How to start a cement dealership business ?

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How to get a Cement Dealership ?

The cement industry is unquestionably one of the most prosperous and profitable businesses in the world today. It is an essential part of the Indian economy, with a considerable contribution to the GDP. Due to the rapid expansion of infrastructure, and being the second-largest producer of cement; for the industry in India, the expansion opportunities are colossal.

Choosing the perfect product for your business, putting up a workspace, establishing a network, and eventually promoting it for stable growth and higher returns are all common steps in becoming a dealer. When one is starting off, the most crucial aspect to be kept in mind is capital and how much of it can be invested. Knowing the capital investment goals and projected expenditures will help in determining how beneficial and ideal it is for one to set-up a dealership.

Challenges for Starting a Cement Dealership Business

One of the biggest challenges of starting a cement dealership is determining the budget and formulating a plan accordingly. It would not help to go into the process without having foreseen the expenditure. This happens on numerous fronts, whether it is for labour, transportation costs, or other fixed costs. It is wise to avoid making any financial decisions that cannot be afforded.

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Furthermore, consistency and monitoring are as crucial as investment. Due to the competitive landscape, marketing and customer acquisition can be difficult, but the returns are ideally matched if done properly.

Is Cement Dealership Profitable ?

A dealership’s success or failure is determined by a number of criteria; such as the product , dealership terms and conditions, market goodwill of the product and the manufacturer, your location, the payment turnover time, and the liasioning capacity.

However, the cement dealership industry has a lot of potential. According to the India Brand Equity Foundation (IBEF), the rising demand for construction and infrastructure development in India as a result of the “local is vocal” initiative is expected to raise demand and production of cement by 2025.

Furthemore, as a crucial commodity in the household industry, a raw material used extensively by architects to shape designs and give their interior forms, the need for cement might not reduce. Additionally, cement is used extensively in ongoing government projects as well, which further gives rise to greater demand.

Ultimately, the total profit margin which the cement dealership business is likely to give is estimated to be somewhere around 8%-10%.

Investment Required for Cement Dealership

Depending on the brand one chooses, an initial payment of Rs 50,000 to 5 Lakhs is made as a security deposit. Usually, these businesses will return the money with an applicable bank interest. Yet, on average, the investment of a cement dealership is determined by the company with which one is dealing.

For instance, when dealing with Ambuja cement, the investment required is Rs 5-8 lakh; while Ultratech needs approximately Rs 10-12 lakh; and JK Lakshmi requires Rs 6-8 lakh.

Requirements for Cement Dealership

The foremost requirement becomes that of an initial investment as a security deposit, which generally varies in accordance to the companies.

Furthemore finding a proper site to set-up a warehouse is just as essential. Setting up a warehouse in an area prone to humidity and dampness can incur additional costs for the company. When selecting a storage facility, it is also important to run an extensive background check to find an optimal location with numerous benefits.

At least a 500 sq ft room is required to stock the cement bags without decreasing their quality. Heavy vehicles, such as trucks, should be able to readily unload the cement bags from the store into the warehouse.

Documents Required for Cement Dealership

Understanding the documentation process is critical to obtaining a dealership. While documentation requirements differ slightly from one brand to the next, every brand requires a few key documents. To avoid any inconsistencies, it is important to prepare and make these documents readily available ahead of time.

  1. GST Registration (Goods and Services Tax)
  2. Land/Rental Agreement
  3. Standard Dealership Arrangement

Some brands demand additional documents, such as ACC cement and UltraTech Cement, where a Firm Registration Document (MSME registration) is required.

Future Scope for Cement Dealership Business

Any cement dealership’s profit margin is directly proportional to the quantity of sales made; i.e., with increased sales, there are more incentives and bonuses from the company. As an incredibly profitable industry, it is highly lucrative and anyone can venture into the dealership to make good money and profits.

According to recent reports, the cement industry is likely to experience a boost with the vast potential for infrastructural growth. Thus bringing about further profits for the cement dealership industry.

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