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ACC launces India’s first Sustainable house called Gratitude Villa

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ACC would promote low CO2 emissions during construction of these houses

ACC Ltd. has launched Houses of Tomorrow (HOT), a worldwide programme of Holcim, in India as a concrete step toward achieving sustainable development. ACC will be the first Indian building materials company to monitor and encourage low CO2 emissions in constructing single-family homes. The Houses of Tomorrow are long-term, cost-effective, accessible, and repeatable. The programme plans to build homes using novel low-CO2 building materials. Puducherry is home to the first project in India, called Gratitude Villa. The project, designed by Trupti Doshi, a well-known sustainability expert, blends materials, climate-specific passive design, and smart building processes to produce a holistically sustainable house that also improves the tenants’ comfort. The use of materials such as ECOPact green concrete, ACC Suraksha cement, fly-ash bricks, and a low CO2 alternative to virgin steel reinforcing is planned to minimise CO2 emissions by 40% at Gratitude Villa. Mr. Sridhar Balakrishnan, MD & CEO, ACC Limited, told the media that their parent company Holcim is pioneering the move to sustainable building. The concept of Houses of Tomorrow sprang from this commitment to sustainability. He said that they are excited to launch this project in India, which would help us continue to inspire future generations of house builders to choose green goods and solutions. Balakrishnan said that through innovation and clever design, they believe that sustainability is for everyone in every place and at any price range.Over 40 well-known architects were asked to participate in the Houses of Tomorrow initiative as part of the selection process. Gratitude Villa was chosen as the first House of Tomorrow in India after a jury evaluation, as it satisfied the goal of displaying a beautifully designed house that uses low carbon impact materials and sustainable construction. The first wave of this unique initiative, which is being coordinated across five nation- India, Kenya, France, Canada, and Mexico – plans to have a good influence on the environment while also providing long-term value to the population.

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Also read: India’s green real estate assets availability grows 37% in 5 years

Concrete

The Economics of Bulk

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While analysing the rising costs of cement and its impact on infrastructure and real estate development, one cannot ignore the major driving factor – bulk distribution. In spite of being a desirable solution, bulk distribution comes with its own set of challenges. ICR looks at the various ways in which the industry is facing off these issues.

The manufacturing process of cement is energy intensive, labour intensive and cumbersome. Once the process of sourcing raw materials, taking it through pyroprocessing, clinker production, cooling and grinding is done, the end product is stored in silos before it is packed in bulk carriers or bags to be transported to its destination.
The growing infrastructure of India is directly impacting the demand and consumption of cement in the country. With the government launching multiple campaigns, programmes and goals for the development of the nation, the cement industry becomes a key contributor towards realising those goals. According to a study conducted by market research giants, Research and Markets in 2021, the housing sector is the key contributor to the cement industry growth. It is estimated that about 60 per cent of cement is consumed by the sector. Demand will be further fueled by the non-trade segment, which is gaining momentum with the resumption of construction work of public infrastructure projects such as roadways and metros, after the lockdown. Amongst the five zones that India is divided into, the South will be the highest producer of cement with 33 per cent production amongst the total produced volume.

Distribution channels
The bulk transportation of cement in India takes place through three modes, i.e., ship, rail and road transports. India transports cement majorly through rail and only 3 to 4 per cent of the total production is transported through water routes.
Railways are used not only for the transportation of finished products, but also for transporting coal and raw materials from one place to another. Indian Railway provides a rake of 40 covered wagons that can carry approximately 2600 MT of cement. Each wagon has the capacity of carrying 64MT to 66MT of cement. Railways provide wagons as per their availability and allow specific timings for rake loading. Once the sidings are loaded, a memo needs to be submitted informing the railways that the task has been completed in time. However, in case of delays, demurrage is charged on hourly basis for the extra time utilised for loading.
The railway deputes commercial staff round the clock on the loading sites for collecting freight, charging demurrage and freight. They also verify the loading of wagons and keep the record for respective authorities involved. These officials are known as Goods Clerk.
Anand Kumar Sharma, Logistics Head, JK Cement says, “Railways is the most suitable mode of transport for carrying large quantities of cement on longer lead destinations. Railways have lower freight costs compared to road transport, especially when shipping high volumes. With the continuous increase of diesel rates in India, road freights consist of almost 40 per cent of fuel cost which makes it costlier than rail freights Railways have standardised transit schedules, which aren’t hindered by traffic and weather.”
According to the India Brand Equity Forum, India’s overall cement production accounted for 294.4 million tonnes (MT) in FY21 and 329 million tonnes (MT) in FY20. In February 2021, the cement production increased by 7.8 per cent compared to February 2020. India’s overall cement production accounted for 262 million tonnes (MT) in FY21 (till February 2021). The cement production is expected to increase by 10 per cent to 12 per cent and the utilisation is expected around 65 per cent in FY22.
As per Statista reports, the volume of cement transported using railways has increased to 120.4 MT in FY 2021 which is the highest volume in the past decade. This increase is accredited public and private investment in infrastructure and housing, and commercial and industrial construction, which will also impact the production of cement and transportation positively.
Road transport in the cement industry amounts to a bulk of cement being transported through roadways using trucks, trailers and tankers/bulkers that makes cement reach its distributors or customers at the final destination. This type of transportation is conducted directly from the packing plant and there is lesser loading and unloading of the material as compared to railway transport.
The tally checker at the plant is responsible for the loading of cement in the trucks or tankers and once the loading is completed they ensure that the sealing arrangement of all manholes or outlets, so the product does not leak from any of the manholes or outlets to avoid theft or adulteration in product through manholes. Once all checks are complete, authorised drivers carry this bulk load of cement through defined routes to the end user or distributor of cement.
The rise in road transportation share has picked up from 36 per cent of total despatches in the ’80s to over 65 per cent now. A majority of cement plants now have their own fleet of trucks and could benefit from the government’s enhancement of road infrastructure. Also, the cement industry is keen on promoting bulk loading of cement for more efficient handling leading to faster loading as well as evacuation, thus improving turnaround time. It offers advantages such as reduction in loss of cement, no seepage due to multiple handling or bag bursts. Besides, bulk wagons carry 40 to 50 per cent more cement, says a study conducted by Ernst & Young.
“By road, the end product directly reaches the customer. The bag quality remains good with the least amount of deterioration to the bag. But in case of rail, the material goes through material handlings like from factory to railway platform, platform to cargo containers. It is then loaded into smaller trucks at the destination and then reaches the customer. In some cases, it goes to the warehouse, then railways, then customers. This amount of bag handling hampers the bag quality. When the distance to be covered is beyond 300km, then we consider rail transport as it also presents a large cost advantage,” says Vimal Choudhary, President and Logistics Head – Heidelberg Cement India.

Cost impact of transportation
In his article published on LinkedIn, Saurabh Tripathi, DGM – Supply Chain Management, Titagarh, mentioned, “The cost of transportation is a key factor in competitively supplying customers with cement. The distribution of cement to the end user from the manufacturer is a major cost factor in the landed cost of cement at the user end. Approximately 30 to 35 per cent of the cost of cement can be attributed to the cost of distribution, which begins at the gates of the cement facility. Cement, being a bulk commodity, transporting is a costly affair. The selling and distribution costs account for around 18 per cent of sales revenues”.
This makes a thought out distribution network key to optimising efficient operation of the whole supply chain. Besides optimising the supply chain, the cement manufacturers will also have to look for strategic locations for warehousing and distribution which can substantially help reduce the logistics cost of cement. In an interview to Business Line in (insert date), A V Dharmakrishnan, CEO, Ramco Cements had said that logistics cost may either equal or exceed manufacturing cost, as 5 to 10 years down the line, for many companies the distribution cost will be more than the manufacturing cost.
Further, the Cement Manufacturers Association of India states that cement transportation results in various losses due to bag burst, seepage, and loss of cement while multiple handling. To minimise such losses cement manufacturing organisations have started promoting bulk cement suppliers. The bulk cement suppliers deliver cement in bulk at construction sites in specially designed vehicles. This supply proves beneficial and convenient over procuring cement bags. This is very economical for the project developer also to procure cement in bulk without traces of moisture as the bulk cement is always untouched and directly transported to the construction sites.

-Kanika Mathur

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“Project size is key to shift to bulk supplies.”

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Anand Kumar Sharma, Logistics Head, JK Cement, brings to light the advantages of bulk distribution of cement and also focuses on the key changes that the industry is likely to witness such as innovations in types of cement and increasing role of e-commerce.

What is the volume of production in your cement plants and how much of it goes in bulk distribution?
Volume of cement production in FY22 is close to 12 million tonnes out of which approximately 8 per cent was part of bulk distribution.

Which is the most suitable mode of transport for carrying large quantities of cement and why?

  • Railways is the most suitable mode of transport for carrying large quantities of cement on longer lead destinations.
  • Railways have lower freight costs compared to road transport, especially when shipping high volumes.
  • With the continuous increase of diesel rates in India, road freights consist of almost 40 per cent of fuel cost which makes it costlier than rail freights
  • Railways have standardised transit schedules, which aren’t hindered by traffic and weather.
  • Poor road infrastructure, vehicle movement restrictions on routes passing through villages and towns, add to delays and underutilisation of logistics assets, adding to cost increases which is not in case of railways.

Sea transport is the optimal mode of transportation and carries huge volumes of load. The transportation is economical compared to rail as well as road transport routes, which are comparatively congested but have very limited sources.

What are the various advantages attached to bulk distribution of cement?
The advantages attached to the bulk distribution of cement are as follows:

  • The loss on account of multiple handling and occasional bursting of bags is totally avoided.
  • Pilferage during transit and at the site is avoided
  • Dust emissions at railway yards, cement handling godowns, transportation by trucks and construction sites are now a major concern in cities. The resultant Suspended Particulate Matter (SPM) levels lead to crores of rupees being spent by the government towards health related issues. The use of bulk cement through modern bulk terminals and related equipment would significantly contribute to the reduction in pollution levels.
  • Plastic bags, which are currently the preferred mode of packing used in India, are not ideal as they are not environment friendly. Since these bags are non-biodegradable, it’s not a viable option therefore, bulk transportation avoids such pollution.
  • Moreover, a major advantage of transporting bulk cement is the easy availability in large volumes and consistent quality.
  • Transportation of cement in bulk has been able to reduce the project implementation time and cost optimisation.

How does distribution or transportation of cement in bulk impact the end user cost of the product?
There are two aspects of cost impact on the end user in relation to transportation of cement in bulk:
Institutional sales: In the institutional segment, there are some benefits of bulk supplies to our customers. However, it requires storage infrastructure hence there’s a cost factor. This cost would be set off by discounts/price negotiations on bulk supplies. In the case of bagged cement, apart from bag cost there would be handling cost, first at the time of delivery and other at the time of usage. So, this cost can be avoided by setting up bulk silos. However, project size is key to shift to bulk supplies.
Trade/IHB sales: With the current infrastructure (load size) it would be difficult to shift bag supplies to bulk. The IHB sector contributes 55 to 60 per cent of total cement demand and the lot size is also small. Average consumption quantity in this space is around 700 to 800 bags/site in a span of 4 to 5 months which is effectively one bulker load but the customer buys this quantity of cement in small lots – of 50 bags or less. So, it would not be feasible to shift a very big chunk of supplies to bulk.
Apart from this, the transportation cost of bulk supplies is much higher than bagged supplies for one very common reason – i.e. return load.

What are the major challenges or gaps faced by your organisation in the bulk distribution domain?
Major challenges faced by our organisation in the bulk distribution domain are as follows:

  • There is always a storage infrastructure challenge at bulk sites due to which silos are needed at customer sites, which leads to some cost implications. Moreover, it is feasible only in the case of long term projects/sites of at least two years of duration. Therefore, there is a need to explore infrastructure of movable silos to overcome this challenge but again this will involve a major cost impact.
  • Though over the period bulk demand for cement has increased but not to the extent where timely unloading of the fleets and vehicle rotation can be optimised. In bulk distribution vehicles often get detained at customer sites for multiple days due unforeseen circumstances like a vehicle breakdown at the site or rain etc.

Explain your organisation’s distribution model.

How can a curated logistics system help in achieving the sustainability goals for the industry?

  • The curated logistics system would help in the following ways to achieve the sustainability goals for the cement industry.
  • Clean energy resources – Companies have to explore EVs and CNG/LNG vehicles more and more to reduce the carbon footprint.
  • Shift of mode of transport to rail/sea would help in achieving sustainability goal.
  • Government has to increase the carrying capacity of the fleet thereby resulting in lower fuel to carry higher volume.
  • Eco-driving education and tracking of drivers is another significant way to reduce fuel consumption. It also minimises the risk of possible damages to the driver.
  • Using tyre pressure sensors helps fuel consumption by up to 12 per cent at lower speeds, as well as extending the tyre’s life.

What are the key changes the industry is likely to witness in the near future?
Key changes the industry is likely to witness in the near future are:
Increase in demand: Based on Kanvic’s Cement Demand Projection Model developed specifically for Indian Cement Review Vision 2030 shows that cement demand in India will increase by 116 per cent by 2030 to 660 million metric tons (MMT) at a CAGR of 6.6 per cent.
Paper bags for cement: Cement manufacturers will switch to sustainable solutions and replacing conventional plastic bags with high shelf life paper bags. The use of paper bags for cement packaging enhances the aesthetic appeal and provides ease of printability. Paper bags for cement packaging will ensure product protection from moisture.
Increase of Ready Mix Concrete (RMC): RMC allows speedy construction through programmed delivery at the site and also reduces the labour cost. RMC comes with consistency in quality through accurate and computerised control of sand aggregates and water as per mix designs. Production of
RMC helps in minimising cement wastage due to bulk handling.
Shrinking IHB sector: With rapid urbanisation and infrastructure developments in urban areas, it is predicted that the IHB sector will shrink and large builder/commercial infrastructure will increase
Increase of new types of cements: Limestone Calcined Clay Cement (LC3) a new environment-friendly additive for concrete that makes it easier to produce high-performance concrete at a lower cost. This cement has shown that it can reduce as much as 30 per cent CO2 emissions and 20 per cent energy consumption in cement production. Still, the performance of the concrete produced using this cement exceeds those using cement commercially available today in most aspects.
Cement in e-commerce: India’s e-commerce industry is expected to grow by 84 per cent by 2024. E-commerce platforms offer customers an array of cement brands to choose from at the best competitive price by removing middle men cost. There are a few players who have already forayed into the online procurement of cement via e-commerce platforms in the last one or two years

-Kanika Mathur

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A balance has to be drawn between cost and service

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Vimal Choudhary, President and Logistics Head – HeidelbergCement India, discusses how bulk distribution impacts cost and the measures his company is taking to ensure smooth operations of their distribution channels.

What is the volume of production in your cement plants and how much of it goes in bulk distribution?
Currently, HeidelbergCement India produces about 9MT cement pan-India. Our production is divided in two parts, central India and south India producing 4.8 MT and 4.2 MT respectively.
23 per cent produced in the south is transported through bulk. In central India, we do not transport on a bulk basis.

Which is the most suitable mode of transport for carrying large quantities of cement and why?
Depending on the distance, we choose the most viable mode of transport for cement. Preference is always based on that. For shorter distances, roadways are considered as it takes less time to reach the customer, handling is less and cost is less. If cement needs to be sent to a longer distance, then railways is preferred as it would allow a much larger quantity to be transported in one go.
Earlier there were concessions allotted to cement manufacturers for transporting cement through the railways, however, those have been withdrawn now. However, what we choose as a mode of transport is not only based on cost, it is also dependent on the service to the customer.
By road, the end product directly reaches the customer. The bag quality remains good with the least amount of deterioration to the bag. But in case of rail, the material goes through material handlings like from factory to railway platform, platform to cargo containers. It is then loaded into smaller trucks at the destination and then reaches the customer. In some cases, it goes to the warehouse, then railways, then customers. This amount of bag handling hampers the bag quality. When the distance to be covered is beyond 300 km, then we consider rail transport as it also presents a large cost advantage.

What are the various advantages attached to bulk distribution of cement?
There are various advantages attached to bulk distribution of cement.
Foremost advantage in transporting cement by bulk is to the environment. In this transportation, we end up using a smaller number of plastic bags which would otherwise be used in smaller quantities of transport. Along with that, dust emission is also very low as compared to loading and unloading of smaller quantities.
A major advantage of transporting cement in bulk is the saving of bag cost. It costs less than transporting smaller quantities and that is why it is widely considered.
A technical advantage is experienced during monsoon. Due to the high humidity levels and moisture, cement usually gets hydrated, which is a loss for us. However, in bulk transportation there is no hydration as the bulkers are air-tight.
Smaller quantities bagged cement present a large chance of adulteration, however, that is not possible in case of bulk transportation. Once the bulker is locked, it is unlocked only at the destination upon reaching the customer.

How does distribution or transportation of cement in bulk impact the end user cost of the product?
In case of bulk, we save a certain amount on the bag cost, but pay a higher amount in freight cost. Example, the cost of a bulker is higher than the bulk trucks. More or less, the cost almost balances itself. Ultimately, the customer gets to witness only a minor difference in their cost. However, bulk buyers get good discounts from us as they pick up large quantities from us.
This cost and demand are different from market to market.

What are the major challenges or gaps faced by your organisation in the bulk distribution domain?
One of the major challenges that we face with bulk cement is consistency in orders. We cannot transport this bulk of transport to anyone else. There are limited buyers in the market. If the orders are received on a regular basis, our system works smoothly and the customer also keeps receiving their cement load in a timely fashion.
Sometimes in South India, we face detention time for the bulkers. Sometimes when we send our bulker to the customer, their silo may already be full. They then utilise their pre-existing load, empty the silo to accommodate cement from the bulker. This duration accounts as cost to us as it is a detention time for the bulker.
Countering this challenge is dependent on the market because bulk buyers are limited. For example, in Bangalore, we sell 25 per cent cement in bulk and 75 per cent cement in bags. We cannot switch over the customers. Only those in need will purchase or consume the product. This gap can be filled by installing more silos which will create space for some more quantity of cement storage and allow bulkers to be free sooner with a lesser detention time.
There are some organisations that are providing silos to customers to promote purchases in bulk cement. The idea behind this is to work towards reducing carbon emission. And bulk cement is preferred as it is environment friendly.
Taking examples from the mature markets of the western countries, they are all consumers of bulk cement. In India, buyers only from the big cities have bulk purchases, buyers from other cities still prefer purchases in small quantities.

Is there a specific reason why international markets have bulk cement transportation in much larger quantities?
Traditionally people in the international markets prefer a ready mix. In some countries there are laws that do not allow mixing to be done at the site, hence, the consumption of ready mix. These users consume bulk cement. Bag cement is used for smaller repair purposes, but if a larger construction project is happening, bulk ready mix orders are placed.

Explain your organisation’s distribution model.
Our distribution in central India is 55 per cent by rail and 45 per cent by road. In south India, 90 per cent distribution happens by road and 10 per cent by rail.
This difference between the use of rail and road in South India and Central India stem from the difference in the distances. In South India, point A to point B is shorter by road as compared to by rail.
We are operating about 70 warehouses in central India and about 90 warehouses in south India. This helps us provide better services to our customers. As a logistics manager, I will always prefer direct delivery to the customer as it involves the least damage to the product and saving of cost as well. But ultimately, a balance has to be drawn between the cost and the service to the customers and warehouses allow us to do that. Most of these warehouses are
maintained in bigger cities where the entry restrictions are a minimum.

Is the preference of using roadways more than railways also stemming from the road conditions of the country?
The road conditions in India have in recent times become so much better. National Highways are in good condition and provide great connectivity as well. Earlier we used to have smaller trucks – 15 tonnes or 18 tonners, the size of those have increased to become 36 tonners. To take cement to warehouses, we sometimes use 45 tonner trucks also.
Roadways have largely improved their condition as compared to railways. Earlier the industry transported 36 per cent by rail, 62 per cent by road and 2 per cent by sea. Now the rail coefficient has significantly dropped to 25 per cent. Since it is easier to handle the material, organisations are preferring roadways as a medium to transport their product.
At the railway platforms, we have to deal with unions for secondary movements or product handling which is a tricky affair. Roadways take the material to the customers with minimum handling.

How can a curated logistics system help in achieving the sustainability goals for the industry?
Logistics of a cement plant can contribute to the sustainability goals in a couple of ways.
Increasing the transportation by rail will result in a better environment. The carbon emission in railway transportation is much lower compared to roadways. Bulk cement transportation should be increased, as it will largely reduce the use of plastic bags and the dust emission that happens in loading and unloading of smaller packs. From the warehouses, we use trucks that use diesel or other fossil fuel, instead, the organisations must use CNG fitted trucks for shorter delivery distances. This will largely reduce the carbon dioxide emitted and better the environment.
Our organisation is focused on achieving its sustainability goals. We plant trees and also push our transporters to plant trees as well.

What are the key changes the industry is likely to witness in the near future?
With rising competition in the industry, service levels have become very important to the customers. They always chose those that provide materials the fastest. Services for the customers are going to significantly increase and become better in the
near future.
Driver scarcity is also something I can see in the near future for the industry. Currently we also have availability of trucks but a lack of drivers. This is happening mainly because it isn’t a lucrative enough business and requires a much larger labour. This is the reason people aren’t going for truck driver training and are opting for other paying roles. The industry needs to build an incentive plan to attract more drivers for our fleet.
Another change in the future will be reduced lead time and distance from the markets.
Some organisations have started installing grinding units closer to the market to achieve the same.
And more organisations will follow a similar pattern. This will also make material reach much faster to the customers.

Kanika Mathur

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