A LIVE PROJECT TRANSPORTATION

A live project Deciding TRANSPORTATION cost of ‘SHREE CEMENT LIMITED’ Submitted To: Prof. B.K.Soam

Accman Institute of Management 46 A/2 Knowledge Park III, Greater Noida (U.P.) 201308 Tel. No. 0120– 2323800-02 Mob. No.: 09873076521-22

TEAM MEMBERS MOHD ARISH

UPMA JOSHI

KAPIL VARDANISANJAY VARDANIRAKESH JANGIROM PRAKASH

BATCH PGDM 2009-11

Contents

S No Title Page page No 1 Acknowledgement.........................................................6 2 Declaration.......................................................................7 3 Company Profile.............................................................8 4 Arcolades..................................................... ....................12 5 Objective of project......................................................17 6 Questionaire...................................................................17

7 Solution to the problem..............................................2 4 8 Conclusion..................................................................... 26

9 Bibliography .................................................................27

Acknowledgement

We hereby declare that this project has been prepared by us during the period 14th January, 2010 to 28th January, 2010 under the guidance of Professor B.K. Soam Accman Institute of Management, Greater Noida We further declare that this project report is prepared from the information collected from the company, the sources available from the Company and the same is purely for academic purpose. This project has not formed the basis for the award of any other degree/diploma of any University/Institution. We also hereby declare that all the information given in the report is true to my knowledge.

Place: Greater Noida

Date: 28th January, 2010 ACCMAN INSTITUTE OF MANAGEMENT

Declaration There are number of people to be acknowledged and thank for their

contributions to this Project. Here is a consideration of all those esteemed

people who provided not only their valuable time but also their views

and transferred their knowledge and experiences, which further enhanced

the project and made it more than what it would have been. We offers our

special thanks to SHREE CEMENT LIMITED, Mr. Shailendra Sharma

(Ast. Manager logistics khush khera) and for all his educative guidance and

more support that they have provided during the preparation of the project.

We would also like to thank our Mentor Prof. B. K. Soam who provided

his valuable guidance, which has helped us in enhancing the quality of

the project report and also to the dean for arranging organization study for

all students. We would also like to grant sincere apologies along with a

thank you who have contributed but their names have not been included.

Thank You… Yours faithfully, We All Group Members

ACCMAN INSTITUTE OF MANAGEMENT

Company Profile Shree Cement is one of India's premier cement makers; the largest in North India. Among the country's top 5 cement groups, Shree Cement is being professionally managed by its promoters Shri B. G. Bangur, Chairman and Shri H. M. Bangur,

Managing Director. Shree Cement posted a turnover of Rs. 33903 crore and generated profit of nearly Rs. 5779 crore during 2009-10. Operational excellence and

efficiency of the Company gets reflected in one of the highest operating profit margins of

38%. High-caliber project management and execution capabilities have seen the Company compress project timelines and push rapid capacity expansions.A striking case in point is the

commissioning of Unit VII in a world record of 367 days. Fast scale-up of operations, driven

by such rapid capacity ramp-ups, made it possible for the company to grab market

opportunities. Shree enjoys the highest market shares in prime markets of Delhi, Haryana

and Rajasthan. The Company pursues a multi-brand strategy. The three brands, viz. Shree Ultra Jung Rodhak Cement, Bangur Cement and Rockstrong

tuff cemento Cement, appeal to different customers and thus create a more diverse and broad customer base. Shree follows the triple bottom-line approach of measuring its performance in terms of three aspects – economic, social and environmental. In line with this approach, the Company goes beyond profit performance to impact community development and environment protection in a sustainable manner.

Shree has already embarked on the 'greening' of its processes so that its operations put the minimum burden on the earth's finite resources. The company is on the way to installing one of the world's largest 'green' power projects to run on waste heat. Shree is continuing its capacity expansion both in cement and power plants with further investment committed to the tune of approximately Rs.1000 crore during 2009-10. For future growth, the Company is looking at acquiring limestone mines within India as well as abroad. Shree Cement Limited Company Profile is the essential source for top-level company data and information. Shree Cement Limited Company Profile examines the company's key business structure and operations, history and products, and provides summary analysis of its key revenue lines and strategy.

SHREE CEMENTThe company primarily operates in India, where it is headquartered in Kolkata and employs around 2,566 people. The company recorded revenues of INR 27,150.2 million (approximately $592.4 million) in the fiscal year ended March 2009, an increase of 28.7% over 2008. The company's operating profit was INR 9,538.9 million (approximately $208.1 million) in fiscal 2009, as compared to the operating profit of INR 4,673.5 million (approximately $102 million) in 2008. Its net profit was INR 5,779.7 million (approximately $126.1 million) in fiscal 2009, as compared to the net profit of INR 2,603.7 million (approximately $56.8 million) in 2008.

1979 - The Company was incorporated on 25th October, at Jaipur. The Company was promoted by members of the Bangur family and others. Shree Digvijay Cement Co. Ltd., Graphite India, Ltd. and Fort Gloster Industries, Ltd.

Key Information

Time Line:-1984 - 70 No. of equity shares subscribed for by the signatories to the Memorandum of Association. In Oct./Nov.1,53,99,930 No. of equity shares issued of which 1,06,99,930 shares reserved for firm allotment1991 - Production of clinker and cement declined due to a major shut down of the plant for implementation of modernization/renovation/modification work.

1992 - 36,00,000 shares allotted to FLT Ltd. a wholly owned subsidiary of P.L. Smith & Co. Denmark

1994 - The Company issued 10,00,000-16% Secured Redeemable NCD of Rs 100 each on private placement basis.

1996 - The Company commissioned its second cement plant - Raj Cement with a capacity of

12.4 lakh tonnes per annum

in Beawar.

1999 - The company has been awarded the first prize for energy conservation in 1998 in the cement sector.

2002 -Unit I and Unit II of the company receives National Award for 'Best Electrical Energy Performance' and 'Best

Thermal Energy Performance' in the Cement Industry for the year 2000-01

-Appoints Mr M K Singhi as the Executive Director of Shree Cements.

-In pursuance to the IDBI, company approves for early redemption of privately placed under

noted cummulative

redeemable preference shares.

2004 -Company conferred 'BEST PRODUCITY AWARD-2003' by the Rajasthan state Productivity Council in recognition of productivity measures and productivity improvements achieved

- Rajasthan Chamber of Commerce & Industries, Jaipur presents 'RCCI Excellence Award' to

Shree Cement Ltd in

recognition of Overall Best Corporate Governance Practices and Disclosures in Annual Report among all companies

having registered office in Rajasthan.

2007 - Shree Cement Ltd has appointed Shri. Amitabha Ghosh as Director of the Company w.e.f. May 14, 2007

Vision

“To drive and sustain industry leadership of the company within a

global context - by developing individual leadership competencies at every level, through a robust backbone of trust, support & Reward.”

MissionTo harness sustainability through low carbon philosophyTo sustain its reputation as one of the most efficient manufacturers globally.To continually have most engaged teamTo drive down cost through innovative practicesTo continually add value to its products and operationsmeeting expectations of all its stakeholdersTo continually build and upgrade skills and competencies of its human resource for growthTo be a responsible corporate citizen with totalcommitment to communities in which it operates and society at large

Trust Achievments Progressive

Management Shree Cement supplemented its attractively low capital investment per tonne with one of the lowest manufacturing costs in the Indian cement industry. Starting with 0.6 million tons per annum of cement in 1985, the capacity was upgraded to 0.76 million tons in 1993. Second plant with installed capacity of 1.24 million tons per annum was commissioned in 1997, in record time of 18 months, raising total capacity to 2.0 MTPA. Even during recession in the industry, it was possible for it to enhance capacity further to 2.6 MTPA due to its strategic location and better brand image and is the largest single location plant in North India. The companys installed capacity accounted for 15 percent of Rajasthans total capacity in 2002-03 and 2.5 percent of Indians production in 2002-03. Cement production increased 3.42% from 2.747 million tons in 2002-03 to 2.841 million tonnes in 2003-04.At the end of year 2008, Shree Cement Limited has entered the big league with current overall production capacity of 9.1 million tons. Shree Cement has evolved into one of India’s top ten cement makers with 18% market share in North India.Believing in the theory of self-sufficiency, Shree Cement Limited has installed its own Captive Power Plants at Beawar & Ras with a combined capacity of 119.50 MW.Once again, the low cost was the result of scores of initiatives across all levels within the company. Some resulting in small savings. Some in big. But each primarily driven by the belief that what was being done could be done better.

Corporate Social Responsibility:-To produce quality cement in an eco-friendly, healthy & safe working SHREE CEMENT LIMITED SUSTAINABILITY POLICY environment in a socially responsible manner with continual improvement in performance and

profitability to the satisfaction of all stake holders by ensuring:►Customer satisfaction.►Clean and green environment.►Sound health and safe working practices.►Compliance to the applicable laws and respecting the international instruments.►Implementation of the systems and continually improving their effectiveness.►Adoption of cost effective technologies and practices for improved productivity and profitability.►Mutually beneficial stakeholder’s relationship.►Human resource satisfaction

Phi\

Accolades

Green-Tech Environment Excellence AwardGolden Peacock Award for Combating Climate ChangeNational Safety Award awarded by the Honourable President of India, Smt. Pratibha Patil.First Prize for Energy Conservation at its mines by Indian Bureau of Mines.

Best Employer Award for Rajasthan for the year 2007. Golden Peacock Award for Excellence in Corporate

Governance in manufacturing sector

Corporate Excellence Award by RajasthanChamber of Commerce & Industry (RCCI) in all four categories namely CorporateGovernance & Capital Market, Financial Performance & Analysis,Business & Qualitative Aspects and Annual Report Presentation as well as Management.Award for Best Cost Management Practices by Institute of Cost and Works Accounts of India (ICWAI).SILVER CIO Award by the CIOL Dataquest.Enterprise Connect Awards 2008

Location:-The Company has the different network at different places:-Regd. Office & Works: Corp. Office: Shree Cement Ltd. 21, Strand Road, Calcutta- 700001.Bangur Nagar, Post Box No. 33, Shree Cement Ltd. Beawar 305901Rajasthan India.

Shree Cement Unit I & II is located at Beawar, 185 Kms. from Jaipur off the Delhi-Ahmedabad highway. Amongst the plants in the state it is nearest from its marketing centersBangur Cement Unit (III, IV, V, VI & VII) is located at RAAS, 28 Km from Beawar in Pali Distt.They are coming up with Grinding Units at Suratgarh & Laksar (Distt. Haridwar,Uttrakhand).Shree Cement Grinding Unit (KKGU) is located at Khush Khera Dist. Alwar Nearest to Delhi.

Departmental Highlights Manufacturing:- Market Classification Primary: Secondary

Rajasthan Delhi, Punjab, J&K Haryana, Western U.P. and Uttaranchal TertiaryM.P. and Central U.P.

Market shareShree’s cement’s strategy of quality advertising combined with active field marketing helped it increase its market share in north India. Company maintained its leadership position in the key market of Rajasthan, Delhi & Haryana. Company increased its market share in North India to 16.4%against 13.9% of last year. Our focuses on increasing marketing share in areas which are closer to their plants offer them the advantage of low radius. The strategy benefited them in significantly increasing their market share in the nearer markets of Rajasthan and Haryana.Going forward they aim to further consolidate and increase our presence to attain the leadership mantle in the entire North Indian market.

0

102030405060708090 2004-05 2005-06 2006-07 2007-08 2008-09

Cement & Clinker Production (Lac Tons)CementClinker

Human resource:-One of India's Top 20 Best Employers Sustained policy of promotionIn a survey carried out jointly by Business Today, Mercer and TNS in 2008, Shree emerged as one of India's Top 20 Best Employers. Shree was the only cement company and one of the five manufacturing companies to be considered in the study. Such a finding only serves to bring out what we already know – the strong commitment of the Company to its human assets. Shree's score in Internal Employee Perception Survey and Employee Engagement Index was higher than the average score of India's Top 10 companies in the study (referred as ‘The Best’ in the following graph). These two categories together indicated the sense of ownership and belonging Shreeemployees felt towards their company. The above gets reflected in the attrition rate, which

5

1618

12

7

191820

0

5

10

15

20

25

Rajasthan Delhi Haryana Punjab

States

Percentage

2005-06 2006-07

came down from 7.5% in 2007-08 to 5.9% in 2008-09. People at Shree can expect fast promotions on the strength of their track record and leadership drive.. It yields initiatives down the line. The percentage of peoplepromoted has been hovering around a high 27% for the last three years. The number of workers promoted to staff category has increased dramatically this year, from 97 in 2007-08 to 264 in 2008-09. More than the pay, Such promotions endow people with intangibles like pride of higher position. In the face of rampant layoffs in the industry during the recession, Shree has actually increased recruitment of its people. Manpower increased from 2418 in 2007-08 to 2566 in 2008-09. Such figures illustrate more than words the fact that the Company prizes its human assets. The management believes that diverse skill-sets make the Company more versatile, increase its in-house capabilities and ultimately save costs. Shree's score in Internal Employee Perception Survey and Employee Engagement Index was higher than the average score of India's Top 10 companies in the study (referred as ‘The Best’ in the following graph). These two categories together indicated the sense of ownership and belonging Shree employees felt towards their company. OBJECTIVEThe main objective behind making the project is to determine the transportation cost of shree cement and after determing, the transportation cost check out whether this transportation cost is minmum or not. This can be done in three ways:-1)North-west cornor rule

2) Lowest Cost Entry Method3)Vogel’s approximation method

After completing these method go for the optimality test whether demand is equal to the supply and if this is not there then there is a degeneracy problem.After this we have designed a questionaire to find out the minimum cost for transportation.These are-: SHREE CEMENT - Transportation Questionnaire

Now that are considering implementing a transportation management system, complete this Transportation

Questionnaire and let us make a few suggestions as to the cost cutting methods for this cemnt plant.

CONTACT INFORMATION

Project Name:

Contacted:

Company:

Address 1:

Address 2:

City:

State/Province

Postal Code/Zip:

Country

Website:

Transportation Cost Reduction

shailendra sharma(Ast. manage

SHREE CEMENT

Bangur Nagar,

, Post Box No. 33

Khush khera

Rajasthan

305901

INDIA

w w w .shreecement.com

1) How long have been in the Industry?

2yrs 5yrs 10yrs >15yrs

2) How many centers do you operate from?

2 5 7 8

3) Please check the one that best describes your company TRANSPORTATION?

satisfactory good excellent

4) Which center do you supply?

Noida Gr.Noida Ghaziabad New Delhi All the above

5) How many employees are there in this centre ?

100-200 200-300 300-400 >1000

6) Do you provide home delivery of goods also?

yes no

7) How many dealers do you work for in the Greater noida Center?

1 2 4 5

 

8) How many ware-houses do you have for inventory storage?

more than 5 between 5 to 10 more than 1 5

9) What is the maximum distance from any of your ware houses to any of the production house?

less than 50 kms between 50 to 100km more than 100 kms

10) What vehicle you are using to deliver your goods?

DCMS TRUCKS VANS OTHER(specify)

11) How many transport agency works for your product transportation?

1 2 3 more than 4

12) How much do you pay per km to your transport agency?

0-100 100-200 200-300 more than 300

13) What is your budget on Transport ?

less than5 LAKH between 5LAKHS to 10 lakhs between 10 LAKHS to 15LAKHS

above 15LAKHS

14) What is your monthly expenditure on Transport in the last month?

less than 5 LAKH between 5 LAKHS to 10 lakhs between 10 LAKHS to 15 LAKHS

above 15 LAKHS

15) What is you demand for cement for all the centres?

16) What is you Supply for cement for all the centres?

17) What is cost per ton to all the centers?

These are the demand and suppy of shree cement from the three plants kush khera, Raas , Andheri.

n

jj

m

ii ba

11

Noida GreaterNoida

Ghaziabad New Delhi

Supply

Kush khera

290 310 330 240 1850

Raas 840 960 980 890 580

Andhei-Dewari

790 810 830 740 520

Demand

200 150 600 2000 2900

Software Software used to determine the transportation problem is Tora.

Facet of the data i.e Demand & Supply of cement per day per ton are:-

Noida GreaterNoida

Ghaziabad New Delhi

Supply

Kush khera

290 310 330 240 1850

Raas 840 960 980 890 580

Andhei-Dewari

790 810 830 740 520

Demand

200 150 600 2000 2900

200 150230

370

18500

150

20 x x x

50 50 120 120

50 50 20 x

500 500 500 500 50 150 150 150

50 150 150 x

840 960 980 x 840 960 x x 840 x x x

Therfore the initial basic feasible solution for the above mentioned transportation problem is mentioned below240*1850 +840*200 + 960*150 +980*230 +830*370 +740*150 = Rs.13,99,500.

After putting these values which are rupees per day per ton into tora we came into the result that the minimum cost of

transporting cement from one ware house to supply depot is Rs.13,99,500

Conclusion

The entire case discusses about the cost incurred for the transportation of the goods from the source location to the destination location of SHREE CEMENT LTD. The objective of the project is to seek whether the

cost incurred on the transportation is minimum or not. With the data provided by the company we were able to analyze on transportation model of SHREE CEMENT LTD is having the minimum transportation cost for transporting the goods. In the end it can be concluded that the solution that we have derived is best feasible solution, incurring the minimum cost on the transportation for moving goods from source to destination.

.

Bibliography www.shreecement.comwww.wikipedia.comOperation Research by J.K.Sharma

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