Under the plan, a retailer who sells a minimum of 200 tonnes (equivalent to 4,000 bags) will be eligible for 30 shares of the blue-chip cement maker. Once the minimum target is achieved, he is entitled to three shares for every additional 20 tonnes sold. The scheme will be valid till May 31, 2000.

Thus, sales of 300 tonnes of cement will fetch a GACL stockist 45 shares of Gujarat Ambuja, which will shoot up to 300 shares (cash equivalent of Rs 1.04 lakh at Tuesday's prices) once sales touch 2,000 tonnes.

The scheme will be a novel route to cement the fortunes of the stockists with that of the company and will help Gujarat Ambuja leverage on the inherent strength of its stock.

On an average, stockists sell around 300-400 tonnes a month, and with this new scheme they will be tempted to push Ambuja cement. Cement retailers generally hawk various cement brandsavailable, and the new arrangement, analysts say, is a ploy to usher in greater loyalty for the Ambuja brand.

The company is, however, not creating any new shares for rewarding the retailers. Instead, they are given the option by the dealers to convert their cash incentives into equivalent number of shares in GACL.

"Instead of giving cash incentives, retailers are given the option to own shares in the company. The understanding is between the dealer and the retailer and the company is no way involved in the share purchases," said a company official.

Besides, Gujarat Ambuja has also launched a host of other performance-linked incentive schemes for its retailers which include gold coins and foreign trips. Also on offer are insurance covers upto Rs 5 lakh for personal accidents and scholarships for their children.

The company has worked out a mechanism under which one particular scheme can be availed of in combination with other available schemes as well.

For enjoying a 10-day trip to the US or a12-day vacation to Europe or 160 grams of gold, GACL stockists will have to meet a sales target of 2,000 tonnes. The same tonnage sales will also entitle the dealer to a six-day trip (for two) to Singapore or Bangkok.

To win gold coins, the retailer will have to sell a minimum 100 tonnes upon which he becomes entitled to 8 grams of the yellow metal. Thereafter, the retailer can win two grams of gold for every 25 tonnes of cement sold.

Retailers can also avail of a combination of two incentive offerings depending on his sales performance. A retailer selling 400 tonnes of cement, for instance, can both enjoy a vacation to Goa and win 16 grams of gold. The combination may be altered to suit the retailers' wishes.

Insight:

A novel attempt

The scheme is an innovative incentive to retailers, and has the effect of tying the retailer closely to the company. However, one issue has to be addressed -- no company is allowed to fund the acquisition of its own shares (except through the buy-backroute, where shares are extinguished and ESOS and ESPS route). But the company has said that it is in no way involved in the scheme. It appears, therefore, that the company has found a novel way to get around this problem.

Urmik Chhaya