MAHINDRA NAVISTAR
Outperformers’ League
Cement
15th Jun 2012
Jaipur
Sushil Cherian
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Cement Logistics Importance and Opportunities
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Industry Overview
• Current Installed Capacity is 245 million T
– 139 Large plants produce ~ 234 million T
– 365 mini plants produce ~ 11 million T
• Players in market
Chettinad
Cement
5%
Madras
Cements
6%
Market Share
ACC
14%
Shree Cement
6%
Dalmia
Cements
7%
India Cements
8%
Century
Textile
4%
Ambuja
13%
Jaypee
12%
Ultratech
25%
• Unequal distribution of production areas and consumption
areas leads to logistics playing critical role in Cement Supply
Chain
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Industry Overview
• Critical components of cement costs
Cement Cost Break Down
Depreciation
12%
Power / Energy
29%
Labour
32%
Raw Material
27%
• Logistics cost is 19-25 % of Cement Production
cost
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Cement Logistics
Logistics
Inbound
Rail
Road
Sea/ Inland
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Limestone
Coal
Fly Ash
Gypsum
Additives
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Outbound
Bagged Cement
Clinker, Loose
cement-bulker
Distribution Puzzle ?
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You have a product that is inexpensive to make and has
a phenomenal demand !
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Not quite….
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What takes away a chunk of the
winning is the disproportionate
transportation cost.
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This is the dilemma which
Cement Makers face
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Preferred Transportation
Model
• Transportation
• Transportation costs high - freight accounts for 19-20 % of the production
cost
• Road preferred mode for transportation for distances less than 250kms.
•
However, industry is heavily dependant on roads as the railway
infrastructure is not adequate - shortage of wagons.
Capacity additions
Acquisitions have been the mainstay of the business
Regional imbalance resulting in cross regional movement limestone availability in pockets has led to uneven capacity additions
Capacity additions have slowed down
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•
•
Rajasthan scenario
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Distribution logistics
100 km
300 kms
600 kms
1000 kms
> 1000 kms
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A
B
Plant Locations vs
Distribution
C
D
E
G
H
I
F
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Road Freight Determinants - Cement
Road Condition/
Congestion
Unloading Time/ Unloading
Timings
Loading Time/ Load Timings
Waiting Period
Return Load
Distance
Mode / Transport Availability
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Logistics HUB- Cement
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Value Addition by you …
• Explore secondary delivery and invoicing (on behalf of
distributor) for region
• How does it work ?
– Identify local area along highway for downsizing Cement Consignment ( Bulk
Breaking)
– Place Containers ( 40 ft ) along periphery with multi opening
– Cement bulk is transported to HUB Container and reloaded to small capacity
vehicle
– Possibility of Invoicing system on small vehicle to facilitate quick delivery
– This works well where rail freight can get offset ( bulk loading)
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Benefits
•
•
•
•
•
•
•
•
•
Portable Container warehousing
Timely delivery with in 6-12 hrs
End to End Logistics Solution
Reduction in shortages and wastage
Bag Damages reduction
Other Labour related issues at Plants
Reduction in payment of wharfage charges
Improving sales efficiency by 15-20 % ( cycle time)
Overcome Railway indent issues
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WIN
WIN
SITUATION !
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Thank You
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