Cement dealer network expansion slows down as non-trade demand rises

Three of the top-five cement makers saw their dealer count fall in FY24

Dealer networks have failed to keep pace with the rise in cement volumes sold in the last financial year, a trend that industry experts suggest may be due to the rise in non-trade and online sales, and a focus on larger dealerships.

According to data collated from annual reports, three of India’s top five cement makers - Ambuja Cements, Shree Cement, and Nuvoco Vistas Corp - saw a decline in the number of dealers they sold cement to in FY24. The other two, India’s largest cement maker UltraTech Cement’s dealer count rose by a modest three per cent, while Dalmia Bharat (Cement) was an outlier with a healthy 10 per cent rise in dealerships.

A spokesperson for Shree Cement said the company was focused on increasing its reach with the end-users.

"Our channel network, consisting of both dealers and retailers, had improved in FY24 as we enhanced our focus on retailers to better reach our end users. This is an ongoing exercise and we will continue to build our channel network," the company said. 

An email query sent to Ambuja Cements and Nuvoco Vistas remained unanswered at the time of going to press.

“With non-trade share rising, that could be one of the reasons that companies are rationalising the dealerships with small business turnovers,” said an industry analyst, who did not wish to be identified.

Non-trade refers to selling cement directly to institutions, mainly for infrastructure, housing and other large commercial projects. According to industry estimates, 35-40 per cent sales in FY24 were non-trade.  

In addition to the rise in non-trade sales, cement makers also appear to prefer larger dealerships as they expand capacities in a particular market.

Company executives from the south-based Keshav Cements in August told analysts their expansion will help margins and “a deeper pocket to reach out for better sales and marketing programmes, better marketing reach, supplying to the larger dealer network who would like to consume at a higher rate, and giving better discounts.”

Over the last few years, conglomerates such as Aditya Birla Group and JSW have also tried to sell construction materials through their online platforms.

Aditya Birla Group’s Birla Pivot earlier said the business had crossed Rs 1,000 crore in the first year of operations. In FY24, JSW One recorded Rs 9,000 crore in gross merchandise value (GMV). Both JSW One and Birla Pivot sell building materials such as paints, cement, steel, tiles, ceramic and other items through their e-commerce platforms.

Dealer count for JSW Cement in FY24 was at 5,043, down 6 per cent from FY23 and 13 per cent for FY22, according to the company’s draft red herring prospectus (DRHP).  An email query sent to JSW Cement remained unanswered.

Dealer Count 

Top-5 Cement makers	FY24	FY23
UltraTech Cement	34971	33890
Ambuja Cements	11000	12000
Shree Cement	21053	21660
Dalmia Bharat (Cement)	22449	20258
Nuvoco Vistas Corp	8793	9535
	98266	97343

Source: Annual Reports