PSU steel firms expand network to tap rural market

Vishwanath Kulkarni New Delhi | Updated on April 04, 2011

Aiding the Government's strategy to boost rural steel consumption, the public sector companies Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) are rapidly expanding their reach by adding more dealers in the countryside.

In the past year, SAIL grew its dealer network by little less than a third while RINL expanded it by half. As of January 1, 2011, SAIL had a network of some 2,579 dealers spread over 630 districts across the country as against 1,963 dealers in 599 districts in January 2010.

Similarly, RINL enhanced its network to 120 dealers from 80 a year ago, according to the Steel Ministry's latest annual report.

In a bid to boost the rural steel consumption, the Government has exhorted these companies to expand their networks aggressively. SAIL has rapidly expanded its network in the past five years from 200 in 2006 to 2,579, while RINL which had no dealers in 2003 now has 120.

In February, RINL launched a Rural Dealership Scheme for boosting per capita steel consumption in the remote areas of the country.

Rural India holds a lot of potential for steel demand. Rural steel consumption in India stands at a little over 2 kg per capita per annum.

The low rural consumption is mostly because steel is perceived to be expensive and lack of sale depots increase the transportation cost for steel usage in the interiors of the country.

The Steel Ministry estimates the present per capita consumption of steel in India at around 49 kg as against the world average of 182 kg.

The Ministry has commissioned a study through the Joint Plant Committee during 2010-11 to estimate the per capita demand for iron and steel sector in rural India and to determine the factors that can contribute to its enhancement.

The findings of the study are expected to be finalised by June.

Published on April 04, 2011

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