Praveen Gnanam leads the team at Tokyo Cement responsible for identifying market needs and trends, informing the development of innovative value-added products by the R&D teams, and taking them to market. The value-added range contributes a small share to group turnover, but the contribution to bottom-line is significantly greater due to higher margins, Gnanam says.
“Despite competition from imports and conventional methods, our focus on quality has allowed us to command premium prices, gaining market share and consumer trust for new solutions that solve old problems.” Despite addressing urgent industry issues, the value-added products took time to find market acceptance. Construction is a costly exercise in Sri Lanka compared to other markets in the region.
“It takes patience and belief in your products to convince people to use them.”
Construction costs for a middle-class home sit at around $1200 per square metre in Sri Lanka compared to $800 in neighbouring India. Costs are higher here due to numerous reasons, from taxation to material costs. However, the key contributor to the disproportionately higher cost of building is wastage. “While bill of quantities will account for 5-10% wastage, the reality is that when you take into account idling machinery, labour inefficiencies and unaccounted for materials, wastage can contribute as much as 40% of overruns,” Gnanam says.
Tokyo cement’s value-added products are designed to address these issues. For instance, the group’s Tokyo Supercast plaster master was introduced to solve two major industry issues; the scarcity of skilled labour, and the wastage associated with transportation and storage of loose materials.
According to Gnanam, the product boasts more than double the application efficiency and coverage with half the workforce. “Despite the benefits of our offerings, there’s often resistance from the market. Sometimes it takes years for a product to contribute to revenue significantly. It takes patience and belief in your products to convince people to use them. Fortunately, the established foundation of the Tokyo Cement Group allows us to take such risks.”
Gnanam’s efforts are paying dividends. Sri Lanka’s cement market shrank 5% in 2018 and is expected to decline further in 2019, reflecting an economic downturn and credit constraints slowing down construction. Despite the slump, Tokyo Cement’s value-added range is recording sales growth of over 20% annually by merely solving everyday problems that plague the industry.