Key policy changes have been made in the retail marketing strategy of Steel Authority of India Ltd (SAIL) with the aim of ensuring furthest possible penetration of its branded products SAIL-TMT and SAIL-JYOTI in the country's hinterland. The strategic initiative is also important in view of the fact that rural consumption is likely to grow substantially from present level of 10 kg per capita. This has resulted in the Central Marketing Organisation (CMO) of SAIL deciding to extend attractive financial terms & conditions as well as incentives in order to popularise its newly launched Rural Dealership Scheme. SAIL has planned 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
A number of attractive incentives will be offered to dealers in rural areas under the scheme. Firstly, dealers will not have to bear the burden of a monthly commitment/offtake of material from SAIL. This would encourage small retailers in the hinterland to reach SAIL's materials to remote locations. In addition, dealers will be given an attractive incentive , irrespective of whatever quantity they lift in a month. This will give confidence to prospective dealers to participate in this endeavour of promoting the use of steel in the rural sector.
To minimise the financial risk of rural dealers, SAIL has also done away with the provision of 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, and to make the operations of the rural dealers smoother, SAIL will also give them appropriate credit facilities.
Further, to reach steel to the doorstep of customers in rural areas, SAIL will arrange transportation of the steel products from its nearest warehouses to the dealers' outlets and bear the transportation costs.
SAIL has the country's largest retail network for marketing of steel with a ground force of over 2,500 dealers. "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," observed SAIL Chairman Mr. C.S. Verma.
Leveraging the retail channel is critical to SAIL's expansion and growth plans. SAIL expects to commission a number of new production facilities in 2012, and this is expected to increase availability of SAIL-TMT (construction rebars) by over a million tonnes in the market.
SAIL's retail channel has been a success story since its re-launch in 2006. In Q1 of 2011-12, SAIL achieved 21% growth in sales through its existing dealer network. Likewise, sales of branded products, SAIL-JYOTI and SAIL-TMT, witnessed growth of 57% and 9.5%, respectively, through the retail channel.
