Companies

Steel makers strengthen rural presence as demand swells

Vishwanath Kulkarni New Delhi | Updated on August 02, 2011

Workers erect steel structures for a bridge in Tiruchi. Steel makers have seen demand for steel rising in rural areas due to several reasons.

Study sees five-fold per-capita consumption growth in 6 years





Steel majors such as SAIL and Tata Steel are beefing up their presence in rural areas to tap the rising demand, largely driven by the construction sector.

The growth has been significant in the past few years.

A recent study by IMRB estimates per-capita steel consumption in rural India at about 9.8 kg, a five-fold growth in six years.

The National Steel Policy-2005 had estimated per-capita rural consumption at two kg then.

Steel consumption in rural India has traditionally trailed the urban sector due to issues such as affordability and availability of the commodity.

The current per-capita consumption of finished steel stands at 55 kg and is projected to grow to 112 kg by 2019-20.

“There is an increasing demand for steel from rural areas, mainly from construction, both household and community, and agri-implements,” said Mr Sushim Banerjee, Director General of the Calcutta-based Institute for Steel Development and Growth.

The Government's rural social welfare initiatives, such as low-cost housing scheme and Pradhan Mantri Gram Sadak Yojana, are also seen aiding the demand, he said.

“Rural market is undergoing a rapid transformation with its new found purchasing power. This potential could help us in raising per-capita steel consumption,” the SAIL Chairman, Mr C.S.Verma, said.

SAIL is present in 630 districts with over 2,700 dealers, of which 728 are in rural areas.

In the current fiscal, SAIL intends to appoint 1,500 dealers, of which about 1,000 will be in rural areas.

About 27 per cent of SAIL's retail sales of 5.8 lakh tonnes in 2010-11 were from rural areas.

SAIL plans to sell about five lakh tonnes of construction steel in the rural market in the current fiscal. The company has recently formulated a special rural-dealership scheme that gives preference to rural dealers.

Tata Steel has some 2,400 direct retail outlets in rural and semi-urban areas, through which it sells roofing sheets. The company also sells steel pipes, used in plumbing and irrigation, through 4,000 outlets, of which 60 per cent are in rural areas. Tata Agrico farming equipment and general-purpose hand tools are sold in the rural market through the company's retail outlets and hardware stores numbering around 20,000.

Other companies, too, such as Essar Steel through its Hypermart outlets and JSW Steel through its JSW Shoppes, are expanding their reach in the rural and semi-urban market.

Published on August 02, 2011

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