Economy & Market

On the Path of Transformation

Published

7 years ago

January 12, 2018

admin

The logistics sector is fundamental to the development of a country. Logistics is a sector where the trend is determined by the country’s overall economic performance.

Logistics including transportation, inventory management, warehousing, materials handling and packaging, and integration of information, is related to management of flow of goods between the point of origin and the point of consumption. With the growing Indian economy and changing business perspectives, the scope of the logistics industry has broadened from rudimentary transportation of goods to include end-to-end supply chain solutions including warehousing and express delivery.

The Indian logistics industry was estimated to be approximately $160 billion in FY17. The key segments include road, rail, coastal, warehousing, cold chain and container freight stations and inland container depots (CFS/ICD). The domestic logistics market is expected to grow at a CAGR of approximately 10 per cent. Indian logistics market is expected to be driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors.

Development of logistics-related infrastructure such as dedicated freight corridors, logistics parks, free trade warehousing zones, and container freight stations are expected to improve efficiency. The industry is dominated by transportation, which accounts for over 85 per cent of total value, and its share is expected to remain high over the next few years. The sector provides employment to more than 22 million people. Improving logistics sector has significant bearing on exports and media sources estimate that a 10 per cent decrease in indirect logistics cost could potentially increase 5 to 8 per cent of exports.

Of the various modes of transportation, roads and railway are the most preferred mode accounting for approximately 60 per cent and 30 per cent of the total cargo volumes handled, respectively. The share of other transportation modes comprising Inland shipping, pipelines and airways remains minimal accounting for the balance 10 per cent. The higher transportation costs in India can be associated with poor road infrastructure leading to lowering of the maximum distance that can be covered by any commercial vehicle, old vehicles fleet and higher cess and toll on the highways while the higher warehousing costs are on account of shortage of warehousing capacity in India, non-standardisation of warehouses in terms of IT application, etc.

As per the Ministry of Road Transport and Highways, India’s logistics cost as a per cent of GDP stood at 13-14 per cent compared to 10- 11 per cent for BRIC countries and 8-9 per cent for developed countries. The US spends 9.5 per cent and Germany 8 per cent of their GDP on logistics costs. A significant proportion of the higher cost can be attributed to the absence of an efficient intermodal and multimodal transport systems. Going forward, the logistics cost as a per cent of GDP for India is expected to decline driven by initiatives such as implementation of GST, investments towards road infrastructure, development of inland waterways and coastal shipping, thrust towards dedicated freight corridors, etc.

Currently the Indian logistics industry is highly fragmented and unorganised. Owing to the presence of numerous unorganised players in the industry, it remains fragmented with the organised players accounting for approximately 10 per cent of the total market share. With the consumer base of the sector encompassing a wide range of industries including retail, automobile, telecom, heavy industries, etc., logistics industry has been increasingly attracting investments in the last decade.

The sector is facing challenges such as under-developed material handling infrastructure, fragmented warehousing, multiple regulatory/policymaking bodies, lack of seamless movement of goods across modes, minimal integrated IT infrastructure. In order to develop this sector focus on new technology, improved investment, skilling, removing bottlenecks, improving intermodal transportation, automation, single-window system for giving clearances, and simplifying processes would be required.

Global scenario
Warehousing primarily refers to the storage of goods to be transported, whether inbound or outbound. The warehousing industry includes establishments operating warehousing and storage facilities for general merchandise, refrigerated goods and other warehouse products. Warehouses are one of the major segments of the rapidly growing logistics industry. Currently the segment has evolved from providing not only custody for goods but also offering value added services such as sorting, packing, blending and processing. With evolution of an organised retail sector modern warehouses for the storage of perishable goods have become indispensable In 2017, the global warehousing and storage market was estimated to be around $475 billion. The global warehousing and storage accounted for approximately 8 per cent of the overall logistics market in 2017. The warehousing and storage market was the fifth largest market in the global logistics market in 2017. North America is the largest geographic region accounting for nearly 28 per cent of the global market.

Globally, warehousing has moved ahead from single storey to multi-story warehouses in densely populated cities and expensive land spaces. A multi-story warehouse consists of more than one floor and is designed to increase the available floor space. It results in better land utilisation rate and enhances operational efficiency. Multi-story warehouses have been successful in densely populated cities predominantly in Asian countries such as China, Japan, Hong Kong and Singapore, due to high land and construction costs, small site areas and limited industrial land availability.

Domestic scenario
The warehousing market in India is highly fragmented with most warehouses having an area of less than 10,000 sq.ft. Approximately 90 per cent of the warehousing space in the country is controlled by unorganised players with smaller sized warehouses which have limited mechanisation. Fragmented warehousing footprint results in higher average inventory holding, in addition to resulting in higher storage and handling losses, driven by lower level of mechanisation.

Warehouses have become one of the major segments of the rapidly growing Indian logistics industry. Today they do not only provide custody for goods but also offer value added services such as sorting, packing, blending and processing. With evolution of an organised retail sector modern warehouses for the storage of perishable goods have become essential. The government’s initiatives to promote the growth of warehouses in the country through measures such as enactment of the Warehousing Act, 2007, investments in the establishment of logistic parks and Free trade warehouse zones (FTWZs) together with the introduction of Goods & Service Tax (GST) regime augurs well for the industry’s growth. Sensing the tremendous growth potential of the warehouse sector, the private players (including both domestic and international) have ventured with a view to bridge the gap between cost and efficiency of operations.

Nearly 60 per cent of the modern warehousing capacity in India is concentrated in the top six cities namely Ahmedabad, Bangalore, Chennai, Mumbai, NCR and Pune, with Hyderabad and Kolkata being the other major markets. This is driven by concentration of industrial activity and presence of sizeable urban population around these clusters. Going forward, due to factors like quality of infrastructure and availability of labour, these advantages are likely to remain with these cities. In all the segments of warehousing industry barring the agricultural segment, the majority of the capacity is controlled by the private sector. In the agricultural segment, approximately three-fourth is controlled by different government entities. The primary objective of a majority of these warehouses is to only store food grains and ensure food security.

Types of warehouses
Traditionally, warehouses were broadly classified into public-private, bonded, government and co-operative warehouses. Lately, cold chains, container freight stations (CFS) and inland container depots (ICD) are gaining importance.

Private warehouses: These warehouses are owned by private entities or individuals and are used exclusively for the goods owned, imported by or on behalf of the licensee. The warehouses are usually constructed at strategic locations to cater various manufacturing, business and service units. They are flexible enough to be customised in terms of storage and placement, according to the nature of the products.

Public warehouses: These Warehouses are licensed by the government to private entities, individual or cooperative societies to store goods of the general public. They are rented out against a fee and usually set up at transportation points of railways, highways and waterways, providing the facilities of receipt, dispatch, loading and unloading of goods. The government also regulates the functions and operations of these warehouses used mostly by manufacturers, wholesalers, exporters, importers, government agencies, etc.

Bonded warehouses: These warehouses are licenced by the Government to accept imported goods for storage until the payment of customs duty. They are located near the ports. They are either operated by the Government or work under the control of customs authorities. The warehouse is required to give an undertaking or "Bond" that it will not allow the goods to be removed without the consent of the custom authorities. The goods are held in bond and cannot be withdrawn without paying the customs duty. Such warehouses are very helpful to importers and exporters. If an importer is unable to pay customs duty immediately after the arrival of goods he can store the goods in a bonded warehouse. He can withdraw the goods in instalments by paying the customs duty proportionately. Goods lying in a bonded warehouse can be packaged, graded and branded for the purpose of sale.

Container freight stations (CFS)/inland container depots (ICDs): CFSs/ICDs are custom-bonded facility with public authority status for the handling and storage for containers. These depots equipped with warehousing space, adequate handling equipment and IT infrastructure.

Cold storage: A cold storage is a temperature controlled storage space catering mainly to agriculture and food industries. Cold stores are used for the storage and distribution of perishable goods such as fruits and vegetables, dairy products; frozen foods such as meat and ice cream, and temperature-sensitive pharmaceutical products. Given that India is primarily an agriculture country, cold storage has huge potential in India.

Government storage: The primary objectives of any government storage are 1) to ensure food security, and 2) enable trade movement both within and out of the country. Consequently, the Central Warehousing Corporation operates 431 warehouses (storage capacity of 100.28 lakh MT) including 44 custom bonded warehouses, 29 CFSs/ICDs, 3 air cargo complexes (ACCs) (5,961 MT) and 3 cold storage warehouses (2,419 MT). Further, various State Warehousing Corporations (SWC) manage a total capacity of 283.34 MT across 1,831 warehouses. The Food Corporation of India (FCI) works for holding agricultural produce to meet the requirements of various government schemes. FCI has its own storage capacity but also hires capacities from CWC, SWCs and the private sector.

Cold storage: There are over 7,700 cold storage warehouses with a capacity of over 36 million MT in India with a significant portion of the facilities being privately owned. India’s cold storage capacity is unorganised and dominated by traditional cold storage facilities. The distribution of cold storages is highly uneven with majority of the cold storages located in Uttar Pradesh, Gujarat, Punjab and Maharashtra. Further nearly two thirds of the total cold storage capacity is used for horticulture crops including potato. Despite the storage capacity, the Central Institute of Post-Harvest Engineering and Technology estimates that close to 15 per cent-16 per cent of fruits and vegetables perish as cold storages are located near consumption centres rather than farms. The cold storage segment is driven by growth in trading of perishable products both agricultural and others (e.g. pharmaceutical).

Regulations
WDRA rules: Warehouses (especially agricultural) in India are regulated and governed under The Warehousing (Regulatory and Development) Act, 2007. The main objective of this Act is to develop and regulate warehouses, negotiability of warehouse receipts, establishment of Warehousing Development and Regulatory Authority (WRDA) and for related matters.

Registration: The act makes it compulsory for a person to carry on warehousing business as a business and issue a negotiable receipt to obtain a certificate of registration.

Warehousing receipt: The warehouse would issue receipts only after ascertaining quantity, quality / grade and other particulars as may be mentioned in the receipts.

Authority and Powers under the Act: Some of the authorities and powers conferred under the Act are granting registration and cancellation/renewal of registration, specifying qualification of warehouseman, and regulating rates, advantages, terms and conditions that may be offered by warehouseman in respect of warehousing business.

Offenses under the Act: Failing to ascertain quality and quantity, failing to surrender negotiable receipt by depositor or endorsee and payment of all his lawful charges and cancellation of encumbrances endorsed on the receipt to deliver the goods represented by the receipt are some of the offences under the act.

Penalties: The offences committed under this Act shall be punishable with imprisonment of a term of up to three years or with fine of Rs 1,00,000 or both.

The industry also remains governed by various acts such as: Multimodal Transportation of Goods Act, 1993, Foreign Trade (Development and Regulation) Act, 1992, Customs Act, 1962, Carriage of goods law etc. regulating the movement of goods and allied services. Various policy changes have impacted the warehousing sector in India. These include the introduction of the Goods and Service Tax (GST), National Policy on Handling, Storage and Transportation, and increasing Public-Private Partnerships (PPP). Following are a few such policy measures:

GST: GST has consolidated the tax regime across states which will result in cost and time efficiencies across the supply chain. GST will also hasten the consolidation of warehouses thus accentuating the formalisation of the largely unorganised warehousing sector. For most logistics services like e-commerce logistics, warehousing and air freight (export), the tax rate is 18 per cent, which is an increase from the earlier rate of 15 per cent which includes service tax and cess. Services like ocean freight and road transportation are in the 5 per cent slab. Under GST, the tax on warehouse, storage and other labour services has increased from 15 per cent to 18 per cent.

Logistics Parks Policy: Launch of multi-modal logistics parks and the grant of "industry" status to the logistics sector.

Domestic manufacturing emphasis: The focus on "Make in India" is expected to increase domestic manufacturing and increase the requirement for associated activities such as warehousing.
Agri-warehousing activity covered under Priority Sector Lending by RBI Subsidy schemes such as 1) Grameen Bhandaran Yojana – a capital investment subsidy scheme offered by the NABARD, which ranges from 15 per cent to 33 per cent of project cost, depending on the location and operator, 2) National Agricultural Renewal Fund. Govt. of India – encourage private investment in the creation of agriculture infrastructure
Tax incentives such as 1) Tax relief under 80(I)(B): tax holiday on warehousing income, 2) Investment-linked deduction under Section 35AD: 100 per cent upfront depreciation for tax purposes
The government permits 100 per cent FDI under the automatic route for all logistics services except courier and air transportation services. In case of courier services, 100 per cent FDI is permitted subject to the approval of the Foreign Investment Promotion Board (FIPB) while FDI up to 74 per cent is permitted under the automatic route for air transport services including air cargo services. Further according to media reports, the government is working on a policy to create new logistics hubs by preparing an integrated logistics plan. The new integrated logistics plan would be prepared by the logistics division in the department of commerce in consultation with various stakeholders.

Trends
Warehouse consolidation due to GST: With the advent of GST and the consequent redrawing of supply chains, there will be significant consolidation of warehouses by companies in the consumption space. A bigger warehouse in an appropriate location would be able to better serve a larger area. This will lead to development of large modern technology based warehousing operations and rapid modernisation of unorganised godowns. Smaller local developers and property owners are expected to exit the space by selling out to the large institutional developers in existing clusters.

Reduction in inventory holding costs: Further the combining of smaller warehouses into a single larger one is also expected to reduce the inventory level requirements which are expected to positively impact the companies as inventory carrying cost is a significant share of costs.

Smart warehouses: With the increase in the warehousing and storage market there has been a concurrent increase in technology usage especially in the grade A/B warehouses. These warehouses use internet of things (IOT) to track a product in the warehouse and also helps in increasing efficiency and speed across supply chains. Variety of devices such as wearables, sensors and radio frequency identification tags are used to locate the products in the warehouse. This reduces the time to deliver the product to the customer and increases accuracy.

Rise of Direct Port Delivery (DPD): DPD involves the delivery of a shipment directly from a port to the consignee instead of initially holding it at a CFS (Container Freight Station). The DPD initiative under "Ease of Doing Business" has witnessed steady growth in terms of proportion of total containers handled. At JNPT, the share of Direct Port Delivery (DPD) has increased from 5.4 per cent in April 2016 to 39.2 per cent March 2018. This is likely to have an impact on the CFS. However, shortage of space at warehouses poses a challenge to service DPD clients efficiently.

High tonnage trucks sales are expected to rise: Supply chain realignment and check post discontinuation has led to a reduction in the travel time as well as fuel costs. This has led to a demand for larger more efficient trucks as warehouses are consolidating and larger loads are required at lower number of locations. Despite the higher upfront costs, such trucks are expected to reduce overall shipment costs by carrying a larger load per trip.

Negotiable warehouse receipts
Negotiable Warehouse Receipts (NWR) issued by registered warehouses enables farmers to seek loans from banks against NWRs and enables them to extend the sales period of modestly perishable products beyond the harvesting season. Consequently, NWRs can avoid distress sale of agricultural produce by the farmers in the peak marketing season. However, NWRs have not witnessed substantial growth due to 1) low levels of registered warehouses with WDRA, 2) minimal concession from banks for loans against NWRs, 3) presence of other collateral based lending entities, which do not require registration under WDRA.

Demand drivers for logistics
Emergence of MNCs and organised retail: One of the key demand drivers for the logistics industry has been emergence of MNCs and the share of organised retail has been increasing over the years. Most of the global MNCs prefer low cost manufacturing locations connecting the consuming market at the lowest possible cost and through highly efficient supply chain.

Emergence of 3PL and 4PL: Third party logistics or 3PL is a concept where a single logistics service provider manages the entire logistics function for a company. While the Indian 3PL market is still very much in its infancy compared with other countries, it is experiencing healthy growth and attracting new companies eager to capitalise on the plentiful opportunities it offers, In fourth party logistics 4PL, logistics is controlled by a service provider that does not own the assets to carry out logistics activities but outsources to subcontractors, the 3PL. 4PLs facilitate single-point reference for all logistics needs, possess knowledge of logistics to obtain most efficient and effective solutions, have manpower resources of higher quality to supervise vendors and ensure continuous process improvements and, above, all an IT base to network customer systems.

Robust trade growth: Post liberalisation there has been significant increase in economic growth which has led to an improvement in the domestic and international trade volumes. Consequently the requirement for transportation, handling and warehousing is growing at a robust pace and is driving the demand for integrated logistics solutions.

Globalisation of manufacturing systems: IT plays a key role in transportation and logistics industry. Today technology is present in all the areas for a logistics service provider. Technology helps organised logistics companies score over the unorganised ones, and will be key to their operations going ahead given the competition

Increasing investment in logistics parks: The concept of Logistics Park has gained attention from both public as well as private players. A large number of special economic zones have also necessitated the development of logistics centre for the domestic market as well as for trade purposes

Growth in the organised retail and the food processing sector is driving growth in the cold chain storage segment in India.

Challenges
Lower Standardisation: India’s logistics industry has been adversely affected by the lower standardisation of cargo and containerisation of logistics traffic, hampering the overall speed and thus increasing cost of storage and movement.
Need for large capital and issues related to land acquisition have also tempered the growth of the sector. However, with expected increase in investment by international players, the gap in funding requirement is expected to be addressed in the near future.
The industry revenue has grown at a modest CAGR of 2.5 per cent over the FY12 – FY17 period. Concurrently, the annual revenue growth rate has varied significantly over the same period. The companies generate the largest share of their revenues from rental i.e. storage charges; other sources of earnings include income from value added services such as such as sorting, packing, blending and processing. On the other hand, the key heads of expenses include employee costs, depreciation, SG&A costs, power & fuel costs and interest costs. Over the FY12-FY17 period, EBITDA margin has moved down as well as up ranging from a low of 7.2 per cent in FY14 to a high of 11 per cent in FY16 and declining to 10.1 per cent, while PAT margin has generally remained at around 2.5 per cent-4 per cent.

Although the debt levels of the companies have trended upwards, the debt to equity has generally remained stable, on the other hand, the interest coverage having peaked in FY15, has trended marginally downwards in the next two years. The decline in credit quality in the transportation and storage sector is on account of delays in debt servicing, liquidity constraints, decline in profitability and deterioration in the capital structure.

Outlook
CARE Ratings estimates that the warehousing industry will grow at a rate of 13-15 per cent in the medium term driven by the growth in manufacturing, retail, FMCG and ecommerce sector. Growth in overall production and consumption, organised retail, logistics outsourcing, and regulatory interventions such as WRDA Act and GST, private investments in logistics and other infrastructure developments such as Dedicated Freight Corridor (DFC) have also improved prospects of the organised professional warehousing segment. Further the implementation of GST is eliminating inefficiencies arising out of the erstwhile complex tax structure as well as interstate taxes.

Additionally, the government’s decision to allow FDI in retailing with emphasis on backend infrastructure such as modern warehousing space is also expected to provide further impetus to the sector.

Industrial warehousing is expected to grow due to various factors including the anticipated increase in global demand, growth in organised retail and increasing manufacturing activities, expansion of e-commerce options and growth in international trade. This segment is expected to witness significant activity as the presence of the unorganised segment which is dominant in the segment is also expected to significantly reduce and the companies would also be rationalising and consolidating their space requirements based on time to serve the market and not taxation.

Demand for agriculture warehousing is expected to grow moderately on account of high base and expected normal monsoons.

Integrated models, diversification across end-user industries are expected to drive growth of cold chain segment. Significant demand is also seen coming from storage of fruits and vegetables, and pharmaceutical segments.

The container freight station (CFS)/ inland container depot (ICD) industry although on a growth curve is expected to be under pressure due to the growth of Direct Port Delivery (DPD) and profitability is expected to be hampered with the anticipated loss of volumes and consequential lower utilisation.

However, the overall growth potential is limited by several key challenges like limitations in infrastructure connectivity, need for large capital and issues related to land acquisition which would need to be addressed for ensuring sustainable growth.

Source: CARE Ratings’ Industry Research on Overview of the India Warehousing Industry

India’s first multi-modal terminal on inland waterways! Prime Minister Narendra Modi inaugurated India’s first multi-modal terminal on the Ganga river in his parliamentary constituency and received the country’s first container cargo transported on inland waterways from Kolkata.

This is the first of the four multi-modal terminals being constructed on the National Waterway-1 (River Ganga) as part of the World Bank-aided "Jal Marg Vikas Project" of the Inland Waterways Authority of India. The total estimated cost of the project is Rs 5,369.18 crore, which will be equally shared between the Government of India and the World Bank. Its objective is to promote inland waterways as a cheap and an environment-friendly means of transportation, especially for cargo movement. The Inland Waterways Authority of India (IWAI) is the project implementing agency. The project entails construction of three multi-modal terminals (Varanasi, Sahibganj and Haldia), two inter-modal terminals, five roll-on-roll-off (Ro-Ro) terminal pairs, new navigation lock at Farakka, West Bengal, assured depth dredging, integrated vessel repair and maintenance facility, differential global positioning system (DGPS), river information system (RIS) and river training.

Disclaimer:
This report is prepared by CARE Ratings Ltd. CARE Ratings has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Ratings is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE Ratings has no financial liability whatsoever to the user of this report.

Concrete

Regulatory and compliance challenges play a significant role

Published

10 mins ago

September 20, 2024

Roshna

Piyush Joshi, Associate Vice President – Systems and Technical Cell, Wonder Cement, shares their strategies and initiatives aimed at enhancing energy efficiency in cement production, showcasing their commitment to sustainability through innovation and advanced technology.

Can you provide an overview of your company’s current initiatives and strategies to enhance energy efficiency in cement production?
At Wonder Cement, our commitment to energy efficiency is integral to our operational philosophy, encompassing every facet of our production process. One of our cornerstone initiatives is the deployment of Vertical Roller Mills (VRMs), which are recognised for their superior energy efficiency compared to traditional ball mills. These VRMs are equipped with high-efficiency separators, significantly reducing the energy required for cement grinding while maximising output.
We have also invested substantially in Waste Heat Recovery Systems (WHRS) across our facilities. These systems effectively capture waste heat from our kilns, converting it into usable electricity. This approach not only diminishes our dependency on external energy sources but also supports our sustainability objectives by curbing greenhouse gas emissions. Additionally, we have optimised our operational processes through the implementation of energy-efficient lighting, the utilisation of variable frequency drives (VFDs) on motors, and the execution of regular energy audits to identify and mitigate inefficiencies. Our unwavering dedication to innovation and the adoption of cutting-edge technology ensures that Wonder Cement remains a leader in energy efficiency within the cement industry.

What are the key challenges your company faces in implementing energy-efficient practices in the cement manufacturing process?
While our energy efficiency efforts have yielded significant results, the implementation of such practices within the cement manufacturing process presents several challenges. Chief among these is the substantial capital investment required to upgrade existing infrastructure to more energy-efficient alternatives. Integrating new energy efficient systems with existing infrastructure can be technically challenging and may cause temporary disruptions in production processes. Although the long-term benefits of these upgrades are evident, the initial financial outlay can be substantial, particularly when applied across multiple production sites.
Another persistent challenge is the variability in raw material quality, which can directly impact the efficiency of our kilns and mills. Fluctuations in the chemical composition of raw materials necessitate frequent adjustments in our processes, potentially leading to suboptimal energy consumption. Furthermore, the inherently energy-intensive nature of cement production, especially during the clinkerisation process, means that achieving significant reductions in energy use often requires comprehensive overhauls of traditional methods rather than incremental improvements.
Regulatory and compliance challenges play a significant role. Ensuring that our energy efficiency measures align with both local and international environmental standards is a complex process, particularly in regions with stringent regulations. Despite these challenges, Wonder Cement is steadfast in its commitment to overcoming obstacles through continuous innovation, strategic collaboration, and a focus on sustainable practices.

How do advancements in technology contribute to improving energy efficiency in your cement plants? Can you provide some examples?
Technological advancements are pivotal in enhancing energy efficiency within Wonder Cement plants. One of the key innovations we have embraced is the integration of automation and digitalisation throughout our production processes. By implementing advanced process control (APC) systems, we can monitor and optimise our operations in real-time, ensuring the most efficient use of energy at all times. These systems leverage data analytics and machine learning algorithms to predict and address energy inefficiencies proactively, resulting in substantial energy savings.
Another significant technological advancement is the incorporation of alternative fuels within our kilns. By utilising waste-derived fuels, such as refuse-derived fuel (RDF) and biomass, we reduce our reliance on traditional fossil fuels. This not only lowers our carbon footprint but also enhances the energy efficiency of our kilns by maintaining a consistent energy input with minimal fluctuations. The adoption of smart sensors and Internet of Things (IoT) devices has further augmented our energy management capabilities. These technologies provide real-time insights into energy consumption across various stages of production, enabling rapid identification and resolution of inefficiencies. For example, our predictive maintenance programs, powered by IoT, allow us to foresee equipment failures and schedule maintenance proactively, thereby reducing downtime and ensuring continuous, efficient operations.

What role does renewable energy play in your overall strategy for energy efficiency, and how is it integrated into your cement manufacturing operations?
Renewable energy is a fundamental component of Wonder Cement’s broader energy efficiency strategy. We have integrated renewable energy sources, such as solar and wind power, into our manufacturing operations to reduce our reliance on non-renewable energy. Our solar power plants, strategically positioned across our manufacturing sites, contribute significantly to our overall energy needs. By generating clean energy on-site, we not only reduce our electricity costs but also achieve substantial reductions in carbon emissions, underscoring our commitment to sustainability.
In addition to on-site renewable energy generation, we have entered into power purchase agreements (PPAs) with renewable energy providers. These agreements guarantee a consistent supply of green energy to our plants, further diminishing our reliance on grid power derived from fossil fuels. Moreover, our participation in carbon credit markets, facilitated by the integration of renewable energy, has opened up additional revenue streams while reinforcing our role as a responsible corporate citizen.
Our approach to renewable energy extends beyond electricity generation. We are actively exploring the potential of renewable fuels for our kiln operations. Through partnerships with research institutions and technology providers, we are investigating the viability of hydrogen and other renewable energy sources to further reduce our carbon footprint and enhance energy efficiency.

Can you discuss any specific projects or upgrades your company has undertaken to reduce energy consumption and increase efficiency in your cement production facilities?
Wonder Cement has embarked on several key projects aimed at reducing energy consumption and enhancing efficiency across our production facilities. A prominent example is the installation of high-efficiency clinker coolers, designed to maximise heat recovery from the clinker. This recovered heat is then utilised to preheat raw materials, significantly reducing the energy required for subsequent grinding processes. Another critical upgrade involves the widespread implementation of variable frequency drives (VFDs) across our production lines. VFDs allow us to adjust motor speeds based on real-time load requirements, ensuring that we use only the necessary amount of energy for each operation. This has led to considerable energy savings, particularly in our grinding and milling processes.
We have also modernised our lighting systems by transitioning to LED technology, which is notably more energy-efficient and durable compared to traditional lighting solutions. This transition not only reduces our energy consumption but also lowers maintenance costs. Our commitment to continuous improvement is further demonstrated through regular energy audits and the implementation of advanced energy management systems (EMS) that meticulously track and optimise energy usage across all our facilities.

How do you measure and monitor energy efficiency in your cement manufacturing processes, and what metrics are most critical for your company?
Precise measurement and monitoring of energy efficiency are paramount to achieving our sustainability objectives. We have established a robust energy management system (EMS) that delivers real-time data on energy consumption across every stage of our production process. This system is equipped with advanced metering and monitoring tools that track energy usage at granular levels, enabling us to swiftly identify inefficiencies and implement corrective measures.
Among the critical metrics we monitor are specific energy consumption (SEC), which quantifies the energy required to produce a unit of cement, and thermal energy consumption (TEC), which tracks the energy utilised during the clinkerisation process. By closely monitoring these metrics, we can assess the effectiveness of our energy efficiency initiatives and make informed decisions to further optimise our operations. In addition to continuous monitoring, we conduct regular energy audits to evaluate our performance against industry benchmarks and identify opportunities for improvement. These audits, conducted by both internal teams and external experts, ensure that our energy management practices remain objective, accurate, and aligned with industry best practices. The insights gained from these audits are instrumental in refining our energy management strategies and setting ambitious targets for energy reduction.
To promote energy efficiency through innovations, we are having groups of employees at every
production centre for identification, evaluation and execution of new ideas related to energy efficiency for continual improvement.

What partnerships or collaborations has your company engaged in to promote and enhance energy efficiency within the cement industry?
Collaboration is a cornerstone of Wonder Cement’s approach to enhancing energy efficiency within the cement industry. We actively engage with various stakeholders, including technology providers, industry associations, and research institutions, to promote and advance our energy efficiency initiatives.
Our partnerships with technology providers are instrumental in integrating state-of-the-art solutions into our operations, ensuring that we remain at the forefront of energy efficiency advancements. Additionally, our participation in industry associations and knowledge-sharing platforms enables us to exchange best practices with our peers and stay informed about emerging trends and technologies.
We also collaborate with research institutions to explore innovative materials and processes that can further reduce our energy consumption. These collaborations have led to pilot projects where novel solutions are tested and validated before being implemented on a larger scale across our production facilities. Through these partnerships, we are not only advancing our energy efficiency goals but also contributing to the broader sustainability of the cement industry.

How does your company balance the need for energy efficiency with maintaining high production levels and meeting market demands?
We recognise the importance of balancing energy efficiency with maintaining high production levels and meeting market demands. Achieving this balance requires a strategic approach that integrates energy efficiency into every aspect of our production process without compromising on output quality or quantity.
One of the key strategies we employ is the use of advanced process control (APC) systems that optimise our operations in real-time. These systems enable us to maintain consistent production levels while minimising energy consumption by adjusting process parameters based on real-time data. This ensures that we achieve maximum efficiency without disrupting our production schedules. We also emphasise continuous improvement through the application of lean manufacturing principles, which focus on the elimination of waste and the efficient use of resources. By streamlining our processes and reducing inefficiencies, we can maintain high production levels while minimising energy usage. Additionally, our investment in employee training ensures that our workforce is equipped with the necessary knowledge and skills to operate our facilities efficiently, contributing to both productivity and energy efficiency.

Looking ahead, what are your company’s strategic priorities for further improving energy efficiency, and how do you plan to address future energy challenges in the cement industry?
Looking ahead, Wonder Cement is committed to further advancing our energy efficiency through a combination of technological innovation, process optimisation, and strategic investments. Our primary focus will be on expanding our use of renewable energy sources, particularly solar and wind power, to meet a larger portion of our energy needs. We are also exploring the potential of emerging technologies, such as carbon capture and utilisation (CCU) and hydrogen-based fuels, to further reduce our carbon footprint and enhance energy efficiency.
In addition to technological advancements, we plan to continue our efforts in process optimisation through the implementation of advanced data analytics and artificial intelligence (AI) in our energy management systems. These tools will enable us to identify and address inefficiencies in real-time, ensuring that we maintain optimal energy usage at all times.
We are also committed to expanding our collaborations with industry stakeholders, research institutions, and technology providers to drive innovation and share best practices in energy efficiency. By staying at the forefront of industry trends and continuously challenging ourselves to improve, we are confident that we can meet the future energy challenges of the cement industry while maintaining our position as a leader in sustainability.

– Kanika Mathur

Concrete

Installing a solar system is just the first step

Published

16 mins ago

September 20, 2024

Roshna

Raman Bhatia, Founder and Managing Director, Servotech Power Systems, talks about innovative approaches to advancing energy efficiency in the solar sector, from embracing the ‘Make in India’ initiative to pioneering new technologies.

Can you provide an overview of Servotech Power Systems’ contributions to energy efficiency in the solar sector?
Throughout its journey with a strong motto of providing high-quality solar solutions, Servotech made noteworthy contributions towards energy efficiency in the solar sector, through innovative technologies and solutions. By developing high-efficiency solar solutions that are both sustainable and reliable, Servotech has played its part in making solar energy a household name. The company has expanded its reach across various sectors. Servotech’s residential solar solutions empower homeowners to reduce their carbon footprint and electricity bills. The company provides solar solutions for industries, helping them reduce energy costs, improve their environmental quotient and comply with sustainability regulations. Servotech caters to the commercial sector by offering rooftop and ground-mounted solar power plants helping them reduce electricity costs and enhance their brand image, Lastly, the company has been actively involved in executing solar projects for government institutions, aiding in the country’s renewable energy goals and by providing efficient and reliable solar solutions, we contribute to the government’s efforts in promoting clean energy adoption.

What role does the ‘Make in India’ initiative play in your strategy to promote energy efficiency and sustainable solutions?
Make in India, a wonderful initiative by our government, has definitely pushed manufacturers across all sectors, especially our sector, which is the renewable energy sector towards indigenous manufacturing. By manufacturing solar components locally, we significantly reduce the carbon footprint associated with transportation and logistics. Local production often leads to cost reductions in solar products which makes solar energy more affordable for consumers, encouraging wider adoption and contributing to energy efficiency. The Make in India initiative also helps create employment opportunities in the solar sector, leading to skill development and a larger workforce dedicated to renewable energy. Domestic manufacturing reduces reliance on imports and strengthens the supply chain, ensuring uninterrupted production and reducing vulnerabilities to global disruptions.

How has Servotech adapted its solar solutions to meet the evolving energy efficiency standards?
Well, it has been more than two decades now. During this long journey, we have constantly worked on ourselves, renovated, and innovated ourselves to keep up with the evolving energy efficiency standards in terms of product development, innovation and R&D. We have consistently incorporated the latest advancements in solar technology that includes the use of higher efficiency solar cells, advanced inverters, and optimised system components. We introduced innovative solar products and solutions that meet the evolving energy efficiency standards. This involves continuous research and development to create more efficient and sustainable products. We prioritise product performance and rigorous testing and quality control measures ensure that our products meet or exceed industry benchmarks and this relentless pursuit of excellence has positioned us as a leader and has helped us in delivering efficient and sustainable
solar solutions.

Could you elaborate on the significance of the engineering and design process in achieving energy efficiency in your solar EPC projects?
The engineering and design phase in solar EPC projects lays the foundation for optimal performance. It involves a careful analysis of site conditions, including solar radiation, shading and environmental factors. By carefully selecting high-performance components and designing the system for optimal orientation and tilt, engineers maximise energy capture. Additionally, this phase focuses on minimising energy losses through efficient wiring, component placement, and system integration. A well-engineered design ensures the solar system operates at peak performance, delivering substantial energy savings and a strong return on investment.

What measures does Servotech implement during the procurement and project execution phases to ensure optimal energy efficiency in its solar power projects?
Constructing a solar system involves a lot of phases with procurement and project execution being the most important ones. During the procurement phase, we prioritise the development of high-efficiency solar modules, inverters and other components. Rigorous quality assurance processes and performance testing are conducted to verify that all components meet or exceed industry standards and are compatible with project requirements. In the project execution phase, Servotech conducts detailed site assessments to determine the optimal system orientation, tilt angle and shading analysis. Strict adherence to installation guidelines and best practices ensures proper system integration and performance. Post-installation, the system undergoes comprehensive testing to verify energy efficiency and performance. Monitoring systems are often incorporated to track performance and identify areas for improvement.

How does your operation and maintenance service contribute to maintaining and enhancing the energy efficiency of
installed systems?
Installing a solar system is just the first step; operating and maintaining it properly is equally important to ensure the system runs efficiently over the long term and for that we conduct regular inspections to detect and address issues like module degradation and inverter malfunctions early, preventing energy losses. Our team ensures optimal performance through routine cleaning and maintenance, which maximises sunlight absorption and energy generation. Continuous performance monitoring using advanced data analytics allows us to optimise system settings, while preventive and corrective maintenance activities minimise downtime and equipment failures. By utilising techniques such as module-level monitoring and inverter tuning, Servotech ensures that solar systems operate at peak efficiency, delivering maximum energy output and long-term cost savings.

In your view, how important is radiation data analytics and project feasibility studies in the planning of energy-efficient solar projects?
Radiation data analytics and project feasibility studies are absolutely critical for the successful planning of energy-efficient solar projects. Accurate radiation data allows for precise predictions of energy generation, system sizing and financial returns. By analysing radiation patterns, engineers can optimise system design, including orientation and tilt angles, to maximise energy capture. Feasibility studies help identify potential risks, such as shading or grid constraints, enabling proactive solutions. These studies also assess financial viability, considering ROI, payback periods, and incentives, ensuring projects are economically sound enabling data-driven decision-making throughout the project lifecycle.

Looking ahead, what are the key trends and innovations in energy efficiency that Servotech Power Systems plans to focus
on in the near future?
Energy efficiency is a dynamic realm with constant emergence of trends and innovations. The company recognises the value these trends and innovations will add in the growth of energy efficiency in the solar sector. Our innovative product solar powered EV charging carport integrates solar power with EV charging, which is an innovative take on how we can charge our EVs and also save energy from renewable sources. Additionally, Servotech plans to invest in enhancing the quality of bifacial solar panels to increase energy generation. We are investing in research and development of major solar developments and understand the importance of energy storage in enhancing grid stability and optimising energy utilisation and grid optimisation. In fact, we are developing an energy storage system that will
accelerate the adoption of renewable energy in low electricity areas.
Exploring digitisation of energy efficiency, we are focused on developing advanced monitoring and control systems to optimise system performance, predict maintenance needs. Lastly, to meet the growing demand for clean energy, we are exploring the integration of solar power with other renewable energy sources like wind and hydro to create hybrid power systems.

– Kanika Mathur

Concrete

Our technology pinpoints excess energy use

Published

26 mins ago

September 20, 2024

Roshna

Dries Van Loon, Vice President – Products, Nanoprecise Sci Corp, talks about the transformative impact of their advanced solutions on the cement industry.

Provide an overview of your company’s current initiatives and strategies to enhance energy efficiency in cement production. How does Nanoprecise’s predictive maintenance technology specifically benefit the cement industry, and what makes it unique compared to other industries?
Nanoprecise’s predictive maintenance technology offers key benefits for the cement industry by providing real-time monitoring of equipment, predicting faults before they occur, and optimising maintenance schedules. This helps reduce unplanned downtime, lower energy consumption, and cut greenhouse gas emissions. What sets Nanoprecise apart is its focus on the unique needs of cement manufacturing, where equipment operates under harsh conditions and efficiency is crucial.
By integrating AI and IoT, Nanoprecise delivers precise insights into machinery performance, enhancing operational efficiency and environmental sustainability. Our technology pinpoints excess energy use and high emissions in processes and equipment. By tackling these inefficiencies, Nanoprecise’s predictive maintenance solutions directly cut energy consumption and GHG emissions while enhancing operation efficiency. For example, if a motor’s energy use rises due to faults, the system alerts the team to
resolve the issue, reducing both wasted energy and associated emissions.

Can you elaborate on the importance of your IP68-certified IoT hardware in ensuring reliable data collection in the dusty environments of cement plants?
Conditions in the cement industry are some of the harshest among industries; most critical equipment and its instrumentation are exposed to natural elements as well as high heat, humidity and dust. Accurately certified hardware ensures reliability and repeatability of the data collected and transmitted to ensure timely insights. Instead of constantly addressing instrumentation issues, the hardware will reliably inform you about the status of critical equipment, allowing for timely and effective maintenance decisions and enhancing your productivity.

How does your customised AI-based health analytics platform cater to the specific needs and challenges of cement manufacturing plants?
Rotating equipment is the most critical in the cement-making process. Issues with slow-speed kilns, dryers, high-speed gearboxes of conveyors and critical fans can shut down the process for extended periods, causing big financial losses.
Partnering with Nanoprecise can eliminate this unplanned downtime. Our platform additionally tracks changes in energy consumption, directly linking inefficiencies and emerging mechanical or electrical issues to lost kilowatt-hours (kWh) and associated costs. This enables you to prioritise maintenance actions that will significantly impact energy savings and cost reduction.

How does your 6-in-1 wireless IoT sensor enhance the ability of cement manufacturers to monitor equipment health remotely, particularly in confined or challenging spaces?
Our wireless IoT sensors, with their easy installation, magnet mount and compact size, significantly reduce the cost of an implementation project (the gateway hardware installation and IT project typically take more than 1/2 of the initial installation project cost) but also reduce the time to scale as any IT project and gateway installation across an industrial environment takes time to prepare and execute. Due to the direct cellular connectivity from each sensor, there is no need for vendor-proprietary gateways and networks to be deployed for the sensors to communicate. If cellular connectivity in a plant is limited, the customer’s WiFi network can also be used for our sensors to connect to directly. Often, this is already available and can be a shared resource for multiple IoT and modernisation projects.

Can you explain how your AI algorithms predict the Remaining Useful Life (RUL) of critical components and the impact of these predictions on maintenance planning and operational efficiency?
The true value of any predictive maintenance programme is a combination of three types of outputs.

Accurate change detection: This helps to understand any change is present on the equipment and how it impacts normal operating conditions.
Root cause identification: A maintenance action can only be defined based on an accurate root cause. So, any detected changes should
be linked to an actionable root cause, allowing proper preparation and execution of the maintenance task.
Remaining useful life: This allows maintenance planners to understand the severity of a developing issue and ensure the maintenance task can be planned in a timeline with minimal impact on operations without increased risk of lost production.

Many PdM systems provide the first output by flagging general changes. However, this needs to be actionable data for the maintenance and operations team as it would require more in-depth investigation. The value for any PdM Solution is created only if the correct maintenance action is planned based on the insights created from the data. Here is where Nanoprecise has been relentlessly focused in the past years to be a true value adder for our current and future customers. Additionally, we are the only predictive maintenance solution on the market that combines predictive maintenance and energy consumption due to any process inefficiencies or developing faults. This feature allows for linking maintenance and process issues to measurable impact on energy consumption, ensuring a plant can run as efficiently as possible.

What specific solutions does Nanoprecise offer to combat the adverse effects of dust on machinery in cement plants, ensuring optimal performance and longevity?
Our solution of IP68 hardware has been specifically designed for the harsh requirements of a cement plant. Our sensors are fully enclosed while in operation and can work autonomously for 3-5 years. This design ensures that the focus is on the reliability of the equipment, not on the IoT hardware, giving you confidence in the performance of our product.

How does your technology handle the challenges of monitoring diverse and intricate machinery, such as kilns, mills, crushers and conveyors, in cement plants?
To monitor the wide variety of applications specific to the cement industry, from slow speed to high speed, our sensors can be configured to ensure proper data is collected for each type of application. For slow-speed applications, our total collection time can be extended to ensure a sufficient number of shaft revolutions are captured, which is the only way to identify the root causes of issues.
Additionally, our unique combination of Triax Vibration, Ultrasound, Temperature and Flux
into the same sensor hardware allows for a full picture of the machine health and identify developing
faults in an early stage regardless of application or operating speed.

In what ways does predictive maintenance help in mitigating the environmental impact of cement manufacturing, particularly in terms of reducing carbon emissions?
When predictive maintenance is an integral part of a company’s maintenance practices it will increase equipment efficiency and directly impact the total energy consumed for the same output for any equipment.
With the Nanoprecise solution fully integrated, our end users not only receive actionable insights with defined ‘remaining useful life’, but also continuous data on the impact to energy consumption and its effect on carbon emissions. This is crucial in prioritising maintenance tasks not purely based on potential saved downtime and repair cost, but also on the highest energy impact, ensuring that maintenance tasks have a significant, measurable contribution to reducing carbon emissions.

What future trends do you foresee in the realm of IT initiatives for the cement industry, and how is Nanoprecise preparing to address these trends?
With cybersecurity being at the top of every IT department’s concern, implementing any outside solution will require compliance with ever more strict IT requirements. At Nanoprecise, we have ensured our system is designed from the ground up with stringent security requirements, from data encryption and secure data transfer to cyber security for our cloud environment. By adopting direct cellular and WiFi communication protocols, we do not need to be integrated inside the customer’s IT environment, making implementation easier as end-to-end data security is entirely handled by our solution.
Additionally, we are proud to be the first and one of the few IIoT solutions that have been SOC 2 Type 2 compliant for multiple years. This assures our entire company and infrastructure is compliant with the most stringent security requirements and continuously adapted to new cyber security threats, as it’s a rapidly developing risk that needs continuous adoption.