Birla Corp plans to replace cement brands Samrat and Chetak with Perfect

The company positions Perfect as its new flagship, looks to build a unified national corporate identity and premium appeal for its products

In its quest to become a national player, Birla Corporation is on its way to replace its entry-level regional flagship cement brands Samrat and Chetak with a new premium one, Perfect. It has also planned a slew of variants and new product launches under this new marquee. But with limited resources and its expertise lying in regional and budget conscious markets, experts say the challenge will be changing common perceptions about the brand that has played largely in the budget category.

The Perfect brand originally belonged to Reliance Cement Company (RCC). It was acquired by Birla Corporation in a Rs 48-billion-buyout in 2016. While the acquisition has been leveraged by the company to up its cement capacity from 10 million tonnes per annum (mtpa) to 15.5 mtpa, one crucial asset that is still to be fully realised is the “more premium and widely recognised brand which RCC had,” say brand experts.

Birla Corporation, strong in eastern Uttar Pradesh and Rajasthan, has had two regional brands acting as its flagships —Chetak in Rajasthan and Samrat in east India. Both are in the budget and entry-level categories. Prior to the acquisition, although it had a few premium brands such as Unique and Ultimate, these were localised and didn’t make up for more than 5-8 per cent of total turnover. Perfect afforded the company access to a superior product category and reputation among the trade channels.

Sandip Ranjan Ghose, executive president of marketing and corporate development at Birla Corporation, was tasked to create a “more premium space for its brands” and to make them relevant and “respected among peers”. And with this objective in mind, Ghose embarked on creating a single and unified identity for the company.

Birla Corporation is part of the MP Birla group that has diversified interests across cement, jute, healthcare, education and others. The first task was to create a single logo for the group and the company. The next step was to leverage the brand recall that Perfect has among dealers and launch a nation-wide advertising campaign to help people (retail customers) make the connection between the brand, its premium identity and Birla Corporation.

“The decision to make Perfect the flagship product has been taken at the third stage. Our brand building exercise is on track as is evident from our financial results and the brand recognition,” Ghose said. For the quarter ended September 30, 2018, the company posted a nine per cent cash profit of Rs 2.06 billion with a 19 per cent topline growth at Rs 14.65 billion.

Ramesh Thomas, president at brand advisory firm Equitor endorsed the efforts and said, “If they have a nationally recognised asset, they should be using it to the fullest given their aim to become a nationally recognised brand.”

Regional to national

“The Chetak brand has excellent recall in Rajasthan while Samrat is popular in the east. But we need a product or brand which is not localised and can have a good recall nationally,” Ghose said. 

The company is expanding its footprint and also trying to frame a new identity for itself. According to Ashish Mishra, managing director at brand strategy firm Interbrand India, “Changing the brand identity for any company is sensitive and employees, trade and customers need to be pre-engaged and carried along with credible projections of upsides to avoid a possible value loss due to an ad hoc change”.

The company said that it had done that for the past three years and apart from talking to the dealers about the transition, the ad campaign had also sensitised the end consumer about the new ownership status and the brand. According to Ghose it was important for the company to reinforce the new identity because the older brands were localised in nature and targeted at particular consumer segments. In the ads, the name of the brand and its association with the MP Birla Group came up for the first time.

Mass to premium

“We made it clear to our dealers that the Perfect brand won’t be supplied just like that. You need to earn this brand,” Ghose said. Since the bulk of the company’s dealers are entry-mid level operators, it was important to drive home the need to keep its value intact and not resort to the regular discounting practices employed for the cheaper brands. 

To add bulk to its premium portfolio, the company is shortly coming up with construction chemicals and wall putty products with waterproofing compounds under Perfect.  

Currently the Perfect brand, which underwent a packaging renovation this year, contributes around 16 per cent of the total sales while the other two premium brands, Unique and Ultimate, confined to West Bengal, Bihar and Uttar Pradesh, account for another eight per cent of the firm’s total earnings.

While the company is keen to maintain its hold on the entry-level and budget cement category with the Chetak and Samrat brands which assures volume play and hence, gives it a lead in central and eastern Uttar Pradesh, it wants to increase revenue share from the premium segment. To put a number to its expectations, the company says it is looking at the premium segment, led by Perfect, to contribute around 30 per cent of the consolidated earnings in the next two years from the current level of around 24 per cent. Industry sources suggested that premium brands directly pull up the bottomline by around 20 per cent as compared to budget brands.

The company is also upgrading its budget brands by rolling out new localised product variants. It recently launched Samrat Advanced, an improved version of the Samrat brand for the eastern zone.