Economy & Market
Today, setting up a mini plant it is no longer economically viable
Published
12 years agoon
By
admin
TD Katwa
Chairman, Katwa Cements
The year 2013 was a year of mergers and acquisitions, when mammoth organisations joined forces to take advantage of scale and supplementary distribution networks that spanned over several continents. Industry experts in India reiterate that a cement plant with production capacity less than 2 mtpa cannot survive in today?s competitive market. So is this the end of mini plants in India? ICR interacts with TD Katwa to know how their mini plant is holding up against the odds. Excerpts from the interview.
Please brief us about your company and markets served?
We started Katwa Cements (KCPL) way back in 1985. The 0.2 mtpa plant has been running non-stop ever since. KCPL has its cement manufacturing plant at Belgaum in Karnataka. The plant is strategically located close to the limestone deposits of Yadwad village in Karnataka. The company serves the cement markets of northern Karnataka, southern Maharashtra and Goa. The dealers network, established three decades ago, is still in place and has only grown stronger with time.
What is the range of products offered by your company?
We manufacture both Ordinary Portland Cement (grades 43 and 53) and Portland Pozzolana Cement. We manufacture and sell cement under the brand names: Katwa Super, Katwa Cement and Katwa Suraksha.
Please brief us about the revenue gathered from your different product lines?
Of all our products, OPC 53 grade cement sales contribute to around 75 per cent of our revenue. OPC 43 grade contributes around 20 per cent and PPC grade contributes around 5 per cent.
What does the management structure at KCPL look like?
We are three directors in the business namely: TD Katwa, Chairman; Nitin T Katwa, Technical Director; Ravi T Katwa, Managing Director, who is also involved in R&D activities at KCPL.
How has KCPL performed in last 5 years in terms of growth and product launches?
KCPL has nearly doubled its production and sales capacity in the last 5 years. There was a strong demand for PPC grade cement indicated by our dealer network. To meet the demand we have launched ?Katwa Suraksha,? a PPC product in the market.
How is the cement industry performing and what are the challenges faced by the sector?
Overcapacity is affecting the cement industry badly for more than half-a-decade now. Rapid expansions worth more than Rs 50,000 crore that were done during 2007-12 have doubled the production capacity from 180 mtpa to 360 mtpa, the fastest in the sector?s history. This is serving as a self-made trap for the cement makers as the demand is very weak, far from the expectations that had driven the expansions.
The cement demand from the infrastructure and real estate sector is very low in comparison to what we expect it to be in a typical summer season. Also, the industry has been grappling with cost pressures due to rise in raw material costs and freight charges.
How are you dealing with these issues?
Though the cement prices have been reduced to stay competitive, we have been able to maintain our sale volumes at good levels. Our volumes are keeping us in profits. One of our business strategies is to remain focused on rural markets. We regularly conduct on-site social gatherings with our customers and run loyalty reward programs to keep them bonded to Katwa Cements. Apart from this, we also keep introducing several annual target-based schemes for our dealers.
We do not compromise on quality and delivery, and make the product available to our customers at an affordable price, which is why our customers keep coming back to us.
Are you planning for any capacity additions or product launches?
Yes. We have identified a few locations and are planning to set up facilities there. We are also planning to introduce Portland Slag Cement (PSC) in the market.
Tell us about your company?s CSR activities
The three thrust areas of our CSR initiatives at KCPL are clean drinking water, health & medical care and good education. Some of our initiatives in these areas include; Clean drinking water: We have installed hand pumps, tube wells, submersible pumps and have constructed elevated water tanks. We have also made provision for water connection; and have installed aqua guard water purifiers, water coolers at schools and community centres, etc.
Health & medical care: Katwa has organised camps to create awareness about several diseases in the region. We also arrange for free medical consultation and medicine for the needy employees at the plant.
Education: We have set-up a nursery for the kids staying at the plant quarters and are providing them with free education.
In today?s market where cement companies are going ahead with mergers and acquisitions to maintain economic viability, what are the challenges faced by a mini plant?
The only problem in being a mini-cement plant is the high cost of production, since a mini plant is highly labour intensive. And nowadays getting labour and skilled manpower is a big challenge due to competition. Labour is in short-supply and has become costly.
In current market conditions, it is advisable to have a cement plant to the minimum at small scale level. With cement prices dropping rapidly and with larger organisations joining hands to take advantage of scale, newly set up mini plants are finding it very tough to sustain themselves. Some of them, which are surviving, are bearing huge debts on their assets. Today, setting up a mini plant is no longer economically viable.
So how is your plant holding up in this tough scenario?
We are free from all bank loans and liabilities, etc., for more than a decade now. This is mainly because of our early start in this business. Katwa brand is pretty old and well recognised in this region. We have focused on quality and quick delivery at affordable prices right from the beginning. Quick delivery and availability is very important for consumers. So, we have maintained strong relations with our dealers and have retained even those who had joined us right from the inception of our plant. Our dealer network and brand recognition has helped us to manage the business profitably.
The other significant factor is we have based our unit closer to the limestone deposits. This has helped in cutting down the cost of logistics, which is a major expense for any cement plant.
Of course we do feel the need to expand, hence looking at boosting our capacity and introducing new products to fuel our growth further.
Are there any benefits of having a mini plant?
Yes, you do get some tax subsidies. Central government offers excise cuts to the mini-cement plants. Besides, the technology applied in mini-plant is simple; we don?t need highly skilled manpower. That helps in keeping overhead costs low.
We do not compromise on quality and delivery, and make the product available to our customers at an affordable price, which is why our customers keep coming back to us.
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Nuvoco Vistas Corp Ltd, part of Nirma Group and one of India’s leading cement companies, has partnered with Clean Max Enviro Energy Solutions Limited (CleanMax), a renewable energy solutions provider for the commercial and industrial (C&I) sector, to develop a 46.4 MW wind-solar hybrid renewable energy project in Rajasthan.
The project will support Nuvoco’s cement operations with cleaner power while strengthening its renewable energy and decarbonisation strategy. It is expected to increase the share of renewable energy in Nuvoco’s power mix, reducing fossil fuel consumption and associated emissions.
Developed by CleanMax, an Independent Power Producer (IPP), at Bhikamkhore, Rajasthan, the project will comprise 20 MW of wind capacity and 26.4 MWdc of solar capacity, along with a 2-MWh Battery Energy Storage System (BESS). Power generated from the facility will be supplied to Nuvoco through the State Transmission Utility (STU) Open Access network.
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The initiative supports Nuvoco’s ongoing efforts to reduce the carbon intensity of its manufacturing operations through renewable energy adoption, Waste Heat Recovery Systems (WHRS), energy-efficiency measures and increased use of alternative fuels. It also aligns with the company’s DIRE (Digitalisation, Innovation and Renewables) agenda, which focuses on climate action, renewable energy transition, water stewardship, circularity and biodiversity conservation across its manufacturing ecosystem.
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Praveen Vashistha, Founder, Gxpress Solutions, speaks about building a holistic logistics network that encompasses latest technology and current challenges faced by logistics service providers.
Logistics may seem to only entail transporting a package from one location to another. However, there is more to this term than just that. Logistics refers to the entire process of controlling all movement, transfers and decisions in the correct way at the right time and cost and with the desired level of visibility.
People nowadays want to receive more than just the delivery. They want quick, efficient, reliable and transparent logistics service. On the other hand, companies are facing higher operating costs, broken supply chains, congested cities, changing habits of consumers and growing complexity of logistics services. In this situation, a full logistics package is gaining importance not only as a competitive advantage but also as a necessity for a successful business.
The main challenge lies in uniting the first mile, the middle mile and the last mile into one seamless process.
The journey begins before the package moves
First-mile logistics may be the least recognised part of the logistics chain, but they have a crucial influence on all that follows.
This stage starts from the moment the shipment leaves the manufacturer, supplier, farm, warehouse or distribution centre. Depending on the industry, first-mile logistics may involve grouping shipments from multiple suppliers, compiling paperwork and checking the inventory before sending the shipments to a central hub.
Flaws in first-mile logistics produce effects later down the supply chain. Delays in cargo pickup can affect warehouse operations; improper packaging can damage goods in transit; and incorrect inventory information may cause stockholding or unnecessary replenishments.
This is why building a reliable network involves simplifying the operations done at the beginning of the supply chain.

Companies require accurate demand forecasts, supplier visibility, standard procedures, and software to capture information from the moment a shipment enters the supply chain. Route planning and fleet management are also important at this stage, especially as it may involve contacting multiple suppliers.
The main goal is simply to make the first mile predictable.
The middle mile: Where scale meets complexity
When products leave the original site, they travel through the ‘middle mile,’ which connects fulfilment centres, warehouses, sorting centres, and regional distribution points. In this phase, logistics networks begin operating on a large scale. A shipment can pass through several facilities before reaching the final destination. Each additional transfer entails the risk of delay or damage and information losses. Accordingly, the ideal solution is not to minimise the number of transfers but rather to optimise them. The use of hub-and-spoke networks, regional distribution centres, and strategically placed distribution centres can help companies shorten transportation routes and optimise distribution costs. Besides, data can be used to determine the optimal placement of inventories.
For instance, a retailer may find that it takes more time and is more expensive to deliver goods to customers if everything is stored in a central warehouse. Meanwhile, regional distribution helps meet the customer’s needs quicker and more efficiently.
The last mile is where the customer judges you
When it comes to the logistics experience, the customer experience comes down to the delivery. While the last mile might comprise a small part of the entire journey in actual distance, it could also entail expensive and difficult processes. Delivery runs through densely populated cities, through traffic jams, through unsuccessful delivery attempts, and through changing consumer preferences and narrowed time frames.
Customers want to have control over their delivery. Delivery means that customers expect to know the exact moment when their order is delivered. They need to receive current updates about their orders and the ability to decide whether they want scheduled deliveries, or whether they want their order to be dropped off at a designated location far from their house.
As a result, last-mile logistics must incorporate both efficiency and experience. The technology may be used to ensure timely and accurate delivery, through such products as route optimisation and real-time delivery tracking.
However, technology is not enough to guarantee success in terms of last-mile delivery. Knowledge of the local area is still an important aspect that contributes to successful delivery.
One network, not three separate operations
First, the common mistake that organisations can make is treating the first mile, the middle, and the last mile separately.
An effective first mile of logistics does not matter much if the shipment waits in a hub for many hours. A perfectly working warehouse does not make a happy customer if the last-mile delivery fails. Therefore, even the fastest last-mile delivery can become an expensive operation if the supply is not well geographically positioned.
The three moments should work together as one whole system.
This implies having a common view on inventory, transport capacities, shipment statuses and demand. The Transportation Management System, Warehouse Management System and order management system should give information to each other instead of acting like separate islands.
That is where real-time information comes into play!
If something happens, such as a vehicle gets delayed, the company has to know that from the start. If not, someone from Customer Service should be informed about the situation.
Visibility is the new infrastructure
Previously, companies had to rely on physical assets, such as warehouses, trucks, and sorting facilities, to create their logistics networks. Today, they have an additional layer of technology providing visibility.
Command-and-control systems now include GPS tracking, Internet of Things devices, bar-coding, RFID, cloud computing, artificial intelligence, and analytics, which allow companies to know what the goods are doing, how well they are doing, and what is going to happen next.
Predictive analytics reveal possible delays. AI-powered forecasting increases availability. Digital dashboards enable the manager to monitor all operations in one place. The efficiency of such technologies is not measured in the amount of information they gather, but rather in their capability of converting data into knowledge.
Logistics managers should be able to answer the following questions: Where is it? When is it supposed to arrive? What causes the delay? What impact does it have? Can it be delivered some other way? How much will it cost?
The sooner the answers are given, the more resilient the logistics system is.
Resilience must be designed into the network
The events of recent years have highlighted the vulnerability of interconnected supply chains. Geopolitical tensions, bad weather, a lack of labour, poorly developed infrastructure and an unexpected spike in demand are some events that can cause problems for logistics systems without prior notice. Thus, companies should create an end-to-end network not just for normal times but also capable of functioning quickly in problematic situations. In order to create such a network, it is necessary to find alternative suppliers, use several means of transportation, create several routes of delivery, and establish inventory. It is also important to use scenario planning to define what to do if the main hub becomes unavailable or any means of transportation is blocked.
Sustainability: Part of the delivery equation
The future of logistics will also be shaped by environmental considerations.
As delivery volumes rise, businesses are under increasing pressure to reduce emissions without compromising service. Better route planning, load optimisation, electric vehicles, alternative fuels, renewable-energy-powered warehouses and consolidated deliveries can all contribute. The most sustainable shipment is often the one that does not require unnecessary movement in the first place.
Better demand forecasting and inventory placement can reduce empty miles and avoid repeated transportation. Consolidating deliveries can improve vehicle utilisation. Reverse logistics can ensure that products, packaging and materials return efficiently instead of becoming waste.
Sustainability, therefore, should not be treated as a separate initiative. It should be incorporated into network design itself.
The future belongs to connected logistics
An end-to-end logistics network ultimately seeks to close existing gaps between various processes.
Every mile of the process should be interconnected with the other miles. Warehouses should be aware of the restraints imposed by transportation. Delivery crews should be able to know at every moment the inventory at their disposal. Clients must have access to this useful information.
Companies that will be successful in this area will not necessarily be the ones with the biggest fleets or the most warehouses. They will simply be the ones that can employ their resources in the most effective manner.
The future of logistics will be represented by an ecosystem consisting of the combination of the physical aspect, digital intelligence, and personnel decisions. Every mile in the process of delivery is important. However, the key advantage here is getting those miles to work together.
For companies, it means having minimal resistance, enhancing their efficiency and improving customer care. For clients, it means simply having the right product delivered at the right time.
About the author: Praveen Vashistha, Founder, Gxpress Solutions,
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