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Two steel PSUs -- SAIL and RINL -- have started working on devising a common marketing strategy for some of their products to reduce logistics cost and avoid unnecessary competition.
"This is a very good move for the two companies to improve on their logistics costs. It may take some time to devise the strategy. The synergy between the two firms will also help consumers to get their products of the right quality and in right quantity.
"It is a win-win for both the two firms. This will also reduce imports," RINL Chairman and Managing Director A P Chaudhary told PTI.
Steel Secretary G Mohan Kumar in a recent meeting with the two firms had suggested that the two state-run companies devise the strategy, a source in the know said.
The onus of fine-tuning the strategy has been bestowed on the marketing departments of the two.
"Steel Secretary had a meeting with SAIL and RINL last month. He suggested the two to decide a strategy on common marketing for some of the products. The two firms have started working on that," the source said.
Vizag-based Rashtriya Ispat Nigam (RINL) mainly produces long products which are used in the construction sector. Steel Authority of India (SAIL) on the other hand has flat products as well. Flat products mainly find use in auto and consumer durables sector.
The common marketing strategy, which is mainly aimed at reducing the costs of logistics, may also eliminate the unnecessary competition between the two, he said.
Chaudhary said the move would help the two firms to collectively improve penetration into the rural areas, where steel consumption is still to improve by miles.
Since SAIL has more dealers than RINL, the Vizag-based firm could gain more using the other's network, the sources said.
He also said that the move would help the two firms to collectively improve penetration into the rural areas, where steel consumption is still to improve by miles.
It is to be seen whether a particular dealer would sell products of both the firms or would SAIL refrain from selling its long products in southern and western markets, where RINL markets its products.
SAIL has big presence in eastern and northern markets. Apparently, RINL has no business in these areas because of high logistics cost involved.
Apart from that, the marketing synergy between the two can also be complimentary.
In case RINL gets an order but it does not have all products in its basket to service that particular offer, it may source them from SAIL to execute the order and vice-versa.
