1. MAHINDRA NAVISTAR Outperformers’ League Cement 15 th Jun 2012 Jaipur Sushil Cherian 1© 2012, All Rights Reserved. l

2. 2 Cement Logistics Importance and Opportunities

3. Industry Overview Current Installed Capacity is 245 million T – 139 Large plants produce ~ 234 million T – 365 mini plants produce ~ 11 million T Players in market Unequal distribution of production areas and consumption areas leads to logistics playing critical role in Cement Supply Chain 3© 2012, All Rights Reserved. l

4. Industry Overview 4© 2012, All Rights Reserved. l Critical components of cement costs Logistics cost is 19-25 % of Cement Production cost

5. Cement Logistics 5© 2012, All Rights Reserved. l Rail Road Sea/ Inland LogisticsInbound Limestone Coal Fly Ash Gypsum Additives Outbound Bagged Cement Clinker, Loose cement-bulker

6. Distribution Puzzle ? 6© 2012, All Rights Reserved. l

7. You have a product that is inexpensive to make and has a phenomenal demand ! 7© 2012, All Rights Reserved. l

8. 8 Not quite….

9. 9© 2012, All Rights Reserved. l What takes away a chunk of the winning is the disproportionate transportation cost.

10. This is the dilemma which Cement Makers face 10© 2012, All Rights Reserved. l

11. Preferred Transportation Model 11© 2012, All Rights Reserved. l Transportation Transportation costs high - freight accounts for 19-20 % of the production cost Road preferred mode for transportation for distances less than 250kms. However, industry is heavily dependant on roads as the railway infrastructure is not adequate - shortage of wagons. Capacity additions Acquisitions have been the mainstay of the business Regional imbalance resulting in cross regional movement - limestone availability in pockets has led to uneven capacity additions Capacity additions have slowed down

12. Rajasthan scenario © 2012, All Rights Reserved. l12

13. Distribution logistics 13© 2012, All Rights Reserved. l 100 km 300 kms 600 kms 1000 kms > 1000 kms

14. © 2012, All Rights Reserved. l14 A CB D FE G IH Plant Locations vs Distribution

15. Road Freight Determinants - Cement 15© 2012, All Rights Reserved. l Return Load Distance Road Condition/ Congestion Loading Time/ Load Timings Waiting Period Unloading Time/ Unloading Timings Mode / Transport Availability

16. © 2012, All Rights Reserved. l16 Logistics HUB- Cement

17. © 2012, All Rights Reserved. l17 Explore secondary delivery and invoicing (on behalf of distributor) for region How does it work ? – Identify local area along highway for downsizing Cement Consignment ( Bulk Breaking) – Place Containers ( 40 ft ) along periphery with multi opening – Cement bulk is transported to HUB Container and reloaded to small capacity vehicle – Possibility of Invoicing system on small vehicle to facilitate quick delivery – This works well where rail freight can get offset ( bulk loading) Value Addition by you …

18. © 2012, All Rights Reserved. l18 Portable Container warehousing Timely delivery with in 6-12 hrs End to End Logistics Solution Reduction in shortages and wastage Bag Damages reduction Other Labour related issues at Plants Reduction in payment of wharfage charges Improving sales efficiency by 15-20 % ( cycle time) Overcome Railway indent issues WIN WIN SITUATION ! Benefits

19. Thank You 19© 2012, All Rights Reserved. l