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| Setting SAIL for rural India |
| Ishita Ayan Dutta / Kolkata Jan 14, 2010, 00:02 IST |
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A few years ago, steel companies took to branding to beat the commodity cycle. Now they are taking the brands to a larger market — rural India.
With the capacity of India’s largest steelmaker, Steel Authority of India Ltd (SAIL), expected to rise from 13 million tonnes to 23 million tonnes in two years’ time, it will have more to sell, and rural India is a safe bet. The downturn has pushed both the big and small steel players to turn to the unexplored hinterland of India.
But the rural market comes with its challenges. It is a large market, with little awareness. Products like TMT bars (which are the most advertised retail steel product) are dominated by unorganised and small players. Of the total TMT bar market, bigger players like SAIL, Tata Steel, Rashtriya Ispat Nigam Ltd and JSW Steel have a 45 per cent market share, while the balance is with the unorganised and small players.
Yet, being an early mover has its advantages. SAIL TMT is an established brand and commands a premium of at least Rs 2,000 a tonne in the market. In spite of this, the rural market is important enough for SAIL to extend the product at the same price — SAIL officials say SAIL TMT is available in the remotest corners of the country at the same price as in the city outlets. According to trade sources, other companies typically add the freight cost.
SAIL has reached out to India’s hinterland through “Apna SAIL Shops”, retail outlets built exclusively for the purpose. SAIL officials say the network at present is more than 2,000 dealers, and growing.
But reach alone cannot assure sales. Over the past year, SAIL TMT advertisements have sprung up across the country — airports, hoardings in metros, buses, local cable in small towns and villages, and long-distance Rajdhani and Shatabdi trains. New-age advertising like the FM radio is also being used to promote SAIL TMT.
Advertising may have been stepped up, but it’s still meagre compared to the smaller TMT bar producers. Trade sources say for every tonne of TMT sold by a small player, the amount spent on advertising is Rs 100. For SAIL, trade sources say, it would be about half of that. Brand endorsers for regional TMT players include Sanjay Dutt, Kapil Dev, Mithun Chakraborty, among others. The public sector steel major, on the other hand, relies on the star value of its corporate brand. After all, it said many moons ago, “There’s a little bit of SAIL in everyone’s life.”
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