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Introduction to the International business in India

The economy of India is the twelfth largest economy in the world by nominal value and the
fourth largest by purchasing power parity (PPP). In the 1990s, following economic reform from
the socialist-inspired economy of post-independence India, the country began to experience rapid
economic growth, as markets opened for international competition and investment. In the 21st
century, India is an emerging economic power with vast human and natural resources, and a
huge knowledge base. Economists predict that by 2020, India will be among the leading
economies of the world. India was under social democratic-based policies from 1947 to 1991.
The economy was characterized by extensive regulation, protectionism, and public ownership,
leading to pervasive corruption and slow growth. Since 1991, continuing economic liberalization
has moved the economy towards a market-based system. A revival of economic reforms and
better economic policy in 2000s accelerated India's economic growth rate. By 2008, India had
established itself as the world's second-fastest growing major economy. However, the year 2009
saw a significant slowdown in India's official GDP growth rate to 6.1% as well as the return of a
large projected fiscal deficit of 10.3% of GDP which would be among the highest in the world.
India's large service industry accounts for 62.6% of the country's GDP while the industrial and
agricultural sector contribute 20% and 17.5% respectively. Agriculture is the predominant
occupation in India, accounting for about 52% of employment. The service sector makes up a
further 34%, and industrial sector around 14%. The labor force totals half a billion workers.
Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes,
cattle, water buffalo, sheep, goats, poultry and fish. Major industries include
telecommunications, textiles, chemicals, food processing, steel, transportation equipment,
cement, mining, petroleum, machinery, information technology enabled services and software.
India's per capita income (nominal) is $1032, ranked 139th in the world, while its per capita
(PPP) of US$2,932 is ranked 128th. Previously a closed economy, India's trade has grown fast.
India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to
the World Trade Statistics of the WTO in 2006, India's total merchandise trade (counting exports
and imports) was valued at $294 billion in 2006 and India's services trade inclusive of export and

import was $143 billion. Thus, India's global economic engagement in 2006 covering both
merchandise and services trade was of the order of $437 billion, up by a record 72% from a level
of $253 billion in 2004. India's trade has reached a still relatively moderate share 24% of GDP in
2006, up from 6% in 1985. Despite robust economic growth, India continues to face many major
problems. The recent economic development has widened the economic inequality across the
country. Despite sustained high economic growth rate, approximately 80% of its population lives
on less than $2 a day (PPP). Even though the arrival of Green Revolution brought end to famines
in India,40% of children under the age of three are underweight and a third of all men and
women suffer from chronic energy deficiency.


Logistics management is that part of the supply chain which plans, implements and controls the
efficient, effective, forward and backward (reverse) flow and storage of goods, services and
information between the point of origin and the point of consumption in order to meet customers'
requirements rather to the customers’ delight. A professional working in the field of logistics
management is called a logistician. Logistics, as a business concept, evolved only in the 1950s.
This was mainly due to the increasing complexity of supplying one's business with materials, and
shipping out products in an increasingly globalized supply chain, calling for experts in the field
who are called Supply Chain Logisticians. This can be defined as having the right item in the
right quantity at the right time at the right place for the right price and to the right target
customers (consumer); and it is the science of process having its presence in all sectors of the
industry. The goal of logistics work is to manage the fruition of project life cycles, supply chains
and resultant efficiencies. Logistics is concerned with getting (or transmitting) the products and
services where they are needed or when they are desired. It is difficult to accomplish any
marketing or manufacturing without logistical support. It involves the integration of information,
transportation, inventory, warehousing, material handling, and packaging. The operating
responsibility of logistics is the geographical repositioning of raw materials, work in process, and
finished inventories where required at the lowest cost possible.

Origin and Definition of Logistics:

The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word,
calculation, reason, speech, oration"). Logistics is considered to have originated in the military's
need to supply themselves with arms, ammunition and rations as they moved from their base to a
forward position. In ancient Greek, Roman and Byzantine empires, there were military officers
with the title ‘Logistikas’ who were responsible for financial management and distribution of
supplies. The Oxford English dictionary defines logistics as: “The branch of military science
having to do with procuring, maintaining and transporting material, personnel and facilities.”
The American Council of Logistics Management defines logistics as “the process of planning,
implementing and controlling the efficient and effective flow, and storage of goods, services and
related information from the point of origin to the point of consumption for the purpose of
conforming to customer requirements.”

Objective of Logistics Management:

The primary objective of logistics management is to effectively and efficiently move the supply
chain so as to extend the desired level of customer service at the least cost. Thus, logistics
management starts with ascertaining customers’ needs till their fulfillment supplies. However,
there are some definite objectives to be achieved through a proper logistics system. These can be
described as follows:

1. Improving customer service:

An important objective of all marketing efforts, including the physical distribution activities, is
to improve the customer service. An efficient management of physical distribution can help in
improving the level of customer service by developing an effective system of warehousing, quick
and economic transportation, and maintaining optimum level of inventory.

2. Rapid Response:

Rapid response is concerned with a firm's ability to satisfy customer service requirements in a
timely manner. Information technology has increased the capability to postpone logistical
operations to the latest possible time and then accomplish rapid delivery of required inventory.

3. Reduce total distribution costs:

The cost of physical distribution consists of various elements such as transportation,
warehousing and inventory maintenance, and any reduction in the cost of one element may result
in an increase in the cost of the other elements. Thus, the objective of the firm should be to
reduce the total cost of distribution and not just the cost incurred on any one element.

4. Generating additional sales:

A firm can attract additional customers by offering better services at lowest prices. For example,
by decentralizing its warehousing operations or by using economic and efficient modes of
transportation, a firm can achieve larger market share. Also by avoiding the out-of stock
situation, the loss of loyal customers can be arrested.

5. Creating time and place utilities:

The products are physically moved from the place of their origin to the place where they are
required for consumption; they do not serve any purpose to the users. Similarly, the products
have to be made available at the time they are needed for consumption.

6. Price stabilization:

It can be achieved by regulating the flow of the products to the market through a judicious use of
available transport facilities and compatible warehouse operations. By stocking the raw material
during the period of excess supply and made available during the periods of short supply, the
prices can be stabilized.

7. Quality improvement:

The long-term objective of the logistical system is to seek continuous quality improvement. Total
quality management (TQM) has become a major commitment throughout all facets of industry.
If a product becomes defective or if service promises are not kept, little, if any, value is added by
the logistics. Logistical costs, once expended, cannot be reversed.

8. Movement consolidation:

Consolidation one of the most significant logistical costs is transportation. Transportation cost is
directly related to the type of product, size of shipment, and distance. Many Logistical systems
that feature premium service depend on high-speed, small shipment transportation. Premium
transportation is typically high-cost. To reduce transportation cost. It is desirable to achieve
movement consolidation.

Logistics Management Function

Logistics is the process of movement of goods across the supply chain of the company. This
process consists of various functions, which have to be properly managed to bring effectiveness
efficiency in the supply chain of organization. The major logistical function are shown in figure

1. Order processing:

The starting point of physical distribution activities is the processing of customers’ orders. In
order to provide quicker customer service, the orders received from customers should be
processed within the least possible time. Order processing includes receiving the order, recording
the order, filling the order, and assembling all such orders for transportation, etc. the company
and the customers benefit when these steps are carried out quickly and accurately. The error
committed at this stage at times can prove to be very costly. Order processing activity consist of
the following Order checking in any deviations in agreed or negotiation terms

• Prices , payment and delivery terms

• Checking the availability in of the material stocks
• Production and material scheduling for storage
• Acknowledge the order, indicating deviation

2. Warehousing:

Warehousing refers to the storing and assorting products in order to create time utility. The basic
purpose of the warehousing activity is to arrange placement of goods, provide storage facility to
store them, consolidate them with other similar products, divide them into smaller quantities and
build up assortment of products. Generally, larger the number of warehouses a firm has the lesser
would be the time taken in serving customers at different locations, but greater would be the cost
of warehousing. Thus, the firm has to strike a balance between the cost of warehousing and the
level of customer service. Major decision in warehousing is as follow:

• Location of warehousing facility

• Number of warehousing
• Size of warehouse
• Design of the building
• Ownership of the warehouse

3. Inventory Management:

Linked to warehousing decisions are the inventory decisions which hold the key to success of
physical distribution especially where the inventory costs may be as high 15 as 30-40 per cent
(e.g., steel and automobiles). No wonder, therefore, that the new concept of Just-in-Time
Inventory decision is increasingly becoming popular with a number of companies. The decision
regarding level of inventory involves estimate of demand for the product. A correct estimate of
the demand helps to hold proper inventory level and control the inventory costs. This is not only
helps the firm in terms of the cost of inventory and supply to customers in time but also to
maintain production at a consistent level. The major factors determining the inventory levels are:
The firm’s policy regarding the customer service level, Degree of accuracy of the sales forecasts,
Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs
to the factory and get the products in the market. The cost inventory consists of holding cost
(such as cost of warehousing, tied up capital and obsolescence) and replenishment cost
(including the manufacturing cost).

4. Transportation:

Transportation seeks to move goods from points of production and sale to points of consumption
in the quantities required at times needed and at a reasonable cost. The transportation system
adds time and place utility to the goods handled and thus, increases their economic value. To
achieve these goals, transportation facilities must be adequate, regular, dependable and equitable
in terms of costs and benefits of the facilities and service provided.

5. Information:

The physical distribution managers continuously need up-to-date information about inventory,
transportation and warehousing. For example, in respect on inventory, information about present
stock position at each location, future commitment and replenishment capabilities are constantly

required. Similarly, before choosing a 16 carrier, information about the availability of various
modes of transport, their costs, services and suitability for a particular product is needed. About
warehousing, information with respect to space utilization, work schedules, unit load
performance, etc., is required. In order to receive all the information stated above, an efficient
management information system would be of immense use in controlling costs, improving
services and determining the overall effectiveness of distribution. Of course, it is difficult to
correctly assess the cost of physical distribution operations. But if correct information is
available it can be analyzed systematically and a great deal of saving can be ensured.

6. Facilities:

The Facilities logistics element is composed of a variety of planning activities, all of which are
directed toward ensuring that all required permanent or semi permanent operating and support
facilities (for instance, training, field and depot maintenance, storage, operational, and testing)
are available concurrently with system fielding. Planning must be comprehensive and include the
need for new construction as well as modifications to existing facilities. Facility construction can
take from 5 to 7 years from concept formulation to user occupancy. It also includes studies to
define and establish impacts on life cycle cost, funding requirements, facility locations and
improvements, space requirements, environmental impacts, duration or frequency of use, safety
and health standards requirements, and security restrictions. Also included are any utility
requirements, for both fixed and mobile facilities, with emphasis on limiting requirements of
scarce or unique resources.

Relevance of Logistics in International Marketing

Marketing experts have recognized that for developing a position of sustainable competitive
advantage, a major source is superior logistics performance. Thus, it can be argued that instead
of viewing distribution, marketing and manufacturing as largely separate activities within the
business, they need to be unified, particularly at the strategic level. One might be tempted to
describe such an integrated approach to strategy and planning as ‘Marketing Logistics’. Business
can only compete and survive either by winning a cost advantage or by providing superior value
and benefit to the customer. In recent years, numbers of companies have become aware that the
market place encompasses the world, not just the India .As a practical matter, marketing
managers are finding that they need to do much work in terms of conceptualizing , designing ,
and implementing logistics initiatives to market effective globally. Following are the reasons

behind the extension of logistics activities at global level to do business internationally. The
magnitudes of global business are:

• Increase in the magnitude global business.

• Business is relying on foreign countries to provide a source of raw materials and markets for
finished goods.

• Fall of global trade barriers.

• Increase in Global competition.

Prospects of Growth in the Industry

In years gone by, the traditional warehousing and logistics facility was located by rail, road
tracks, a water port, and/or freeways, usually in the least desirable parts of cities or large towns.
This stereotype then faded as gigantic, state-of-the-art facilities began to sprout in more rural
areas on the outskirts of transportation and population hubs. The World started beginning to see
such facilities showing up in even less "traditional" areas. Modern warehouses now are being
located in carefully manicured industrial parks that are sprouting as fast as the corn and wheat
once did in these open spaces-often in out-of-the-way places. Why the emphasis on such
locations for logistics companies? Much of it is due to the great flux that the logistics industry
has been undergoing in the first three years of the 21st century. Most of these changes are being
driven by a growing trend in the manufacturing and retail sectors to form partnerships with
companies to which they can outsource non-core logistics competencies-3PL providers. In turn,
3PL providers are continually looking to provide innovative supply chain solutions to customers
by focusing on value-added capabilities, differentiating themselves from the competition. They
focus on key objectives, such as implementing information technologies, instituting effective
management processes, integrating services and technologies globally, and delivering
comprehensive solutions that create value for 3PL users and their supply chains. This need to
partner with customers and become more integrated into their supply chain processes has created
the ancillary need to locate close to these customers. That isn't to say the need for easy access to
transportation hubs and different modes of transportation won't continue to be important. But the
above shift in business strategy, along with the advances in technology and enhanced

communication, has opened the door for logistics facilities to operate effortlessly in a myriad of
locations. Profit warnings, share price pressures, mergers, reorganizations, relocations, disposals,

painful layoffs and great geopolitical uncertainties can sweep away even the most comprehensive
logistics strategies – and that’s despite outstanding management over many years. These are
exceptionally difficult times and it has never been more important to connect logistics and freight
planning to executive board thinking than now. It’s easy to lose sight of the bigger picture in the
rush to cut infrastructure cost and conserve cash. Hopefully organization succeed in protecting
the business, satisfying shareholders and analysts, but what about capacity and flexibility, morale
and momentum? To be a logistics winner in the coming years organizations need to use the
downturn to reshape for growth, propelled by an unshakeable conviction that the mission is still
important, that more prosperous times lie ahead, and that in some way the company
infrastructure is helping to build a better kind of world. Own passion for running the race matters
most of all in a downturn, when people are insecure, see only savage cost savings, and loyalty is
tested. The corporation’s future will be dominated by six factors, or faces of a cube, spelling F U
T U R E. Logistics is inevitable in the future and essentially the management policy also has a
significant role in the future of world. Generally the study is being featured with all aspects of
management in Logistics and Freight areas. (Logistics include Transportation, Warehousing,
Network Design, Cross docking, and Value Adding)



Oriental Carbon and Chemicals Limited (OCCL), a company belonging to Duncan J.P Goenka
was incorporated in 1978 as Dharuhera Chemicals Ltd. (DCL). In 1983 Oriental Carbon Ltd. a
group of manufacturing Carbon Black, was merged with DCL to form Oriental Carbon and

Chemicals Limited (OCCL). In 1994, OCCL setup a unit of manufacturing insoluble sulfur
which later emerged as a flagship product of the company. In year 2000 the company re-aligned
its focus to concentrate on insoluble sulfur with the aim of becoming a leading player in the
world. In the process the company divested its Carbon Black unit in favor of Continental Carbon
Company U.S.A. OCCL today is a debt free company.

The company is involved in chemical manufacturing i.e. Insoluble Sulphur, Sulphuric Acid
including Oleums. The company has installed capacity to produce 10000 MT of Insoluble
Sulphur and 41250 MT of Sulphuric Acid per annum. The Sulphuric Acid unit has been in
operation since 1980 and the Insoluble Sulphur unit having installed capacity of 5000 MT since
1994. The company doubled its capacity by setting up of EOU (Export Oriented Unit) plant
which is operational since 2005.

Management of the Company


Chairman: Mr. J.P. Goneka

Whole Time Directors:

Mr. A. Goneka
Mr. S.J. Khaitan
Mr. H.C. Taneja

Nominees of Life Insurance Corporation of India:

Mr. O.P. Dubey

Mr. B.B. Tandon
Mr. S.K. Roy
Mr. K Raghuraman
Registered Office

Oriental Carbon and Chemicals Limited

Duncan House, 31, Netaji Subhash Road, Kolkata - 700001

Corporate Office

Oriental Carbon and Chemicals Limited
1st Floor, Publicis House,
1-2, Aram Bagh Community Center,
Panchkuian Road, New Delhi - 110055, INDIA.


Oriental Carbon and Chemicals Limited

Plot No. 3 & 4, Industrial Complex, Phase – I
Dharuhera - 122106.
District: Rewari, Haryana
Website : http://www.occlindia.com


Quality consciousness and an understanding of the customers needs for constant product and
process improvement, has contributed to the growth of OCCL's Insoluble sulfur business. An
ongoing mutually rewarding relationship with it's global clients, complemented by a growing
demand for Diamond Sulf, has encouraged OCCL to continuously enhance it's production levels
which now stands at 4400 TPA. Today continuous improvement is the guiding corporate

Main products

Insoluble Sulfur:

Insoluble sulfur plant, with installed capacity of 10000 MT, is situated in Dharuhera, in the
Indian State of Harayana, about 80 Km South West of New Delhi. Insoluble sulfur manufactured
in this plant is marketed as "Diamond Sulf" in India and around the world. The plant, through
continuous innovations over the years, can be counted among the best in the world. It adheres to
total Quality norms and is ISO9001-2000 & EMS14001-2004 Certified. OCCL produces wide

range of insoluble sulfur grades, which are being widely exported to leading tyre companies
around the world. OCCL's efforts in exports have earned Government of India's recognition as
certified "Export House". In India OCCL is the undisputed leader with major market share.
DIAMOND SULF is an amorphous form of Sulfur in Polymeric form in contrast to the natural
Sulfur which is Crystalline and monomeric in nature. The polymeric chains of DIAMOND
SULF consist of several thousand micro fine sulfur particles. The product is thus rendered
insoluble in all known solvents and also in Rubber Compounds and does not take part in cross
linking reaction like Natural Sulfur as long as it is in Polymeric form Applications Manufacture
of Tyres and different types of Rubber articles like Belts, Hoses and other goods wherein long
compound storage, prevention of premature vulcanization, superior adhesion and green tack and
use of various reinforcements are pre-requisites for manufacturing superior quality products.

High Quality Products Attributes

Diamond Sulf offers a single point solution to multiple processing problems, viz,

• It prevents bin scorching

• Eliminates sulfur bloom

• Ensures uniform dispersion

• Prevents sulfur migration

• Facilitates optimum curing every time

• Preserves building-tack

• Improves bonding between rubber to rubber as also with dissimilar reinforcement


• Currently Diamond Sulf is being consumed mostly by the automotive tyre sector in the
production of carcass, tread, cushion, beading as well as non-retreating compounds that
need long storage periods. However it is also being increasingly used in the manufacture
of conveyer and transmission belts, hoses and other rubber products that require green
tack and adhesion, extended compound storage and prevention of premature


Insoluble Sulfur possessing higher level of thermal stability provides optimum resistance to
reversion to the soluble form of sulfur even at elevated temperatures. Such a product would
facilitate enhanced bloom protection. High stable DIAMOND SULF ensures more consistent
vulcanizing properties and allows storage at relatively higher ambient temperature.

QUALITYPARAMETER DS - OT - DS - OT - DS - OT - 33 Test Method

S 10 (HS) 20 (HS) (HS)
Material Safety Data DS - OT - DS - OT - DS - OT - 33
Sheet 10 HS 20 HS HS
Physical Appearance Fine Fine Fine Yellow
Yellow Yellow Powder
Powder Powder
Elemental Sulphur % 90±1 80±1 67±1
Insoluble Sulphur (Min)% 90 90 90 ASTM D
(On Total S) 4578-89
Oil Content % 10±1 20±1 33±1 ASTM D
Acidity(as H2SO4)(Max) 0.05 0.05 0.05 ASTM D
% 4569-89
Ash Content (Max)% 0.05 0.05 0.05 ASTM D
Heat Loss (Max) % 0.5 0.5 0.5 ASTM D
Fineness Retention on ASTM D
(Wet Screen) 100 4572-89
100Mesh (Max)% 0.2 0.2 0.2
200 Mesh (Max)% 2.0 2.0 2.0
Thermal StabilityHeating 80 80 80
at 105°C for 15 min.(In
Liquid Paraffin ) (Min) %

Goods are packed in 20/25 kg paper / HDPE Bags which are stretch wrapped by poly film and
palletized in wooden/steel/plastic pallets. The pallets are stuffed inside the factory in 20'/40'
containers and dispatched through world Class Shipping Lines.

PREDISPERSED DS-75 is a newly designed 'Pre dispersed Insoluble Sulphur' for applications
in both natural and synthetic rubber based compounding. It enhances the dispersion of IS in
rubber matrices upto the highest level to achieve more consistent vulcanizate properties in final
product. The product is eco-friendly and is supposed to have acceptance in rubber industry.


Physical Appearance Bright Yellow
Total Sulphur % 75 (±2.0)%
Insoluble Sulphur (Min)% (On 72 (±2.0)%
Total S)
Binder (including process aid) 25 (±2.0)%
Physical Form Available both in slab & pastilles
(tablets) forms

MASTER BATCHES of Insoluble Sulphur with polymers in different ratio are also available.
2) Sulphuric Acid

The Company manufactures both Commercial Grade and Battery Grade Sulphuric Acid and
Oleums. Sulphuric Acid finds application as a dehydrating agent, catalyst, active reactant in
chemical processes, solvent, and absorbent. It is used in the process industries from very dilute
concentrations for pH control of saline solutions to strong fuming acids used in the dye,
explosives, and pharmaceutical industries. It is produced and supplied in grades of exact purity
for the storage battery, rayon, dye, acid slurry and pharmaceutical industries and in grades of less
specifications for use in the steel, heavy chemical and superphosphate industries.

Sulphuric Acid (%) Specific Gravity*

65.13 1.5591
74.36 1.6667
77.67 1.7059
93.19 1.8354
98.00 1.8437
100.00 1.8391

20% oleum 104.50 1.915
30% oleum 106.75 1.952
40% oleum 109.00 1.983

General information about OCCL

Financial Summary


2007-08 2008-09

Production (Mt)

Insoluble Sulphur 9391 10703

Sulphuric Acid 32785 24932

Gross Sales 9667 12898

Net Sales 8964 12183

PBIDT 986 1599

Interest 298 338

PBDT 688 1261

Profit Before Tax 249 813

Profit After Tax 160 763

Dividend %* 5 15

Fob Value Of Exports 4616 6735

Gross Fixed Assets (Including Capital Work In Progress) 9485 10105

Net Fixed Assets 5453 5721

Net Current Assets 3821 3960

Share Capital** 1007 1031

Reserves &Surplus*** 4927 5637

Net Worth 5934 6668

Deferred Tax Provision 698 639

PBIDT Margin % (Over Net Sales) 11.00 13.12

PBT Margin % (Over net Sales ) 2.78 6.67

Debt Equity Ratio 0.42 0.33

Earning Per Share for the year (Rs./Share) 1.76 7.67

Book Value Of Shares (Rs./Share) 61.96 66.26

*Proposed Dividend for Financial Year 2008-09

** Includes Warrants for Rs 26.88

*** Excluding Revaluation Reserve


Nature of Industry

The company is involved in Chemical manufacturing i.e.Insoluble Sulphur,Sulphuric acid

Including oleums. The plant of the company is situated at Dharuhera, Dist.Rewari,Haryana. The
company has installed capacity to produce 10000 MT of Insoluble Sulphur and 41250 MT of
sulphuric Acid per annum.

2. Date or expected date of commencement of commercial production

The Sulphuric Acid unit has been in operation since 1980 and the insoluble sulphur
unit having installed capacity of 5000 MT since 1994 .The company doubled its capacity by
setting up of EOU plant which is operational since 2005.

3. Financial performance based on given indicators

Financial Performance over the last three financial periods are set out as under:-

(Rs. Lacs)

2007-08 2008-09

Gross Revenue 9667.31 12897.97

Profit Before Tax 248.71 813.34

Profit After Tax 160.27 762.93

Gross Fixed Assets (include Revaluation Reserve) 9484.78 10105.20

Equity Share capital 1006.93* 1031.13

Reserve & Surplus (excl. revaluation Reserves) 4926.55 5636.79

Net worth (excl. revaluation reserves) 5933.48 6667.92

*includes warrants for Rs. 26.88 lakhs

4.Export performance

Export earnings on FOB basis over the last three accounting periods have been as under:-


2007-08 2008-09

4615.94 6735.45

5. Foreign investments or collaboration , if any

The Company has no foreign collaborations.

6. Other Information

-Reason of loss or inadequate profits

Fluctuation in raw materials prices and all round economic slow down (in the year 2008
estimated) adversely effected the profitability of the company.

-Steps taken or proposed to be taken for improvement

In order to meet the demand of the product, existing capacity is being increased through
debottlenecking of the Insoluble sulphur plant by 15% The company has also decided to put up
a new plant for manufacturing of Insoluble Sulphur in SEZ to cater to overseas customers.

-Expected increase in productivity and profits in measurable terms

Production of insoluble Sulphur is expected to increase on account of debottlenecking /

expansion with consequent impact on profitability.

7. Dividends

Dividend is given 15 % on 10296062 Equity Shares (year 2008-09) (Rs.1.50 per share of Rs.10
each). The dividend will absorb Rs.1,80.69 Lacs (Inclusive of Dividend Tax of Rs.26.25 Lacs).

8. Pollution Control

Company’s Plant has all the requisite Pollution Control Equipments and meets all the desired
and statutory norms in this regard .The Insoluble Sulphur Units of the company enjoys ISO
14001-2004 Certification.

9. Public Deposits

Fixed deposits from public, outstanding with your company at the end of the financial
year, stood at Rs. 1,37,13,000/-. Deposits aggregating Rs. 19,87,000/- due for repayment on or
before 31 st March,2009 were not claimed by the depositors .Out of these, deposits totaling Rs.
1,15,000/- have since been claimed and settled. Besides this, deposits amounting to Rs.
12,95,000/- though fallen due for payment, could not be sold as there is dispute between the
concerned joint depositors.

10.Share Capital

During the year, 5,10,750 warrants have been converted into 5,10,750 Equity Shares Of Rs. 10/

11. Operations

Insoluble Sulphur

During the year company achieved 14 %growth in production to 10703 MT as Compared to

9391 MT last year .The domestic sale was down 11% and exports 5% over previous year in
quantity term resulting in total sale of 9882 MT.

Sulphuric Acid & Oleums

Sales of Sulphuric Acid was down by 23% at 24769 MT and Oleum was higher by 37 % at 6947
MT. Production of Sulphuric Acid (Eqvt) was 14% lower than last year. Selling Price of Acid\
has gone down to its historic low due to decrease in price of raw materials and sluggish demand.

12. Performance of the Company

During the year company achieved a profit before tax of Rs. 8,13 lakhs and of Rs.15.99 lakhs
before provision of Depreciation and interest. Production of Insoluble Sulphur increased 14%
to 10703 MT from 9391 MT last year. The sales of the company (net excise) increased 36% to
Rs. 1,21,83 lakhs. FOB value of exports grew 46% over previous year to Rs 6735 lakhs.

Situational Analysis:

OCCL has a vast knowledge of its diversified customer base. Its products and different grades
have been well received, both in domestic and international market. The marketing is the key to
development of brand and product awareness as well as the growth of customer base



Word, ’Logistics’ is derived from French word ‘loger’, which means art of war pertaining to
movement and supply of armies. Basically a military concept, it is now commonly applied to
marketing management. Fighting a war requires the setting of an object, and to achieve this
objective meticulous planning is needed so that the troops are properly deployed and the supply
line consisting, interalia, weaponary, food, medical assistance, etc. is maintained. Similarly, the
plan should be each that there is a minimum loss of men and material while, at the same time, it
is capable of being altered if the need arises. As in the case of fighting a war in the battle-field,
the marketing managers also need a suitable logistics plan that is capable of satisfying the
company objective of meeting profitably the demand of the targeted customers. From the point
of view of management, marketing logistics or physical distribution has been described as
‘planning, implementing and controlling the process of physical flows of materials and final
products from the point of origin to the point of use in order to meet customer’s needs at a profit.
As a concept it means the art of managing the flow of raw materials and finished goods from the
source of supply to their users. In other words, primarily it involves efficient management of
goods from the end of product line to the consumers and in some cases, include the movement of
raw materials from the source of supply to the beginning of the production line. These activities
include transportation warehousing, inventory control, order processing and information
monitoring. These activities are considered primary to the effective management of logistics
because they either contribute most to the total cost of logistics or they are essential to effective
completion of the logistics task. However, the firms must carry out these activities as essential
part of providing customer with the goods and services they desire.


The importance of the logistics systems lies in the fact that it leads to ultimate consummation of
the sales contract. The buyer is not interested in the promises of the seller that he can supply
goods at competitive price but that he actually does so. Delivery according to the contract is
essential to fulfilling the commercial and legal requirements. In the event of failure to comply
with the stipulated supply of period, the seller may not only get his sale amount back, but may
also be legally penalized, if the sales contract so specifies. There is no doubt that better delivery
schedule is a good promotional strategy when buyers are reluctant to invest in warehousing and
keeping higher level of inventories. Similarly, better and/or timely delivery helps in getting
repeat orders through creation of goodwill for the supplier. Thus, as effective logistics system
contributes immensely to the achievements of the business and marketing objectives of a firm. It
creates time and place utilities in the products and thereby helps in maximizing the value
satisfaction to consumers. By ensuring quick deliveries in minimum time and cost, it relieves the
customers of holding excess inventories. It also brings down the cost of carrying inventory,
material handling, transportation and other related activities of distribution. In nutshell, an
efficient system of physical distribution/logistics has a great potential for improving customer
service and reducing costs.

Logistics has gained importance due to the following trends

• Rise in transportation cost.

• Production efficiency is reaching a peak

• Fundamental change in inventory philosophy

• Product line proliferated

• Computer technology

• Increased use or computers

• Increased public concern of products Growth of several new, large retail chains or mass
merchandise with large demands & very sophisticated logistics services, by pass traditional
channel & distribution.

• Reduction in economic regulation

• Growing power of retailers

• Globalization

As a result of these developments, the decision maker has a number of choices to work out the
most ideal marketing logistics system. Essentially, this system implies that people at all levels of
management think and act in terms of integrated capabilities and adoption of a total approach to
achieve pre-determined logistics objectives. Logistics is also important on the global scale.
Efficient logistics systems throughout the world economy are a basis for trade and a high
standard of living for all of us. Lands, as well as the people who occupy them, are not equally
productive. That is, one region often has an advantage over all others in some production
specialty. An efficient logistics system allows a geographical region to exploit its inherent
advantage by specializing its productive efforts in those products in which it has been an
advantage by specializing its productive to other regions. The system allows the products’ landed
cost (production plus logistics cost) and quality to be competitive with those form any other
region. Common examples of this specialization have been Japan’s electronics industry, the
agricultural, computer and aircrafts industries of United States and various countries dominance
in supplying raw materials such as oil, gold, bauxite, and chromium. Further more Logistics has
gained importance in the international marketing with the following reasons:

1. Transform in the customers attitude towards the total cost approach rather than direct cost
approach .

2. Technological advancement in the fields of information processing and communication.

3. Technological development in transportation and material handling.

4. Companies are centralizing production to gain economies of scale.

5. Most of the MNC organizations are restructuring their production facilities on a global basis.

6. In many industries, the value added by manufacturing is declining as the cost of materials and
distribution climbs.

7. High volume data processing and transmission is revolutionizing logistics control systems.

8. With the advancement of new technologies, managers can now update sales and inventory
planning faster and more frequently, and factories can respond with more flexibility to volatile
market conditions.

9. Product life cycles are contracting. Companies that have gone all out to slash costs by turning
to large scale batch production regularly find themselves saddled with obsolete stocks and are
unable to keep pace with competitors’ new-product introductions.

10. Product lines are proliferating. More and more product line variety is needed to satisfy the
growing range of customer tastes and requirements, and stock levels in both field and factory
inevitably rise.

11. The balance of power in distribution chain is shifting from the manufacturers to the trader.


One of the main functions of logistics is to make the goods and services available to the place
where there is demand for the product. Supply chain is the process that is involved from the
procurement of raw materials till the outcome as finished products. The logistics and the supply
chain management is the two sides of a coin. They are interrelated and they function on their
own simultaneously. Some experts distinguish supply chain management and logistics while
others consider the terms to be interchangeable. From the point of view of an enterprise, the
scope of supply chain management is usually bounded on the supply side by your supplier's
suppliers and on the customer side by your customer's customers. The logistics plays an
important role between sources of demand and sources of supply. The supply chain management
is the planning and management of all activities involved in sourcing and procurement,
conversions, and logistics management activities, including coordination and collaboration with
suppliers, intermediaries, third party service providers and customers to facilitate integration of
supply and demand management within and across companies. Supply chain management is

used in filling the gaps and the logistics is used in closing the gaps. Thus we can say that the
supply chain management and logistics are part and parcel of a solution to the same purpose.
Overall productivity of the organization increases if the supply chain management and logistics
goes hand in hand.


The need of supply chain management has been identified as follows:

• Improve operations

• Increasing levels of outsourcing

• Increasing transportation costs

• Competitive pressures

• Increasing globalization

• Increasing importance of e-commerce

• Manage inventories

Major module of international supply chain management has two major components:

1. International movement of products and raw materials, title transformation, payments,

controlling risk factors

2. In parallel with the above activities, an information network is hard at work. Information
sharing and collecting is very important to run an effective global supply chain management



Customers Determining what customers want

Forecasting Predicting quantity and timing of demand

Design Incorporating customer wants, mfg., and time

Processing Controlling quality, scheduling work

Inventory Meeting demand while managing inventory costs

Purchasing Evaluating suppliers and supporting operations

Suppliers Monitoring supplier quality, delivery, and relations

Location Determining location of facilities

Logistics Deciding how to best move and store materials

The efficiency of the global supply chain management of any company can make everything
look easy. However in order to attain those efficiencies your employees need to understand the
fundamentals. The most basic fundamental is that supply chain management is not just domestic
anymore nor is it just for large corporations. Small and midsize companies have to be global
supply chain management savvy if they wish to survive. The growth and development of a
company is largely dependent on the global supply chain management system and its most
important asset – employees.



Though the concept of supply chain management is same at the domestic and international level,
when it comes to practice few similarities and differences are there. The are:


• Conceptual framework

• Involve the movement and storage of products

• Role of information

• Quality monitoring

• economic and safety regulations


• Distance

• Language

• Cultural differences

• Currency

• Political stability

• Infrastructure


The following are the major objectives of supply chain management and which are implemented
by various organization to enhance their competitiveness.

1. Logistics:

“Keeping the cost of transporting materials as low as possible consistent with safe and reliable
delivery.” Here the supply chain management system enables a company to have constant
contact with its distribution team, which could consist of trucks, trains, ships, or any other mode
of transportation. The system can allow the company to track where the required materials are at
all times. As well, it may be cost effective to share transportation costs with a partner company if
shipments are not large enough to fill a whole truck and this again, allows the company to make
good decision

2. Fulfillment:

Ensuring the right quantity of parts for production or products for sale arrive at the right time.
This is enabled through efficient communication, ensuring that orders are placed with the
appropriate amount of time available to be filled. The supply chain management system also
allows a company to constantly see what is on stock and making sure that the right quantities are
ordered to replace stock.

3. Production:

Ensuring production lines function smoothly because high-quality parts are available when
needed.”. Production can run smoothly as a result of fulfillment and logistics being implemented

correctly. If the correct quantity is not ordered and delivered at the requested time, production
will be halted, but having an effective supply chain management system in place will ensure that
production can always run smoothly without delays due to ordering and transportation.

4. Costs:

“Keeping the cost of purchased parts and products at acceptable levels.” Supply chain
management reduces costs by increasing inventory turnover on the shop floor and in the
warehouse controlling the quality of goods thus reducing internal and external failure costs and
working with suppliers to produce the most cost efficient means of manufacturing a product.

5. Revenue & profit:

“Ensuring no sales are lost because shelves are empty. Managing the supply chain improves a
company’s flexibility to respond to unforeseen changes in demand and supply. Because of this, a
company has the ability to produce goods at lower prices and distribute them to consumers
quicker than companies without supply chain management thus increasing the overall profit.

6. Cooperation:

“Among supply chain partners ensures 'mutual success.'”. Collaborative planning, forecasting
and replenishment (CPFR) is a “longer-term commitment, joint work on quality, and support by
the buyer of the supplier’s managerial, technological, and capacity development.” This
relationship allows a company to have access to current, reliable information, obtain lower
inventory levels, cut lead times, enhance product quality, improve forecasting accuracy and
ultimately improve customer service and overall profits. The suppliers also benefit from the
cooperative relationship through increased buyer input from suggestions on improving the
quality and costs and though shared savings. Consumers can benefit as well through the higher
quality goods provided at a lower cost.


Wars have been won or lost on the strength of logistics capability or lack of it. Although quite an
old concept, logistics has been becoming efficient only since the globalization wave of the early

1990s and hence, the businesses supported by it, worldwide, have been pushed for competitive
balance-sheets, providing consumers a better product/service and yet adding value to its
investors. Triggering intense competition, globalization, coupled with liberalization, forced both
private and public firms to commit themselves to making available to their customers the right
material of right condition, at the right time and place at the lowest cost — be it a product or a
service. The World Bank, in a recent survey Connecting to Compete: Trade Logistics in the
Global Economy, has developed a Logistics Performance Index (LPI) that can serve as a
benchmarking tool for measuring performance of businesses along a country’s logistics supply
chain. The Bank study asserts that countries that are able to connect to the global logistics web
would not only have access to vast new markets but also remain a part of the global trade
growth. The report avers that it is not the income of nations but their undergoing trade expansion
that determines their logistics efficiency, as the survey shows that nations with increasing trade
(imports and exports) to GDP emerged as the out-performers on the LPI scale relative to their
income levels. It also warns that those countries whose links with the global logistics chain are
weak are bound to face large and growing costs of exclusion from international trade. India trails
behind China on important indices such as customs procedures, overall infrastructure quality,
international shipment, logistics competence and tracking of shipments, but is ahead of the latter
on the domestic logistics efficiency front. Healthy economic growth in India is increasingly
supported by robust industrial growth. One of the relatively lesser known but significant sectors
that support almost all industrial activity .the logistics sector - is also witnessing this growth as a
follow through. However, not withstanding its importance and size (INR 4 trillion), it has
traditionally not been accorded the attention it deserves as a separate sector in itself.

Country LPI Score

USA 3.85

UK 3.84

Singapore 4.19

India 3.07

China 3.64

Mexico 2.64

The level of inefficiency in logistics activities in the country has been very high across all
modes. With the evolving business environment creating a strong demand pull for quality and
efficient logistics services, core issues around enabling infrastructure, regulatory environment
and the fragmented nature of the industry are being overcome gradually. The required pace of
efficiency and quality improvement will demand rapid development of capabilities of logistics
service providers. And with logistics being a service oriented sector, skill development will
emerge as a key capability while skill issues exist in varying degrees in all segments of logistics;
those segments where the gaps are not only wide but also widening at a relatively fast pace. The
most severe and immediate requirement for skill development is found to be in the road freight
and warehousing segments. India’s spend on logistics activities - equivalent to 13 percent of its
GDP is higher than that of the developed nations. The key reason for this is the relatively higher
level of inefficiencies in the system, with lower average trucking speeds, higher turnaround time
at ports and high cost of administrative delays being just a few of the examples. These
inefficiencies have arisen over the years from a combination of a non-conducive policy
environment, extensive industry fragmentation and lack of good basic infrastructure. India's
indirect tax regime discouraged large centralized warehouses and led, over time, to
fragmentation in the warehousing sector. At the same time, the absence of a single logistics
'champion' (whether in form of a ministry or otherwise) in the government (or industry) led to a
disintegrated approach to development of the sector.

Country Logistics Cost/GDP

India 13%

U.S. 9.9%

Europe 10%

Japan 11.4%

Extensive fragmentation meant the incapacity of industry players to develop the industry as a
whole and poor support infrastructure, such as roads, ports and telecom, led to a situation where
the opportunity to create value is limited. However, much of this is changing with the
government now demonstrating a strong commitment towards providing an enabling
infrastructure and creating conducive regulations. There is significant current and planned
investment in infrastructure to the tune of (INR 15 trillion) over the next few years and an
increased emphasis on public-private partnership. At the same time, regulations around
rationalization of tax structures and prevention of overloading for example are creating an
environment of positive change. Players now have the opportunity to leverage economies of
scale, complemented with better infrastructure, to provide integrated logistics solutions which
are cost effective. In addition, the evolving business landscape and increasing competition across
industries, is creating the need for more efficient and reliable logistics services than what exist
today For example, rapid growth of organized retail and the need to reach out to the large
untapped rural markets in India are necessitating development of strong back end and front end
supply networks. Fundamentally, a fragmented industry with low average scale - and consequent
limited investment and market development capability - is worst placed to serve these needs. It is
not surprising therefore that there is a frantic pace of consolidation and organic growth that the
industry is witnessing (refer box and figure 4). While logistics service providers are struggling to
keep pace with the growth, logistics service users with limited or no outsourcing are finding it
increasingly difficult and / or undesirable to manage this non-core activity in house. The result is
a wide need gap that is seemingly widening much faster than it is being filled. It is in this context
that capability development of logistics service providers assumes critical importance. While
rapid development across all dimensions of organizational capability will be required to achieve
and sustain demand growth, logistics being a service industry, manpower capabilities assume
utmost 5 importance. The sector currently employs about 40 million people, a number that will
rise rapidly with exponential growth expectations in the sector. 6 A look at the financials of a set
of 80 logistics companies in India across sectors reveals that manpower spends comprise 8-10
percent of overall sales of the sector. This roughly translates to about an INR 500 billion spend
on logistics manpower in the country annually. Only about 13 -14 percent of the overall
manpower costs are spent on non salary, manpower development items (welfare, training etc.).
This share for the unorganized companies would expectedly be much less. As against this
leading global logistics companies spend around 20 percent of their employee expenditure on
non-salary items. This lack of focus on developing manpower and skills for the logistics sector
has resulted in a significant gap in the numbers and quality of manpower in the sector. This gap,
unless addressed urgently, is likely to be a key impediment in the growth of the logistics sector in
India, and in consequence, could impact growth in industry and manufacturing sectors as well.
This underscores the need for identifying areas where such manpower and skill gaps are critical,
and developing focused action plans to improve the situation. In the next section, we analyze
each segment of the Logistics sector in India to identify the skill gaps that exist in each. These
gaps are then prioritized to identify key focus areas, and the action that needs to be taken to
bridge the gaps.


Growth within the organized sector

The logistics and warehousing sector in India, till now, has been highly fragmented and
characterized by the presence of numerous unorganized players. A large number of players have
been providing services in individual segments like transportation, warehousing, packaging etc.
In 2007, organized players accounted for only 6 per cent of the total US$ 100 billion Indian
logistics industry However, changing business dynamics and the entry of global third party
logistics players (3PL) has led to the remodeling of the logistics services in India. From a mere
combination of transportation and storage services, logistics is fast emerging as a strategic
function that involves end-to-end solutions that improve efficiencies. Logistics players that
provided limited logistics services, are also planning to broaden their areas of operation. Besides
expansion of distribution network by both national and regional players, the sector is also
witnessing considerable M&A (merger & acquisition) activity. For instance, DHL acquired Blue
Dart, TNT acquired Speedage Express Cargo Service and Fedex bought over Pafex.

Consolidation within the industry will lead to economies of scale for the existing organized
players, thereby lowering costs and improving efficiencies. Global logistics companies – like
Gazeley Broekmen (Wal-Mart's logistics partner), CH Robinson and Kerry logistics – have also
forayed into the Indian market in order to capitalize on the vast emerging opportunities within
this industry. Many of them are planning to develop their own logistics parks across the country.

Entry and expansion plans of logistics firms

• DHL and India-based the Lemuir Group entered into a 76: 24 joint venture – DHL
Lemuir Logistics Private Ltd.
• Germany-based Rhenus AG and Hyderabad based Seaways Shipping Ltd have set up a
joint venture – Seaways Rhenus Logistics Ltd.
• The UAE-based Swift Freight has forayed into the Indian market.
• Blue Dart Express is planning to add 1 million square feet of warehousing space to
develop 58 warehouses across the country by 2010.
• The Future Group plans to develop 3 million square feet of warehouses by 2010.

Competitive dynamics and other issues

The following problems existing in the Indian logistics industry make it unattractive for
investments and also create entry barriers.

➢ Logistics is a high-cost, low-margin business. The problem of organized players is

compounded by unfair competition with unorganized players, who can get away without paying
taxes and following operating norms stipulated in the Motor Vehicles Act such as quality of
drivers and vehicles, volume and weight restrictions, etc.

➢ Economies of scale are absent in the Indian logistics industry. Even the organized sector that
contributes slightly more than 1% of the logistics cost, is highly fragmented. Existence of the
differential sales tax structure also brought in diseconomies of scale. Though VAT (Value Added
Tax) has been implemented since April 1, 2005, failure in implementation of a uniform VAT
structure across different states has let the problem persist even today.

➢ Apart from the non-uniform tax structure, Indian LSPs have to pay numerous other taxes,
octeris, and face multiple check posts and police harassment. High costs of operation and delays
involved in compliance with varying documentation requirements of different states make the
business unattractive. On an average, a vehicle on Indian roads loses 24-48 hours in complying
with paperwork and formalities at different check posts en route to a destination. Fuel worth

USD 2.5 billion is spent on waiting at check posts annually. A vehicle that costs USD 30,000
pays USD 7,500 per annum in the form of various taxes, which include the excise duty on fuel.
This is why freight cost is a major component of the cost of a product in India.

➢ There is lack of trust and awareness among Indian shippers with regard to outsourcing
logistics. The volume of outsourcing by Indian shippers is presently very low (~ 10%) compared
to the same for the developed countries (> 50%, sometimes as high as 80%). The unwillingness
to outsource logistics on part of Indian shippers may be attributed to skepticism about the
possible benefits, perceived risk, and losing control, of sensitive organizational information, and
vested interests in keeping logistics activities in-house.

➢ Indian shippers expect LSPs to own quality assets, provide more value-added services and act
as an integrated service provider, and institute world-class information systems for more
visibility and real-time tracking of shipments. However, they are unwilling to match the same
with increased billings; even pay little attention to timely payments that leave LSPs short of
adequate working capital.

➢ Indian freight forwarders face stiff competition from multi-national freight forwarders for
international freight movement. MNCs, because of their size and operations in many countries,
are able to offer low freight rates and extend credit for long periods. Indian freight forwarders, on
the other hand, because of their smaller size and lack of access to cheap capital, are not able to
match the same. Moreover, clients of MNCs often want to deal with a single service provider and
especially for FOB (Free on Board) shipments specify the freight forwarders, which most of the
time happen to be the multi-national freight forwarders. This is sort of a non-tariff barrier
imposed on Indian freight forwarders.

➢ Poor physical and communications infrastructure is another deterrent to attracting investments

in the logistics sector. Road transportation accounts for more than 60% of inland transportation
of goods, and highways that constitute 1.4% of the total road network, carry 40% of the freight
movement by roadways. Slow movement of cargo due to bad road conditions, multiple check
posts and documentation requirements, congestion at seaports due to inadequate infrastructure,
bureaucracy, red-tapeism and delay in government clearances, coupled with unreliable power
supply and slow banking transactions, make it difficult for exporters to meet the deadlines for
their international customers. To expedite shipments, they have to book as airfreight, rather than

seafreight, which adds to the costs of shipments making them uncompetitive in international
markets. Moreover, many large shipping liners avoid Indian ports for long turnaround times due
to delays in loading/unloading and hence Indian exporters have to resort to transshipments at
ports such as Singapore, Dubai and Colombo, which adds to the costs of shipments and also
delays delivery.

➢ Low penetration of IT and lack of proper communications infrastructure also result in delays,
and lack of visibility and real-time tracking ability. Unavailability and absence of a seamless
flow of information among the constituents of LSPs creates a lot of uncertainty, unnecessary
paperwork and delays, and lack of transparency in terms of cost structures and service delivery.
For example, a shipper has to pay a higher freight rate if it cannot ensure return load. At present,
there is no real time process by which a shipper may know about the availability of trucks and
going rates at the destination market. Therefore, it has to pay more. Had the market information
been available to both the shipper and the service provider, the service provider’s cost structure
would have been transparent to the shipper and it would have ended paying the actual market

➢ Rate. Another example would be that LTL (Less than Truckload) shipments cost more
than FTL (Full Truckload) shipments. Now, when a shipper books a LTL shipment, it has
no idea about the status of its shipment after it leaves the warehouse at the origin and
before it reaches the warehouse at the destination. The service provider may still convert
this LTL shipment into a FTL shipment at its own warehouse before delivering at the
destination. So, the shipper ends up paying LTL rates for a FTL shipment. Had there been
visibility during delivery, this problem would not have occurred.
➢ Since most of the LSPs are of relatively small size, they cannot provide the entire range
of services. However, shippers would like service providers to offer more value-added
services and a single-stop solution to all their logistical problems. The inability of service
providers to go beyond basic services and provide value-added services such as small
repair work, kitting/de- kitting, packaging/labeling, order processing, distribution,
customer support, etc. has not been able to motivate shippers to go for outsourcing in a
big way.
➢ Service tax levied on logistics service fees (currently 12.36% with educational cess) may
make outsourcing costly and outweigh the possible benefits.
➢ There is lack of skilled and knowledgeable manpower in the logistics sector.
Management graduates do not consider logistics as a prime job. To improve the status of

the industry, service providers have to move beyond the level of brokers and truckers to
attract and retain talent.


➢ Despite problems, The Indian logistics industry is growing at 20% vis-a-vis the average
world logistics industry growth of 10%. Since the organized sector accounts for merely
1% of the annual logistics cost, there is immense potential for growth of the sector. The
major opportunities are highlighted below.
➢ Many large Indian corporate such as Tata and Reliance Industries have been attracted by
the potential of this sector and have established logistics divisions. They started providing
in-house logistics services, and soon sensing the growth of the market, have started
providing services to other corporate as well.
➢ Large express cargo and courier companies such as Transport Corporation of India (TCI)
and Blue Dart have also started logistics operations. These companies enjoy the
advantage of already having a large asset base and an all-India distribution network.
Some large distributors have also forayed into the logistics business for their clients.
➢ Since logistics service can be provided without assets, there is growing interest among
entrepreneurs to venture into this business.
➢ Indian shippers are gradually becoming more aware of the benefits of logistics
outsourcing. They are now realizing that customer service and delivery performance are
equally important as cost to remain competitive in this global economy.
➢ The Indian economy is growing at over 9% for the last couple of years (compared to the
world GDP growth rate of 3%), which implies more outputs and more demand for
specialized logistics services.
➢ The Indian government has focused on infrastructure development. Examples include the
golden quadrilateral project, east-west and north-south corridors (connecting four major
metros), Free Trade and Warehousing Zones (FTWZ) in line with Special Economic
Zones (SEZ) with 100% Foreign Direct Investment (FDI) limit and public-private
partnerships (PPP) in infrastructure development. It is expected that infrastructure
development would boost investments in the logistics sector.
➢ In India, 100% FDI is allowed in logistics whereas in China, until recently, foreign
investment was not allowed in domestic logistics. Almost all large global logistics
companies have their presence in India, mainly involved in freight forwarding. For
domestic transportation and warehousing, they have tie-ups with Indian companies. As
the Indian logistics scenario looks promising, these MNCs are expected to play a bigger
role, probably forming wholly-owned subsidiaries or taking the acquisition route. The
latter may be the preferred route of investment since the target company is readily
acquired with its asset base and distribution network, and the need for building
everything from scratch can thus be avoided. The benefits for the acquired company
include the patronage of an MNC and access to the MNC’s global network. As an
example, DHL Danzas, the biggest logistics company in the world, has taken over Blue



• To identify the role of Logistics in supply chain management at OCCL

• To know about network of logistics and transportation industry.
• To study the role of global 3PL service providers in India



The objective of the present study can be accomplished by conducting a systematic market
research. Market research is the systematic design, collection, analysis and reporting of data and
findings that are relevant to different marketing situations facing the company. The marketing
research process that is adopted in the present study consists of the following stages:

Collection and Sources of data:

Market research requires two kinds of data, i.e., primary data and secondary data. Secondary data
was collected from various books and web sites. Secondary data is use to complete this project
report from various sources like World Bank (website), CII (website) and other consultant firms.
Primary data is collected from OCCL (Personal interview).

a) Reducing logistics costs

The logistics cost in India – which includes inventory holding, transportation, warehousing,
packaging, losses and related administration costs – is estimated at approximately 13 per cent of
GDP and is high when compared to the corresponding figures for major economies India's multi-
layered tax regime, infrastructure bottlenecks and other inefficiencies have been the primary
reasons in keeping logistics costs high in India. Under the existing tax structure, 2 per cent
Central Sales Tax (CST) is levied on inter-state sales. As a result, companies have had to
maintain small warehouses and depots in every state in order to avoid paying CST on Inter-state
sales. These multiple warehouses have resulted in high inventory costs, increased working
capital and other overheads. A simplified tax regime will help logistics players service multiple
markets and offer end-to-end solutions far more efficiently and at much lower costs. As per the
World Bank's report on the Logistics Performance Index, a 0.5 per cent decrease in logistics cost
leads to 2 per cent growth in trade and a 40 per cent increase in the range of products that get
exported out of the country.

From multiple taxes to a simplified tax regime:

Union Budget 2008-09 has proposed the phasing out of Central Sales Tax (CST) 2010-11. Once
implemented, this measure will promote outsourcing of logistics operations and encourage the
creation of large warehouses at key strategic locations that could operate on the 'hub-and-spoke'
model. The implementation of Value Added Tax (VAT) in 2006 has played a role in reducing
logistics costs. The proposed implementation of Goods and Service Tax (GST) could lower
logistics costs further. According to the Confederation of Indian Industry (CII), improvement of
logistics and warehousing industry can make Indian industries more cost-competitive, thereby
enabling a GDP growth of 11 to 12 per cent, from the existing 7 to 8 per cent.

b) Improvement in infrastructure

Transportation in India accounts for nearly 40 per cent of the total cost of production. One of the
major barriers faced by the Indian logistics industry has been the lack of quality physical
infrastructure. However, India's core sectors are witnessing a significant change. The country is
expected to increase its infrastructure development spend from 4.7 per cent of GDP in 2007 to 8
per cent of GDP by 2012. This increased spend will help boost the logistics industry. However,
delays in critical projects may lead to a failure of this measure to provide the much needed
impetus to the growth of this sector. Better connectivity to small towns and cities is another area
planners need to work upon. Road transportation is currently the most dominant form of
transportation with more than half of the goods in the country being moved by road. Almost
every mode of transportation in India is fraught with inefficiencies. For instance, ports – that are
vital for foreign trade—have very high turnaround times when compared with statistics for other
countries. Similarly, the railways, which were a popular mode for freight transportation
(especially the movement of bulk goods), have lost ground to road transportation due to limited
access to smaller towns. Air, on the other hand, is a costly mode and its use is restricted to
courier shipments. It is rarely used for bulk transportation.

Emerging concept of third party logistics

Third party logistics or 3PL is a concept where a single logistics service provider manages the
entire logistics function for a company. Although still at a nascent stage, the Indian 3PL industry
is growing at a rapid pace. Global sourcing activity and fierce competition amongst
manufacturers to cut costs have made movement of materials rather complex, giving rise to the
emergence of several third party logistics players. Fuelled by the increasing trend of outsourcing,
coupled with the rapid growth in the Indian manufacturing sector, 3PL is estimated to grow at
about 30 per cent annually and become a US$ 30 billion industry by 2010

Firms Investment Details/


(2007-08) (in US $


DHL 250

TNT 115

Gati 200

Shreyas Shipping and Logistics 350

The entry of large third party logistics (3PL) carriers – like Federal Express (FedEx) and DHL –
and network expansion by the existing domestic players (such as Gati and Shreyas Shipping)
have also contributed to the transformation of services and the business practices across this
sector .Value added services like inventory management, warehousing, packaging, labelling,
tracking of shipments etc have witnessed huge demand from the corporate sector. The end-users
of 3PL services include major players from the retail, auto components and the electronics
industry. The organized 3PL market in India can be categorized into three major segments –
public sector, private sector and foreign entrants. Some of the major players in each category are
as illustrated.

Public Sector Companies Foreign Entrants Private Sector

Transport Corporation DHL Gati

of India

U Fed Ex Safe express

Container Corporation

of India

Food Corporation Blue Dart Reliance

of India Corporation Logistics

Central Warehouse TNT All cargo


Rapid growth of the warehousing sector

The role of a warehouse has also transformed from a conventional storehouse to an inventory
management set-up with a greater emphasis on value added services. Warehouses now provide
additional services like consolidation and breaking up of cargo, packaging, labeling, bar coding,
reverse logistics etc. It has emerged as a critical growth driver, leading to large investments by
logistics companies for the development of warehouses and logistics parks. Warehousing and
related activities currently account for about 20 per cent of the total logistics industry. However,
it is estimated that by 2010, this proportion would increase to approximately. The traditional
concept of establishing warehouses in the proximity of manufacturing facilities and raw material
sourcing centre is also undergoing a transformation. Today, there is an increased trend of
relocating warehouses near consumer markets. Currently, the organized warehousing industry in
India has a capacity of approximately 80 million metric tones (MT) and is growing at 35 to 40
per cent per annum. An investment of approximately US$ 500 million is being planned by
various logistics companies for the development of about 45 million square feet of warehouse
space by 2012.

Logistics parks – One-stop shop for logistics needs

The concept of a consolidated logistics centre can be traced back to the Foreign Trade Policy of
2004, which led to the development of Free Trade Warehouse Zones (FTWZ). While FTWZ
were aimed at facilitating import and export of goods, the need for a one-stop shop that could
additionally cater to the domestic market led to the development of logistics parks as a part of the
infrastructure industry in 2005-6. A logistics park is a notified area that facilitates domestic and
foreign trade by providing services like warehousing, cold storage, multimodal transport facility,
container freight stations etc. This area also acts as a place where a company can unload cargo

for distribution, redistribution, packaging and repackaging. Majority of these logistics parks will
be developed in the proximity of established and emerging industrial hubs in the country in order
to tap their logistics needs. By 2012, around 110 logistics parks, spread over approximately
3,500 acres, are expected to come up across India at an estimated cost of US$ 1 billion. Majority
of the upcoming logistics parks are being planned in close proximity to state capitals. However,
availability of large land parcels at relatively low cost, connectivity to multiple markets across
states and proximity to industrial clusters has led to the emergence of some tier-2 and tier-3 cities
as favoured destinations for the development of logistics parks and warehouses.


Besides the core transportation and warehousing services, the business of logistics is evolving to
encompass services that either enhance the effectiveness of existing transportation and
warehousing services or cater to associated value chain elements. All such services that do not
directly involve transportation and warehousing have been classified as value added and
emerging services.

Express services by both road and air are fast growing. While the Air Express and Courier
segment is reasonably organized, the Road Express segment is relatively less developed.
Sophistication and competition along with scale building among the industry players is expected
to drive the need for deeper skills at the operational level and a broader range of skills at the
middle and senior management levels in future.

Track and trace as a technology finds limited acceptance currently but is inevitably going
tobecome an indispensable part of transportation. Manpower that is capable of operating and
maintaining the systems would be increasingly in demand.

Cold chain services are likely to gain significance as organized food retail takes off. This would
particularly give rise to the need for technically competent manpower capable of understanding
the temperature and humidity control requirements of various perishables and operating
sophisticated controlled atmosphere equipment Value Added services associated with
warehousing, such as packaging, inventory management etc. would create a corresponding
demand for personnel with matching skill sets.

The third party logistics (3PL) market in India is still in a relatively nascent stage While
multinational companies in all industries have been predominant users of these services,
domestic majors in leading industrial sectors have also begun to follow the footsteps of their
multinational counterparts, starting with outsourcing their basic logistics functions. Realizing
the significant cost reductions and several other benefits gained by these companies, a large
number of small to medium companies in all the industries are gearing up to use 3PL services for
their logistic functions, resulting in tremendous potential for 3PL market in India. As far as skills
go, the 3PL business being an amalgamation of all other logistics services combined, necessitates
the all round development of skills in each sub sector as far as operational and front line skills

are concerned; on the middle and senior management levels, while soft skills around customer
relationship management would need to be developed and enhanced on the one hand, breadth of
management skills across various segments of logistics would also need to be developed. We
will now look at selected specific profiles in each of these segments the development of which
would be critical for achieving and sustaining the projected growth.


The global logistics industry was valued at US$3.5 trillion in 2007, whereas US logistics
industry size was around US$900 billion, 25% of the global logistics industry. Logistics costs in
India are estimated to be around 13% of the GDP, which comes to around US$94 billion in
2006-07. However, India’s spending on logistics industry is much higher than the developed
economies like the US (9.5%) and Japan (10.5%).
To know about network of logistics and transportation industry.


Air transport sector contributes over 0.2% to the country’s GDP at constant prices (1999- 2000
Prices). Transport sector’s contribution to the GDP has been firming up over the last couple of
years, mostly because of the growing economic activities in the country. Domestic air cargo
traffic has been growing at CAGR of 12.80% from 2001-02 to 2006-07, whereas international air
cargo traffic has been moving at CAGR of 13% during the same period. During 2006-07, total
air cargo traffic is estimated to be over 1.56m tones against 1.4m tones during 2005-06,
registering a growth rate of 14.65%. According to the Planning Commission, India’s air cargo
movements would grow at over CAGR of 11.5% from 2007-08 to 2011-12. Riding high on
export of gems and jewellery, special chemicals and high-value pharmaceuticals, international
air cargo traffic at all Indian airports have been growing rapidly.


Marine transport sector contributes over 0.2% to the country’s GDP at constant prices (1999
2000 prices). Transport sector’s contribution to the GDP has been firming up over the last couple
of years, mostly because of the growing economic activities in the country. Shipping industry
plays a significant role in the Indian economy. India has 12 major and 187 minor/intermediate
ports along its coastline of around 7,517km. The fleet strength at the end of December 2006 was
774 vessels with 8.42m Gross Registered Tonnage (GRT). Ports serve as the gateways to the
international trade in India. Major ports in India together have handled 463.84m tones of cargo in
2006-07, a growth of 9.51% against the same period of the previous year. The petroleum-oil-
lubricants (POL) accounted for 33.38% of the total traffic at major ports during April-March
2007, while iron ore constituted 17.37%, coal 12.98%, container traffic 15.84%, fertilizer 3.04%,
and others 17.49%. According to the Planning Commission, India’s shipping fleet strength will
be increased up to 15m GRT (as per the 3rd target) by the end of 2011-12, with an estimated

investment of US$17.7 billion. The port throughput will increase up to 1,008m tones, growing at
a CAGR of 10.96% from 2007-08 to 2011-12.


The plan by the Indian Railways to develop Logistics Parks [‘hubs’ in supply chain parlance is a
good one. It has the potential to streamline and optimize the supply chain and reduce the supply
8 chain costs. The service concept, service delivery and infrastructure have to be designed very
well for the Railways Logistics Parks to add value to the supply chain. For the Railways
Logistics Park to add value to the supply chain, at least one part of the transportation, either the
incoming or outgoing, has to be by rail. The Indian Railways would have to introduce innovative
train services, so that customers shift to rail from road and use trains for either the incoming or
outgoing from the hub. Currently about 80% of the products in India move by road. One simple
innovation could be to introduce time-tabled container trains, time-tabled parcel trains etc. It is
essential to have a few time-tabled freight trains, because reliability in a supply chain is a big
cost saver [reduces inventory levels, improves customer service] If the transportation, incoming
and outgoing, is by road, then the Logistics Park adds no value to the supply chain. It makes
more sense, from a supply chain standpoint, to have the hub on the highway, close to the city
bypass, outside the city limits, outside the octroi limits and outside any ‘No Entry’ zone. It then
makes more sense for the Railways to act as a landlord and build a Mall or Hypermarket. A Mall
or Hypermarket would give much better rentals and higher returns on the land that the Railways


Data Analysis:


Once the goods are packed and their pre-shipment inspection has been completed, the exporter
should draw up a logistics plan for the distribution of the goods to the importer to ensure their
timely delivery. This involves planning for transportation of the goods. The decision as regards
the mode of transport to be used is thus, the essence of distribution logistics. The logistics plan
should be drawn up considering the factors such as one, the alternative modes of transport and
two, the mode which is optimal from the point of view of the transportation cost. It may
sometimes so happen that there is no direct shipping link between the exporting and the
importing country. In such a case transport of the goods would involve transshipment of goods
from an intermediate port in other country. The mode of transport as to whether the shipment
would be sent by air or by sea or by road is a matter of negotiation between the exporter and the
importer and specified in the export contract. The exporter has to plan the transport logistics to
insure timely dispatch of the goods. In this significant area Clearing and forwarding agent are a
link between the owners of the goods and owners of means of the transport. They are experts and
knowledgeable in laws and regulations governing shipment of goods through the customs


There are primarily two types of containers used for the shipment of products from OCCL:

1) 20 ft (for 15 to 16 MT)

2) 40 ft (standard container)


Containerization is the technique of stowing freight in reusable containers of uniform size &
shape for transportation. The use of containers has revolutionized the carriage of goods through
shipment. The containers are carried by train or road to the sea ports where they are loaded on
the ships for the onward transportation to the destination. The exporters do not need to carry the
cargo to the seaports any longer rather they can approach the container freight station or the
inland container depot(ICD) to book the cargo there for the transportation to the destination. The
custom clearance of the cargo is provided at ICDs and in the process, the exporters are able to
save lot of time. The packing of the cargo in a container can be done either in the container depot
or in the factory of the exporter. The type of container used in OCCL is General Purpose
containers which are closed and are suitable for the carriage of all types general cargo both solids
and liquid. Access for loading and unloading is through full width doors. The dimensions of
general purpose container are as follows: Based on the length of the container, the container is
generally known as 20ft container or 40ft container,20ft containers are specifically used in
OCCL although some times in rare cases 40ft containers are used at some discrepancy.

1) What are you engaged into export-import or both?
• OCCL is engaged into export but it imports only raw material .

2) What is your basic product/ commodity?

• OCCL produces Insoluble sulphur it is mainly used in tyre industry. The growth in Indian
market for Insoluble sulphur is currently twice the growth rate for the tyre industry due to
increasing share of radial tyres which consume more Insoluble sulphur.

3) What are your main destination ports?

• The Port of Hamburg for Germany.

• The Port of Jakarta for Indonesia.
• Port Elizabeth for South Africa
• Santiago for USA
• Felixstowe for U.K.

4) What mode of transportation is used basically (air/sea)?

• Basically OCCL uses sea mode of transportation because it is cheapest than air. For dry
port Rail mode is used and sometime Volvo trucks are also used .

5) What types of containers are used for your product?

• Standard containers are used by OCCL. Size of containers used are 20ft and 40ft ( std).

6) What is loadability for container for your product?

• 20ft containers are used for 15 to 16 MT weights of cargo and 40ft for more than 16Mts.

7) Who handle/look after your logistics part?

• GMH PVT Limited, Nehru Place, New Delhi.

8) Does GMH look after clearance part also?

• Yes.

9) What are the Inco terms which are used by the company for export shipments?

• C&F (cost and freight)

• CIF (cost, insurance and freight)
• DDU (delivered duty unpaid)
• DDP (delivered duty paid)
10) Which shipping lines are used by the OCCL?
• Hyundai

To know about network of logistics and transportation industry.


The road freight industry in India is worth about INR 1.42 trillion and is growing at about 6-8
percent year on year (refer figure 6). Manpower spends amount to only about 4 percent of sales
as against the overall sector average of 8-10 percent. The industry has traditionally been
extremely fragmented - almost 75 percent of the trucking 'companies' are single truck operators
and almost 90 percent of trucking companies have a turnover of less than INR 10 million A
majority of players in this industry have been small entrepreneurs running family owned
businesses. Given their small scale and limited investment capability, most of their investments
have been focused on short term gains - direct and immediate impact on the top line / bottom line
of the business being the key decision criterion. As a result, investments that pay off in the
longer term, such as those in manpower development, have been minimal historically. Also,
these businesses are typically tightly controlled by the proprietor and his / her family and as
such, making it unattractive for professionals. Poor working conditions, low pay scales relative

to alternate careers, poor or non-existent manpower policies and prevalence of unscrupulous
practices have added to the segment's woes creating the image of a segment that holds few
attractions for those seeking employment. While industry players have been incapable of
investing in manpower development, the government has also not focused sufficiently on the
same. There exist very few formal training institutions for driver training and practically none for
operational training on associated areas like loading / unloading supervisory, proper handling
practices etc. The result has been that in the current scenario, there exist gaps in core technical
skills of the existing set of personnel. For example, the backbone of the trucking industry truck
drivers lack knowledge of good driving practices and areas associated with driving like
understanding of VAT. Taking a level-wise view of the skill issues, it is seen that in the road
sector, skill issues are widespread across the board with the situation being most severe at the
operational level


➢ Road network of 3.3 million km is the second largest globally

➢ 55% of total freight movement is via roadways
➢ Roads offer wide reach and easy accessibility to even small markets


➢ High cost of transportation

➢ National Highways account for only 2% of the total network but carries 40% of total

Key Developments:

➢ National Highway Development Project to upgrade and modernize highways

➢ 24,000 km of National Highways are to be upgraded to four/six lanes. Connectivity to ports is
also being improved


Rail freight traffic revenues stood at around INR 350 billion in 2006 having grown at around 8
percent in the recent past with the growth in the last couple of years being around 10 percent. It
is the world's second largest rail network spread over 81,500 km and covering around 7000
stations. Manpower spends amount to about 45 percent of revenues as against the overall sector
average of 8-10 percent. Also, non-salary expenditure comprises 36 percent of overall manpower
expenditure compared to the sector average of 13-14 percent. With the government being the
only employer, recruitment systems in the railways segment are formalized and there exists an
institutionalized training infrastructure and policy. Though the employee numbers are high
(around 1.4 million) there are no significant skill gaps owing to this traditionally strong in-house
training infrastructure. With technological up gradation, certain jobs are made redundant every
year with the people on these jobs being absorbed in newer areas through training. However, the
rapid introduction of modern technology that is creating gaps even in technical areas such as

signalling and telecom. Also, the Railways is facing increase in attrition levels due to gradual
opening of the sector. To counter the emerging gaps, the Railways is overhauling the curriculum
and infrastructure and rolling out training to the lowest levels (Grade D) to increase productivity.
With competition from road and air, the Railways is focusing on making its large manpower
more customer friendly. In the overall assessment, therefore, the skill gaps situation in the
railways segment does not seem to be alarming. The host of new players entering into the rail
container services segment (15 licenses have been awarded for the same) will however require
skills that hitherto were only residing with the Indian Railways. While the quantum of
requirement at this stage would be small and the need would likely be filled by the buffer created
by the Railways, this could become a gap area going forward


➢ Spread over 81,500 km, railways carries 25% of total freight movement
➢ Low transportation cost as compared to roads


➢ Bulk commodities account for 90% of total freight revenues

➢ Inflexibility to reach deep interiors

Key Developments:

➢ Phase 1 of dedicated freight corridor along Golden Quadrilateral to be initiated in 2008-09


The growth in shipping has been even higher than that of the railways driven by strong growth in
foreign trade both in bulk and containerized cargo. Manpower spends amount to about 8-10
percent; non-salary expenditure varies greatly between companies ranging from 3- 20 percent of
overall man power expenditure. The nature of liner shipping services to and from India has
undergone a sea change in the last few years as a result of the growth in break-bulk and
conventional cargoes. With the nature of goods being shipped changing, the potential and
opportunities for container transport and logistics companies are enormous. Over the past few
years the size and the number of vessels that are being deployed by India has increased. With
increasing capacity and infrastructural support, the scope of the operations is set to increase.
India now has the largest merchant shipping fleet among the developing countries. India is being
ranked 17th in the world in shipping tonnage. Indian share of maritime transport services is 1
percent of world market. The container traffic has registered an impressive growth of 15 per cent
over the last five years. The Government is responsible for creation of the trained manpower
required for the country's merchant navy fleet and also facilitation of training and employment of
seafarers in foreign flag vessels. . In addition to the above, there are about 124 training institutes
in the private sector approved by the Director General of Shipping, imparting pre-sea and post
sea training in various disciplines. The Directorate General of Shipping maintains a system of
inspections to ensure the quality of training. India is globally recognized as a very important
source of mercantile manpower. Accentuating the situation is the inherent disadvantage to the
Indian ship owners as employers arising by virtue of extra burden of income tax on Indian
seafarers' income. This makes the employment on a foreign flag the first choice of any Indian
seafarer, and thereby denies the best talent to the local shipping industry. Thus, in the core
shipping industry, while the manpower situation in terms of quality fares much better than the
other segments of logistics, the issue here is that of quantity with an increasing number of
qualified people being attracted towards working on foreign vessels as they offer better salaries
and perks. However, if one were to look at the ports side, there is an increasing lack of trained
manpower for pilotage functions and equipment operators


➢ Cheapest mode of transportation


➢ Poor state of inland waterways in the country

➢ High turnover time

Key Developments:

➢ Cargo handling capacity of ports to be increased from 600 million tones in 2007 to
1500 million tones by 2015


Though the air freight segment holds a small share of India's freight market, it is growing at a
fast pace. While India accounts for meager 3 percent of the global air cargo market, the Indian
air cargo industry is expected to double in size by the year 2010, as per an expert estimate. As in
the case of sea freight, the level of formalization and standardization of operations in the air
freight segment is greater than in the road sector. By virtue of the level of investments in assets,
network and relationships required to be a player in this segment, it has traditionally been
relatively more organized leading to greater regard for manpower development. The market
leaders typically have established internal structured training practices to train the staff employed
at this level. Nevertheless, there exist perceived gaps at the operational / front line level and are
primarily to do with soft skills, such as relationship management, interpersonal and managerial,
and supervisory skills.


➢ Fastest mode of transportation


➢ Low freight movement

➢ 87% of total freight traffic being handled by airports in metro cities

Key Developments:

➢ Modernization of 37 operational airports and development of new airports will increase air
cargo handling capacity


The warehousing segment consists of storage warehousing related to distribution whether

inbound or outbound trans shipment warehouses or 'terminals' used for bulking / de-bulking,
stuffing / de-stuffing cross docking and temporary storage (including CFS and ICD) The
warehousing segment is perhaps where the greatest growth potential exists. Like road
transportation, this segment has traditionally been extremely fragmented, small scale and
scattered geographically. A key reason for this has been India's indirect tax structure, with tax
paid on cross border (state border) sales not being fully set off against local tax liabilities. As a
result, most players resorted to setting up small warehouses across different states, rather than
large, centralized set-ups. This has led to the prevalence of small scale, fragmented warehouses,
with corresponding inefficiencies. This cause and effect cycle is depicted in Increasingly,
warehouses are being used to serve several important functions, beyond mere storage of products

Customer service
Increasingly, warehouse are being used as the customer service and repair centers. This ensures
quick availability of spare parts and offers low turnaround time


The goods are dispatched to the dealers/distributors from the warehouse. The warehouse, thus,
performs functions like invoicing and order processing.

Value Addition

Increasingly, warehouses are also being used to do higher end tasks associated with production
till now. These include MRP tagging, promotion bundling, repackaging , quality checking etc.

Product mixing

A warehouse may be used as a place where material from different factories of an organization is
mixed and dispatched to common set of distributors.


A warehouse is often used as a stockpiling location to manage demand-supply gaps over a longer
term. While no organized players have evolved in this segment, several trends are driving the
need for a more professional and organized approach to warehousing. Figure outlines the several

additional functions that warehouses perform today, apart from being physical storage points
such as Stockpiling, Product Mixing, Value addition, Distribution and Customer Service. These
functions require different skill sets and hence, warehouse service providers today need to
develop proficiencies in a diverse set of both core and non-core activities The size of the
warehousing segment is estimated to be INR 1.2 trillion in 2006; while the overall sector growth
may be estimated to be around the GDP growth rate of 8-9 percent, the organized portion of this
market is estimated to be growing at over 20 percent. A majority of players in this industry are
small / medium entrepreneurs running the warehouse as a CFA for one or more companies. As
mentioned earlier, the scale of these warehouses was never large enough to tap scale economies
or justify investments in higher standards. However, going forward, while implementation of the
VAT regime is expected to drive consolidation and hence larger scale warehouses, the rapid
growth of organized retail is expected to drive sophistication and efficiency in warehousing
practices. These developments would drive the need for specialized warehousing skills like
picking and packing, inventory management, proper handling practices including usage of
warehousing equipment like stackers, pallet trucks etc. and ability to understand and use
warehouse management systems (WMS) The growth in the proportion of containerized cargo in
addition to the opening up of container rail transport is giving a boost to the development of
Container Freight Stations (CFS) and Inland Container Depots (ICD). These 'warehouses', being
used more for transshipment than storage per se, require basic skills around loading / unloading,
stuffing / de-stuffing etc. at the operational level Newly developed electronic commodity
markets, such as Multi Commodity Exchange of India Ltd. (MCX) have played an instrumental
role in the logistics. Creation and development of warehouses followed the emergence of these
markets or exchanges. MCX’s collateral management arm National Bulk Handling Corporation
Ltd (NBHC), a national-level end-to-end solutions provider in warehousing, bulk handling,
grading and inspection, commodity care, pest management and collateral management of
commodities, is playing a key role in taking logistics and, hence, markets closer to the producers.
Sticking to their mandate, commodity derivatives markets have proved to be extremely
beneficial to farmers.

Logistics Companies of India

The land which opens up wide array of opportunities for the logistics service providers across the
world is India. The high demand for the logistics services is due to the significant growth of
economy. A few years back the value of the India logistics market was is $14 billion and will
grow at a rate of 7-8 per cent. The logistics companies in India cater to millions of retailers and
meet the requirements of about a billion people. The list below gives the name of the best
logistics companies in India.


TNT Express:

This company is a key leader in the international market in the sector of global express services.
The company ensures safe and on time delivery of your documents, freight and parcels. The
company offers time and day definite delivery in about 200 nations across the world. It operates
47 jet freighter aircraft and 26,000 road vehicles and has a network of 2,300 companies.

American President Lines Ltd (APL)

APL is the world's fifth-largest container transportation and shipping company, providing
services to more than 140 countries through a network combining intermodal freight transport
operations with IT and e-commerce. It is a wholly owned subsidiary of Neptune Orient Lines
(NOL), based in Singapore, a global transportation and logistics company engaged in shipping
and related businesses. APL has offices in almost 100 countries worldwide.
One among the acknowledged leaders among the logistics companies in India is AFL. Through
its domain of logistics services, the company has delivered world class service in India. In
1979,the company introduced the first ever courier service by forming an alliance with DHL
World Wide Express. The company offers services like Logistics and warehousing, Courier
Company and Custom Consultant.
This company is one among the major logistics companies in India. It is a market leader globally
in overland transport, air freight and international express. The company ranks No.1 in the world
in contract logistics and ocean freight. The biggest logistics and express network in the world has
a network in about 220 territories and countries,72,000 vehicles,350 Aircrafts,36 hubs and 4,700
Blue Dart :

This logistics company is South Asia's top integrated express package Distribution and Courier
Company. The domestic network of the company covers about 21,340 locations and provides
service to 220 countries by the company's sales alliance with DHL. It provides the best service
like Free Pick up from Your location, Regulatory Clearances, Real Time Tracking, Free
Computerized Proof of Delivery etc.

Gati :

The company is a key leader in then arena of express cargo delivery and a significant one in the
supply chain management solutions and distribution in India since the year 1989.The company
provides services like the Ware Housing, Express Cargo etc. Logistics Solutions of the company
are Warehousing, Supply chain Management. The Distribution Solutions of the company are
Gati Surface Express, Gati coast to coast and Gati Air Express etc.

Safe express :

It is one of the largest express company in India. The company offers the best and integrated
logistics solutions. In 2002 the Limca Book of Records declared the company as the Largest

Logistics service Provider in India. The company has a network over 550 locations in 28 states
and 7 countries. It has 3000 weather proof ISO-9002 vehicles.

Ashok Leyland :

The leading provider of logistic vehicles for the India Army is this company. It is a key leader in
the tractor-trailers and multi axle trucks. The company manufactures buses, trucks, engines and
special application vehicles in India. It is promoting a new company called Ashley Transport
Services Ltd. for exchange of information and integrated services related to logistics in order to
tackle the business of freight contractors.

Mediterranean Shipping Company S.A. (MSC)

MSC is currently the second-largest container shipping line in the world. The line operates 376
vessels and has a capacity of 1,250,000 twenty-foot equivalent units (TEU). Services are
operated to all major ports of the world.


The biggest Domestic Delivery Network Company is DTDC. The company offers high class
delivery service in about 3700 Indian locations and 240 international places. The company
dispatches about 10 million parcels in a month. It also offers low cost for bigger parcels to US,
UK, India, Nepal, Dubai and other places across the world.

First Flight:

This logistics company in India specializes in courier services worldwide. The multi-tracking
programs of the company are Domestic, International, First Wheels, First Wings and many
others. The overseas offices of the company are in Malaysia, Singapore, UK, US, UAE, Quatar,


India is being touted as the land of opportunity for logistics service providers all over the world.
The demand for logistics services in India has been largely driven by the remarkable growth of
the economy, projected to grow at 9-10 per cent in next few years. The Indian logistics market,
valued at $14 billion a couple of years ago, is expected to grow at a CAGR (compounded annual
growth rate) of 7-8 per cent. It is felt that the growth will continue, and might even scale newer
heights, as the economy is experiencing a retail boom with Western companies such as Metro,
Wal-Mart planning to start operation in this country, and large local retailers such as Shoppers
Stop, Pantaloon, RPG and Big Bazaar planning to expand their operations in smaller cities. But,
then, logistics management in India is too complex, with millions and millions retailers catering
to the requirements of more than one billion people and the infrastructure yet to develop to cater
properly to a growing economy. The poor condition of roads translates directly to higher vehicle
turnover, which in turn pushes up the operating costs and reduces efficiency. The reduced
efficiency is passed on the logistics service providers, with transportation costs accounting for
nearly 40 per cent of the total logistics cost. The National Highways are being upgraded but
these highways account for a meager two per cent of the total road network in the country. There

are other problems such as complex tax laws and insufficient technological aids. The fragmented
market increases costs due to huge paperwork and the individual truck owners, dominating the
market, are unable to contract directly with customers, with the result freight consolidators and
brokers take a commission to generate business for the truck owners. Only about a few thousand
vehicles out of a total of several millions have tracking system. The use of IT, thus, is limited.
Despite these challenges, the country's logistics industry is set to grow. Industries such as
chemicals and pharmaceuticals, metals, FMCG, cement, textiles and capping it all the retail
segment have been identified as the top contributors to the projected growth of the economy and
therefore to logistics revenues. The new generation corporate are looking to outsource non-
traditional logistics requirements such as reverse logistics, inventory management, order
processing, distribution, and labeling and packaging.

Comparison of Indian Logistics industry with other countries:

USA Europe Japan Chin India

LPI Score 3.85 3.84 4.02 3.64 3.07

LPI Rank 14 9 6 21 39
Logistics 9.9% 10% 11.4% 12% 13%
From GDP
57% 30% 80% 15% 10%

Share of 3PL
in overall


Logistics 57% 40% 80% 10% 6%

activity by



1. The logistics performance index shows the performance of country in the global logistics
industry, customs, trade-related infrastructure, inland transit, logistics services, information
systems, and port efficiency are all critical to whether countries can trade goods and services on
time and at low cost. Here India LPI score is 3.07 and secure 39th position in the global logistics
industry. As the share of Indian Logistics Industry is more than the Mexico and less than the
USA, UK and Singapore witness that Indian Logistics industry is one of the growth drivers for
Indian economy.

2. In the global logistics sector India at the top position among the all the low income group
countries, that show that Indian Logistics sectors perform better among all the low income
countries or developing countries.

3. Logistics cost contribution of India in GDP is 13 % which shows the high logistics cost of the
Indian Logistics industry and also higher than the developed countries. Due to the poor
infrastructure and other logistics service is not better than the developed countries like USA and

4. 3PL service providers share is less in overall industry of India as compare to Japan, USA and
Europe. The third party logistics (3PL) market in India is still in a relatively nascent stage.
While multinational companies in all industries have been predominant users of these services
but the Indian companies are not. Also significant cost reduction and several other benefits
provided by these companies. This is also one of reason of high cost in India.

5. Organized sector include the cost of inventory holding, transportation, warehousing,

packaging, losses and related administration which shows the high logistics cost in India due to
less organized sectors. But organized sectors are well established in Japan, USA and Europe also
one of the reasons to low logistics cost.

6. Major sectors investment in Indian Logistics industries are Aviation, Metal & Mining and
consumer durable. Among these sectors share of Aviation sector is higher due to increasing
international business in India also cost of transportation is higher, fast and safe for overseas
movement of goods.

7. Now 3PL service providers are start investment in India to reduce the logistics cost which
include both domestic and international companies. Shreyas Shipping and Logistics is investing
high as compare to the DHL, TNT and Gati. This shows that trend of 3PL providers is increased
in India.

8. Revenue generated from 3PL providers increase the Indian economy and also the percentage
growth the revenue increased continuously from 2005 to 2008. According to Planning
Commission India this is growth continuous and it reached to $3556 million till 2012 is

9. Logistics industry also improves the performance of other industries in India as these are auto,
IT and pharmaceutical industries that shows high growth rate. Logistics grow with 8–10 % rate
between 2002- 2007 implies that improvement in the supply chain of the other industries in

10. Logistics cost play an important role for the growth of industry. Logistics cost contribute to
sale indicate importance of logistics in different industries. As logistics cost share in sale of
cement industry higher than other industries shows it play an important role in sale.

1. Logistics performance of Index of India with other countries :

Country LPI Score

USA 3.85
UK 3.84
Singapore 4.19
India 3.07
China 3.64
Mexico 2.64

Interpretation: The Logistics Performance Index (LPI) and its indicators provide the first in
depth cross-country assessment of the logistics gap among countries. As the above graph shows
that LPI score of USA, UK, Singapore, India and Mexico, indicates the performance of logistics
in global transport and logistics hubs. Also as the performance of developed countries in logistics
are high as compare to the developing nation. Singapore has high performance in global logistics
as compare to other countries also gain rank 1st among all by World Bank. USA, UK, Mexico
and China are ranked in logistics performance in global market at 9th, 14th, 56th and 30th
respectively. India is ranked 39th in the Global market show the high logistics performance than
in the global market.
2. LPI top 10 countries of low income group :
Country LPI score

India 3.07
Vietnam 2.89
Sao Tome and Principle 2.87
Guinea 2.71
Sudan 2.71
Mauritania 2.63
Pakisthan 2.62
Kenya 2.52

Gambia 2.52
Combodia 2.50

Interpretation: This table shows that India had performed well among all the low-income
countries. India has scored 3.07 LPI score and ranked 1st among all other low income countries.
This shows the among the low income countries India’s performance in global transportation and
logistics hubs is better.

3. Logistics cost contributed from GDP in different countries :

Country Logistics Cost/GDP

India 13%
U.S. 9.9%
Europe 10%
Japan 11.4%

Interpretation: Above table show that in India logistics cost high than developed countries and
contribution in GDP is 13 %. High logistics cost is due to the incomplete and under developed
infrastructure, non conductive policy, environment, indirect tax regime and extensive industry
4. Share of 3PL in overall industry :
Country Share of 3PL in overall


India 10%
U.S. 57%
Europe 30%
Japan 80%

Interpretation: Above table shows that in Japan share of 3PL in overall industry high as
compare other developed countries is 80 %. In India share of 3PL is 10 % show that in India 3PL
service provider are less.

5. Logistics Activity by Organized Sector :
Country %age of Logistics activity by

organized sectors

USA 57%
Japan 80%
Europe 40%
India 6%
China 10%

Interpretation: The above table shows that cost of logistics include the inventory holding,
transportation, warehousing, packaging, losses and related administration are high in India as
compare to the China , Europe, USA and Japan.
6. Major Sectors investment in Indian Logistics Industry :
Sector Investment in Cr.

Aviation 20,890


Metal & Mining

Consumer Durable 6000
Interpretation: Above table shows that as different sectors invest in Logistics industry there are
major sectors those invest are Aviation, Metal & Mining and Consumer Durable. Aviation sector
investment is highest than the Metal & Mining and Consumer Durable.
7. Global 3PL service providers invest in India :
Firms Investment Details/

Plans (2007-08) in


DHL 250
TNT 115

Gati 200
Shreyas Shipping and Logistics 350

Interpretation: Global 3PL providers investment in India by four major player are DHL, TNT,
Gati and Shreyas shipping & Logistics. Among all these SS & Logistics invest more as compare
to other three.
8. Revenue generated from 3PL :
Year Revenue (mn USD)

2005 890
2008 1622
2012E 3556

Interpretation: The above table shows that 3pl share in the logistics industry increased with the
increased in revenue of the 3PL in the logistics industry in India.
9. Impact on Logistics industry on growth with the performance of
other industry :
Year Revenue (USD Percentage growth


2002 65
2003 70.2 8%
2004 76.3 8.7%
2005 84 10.1%
2006 9172 9.2%
2007 100 9.1%

Interpretation: The above table shows that in Indian logistics industry the revenue is increased
by 8 – 10 % annually from 2002 to 2007. The maximum growth in the revenue in the year 2005
and minimum in 2003.

10.Share of Logistics cost in total sale for various industries:
Name of Industry Percentage share of Logistic cost in Total


Cement 15%

Steel 6%

F&B 5%


Durable 4%

Apparel 3%
Auto 3%

Interpretation: Above table shows that logistics cost contribute to sale of different industries.
Maximum share in Cement industry (15%) and Steel industry (6%) sale as compare to the other
industries like Food & Beverage, FMCG, Consumer Durable, Apparel and Auto.
11. Transportation Growth with different modes in India (in million tones):
Year Road Railway Sea Air

2002 1075 0.9 364 478

2006 1560 1.4 578 667

Interpretation: Above table shows that out of the different modes of transportation Road

transportation is used maximum in Indian Logistics industry as compare to other modes of
transportation and railway is used minimum among all others modes of transportation this is due
to lesser area coverage by the rail lines and the poor infrastructure as compare to the other modes
of transportation. The above graph shows that increase in the modes of transportation annually
and the maximum growth shown by the railway and sea as compare to other two modes of
12. Road Freight in India (INR billion) :
Year Road Freight ( INR billion)
1995 610
2000 840
2005 1430

Interpretation: The table shows that movement of goods is continuously increased due to the
improvement of infrastructure and more area coverage. The road freight is increased
continuously with 6-8 % annually.

13. Rail freight in India

Year Rail Freight (million tones)
2002 493
2003 519
2004 557
2005 602
2006 667

Interpretation: The above table shows that the increase in the movement of goods by railway.
But the movement of goods by railway is almost domestically.
14. Sea Freight in India:
Year Sea Freight ( million Tones)

2003 422
2004 464
2005 519
2006 578

Interpretation: Above table shows that the movement of goods by the sea. This tells that the
movement of the goods by sea is increased as the increase in the international market.

15. Air Freight in India :
Year Domestic International

(million tones) (million tones)

2002 300 575
2003 340 650
2004 375 700
2005 480 810
2006 510 900

Interpretation: The above table shows that movement of goods by air is increased continuously
due it is fast and safe way. Also air mode of transportation is preferred better for the international
market as compare to the domestic market.
16. Preferred mode of cargo movement :
Mode of Transportation Percentage of total cargo

Air 2.5%
Sea 20%
Railway 23%
Road 54.5%

Interpretation: Table shows that the preferred mode of cargo movement in India is Road as
compare to the Rail, Air and Sea. Because roads are almost covers all the areas in India as
compare to the other mode of transportation. Due to underdeveloped infrastructure and other
service to choose best mode of transportation is road. As road covers almost all the rural, urban
and hilly area as compare to railway. In India cargo movement by air is least among the other
three modes this due to high cost involved in this mode of transportation.
17. Growth of container volume in India (mn TEU)
Year Container volume (mn TEU)
2002 2.9
2003 3.4
2004 4
2005 4.5
2006 5.1

Interpretation: The above table shows that container volume grows continuously with the
increase in the export and import in India. The maximum growth in the container volume in the
year 2004 and 2006 as compare to other years.
18. Economic Zonal attractiveness for logistics :
Zone SEZ’s Retail Warehouse Logistics
Capacity Parks

South 40% 20% 20% 30%

West 55% 50% 60% 50%
North 5% 20% 15% 10%
East 0 10% 5% 10%

Interpretation: The above table shows that zonal attractiveness in India. Out of the four zones
West zone is better develop as compare to the other zones and the least develop zone is East
zone. South and North are shows the 2nd and 3rdposition for the development of the zones



1) Distribution & dispatching process must be minimizing to reduce the processing cost.

2) Company should work on fundamental of JIT (just in time) where demand of customer is
fulfilled taking very less time.

3) Maintain the route management to decrease the time of the transportation.

4) Use the new technology to maintain the Competitive Advantage.

5) Manage proper warehousing.

6) Increase its office network within India and abroad.

7) Scheduling of service time point of arrival and departure of rails, ships and plane has great
scope for improvement. They never run on time and require national discipline.

8) Legal system is not in keeping with the modern outlook of life and business. The laws are out
mode and require comprehensive amendments. The laws are infect remnant of British Rule and
provision contained therein do not meet the requirements of modern and complex international

9) It augurs well observing development of national and selected state highways for faster
movement of traffic. It is response to free trade regime being speedily established under the
compulsive auspicious of WTO in the interest of humanity. It is hoped that the implementation
of the gargantuan project would be on schedule or at least without much time cost overrun.

10) In this connection the UPA-1 government initiated the greatest ever emphasis on
infrastructure development, general and specific ; UPA-2 has lent first priority and invited
convergence of all ministries agenda to bear upon this infrastructure subject of international
standard to facilitate movement of foreign capital with promise of high profitability as the
country cannot moved resources of the required dimension.

11) Logistics development is absolutely necessary. In the absence of flow less and latest
logistics, the MNCs shy away from doing business in India. There is need to increase FDI in
logistics sphere and relaxing of norms relating to entry, taxation, import of material handling and
movement of equipment etc.

12) At present agriculture contribute nearly 25 % to Indian economy (GDP) and also require
development of warehouse sector. This service sector has good prospects of equipping top place
in services of diverse types.



1) To get primary data from company employees is a time consuming task as they do not have
time to tell.

2) Some time company people do not pay attention on other’s work.

3) The study is based on the secondary data published in newspapers, books and journals of the
researchers. Sometimes data which is published by the researchers cannot analyze fresh situation
means old data and wrong data is collected by inherent error.

4) The time & cost plan an important role when one goes for a particular study. Due to the time
& cost constrains the large sample was not taken. Hence extra picture cannot be received and the
finding cannot be generalized.


Logistics is one the most important and integral part of any organizations strategy and function.
When the logistical process is carried out accurately then not only the company reduces the
production cost but also improves the efficiency and customer satisfaction. Overall logistics
management is very important for today’s highly competitive and cut- throat corporate world.
Indian Logistics industry is continuously improving its performance in the global logistics
industry by improvement of customs, trade-related infrastructure, inland transit, logistics

services, information systems, and port efficiency help to provide trade goods and services on
time and at low cost. The World Bank's 2007th Global Logistics Report ranks India 39 amongst
150 countries in terms of logistics performance during the year as well as its future potential.
Indian Logistics industry has low performance than developed countries like USA, UK and
Singapore in global logistics sectors due inefficiency in logistics services and highest among the
low-income group countries. India spend in Logistics activities equivalent to 13 % of its GDP is
higher than that of developed countries. The key reason is the relatively high level of inefficiency
in the system with lower average trucking speeds, higher turnaround time at ports and high cost
of administrative delays. 3PL service provider share is less in logistics sector in India as compare
to developed countries and still at the nascent stage. Multinational companies in all industries
have been predominant users of this service as one of reason for lesser share 3PL in India. Also
in India organized sector not well established as compare to developed nation this contain cost of
inventory holding, transportation, warehousing, packaging, loss and related to administration
is higher. In Indian logistics sector major sector investors are Aviation, Metal & Mining and
Consumer Durable. Also logistics industry in India improves the performance of other industries
year to year and share of logistics cost in sale also important which is maximum in cement
sector. Transportation modes grow with of domestic and international market and in India road
better mode of transportation because of well infrastructure of roads in India as compare to other
mode like water, rail and sea. Road freight in India grows with increase of domestic and
international trade also large area coverage. Railway freight also increases due low freight as
compare to road but cover some of area and better for long distance movement of goods. Sea
freight also increase better for overseas movement of goods at low cost as compare to air but
consume more time as compare to air. Air mode of transportation is also helps in both domestic
and international movement of goods but for international movement is more as compare to the
domestic due to the higher cost, safe and faster way as compare to others modes.


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