Better utilisation of warehouses, reworked branding strategy and micro focus on marketing have helped state-owned Steel Authority of India (SAIL) record an over 36 per cent year-on-year jump in sales volume this November.
The company’s sales for the month stood at 1.409 million tonne amid concerns over demand pick up in the domestic market due to the economic slowdown.
“In September, we restructured our marketing segment. It is this restructuring that has started to show results now,” a senior company official told Business Standard.
The company has divided its marketing section into three verticals—sales, marketing and services—for an enhanced focus.
“Splitting into verticals has led to micro management in marketing and each area is having more focus leading to better results getting generated from every section,” said the official.
The sales figure for November is also one of the industry’s best, reflecting the company’s renewed thrust on marketing strategy to seize the market opportunity, SAIL said in its release.
While the company’s marketing vertical is focusing on pricing, branding and promotion, the sales vertical is looking into warehousing and physical movement of goods. The services vertical, on the other hand, remains focused on logistics and customer service.
In retail marketing, where SAIL earlier dealt largely with dealers, the company is now looking at stronger distributorship to make material supply smoother in the market.
“We had identified 47 places for distributorship and have already put 27 of them in place in the eastern part of the country (where our plants are based), since it is our natural market as we get better realization than in other zones. This has improved our product reach in a big way in the retail market,” said the official.
SAIL has the largest dealership among domestic primary producers in the country.
The company is also encouraging customers to use its warehousing facility which earns it a sum of Rs 600 per tonne as the stockyard margin for the services it provides. This element is missing in case of direct dispatch.
“Using warehouses has its own advantage as the customer can pay in parts, which is not the case with direct dispatch option. Also if there is a quality issue warehousing system allows the customer to not pick up the material but in direct dispatch, there is no such flexibility as the customer can raise quality dispute only after full delivery,” said the official.
Currently, SAIL has a total of 45 warehouses spread across the country, some of which are owned by the company, while others are owned by an agency.
With credit not being easily available in the market, consumers could be choosing to go for warehousing options as it allows part payment flexibility.
In terms of turnaround time, SAIL has cut down on truck turnaround time to 2-3 hours from more than 10 hours earlier. This has also helped the company get immense customer response for their products, informed the official.
That is not all. On the branding front, SAIL is reaching out to relevant segments of the industry through workshops to deepen its product reach.
“Spending on television commercials or hoardings or other options of advertisements will not help demand pick up in our branded products. These products are niche and have to reach relevant people of the industry for usage to pick up,” said the official.
Workshops for designers, architects, consulting engineers along with engineering students are being conducted across the country, highlighting products’ architectural flexibility and economic benefits of the same, said the official.
The company is holding workshops for new age structural branded products like SAIL-SeQR TMT and NEX in several cities of the country.
Meanwhile, analysts are of the view that the company’s sales volumes need to watched for a few more months to see if the trend is sustainable.
“There could have been some destocking in the system by dealers which could have led to this increase in volumes sales. We need to wait-and-watch to find out if the volume jump is sustainable,” said a Mumbai-based analyst on condition of anonymity.
In FY19, the company on average had monthly volume sales of 1.17 million tonnes. (see chart)
Alongside, SAIL has already launched a cost control drive across it plants and units with the motto of ‘doing more with less’ which is expected to bring down the cost of production.
With efforts towards both, marketing and cost-cutting, the company seems to be preparing for stronger margins in the coming months.