Due to India’s rapid urbanization and growth in infrastructure development, there is always a demand for basic construction materials like cement.
India is the second largest producer of cement in the world, with an annual production capacity of over 550 million tonnes.
If you are planning to enter the cement industry, the easiest way is by starting a cement dealership business.
This article provides you with complete details required to start a cement business in India, including investment required, profit margin, best dealership opportunities, and licenses required.
Why Choose Cement Business
Starting a cement dealership business is also one of the cost-effective ways to enter the cement industry. No specialized skills or experience are required.
Cement dealers typically purchase cement from manufacturers and sell it to construction contractors and individuals.
You can start with a small shop and later grow your business by expanding your customer base and increasing your inventory.
As a cement dealer, you can sell a wide range of cement products, such as
➤ Portland Slag Cement (PSC),
➤ Portland Pozzolana Cement (PPC),
➤ Portland Slag Cement (PSC),
➤ White Cement,
➤ Sulphate Resisting Cement (SRC).
This allows you to cater to the needs of a variety of customers.
Apart from cement products, you can also sell other construction materials such as TMT bars, decorative paints, bricks, aggregates, and sand.
The cement business in India is highly competitive, but there is still scope for new entrants.
Investment required for Cement Business
You need an investment of around ₹4 lakhs to ₹6 lakhs to start a cement dealership business in India.
The investment required to start a cement dealership business mainly varies depending on the size of your shop, its location, and the type of cement products you sell.
Here is a breakdown of some of the key costs associated with starting a cement dealership business:
- Dealership Security Deposit: ₹1 lakh to ₹2 lakhs
- Initial Inventory/Stock Purchase: ₹2 lakhs to ₹5 lakhs
- Shop Interior and Warehouse: ₹1 lakh
- Licenses and Registrations: ₹20,000
- Marketing & Promotions: ₹10,000 (Business cards, brochures, signage, etc)
- Shop Advance: (if you do not own a shop)
- Vehicle for Delivery, Forklift: (extra if required)
The monthly ongoing expenses include shop rent, labour salary, inventory purchase, and utility bills.
Profit Margin in Cement Dealership Business
You can expect a profit margin of 5% to 10% from a cement dealership business in India.
These profit margins may vary depending on factors such as the volume of your inventory purchase and your shop’s operating expenses.
As with other cement brands, these profit margins are also decided by the bonuses and schemes offered by the company.
If you make more monthly sales, your chances of getting good discounts from the company will be higher.
Best Brand for Cement Dealership Business
The best cement brand for a dealership business in India depends on a number of factors, including the region you operate in and your budget.
However, some of the most popular cement brands in India include:
1.UltraTech Cement: UltraTech Cement is the largest cement manufacturer in India, with a production capacity of over 120 million tonnes per annum (MTPA) and a network of over 119 cement plants and grinding stations across India and abroad. It is part of the Aditya Birla Group, one of India’s largest conglomerates.
Read more about UltraTech Dealership.
2. Ambuja Cements: Ambuja Cements Limited is a major Indian cement-producing company, part of the Adani Group, one of the largest conglomerates in India. It has a production capacity of over 30 million tonnes per annum (MTPA) and a network of over 100 cement plants and grinding stations across India.
Read more about Ambuja Dealership.
3. ACC Cements: ACC Limited (ACC) is another major Indian cement-producing company, also part of the Adani Group. It has a production capacity of over 35 MTPA and a network of over 170 cement plants and grinding stations across India.
Read more about ACC Cement Dealership.
4. Shree Cements: Shree Cements Limited is one of the largest cement producers in India, with a production capacity of over 40 million tonnes per annum (MTPA) and a network of over 20 cement plants and grinding stations across India.
Read more about Shree Cement Dealership
Licenses and Registrations required
The following licenses and registrations are required for a cement dealership business in India:
- Dealership agreement: A dealership agreement is a contract between the cement dealer and the cement manufacturer.
- Company Registration (Sole Proprietorship/LLP/Pvt Lmt.)
- Trade Licence from the local municipality
- Shop & Establishment Registration
- GST Registration
- Previous bank statements/IT Returns: For financial background verification
- Business Insurance (if required)
These document requirements vary from state to state. You can consult a local chartered accountant to get these documents.
Location and Space requirement
Your cement dealership should be located in a convenient and accessible location with good transportation links and easy access for heavy vehicles such as trucks.
You will need at least 500 square feet of space to start a cement business, plus additional space to store your inventory.
If you plan to sell other construction materials together with cement or offer additional services, you may need more space.
How to contact Cement Companies
Every cement company has an official website, where you can find their contact information. You can also call the company’s customer service line or email the company directly to express your interest in becoming a dealer.
Once you have contacted a cement company, they will likely ask you for some basic information about your business, such as your location, target market, and sales goals. They may also ask you to complete an application form.
Once your application has been reviewed, a sales representative will contact you to discuss your dealership opportunity. They will be able to answer any questions you have about the program and help you get started.
We hope this information will help you start a cement business in India. If you like this article, please share it with your friends who are interested in the construction materials industry.