specification based on the structure. As dealers we have to manage these challenges. There can be major accidents on the way or there could be police checks on the highway. These are unprecedented issues that can pop up randomly. We have to be prepared. Managing is tough. The contractor and builders are anxious as they would be in middle of the process. The truck driver is worried as he has to make as many rounds as possible. We have to communicate and co-ordinate with all of them. Dealing in RMC requires a lot of patience and perseverance. Then, even after going through all these hassles, the profit margin is not that high. This is one of the reasons why you won´t see too many dealers in the RMC field. We do it because we know it is really beneficial to our customers. They get good quality construction material and face lesser labour hassles. We do it with an attitude to serve our customers rather than to make profit. We must provide everything that our customers ask for.
In a place like Mumbai, you can do construction work only during the day; however, trucks are allowed to run on the highway at night. So how do we make both ends meet? We barely have a three- hour window in the evening or a two- hour window in the morning. A pour just cannot be completed in that short time.
What about your levels of expertise when using RMC?
At times contractors do not get the result they want and then they immediately start blaming the RMC manufacturer. They start suspecting everything, right from cement quantity to mixing efficiency. Actually, it is mostly the fault of the pouring process. Did the honeycombing process go ahead smoothly or did the contractor use the vibrator or not, all this impacts the outcome. An RMC company cannot be held responsible for this. Levels of expertise have to improve.
How good is RMC consumption in the cities?
The demand for RMC is not uniform across the country. Mostly it is used on large infrastructure projects. Demand and use of RMC is more in Bangalore than Mumbai. One is that the awareness level is better in Bangalore, plus the road transport infrastructure is better there. Even a small bungalow builder asks for RMC in Bangalore but in Mumbai, the situation is different.
Do you have any expectations from the government?
RMC is eco-friendly, it is beneficial for infrastructure and it is cost- effective. If the government is convinced of this, then why can`t they incentivise the use of RMC? Why would someone not use it if there is a monetary benefit linked to it? The tax system has to be tweaked to promote RMC.
Is RMC equipment readily available?
The quality of the equipment available is very good; mixers and pumps from a range of supplier are available. For example, Schwing Stetter, supplies equipment of high quality. Chinese equipment makers have also entered the market. Their equipment is not of very high quality but the price is less when compared to existing reputed players and people are trying out this equipment, too. However, we have doubts about the service support offered by Chinese equipment suppliers.
If you lodge a complaint with Schwing Stetter, the person arrives at the site within three hours. And that gives the company an edge over others.
What are the hassles in setting up an RMC plant?
If you are planning to set up a plant, you will need a large patch of land which is close to the city but at the same time, away from residential areas. When transit mixers are passing from villages, at times we face objections from local village leaders who say that our trucks create traffic jams, etc.
At times they insist only their sand or aggregates should be used in the making of the product, irrespective of the quality or the cost of sand. This too, is one of the major factors that stop many from getting into RMC production. It is an investment of Rs 3 – 4 crore, or at the least 1 crore. You do not want such issues bothering you when the investment is so high.
In a place like Mumbai, you can do construction work only during the day; however, trucks are allowed to run on the highway at night.