Economy & Market
“Railways consider private terminals as their competitors”
Published
10 years agoon
By
adminYogesh Mehta Joint Vice President – Commercial, Shree Cement
Government policies must be so framed as to encourage bulk cement transport in India. There are many ways to boost logistical efficiencies at plant and government level. Yogesh Mehta shares with ICR what Shree Cement is doing at its plant and how the government can help to do more. Excerpts from the interview…
How much is the contribution of the logistical expenses to the cost of the product? How can one reduce this cost?
Logistics is one of the major cost contributors to cost and has significant influence on the final price of the product. Factors leading to the high cost mainly include transportation and warehousing costs, maintaining distribution networks and the expenses of procuring raw materials. Overall the cost amounts to almost 25 per cent of final cost of product.
There is a need to identify major cost drivers in logistics and to replace traditional forms of cost allocation structures with more appropriate methods. Well organised logistics management can have significant impact on overall return on investment and ultimately bring value to the stakeholder.
To reduce logistical expenditure, the cement industry can adopt the following measures:
- Encourage big cement users for bulk/loose cement transport. This will reduce packing cost and is also eco-friendly. It is beneficial for both – the seller and the buyer
- Establish grinding units, blending or packing units in big market area for direct delivery of materials
- Plan dispatches in a way that reduce rail freight/rail freight on return journeys availed for procurements
- Maximise dispatches directly to the end user so that warehousing/distribution cost can be reduced, and
- Optimise truck size/fleet capacity, timing of vehicle engaged in cement and raw material loading, unloading as well as the transit time, so that operational cost of vehicle is reduced by maximising efficiency of every trip made by the vehicle.
How do you synchronise your production volume with respect to fluctuating market demands?
Looking at the nature of cement commodity, no one can produce excess and store it for long period. Hence all cement industries plan their production according to their sale projections/targets. Being a smart producer of cement, the industry maintains cement stock just sufficient to meet the demand for next to 2-3 days at production centre and similarly a stock of 2-3 days in kept in transit and at godowns. So on an average the company maintains around 5 days stock to absorb fluctuations in a timely manner.
Besides that, most importantly, extra cement grinding capacity can be planned while setting up various production units based on future projected demand/fluctuation.
What are the problems faced by the cement industry in the last mile delivery?
Hurdles in last mile delivery may be classified as encountered with big and small consumers. Both have different types of problems, which need to be resolved in manner that ensures that the deliveries are made in minimum lead time. These challenges are as under:
Big consumer:
- Maintaining supply according to their consumption schedules
- Cement storage constraints at consumption sites
- Labour unavailability and unloading issues at night
- Sudden spurt in demand in short of period making it difficult to arrange vehicles for transport, and
- Lack of rail wagons for small delivery for far-off destination, where road delivery is not feasible.
Small consumer:
- Meeting demands of small quantity with minimum lead time
- Requirement of product at remote locations, and
- Lack of storage space.
The problems mentioned above can be tackled by doing well-planned supply co-ordination with consumer, supported by strong logistic backbone having commitment towards costumer?s satisfaction. Big consumers have their own planning of consumption which is fulfilled from plant directly by adopting any mode, i.e., rail or road. To overcome storage issues, stock on wheels is one of the best options considering unloading of cement vehicles within stipulated time frame with excellent coordination with consumer. However, small users may be served better by the cement dealer networks or from nearest warehouses. Therefore such delivery networks/warehouses need to be situated at strategic locations from where supply can be made effectively.
In SCL, we encourage regular and big consumer to use bulk (loose) cement, which can be stored easily in vertical silos with minimum requirements. Here we faced a hurdle where the bulk cement users were not able to use their existing compressor facility. The pumps were not compatible with all of the individual bulk carrying vehicles. To overcome this, we have installed compressors mounted on mobile vans.
By using loose cement, customers, industry and builders can reduce their dependency on manual intervention to a great extent. The labour involvement in cement bag unloading as well as feeding in silos could be avoided.
To give delivery at long distances, SCL has established cement production units near consumer areas, from where multiple consumer deliveries are clubbed together for last mile delivery with minimum lead time.
Bulk cement small deliveries are also catered through bulk cement loading terminal, where customers can take loose cement delivery in short lead time and in small lots as per their convenience. In this way all customers are served by SCL in the loose cement too. SCL is one of the leaders in implementing eco-friendly initiatives. The company has converted PP bag-using consumers into bulk cement users.
How do you ensure that your fleet is performing at its best?
There is a variety of vehicles that ply cement for us. Some vehicles are dedicated for cement dispatches, which form 80 per cent of the fleet. The rest of the cement dispatch is done through return vehicles, which normally ply in open market. Market trucks are attracted to us due to surety of load availability, i.e., assurance. Dedicated vehicles require load planning with lowest turnaround trip time. So the optimum use of vehicles achieved by maximum quantity loaded to earn more revenue in defined period serves as an incentive to them. In SCL?s case, we have a fixed size of our truck fleet that plies on our dedicated route dispatches. After restricting the number of trucks (by reducing fleet strength by 25 per cent), we observed that the rate of vehicle utilisation has improved. Now maximum quantity is dispatched using minimum number of vehicles. As a result, our benchmarking freights are achieved as well as revenue to truckers has also increased.
To further improve the performance of the fleet, SCL increased laden run km of vehicles by 9 per cent in last fiscal year, i.e., 53 per cent in FY 2013-14 from 44 per cent in FY 2012-13, by providing return load of raw material to dedicated fleets. This ensures increased revenue for every run km.
Also, while ensuring dedicatedly fleet performance, SCL encourages market fleet to approach SCL?s independent/impartial reverse freight bidding system, in which they can decide their own revenue, as result of their own choice routes available for transit.
Do you think that it is a good idea to outsource logistical functions?
Looking at the huge involvement of logistics cost in total cost of product, at first instant the obvious answer is NO to outsource logistical functions in SCL. In logistic function huge dedication is required for customer satisfaction which is possible with personal involvement only, with an object of cost reduction.
By outsourcing, it is not necessary that we get financial benefits but on the contrary, purity of work and quality of service both may disturb or get affected and the result may not up to the mark. Scarcity of expert and experienced employees will always be there since none of the outsourced party will give preference to priority work in a dynamic company which is objective/essence of logistics. Secondly the pipeline of experienced manpower, in a growing organisation which has need of expert people, will become dry because outsource people do not necessarily have cultural acquaintances.
How do you assess the potential of coastal shipping and IWT? What are the major hurdles that dent the growth potential of IWT?
Coastal shipping can be a very good option for reduction of cost for plants located close to water bodies. However, there is an unmet need of small jetties for delivery at unloading point as well as connecting with road to consumption centres across coast. In Bihar, industries are located in Southern region, but the main consumer market of Bihar lies in north. As of now no infrastructure is available to let heavy commercial vehicles cross Ganges River, except rail, which is already insufficient to meet the growing demand.
IWT has very good potential in India. IWT can be used where we have limitations in road/rail transportation, but are blessed with plenty of rivers and other water bodies. SCL is one of the first cement companies to associate with Inland Waterways Authority of India (IWAI) to move cement trucks via waterways by Roll on-Roll off of trucks from vessels. IWAI provides facility for cement laden trucks to disembark vessels at Patna (South Bihar) and then roll-off at Chhapra road (North Bihar) accounting to a lead distance reduction by 60 km. This not only conserves natural resources like fuel but also prevents congestion on overburdened road/rail infrastructure.
To make IWT a success, the government is expected to build the infrastructure of small loading and unloading jetties through IWAI as-well-as dredge the river channels regularly. The government should provide freight subsidy for using IWT to encourage its use at large scale.
Why has cement transport via BCCW not picked up that well in the country?
In India, the use of bulk (loose) cement is not as popular as it is in the international market. Compared to packed cement, use of bulk cement is just 8-9 per cent since no infrastructure or encouragement is provided for bulk cement transport and use. BCCW transport to be economically viable requires minimum order size of 3000+ MT of cement in one way single trip and the wagon must bring back fly ash from the nearest source from the cement dispatch point. Consumers are not always located near to the railway line. Cement companies have to establish packing units at rail site to take two way advantage. Since two way movement of cement and fly ash cannot be done on rail line, use of BCCW has not yet picked up in India.
There is lack of co-ordination amongst government enterprises both at the Centre and at State level. The Railways department should develop industrial parks along the rail terminals jointly with the state governments. The suggestions for rail terminal location should be invited from industrial organisations. As government initiative, a high level coordination committee should be formed, consisting of experts from industry, railway, and the Centre and State governments with an objective to promote return logistic in railway.
This initiative will develop many industries at a small cost of coordination. Cement industry alone cannot bear the cost of huge fly ash evacuation system at power plant. It should be a part of the government policy for power project?s in-built approvals that they should compulsorily develop fly ash filling system at their railway siding for BCCW type wagons.
The cement industry can develop infrastructure at their plants, but they cannot build infrastructure at fly ash sourcing point. Huge costs are involved at factory level for creation of storage silos for cement/fly ash, with compressor and transportation system from rail siding to their main plant.
What are the hindrances in setting-up private rail terminals?
Basic hindrances in setting-up private terminals are as under:
- Discouraging policies of railways towards private terminals. It is as if railway considers private terminals as their competitors, instead as supporters who will take on the load from overburdened rail system.
- Long and difficult approval process prevalent at various railway departments where approvals are required separately from commercial, technical, civil, rail transporter department, etc.
- Difficulties inland acquisition and high lease licensing for railways land for siding takeoffs.
- Clearances from various government bodies, i.e., road/highways authorities for ROB and RUB, State Electricity Boards for relocation of cable tower, etc. Take too much time.
- No incentive is offered by railway for cost recovery of infrastructure created by private terminals. Earlier Rs 40/- PMT was committed by railway as terminals charges but they have been withdrawn unexpectedly.
The Liberalised Wagon Investment Scheme (LWIS) seems to be skewed in favour of Railways. What is your take on this and what needs to be done?
LWIS policy does not correlate with huge investment. A wagon costs around Rs 60 lakh, whereas railway policy gives rebate on railway freight instead of ensuring return on investment (ROI) for a wagon. Only if the scheme is modified by way of freight rebate to investment based return will the LWIS be successful. Even if railway plans to give return by way of freight rebate then they have to ensure free movement of wagons on railway infrastructure, without any restriction. The freight rebate should match ROI at 15 per cent. This will help LWIS serve its true purpose.
Cement being the 3rd largest revenue earner for Indian railways, should there be preferential treatment given to the industry especially when restrictions are necessary to be imposed?
Cement is put on ?D? category for wagon allotment preference by railways. Hence, cement has low priority in comparison to ?B? category food grains and fertilisers. The cement industry has to suffer heavily on account of wagon shortages, being non priority in wagon allotment. Choking of rail infrastructure at loading and unloading points with large storage areas occupied by ?B? category seasonal items, puts restrictions on cement industry. Cement should be considered in par with other commodities.
Coastal shipping can be a good option for plants located close to water bodies. However, there is an unmet need of small jetties for delivery at unloading point as well as connected road network.
You may like
As part of the 10th India Construction Festival, the RAHSTA Awards recognised outstanding contributions to the road construction industry.
On October 10, 2024, the RAHSTA Awards were held at the Jio Convention Centre in Mumbai, forming a significant part of the 10th India Construction Festival. This esteemed event serves as a pivotal platform for recognising and honouring outstanding contributions in the road construction industry, particularly those that prioritise sustainability, innovation and excellence.
RAHSTA, an acronym for ‘Roads and Highways Sustainable Technologies & Advancement’, has become synonymous with the promotion of advancements in road construction equipment and technologies. Organised by the FIRST Construction Council, the awards seek to highlight the importance of sustainable practices in infrastructure development and celebrate those organisations that lead the way in this critical area.
At the event, Pratap Padode, Founder, FIRST Construction Council, underscored the importance of skilling the workforce in the construction sector. He pointed out that construction is India’s second-largest employer, with the potential to reach 100 million jobs by 2030. However, he emphasised that a significant portion of this workforce remains unskilled, with 80 per cent of the 70 million workers lacking adequate training.
“To bridge this skill gap, we must incorporate practical orientation in engineering and management courses,” Padode urged. He highlighted the Indian Government’s initiative to onboard 1 crore interns through CSR funding over five years, encouraging construction companies to participate actively
in this programme. By doing so, he said, the industry could not only enhance skill development but also position itself for future growth and sustainability.
The RAHSTA Awards recognised seven outstanding contributions to the road construction sector, celebrating innovations that drive sustainability and efficiency:
- Award for Highest Standards of Excellence in Road Engineering & Construction: Patel Infrastructure
- Award for Excellence in Bridge Engineering: L&T Construction, DIAL Phase 3A Project
- Best Road Financier Award: HDFC Bank
- Award for Best Use of Waste Material Recycling in Road Construction: Tata Steel
- Best Digital Technology Award in Road Building: Cube Highways and Transport Assets Advisors
- Award for Excellence in Project Management: Haryana Rural Road Infrastructure Development Agency
- Innovation Award in Project Execution:
- CC Precast Solutions
Indeed, the RAHSTA Awards 2024 were more than just a ceremony; they represented a vital call to action for the road construction sector in India. By highlighting the importance of sustainability and technological advancement, the awards inspired industry stakeholders to strive for excellence
and innovation.
As the event concluded, it left attendees with a renewed sense of purpose and a collective vision for a more sustainable and efficient future in infrastructure development. The RAHSTA Awards stand as a testament to the possibilities that lie ahead when industry leaders come together to embrace change and foster growth.
The titans of the construction equipment industry were honoured at the 12th BKT Equipment India Awards 2024.
On October 10, 2024, Mumbai played host to the much-anticipated 12th BKT Equipment India Awards 2024, an event that recognised and celebrated the outstanding achievements within the construction equipment sector. The grand ceremony took place at Jio Convention Centre and was among the highlights of the India Construction Festival, which gathered industry leaders, manufacturers and financiers from across the nation to honour innovation and excellence in this vital sector.
The inaugural addresses set a reflective tone for the evening, emphasising the importance of collaboration and information sharing within the industry. In his opening speech, Pratap Padode, Founder, First Construction Council, remarked, “At Equipment India, we have always tried to enhance the standard of the industry. During this 17th year of our existence, we still find that companies are trying to hide behind a veil as far as the disclosure of factual data is concerned.” His emphasis on transparency resonated with the audience, highlighting the critical need for the construction equipment sector to adopt best practices for data sharing, akin to those seen in the automobile industry.
For his part, Vipin Sondhi, Chairman, RAHSTA Committee, and former MD and CEO, JCB India and Ashok Leyland, also shared optimistic insights, stating, “Today, we celebrate not just the figures but the remarkable individuals behind them – the innovators, manufacturers and teams that push the boundaries of what’s possible.” He highlighted the impressive growth of equipment sales, which saw a 26 per cent increase during FY2023-24, reflecting strong market recovery and renewed confidence.
The 12th BKT Equipment India Awards not only celebrated the achievements of key players in the construction equipment sector but also served as a reminder of the collective effort required to drive the industry forward. The event reaffirmed its commitment to supporting the industry’s ongoing evolution, ensuring that India remains a significant player in the global construction equipment market. With the industry poised to grow at a CAGR of 12 per cent, reaching $25 billion by the end of the decade, the evening left attendees inspired and motivated to continue pushing boundaries in their respective fields.
A significant highlight of the evening was the presentation of the Equipment India Person of the Year 2024 award to Jaideep Shekhar, Managing Director, Terex India. Under his astute leadership, the company has achieved remarkable growth, marked by innovation and a commitment to excellence. The jury praised his strategic vision, which has not only propelled the company’s success but also contributed positively to the broader industry landscape.
Receiving the award, Shekhar expressed heartfelt gratitude, stating, “I’m deeply grateful to the jury and Equipment India for this remarkable honour. This award reflects not only my contributions but also the dedication and hard work of my team. I have been associated with the industry for more than 25 years and this award motivates me to keep pushing boundaries and to lead the growth
with integrity.”
The award presentation was made all the more special by the presence of previous winners of the Equipment India Persons of the Year, including Vipin Sondhi, former MD and CEO, JCB India (Equipment India Person of the Year 2013); Sandeep Singh, Managing Director, Tata Hitachi Construction Machinery (Equipment India Person of the Year 2015); and Dimitrov Krishnan, Managing Director, Volvo Construction Equipment India (Equipment India Person of the Year 2013).
The event also witnessed the recognition of numerous companies across various categories, showcasing the best of the best in the construction equipment sector. Indeed, as the industry gears up for future challenges, the awards stood as a testament to resilience, creativity and the unwavering spirit of collaboration. Together, the participants are set to build a brighter tomorrow for the construction equipment industry in India, fostering innovation and sustainable practices that will serve the nation for years to come.
Winners of the 12th BKT Equipment India Awards
- Equipment India Person of the Year 2024:Jaideep Shekhar, Managing Director, Terex IndiaGreen Factory of the Year: Tata Hitachi Construction Machinery
- Best After-Sales Service Provider: Tata Hitachi Construction Machinery
- Concrete Pumps: Schwing Stetter India
- Truck Cranes: Sany Heavy Industry India
- Asphalt Plants: Ammann India
- Asphalt Finishers: Ammann India
- Batching Plants: Schwing Stetter India
- Crawler Cranes: Sany Heavy Industry India
- Piling Rigs: Sany Heavy Industry India
- Rigid Dump Trucks: Caterpillar India
- Motor Graders: Caterpillar India
- Mini Excavators: Tata Hitachi Construction Machinery
- Crawler Excavators: Tata Hitachi Construction Machinery
- Mobile Cranes: Action Construction Equipment
- Crawler Dozers: BEML
- Skid-Steer Loaders: Doosan Bobcat India
- Wheel Loaders: LiuGong India
- Self-Loading Concrete Mixers: AJAX Engineering
- Tower Cranes: Action Construction Equipment
- Compaction Equipment: Case Construction
- Mobile Cranes: Action Construction Equipment
“I congratulate ASAPP Info Global on the outstanding success of the conference and award shows! It was a privilege to be part of such an insightful session with industry leaders.”
– Sanjay Koul, President- India and South East Asia and Managing Director, Timken India
Concrete
22nd CONSTRUCTION WORLD Global Awards Excellence Revisited!
Published
4 weeks agoon
November 23, 2024By
RoshnaAt the 22nd CONSTRUCTION WORLD Global Awards, over 50 awards in 21categories were presented to industry stalwarts.
The 22nd CONSTRUCTION WORLD Global Awards, was held on October 9 and 10, 2024, at the Jio World Convention Centre, Mumbai, and hosted by infrastructure think-tank FIRST Construction Council in partnership with CONSTRUCTION WORLD (CW) and Equipment India (EI) magazines. Incidentally, the spectacular RAHSTA Expo was India’s first indoor trade fair for construction equipment technology.
Benchmarked to global standards
At the inaugural session, Sanjay Bhatia, Upa-Lokayukta, Government of Maharashtra, along with Vipin Sondhi, Chairman, RAHSTA Expo Committee, and Pratap Padode, Founder, FIRST Construction Council, inaugurated the RAHSTA Expo. Expressing delight at the huge display of construction technology, Bhatia said, “The expo has put the construction industry on an international standard. India is experiencing nation-building at a robust pace and I am truly impressed with the work now being done by our youth with their startups, many of whom are showcasing their innovation here.”
Special bytes
At the 22nd CONSTRUCTION WORLD Global Awards, over 50 awards in 21 categories were presented to over 50 companies.
“I am thrilled to accept this award on behalf of Century Ply,” said Anup Mangaserri, Chief Executive Officer – Laminates, Century Plyboards India.
“It’s an honour to be recognised and I extend my heartfelt thanks.”
“Tata Consulting Engineers has made significant strides in nation-building projects in India and
high-impact engineering efforts abroad,” said BR Parthasarathy, Senior Vice President and Head – Infrastructure Cluster, Tata Consulting Engineers (TCE), sharing his pride in receiving the ENR Award. “This recognition underscores our global capabilities and we are honoured to be part of this journey.”
For his part, Sarat Chandak, CEO, H&R Johnson, said, “We are truly delighted to receive this award as the most admired brand in the construction world. This recognition reflects the dedication and hard work of the brand over its six-year journey in India. Thank you for acknowledging our efforts.”
And Sandeep Desai, Executive Director, and Ananta Rayaprolu, Director, Afcons Infrastructure, noted, “This is a proud moment for the entire Afcons team to have this particular trophy and prestigious award. Afcons has always been at the forefront of extreme engineering, and we are really happy for this acknowledgment, which motivates us to continue pushing the boundaries of innovation.”
Joining the chorus of gratitude, Manish Kumar, Executive Vice President, ITD Cementation, stated, “It is an incredible honour to receive this award and to be here for this event, which is very well organised. Being recognised among the best of our peers in the industry is truly a privilege. I accept this on behalf of my team and company and we are deeply grateful for this recognition.”
Many winners addressed the efforts that led to their recognition. “We are extremely proud and thankful that our founder has received the CW Person of the Year (Private Sector) award,” said Hardik Agrawal, Director, Dineshchandra Agrawal (DRAIPL). “This recognition reflects the relentless efforts of the entire Dinesh Chandra Group. We are deeply motivated by this honour and we thank the CONSTRUCTION WORLD Global Awards for this acknowledgment.” And Lalit Chhabra, Managing Director, PINI India, added, “It is a tremendous honour to receive this award. We are delighted that our global efforts have been recognised. This is a testament to what we have done in the past and our hard work. We look forward to improving our ranking in the years to come.”
Sharing his excitement, Ryoya Watanabe,
Senior Manager – BD & Marketing Division, Nippon Koei India, said, “We are headquartered in Tokyo and I am excited and honoured to accept this prestigious award. Thank you very much for this recognition.”
Meanwhile, Saji Samuel, Executive Vice President (Long Products), JSW Steel, brought the conversation around to India’s bright future. “I feel elated with this award because this is going to propel India into a five trillion-dollar economy as quickly as possible,” he remarked. “I wish CONSTRUCTION WORLD all the very best and hope many new companies will participate in this event going forward. I feel very proud to hold this trophy in my hand on behalf of my company.”
This collection of leaders from different sectors was a showcase of the diversity and excellence celebrated by these prestigious awards, marking significant milestones in their respective industries.
As Rajiv Poddar, Managing Director, BKT, observed, “India Construction Festival 2024 has once again proven to be an invaluable platform for the construction equipment industry. The convergence of innovative ideas and collaborative efforts showcased here reflects our collective commitment to growth and excellence. Congratulations to ASAPP Info Global for orchestrating such a successful event and to all the award winners – your achievements are a testament to the bright future of our industry.”
An event to remember Another highlight of the event was the launch of Pratap Padode’s book, Tarmac to Towers – India’s Infrastructure Story.
Indeed, in keeping with tradition, the annual CWGA Awards ceremony was a memorable celebration of architectural achievements and a platform for dialogue on critical issues affecting the construction industry.