You are on page 1of 48

2012

Summer Internship Report

Sagar Relan
MBA (Logistics and Supply Chain) University of Petroleum & Energy Studies

7/26/2012

Table of Contents
Acknowledgement Letter of Transmittal Executive Summary....................................................................................................................................... 2 Objective of Study ......................................................................................................................................... 3 Scope of Study .............................................................................................................................................. 3 Introduction .................................................................................................................................................. 4 Geographical Presence in India................................................................................................................. 5 Introduction to Organization: Kandla Energy & Chemical Limited ............................................................... 6 Supply Chain process followed in Chemical Industry ................................................................................. 12 Incoterms: ............................................................................................................................................... 12 IMCO Labels ............................................................................................................................................ 15 Changing trend in Supply Chain of Global Chemical Industry: ............................................................... 15 Global Supply Chain trend followed: Case Studies ................................................................................. 17 Pilot Chemicals ltd (Cincinnati, California, USA) ......................................................................... 17 Puyang Tiancheng Chemicals ltd ( Puyang City, Henan Province, China) ................................... 19

Current Supply Chain Structure at KECL ..................................................................................................... 19 Need for Supply Chain Enhancement ......................................................................................................... 23 Recommended Supply Chain for KECL: ....................................................................................................... 25 SWOT Analysis KECL .................................................................................................................................... 33 Bibliography ................................................................................................................................................ 36 Website Reference...................................................................................................................................... 37 Appendix-1 (IBC tanks)................................................................................................................................ 38 Appendix-2 (IMCO Class & Labels) .............................................................................................................. 39 Appendix-3 (Checklist for Import)............................................................................................................... 43 Appendix-4 (Checklist for Export) ............................................................................................................... 44 Appendix-5 (Document set prepared for road transport from plant) ........................................................ 44 Glossary ....................................................................................................................................................... 45

Executive Summary
The report is the compilation of work done at Kandla Energy & Chemical Limited as an Intern Trainee wherein I undertook the project: To study the Supply Chain processes followed in Chemical Industry in India and compare it with Global Supply Chain standards

The study based project was completed understanding entire supply chain project and role logistics play in it. A complete analysis of finding is compiled and classified into appropriate submodules. Various interesting finding from the two case studies i.e.; Pilot Chemicals (USA) & Puyang Tiancheng Chemicals ltd (China) are mentioned and I did a comparative analysis is done.

A brief analysis in with the help of Supply Chain analysis and SWOT analysis has been included in the project report. Appropriate recommendations are drawn after analyzing best available logistics practice in terms of making the supply chain responsive and efficient is done. To competently work in industry, KECL needs to learn from the practice followed by various domestic chemical companies in Logistics and Supply Chain processes. This report also suggests that KECL should create an in-house logistics department, instead of outsourcing logistics activities. In this report, certain crucial loopholes regarding the current logistics practice followed bythe company are identified and further ways to overcome them are also suggested, which if followed should prove highly beneficial and which will make companies entire supply chain process highly efficient.

Objective of Study
To study the Supply Chain processes followed in Chemical Industry in India and compare it with Global Supply Chain standards
1. To review the Supply Chain process followed by KECL. 2. To identify causes of delay in the entire Supply Chain Process. 3. To suggest various strategic options for improvement in Inbound Logistics. 4. To find out the issue faced by the customers and suggest ways to eradicate them. 5. To identify necessary recommendations in the operations executed at Kandla Plant along with ways to strengthen the Distribution network of the company.

Scope of Study
1. Benchmark own performance in the period of the study. 2. Identify causes for delay in Inbound Logistics. 3. Identify causes for delay in Plant operations. 4. Identify causes for delay in Outbound Logistics

Introduction
The Chemical Industry is critical for economic development of any country, providing products and enabling technical solutions in virtually all sectors of the economy. Global chemical production growth slowed down from 4.4% p.a. in 1999-2004 to 3.6% p.a. in 2004-2009, with global chemical sales in FY10 valued at $3.4 trillion. The industry is increasingly moving eastwards in line with the shift of its key consumer industries (e.g. automotive, electronics, etc.) to leverage greater manufacturing competitiveness of emerging Asian economies and to serve the increasing local demand. This has led to share of Asia in the global chemical industry increasing from 31% in 1999 to 45% in 2009. With Asias growing contribution to the global chemical industry, India emerges as one of the focus destinations for chemical companies worldwide. Indian Chemical industry is worth around US$ 35 billion or about 3% of countries GDP. It has also moved up in value chain from being a producer to a developer of a specialized and knowledge chemicals. Some of the major markets for Indian chemicals are North America, Western Europe, Japan and even the gulf countries. The industry covers more than 70,000 commercial products and it broadly constitutes petrochemicals, dyes, and dyestuff, pharmaceuticals, paints, agrochemicals, Source: Ministry of Chemicals & Fertilizers special chemicals and fertilizers industry. Indian chemical industry has shown increase in its imports and exports, after average growth rate of 7.7% in the Tenth Five year Plan period (2002-03 to 2007-08) in which the last 4 years had an average growth rate of 8.7%. Now the focus shifts to constructing adequate logistics infrastructure system to support the flourishing industry. The Indian chemical industry can deliver on an accelerated growth phase, provided a clearly defined vision along with a strategic roadmap is developed to enable it. If this is not done, we may see the growing market increasingly being served through manufacturing done outside India. The various segments of the chemical industry (such as organic chemicals, specialty chemicals, chlor-alkali, pesticides, colorants and alcohol based chemicals) have their own unique set of challenges. The industry can grow only if these individual segments overcome
4

their challenges and move swiftly along the growth path. The performance of these segments has been studied in the subsequent chapters and targets/ goals have been set for the XIIth five year plan along with concrete action plans consisting of levers that will help overcome challenges and drive growth. Focused growth and planning for the chemical sector would enhance our global competitiveness further, increase domestic value addition, provide technological depth and promote sustained economic growth. In order to realize the growth envisaged above and leverage the India opportunity effectively, the chemical industry would require significant investments in capacity creation, technology development, access to feedstock and a larger pool of skilled human resources.
Features of Indian Chemical Industry:-

Total Investment in the industry is US$ 60 billion and total employment generated is 1 million The sectors accounts for 13-14% of Indias total export and 8-9% of Import. India chemical industry is 12th largest in the world and 3rd largest in Asia. (in terms of volume) Gujarat contributes nearly 51% of countries total manufacturing capacity in chemicals. India has emerged from being a net importer till year 1990 to an exporter from 2000 onwards.

Geographical Presence in India


Indian Chemical industry is largely present in the western region of the country i.e.; Gujarat and Maharashtra. As these two states have a cluster approach with shared common infrastructure, R&D and knowledge source helps in cost optimization and better input/output linkages have responsible in making it highly conducive for chemical industry. Another major reason for growth of western region has been the fact that these two states have international ports with them; JNPT handles 60% of countries container traffic followed by Mundra, Kandla and Pipava in Gujarat. Major reason why Gujarat has been successful state is due to a highly supportive government and attractive business environment.

Figure 1: Gujarat Map

Introduction to Organization: Kandla Energy & Chemical Limited


Profile The promoters of KECL are engaged in manufacturing, exporting and supplying a wide range of Hydrocarbon Fluids like Aromatic Solvents, Aliphatic Solvents, Oil field chemicals, Thinner, Adhesive Solvents, White Oil and Mineral Turpentine Oil (MTO). Their range of aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil, typical industrial solvents, hydrocarbon fluid, petrochemical solvents, aromatic fluids, hydrocarbon solvents and chemicals, petrochemical solvents and fluids is manufactured using latest methodologies. Their quality inspectors thoroughly check the entire range at every level of production to ensure these are at par with international standards and meet client's demands. Owing to its quality, they have been able to build a huge client base in India and various countries around the world that include GCC & SAARC Countries, Yemen, Jordan, Turkey, Europe, Sri Lanka, Far East, Japan and some African countries. In addition, we supply our range to various industries that includes ink, coating, paint, pesticide, pharmaceutical, and automobile, cosmetic, electrical and textile and Oil Field Chemicals. Under the able and efficient guidance of CEO Mr. Sanjay Prakash Rai, they have carved a niche for themselves and have become one of the leading manufacturers, exporters and suppliers of hydrocarbon fluid in the industry. His in-depth knowledge and sharp business acumen is instrumental in their phenomenon success throughout these years.

Mission Kandla Energy & Chemicals Limited is to be among the Indian leaders in the manufacture of petrochemical solvents and petrochemical fluids. While adhering to Indian ethics they shall:

Endeavor to understand and meet agreed upon customer requirements. Operate safely, protecting the environment and the health of the end-users. Empower and reward our employees. Strive to enhances the country's self-reliance, and Assure sustained growth and economic viability. Product Portfolio They are a specialized manufacturer, exporter and supplier of a wide range of Aromatic Solvents, Aliphatic Solvents and Oil Field Chemicals, White Oil and Mineral Turpentine Oil (MTO). Our range like hydrocarbon fluids, petrochemical solvents, aromatic fluids, hydrocarbon solvents and chemicals, petrochemical solvents and petrochemical fluids is fabricated using quality raw materials like hydrocarbons.

Following are the features of their range:


Better flow and film formation Less hazardous Environment friendly Better flow and film formation Controlled uniform evaporation Contains low moisture content Easy in installation Target Industries: They are one of the leading manufacturers, exporters and suppliers of a wide range of aromatic solvents, aliphatic solvents and oil field chemicals, specialty oil, typical industrial solvents, hydrocarbon fluids, petrochemical solvents, aromatic fluids, hydrocarbon solvents and chemicals, petrochemical solvents and fluids. Their team of engineers uses latest methods in manufacturing the entire range.

Various industries they serve include:


Agro-chemical Pesticide Paint Pharmaceutical Automobile Electrical Textile Oil field chemicals In addition, their range is also used in various areas that include automotive, stoving, coil & metal coatings, aluminum, enamels, alkyds, hammer tone, low odor finishes, inks, fuel & lube additives, oil field chemicals, fungicides, deodorants and hexa compounds. Human Resource They have a team of professionals who possess sound experience of the industry. They professionals are employed only after they test them on the basis of their domain expertise. In their team, they have professionals such as engineers, technicians, quality analysts, research associates, warehousing & packaging experts and sales & marketing personnel. Their professionals work in close coordination with each other at different stages of production in order to ensure quality at international standards. The main objective of our professionals is to enhance the quality of their range of products and thereby maximize client satisfaction.
7

Some

of

the

basic

functions

of

our

professionals

are

as

follows:

Following proven methods of manufacturing Regular and stringent quality checking Continuous research for product enhancement Effective sales of our range of aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil and typical industrial solvents. Effective storing and packaging. Quality Compliance Quality has always been one of the major concerns in our company since inception. They manufacture and supply their range of aromatic solvents, aliphatic solvents and oil field chemicals, specialty oil, typical industrial solvents that are at par with international standards. These are manufactured using quality raw material like hydrocarbons that is procured from reliable vendors. In addition, our in-house quality inspection department strictly tests & monitors the entire range at every level of production to ensure the quality at international standards.

Environment friendly Better flow and film formation Contains low moisture content Good solvency power Low odor solvent Purity They are applying American Standard of Test Methods As per their quality approach, we also ensure safe packaging of their aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil and typical industrial solvents. They use high grade packaging material for packing of our final consignment so that clients get our range of products without any damages. They at Kandla Energy & Chemicals Limited shall strive to:

Listen, understand and meet customer's (internal or external) agreed upon requirements To complete each task correctly on time, every time Never make promises we cannot keep Have effective and open communications at all levels Treat all our customers and each other with respect Continuously improve our quality culture and processes working together as high performance teams Quality standards are incompliance with American Standard of Test Methods (A.S.T.M).
8

R&D They are facilitated with sophisticated research and development wing that is backed by a diligent team of R&D experts. Their entire research and development department plays a vital role in the smooth functioning and of our company. In order to provide quality range of high, medium & low aromatic solvents, specialty oil and typical industrial solvents their team of R&D experts conducts research on well-defined parameters like raw material used, manufacturing process and technology. Their research and development wing plays a vital role in choosing reliable vendors in order to provide quality range of aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil and typical industrial solvents. The R&D experts thoroughly conduct market research to ensure that the raw material is sourced from most reliable vendors in the industry. Client Satisfaction They have carved out a separate place in the business owing to our commitment to serve our clients with a flawless range of aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil and typical industrial solvents. They have a well-developed distribution network spanning in many cities around the country and other countries like Yemen, Jordan, Turkey, Sri Lanka, Japan, Middle East countries, Gulf, Europe, and South Africa. It helps them to further improve the reach of their range in the market as well as making their products easily accessible to their client. In order to keep their clients satisfied, they also accept easy payment modes to ensure hassle free transaction with them.

Kandla Energy & Chemical Limited- USPs They have been able to build a client base for ourselves in the international market with the help of their quality range of aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil and typical industrial solvents. They use latest technology to process the entire range. Owing to the quality of their range, they have been able to build a huge client base in India as well various parts of the world.

They are one of the favored choices due to following reasons:

Quality range of aromatic solvents, aliphatic solvents, oil field chemicals, specialty oil and typical industrial solvents. Competitive prices Timely delivery Easy payment modes Safe packaging Wide distribution network Multi Modal Transport system

Kandla Energy & Chemical Limited: Infrastructure They have a state-of-the-art infrastructure facility with latest machinery and a well-equipped quality examination center. Their infrastructure facility is fully automatic and is fitted with the biggest and most modern hydrocarbon solvents plant. Owing to modern technology, we are able to produce 1,00,000 tons per year. Their manufacturing unit spreads across an sprawling area of 1,00,000 sq. meter and an installed capacity of 1,00,000 metric tons. They use most recent technology in our production unit that enables us to meet the bulk requirements of our clients. All the machines are operated by experienced technical staff to maintain high quality standard. They also have various plants that are used for environment protection. They have following facilities in our unit: 1. Treatment Plant 2. Effluent Treatment Plant for Environment Protection 3. Drum Filling Shed for packing of 1 to 210 liters 4. Storage tank has capacity of 2500 metric tons 5. Automated SCADA operated two plants

10

I. II.

Per day capacity of 200 metric tons fully automated stainless steel plant (SS 304) Per 150 metric tons fully automated plant Both plants are separately dedicated for aromatic solvents, aliphatic solvents, aliphatic hydrocarbon solvents, alternative fuel, organic solvents and specialty solvents.

Kandla Energy & Chemical Limited: Quality Policy


Listen, understand, and meet the customers (internal and external) requirements. Complete each task correctly on time, every time. Never make promises we cannot keep. Have effective and open communication at all levels. Treat all our customers and each other with respect. Continuously improve our quality culture and processes working together as high performance team.

11

Supply Chain process followed in Chemical Industry


Situation is changing in chemical industry and logistics, Production aspects are last resort for companies where they can save money. Logistics is difficult based on the discrete nature of product/ methodology where a liquid is pouring through tanks. Globally many chemical companies follow, Just in Time concept as it helps them avoid delay and additional storage chargers, for its implementation it requires a schedule system in place with known time and cost enable cargo to be delivered accordingly. Due to chemical product are used for process and manufacturing purpose therefore any delay in import or availability of raw material due to logistics affects the production and business. Companies prefer cargo just in time so that it can be directly used in the plant without incurring storage cost. The hazardous material is shipped with use of ISO tanks.

Sourcing

Inbound Logistics

Refining Plant

Outbound Logistics

Distributor

Customer

A standard Supply Chain Flowchart

Incoterms:
The Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) widely used in international commercial transactions. Based on my research, I have list down each of the eleven incoterm and their importance in chemical industry, important point here to note is that role of buyer

12

and seller changes with each term. KECL is both a buyer as well as a seller, therefore usage and understanding of each incoterm is very important for them .

Incoterms 13

Incoterm

From a manufacture understanding, who imports its Raw Material like KECL, ideally FOB should be preferred as KECL will arrange the vessel along with insurance, which would not induce extra cost charged by the seller for freight and similarly for insurance. If the freight cost offered by seller is same or less as compared to what KECL would get then CFR should be used. And during Export KECL should favor EX-Works, as responsibility/ obligation of seller (KECL) is limited till providing material at the plant and the purchaser would be responsible for moving material from the plant till his warehouse.
14

IMCO Labels
The product here dealt is hazardous material which comes under Dangerous in nature and can harm living being if they are handled in the way prescribed by the consignee. In order to get attention of the shipping line and the user certain labels are used. This is called Kanban technique (originated in Japanese automobile sector) followed by the manufacturer of the chemical. The Transport Of Dangerous Goods And Marine Pollutants In Sea-Going Ships Is Regulated In The International Convention For The Safety Of The Life At Sea (SOLAS) And The International Convention For The Prevention Of Pollution From Ships (MARPOL). Terms Of Both (SOLAS) And (MARPOL) Have Been Worked Out In Detail And Are Included In The International Maritime Dangerous Goods (IMDG) Codes. These labels divide chemical into 9 different classes (Class 1. Class 2, Class 3 till Class 9) where the most hazardous product comes under Class 1 and so on. (Appendix-2). In KECL, its very carefully followed. Their product KESOL-100 comes under Category Class 3, which is Flammable Liquid with very low flash point.

Changing trend in Supply Chain of Global Chemical Industry:


For years, the chemical industry was suffering from lack of significance given to logistics in the entire supply chain and making the senior management regard it to be as important as manufacturing and sales. Although still we are years away from attaining this goal, but several recent development show that progress is been made. Now there is supply chain integration, leading chemical producers are integrating logistics into their corporate planning. Now companies look towards 3PL companies to help them achieve greater connectivity with customers.
Different Logistics Structures followed by chemical company globally

A. In-house Logistics Department: Creating an In-house logistics department looks to be an operational strategy prominent in companies which have large of sales to deal with. In-house logistics provides them with control over each logistics activity which further helps ion coordinating with the customers. Having inhouse logistics departments provides the following advantages for the company: Safeguards exposure of confidential data Synchronization of deliveries Increases customer focus

15

Although it has certain disadvantages as well: Concentration is shifted from core activity Risk increased Increase in operational and recruitment cost B. Outsourcing the logistics operations to a 3PL Its the upcoming trend which already followed in leading chemical companies in the west. 3PL has grown but with mixed results, as the companies tend to use their services where its more cost effective forwarding, brokerage & clearance are majorly the services outsourced to 3PL by chemical companies. Indian government has a stringent rule for transportation of chemical in the country. But there are continuous changes made in them to make more comprehensive and safe, here 3PL follow the norms and hence stay ahead in business. Weakness of 3PL Costing increases, depending on usage of their service don't propose innovation solutions it represents a significant expense in addition to the expense of the shipping process it rarely results in the widest range of integrated shipping solutions 3PL customers feel distanced from their logistics provider

C. Usage of logistics software for tracking purpose:They cut the middleman out of the shipping process and become their own logistics provider. They aren't beholden to a logistics provider's limited range of shipping solutions. Designed to sync with a company's unique shipping needs and it doesn't require logistics expertise of its users. It provides a more comprehensive and cheaper solution than 3PL; also its more affordable than Comprehensive 3PL Solutions. It is more affordable than Hiring Your Own Logistics Experts and it puts you in Control of the Shipping Process and Presents You with a Greater Range of Shipping Options.

16

Global Supply Chain trend followed: Case Studies


Pilot Chemicals ltd (Cincinnati, California, USA)

a leading Chemical company Pilot Chemical based in Cincinnati, California, in order to concentrate on Midwest and East Coast facilities they retained a 3PL which was based in Los Angeles to handle their west coast plant operations, which handles transloading, storage, and distribution of bulk and packaged chemicals. There move was a straightforward business decision aimed at rationalizing and maintaining production.

Like KECL Pilot Chemical was a growing chemical company which understood the importance of logistics in their supply chain planning. Their decision to outsource their logistics operation was understandable as there was lack of organization in Pilot Chemical logistics management. Their priority has been security and continuity in supply to the customers. There major flaw in their supply chain strategy was first encountered when hurricanes hit the gulf coast, which affected their Raw material procurement from suppliers, that did hit their business pretty hard and their daily production suffered. Now in order to counter this issue they have increased their supplier base and they buy spot opportunities from discretionary suppliers, this strategy gave them flexible supply along with outstanding market intelligence. In their outbound logistics, they were the most expensive producer for their customer because they considered freight to be a fixed cost. There supply chain manager said, We had to find out why we were the most expensive producer for our customers. We never considered freight because we assumed it was a fixed cost. But we discovered that theres more to freight than linehaul charges

Now in order to reduce their outbound logistics costs they started measuring the transportation cost which was previously guessed at. They hired 3PL service provider to help them with metrics and implement more efficient processes. Their aim was create a supply chain which is as hands-off as possible for both company & their customer which resulted in enhanced overall visibility. For their domestic distribution they have traffic manager reporting to individual plant manager rather than their supply chain head, this situation will soon we centralized with implementation transportation management software (TMS) which is part of SAP. Like KECL even Pilot Chemical had presence of big players in chemical and logistics located nearby.

17

Supplier (min.3 suppliers) Inbound Logistics

Pilot Chemical (refining plant)

Customers (Outbound Logistics)

Supply Chain flow at Pilot Chemicals

Pilot Chemical inbound logistics:They bring their raw material in by marine tank containers, bulk parcel tankers, barge, rail and trucks. Most of their products are brought on delivered basis, Where 60% incoterm used is CFR. Outbound logistics:Finished product goes out to customers primarily by truck for domestic distribution, but they prefer to use rail route as its more cost effective by comparison. Truckers usually supply dedicated assets and drivers. Also 40% of their export sales are done on ex-works. Future strategies:With 3PL strategy well in place, now the supply chain department are focusing their attention on electronic integration, while their system is in place their backup is still dine manually. Their main aim is to reduce their transactional tasks by the help of IT so that they can concentrate more on their core competency. Their aim is to: Gain better control of inventory Improve velocity and order management Forecasting and demand planning, this will help them get reality checks of their forecasts against actual sales, which will further get them better feel of safety stock required. Supply Chain department also plans to educate the management about what is included in freight costs. They want to include detention and order charges in distribution cost whereas currently the company was including these cost as part of production cost. These cost are

18

incurred due lack of coordination between the logistics department, therefore reduction or elimination of these cost is utmost priority for the company.
Puyang Tiancheng Chemicals ltd ( Puyang City, Henan Province, China)

They provide complete packaging service that meets the specific demand of their customers, which gives them competitive advantage over the others in the market. As mentioned on their website What is our demand for an outstanding shipping company? Certainly first and foremost: punctuality, reliability, high technical standards, optimal handling of our cargo, comprehensive know-how in the regions served, all-round logistics solutions, modern information systems, firstclass service and not least efficient cost control, the basis for competitive terms. Source: http://www.credrez.com/logistics.html

In order to get better service, they have developed extensive partnership with their preferred shipping lines, which gives them guaranteed shipping space and favorable freight (because of huge volume). This gives them competitive advantage in logistics scenario and lowers their overall cost. They are also willing to customize their logistics operation according to customer demand.

Current Supply Chain Structure at KECL


International Sourcing (E.g.Middle East) (Freight/Insurance cost bearer depend upon Incoterm)

In-bound Logistics

KECL Refining Plant

Out-bound logistics

End Use

managed by in-house No Distributor present logistics department of KECL

Supply Chain flow followed at KECL

Raw Material used is called heavy aromatics which are the leftover of aromatic petrochemicals plant like BTX plant after higher value products Benzene, Toluene and Xylene have been absorbed. Heavy aromatics obtained depend upon the type of feedstock used in BTX plant and plants processes capacity and efficiency. Approx. percentage of heavy aromatics obtained from a BTX plant is only 2-3% of the feedstock; Countries like Iran, Kuwait & Korea are the major supplying countries for KECL. It has been observed that heavy aromatic purchased from Kuwait has more density than material from Korea; higher density product would result in better quality of finished goods.
19

Inbound Logistics at KECL:

Once the Heavy Aromatic is procured, the material shipped on an oil tanker where part load is booked by KECL. For example if KECL purchases 4000MT of heavy aromatics then it can be booked as apart load on an oil tanker ship, incoterm Figure 2: Raw Material been unloaded from a tanker would suggest who will bear the freight and insurance cost. Once the vessel reaches Kandla or Mundra port, the material is stored at custom bonded tankers. The material is transferred from the vessel at jetty till the bonded tankers by pipeline installed at port. Then according to demand the material is cleared by CHA & payment of duty is made. (Checklist for ImportAppendix 2) PROCESS FLOW DURING INBOUND LOGISTICS:According the requirement, the commercial team arranges for tankers for loading of raw material from Friends salt and allied works (FSAW custom bonded tanks at Kandla port) The tanker reaches the plant from Kandla or Mundra port with raw material. The commercial team checks the documents checklist and allows the tanker to proceed to the unloading point. (RRM) Then the tankers weight is checked on weigh bridge Once it reaches the unloading point, the lab team collects the sample of the raw material and checks it for its aromatic content ( process takes about 20 minutes) Once the lab teams confirms the material, the unloading starts ( process takes about an hour) The Raw material is then transferred via the pipelines to the two tankers used for storing purpose. Again when the tanker is leaving the weight of the tanker is again checked.

Storage at KECL Plant:

Once the raw material is unloaded at the plant its stored in two tanks available with total quantity of inventory of 10600MT. After their distillation the finished product are further divided three different classes A, B and C according to their flash point (flammable level). Class A products are stored in underground storage tanks available which can store a capacity of
20

385MT. similarly Class B & C material are stored but in over ground tanks having a total capacity of 1465MT.

Outbound Logistics at KECL:

For outbound logistics ISO Tanks and Barrels are used according to customers requirement. When there is an export order then similar to import export checklist is prepared (Checklist for export Appendix-3)

FLOW DURING OUTBOUND LOGISTICS:-

The order PO is received by the commercial team from Ahmedabad office According the PO packing arrangements is made (ISO tanks or barrels) Commercial team arranges for vehicle required, ISO tanks or containers(barrels) The truck is then brought where its weight checked at Weigh Bridge before loading. Then a small sample is filled in the ISO tanker and sent to the lab for checking for any leakage or presence of any previous material in the tanks as it would contaminate the solvent. If yes, then the truck is sent back for proper servicing & cleanup of tank. After servicing the tanker is checked again, if OK then its moved towards the loading point. Then according to the PO loading is done (KESOL-100,200 etc.), here the supervisor checks the capacity filled by the measuring stick. Then the tanker is weighed to confirm the total capacity of the solvent filled.

21

Then the documents are handed over to the driver the tanker is released from the plant.

Figure 3: ISO tank at Loading Bay

KECL

Out-bound logistics

End user (Customer)

The biggest reason for success of the company is presence of NO Distributor in the supply chain. This factor helps KECL to interact with customer directly, hence develop a dynamic process and having no distributor or middle man present doesnt affect the cost incurred to the customer.
Domestic Distribution process flow

KECL manages the local Supply Chain and Logistics 1. Purchase order is received by the Ahmedabad office and checked for terms and condition mentioned in the order 2. Purchase Order is then forwarded to the plant, commercial department 3. Distribution scheduled is prepared and then followed by the KECL Kandla plant 4. KECL provides 30 days waiting period 5. Docs required from the customer: i) Solvent License number ( customer) ii) Copy of GST/CST number
22

Figure 4: Barrels are in high demand in southern states of India. But KECL doesnt have a depot setup outside Gujarat.

iii) Copy of PAN Card iv) Copy of excise registration number v) Copy of ECC (Excise Control Code) vi) Copy of TIN number vii) Notification for exemption of Excise and VAT 6. Transportation arrangements, KECL responsible generally. Check Tanker for Leakage, Water, Colour. Rejection leads to cancellation and OK leads to loading. Loading takes 23hrs/Tanker. Plant operates 24hrs 7. Coordination done from Plant (Talking to driver etc.) 8. Invoice date (Payment purpose) Credit date 9. 24% per month interest charged after extension of credit day

Need for Supply Chain Enhancement

23

Before we do an in-depth analysis of supply chain process followed at KECL and suggest ways in which it can be enhanced, we need to understand the need for the same. Supply Chain value enhancement will be successful if there is profitability enhances and reduction in capital invested. Profitability enhancement is achieved when there is an overall revenue enhancement which is driven by Improved product quality Consistent and Availability of the finished product Improved customer service

Figure 5: ISO Tank being weighed at Weigh Bridge at the Plant

So when there is a growth in revenue, there should be reduction in operating cost, which can be attained by: Operational efficiencies Process enhancement Procurement savings

Similarly in-order to boost supply chain value there should reduction in working capital, which is realized through: Inventory reduction Reduced order to cash time Both these reduction can be accomplished through proactive use of technology to manage orders throughout the pipeline will minimize the amount of inventory required.

Another way by which capital can be reduced is through reduction in fixed capital, which will result in: Capital asset transfer Better asset utilization This can be attained if there is a careful outsource of logistics operations to professional logistics partners as this will allow them to invest in its core competencies.
24

Recommended Supply Chain for KECL:

Ideal Supply Chain for KECL

Sourcing:

Currently lower cost plays the key role in selecting the vendor for procurement, but when we compare KECLs strategy to the Global Chemical companies, it lags behind. Procurement plays a significant part in the supply chain, its the starting point of any manufacturing process therefore companies have to be extra careful while procurement. Below flow chart displays the formal procurement process:-

25

Define Business Need: This first step in the process deals with understanding the basic fundamental requirement of the business. At KECL the requirement is of Heavy Aromatic or High Aromatic Petroleum Hydrocarbons which is a left over product obtained from the aromatics petrochemical plant like BTX plant after the higher value product like benzene, toluene and xylene are absorbed.

Procurement Process

Develop Procurement Strategy: Depending upon scale of the project, the strategies are developed. In this step various supplier/Vendors are identified. Keeping in mind the 2020 vision of a Global KECL, the requirement of Raw material will increase tremendously therefore there will be an urgent requirement of having a group of vendors rather than one or two. Supplier Evaluation & Selection: In this step of the process, the various identified supplier are evaluated in terms of their current performance and then the supplier which suits the company better is then selected. As the demand for Raw3 material is bound to increase, KECL should increase the number of prospect supplier to at least more than 3, ideally it should as many as possible so that the company is not dependent upon a few suppliers. When it comes to Selection of supplier weightage should be given to costing more as compare to other criteria which have little impact on the process. Negotiation & Award: Even when you have selected a supplier it is important that detailed negotiations are undertaken. This is not just about price. Think in terms of Total Cost of Ownership. A cheap product is not so cheap if the carriage costs are huge or if the maintenance contract is tedious. Consider carefully the process by which the goods or services will be ordered and approved; how they will be delivered and returned if necessary; how the invoice process will work and on what terms payment will be made. Considering the whole Purchase to Pay process (P2P) at the outset can reduce costs and risk significantly. Induction & Integration: No goods or services should be ordered of delivered until the contract is signed, but this is not the end. It is vital that the supplier is properly launched integrated. The P2P process needs to be in place and need to be understood on both the buy-side and the
26

supplier side. Any service levels that have been agreed need to be measured and KPIs put in place. Regular reviews should be established.

Inbound Logistics:

Once the procurement has been completed the logistics aspect of supply chain comes into play here. Now the requirement is of moving the purchased Heavy Aromatic (Raw Material) till the Kandla Plant. When movement is between two countries then understanding and selecting the most suitable incoterm is important, therefore based on my understanding and trend followed by Chemical industry worldwide FOB is most preferred term although currently CFR/CIF are most used incoterms. From the supplier viewpoint he prefers FOB as the ownership of the material is transferred once the material is loaded upon the vessel, so once the material is loaded on vessel at the port of origin Supplier wont be responsible for it, now from purchasers viewpoint he saves money as the freight charges will be at actual along and he can use his preferred insurance company to insure the material.

Inbound Logistics: Kandla Port to Kandla Plant

After reaching Kandla Port, the Raw Material has to be custom cleared along submission of all import documents (appendix 2) to the Customs department at Kandla Port. Currently a CHA is hired to do this task for KECL, where the CHA presents the document along with advance license certificate to the appraiser. Duty of appraiser is to cross check the material as per the
27

document submitted and release the shipment, here a well-established CHA can be helpful as they understand the entire process of clearance and use the services of appraiser regularly, so basically CHA help in smoothing the entire clearing process for the companies. But most large import and export house clear their material themselves as they have a daily shipment and it saves them a lot of time and money. So in future when the frequency of shipment increases, I would recommend that KECL develops their own logistics department and clear their own material themselves. Once the material is cleared at Kandla Port, the raw Figure 6: Unloading Bay material is brought in to the plant via road transportation between port and plant. When I was doing my cost analysis for transportation between Kandla Port and KECL Plant, I tried to compare three scenarios that can be used, which are: 1. Day to Day hire: its currently been followed at KECL, where tankers are been hired from the transport market located at Gandhidham, Kandla. But as the availability of tanker is an issue, there is delay in placing a tanker at the port, which in turn increase the storage cost and loading cost at the port. 2. Long Term Contract: This is a practice followed in other chemical companies around Gujarat and Delhi, where manufacturer hires dedicated trucks/Tankers on monthly basis for routes which are regular in movement. This gives them control over the movement and reduces any delays in placing the tankers at the port. 3. Purchase own tankers: This solution works perfectly for industries like Cement/ mining, where entire business works upon efficient logistics of material. In Chemical Industry, it can be worked upon as the movement between Port and Plant is regular, also due to regular movement costing of tanker can be earned back. But the major issue would come in hiring and maintaining of drivers/Tankers along with increase in fixed assets in the long run.

28

Day to Day Hire Long term Contract Cost 7000 (Daily Basis) 150000 (month) Movement 25 trips per month Total Cost per month 175,000.00 150,000.00 Annual Cost 2,100,000.00 1,800,000.00
Cost Analysis (Road Transportation)

Purchase 2000000 (per Tanker) 2,000,000.00

Plant Storage:

As I have explained earlier the operation taken care at the plant, now I will highlight the shortcomings and my recommendation that are hampering the efficiency at the Plant. Major issues that i observed during my visit to the plant are: Approach road, highly condensed and bumpy The approach road to the Plant has a width of 2 meters(approx.) which narrow we compare to the size of Figure 7: Loaded Barrels Ready for Movement trucks that using it, and as the Road is not a proper laid out one therefore it is very bumpy and leads to danger of spilling of the Solvent from the tanker. Due to the approach road, 40ft ISO tanks are difficult to bring in the plant In order to be more cost effective 40ft tankers /ISO tanks can also be used but due to the road constraint, movement of 40ft tanks is very difficult. The weigh bridge can only be used for a 20ft tanker As the weigh bridge constructed at the plant is of 20ft length, so in future weighing tanker longer than 20ft wont be possible. Currently the Barrels are stored in the open Barrels which are used for storing of finished product (C9 solvent) and currently they are been loaded at the same loading bay where ISO tanks are loaded, there should be a separate location for loading and storing of Barrels.

29

Forklift Charges: For loading of Barrels in the container, forklifts are hired from nearby Gandhidham city and as distance is around 5 km, the whole process takes time. As the forklift is hired therefore charges are extra, so in my recommendation purchase a forklift, cost of a new Voltas forklift is 4.5 lacs.

CCTV camera They should be installed on loading/unloading point, this need of the hour for commercial team. As the distance between the commercial house and loading/unloading point is about 1km the operation team sometimes is confused as to which tanker is been loaded or unloaded. In my research, I contacted Cyber Info, an electronic company which excels in installing CCTV. They gave a quotation for 5 cameras to be installed at Loading & unloading bay would cost Rs.51225/ Based on the increasing demand KECL needs to build in extra storage tanks with 500kl space, so as to meet demand and save the bonded warehouse storage cost. There should be a Board installed in the commercial house that signifies highest numbers of trucks loaded/unloaded, like a competition. When IT software like SAP is installed, use Logistics features available in them as well, Transport Management System (TMS).

SOP which has to be followed during loading & unloading should be set up at the loading/unloading points in Gujarati, Hindi and English. Packaging Solutions: IBCs provide an unparalleled value in long-term reusable IBCs for both hazardous and nonhazardous commodity liquids, (Appendix 1) An Intermediate bulk container (IBC) is a container used for transport and storage of fluids and bulk materials. The construction of the IBC container and the materials used are chosen depending on the application

30

Outbound Logistics:

In outbound logistics the finished good is transported to the customer directly, as mentioned earlier KECL doesnt have a distributor in between them in client. Transportation to the customers is done in two ways:
1. Road Transportation: for Domestic distribution in

Indian market road transport is used, where tankers


are hired from the transport market. Recommendation: KECL must identify more than 3 big transporters who Figure 8: ISO tank been Weigh at Weigh Bridge expertise in providing oil tankers for all India movement so that KECL doesnt over dependent on them. Currently there are only one or two transporter with whom KECL uses, so whenever there is a delay in placing of tankers in the plant by them, the finished good is not received by the customer in the committed time, which effects the brand of the company. In my research this one off the major issues faced by the clients today.

2. Sea Transportation: All the export currently are done using ISO tanks provided by shipping lines like CMA-CGM, MSC and APL, but KECL doesnt directly contact a shipping line rather they use freight forwarders to ship the tanks. In my recommendation KECL should forecast number of ISO tanks they will need on monthly basis keeping in mind the growing sales seen the last 5 years and get into a long term contract with most cost effective shipping lines. This step would eradicate the cost of freight forwarders and make exports more cost effective.

3. Setting up of Depot: Major grievance that the existing customer faced was the delay in delivery and lack of Barrels availability. As per the market research done by my fellow intern, cities like Bangalore & Chennai have a higher demand for barrel as compared to tankers. Therefore, to be competitive in market and deliver products on time, KECL should initially hire warehousing space near these cities instead of purchasing land. After a year or so, review the performance based on increase in customer satisfaction level and if there has been reduction in Delivery time, if so then KECL should encouraged to purchase a land and convert it into Depot similar to the other companies.

31

Customer:

KECL directly sells the product to customer, eliminating the presence of any intermediary or middle men. This structure helps them to be directly in contact with customer and provide them with their desired solvent as KECL can also provide customized solvent depending upon customers requirement and build a strong relationship with them. Here CRM plays in important role: Customer Relationship Management (CRM): (CRM) is a widely implemented model Figure 9: ISO tank ready to be transported till Kandla Port for export for managing a companys interactions with customers, clients, and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients; nurture and retain those the company already has; entice former clients back into the fold and reduce the costs of marketing and client service. Considering CRM practices followed World over, KECL should be taking feedbacks regularly from their customers to understand their satisfaction level with the company. Positive response should give the award & recognitions to the executive involved and grievances should be considered as top priority, and should be eradicated at earliest. During my research, majority of customers gave delay in delivery as a major issue. Also upon inquiry customer were sometimes provided with false information regarding their shipment reason to which can be traced to the long communication cycle structure followed at the company. Customers have to get in touch with Ahmedabad office instead of Plant from where they can get the exact information.

32

SWOT Analysis KECL


Strength: In India, Aromatic Solvent industry is an oligopoly market: As the raw material used Aromatic Solvents are difficult to procure, not many companies are involved in solvent industry. growing end-use industries especially in a developing nation like India. Ideal Location: Strategic location of KECL plant, which helps it to be an export oriented manufacturing unit and also ease of importing raw material. No Middlemen/ Distributor involved: The major strength for KECL is that they dont deal with any distributor whereas they directly deal with the end customer. Own Refining Plant: Operating with the most sophisticated technological installations and producing product equivalent to American Standards also give an edge over local producers also the area of the plant is around 60acres and only 30% of it been used so far. So for future expansion its ideal. Customization of product: Although Reliance is producing C9, C10 but their concentration is more on their core material not so much on solvents, therefore the quality provided is inferior as compared to KECL. Also KECL product like KESOL-100 which is the flagship product of the company is manufactured according to customers specification. Situated in the state of vibrant Gujarat, where the economies of scale in terms of transport infrastructure, port, SEZ, labour, government policies are always favouring industries to grow also acts as a very strong benefit for KECL.

Aromatic solvent chemicals segment has immense growth potential driven by high

Weakness Absence of any IT software for supply chain (SAP/ERP): Which leads to lack of coordination and synchronization between the plant and HO in Ahmedabad KECL still has a long road to travel in terms of brand recognition and awareness among different industries at national level. While chemical industry addresses growing need for materials required by different sectors, the industry employs highly complex manufacturing processes that involve handling of often toxic and hazardous chemicals. The process being energy intensive, the importance of safety, security and environmental protection cannot be underestimated
33

KECL has to compete with big players like RIL, IOCL, IPCL, GAIL, which are established players in this industry and having integrated petrochemical and refinery plant facility in terms of raw materials supply. KECL has to depend on import of raw materials which is cost & time intensive. The only manufacturing plant being situated in Gujarat makes it difficult to compete with massive south Indian solvent market in terms of delivery time and transportation costs Transportation cost is high for domestic distribution: As the plant is in Kandla, so for customers in Delhi would incur high transportation cost, which further increase the price of the solvent as KECL is selling at a higher price than the competition (Reliance). Long Credit Period: This effect the payment cycle. Lack of coordination between purchase team-Sales team: Sometimes extra raw material is purchased and then stored in bonded tanks at Kandla port incurring storage and duty cost.

Opportunity Indias a big market, so explore new Industry to cater to: As KECL is still on a growing phase and has lots of expansion opportunity to expand its production capacity to increase the market its catering to from present. KECL can take advantage of various untapped market in different regions of India, by establishing tank depots and manufacturing units in different strategic locations of India. As aromatic solvent chemical business is the major area of business for KECL unlike its competitors, it can invest heavily to outcast its rival players in terms of innovative marketing, service offerings and product quality. Government of India and specially Gujarat Government is investing heavily in developing road, water, electricity infrastructure for industrial growth in remote areas of India. This could be a golden opportunity for a growing company like KECL to take advantage and utilize them.

Threats New Competitors arising: Like any industry, the solvent industry is seeing entry of many new players and along with expansion of existing players like Reliance Industry and Ganga Raisayan. Raw Material supply uncertainty and scarcity is a big threat as KECL is dependent on import.

34

Quality control of product specification is the crucial factor for sustaining in chemical industry. Concept can be easily imitated: Due to increase in competition, there is a risk of replication. Dependence upon few suppliers: In order to cater to increase in demand in future, there is an urgent need of increasing the pool of suppliers of raw material. High price in the market: Upon research, I found that Reliance industry provides a similar product (C9) but at a cheaper cost than KECL, although KECL product is supreme quality wise. Not having enough production plants across India: KECL caters to whole of Indias demand from its sole plant in Kandla, so logistically moving of material from Kandla to northern part of the country and similarly moving it down south attracts increasing in freight cost. So in order to control the costing, there is an urgent need to setup plants in northern and southern part of the country.

35

Bibliography
Accenture. (2007). How do chemical companies achieve high performance through their supply chain. Accenture. Braithwaite, A. (2002). Achieving world class supply chain and logistics in the chemical industry . United Kingdom: LCP Consulting. Dangerous Goods Act 1985, S. 5. (2000). Storage and Handling of Dangerous Goods. New Delhi: Govt of India. Deloitte. (September, 2011). Chemical Logistics Vision 2020. United Kingdom: Deloitte. fertilizers, M. o. (2012-2017). Indian Chemical Industry. New Delhi: Govt. of India. FICCI. (June 2011). Methodology for measuring the logistics cost for major manufacturing exports and assessing its impact on their competiitiveness. Jeff Ferrio, J. W. (2007). Chemical supply chain network optimization. KPMG. (2003). The Indian Chemcial Industry. Bangalore: KPMG. Microsoft. (2009). Chemical Industry-Supply Chain Visibility and Collaboration. Microsoft. Miegham, T. V. (1998, January). Logistics Lesson from Alexander the Great. "If Alexander were a CEO today...", pp. 2-7. Mieghem, T. V. (1998). Logistics Lesson from Alexander the Great. If Alexander were a CEO today. Morris, G. D. (2006). Outlook & Opportunities in Chemical Logistics. Chemical Logistics, 1-8. Morris, G. D. (2008). Chemical Supply Chain Comes of Age. Chemical Logistics, 1-17. Noche, J. K. (n.d.). Simulation of logistic systems in chemical industry. Sim Serv. Rytkonen, S. H. (2006). Transportation of liquid bulk chemicals by tankers in the Baltic Sea. Finland: VIT Teachnical Research Centre. Searls, D. (2012). The Intention Economy. Massachusetts: Harvard Business School. TATA Strategic Management Group, FICCI, Roland Berger. (2010). Sustaining the India Advantage. VEDP International Trade. (2010). International Chamber of Commerce. Retrieved from www.exportvirginia.org

36

Website Reference
http://seminarprojects.com/Thread-reliance-petroleum-limited-ppt#ixzz1x5OFLdw4 http://EzineArticles.com/4806164
http://www.moneycontrol.com/smementor/news/operations/a-safe-mode-for-hazardous-chemicalstransportation-679620.html http://www.exel.com/exel/exel_chemical.jsp http://www.chemicalsupplychain.com/ http://pubs.acs.org/subscribe/archive/ci/31/i10/html/10manage.html http://www.dov.gov.in/newsite3/clearance_procedure.asp http://www.ec-finance.com/site/about_lcs/letter_of_credit_process.htm http://interport-india.com/import.htm http://www.chemtech-online.com/events/chemtech/2010/01/indian-petrochemical-industry.php http://www.cii.in/PolicyAdvocacyDetails.aspx?enc=qJsG53+0jrcPrLIdNp1+GDoW+P96sj7vM6Pvfq00WU O8p7S03rTF+Ep6D1+TfBJ0R++X0wize3iuzSSJtbie+w== http://www.icis.com/blogs/asian-chemical-connections/2010/03/dealing-with-the-middle-east-l.html http://www.hutchison-ls.com/en/solution/index.aspx?typeid=39 http://www.gpca.org.ae/node/445 http://gpcd.org/articles/sri/ http://en.wikipedia.org/wiki/Customer_relationship_management http://www.smithsofthedean.co.uk/IBCs%20&%20Baffled%20Tanks.htm http://en.wikipedia.org/wiki/Intermediate_bulk_container

37

Appendix-1 (IBC tanks)

IBC Tank Recycled White Recycled White Recycled White Reconditioned White New White New White Steel Pallet New White Black Plastic Pallet New Black Black Plastic Pallet New White Large Lid

Litres / Gallons 600 / 132 820 / 180 1000 / 220 1000 / 220 640 / 141 1000 / 200 1000 / 220 1000 / 220 1000 / 220

Height 1.15m/3'9" 1.00m/3'3" 1.15m/3'9" 1.15m/3'9" 1.15m/3'9" 1.15m/3'9" 1.15m/3'9" 1.15m/3'9" 1.15m/3'9"

Width 0.8m/2'8" 1.02m/3'4" 1.02m/3'4" 1.02m/3'4" 0.8m/2'8" 1.02m/3'4" 1.02m/3'4" 1.02m/3'4" 1.02m/3'4"

Length 1.20m/3'11" 1.20m/3'11" 1.20m/3'11" 1.20m/3'11" 1.20m/3'11" 1.20m/3'11" 1.20m/3'11" 1.20m/3'11" 1.20m/3'11"

38

Appendix-2 (IMCO Class & Labels)

IMCO Class Class 1 Division 1.1 Division 1.2 Division 1.3 Division 1.4 Division 1.5 Division 1.6 Examples: Class 2 Division 2.1 Division 2.2 Division 2.3 Examples: Explosives

Description

Substances And Articles, Which Have A Mass Explosion Hazard. Substances And Articles Which Have A Projection Hazard But Not A Mass Explosion Hazard. Substances And Articles Which Have A Fire Hazard And Either A Minor Blast Hazard Or A Minor Projection Hazard Or Both, But Not A Mass Explosion Hazard. Substances And Articles, Which Present No Significant Hazard. Very Insensitive Substances Which Have Mass Explosion Hazard Extremely Insensitive Articles Which Do Not Have A Mass Explosion Hazard Ammunition, Fireworks, Blasting Explosives Gases Compressed, Liquified Or Dissolved Under Pressure. Flammable Gases Non-Flammable Gases. Toxic Gases Div 2.1 Cigarette Lighters, Refills For Gas Lighters, Acetylene, Ethylene , And Hydrogen Some Industry Use. Div 2.2 Carbon Dioxide, Oxygen (For Medical And Industrial Use), Compressed Air, Freon Gas Used For Refrigeration And Air Conditioning, Compressed Nitrogen And Argon For Welding. Also, Liquid Oxygen And Liquid Nitrogen For Industrial Use. Div 2.3 Chlorine (For Water Treatment And Ammonia (For Industrial Works). note Aerosols, As Pesticides, Air Fresheners, Aerosol Deodorants And Some Oven Cleaners Are Assigned To Division 2.1, 2.2 Or 2.3 Depending On Their Properties.

Class 3 Division 3.1 Division 3.2 Division 3.3 Examples: Class 4 Division 4.1 Division 4.2 Division 4.3 Examples: Class 5 Division

Flammable Liquids Low Flash-Point Group Of Liquids(Flash-Point Below 18C. ) Intermediate Flash-Point Group Of Liquids (Flash-Point Of 18C.Up To But Not Include +23C.) High Flash-Point Group Of Liquids (Flash-Point Of +23C. Up To And Include +61C.) Petrol, Kerosene, Paints, Car Lacquers, Chemical Solvents (Petroleum Derivatives), Varnishes. Flammable Solids Or Substances Flammable Solids Substances Liable To Spontaneous Combustion Substances Which In Contact With Water Emit Flammable Gases. Matches And Sulphur Powder. 39

Div 4.3 Calcium Carbide - Used To Produce Acetylene Gas. Oxidizing Substances (Agents)And Organic Peroxides. Oxidizing Substances (Agents) Yielding Oxygen Increases The Risk And Intensity Of Fire.

5.1 Division 5.2 Examples: Class 6 Division 6.1 Division 6.2 Examples: Class 7 Examples: Class 8 Examples: Class 9 Examples: MHB Organic Peroxides-Most Will Burn Rapidly And Are Sensitive To Impact Or Friction. Div 5.1 Pool Chlorine , Some Fertilizers. Toxic And Infectious Substances Toxic Substances. Infectious Substances. Div 6.1: Some Pesticides , Industry Products Such As Cyanide Products. Div 6.2: Waste Medical Products For Example. Radioactive Substances Substances Used In Industrial ,Medical Or Scientific Purposes. Corrosives Acids As Glacial Acetic Acid, Hydrochloric, Sulphuric And Nitric Acid, Caustic Soda And Caustic Potash Miscellaneous Dangerous Substances And Articles. A Wide Range Of Substances As Asbestos, Some Fertilizers And Environmentally Hazardous Products. Materials Hazardous Only In Bulk.

40

Class 1 Explosives

Division 1.1

Division 1.2

Division 1.3

Division 1.4

Division 1.5

Division 1.6

Class 2 - Gases Compressed ,Liquified Or Dissolved Under Pressure

Division 2.1

Division 2.2

Division 2.3

Class 3 - Flammable Liquids

Class 4 - Flammable Solids Or Substances

Division 4.1

Division 4.2

Division 4.3

41

Class 5 - Oxidizing Substances (Agents)And Organic Peroxides

Division 5.1

Division 5.2

Class 6 - Toxic And Infectious Substances

Division 6.1

Division 6.2

Class 7 - Radioactive Substances

White

Yellow II

Yellow III

Class 8 - Corrosives

Class 9 - Miscellaneous Dangerous Substances And Articles

42

Appendix-3 (Checklist for Import)


Documents Required for Import:

Invoice Packing List Bill of Lading/ Delivery order GATT Declaration form duly filled Importers / CHAs declaration duly signed Import License Letter of Credit / Bank Draft

Buyer applies to bank for issue of LC, bank evaluates his credit standing, based on the results bank will issue the LC or may require cash cover to issue it. Once LC is issued its transferred to advising bank, who in turn informs the sellers. Now the sellers should check that LC matches commercial agreement between buyer and him. Sellers ships the product and collect the docs required by the bank (invoice, tpt doc etc) the advising bank checks the doc provided by the seller and releases the payment to the seller and informs the buyers bank about the same. Now the buyers banks checks the docs again and if they are correct it reimburses sellers bank immediately. The issuing bank debits the buyers account and release the docs to him so that he can clear the shipment once it reaches the port. Insurance policy Industrial License if required (Solvent Certificate) Certificate of country of origin. Multimodal Dangerous goods certificate.

43

Appendix-4 (Checklist for Export)


Documents Required for Export (Format):

Shipping bill for export of goods under claim for duty drawback these should be green in colour Shipping bill for export of dutiable goods - this should be yellow colour Shipping bill for duty free goods it should be white colour Shipping bill for duty free goods ex bonds it should be pink colour Shipping bill for export under DEPB scheme it should be blue colour 4 copies of commercial invoice 4 copies of packing list Certificate of origin or pre-inspection where required Insurance policy Letter of credit Declaration of Value Excise ARE-1/ARE-2 form GR/ SDF form prescribed by RBI in duplicate Letter showing BIN number Certificate of analysis Surveyor Which has product name, container no, production date, batch no, expiry date

Appendix-5 (Document set prepared for road transport from plant)


Invoice Packing List Form 402 C Form Insurance of truck Delivery of Sales (DOS)

44

Glossary
JAFZA: Jabel Ali Free Zone Area DOS: Delivery of sales RRM: Received Raw Material IMCO Class: Grouping Of Dangerous Goods By Type Of Risk Involved, This Grouping Was Drawn Up By The UN Committee Of Experts On Transport Corrosive Material: A Liquid Or Solid That Causes Visible Destruction Or Irreversible Damage To Human Skin Tissue On Contact. Also, It May Be A Liquid That Has A Severe Corrosion Rate On Steel. Flash Point: The Minimum Temperature At Which The Flammable Vapors Of A Substance (In Contact With A Spark Or Flame) Will Ignite UN Number: United Nations Serial Number, That Is To Say, One Of The Four Digit Numbers Devised By The United Nations And Specified In The Approved Carriage List As A Means Of Identification For Dangerous Goods. ADR: Means the European Agreement Concerning The International Carriage Of Dangerous Goods By Road Signed At Geneva On 30th September 1957[4], As Revised Or Re-Issued From Time To Time MFAG: Medical First Aid Guide MHB: Materials Hazardous Only In Bulk, Where Hazardous Regulations Are Not Applied To These Materials When They Are Carried In Closed Containers

45

3PL 4PL AAI APEDA ASEAN ATI BG BIS BRIC C&F CAGR CAPEXIL CBEC CBU CFS CHA CIWTC CMIE CNG CONCOR CV CWC CY DGCI & S DFC DGFT DoS EDI EOU EPCG EPZ EXIM FDI FEU FICCI FOB FTA FTZ

Third Party Logistics Fourth Party Logistics Airports Authority of India The Agriculture and Processed Food Product Export Promotion Agency Association of South East Asian Nations Automotive Training Institute Broad Gauge Bureau of Indian Standards Brazil, Russia, India and China Clearing and Forarding Agent Compound Annual Growth Rate Chemical and Allied Export Product Council Central Board of Excise and Custom Completely Built Unit Container Freight Station Customs House Agent Central Inland Water Transport Corporation Center for Monitoring Indian Economy Compressed Natural Gas Container Corporation of India Ltd Commercial Vehicles Central Warehousing Corporation Container Yard Directorate General of Commercial Intelligence and Statistics Dedicated Freight Corridor Director General of Foreign Trade Delivery of Sales Electronic Data Interchange Export Oriented Unit Export Promotion Capital Goods Export Processing Zone Export Import Foreign Direct Investment Forty-feet Equivalent Unit Federation of Indian Chamber of Commerce and Industry Free on Board Free Trade Agreement Free Trade Zones

46

GACL GDP GPS GSFC GTIL ICD IPCL JAFZA JIT KPT LC LCL LCV LDPE LPI LSP M&HCV MIS MSME NHAI NMCC NSICT OEM PCPIR PPP R&D RBI RCT REACH RRM SAARC SCI SEZ SSI SWOT TAMP TEU THC TKD TPM TQM VAT

Gujarat Alkalies and Chemicals Ltd Gross Domestic Product Global Positioning System Gujarat State Financial Corporation Gateway Terminals India Private Ltd Inland Container Depot Indian Petrochemicals Corporation Limited Jabel Ali Free Zone Area Just in Time Kandla Port Trust Letter of Credit Less than Container Load Light Commercial Vehicles Low Density Polythylene Logistics Performance Index Logistics Service Providers Medium & Heavy Commercial Vehicles Management Information System Micro, Small and Medium Enterprises National Highway Authority of India National Manufacturing Competitiveness Council Nhava Sheva International Container Terminal Original Equipment Manufacturing Petroleum, Chemicals and Petrochemical Investment Region Public private Partnership Research and Development Reserve Bank of India rail Container Terminal Registration on Authorisation, Evaluation, Authorization and Restriction of Chemicals Received Raw Material South Asian Association for Regional Cooperation Shipping Corporation of India Special Economic Zone Small Scale Industry Strengths, Weakness, Opportunities and Threats Tariff Authority for Major Ports Twenty-Feet Equivalent Unit Terminal Handling Charges Tughlakabad Total Productive Maintenance Total Quality Management Value Added Tax

47