Covid-19 and the response to it in India has forced daily wagers and low-wage gig workers in urban slums to return to their villages, orchestrating an unprecedented U-turn in migration trends. The stimulus package under the Atmanirbhar Bharat initiative and allocations under other projects for infrastructure development is expected to absorb a good part of regular and surplus (including returnee migrants) workforce in the rural market.
In a recent interview conducted by SteelMint, Mr. Anubhav Gupta, Chief Strategic Head, APL Apollo Tubes said that “We adopted a strategy to focus highly on the rural sector when there was a reverse migration of more than 150 million workers from big cities to small towns. It was quite evident that the rural economy would outperform the urban economy in the next three to four quarters”. The company witnessed the expansion of structural steel tubes as it offers a proposition to fabricators, construction workers in order to earn their livelihood by setting up homes, offices, small shops, stalls, etc in the rural sector.
Key takeaways from SteelMint’s conversation with APL Apollo
- On 18th April, the Govt. had come out with the first set of relaxation guidelines. Apollo’s first plant in Raipur had begun operation on 22nd April. By first week of May, other ten plants were also fully operational.
- Despite, zero sales in April, Apollo’s market share has grown to 50% from 40% in March 2020, given its size and scale with plants across India, wide reach and brand equity.
- On seeing possibility in rural market, Apollo revitalized the whole network of 300-400 distributors in the rural market during April and May as they have a vast network of 800 distributors across the country. Earlier, 400-500 distributors in big towns were highly active in comparison to the distributors in small towns.
- The demand being strong at the end level, the architects and fabricators purchased material from Apollo. A rural urban split which was 35%:65% last year is 60%:40% this year. The rural sale has almost doubled during last 3-4 months.
- Urban markets are operating at 80-90% of pre –Covid levels now whereas, rural markets are operating at 110-115 % levels.
- Rural market has grown by 10-15% while the urban sales is down by 10-20%. Adopting the rural strategy, Apollo gained momentum and foundation was laid in April.
Outlook
As APL witnesses steady demand from the rural market, there is a focus on deeper distribution of structural tubes and creating a consumer brand in the rural sector. Keeping the rural market in consideration, APL Apollo has been at the forefront of launching innovative products such as Signature (designer roofing), Chaukhat (steel door frames) and Tricoat brands in order to enhance the awareness of their products. We expect rural demand to increase in the coming months since Covid-19 pandemic has changed India’s workforce dynamics, as a majority of the white collar workforce have relocated to smaller cities owing to work from home being the new normal.
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