How to Start Cement Dealership Business ?

Cement Dealership Business Overview

Growing to the business opportunities and foreign direct investment in India the need for making its infrastructure and development look appealing and signifying the country’s capability highly depends on its construction which is not possible without cement.

The cement production reached 334.48 million tones in FY 2020, with India being the second largest producer of cement in the world contributed by the top 20 cement companies of India which account for 70% of of the total cement production.

So, how would you like to have one cement dealership of your own? Let’s see the how’s and why’s.

Market potential and uses

Cement dealership business is all about buying the cement directly from the specialized cement companies and also retail selling it to other purchasers or buyers.

The scope of expansion for your cement dealership business entirely depends on the cement company you’ve chosen to deal with and the retail customers you cater to.

The market potential for your cement dealership business can be defined and elaborated on the following basis.

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On the basis of type of cement

Type I : Ordinary Portland cement.
Type IP : Blended cement (Pozzolan) general purpose.
Type II: Used when mild sulphate resistance or moderate heat of hydration is required.
Type III : Rapid hardening cement, diner type I.
Type V (SR) : A high sulphate resisting (SR) cement.
Class G oil well cement : Made for oil and gas industry.

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On the basis of type of cement dealership companies

• Jk Cement.
• Ambuja cement.
• ACC cement.
• Ultra tech cement.

On the basis of uses of cement.

• Used in mortar for plastering, masonry, work, painting etc.
• Used in concrete for laying floors, roofs and constructing lintels.
• Used for precast pipe manufacturing.
• Used in preparation of foundation, water light floors, footpath etc.
• Used in construction of houses, wells, buildings, sport spaces, restaurants etc.

License, investment and space requirement of cement dealership

The licenses, investment and profits of a cement dealership depends on the company you are dealing with. These aspects for few of the top cement companies which you can deal with are

Ambuja cement dealership/franchise

Ambuja cements Ltd are a part of the global conglomerate LafargeHolcim and is known for its tailor made cement products made to suit the Indian climatic conditions for hassle free, hike building solutions.

  • Shop advance
  • Dealership advance – ₹1 lakh – ₹2 lakh
  • Cost of initial stock – 400 Bags @ ₹1.5 lakh
  • GST number
  • Land/rental detail
  • Marketing office location
  • Information about Co-partners
  • Application form from the official website of Ambuja cement
  • TIN number

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ACC Cement

It is India’s foremost manufacturer of cement and ready mixed concrete. It is an abbreviation for Associated Cement companies which is also registered as cement house.

  • Space requirement of 500 sq. ft.
  • Deposit of ₹ 1 lakh

Ultra tech Cement

This company has the capacity of 102.75 million tones per annum of grey cement. It operates 20 integrated units, 26 grinding units, seven bulk terminals and one clinkerisation plant for grey cement. It is India’s largest manufacturer of grey cement

  • Security deposit: ₹10 lakhs
  • Space requirement: 3000 sq ft
  • Godown capacity: 5000 bags of cement
  • Firm registration document (MSME registration)
  • GST registration
  • Land/rental agreement
  • Standard dealership agreement

JK Lakshmi cement

It is a part of an 132 year old JK organization. It has an annual turnover of ₹40000 crore and a production capacity of 13.30 million tones of cement per annum.

  • Security deposit : ₹5 lakhs
  • GST registration
  • Land/rental agreement
  • Standard dealership agreement

Target consumers

The target consumers for this business are

Households: The households sector requires cement for the purpose of construction houses, floorings, walls etc.

Interior designers: The interior designers are another target customer for this business because of their affiliation with contractors and architects for building office, exhibition and housing spaces.

Construction industries : These require cement for the purpose of constructing large offices spaces, pavements, roads, railings etc.

Architects: The architects in contract with clients and designers etc. also require cement for the purpose of construction of partitions, ceilings, Walls etc.

Retail shops: Your wholesale cement franchise could serve the small cement retail shops who could buy from you in bulk to cater to the regional specific demands.

Government projects: The construction of railways pavements, airport runways etc. also require cement for the purpose of water and heat resistant platforms.

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Raw materials

The raw materials required to set this business up is
• Land
• Labor
• Office stationary
• Water and power supply

Manpower requirements

The manpower required to set up this business is

• 2-skilled workers
• 4-unskilled workers

Business model and growth

The business model of a cement dealership can be defined using these four variants.

Value proposition: The value which a cement dealership business is likely to get to you is

Brand reputation
• Large customer target markets
• Bulk demand
• Low investment prospects
• Reasonable profit margin

Target consumers: The target consumer for this dealership business are

• Household sector
• Construction industry
• Interior designers
• Architects
• Airports
• Railways

Competitor review: The competition you will have is likely from the other cement dealership companies like

• Jaypee cement
• L&T cement etc.

Marketing strategy: The marketing strategy that can be implemented by your business is

• Hoardings and billboard advertising
• Sales promotion through cash and bulk discounts
• Google listings
• Presence in Google local directories

Growth

The cement dealership business has the potential and has witnessed the following growth prospects according to the IBEF,

• The cement industry is expected to achieve a demand of 500-600 MT by FY 2020.
• The Indian cement export reached $1.66 billion in FY 2020.
• The growing need of construction and development of infrastructure in India because of the local is vocal initiative is also likely to boost the demand and production for this product by 2025.

Profit margin : The profit margin which this cement dealership business is likely to yield to you is 8%-10%.

Suggestions to start Cement Dealership Business

This business is likely to give you rock solid turnover as it is in nature so here’s why you should take it up

Firstly, the assistance by the cement brands in terms of marketing and inventory maintenance reduces your operational work

Secondly, the brand reputation you are likely to enjoy being in association with big cement companies like those mentioned above is immense

Lastly, the consumer market for this product is more than sufficient and not likely to put you out of business for coming whatever years.

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