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written by | June 29, 2022

How to Set Up a Cement Dealership Business in India?

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India’s cement industry contributes between 0.10% and 0.06% towards the Gross Domestic Product of the country. Cement is one of the key constituents contributing to India's economic development. With 100 smart cities already functioning smoothly, the government of India has set a new goal of increasing these. Better public infrastructure is on the anvil, and all these infrastructure projects. The consumption level of cement is very high as well. There are about 20 cement manufacturers in  India which cater to the great demand for cement within the country. Some of these include J.K, Ultratech, Jaypee, Mangalam, ACC, as well as Ambuja, to name a few. About 98% of its total production is with the corporate giants of India, and only 2% rests with the government of India. This is one industry which is known to have maximum centralisation of ownership. In 1982, this industry was deregulated, and this attracted large amounts of investments from overseas, foreign investors as well as Indian investors.

Did you know? India is the second-largest producer of global cement and employs about 1 million people!

Steps to Start a Cement Dealership Business in 2022

India is acknowledged to have the largest capacity for cement production after China. However, there are about 23 different varieties of cement which are used as per the requirements of the project. You have to be familiar with the usage of these varieties to understand which type of dealership would interest you. There are many leading manufacturers of cement. You should research the company background, quality of cement, dealership requirements as well as the terms and conditions before starting the necessary formalities. Today, many manufacturers are also focusing their energies on producing environment-friendly cement. Let’s go through some of these details.

Also Read: Know About India's Top Ten Cement Companies

License, Investment and Space Requirements of Cement Dealership

Like every other dealership, a cement dealership involves the completion of several formalities. The investment amount is dependent on the brand of the cement. The amount could vary between 50,000 and 5 lakhs. Most of the top cement companies are known to return this amount with an applicable bank interest as well. Dealers are known to earn a margin of at least 8-10% of the retail selling prices. A minimum space requirement of 500 square feet is a prerequisite though it may vary according to the brand's requirements. Most of the documents required from several brands include:

  • Your GST number
  • Ownership or rental premises
  • Location of your commercial premises (where you propose to set it up)
  • Details of other partners (if you plan to include partners)
  • Details of taxpayer identification number (TIN).

Let’s study the requirements of some leading brands like Ambuja, Jaypee, and JK cement.

Total investment required

The above five brands ask for a security deposit that could vary between 1 lakh and 3 lakhs. If you find this amount too big, you can approach existing dealers and get associated with them. They can help you understand which brands are fast-moving and what profit margins to expect from them.

Also Read: Ways To Start A Successful Cement Brick Manufacturing Business - Tried & Tested!

Ambuja Cement

Documents required:

  • Registration – GST, Shop & Establishment & Company (whether LLP, Proprietorship or Pvt Ltd).
  • Bank statement of at least the last financial quarter and IT returns
  • Trade license
  • Details of taxpayer identification number (TIN).
  • Business insurance

Investment requirement:

About 5 - ₹6.5 lakhs. This amount includes:

  • A security deposit -2 - 2.5 lakhs.
  • Inventory expenses - 1 - ₹1.5 lakhs.
  • Commercial premises equipment (including warehouse) -1 - ₹1.5 lakhs.
  • The initial salary for at least 2 labourers for loading and unloading activities - is25000.
  • Rental deposit and one month’s rent (if premises are on rent).
  • A delivery vehicle like a tempo or a mini truck, if necessary.

Space requirement:

At least 600 – 1500 square feet. In case you plan to sell other related products like steel bricks, tiles or even paint, you will require bigger premises.

Other requirements:

The location should be easily accessible

Profit margin: 3-7%.  The company provides various bonuses for extraordinary achievement of sales figures.

Application for dealership:

Online

  • Visit the official website of Ambuja Cement – www.ambujacement.com
  • Access the application form for becoming a dealer and key in all details requested for.
  • Review the details you have provided, and then submit the form.
  • The concerned authority that manages franchise associations connects with you after your details are verified.

Offline

Get an appointment with the area or zonal sales manager of the city in which you reside. You can get the details from the official website or dial their toll-free number, i.e., 1800 223 010.

Jaypee Cement

Documents required:

  • Registration – GST, Shop & Establishment & Company (whether LLP, Proprietorship or Pvt Ltd).
  • Bank statement of at least the last financial quarter and IT returns
  • Trade license
  • Details of taxpayer identification number (TIN).
  • Business insurance
  • Loan facility from Small Industries Development Bank of India (SIDBI)

Investment required

About 5 - ₹7 lakhs. This amount includes:

  • A security deposit - 2 lakhs
  • Inventory expenses - 1 - ₹3 lakhs
  • Commercial premises equipment (including warehouse) - 1 lakh
  • The initial salary for at least 2 labourers for loading and unloading activities - 30000
  • Rental deposit and one month’s rent (if premises are on rent).
  • A delivery vehicle like a tempo or a mini truck, if necessary.

Space requirement:

A minimum of 500 square feet.

Profit margin: 6-10%. 

Application for dealership:

Online

  • Visit the official website of Jaypee Cement – http://jalindia.com/contact.html..
  • Access the application form for becoming a dealer and key in all details requested for.
  • Review the details you have provided, and then submit the form.
  • The concerned authority that manages franchise associations connects with you after your details are verified.

Offline

  • You can connect with them on their toll-free number, i.e., 91 120 460 9000
  • You can also email your inquiry to – jal.investor@jalindia.co.in
  • If you are a resident of North India, you can make a personal visit to Noida in Uttar Pradesh at the following address – Jaiprakash Associates Limited, Sector -128, Noida, (UP) – 201304.

Also Read: How to Begin a Tiles Business?

JK Cement

Documents required:

  • Registration – GST, Shop & Establishment & Company (whether LLP, Proprietorship or Pvt Ltd).
  • Bank statement of at least the last financial quarter and IT returns
  • Trade license
  • Details of taxpayer identification number (TIN).
  • Business insurance – this is optional.
  • Loan facility from Small Industries Development Bank of India (SIDBI)

Investment required

About6 - ₹7 lakhs. This amount includes:

  • A security deposit - 2 lakhs
  • Inventory expenses - 2.5 - ₹3.5 lakhs
  • Commercial premises equipment (including warehouse) - 1 lakh
  • The initial salary for at least 2 labourers for loading and unloading activities - 30000
  • Rental deposit and one month’s rent (if premises are on rent)
  • A delivery vehicle like a tempo or a mini truck, if necessary.

Space requirement:

A minimum of 500 square feet.

Profit margin: 7-10%. 

Application for dealership:

Online

  • Visit the official website of Jaypee Cement – https://www.jkcement.com/
  • Access the application form for becoming a dealer and key in all details requested for.
  • Review the details you have provided, and then submit the form.
  • The concerned authority that manages franchise associations connects with you after your details are verified.

Offline

  • You can connect with them on their toll-free number, i.e., 1800 266 4606. The concerning sales or zonal manager will connect with you. You can also email your inquiry to – customer.care@jkcement.com.
  • JK Cement insists on at least a 2-3 kilometre distance between two dealers. In case you have a premise close to a JK cement dealer and apply for a dealership, it will get rejected.

Conclusion:

The recent mention of the National Highways Authority of India (NHAI) in the Guinness book of world record affirms the rapid development of infrastructure in India. It also states the increasing dependency on its core component of cement. Starting a cement dealership is, without doubt, one of the most feasible and rewarding businesses. This type of dealership assures you of at least an average profit margin of at least 8-9% on sales. This article lists the various requirements for acquiring a profitable dealership business of some of the most acclaimed cement brands in India. 

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: How much does a cement dealership cost?

Ans:

The dealership costs are dependent on the brand. They could vary between 5 - 6 lakhs

Q: What is the average profit margin in a cement dealership?

Ans:

The profit margin varies across the different brands, but an average return would vary between 7-8% on sales

Q: Explain a viable cement dealership business plan?

Ans:

There are some key considerations which you have to take into account. Some of these include:

  • The type of cement you wish to deal in
  • Do you have a property in a good commercial location with easy connectivity, and does it meet the minimum requirements for a cement dealership?
  • If not, do you have the finances to take up something on rent?
  • Do you have a good network with individuals, corporates, builders, and construction companies who need a consistent supply of cement?
  • Does an average profit margin of about 8-9% suffice?
  • If you affirm all of the above, you have to then decide on which brand of cement would you like to get associated with
  • You can then approach the brand online or offline after obtaining the details of the concerned authority from the website.

Q: Is cement distributorship a feasible business venture?

Ans:

A cement distributorship is one of the most rewarding businesses. India’s infrastructure is seeing phenomenal growth with more smart cities being developed and an expansion of the national highways. The demand for cement is unending as it forms a key component in all infrastructure projects. A cement dealership assures you an approximate margin of 8-9% returns on sale.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.