New Delhi: State-run Steel Authority of India on Sunday said it will appoint 1,000 new dealers in rural areas to increase the market penetration of its products, adding that it will offer incentives to these dealerships irrespective of the quantities sold.
“SAIL plans to appoint 1,000 rural dealers in taluka, blocks and panchayats under this scheme during the current financial year with the aim of increasing consumption of steel in rural India,” the company said in a statement.
According to steel industry data, per capita steel consumption in rural India is estimated at only 9.78 kg, compared to around 140 kg in urban areas of the country.
The steel major has decided to extend attractive financial terms and conditions and incentives in order to popularize its newly launched Rural Dealership Scheme.
“Firstly, dealers will not have to bear the burden of a monthly commitment for offtake of material from SAIL.
This would encourage small retailers in the hinterland to reach SAIL’s materials to remote locations,” the company said.
In addition, the dealers will be given incentives, irrespective of the quantity they lift in a month, to boost their confidence in participating in this endeavour aimed at promoting the use of steel in rural areas.
To minimize the financial risk of the rural dealers, SAIL has also done away with the norm of collecting a security deposit for offtake of material.
“This has been done to encourage the rural dealers to do greater volume business with SAIL, since purchasing power is relatively low in rural areas. To make the operations of the rural dealers smoother, SAIL will also give them appropriate credit facilities,” the statement said.
SAIL said it will also supply promotional items and various point-of-purchase materials to the dealerships to help rural dealers get better visibility in their areas.
“The dynamic changes initiated in SAIL’s retail marketing will go a long way in meeting our long-term strategy of further spreading the network and making it more robust in terms of easy procurement and supply in the rural hinterland,” SAIL chairman C S Verma said.
In addition, to facilitate steel products being delivered at customers’ doorstep in rural areas, SAIL will arrange for the transportation of steel products from its nearest warehouses to the dealer outlets and will bear the transportation costs, the statement said.
It further stated that the company achieved a 21% growth in sales through its existing dealer network in the April-June quarter.
Sales of its products -- SAIL-JYOTI and SAIL-TMT -- grew by 57% and 9.5%, respectively, during the period