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Tata Steel lines up rural retail push

Monday, 26 May 2014 - 9:00am IST | Agency: dna

Tata Steel, India's second-largest steel maker, is gearing up to cater to the huge demand that is expected in next few years from rural and semi-urban areas.

Apart from developing unique products for rural requirement, the company is also designing a supply chain to reach far-away villages.

"We have a lot of plans to go rural, but those are not yet on the ground. It could be a house, it could be installing roof, instead of just selling a sheet. It could be selling steel doors or steel grain silos," Atrayee Sarkar, chief, marketing and sales, Tata Steel, told dna.

The company is also planning to develop a cost-effective retail supply chain model for hinterlands. "There is a huge under-skilled and non-educated population whose energies could be channelised to support the company and their own lives. Even FMCG companies would not have thought of the alternatives we are thinking of. Alternatives are right now being worked out, and we will have something on the ground soon," Sarkar said, adding that model could also use local village entrepreneurs.

The company plans to come up with this new rural model by the fiscal-end.

With pucca houses coming up across rural areas, Tata Steel this fiscal plans to launch two solutions purely focused on offering house construction related services.

One is providing home designs along with structural engineering, costing, end-to-end supervision of project service. "Second is 'Nest-in', a bottom-of-the-pyramid rural solution, which would involve going to interior villages and helping build homes within nine days without crane or cement. This solution will be slowly ramped up. Commercialisation has just taken place, so probably we will increase its bandwidth," Sarkar said.

Last fiscal, Tata Steel added 1,200 dealers between two key brands Tata Tiscon -- rebars used in construction, and Tata Shakti -- galvanised corrugated sheets used in roofing.

"In 2014-15, we do not have any additional volume. So maximum addition will be another 500-600 dealers on all-India basis," Sarkar said.

The steelmaker, however, wants to increase its presence in western and southern India.

The company has nearly 1,500 customers for hot-rolled coil product, which it would double post commissioning of the first phase of its 3 mt Kalinganagar, Odisha, plant this year.

Also, the branded product segment's contribution to company's revenues is expected to touch 45% this fiscal from 41% in the last.

The company also wants to expand its retail presence in other Southeast Asian countries. Its Thailand unit already sells Tiscon products.

"If we had more material and capacity, we would be happy to go to Myanmar and Bhutan, which are very similar to India, where old trade market needs to be done away with," Sarkar said.

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