Overview of Chemical Logistics in India

Presentation for CHEMLOG India 2016

Manish Panchal, Practice head- Chemical, Logistics & SCM

29th Jan 2016

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from TATA Strategic Management Group.
 Indian chemical industry is estimated at USD 141.5 Bn and accounts for 9% of the
manufacturing output
Past Growth of Indian Chemical Industry (USD Bn) Market Share of Sub-segments (%)

141.5 Biotechnology Agrochemical

, 4% s, 3% Bulk
Fertilizers, Chemicals,
108.4 5.5% 15% 25%

Pharmaceutic
als, 16% Petrochemical
s, 19%
Specialty
Chemicals,
2010 2015 18%

• Indian chemical industry is a diverse industry accounting for ~3.4% of the global chemicals industry
• Chemical industry contributes 9% of the output of the Indian manufacturing sector
• Western coast of India has been the key hub for chemicals and petrochemicals industry with Gujarat and
Maharashtra alone accounting for 62% of major chemical and petrochemicals production
• Since production clusters are concentrated in one particular region, better infrastructure and logistics are
required to supply chemical products across the country

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Source: Tata Strategic Analysis
 Indian traffic freight is more dependent on roads as compared to developed
countries like China and USA
FREIGHT LOGISTICS OVERVIEW

Mode share (% of ton-km)

Comments

• India’s traffic freight relies excessively on

roads; current infrastructure is over-
stretched with major congestion in east-
west, north-south road corridors

• India is unfavourably places in

comparison to some of the key global
economies on parameters of logistics

• Indian logistics costs are estimated to be

at a high of around 13 to 14 per cent of
GDP, almost double, when compared
with 7 to 8 per cent of GDP in developed
countries

2
Source: Tata Strategic Analysis
 Quality infrastructure, capacity constraint and poor hinterland connectivity are
key issues faced by Indian Chemical Industry
MODES OF TRANSPORT: SNAPSHOT

Indian wagon productivity is 2.7 Million/wagon holding as compared to China’s 4.3 Million/wagon
holding
To increase rail share in the commodities like chemicals and petrochemicals a scheme namely
Special Freight Train Operator Scheme (SFTO) was launched in 2010

Railways

Average distance travelled by a truck in India is 250 km/day which is almost 55% of global
average 450 km/day
The government has taken initiatives to improve the road infrastructure with 55,000km of
national highway development planned as well as the construction of the Golden Quadrilateral to
connect the 4 major cities in India

Road

Indian ports sector consists of 13 major and about 200 non-major ports with major ports
comprising almost 55% of country’s trade by volume
Over the years, Indian ports have transitioned from handling typical break and bulk type cargoes
to handle specialized cargoes like liquefied natural gas (LNG) and hazardous chemicals
A comparison of Indian ports with respect to global ports clearly indicates inadequacies at Indian
ports which lead to inefficient operational performance and poor resource utilization

Ports
3
Source: Tata Strategic Analysis
 Challenges faced in chemical logistics

CHALLENGES FACED IN CHEMICAL LOGISTICS

Close to 1 lakh Products could be

products across a solids, liquids or
range of categories gases; some being
and SKUs inflammable &
hazardous
Diverse Product Nature of
Segments products

Varied needs &

Adoption of green Chemical requirements of
Focus on Diverse end different
logistics incurs Industry customer
incremental costs QSHE user segments
Complexity segments

Transport
Involvement of
Large Number Regional concentration
Intensive Supply
multiple agencies Of Stakeholders of chemical clusters
& Distribution resulting in
in the
transportation of lengthening of supply
chemical products lines

4
Source: Tata Strategic Analysis
 ‘Hazardous Chemicals’ logistics needs to improve and various rules and
regulations needs to be followed stringently
HAZARDOUS CHEMICALS: HANDLING AND REGULATIONS

1 There are various acts & rules related to management of chemicals such as Manufacture, Storage and Import of
Hazardous Chemicals Rules, 2000, Chemical Accidents Rules, 1996, Petroleum Act & Rules etc.

Hazardous materials training is required by law as per 9 of CMV Rule. Eg: Hazmat employers are responsible
2
for certifying that each hazmat employee has received the required training and for keeping detailed records of
when and what training was given

3 With nearly 20% of chemical accidents happening during transportation, hazchem legislations in India are
critical and needs to achieve the levels of REACH of Europe

4 Prohibited activities within the “Coastal Regulation Zones” norms include manufacturing, storage or disposal of
hazardous chemicals except transfer of hazardous chemicals from ships to ports, terminals and refineries and
vice versa

5
Source: Tata Strategic Analysis
 Opportunities and Way Forward

1 Port capacity expansion and infrastructure up-gradation

• High capacity berths must be created for handling chemical liquid cargoes with specialized handling equipment. This would
reduce turnaround time & pre-berthing delays and increase hourly throughput
• Draft depth at ports need to be increased to enable them to handle bigger vessels whose proportion would increase with
increase in liquid volumes
2 Alternate transport modes
• Conscious efforts should be made to shift the chemicals transport load from roads to safer and economical modes like rail and
water
• Dedicated wagons can be introduced to transport chemicals across the country over rail
• Financial incentives should be provided by the Government for using alternate transportation modes

3 Integrated Logistics
• The logistics firms are moving from a traditional setup to the integration of IT and technology to their operations to reduce the
costs incurred as well as to meet the service demands
• Chemical companies can stay ahead by establishing an integrated transportation management program that is a cohesive
strategy aligned with the company’s overall business objectives.

4 Additional Steps
• All stake holders should come together and highlight their cause to Government bodies and concerned authorities
• Chemical companies should be encouraged to outsource their storage and handling operations to independent third party
operators

6
Source: Tata Strategic Analysis
Tata Strategic is the largest Indian owned management consulting firm

AN OVERVIEW

Founded in 1991 as a division of Tata Industries Ltd.

The largest Indian owned Management Consulting firm

Supported by a panel of domain experts

Growing client base outside India

1000+ engagements, 300+ clients, across countries, across sectors

20% revenue outside India

7
We offer End to End Solutions ………………….with tangible Results /Benefits

Formulate Strategy Develop Solutions for Strategic Priorities

Competitive Strategy : Organization Sales &Marketing Operations

Entry /Growth
• Organization Structure • Go to Market • Supply Chain
India Entry
• Work force Optimization • Market Share Gain • Delivery
M & A support
• Talent Management • Rural Expansion • Cost Reduction
Alliances
• Culture & HR Transformation • Alternate Channels

Drive Implementation & Change

Results and Benefits*

• Revenue • Cost • Profit
• Market Share • Throughput • Lead Time
• Key Milestones
*Illustrative
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We have deep expertise in select Industry domains and Functional areas

TATA STRATEGIC
Auto & Infrastructure
Chemicals Logistics
Engineering & Energy

Industry Domains

FMCG & Durables Retail Technology Social Sector

& Healthcare

Organizational Sales & Supply Chain

Strategy
Effectiveness Marketing & Operations

Functional Areas

9
 IP covers unique India Insights, Proprietary frameworks and Quality Tools

INTELLECTUAL PROPERTY

Benchmark Data Market/ Industry Insights Proprietary Models/Frameworks

• Financial Performance • Industry Reports • DisPro™ District Profiler

• Operating Parameters • Articles & Notes
eg. cost, efficiency, • Knowledge Partnerships with
productivity Industry bodies eg. FICCI, CII
• Processes, Structure &
• Trends and insights from
Headcount
National Surveys (eg. NCAER,
NSSO etc.)
• CitPro™ City Profiler
• Strat View™ - Strategy
• Priority Plus™ - Prioritization
• Talent Pro™ - Talent Processes
• Future Scan™ - Scenario Planning
• OPTIC Pharma™, Pharma Packaging
• FOB Trans™ - Family Business

Quality Tools

• I Plan – Fin. Planning

• T Square -
Presentation

10
Tata Strategic is supporting the Govt. of India to formulate the national chemical
policy

Chemical Task Force – Govt. of India

India Chemical Vision 2020 &
National Chemical Policy
• Study industry framework & challenges

• Draw learnings from international

experience

• Establish Chemical Industry Vision 2020

& National Chemical Policy
• Identify initiatives to be taken by the

industry/ government

• Formulate National Chemical Policy

• Create implementation/ communication

plan

Tata Strategic was also the knowledge partner for the chemicals subgroup set up by the Planning
Commission, Govt. of India, for the XIIth Five Year Plan

11
 TSMG at various industrial forums and conferences…

12
Source: Tata Strategic Management Group
 Tata Strategic has worked with several leading Multi-national chemical
companies
INDICATIVE LIST OF CLIENTS – INTERNATIONAL INDICATIVE

13
 Tata Strategic has worked with several leading domestic chemical companies

INDICATIVE LIST OF CLIENTS – DOMESTIC INDICATIVE

14
 Tata Strategic has assisted the top players in the industry in making the right
strategic and operational choices
SELECT SECTOR & FUNCTIONAL EXPERIENCE: SNAPSHOT INDICATIVE

SCM Transformation Logistics Service Providers

Stolt-Nielsen

Kesar Terminals

TM International
Logistics Ltd.
Yamato

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With our unmatched India insights, Tata Strategic can companies in planning and/
or preparing for success in India
WHY TATA STRATEGIC?
• In-depth understanding of Logistics and
Supply Chain functions
> Deep understanding of Industry related
SCM advancements and challenges
1 2
> Worked on several Logistics and Supply
Chain transformation Projects spanning
end to end business processes
> Proprietary tools of Supply Chain
optimization and continuous improvements
WHY US?
• Experience in working with leading
global and domestic companies
> Worked with leading domestic clients
such as Gati, DIESL, TM International
3 Logistics, DS Group, TVS Tyres,
4
> And MNCs such as Vopak, Stolt, NYK
Logistics, Maersk, Pfizer, Sony
• Access to expert network with
extensive industry experience
> Ex-CEO and COO of a logistics MNC
> CFO of a leading Indian express logistics
company
> MD of a company specializing in
warehouse simulation
> Certified Practitioner in SCM and TOC
• Track record of successful projects
> Consultants experienced in Supply
Chain & logistics domain
> Experience in providing implementation
support for translating recommendations
into results
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Mumbai
Contacts : B - 1001, Marathon Futurex,
N.M. Joshi Road
Lower Parel (East),
Mumbai 400 013. INDIA
Tel:+91 22 66376789
Fax: +91 22 66376600
MANISH PANCHAL
PRACTICE HEAD – CHEMICAL & SCM
Phone: +91 22 6637 6713
Mobile: +91 98205 20303
e-mail: manish.panchal@tsmg.com
Delhi
Level 12, Building No.8, Tower C
DLF Cyber City, Phase II
Gurgaon – 122002
Haryana, INDIA
Tel:+91 124 4696692
Fax: +91 124 4696970