PROJECT ON

OUTBOUND LOGISTIC MANAGEMENT

AT

INDIAN PETROCHEMICALS CORPORATION LIMITED

A Project Report Submitted in Partial Fulfillment of award of MBA Degree

Project Guide
Mr. G. Vijayan (Sr. Manager, MOP)
IPCL

Submitted By
Mitali Shah
Roll No – 47

AES POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT

AHMEDABAD
JULY 2006
 SUMMER TRAINING REPORT
ON
OUTBOUND LOGISTIC MANAGEMENT
AT

INDIAN PETROCHEMICAL CORPORATION LIMITED

VADODARA

GUIDED BY SUBMITTED BY
Mr. G. Vijayan Mitali Shah
Sr. Manager, MOP AES PGIBM
IPCL, VADODARA AHMEDABAD

2
 ACKNOWLEDGEMENT

It gives me great pleasure and personal satisfaction in presenting this report as a part
of my vocational training at Indian Petrochemicals Corporation Limited that has given
me first hand experience of the Corporate World.

I am indebted to many individuals who have either directly or indirectly made an

important contribution in the preparation of this report. I am grateful to
Dr.A.H.Kalro, Dean of AES PGIBM, for giving me opportunity to experience the
corporate world. I am also grateful to my faculties, Mr.Mayank Joshipura and Miss
Jinal Parikh for their guidance.

With immense sense of gratitude, I hereby take this opportunity to thank my guide
and mentor, Mr. G Vijayan (Senior Manager – MOP), Mr. J. K. Smart (Head of
the Marketing Operations and Planning), Mr.B.J.Chavda (G.M.-MOP) and Mr.
M. A. Khan (Training Manager) for their kind contribution in my training.

I would like to thank the entire staff of MOP for their immense support. I would also
like to thank all the respondents whose names are not mentioned here, without whom
the report would not have been completed.
Last but not the least I would like to place special thanks to my parents and friends for
their support.

3
 PREFACE

Globalization has ushered in new challenges and the Indian

companies are facing higher levels of competition in the market place, not only from
the local players but also from all organized MNCs. To be successful, the best
companies will have to be smart in managing the 4 business resources of Man,
Material, Money and Information. Effective planning and efficient management of
flow of material and related information from the supplier to the customer through the
organization forms the major responsibility of Supply Chain Management.
The two months exposure to the ‘Outbound Logistic Management’ at
Indian Petrochemicals Corporation Limited (IPCL), one of the largest petrochemicals
company in India has given me sufficient knowledge to feel the gap between the
theoretical and practical knowledge. I got to know how IPCL carries out its
transportation of goods through air, road and water routes, the importance of contract
between the company and the transport agency, domestic and global export
procedures, promotional activities, pricing policies, warehousing etc.
During my training programme I got to know that theoretical
knowledge doesn’t always workout in practical life. For example: shortest route of
transportation may not always be economical. I have learnt many more aspects
required to mould the personality of a management student that is not taught in any
classroom.
As a part of my training, I was given the responsibility to solve the
problem of high cycle time between the procedures of TOL to INVOICE at LDPE
warehouse. Based on observation in the warehouse, several recommendations are
given at the end of the report to improve cycle time. This would help the company to
save high cost incurred due to improper management.

4
 EXECUTIVE SUMMARY

I had wonderful experience of undergoing training at India’s one of the largest

Petrochemicals Company, IPCL for the period of 8 weeks as a part of my MBA
curriculum. The project I had taken up was pertaining to the study of outbound
logistics of Industrial Products.

Logistics in any organization forms the foundation of the Marketing Department. It is

involved in the warehousing and dispatch of various products produced in the
company’s premises. The strategic planning involves dispatch of the materials which
smoothens the function of Logistics.

Due to globalization, the logistic activity has undergone a drastic change. It has been
modified to such an extent so as to facilitate the availability of the products to the
customers in the best possible manner.

IPCL has an excellent logistics system for the dispatch of its products which ensures
the availability of the products to the customers on time. The newly introduced ERP
system ‘SAP’ integrates different departments of IPCL facilitating the logistic
function for the dispatch of solid and liquid products.

It is obvious that IPCL’s Logistics systems are benchmarked as one of the best in their
category of Industry on worldwide basis. The practical knowledge that I have gained
during my training has broadened my view about Logistics. It has helped me to
understand the topic of my study thoroughly.

5
 INDEX

Sr. Page
No. Contents No.
1. Company Profile 07
2. Product Portfolio 38
3. Introduction to Marketing of IPCL 47
4. Marketing and Operation Planning (MOP) 53
5. Order Process Procedure 55
6. Solid Product Cycle Movement Through SAP 56
7. Distribution Channel at IPCL 61
8. Introduction to Logistics 63
9. Outbound Logistics at IPCL 64
10. Transportation at IPCL 66
11. International Trade 71
12. Export Procedure 76
13. Logistic Supports Marketing 81
14. Pricing Policies and Promotional Measures 83
15. Warehousing 84
16. Role of Government in Logistics 88
17. Time Motion Study 89
18. Glossary 94
19. Bibliography 95
20. Annexure 96

COMPANY PROFILE

6
IPCL – Indian Petrochemical Corporation Limited
The Indian Petrochemical Industry went through a long and turbulent gestation
period. The need for development of petrochemical industry in India was highlighted
and reviewed by Kane Committee as early as in 1961.All efforts and plans thereafter

7
failed to gain momentum. Several international organizations like Union Carbide,
Dow Chemicals, Philips Petroleum, Imperial Chemicals, Standard Oil, Burma Shell
etc., proposed to participate only to withdraw subsequently. It soon became apparent
that the massive commitment, to manufacture the basic building blocks and
intermediates for petrochemicals must come from government itself. IPCL was a
manifestation of that serious commitment.

IPCL pioneering Petrochemicals Company in India was incorporated on March 22,

1969. IPCL’s business comprises of polymers, fibre, fibre intermediates, synthetic
rubber, commodity chemicals, surfactants, catalysts and adsorbents backed by
innovation from its technology management centre, research centre and product
application centers. The company is continuously upgrading its products and
processes. The company owns and operates 3 petrochemicals complex. A naphtha
based complex at Vadodara and a gas based complex each at Nagothane and Gandhar.
The company produced more than over a million tones of merchant products, and
generates a turnover closed to Rs.100billion.

Reliance Petroinvestments Ltd. (RPiL) acquired 26% of the total voting capital of
IPCL and management control at a price of Rs.231 per share from the government of
India. RPiL is a member of Reliance Group, founded by Dhirubhai H. Ambani. This is
the single largest disinvestment till date.
Subsequently RPiL made an open offer to shareholders of IPCL and acquired
additional 20% of the total voting capital. RPiL today has 46% equity stake in the
company.

8
The Reliance Group’s petrochemicals business is conducted through Reliance
Industries Limited, which is India’s largest private sector company in terms of assets,
revenue and profit among others. Dhirubhai’s pioneering vision and over three
decades of successful operation ingrain in IPCL a unique level of expertise, making
the company competently engineered for the future. The Reliance Group is the leader
in the petrochemicals industry in India, and IPCL as a significant player in this
business, enjoys certain synergies with the Reliance Group. As a result of the
acquisition of management control by RPiL, IPCL’s credit rating has risen from AA-
(AA minus) to AA.

BOARD OF DIRECTORS

9
Nominees of Reliance Petro investment Ltd.

Mr. Mukesh D. Ambani – Chairman

Mr. Nikhil R. Meswani
Mr. Anand J Jain
Mr. Kamal P. Nanavaty
Mr. S. K. Anand

Government of India nominees

Mr. G S Sadhu
Mr. Ramesh I. Singh

Independent Directors

Mr. Lalit Bhasin

Mr. Shailesh V. Haribhakti
Mr. Sandeep H. Jhunarkar
Mr. R. S. Lodha

Registered Office

P.O. Petrochemicals
Vadodara – 391346
Gujarat
India.

IMPROVEMENT POST CHANGE IN MANAGEMENT CONTROL

10
The new management team has re-endorsed the company’s mission to create value for
all stakeholders. All out efforts are being made to enhance productivity and control
cost for superior value addition.

The physical and cultural integration of IPCL and Reliance resulted in adopting “Best
Practices” from each other. This led to optimal utilization of available resources for
enhancing productivity.

The benefits of change in management control are visible from the company’s
performance in the very first year after the acquisition.

During the year 2002-03, IPCL’s three manufacturing sites, namely, Vadodara
Complex, Gandhar Complex and Nagothane Complex have recorded 14%, 29% and
9% increase in production capacity over the previous year, resulting in overall
production growth of 18%.

Steps have been taken to utilize all internally available hydrocarbons as feedstock or
fuel, thereby reducing external purchases. This has resulted in significant savings.

A comprehensive linear programming model for the entire company has been
developed and implemented for optimizing manufacturing operations of all the three
Complexes.

With greater focus and proactive action taken by the company, the specific energy
index of the company has come down to 3.65 mmKcal per MT of product from the
earlier 3.76 mmKcal per MT of product.

11
Net sales for all major products have increased to the previous year, as a result of
initiatives for strengthening customer relationships. This has contributed to
improvement in operating margins.

The IT facilities and MIS have been recast in line with the best standards, and SAP
system has been introduced in all three complexes with attendant benefits of enhanced
efficiency at all levels.

The company and its shareholders, workers and employees will continue to get
benefit from Reliance’s proven vision and management strengths, established project
execution capabilities, and demonstrated track record of consistent operational and
financial performance. The company will also get significantly benefited from
Reliance’s financial engineering skills, its capability to access capital at the most
competitive terms and optimize financial costs.

The company will be in a position to leverage Reliance’s proven capabilities of

achieving optimal plant capacity utilization, through operational efficiencies, and low
cost de-bottlenecking of capacities. The company will also enjoy the benefit of
Reliance’s strong relationship with customers, technology and equipment suppliers
and other constituents, in the domestic and international markets.

12
 REVIEW OF PERFORMANCE

2001-02 2002-03 2003-04 2004-05 2005-06

Production 3.70MT 4.40MT 4.60MT 5.18MT 5.4mT

Gross Rs.5527crore Rs.9921 Rs.13541 Rs.9386 Rs.9597

Turnover crore crore crore crore
(US $ 2089 (US $ 3097 (US $ 2146
m) m) m)

Net Profits Rs.107crore Rs.204 Rs.273 Rs.786 Rs.1005

crore crore crore crore
(US $ 43 (US $ 62 (US $ 180
m) m) m)

Total Assets NA Rs.8054 Rs.7222 Rs.7675 NA

crore crore crore
(US $ 1696 (US $ 1652 (US $ 1754
m) m) m)

Earning per Rs.4.33 Rs.8.23 Rs.11.02 Rs.31.65 Rs.40.47

share (US $ 0.2) (US $ 0.3) (US $ 0.72)

13
 SWOT ANALYSIS OF IPCL

STRENGTHS
• Multi-product and Multi-Location
• Skilled and trained manpower
• Captive power plants in all three complexes
• Availability of funds for new projects
• Market / product Segmentation
• Utilization of RIL infrastructure for export
• ISO 14001 certification for Vadodara and Nagothane Complexes

WEAKNESSES
• Low capacity of plants
• High cost of production
• High human cost component at Vadodara Complexes

OPPORTUNITIES
• Access to alternate feedstock suppliers
• Increasing alternative usage of plastics for different purposes in domestic market
• Capacity enhancement of plants at Vadodara and Gandhar Complexes

THREATS
• Growing bargains from domestic customers due to reduction in government duties
• Loss of skilled manpower
• Anti-plastic movement by environmental activists

14
• Growing competition: The domestic industry is likely to witness immense competition
going forward with IOC all set to enter the segment with its Rs 64 bn project. Further,
ONGC is also venturing into petrochemicals business. With commitments to reduce and
eliminate tariff and non-tariff barriers, India, with huge market potential, might witness
entry of global majors such as Exxon Mobil, Dow Chemicals and Shell into the business.
These global majors with deep pockets can actually lead into a pricing war, which could
result in squeezing margins.

• Customs duties: Historically, the domestic industry has been protected from overseas
competition by high import duties imposed by the government. However, of late, Import
duty on polymers has been steadily reduced and is currently at 20%. As part of its
commitment to various multilateral and bilateral trade agreements, the government is
likely to reduce duties going forward and this is likely to reduce the cushion enjoyed by
the domestic players as against the landed cost of imported products.

15
 LOGOS

The first logo consisted of a tetrahedron – representing the molecular structure of the
simplest organic chemical- methane, in a circle.

This decision of the government, “Every thing under one roof” inspired the second logo
of IPCL. IPCL took up the challenge of setting up the entire integrated complex at
Vadodara.

16
 PRESENT LOGO

IPCL, as a corporate entity, is and what it shall strive to be. This symbol or logo reflects
that IPCL is a single matrix of many diversified activities and products, emerging from
one source and branching out in different directions, yet retaining its unity and identity.
The lines flow upwards and outwards from a common base into infinity, reaching for
unending growth, universal goodwill, general prosperity and excellence in everything.
The green color used in the design reinforces the theme – aspiration and growth, rooted in
the earth and in harmony with the other elements – water, light, air and space.

17
 VISION
Be a globally preferred business associate with responsible concern for ecology, society
and stakeholders’ value.
We shall strive to generate best value for all associates we deal with, by constantly
innovating and updating ourselves with best practices from across the world. “Think big,
Think fast, and Think ahead. Ideas are no one’s monopoly”.

MISSION
Continuously innovate to remain partners in human progress by harnessing science and
technology in the petrochemicals domain.
Continuously Innovative
This concept is ingrained in IPCL’s culture. The founder chairman of our Group Shri
Dhirubhai Ambani said, “Only when you dream it, you can do it” underscores our drive
to become better and bigger company.

Partners in human progress

The products we make, find their way into products that help people with improved
lifestyles. All of us at IPCL must understand and take pride in this. We must also use this
concept to further connect IPCL with the external markets we serve. When we think in
terms of markets we serve, we become more outside-in focused and we can better seek
growth opportunities.

Harnessing science and technology

We must put our knowledge in science and technology to work, to create solutions for our
customers and for society.

18
 VALUES
Integrity
The relationships that are critical to our success depend entirely on maintaining the
highest ethical and moral standards. As a vital measure of integrity, we will ensure the
health, safety of our communities, and protect the environment in all we do.

Respect for people

We believe in the inherent worth of people and will honor our relationships. We, the
employees of IPCL, are the engines of value creation. Our imagination, determination,
and dedication are essential for growth. We will work to celebrate and reward the unique
backgrounds, viewpoints, skills and talents of everyone at IPCL. Respect for people is
measured by how we treat each other, by the contributions that flow from our diversity,
by the productivity of our relationships, and by a job well done, no matter what the job is.
Our customers are our partners in creating value; their loyalty is our greatest reward. Our
shareholders are the beneficiaries of our success; their on-going commitment to us is
based on returning to them consistent superior returns over time. We will strive to answer
people’s most vital needs: for food, water, shelter, transportation, communication, health
and medicine.
Unity
We are one company, one team. We believe that succeeding, as one enterprise is as
important as succeeding independently. Balancing empowerment and interdependence
makes us strong. We will work together; build relationships to create greater value for the
customers.

19
 Outside-in-focus
We believe that growth comes from looking at opportunity through the eyes of the
customers and all those we serve. Taking an “outside-in” view ensures that our efforts
are always relevant and that our unique talents are applied to “real world” opportunities.
We will see through the eyes of those whose lives we affect, identifying unmet needs and
producing innovative and lasting solutions. We will bring to this task all of our
experience and knowledge.

Agility
At IPCL, we believe our future depends on speed and flexibility- mental, emotional and
physical. Responding resourcefully to society’s fast-changing needs is the only road to
success. We will meet the forces of change with power and grace. We will make
necessary corrections that demonstrate flexibilities as well as courage, and that highlight
our ability to keep ourselves aligned with a world in motion.

Innovative
We believe that meaningful productive change; solving problems; only comes by looking
at challenges and opportunities from new angles and exercising our curiosity. In the name
of innovation, we will make science a way of living. We will not only harness the science
of the physical world, but the science of the mind and heart. Our job is to unlock the
answers that make a fundamental difference to peoples’ lives. We will use technology to
help lead society forward. We will conceive, design, engineer, and execute solutions that
remove barriers to human potential and productivity.

These values guide our vision, mission and all our transactions.

20
 QUALITY POLICY
“We at IPCL are committed to meet customers’ requirements through continual
improvement of our Quality Management Systems. We shall sustain organizational
excellence through visionary leadership and innovative efforts.”

Continual Improvement
This concept finds its roots in our mission and is ingrained in IPCL’s culture. Continual
improvement will lead to higher reliability in quality of products and services needed by
our customers. This will make us outside-in focused and provides us with the needed
drive and direction in achieving excellence in managing our business.

Visionary Leadership
This means that we shall collectively work to sustain excellence. Our vision is to develop
enabling leaders who will carry our people to sustain excellence, to scale newer and
higher benchmarks.

21
 ISO IN IPCL
• What is ISO?
ISO is derived form the Greek word, ISOS which means Equal, Homogeneous &
Uniform.
ISO stands for ‘International Organization for standardization’. It is a worldwide
federation of national standards bodies forms 150 countries, including India, based at
Geneva, Switzerland, it promotes the development of standardization with a view to
facilitating the international exchange of goods & services.
ISO-9000 series was first published in 1987.

• What is ISO-9000?

ISO 9000 is a series of Models for Quality Assurance. It specifies uniform standards for
developing and maintaining management systems procedures, methods and keeping
records. Thus it is model for quality system.

• What is Process model for ISO 9001?

ISO – 9001: 2000 was introduced as revision in the year 2000. With this revision the
concept of “Process model” was introduce to improve “Efficiency” of the system.
A process is a set of system, which converts input to output.

ICOM

Process of conversion utilizes certain “means” like people, system, tools, etc. and also
uses certain guidelines or control like company policy, specification, standard etc. Thus a
process can be managed through monitoring Input, controls, output & means (ICOM)
Hence, ISO is a teamwork & participation form every corner be it operation,
maintenance, materials finance etc. are essential.

22
 Eight Principles of ISO-9001

1. Customer Focused Organization

2. Leadership
3. Involvement of People
4. Process Approach
5. System Approach to Management
6. Continual Improvement
7. Factual Approach To Decision
8. Mutually beneficial supplier relationships

What is ISO – 14000 (EMS)?

• It was introduced in September 1986 with the publication of the ISO –14000 Standards
by international organization standard, Geneva, Switzerland
• ISO 14000 focuses on Management of Environment like ISO-9000 focuses on customer
Satisfaction.

1. Provides a framework for Management of Environment impacts arising

out of business activities, products and services.
2. Integrates this environment framework with overall business management
activity
3. Contains requirement that result in a higher and steady improvement in
performance level.

23
 Benefits of ISO14001

Internal benefit

Structured and controlled environments management system (EMS) helps to:

• Enhance efficiency of internal processes.

• Increases programmes.
• Better cost control
• Conservation of natural resources and energy.
• Evidence for environment care and statutory

External Benefit

Strengthens Environmental credibility with

• Customers
• Statutory bodies
• Community/environment group
• Insurance
• Judicial system

24
 .
ISO – 14001 Documentations
Following are the documentation that contain under the ISO-14001

1. Environmental Management system Manual

Environmental management system manual is the apex manual of IPCL-BC
formulated on the basis of ISO14001 standard. It shows the vision of the management
towards:
• Maintaining environmental norms as per statutory regulations
• Conservation of natural resources and minimization of waste
generation/pollution.
• Minimization of environment impacts of petrochemicals operations.
• Creating environmental awareness in employees and society.
• Moving towards green economy through technological innovation and
continual improvement.

2) Environment System procedure

ESP describes the methodology and measures to achieve the vision/intent of the
management stated in EMSM.

3) Environmental Aspect Register

EAR provides the basis for environmental management by identifying and

quantifying significant environmental aspect related to various activities, products and
services by assigning impact scores.

4) Environment Legal register

ELR describe the environmental legislations applicable to environment aspects of

our activities, product and services.

25
5) Environment management programme

Considering the significant environmental aspect and techno-economic feasibility,

EMP is taken to achieve the objectives and targets in line with the environment policy.

6) Operational control procedure

OPC stipulates operating criteria for operations and activities that are associated
with the identified significant environmental aspects in line with policy, objectives and
targets. OCP also cover the situation where their absence could lead to deviations form
environment policy, objectives and targets.

What are the focus area of IPCL, BC for the year ’05-’06?

ISO-9001: To enhance customer satisfaction index (CSI)

ISO-14001: Conservation of water resources

ENVIRONMENT POLICY

The environment policy declared by IPCL reads as follows:-

Aims to maintain relevant environment norms as per prevailing statutory standards.
Strives to conserve natural resources and to minimize waste generation in petrochemical
operations.
Contribute to a green economy for continual improvement and sustainable development
in minimizing environmental impacts by technological innovation and research.

26
Encourage environmental awareness in employees and society for vigilant hazard
management and prevention of pollution.

SAFETY & HEALTH POLICY

The safety & health policy declared by IPCL reads as follows:-

Professionally manage and comply with the statutory provisions by giving high priority
to health, safety and environment control programs.

Ensure that technology absorbed, assimilated, upgraded and developed by the company
lays emphasis on safety in and around the workplace.

Ensure continuous improvement in safety and health aspects by carrying out safety audit,
risk analysis etc.

Constitute safety committees to promote safety awareness and ensure participation of

employees in safety and health related functions.

Organize structured training programs on continuous basis to educate employees and

neighboring society on safety, health and loss prevention and control aspects.

Ensure codification of safety standards and extend services to parties associated with the
company on safety aspects.

Recognize contributions made by an individual employee towards safety and health

aspects.

27
 SIX SIGMA IN IPCL
• What is Six Sigma?
* Sigma (6) is:
-The 18th letter of the Greek alphabet
-Sigma is the symbol of Standard Deviation
-A measure of variation

VISION PHILOSOPHY

MANAGEMENT
TOOL BOX
SYSTEM

DATA
BASED CUSTOMER
METHOD FOCUS

AGGRESSIVE
BENCHMARK
GOAL

SIX SIGMA IS A COMPREHENSIVE SYSTEM

• WHO ALL ARE DOING SIX SIGMA IN ASIA?

GE, AlliedSignal, Motorola, Nokia, Toshiba, Samsung, Ford, Du Pont, Boeing, American
Express, Siemens, Whirlpool, Kodak, Hyundai, Etc.

28
• HISTORY OF SIX SIGMA
• Mid-80’s-A drive towards zero defects, a Metric that became a Vision.
• Late 80’s, early 90’s-A methodology to achieve the goal.
• Mid to Late 90’s-A comprehensive process improvement system and philosophy
complementing the methodology to achieve the goal.
• Today-A metaphor for business and process excellence.

BENEFITS OF SIX SIGMA – ORGANIZATION

 Reduction of defects
• Lower costs
• Higher customer satisfaction
• Shorter cycle time
• Predictable processed

 Culture change
• Focus on quality, the customer and doing it right
• Pride in belong the best
• Standardization for problem solving

 Highly trained workforce

 Common language
 Organizational, Institutional memory

29
Master Black Belt:

Roles:
• Variable from company to company
• Should make Champions life easier in mature deployment

Responsibility:
• Instructor and mentor of Back belts and Green belts
• Training material developer
• Deployment assistant to core team and champions
• Keeper of project backlog list
• Driver of project closure process
• Leader of larger scoped projects

Black Belt:

Roles:
• Practitioner of DMAIC/DMADV Methodology

Responsibility:
• Ideally full time facilitator/leader of six sigma project team
• Team should discover and recommend project solution
• Executes 4 to 6 projects/ year

Green belt:

Roles:
• Carry the language of Six sigma deeper into the organization
• Accelerate number of employees positively by Six Sigma

Responsibility:
• Become local advocate

30
 • Part – time implementers of smaller scope projects with direct impact to daily non
Six Sigma duties
• Assist BB with team activities and too application to project area

Yellow Belt:
Roles:
• Extend the reach of the Six Sigma language in to the trenches.

Responsibilities:
• Assist Black Belts/Green Belts with data collection and tool application
• Provide invaluable process expertise to Six Sigma team
• Assist Process Owner with long term implementation of solution

Other Roles:

• Brown Belts:
Receive same training as Black Belts but not a fully dedicated Six Sigma leader

• Functional Managers:
Current managers of potential Black Belt candidates that may remain involved in
the reporting relationship of Black Belts

• Six Sigma administrators:

Assist all Six Sigma Roles in event coordination, communication, and reporting
of Six Sigma activities.

31
 BEYOND BUSINESS

INSTITUTION BUILDING

IPCL has helped in establishing several institutions, which in turn help to sustain growth
of the petrochemical industry.
 A pioneering data bank providing information and consultancy services in the area of
petrochemicals both in India and abroad.

 National committee on use of plastics in agriculture (NCPA) was constituted in 1981 and
since its inception; IPCL has been actively supporting it with manpower and
infrastructure. NCPA has been instrumented in propagating use of plastics in agriculture
universities in different states.

 Petrochemicals Management Development Institute (PMDI) was established in

November 1991, to serve overseas training contract and create human resources for
outside organization and for IPCL

 Plastic Processing operator training: A scheme to general trained workforce for plastic
processing industry, jointly with ITIs, Ministry of Labor and State Governments.

32
 ARTS AND SPORTS
IPCL has a tradition of supporting activities related to arts, aesthetics and sports.
 A beautiful piece of contemporary sculpture by Shri Nagji Patel is a landmark in the city
of Vadodara. It is also symbolic of IPCL’s deep commitment to promote art and culture.

 A huge sports complex matching international standards has been developed at Vadodara.
It has held men’s and women’s world cup cricket matches, international tennis
tournaments besides being a venue to various national and state level games. Some of the
IPCL players have made their mark at state and national level in various sports.

 A giant mural adorns IPCL’s open-air theatre at Vadodara.

 IPCL organizes regular camps for painters, graphic artists and sculptors. A Konkan craft
festival was also organized at Nagothane in 1993.

33
 The calendar themes for the last few years have depicted India’s rich cultural heritage.
For instance, the famous musicians of Vadodara, the maritime heritage of Marathas,

 Nandlal Bose’s mural, British colonial art in Vadodara, and Prof. N. S. Bendre’s paintings
on Nagothane.
 IPCL has sponsored a book on the ‘Contemporary Art of Vadodara’.

SOCIO-ECONOMIC DEVELOPMENT

The company, as a matter of policy, continues to meet some of the basic needs of the
villages surrounding the complexes and developmental work is prioritized according to
the needs of the people in the peripheral villages. The Company’s Social Welfare and
community Development initiatives focus on the key areas of education, health care and
the overall development of the communities in which the company operates. These
initiatives are undertaken directly by the company and also through legally constituted
trusts and welfare bodies. SVADES (Society for Village Development in Petrochemicals
Area), MADER and JADER trusts have been established for up gradation of
infrastructure facilities and developing the rural community in the vicinity of IPCL
Complexes. The company has been quick to place all its resources at the service of the
nation and community in time of crisis and emergency.

34
 Health camps, Family Planning Camps, Dispensary and Mobile Medical Vans are
provided to neighboring villages.
 Nursery and Industrial Training Institutes

 Cattle Development Centre and Vaccination camps.

 Providing subsidized sanitation facilities to rural families.
 Providing facilities like school building, books, and furniture for libraries play grounds,
wells, approach roads and subsidized bus-service to school children.
 Scholarships for graduate and post graduate students from Gujarat.
 Technical assistance to the national institute for the blind.
 Provision of drinking water at Nagothane villages.
 Vocational training programs for the youth and women.
 Tree plantation, diagnostic, eye camps, educational tours, training farmers etc..

ENVIRONMENTAL PRESERVATION

IPCL professes the doctrine that any economic activity should not erode the very
foundation of such activity. Development should therefore be with due regards to
environment protection and not at the cost of it. IPCL has formulated a clear and focused
safety, health and environment policy which reinforces the corporate commitment to
these facets of business.
IPCL has:
 Adopted elaborate water treatment and air monitoring at all sites.
 Developed micro-organism for bio-degradation of cyanide water.
 A multi-purpose hazardous waste incinerator.

35
 Developed a 27-acre experimental farm at Vadodara where vegetables are grown and the
use of treated effluents for agricultural produce studied.
 A living museum of trees where 70 species proliferate over 40 acres of land.
 Created an artificial lake from treated wastewater, which attracts over 100 species of
birds from all over region.

PLASTICULTURE

IPCL is committed to the development of the use of plastics in agriculture also known as
plasticulture. The plasticulture group works with the objective of providing quality end
products like plastic firms for lining canals (Agrifilm), mulching, specialized UV
stabilized film for green houses, plastic creates for packaging fruits and vegetables. It
also works closely with existing organizations in agriculture sector to establish an
effective distribution channel to ensure timely availability to the end users. IPCL guides
existing manufacturing unit to the use of IPCL raw material and available know how.
IPCL is also closely involved with the National Committee on use of Plastics in
Agriculture (NCPA) under the Ministry of Agriculture.

36
 ACCOLADES

 Best petrochemicals company worldwide: 1990 (CI London).

 ICMA award for forward technology development: 1981, 1985, 1991.

 The federation of Gujarat mills & industries (FGMI) award and the development of
scientific and industrial research (DSIR) award in the field of research.

 National safety award 2001 from the British safety council, UK for substantial (90%)
reduction n incidence rate (2002-2003).

 Indira Gandhi memorial national award for best environmental and ecological
implementation 2002-2003.

 ISO 14001 certification 2002-2003.

 Award of honor from Gujarat safety council for achieving more than 3 million man-hours
accident free spells 2002-2003.

 National energy conservation award – 2003 by the ministry of power.

 National gas conservation award – 2003 by the ministry of petroleum and natural gas.

37
PRODUCT PORTFOLIO

38
 LINE OF BUSINESS

 Polymers
 Synthetic Rubber
 Fibre & fibre intermediates
 Industrial Chemicals
 Surfactant
 Solvents

PRODUCT LINE:

Product line can be defined as the number of product having similar need of the people.
IPCL has four major product lines viz...

Polymer

Chemical

Fibre & fibre intermediates

Rubber

Above product lines are further classify as mentioned on the next page with particular
products.

39
 IPCL’s Product Line

Fiber & in-

Chemicals Solvents Surfactants Polymers Rubber
termediates

Acetonitrile Cixon Ethylene Indothene Cisamer 1220 Acrylonitrile

Ammonium Hepton Oxide Indoethene CC Cisamer 1220GP Dimethyl
Sulphate Solvent CIX Linear Indoethene HD Cisamer 1220OG Terpthalate
Benzene Alkyl Indoethene LL Cisamer 1220PS Ethylene
Butadiene Benzene Indovin Cisamer 1220CS Glycol
Butyl Koylene Indacryl
Acrylates Koylene CP Supacryl
Caustic Soda Koylene ADL
Carbon Black Koylene ADL-CP
Feed stock
Ethylene
Ethyl acrylate
Methyl acrylate
Orthoxylene
Propylene

40
 Product Portfolio

(Capacities in MTA)
Products Vadodara Nagothane Gandhar
Complex Complex Complex

Ethylene 1,30,000 4,00,000 3,00,000

Propylene 1,07,460 63,000 38,000
Butadiene 37,700 - -
Butane-1 - 15,000 -
Benzene 23,600 - -
Cixon 12,000 - -
Carbon black 17,900 - -
feedstock
Acrylonitrile 30,000 - -
Indothene 80,000 - -
Indothene - 2,20,000 -
LL/Indothene HD
Indothene HD - - 160000
Koylene 30,000 60,000 -
Koylene CP 25,000 - -
Koylene ADL 75,000 - -
Indovin 55,000 - 1,50,000
Cisamer 50,000 - -
Ethylene Oxide 10,000 5,000 10,000
Ethylene Glycol 7,000 50,000 1,00,000
Indacryl 12,000 - -
Supacryl 12,000 - -
Acrylates 10,000 - -
Petrez 5,000 - -
Linear alkyl benzene 43,500 - -
Para xylene 48,600 - -
Ortho xylene 47,900 - -
Solvent CIX 10,000 - -
Hepton 20,000 - -
Dimethyl Terpthalate 30,000 - -
Caustic soda - - 1,30,000
Chlorine - - 1,15,000
Power(mwh) 89 87 154.5

41
PRODUCT FLOW DIAGRAM: VADODARA COMPLEX

INDIAN PETROCHEMICALS CORPORATION LIMITED

42
 Application of Products
Solid Products
Main uses of polymers:
Product Uses
LDPE/LLDPE Consumer packaging/film, extrusion wires, cable coatings, heavy
duty bags, garbage bags, milk & shopping bags.
HDPE Fertilizers/household packaging, woven sacks, cartons, crates,
luggage, pipes, paints, storage bins etc.
PP Cement packaging, monofilament yarn, ropes, fishing nets.
PVC Water pipes, electrical conduit/wires, cables, sheets, footwear,
flexible films
PBR Automobile tyres & tubes, conveyor belts, footwear.

Main uses of fibre & fibre intermediates:

Products Uses
AF/DSAF Textiles, knitting yarns, sweeter.
MEG Polyesters
CAN Acrylic fibre, Acrylates, engineering polymers.
DMT Polyester staple fibre, polyester filament yarns, polyester.

Liquid Products
Main uses of chemicals:
Products Uses
LAB Raw material for household, industrial detergents,
personal care products.
EO/BENEZENE/TOLUENE Phenol, dyestuff, pharmaceuticals, paints, industrial uses,
caprolactum
Caustic Soda Alumina/paper.

LIST OF COMPETITORS

43
Competitors are those firms or individuals playing in the same industry i.e. producing a
similar product. In other words, it means a threat to the firm in terms of acquiring the
market share.

The petrochemicals industry in India is dominated by three large producers in addition to

us. These are RIL, GAIL & HP. Moreover, since petrochemical products can be freely
imported in to India, IPCL & their domestic competitors face competition from products
manufactured by global manufactures like Dow chemical, Exxon Mobil, Royal, Dutch,
Shell & SABIC.

They believe that their cost effective integrated petrochemicals facilities, emphasis on
customer satisfaction reliability of supply & product quality provide them with
competitive advantages in many of their products.

IPCL changed insignificantly when RIPL, which is part of the Reliance group, acquired
management control of I.P.C.L. The largest company of Reliance group is RIL, which is
INDIA’S largest petrochemicals company. We believe that synergy of I.P.C.L with RIL
will enable us to compare the domestic & international market more effectively.

POLYMERS

44
 RIL & IPCL have the first & second largest market share
responsibility in domestic polymers. The table below gives the respective market share in
terms of the industry products.

Industry HDPE LLDPE LDPE PP PVC TOTAL

Participation

Chemplast __ __ __ __ 5.5% 1.3%

OCM Shriram __ __ __ __ 4.3% 1.0%

DCM ___ __ __ __ 8.5% 2.0%

Finolex __ __ __ __ 16.7% 4.0%

GAIL 18.6% 10.0% __ __ __ 5.4%

Haldia Petro 16.4% 21.3% __ 7.0% __ 8.7%

IPCL 26.0% 33.2% 100.0% 15.6% 27.0% 27.5%

NOCIL 7.1% __ __ __ __ 1.6%

RIL 31.9% 35.4% __ 77.4% 37.9% 48.5%

TOTAL% 100.0 100.0 100.0 100.0 100.0 100.0

FIBRE AND FIBRE INTERMEDIATES:-

45
 The acrylic fibre industry has historically witnessed low profit margins
and operating rates both in India & internationally. This has resulted in under utilization
of capacity by them as well as most of the domestic competitors. Their competitors are:-

• Acrylic limited=34%
• Pashupati Acrylic limited=20%
• Vardhman Acrylic limited=14%
• Consolidated fibre corporation limited=10%

IPCL operates 21% of the domestic production capacity. Their competitive

advantage in this market is their access to methyl acrylate which is raw material that they
produce themselves. RIL is largest producer of MEG in INDIA & operates 65% of the
domestic production capacity. RIL consumes a significant portion of its MEG production
as raw material for its downstream polymers units. IPCL operates 24% of the domestic
production capacity & are the largest merchant seller of MEG in India. The third largest
producer of MEG Indian glycol limited operates 8% of production.

46
 INTRODUCTION TO MARKETING OF IPCL

Marketing is inevitable in present era as, “consumer is the king”. Marketing

activities includes identification of unfulfilled need and wants, defines and measures
which target market the organization can best serve. Decides an appropriate
product, services and programmed to secure those market and calls upon every one
in the organization to think and serve the customers.

IPCL’s Marketing Department has six business groups, which are

1. Chemical & Business Group

2. Polymer Business Group
3. Fibre & Fibre intermediate Group
4. International Business Group
5. Marketing operations& Planning Group
6. Plastic culture

The Department uses both the methods of channels of distribution i.e. direct and indirect.
IPCL also has its regional offices at Ahmedabad, Bombay, Chennai, Delhi, Bangalore &
Calcutta. They have their Sales Centers at Jaipur, Bhavnagar, Indore, Pune, Nagpur,
Kanpur, Cochin, Patna and Bhubaneshwar.

IPCL exports products like LDPE, LLDPE, HDPE, PVC, PPCP, PP, LAB, AF, MEG, PX,
Yarn, PIB etc.in South Eastern Asia, Gulf countries, African countries and Europe.

47
 LOGISTIC ACTIVITIES FOR DIFFERENT PRODUCTS

Fibre Group

Fibre division forms 15% of the business of IPCL in terms of its sales %. The customer
profile varies from tiny sector to middle to very large volume ones. There are about 40
customers, majority of which are located in the North. The Product is supplied directly on
delivery basis and also from warehouse located in Ludhiana to cater to the requirements
of the customers.

Chemical Group
Chemical division is forming approximate 20% of the total Business of IPCL in terms of
its sales percentage. The customer profile varies from tiny sector to middle to very large
ones. The scattered number of customers figures out to 200. The product is supplied
either on delivery basis or directly to the customer.

Polymer Group
The polymer business forms about 65% of the total business of IPCL. The customer
profile varies from tiny sector to medium to very large volume ones. The customers are
spread throughout the country totaling to about 20,000. The product is supplied to the
customers:
a) Via Distributors and Consignment stockist.
b) Via Direct sales.

48
 OBJECTIVES OF MARKETING MANAGEMENT
The main activity of the development includes the following:
• Strategic market development.
• Formulations of marketing plans/cash flow plan
• Competitor’s strategy updated and co-operative strategic responses.
• Expert marketing as a tool of value addition.
• Setup of an effective and efficient system for expenditure.
• Prepare all necessary production and sales reports.
• Floating various tenders and preparation of tender documents.
• Strategic integration of development plans with national plans.

MARKET SEGMENTATION

It is a fact that only marketer cannot get maximum benefit from any analysis of
marketing as a whole. Therefore, to suit with the proper market of the products of the
organization, the marketer has to divide the total market into sub markets where the group
of consumers is having some similar needs and wants, to get maximum buyers response
to marketing programme. The conventional way is to segment the market into variables
like age, sex, family, size, income, occupation, family life cycle, etc.
Here main products are intended to industrial use. Therefore, the main targets are the
industries that are based on the following terms:
-Petrochemicals Products - Plastics
-Solvents - Chemicals
IPCL produces such products that are directly or indirectly related to different
communities. For example plastic products like LDPE, HDPE etc. has broad usage in our
day-today life, not directly as LDPE or HDPE but they are converted into usable goods
by other manufacturers as per the demand of the market.

49
For e.g. we are using, Polyethylene bags in out day-to-day life, which is made by LDPE.
Thus every industry which is using plastic is the market for IPCL. It is true for other
products also. Thus total industrial approach is right thing for IPCL and it is doing so.
However common people cannot directly use IPCL’s products.

Marketing Department is the nerve center of any organization. It is the most vibrant
part responsible for the distribution of the products produced by an organization. For an
industrial goods manufacturing company like IPCL, which is market driven it is its
Marketing Department that has to be at its service all the time. The Marketing
Department is divided in:
A. PRODUCTS MANAGEMENT
B. SALES MANAGEMENT
C. SUPPORT MANAGEMENT

(A) PRODUCTS MANAGEMENT

The Products Management is further divided into 3 sub-groups. They are as below:

a) POLYMERS Business Group (PBG)

b) CHEMICALS Business Group (CBG)
c) FIBRES & FIBRE Intermediates Group (F & FIBG)
The Polymers group handles all the Polymer Products. A General Manager to whom the
Deputy General Manager, Product Manager and other Officers reports, heads the Polymer
group.
The structure of Chemical and Fibre group is similar to Polymer group except that they
are headed by a Deputy General Manager. Chemicals and Fibre are not as large groups as
Polymers, thereby requiring comparatively less manpower.

50
(B) THE SALES MANAGEMENT
The sales management group comprises of exports and domestic market.

1. INTERNATIONAL BUSINESS GROUP (IBG):

IPCL is essentially a manufacture exporter i.e. exports its manufactured product.
In some cases it is also a merchant exporter i.e. it provides raw materials which some
companies further process it and then IPCL exports it.
IPCL’s major exporting countries are South East Asian countries, Africa, South
America and Australia. Most of IPCL’s products are on FOB (Free On Board) basis.
FOB means that IPCL has to pay cost incurred to load the material on ships. It also
exports the products on C&F (Cost and Freight) basis. C&F means that the company
has to pay the costs incurred in loading the goods at the customer’s warehouse.
Among Polymers, IPCL exports PVC, LDPE, LLDPE, HDPE and APPWAX.
Among Chemicals, IPCL exports LAB, CSF, CSP and MEG.
Among Fibre, IPCL exports only Acrylic fibre.

In India IPCL has a distributor for distribution of its products. Similarly for overseas,
it has associates like AMGULE, VINMAR etc. These associates help in identifying
IPCL’s customers abroad. IPCL sets its product prices based on the South Asian
Market.

(C) SUPPORT MANAGEMENT

Support group assists the marketing development in carrying out its activities. These
groups do not directly assist in the marketing activities, but do so indirectly. IPCL’s
marketing group has 3 support groups, viz:

1. Strategic Marketing Group (SMG)

2. Product Application Center (PAC)
3.Marketing Operation and Planning (MOP)

51
These groups collect vital inputs in terms of keeping updated, latest trends and
development in the domestic and international markets. They carry out special studies
related to overall marketing functions from time to time. They communicate to
various departments and give them feedback about their activities.

1. SMG (Strategic Marketing Group)

This group essentially carries out activities related to market research, market
intelligence, setting up data. It also carries out specific assignments and market related
studies.
Their line of control is restricted to carrying out market specific or product specific
studies, getting latest information, co-coordinating with other product manager in
setting of prices.

2. PAC (Product Application Center)

PAC acts as an interface between the company and the customers.
It is the technical hand of the marketing department.
It helps in developing new products in the market.
If the consumer has any problem regarding the quality, grade etc of the product
they have to approach to the PAC.
PAC also has to communicate the information gathered by it to the business groups.

3. MOP (Marketing Operation and Planning)

MOP is essentially a logistic group.
The most important activity of MOP is to facilitate movement of goods from the
company’s plant to its distributors and customers.
It coordinates with different transport companies in order to carry out effective
distribution of goods.

52
MARKETING OPERATIONS AND PLANNING (LOGISTIC GROUP)

IPCL has achieved considerable progress in the area of logistics in terms of its selling
strategy due to the economic reforms that resulted in opening of the domestic market
to the international competition.
Special groups were set up to collect and compile market information for a better
response to the market challenges. Appropriate marketing strategies were worked out
based on this information.
The movement of product is done through an Annual Transportation Contract basis,
which is finalized during the month of April every year.
The company’s market is widely spread over 20 countries in Asia, Africa and Europe,
besides the domestic market. The growth has been possible because of the sound
marketing, Application Development, customer service, sales and distribution
network.
The Sales and Distribution network comprises of 5 Regional Offices, 5 Sales centres,
6 sales offices, 79 distributors and over a 100 distribution points spread across the
country. The company also provides technical assistance and customer service at each
of its Regional offices.IPCL’s market friendly approach can be known by how well it
is serving its customers. It assures of providing services to over 90% customers within
50 kms reach and to maximum 5% of the customers beyond 100 kms. None of the
customers have to travel for more than 250 kms for IPCL’s Products.

53
 IMPORTANCE OF MOP (LOGISTICS GROUP)

MOP group is the backbone of the whole organization which is responsible for the
warehousing and movement of the product from different plants to various customers,
distributors, Regional Offices, etc.

The principle task of MOP is Logistics management. The logistics movement of

Solid, Liquid, Gaseous products is done either by roadways, railways or even by
pipelines. MOP is responsible for moving about 5 lakh MTs of IPCL’s products
annually.

The Regional offices collect the orders and submit their requirements to the Polymer
business Group, Chemical Business Group and Fibre business Group respectively.
The Respective Business groups then send the requirements to the Marketing
Operations and Planning groups. The MOP group undertakes all the logistic activities.
The other activities include processing freight bills for payment, coverage of
insurance polices, hiring of warehouses/storage tanks, appointment of surveyor,
appointment of C&F Agents for export, movement through rail, shipping and
roadways.

IPCL has 5 Regional offices at Delhi, Mumbai, Calcutta, Chennai and Ahmedabad
respectively. Its sales centers are at Baroda, Daman, Hyderabad, Indore, Ludhiana and
Kanpur. Its sales offices are at Baroda, Bhavnagar, Jaipur, Nagpur, Pune and Rajkot.

54
 ORDER PROCEDURE PROCESS
IPCL customers can place their orders through its regional offices or its distributors.
They have to make advance payment through check/DD/Cash.
The major function of different Regional offices is to receive payment, to make the
sales orders and to calculate relevant taxes and discounts and attend to customer
complaints. If all conditions are satisfied, then Regional officers enters the customer
order in SAP system.

At the head office the concerned Business group receives the customer orders from
five
Regional offices located all over the India. The major function of Business group is to
decide the prices of different materials, customer wise allocation and region wise
allocation of the materials.
After checking the availability of material, Business Group releases the pending order
through SAP system to MOP (Marketing, operation & planning) department.

The major function of MOP is to check the availability of material in different

warehouses, to make the dispatch plan, to release the dispatch plan to the concerned
transporters and to see that the respective loading for the day gets over well in
advance. The final dispatch plan is prepared and given to the transporters in the
previous day evening. MOP also gives some additional dispatch plan throughout the
day, which again depends on the order that comes from the head office. Transporters
have to place their
trucks in advance. The Product Transfer Department (PTD) releases the material to
respective transporters and in turn transporters deliver the material to customers.

55
 SOLID PRODUCT MOVEMENT CYCLE THROUGH SAP

Sr. Transaction Code Description of Transaction

No.
1 ZPOR Pending Order Report
The MOP prepares this report in advance based on the
availability of material stock and then the indents are
placed to the transporter.
2 YTTS Truck Tracking System
TPN Truck Parking Entry
Based on the indents placed to the Transporters, they
arrive with their respective trucks, each of the truck is
allotted the Truck Reporting no.
3 YTTS Truck Tracking System
TOL Truck Order Linking
Once the truck is reported, order linking takes place
based on the quantity, type/grade of the material to be
dispatched in that truck.
4 VLO2N Picking and Post goods issue.
After the truck order linking is done, material picking
note is prepared based on the type, grade and quantity
of material to be moved from a particular location.
5 ZIPS Invoice Processing and Printing
After the truck is loaded with the required quantity of
material, the MPN is handed over with the invoice to
the transporter before he leaves.
6 YTTS Truck Tracking System
MGX Main Gate Exit
After checking the weight and Tolling of order, the
truck is allowed to move.

56
 PROCEDURE

The MOP department every evening receives pending order which is to be dispatched
the next day, from the concerned business group. According to the pending order and
the production quantity / stock availability at different warehouse, final dispatch plan
(plant wise & transporter wise) is prepared and given to the transporters in the
evening. MOP also gives some additional dispatch plan for the day, which again
depends on the order that comes from the head office. Transporters are informed of
the plan in advance.

Transporters thus get the plan in the evening and they have to place their trucks the
next day. If they fail to place their truck, then they have to pay the non-placement
penalty, which is 25 Rs. /MT i.e. 500 Rs for one truck of 20MT. The non-placement
plan is given to other transporters or trucks are hired from the open market, and the
difference in the rate will be deducted from the respective transporters account.

After trucks arrive at the IPCL parking plaza, trucks and their document are checked
and then TPN is done. Document, which are checked at the parking plaza are driving
license, PUC, RC book, Insurance of truck and National permit. Before entry of the
trucks inside the complex, driver has to attach a muffler to the truck for safety
purpose.

Then the truck goes at weighbridge for weighing the empty truck (WBN). After these
the order linking is done at the concerned warehouse (TOL). The warehouse
employees then place the material that is to be dispatched at the loading point, with
the help of forklift operator who will put the respective material at the loading point.
There are two forklifts each at loading point and at packaging point for each
warehouse.

After the material has been placed at the loading point, labors will load the material in
the truck. IPCL has signed labor contract with two labor contractors and concerned
contractor has to bring certain number of labors as mentioned in the contract.

Then the Product Transfer Department (PTD) makes invoice (INV) cum challan of the
truck. (Invoice cum challan-Annexure)

The truck then goes at weighbridge (WBX). At this point the security checks the
weight and compares with the initial i.e. tear weight and finds out the difference
between them. If the difference is much higher then the truck is sent back to the
warehouse.

After this, Main Gate Exit (MGX) of the truck is done by the security.

57
FLOW DIAGRAM FOR DISPATCH PROCEDURE OF SOLID PRODUCTS

TPN (TRUCK PARKING ENTRY)

ENTRY OF THE
TRUCKS

WB (WEIGH BRIDGE)

WBN (WEIGH BRIDGE ENTRY)

ENTRY TRUCK IS WEIGHED

TOL (TRUCK ORDER LINKING)

CYCLE TIME
TRUCK ENTERS THE
WAREHOUSE
LOADING TIME

PICK UP NOTE

INV (INVOICE)
INVOICE DONE

WBX (WEIGH BRIDGE EXIT)

LOADED TRUCK IS WEIGHED

MGX (MAIN GATE EXIT)

58
 LIQUID AND GAS PRODUCTS

Liquid products

• Benzene
• Aromatic Feedstock C6
• TOLUOL
• Raw Toluol (RTLOL)
• NAPTHA C-7
• BUTADINE
• LAB
• HNP
• LR2528
• HEAVY ALKYLATE
• MEG
• PEG
• ETHYACRYLATE
• METHYLACRYLATE
• BUTYLACRYLATE
• AMMONIUM SULPHATE

GAS PRODUCT

• C-4 RAFFINATE –I
• C-4 RAFFINATE - II
• ETHYLENE OXIDE
• NITROGEN
• SLOP OIL

59
 LOADING PROCEDURE FOR LIQUID PRODUCTS

In case of liquid loading procedure, customers have to send their trucks for loading
the material. In case of stock transfer and export, transportation is carried out through
RELOGISTCS.
Chemical Group located in Vadodara makes sales orders. Order procedure for liquid
product is same as solid products.

STEPS FOR LOADING OF TANKERS:

• The customer orders are tailed with Daily Dispatch Plan.

• Entry of trucks (TPN). Here documents such as original RC BOOK, insurance,
PUC, Tankers fitness certificate (Issued by chief controller of explosives), Driver
License, National permit, Pressure test (carried out by private as well as government
agencies) etc are Checked. After this trucks are physically checked.
• Then the Truck Order Linking (TOL) is done.
• Weigh Bridge Entry (WBN).
• After WBN, if the tanker is of Relogistics then it is sent for testing.
• Now, Tankers are sent for loading.
• After loading the material weight bridge exit (WBX) is done.
• Load office exit. (LOX)
• Invoice preparation.
• Main Gate Exit (MGX)

LOADING POINTS

There are 13 loading points for loading liquid at IPCL Vadodara complex
.
Sr. PRODUCT NUMBER OF LOADING
No. POINTS
1 BENZENE 2
2 NAPTHA 3
3 C-6 1
4 LAB 2
5 HNP 2
6 MEG 2
7 LR 2528 1

60
 DISTRIBUTION CHANNEL AT IPCL

The distribution channel for solid products is shown in the following block diagram.

Customer
Sales

IPCL
Warehouse CUSTOMER

IPCL
Stock Distributors
Plant Warehouse CUSTOMER
Transfer Warehouse

Export CUSTOMER

The distribution is basically done through road with the help of trucks. IPCL has made
a contract with some transporters for transferring its goods to the different cities in
India. IPCL follows 1 level channel for distributing its goods through out the country.
IPCL sells its goods through distributors warehouse located in different cities of India.
It also provides door delivery of the goods to its customers.

IPCL follows three types of distribution strategies.

1) Stock Transfer
2) Direct Sales
3) Export

61
 SUPPLY CHAIN MANAGEMENT

Supply chain management includes the collection of activities from procurement of

raw material to production to delivery to the end users.
SCM is the co-ordination or integration of a series of activities/processes; which
procure, produce, and deliver products and /or services to customer.
Place is the key element of the marketing mix with which logistics interfaces directly.
Customer service is an output of the logistics system.

LOGISTICS OBJECTIVE: Minimize total costs of the product to the customer

where Total costs = Transportation costs + Warehousing costs + order processing
costs + lot quantity costs + inventory carrying costs.

62
 INTRODUCTION TO LOGISTICS
DEFINITION:
“Logistic means management of the flow of goods or material from point of origin to
point of consumption and in some cases even to the point of disposal.”

The Council of Logistics Management (CLM) defines:

Logistics is that part of supply chain process that plans, implements and controls the
efficient, effective flow of and storage of goods, services and related information from
the point of the point of consumption in order to meet the customers’ requirement.

LOGISTICS

INBOUND LOGISTICS

In inbound logistics, the material moves from the supplier to the company’s raw material
warehouses, then transportation of raw material from ware houses to the plants i.e. to the
production houses.
OUTBOUND LOGISTICS
It is mainly concerned with 3 types of logistics.
1. Primary logistics: - in which materials moves from plant area to C&F agent. (Cost
and freight) or from company warehouses to the C&F warehouse.
2. Secondary logistics: - in which materials flow would be from C&F agents to the end
users (customers) or wholesaler or retailer.
3. Tertiary logistics: - in which material flow from the retailer to the customers.

OUTBOUND LOGISTICS AT IPCL

63
Block diagram of order procedure for solid products

Order
PRODUCT DELIVERED THROUGH
CUSTOMER PTD
TRANSPORTERS TTTTT
(WAREHOUSE)
PLACE THE (ADVANCED
ORDER PAYMENT BY
CHEQUE OR DRAFT)
RELEASES
DISPATCH
PLAN

REGIONAL
OFFICES

PLACE THE PENDING ORDER RELEASES

ORDER IN SAP
HEAD OFFICE MOP
(BUSINESS DEPARTMENT
GROUP)

EXPLAINATION

The customers of the IPCL are located all over India. The customer places the order at
their respective Regional offices. The customer has to make advance payments
through the cheque, DD or cash.

The major functions of different Regional offices are to receive payment, to make the
sales orders and to calculate relevant taxes and discounts and attend to customer
complaints. If all conditions are satisfied then Regional offices enters the customer
order in SAP system.

At the head office the concern Business group receives the customer orders from five
Regional offices located all over the India. The major functions of Business group are
to decide the prices of different materials, customer wise allocation and region wise
allocation of the materials.

64
 After checking the availability of materials, Business group releases the pending order
through SAP system to MOP (Marketing, operation & planning department)
The major function of MOP is to check the availability of material in different
warehouses, to make the dispatch plan, to release the dispatch plan to the concerned
transporters and to see that the respective loading for the day gets over well in
advance. The final dispatch plan is prepared and given to the transporters in the
previous day evening. MOP also gives some additional dispatch plan throughout the
day, which again depends on the order that comes from the head office. Transporters
have to place their trucks for the additional plan given throughout the day.
The Product Transfer Department (PTD) releases the material to the respective
transporters and in turn transporters deliver the material to customers.

PRIME ACTIVITIES OF LOGISTICS:

The key activities of logistics are:
1) Inventory Maintenance
It is usually not possible or practical to provide instant production or instant delivery
to customers. In order to achieve a reasonable degree of product availability,
inventories need to be maintained as buffers between supply and demand. The
extensive use of inventories results in the fact that, on the average, they account use of
approximately on third of logistics costs, making inventory maintenance a key
logistics activity.

2) Order Processing
Order processing cost tends to be minor as compared to transportation or inventory
maintenance costs. Nevertheless, it is a primary logistics activity. Its essential nature
comes from the fact that there is a critical time element in getting goods and services
to customers. Also it is the primary activity that triggers product movement and
service delivery.

3) Transportation

65
 For most firms, transportation is the most important logistics activity, simply because
it absorbs, on the average, approximately two thirds of logistic costs. “Transportation”
refers to the various methods for moving a product. Road, rail, water and air are just
a few of the popular choices. Management of the transportation activity usually
involves in making choices regarding the method of shipment, the routings, and the
utilization of vehicle capacity.

TRANSPORTATION AT IPCL

Effective transportation management can help to reduce the total cost. It

functionally provides two major functions: product movement and product storage.
Here at I.P.C.L. Baroda Complex, the main model used for transportation are
well managed and effective in cost. The transportation is done by road and pipeline.
Pipeline is used to bring the raw material to plant and final product at loading point.
The road transportation is used for solid and liquid products.
For delivery of the products, mainly 19 transporters are selected through
bidding which covers each and every region of India. Various regions of India are
allocated to particular transporter. After selecting transporter, the contract procedure
takes place. In contract, the contract conditions are written which are prepared by
expertise of I.P.C.L.

ROAD TRANSPORTATION

SALIENT FEATURES OF TRANSPORTATION CONTRACT

• A contract period is generally for one year.

• The trucks should be in perfect roadworthy condition and equipped with all necessary
permits and licenses.

• The contractor is responsible for paying road tax, entry tax, goods tax, RTO tax and
all other taxes, levies and surcharges.

66
• The contractor is responsible for providing required number of trucks as per indent for
each destination within specified working hours. In case of failure, I.P.C.L. has the
right
to hire the trucks at open market rates and deduct the difference of rates from the
defaulting contractor.
• The consignment should be delivered within the permissible transit period, failing
which penalty will be imposed for each day of delay.
• Trans-shipment is strictly prohibited. The transporter is solely responsible for any act
of negligence.
• The contractor is required to submit his bills along with necessary documentary
evidence regarding safe delivery of goods at the destination, within the prescribed
time limit.
• Neither the corporation nor the transporter is liable for any failure or any delay if
caused by Force Majeure, i.e. reasons like fire, explosion, flood, earthquake, strikes,
epidemics, government and other uncontrollable acts.
• A reasonable security deposit as a percentage of estimated value of contract is
obtained from the contractor to take care of any financial loss caused to the
corporation by the contractor.
• Delivery of goods – It means that the delivery of current quantity and quality of
goods as per invoice at the destination and obtaining the proof of delivery of the
consignment from the consignee on the lorry receipt. This shall include the signature
and rubber stamp of the consignee, receipt quality, date and time of receipt, shortages,
damages, cut and torn quality, sweeping quantity.
• Transit loss and Accidents - I.P.C.L. shall recover the full value of the shortage
quantity of goods, caused in the interalia due to in damage, pilferage and theft in
transit or non-delivery etc.

• The driver of the vehicle should carry the duplicate copy of the excise invoice which
indicates excise particulars. In the event of loss of such documents, drivers shall file a
FIR at the nearest police station.

67
• The event of an accident, theft, pilferage, I.P.C.L. is entitled to recover the entire
value of the goods.
• In the event of an accident, robbery, theft, pilferage, vehicle having been stolen or
lost or vehicle meeting any uncured incident, necessary actions required under the law
to be taken.
• Malpractices and Contamination of goods – The transporter shall ensure that the
goods do not get contaminated due to any cause whatsoever.
• If a vehicle used under this agreement found to be involved in any malpractice by the
vehicle owner or the driver or any other person, I.P.C.L. shall blacklist the vehicle and
immediately suspend its operation.
• Transit Period – A standard transit time is decided for each route is decided. For
vehicles taking more than such a transit time, penalty shall be levied.
• RLW Restrictions (Registered Laden Weight) –The transporter shall ensure that the
weight and the volume of the goods that are loaded for consignment in the vehicle is
within the RLW limits prescribed by the vehicle RTO.
• PUC (Pollution under Control) – The vehicles shall comply under all pollution
requirements including PUC certificate.
• Termination – The agreement shall stand automatically terminated in the event of
1. Any party being adjudicated, insolvent or being a company
resolved or ordered to be wound up
2. Where breach, default or violation of any of the terms of the
agreement is committed.
3. The agreement can be terminated by each party by giving a
written notice of 30 days to the other party without
incurring any liability.

CONDITIONS FOR THE CONTRACT IN IPCL

68
1. The corporation reserves the right of accepting or rejecting the whole or any part of
the tender. The tenderer should code competitive or workable rate for operating
throughout the contract period.
2. EMD (Earnest Money Deposit) – EMD of successful tenderer shall either be
converted in to security deposit towards the fulfillment of contract or refunded after
submission of bank guarantee.
3. Security deposit – in case of cash security deposit the balance amount is paid by way
as under
• Demand Draft
• Bank guarantee from any nationalized bank or specified bank in favor
of IPCL.
4. Corporation shall pay interest @ 8% per annum on the cash/DD security deposit.
5. FORCE MAJEURE – uncontrollable conditions like fire, explosion, and natural
causes like flood, earth wake, strikes etc. neither the corporation nor the transport
contractor shall be liable or deemed to be in fault.
6. Settlement of dispute/ arbitration – in case of any disputes the rules of arbitration of
Indian council of arbitration shall be binding of the party.

RAILWAY TRANSPORTATION

• Railway transportation also plays an important role in outbound logistic of

I.P.C.L

69
• Planning stage - Ensures availability of orders, material availability (i.e. grade wise as
per the order), availability of loading labors, cleaning of wagons etc.
• Demurrage is the penalty for delay in loading the material in the wagons which is
maximum 5 hours.
• Warfare is the penalty for unloading the material from the wagons and removing it
from the platforms to the company’s destination. Maximum time limit is 5 hours.
• WRF (Wagon Registration Fee) is Rs.600/- for 4 wheelers and Rs. 800/- for 8
wheelers.
• I.P.C.L. product fall under category 210 for railway transportation, the prices of which
are already mentioned in the category list of the railways.
• ‘Church gate’ is the controlling station for Western Railways.
• Cancellation of booking for wagons is allowed before 48 hours.
• Railway Receipt is issued by the railway authority where it is mentioned ‘said to
contain so and so material’. It means railway believes what the company says but it is
not responsible for any deviation in the quantity during transportation.
• For safety company seals all the wagons with one- time locks.
• Railway has the authority to check the goods any time for quantity and security
purpose.
• Destinations are informed of the plan in advance for smooth transportation.
• Insurance of the consignment is taken for compensation if any damage or loss of
goods takes place.
• Advantage of railway transportation is that it spreads less pollution and the
government earns revenue. It is cheaper way of transportation when goods are to be
transported to farther distances in bulk.
• Disadvantage – There are more chances of damage in handling of goods during
railway transportation.

TRANSPORTATION BY WATER ROUTE

INTERNATIONAL TRADE

70
IMPORT:
Import has been defined as bringing into India the goods from a place outside the
India. India includes the territorial water of India. Territorial waters extend up to 12
nautical miles into the sea from the coast of India. The liability to pay import duty
commences as soon as goods enter the territorial water of India. However for
administrative purpose, it is collected when the goods are unloaded on the land of
India.

EXPORT:
Export has been defined as taking goods out of India to a place outside India. The
liability to pay export duty commences as soon as goods leave the territorial waters of
India. However, for administrative purpose it is collected when goods are on the
vehicle for transport out of India.
EXPORTS

THEORY RELATING TO THE TOPIC

Export is one of the most lucrative business activities in India. The government also
provides various incentives to the exporters for earning valuable foreign exchange for
the country by meeting their requirements for importing modern technology and
essential inputs. Besides, the income from export business is also exempted to the
specified extent under the Income Tax Act, 1961. Refund of central excise & custom
duty on export is also made under the duty drawback scheme of the govt. There is no
sales tax on products meant for exports. Various schemes have been simplified to a
great extent under new EXIM policy 2002-2007.

Definition of International Logistics:

Designing and managing of a system that controls the flow of material in and out of
International Corporation.

71
 Logistics gained recognition since World War II when, marketing became
predominant over manufacturing, requiring concentrated attention to customer wants.
The word “logistic” means “the movement, storage and supply of troops and
equipment.” The important point about Logistics is that it is much more than
transportation or the mere physical movement of goods. International logistics
decision affect the number and location of production and storage facility, production
schedule, inventory management and even firm’s level of involvement in international
competition. In other word we can say that it is closely associated with the ‘Just in
Time (JIT) management technique.’

Basically, logistics is the ability to get the right product at the right place at the right
time. Overall it is the planning, organizing, controlling and execution of the flow of
goods from purchasing through production and distribution to the final customer in
order to satisfy the requirements of the market. It combines production, distribution
and transportation on global basis. So, the basic function of Logistics in international
competition, is to create “Place and Time utility” in goods, locating them at the right
place, at the right time and also in right quantity to customer demand.

CATEGORIES OF EXPORTERS
Exporter means a person who exports or intends to export and holds a valid Import-
Export code number. Exporters can be categorized in to the following:

 Merchant Exporter – He is one who manufactures goods from the market or from a
manufacture and then sells them to foreign buyers.

 Manufacture Exporter – He is one who manufactures goods himself and intends to

export such goods to foreign buyers.
 Export oriented unit, and
 Export processing zone – Units undertaking to export their entire production of goods
and services may be set up under the EOU scheme and EPZ scheme.

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 HANDLING OF EXPORTS

For any manufacturer to commence export, he has to follow four basic steps:-
 Willingness to export and have need for world market survey.
 Establish a buyer and negotiate.
 Complete all formalities relevant to his products as per the requirement of the country
of origin.
 Find a suitable clearing and forwarding agent to handle the actual export of the goods.

The succeeding pages are devoted to actual movement of cargo from the point of
origin till the point of discharge.

EXPORT MARKETING

IPCL export a wide range of products to approximately 13 countries.

Major 3 markets are China, Vietnam and the European Union which accounted for
approximately 54%, 19% and the 8% respectively of total exports.

I.P.C.L. obtains “Training House status from the government which gives certain
administrative and regulatory advantage”. With growing international

73
competitiveness, IPCL was able to make deeper impact in advance in global
petrochemical markets.

This is reflected in IPCL’S increased export.

During the year 2004-2005, I.P.C.L. exported 1,638 crore (US $ 374 million) worth
manufacturing goods.
Indian Petrochemicals Corporation Limited is now a Reliance group company. An
integrated IPCL-Reliance marketing team markets the company’s products. The
integration aims to facilitate customer to shop his entire raw material needs from a
single window. In view of this the B2B facilities of IPCL as well as Reliance have
been merged.

ROLE OF A C.H.A.; FREIGHT FORWARDER & LOGISTICS IN

INTERNATIONAL TRADE:

CUSTOMS HOUSE AGENT:

“According to sec. 146 of the customs act 1962, CHA is a person licensed under the
central board of Excise & Customs regulation to act as an agent for the transaction of
any business relating to entry or departure of conveyances or the import or export of
goods at any customs station”.

NEED FOR A CHA: FRIGHT FORWARDER: LOGISTICS AGENT:

The import or export of goods involves quite a lot of procedural formalities. These
formalities have to be observed by importer, exporter or passenger as the case may be.
But in most cases, the custom station would be far away and it may not be possible for
the importer / exporter to attend to such work promptly. As clearance is allowed only
after the completion of formalities and payment of duty, a provision for licensing

74
 customs house agents, to present the importer / exporter for the clearance work, has
been made in the customs act 1962.

SERVICES PROVIDED BY CHA:

1. Preparing the customs entry form and assuring that all the necessary documents are in
order for processing through customs channels.
2. Calculating the amount of duty according to the “Tariff Act”.
3. If necessary, requesting extensions of the general order time from the collector of
customs.
4. Providing the surety bond required by the customs authority, which guarantees full
payment of all duties.
5. Arranging for the goods to be transferred under bond from the port of entry to an
interior destination for customs clearance.
6. Obtaining special permits for immediate delivery of perishable goods.
7. Preparing the warehousing entry bond and arranging for goods to be transferred to the
bonded warehouse.
8. Arranging for the withdrawal of goods from the bonded warehouse in part or
completely. Payment of duties will be made accordingly to the quantity of goods
withdrawn.
9. Pursuing appropriate channels if disagreements occur with customs over rate or value
of appraised goods.

EXPORT PROCEDURE

START

EXPORT ORDER

ORDER ACCEPTANCE

LETTER OF CREDIT

75
 PRODUCTION & PROCUREMENT

MARINE INSURANCE POLICY

INVOICE

PACKING LIST

SDF (STATUTORY DECLARATION FORM)

CERTIFICATE OF ORIGIN

AR-E1 FORM

SHIPPING BILL

STOP

PROCEDURE:

1. EXPORT ORDER:
An export order is a commercial transaction, which is important to the exporter & the
importer, and is also of concern to their respective countries, since it affects the
balance of payment position of both the countries. The exporter is required to produce
copies of export order to various government departments / financial institutions. The
company receives the confirmed export order / purchase order from its overseas
customer on agreed terms & conditions.

76
2. ORDER ACCEPTANCE:
The order acceptance is another important document prepared by the exporter,
confirming the acceptance of order placed by the importer. Under this document, the
exporter commits the shipment of goods covered at the agreed price during a specified
time. It normally covers the name & address of the indenter, consignee, port of
shipment, country of final destination description of goods, terms of payments etc.

3. LETTER OF CREDIT(L/C):
L/C is a document issued by the importer’s bank in favor of the exporter, giving him
authority to draw bills up to a particular amount covering a specified shipment of
goods & assuring him of payment against the delivery of shipping documents. The
buyer’s bank sends original L/C to the exporter & after obtaining it, the accounts
manager after verification accepts it.

4. MARINE INSURANCE POLICY:

If the delivery term is on CIF, it becomes obligatory for the exporter to arrange for
insurance. The exporter thus arranges for transit insurance & obtains insurance policy
& cover note from the insurance company.

5. COMMERCIAL INVOICE:
It is one of the most important documents issued by the seller in the standardized
format. The invoice is usually made out for the full realizable amount of goods as per
the trade term. The Logistics department makes six copies of this document once the
goods are ready for dispatch. If the export documents are drawn under L/C, the
description of goods in the commercial invoice must correspond with description in
the credit.

6. PACKING LIST:
It is a list showing details of goods contained in each parcel / shipment. Shows item-
by-item the contents of the containers, measurements, weight parcels shipped to

77
 enable the buyer / receiver of the shipment to check shipment. Packing list has to be
prepared in the aligned document format.

7. GR FORM / SDF:
Guaranteed remittance form is a declaration, a definite undertaking between the
exporter & the RBI to deposit the amount of foreign exchange mentioned in the L/C
to the bank
within six months from the date of shipment. Purpose of GR form is to enable RBI to
ensure that export proceeds from the export are received in India through proper
banking channels only within reasonable time limits. GR form is in aligned
documentary format and is prepared in duplicate.
On account of introduction of Electronic Data Interchange (EDI) system at certain
customs offices, where shipping bills are processed electronically, the existing
declaration in GR form is replaced by a declaration from SDF (Statutory Declaration
Form).
GR form is used in case of manual documentation. The customs authority, for onward
submission to RBI retains the original copy. Duplicate copy of this form is given to
exporter after it is custom attested & this document must pass through the medium of
an authorized dealer in foreign exchange in India within 21 days of shipment.

8. GSP CERTIFICATE / CERTIFICATE OF ORIGIN:

The EEC member countries have adopted the generalized system of preferences.
Under GSP, manufactures and semi-manufactures from developing countries
including India will be entitled to a concessional rates of import duty in these
countries.

9. AR-E1 FORM:
This form is for central excise clearance. Excise is basically production tax. It is
payable to the government whenever, goods produced in India are ready for
distribution in India. Since goods meant for export are to be sold abroad, such goods
are exempt from paying excise duty.
There are 2 methods for payment of central excise duty:

78
 To pay the excise duties on goods meant for export & then claim refund of the same,
after showing the proof of exports.

 Export under bond: To provide a security to the government, the exporter makes a
bond with the central excise authorities. Money debited in his account will later on be
credited after proof of exports is presented. Goods are removed from factory without
prior payment of duty subject to the execution of bond with security for a sum
equivalent to the duty chargeable on the goods to be exported. AR-E1 form i.e. the
exemption certificate is to be prepared in sixtuplicate, in such cases.

Original, duplicate & yellow copy: - Customs.

Triplicate, quadruplicate & quintuplicate copies: - Central excise department.

After the shipment is done, the custom attend original & duplicate copies of AR-E1
form which is sent to central excise department as proof of export & then the bond is
credited.

10. SHIPPING BILL:

Shipping bill is the main document required by the customs for allowing shipment.
Basically shipping document is of 4 types.
a) DEPB Shipping Bill (Blue)
b) Duty Drawback Shipping Bill (Green)
c) Shipping Bill for Duty Free Goods (White)
d) DEEC Shipping Bill (White)
Shipping bill is a document, which has to be filled with the customs in order to enable
the goods to be made ready for export. Shipping bills are prepared in 6-7
copies.

79
1. Original – It is for customs statistical record.
2. Duplicate – It is a proof of examination of cargo. The customs authorities write a
report on the backside of it. Original and duplicate copies are kept with the customs
only.
3. Triplicate – This is DEPB / Drawback copy.
4. Quadruplicate – It is the export promotion copy. It is a proof that goods are actually
exported out of India.
5. Triplicate & Quadruplicate copies are returned to the exporter after it is customs
attested.
6. Port trust copy I
7. Port trust copy II – Port trust copies or transference copies go along with the truck /
cargo to the gateway port of customs.
8. Port trust copy III – Port trust III is a CWC (Central warehousing corporation) copy.

LOGISTICS SUPPORTS MARKETING

The “four P’s” of the marketing mix require that for a firm to be successful any
marketing effort must integrate the ideas of having the right product, at the right price,
publicized with proper promotion, and available in the right place.
Logistics plays a critical role particularly in support of getting the product to the right
place. Primary goal of logistics is to provide customer service. Achieving customer
satisfaction requires an integrated effort both internally and with suppliers and
ultimate customers and these can be achieved with the help or Logistics Management.
Following figure summarizes the tradeoffs required between and among the major
elements of the marketing mix and logistics.

80
 .
COST TRADE-OFFS REQUIRED IN MARKETING AND LOGISTICS

PRODUCT

M
A
PRICE R
PROMOTION
K
E
T
I
PLACE /CUSTOMER N
G
SERVICE LEVELS

L
O
G INVENTORY CARRYING
COSTS TRANSPORTATION COSTS
I TRAFFIC & TRANSPORTATION
INVENTORY MANAGEMENT
S
REVERSE LOGISTICS
T PACKAGING
I 81
C
S
 WAREHOUSING
LOT QUANTITY COSTS COSTS
WAREHOUSING &
STORAGE
MATERIAL HANDLING PLANT & WAREHOUSE
PROCUREMENT

ORDER PROCESSING &

INFORMATION COSTS
ORDER PROCESSING
LOGISTICS COMMUNICATIONS
DEMAND FORECASTING
/PLANNING

PRICING POLICY IN IPCL

1. Ex-factory as well as ex-point selling pricing is inclusive of excise duty.

2. For payment of excise duty on ex-factory sales, freight should not be included.
3. For ex-factory sales, excise duty shall be paid after considering deduction of cash
discount if applicable.
4. Quantity discount if applicable will not be deducted from the basic price for the
purpose of excise duty.
5. Cash discount if applicable is to be allowed post excise on the list price.
6. Prices for prime grades of products are higher than the non-prime grades and waste.
7. Prices are inclusive of standard packing charges.
8. Quantity discounts more the quantity purchased more the discount is given.

82
9. Cash Discount is given in the form of early payment incentives before dispatch of
product etc. No cash discount is given on waste.
10. Additional discount is given to exporters.
11. Credit policy (14 days interest free credit) for customers and dealers.
12. Cash sales, interest @24% will be charged for delayed payment.

PROMOTIONAL MEASURES

• Sponsorship of events like cricket.

• Conduct seminars, symposium and trade fairs.
• Encourages entrepreneurship.
• Grade selection card.

83
Supporting activities of logistics are:
- Warehousing. -Materials Handling.
- Protective Packaging -Acquisition.
- Product Scheduling - Information Maintenance.

WAREHOUSING

All the solid products are packed in specified weight. Different products are packed in
different weights, which are given below.

POLYMER GROUP:-
Product Name Specified Weight

LDPE 25kg. (Standard)

PPCP 25kg. (Standard)
PVC 25kg. (Standard)
PP-IV 25kg. (Standard)

RUBBER GROUP:-

Product Name Specified Weight

PBR – I 30-35kg. Approximately

PBR - II 30-35kg. Approximately

84
FIBRE GROUP:-
Product Name Specified Weight (Per Bale)

AF 250kg. (Approximate)
DSAF 300kg (Approximate)

LOCATION OF PRODUCTS
After packaging of the products, they are stored in the proper location according to
the batch.
Dispatchable quantity of production is cleared after proper quality check where the
gradation of the products is determined. After the quality check, it is transferred to the
warehouse and gets entered in the SAP system.

Wooden pallets are used for carrying the polymer products of 40 bags of 25kg each.
Weights are stacked (1 ton) and moved by the forklift truck. The equipments used in
the packaging, stacking and moving products are shown as below:-

FORKLIFT TRUCK CONVEYER

85
HANDLING, STORAGE, PACKAGING, PRESERVATION &
DELIVERY:-
Storage of the Finished Product:
Finished products are received from the plant by the product transfer department
(PTD). This functions as an interface between the marketing department & the
production department. However in the recent restructuring of the functional activities
of IPCL there is a plan to eliminate the PTD.

Packaging:
Bagging is done with a semi automatic machine. Lot number or bale number is
marked on each of the bags. Care is taken to ensure that only graded material packed
in intact bags are dispatched. In case of quality complain by the customer the batch
no. or lot no. printed on the bag will help in tracing out the cause of the complaints.
The package material use by IPCL’s environment friendly as it can be recycled for
further use; proper care is taken in transporting the material in order to prevent any
damage to the bags or to the materials.

Preservation:
Packed bags are stored in warehouse to prevent exposure to rain and sunlight. In rare
circumstances when warehouse is full, bags are stored in an open area with proper
protection to prevent effect of rain and sunlight on the bagged material.

Delivery:
The delivery procedure followed in IPCL is very systematic after the introducing of
SAP each transaction is cent percent full proof. In the delivery process there is a
convenient
tracking system in which one is able to see the status of the vehicle loading and arrival
at the final destination. The goods when they reach the destination are received by the
consignee and a goods receipt note is prepared. Any deficiency in the receipt of
material

86
needs further action such as recovery from the transporter or lodging claim with the
insurance company. Thus, the total product movement is well secured.
IPCL WAREHOUSES AT DIFFERENT LOCATIONS
Ahmedabad Indore
Baroda Daman
Silvassa Mumbai
Nagpur Calcutta
Delhi Ludhiana
Kanpur Faridabad
Ghaziabad Bangalore
Chennai Hyderabad

IMPORTANCE AND USE OF LOGISTICS

Logistics gained recognition since World War II, when marketing became
predominant over manufacturing, requiring concentrated attention to customer Wants.
Concurrently, logistics is the delicate fulcrum-balancing product with consumption.
Hence it plays a very important role in International Competition.

The most important point about logistics is that it is much more than transportation or
physical movement of goods. Basically, the art of logistics is the ability to get the
right product at the right place at the flow of goods from purchasing through
production and distribution to the final customer in order to satisfy the requirements
of the market. It combines production, warehousing distribution and transportation on
global basis.
So the basic function of logistics in International Trade is to create place and time
utility in goods, locating them at the right place, at the right time and also in the right
quantity, to customer demand.

87
 ROLE OF GOVERNMENT IN LOGISTICS

In Indian context, the government plays a significant role in logistics. Some of the
important legislations that affect logistics are:

1. Central Sales Tax (CST) is a tax on interstate commodity sales. In situation where
there is a resale in the receiving state, local sales tax is also incurred. CST is not
incurred if there is a branch in the receiving state for the organization, and then the
interstate movement would be considered as a stock transfer. Often, organizations set
up branches in every state more as a means of avoiding CST rather then as a
functional requirement.

2. Excise duty is a tax on each product produced in the factory.

3. Octroi A logistics implication of octroi is that if warehouses and transshipment

points are out side the octroi limit then octroi needs to be paid.

4. MODVAT, which stands for Modified Value Added Tax. It ensures that double
charging of excise duties is prevented and eliminates the need for repayment and
future collection of refund of such duties. When a product that attracts excise is used
as a component for another product, the raw material inventory costs would now be
lower, thus facilitating planned procurement.

5. The Motor Vehicle Act, 1988, has brought in strict regulations to prohibit
overloading of trucks and ensure better quality of drivers. But some of the northern
states illegally allows for overloading of the trucks.

88
 REPORT ON CYCLE TIME STUDY AT LDPE WAREHOUSE

OBJECTIVE

• To reduce the time between the procedures of TOL to INVOICE at LDPE (low
density polyethylene) warehouse.
• To understand the logistics, time and motion study in outbound logistics at IPCL
Baroda Complex.
• Understanding the behavior of contract laborers of warehouse.

TIME DURATION OF STUDY

• We selected the period of 4 days i.e. from 10/06/06 to 14/0606 out of 30 days of June.
For effective study, we used the data of all the 4 days i.e. all the trucks which came to
the LDPE warehouse.

SOURCE OF DATA FOR ANALYSIS

• SAP-YTTS MODULE is used for TOL (Truck Order Linking) which is done at the
warehouse after the process of WBN (Weigh Bridge Entry).TOL is done based on the
quantity, type/grade of the material to be dispatched.

• SAP-VLO2N is done after TOL, for making material picking note based on the type,
grade and quantity of material to be moved from a particular location.

• SAP- ZIPS is used for Invoice Processing after the truck is loaded with the required
quantity of material. The Invoice is handed over to the transporter along with the
MPN (Material Picking Note).

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 FACTORS AFFECTING TOTAL CYCLE TIME OF TRUCK

The main purpose of any project is to study the system and find the problems and
loopholes, which exits in the system as here at IPCL Baroda complex. We have been
assigned the problem of high cycle time and for that we have to observed the system
and found out the solution for reduction of cycle time.
For that we observed the system from various aspects and we found out some reasons
that were increasing cycle time.
IPCL is dealing in a monopolistic market, so optimum utilization of time is also very
important factor, as the profits equally depends on the production as well as the time
saved and optimally utilized time could add to more of the profit of the company.

1. Improper handling of forklift and materials – The laborers at different warehouses

are not handling the material properly they are throwing bags in the truck while
loading which damages the bags. In every consignment. 2 – 3 bags get damaged
which increases the time of loading and the cost because company has to replace this
bag with the new one. In a day about 50 trucks are coming therefore the amount of
loss is very high. Many a times improper handling of forklifts also damages the bags.

2. Contract laborers – The laborers at warehouses are on contract basis. So they are not
managed by IPCL. This results in insufficient laborers present at the loading point and
it increase the loading time.

2. Lack of Professionalism - People at IPCL are still living in the government

organization era. Privatization’s effect is very low in work culture. Many of the
employees are having casual approach towards their work. They are passing their
work to others which increase the processing time. They also take long lunch breaks,
frequent and long tea breaks which hampers the system badly. Now the system is fully
automated because of SAP but adaptation of new technique is difficult for them and
still people don’t know much about it.

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4. Improper distribution of laborers – Company is not placing laborers properly at the
ware houses.

5. Lack of supervision – There is lacks of supervision while laborers are loading the
trucks which results in improper handling of bags.

6. Improper distribution of trucks – From the graph, we can say that there is lack of
proper distribution of trucks during the entire day. We have divided the total time of
TOL and INVOICE of truck in three different ranges so that we can see that
maximum numbers of trucks came between 12:00 to 16:30 hours. This improper
distribution of trucks is due to the transport market which affects the logistic system
very badly.

OBSERVATIONS
• There is a lack of coordination between transporters and the warehouse department.
So the department is unaware of the exact status of the no of trucks coming to IPCL
and its arrival timing.

• Due to lack of coordination, the labors are also not aware of the trucks arrival
schedule. This results in less no of laborers when the work load is more and vice a
versa.

• Sometimes the driver of the truck has to wait because there is no one to attend him
when he comes for TOL.

• The fork lifter in order to finish off the work quickly, damages the bags while lifting
two pellets simultaneously. This results in increased loading time due to replacement
of the damaged bags. It is also an unsafe practice.

• There is as such no regulation on the arrival and departure of the contract laborers.
They come and go as per their own wish.

91
• The laborers don’t have food facilities and that which is available is very expensive
for them. So this results in their inefficiency to work till late night.

• Lack of co-ordination between MOP staff and PTD staff results into lack of proper
management.

• There is improper distribution of laborers, so in some warehouse there are more

laborers working and at other ware houses- less number of laborers working.

• Sometimes the SAP system gets hanged up which affects the cycle time.

• It is observed that during shift change, the movement of all the trucks comes to a
standstill so as to let the employee vehicles move freely. Moreover the processing of
TOL and INVOICE also stops due to shift change. This factor is unavoidable.

RECOMMENDATIONS

• Supervisor should be there when trucks are getting loaded so that laborers work
properly and damage of bags and loading time can be reduced. Laborers sit idle until
all the material is brought to the loading point. Supervisor should force them to start
loading as soon as the first pallet or crate has been brought to loading point.

• The overall performance of warehouse depends on MOP staff at warehouse but there
is lack of co-ordination between PTD staff i.e. operational person at warehouse and
MOP staff. The MOP staff should be given some power so that they can get work
done from them and before any holiday or staff change, they must inform MOP staff
at warehouse.
• Warehouse person already have their dispatch plan. So they know about their daily
work well in advance. The warehouse person should bring material at loading point in
the morning before the truck comes for loading instead of bringing material after the
truck comes. This would save time.

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• The warehouse department should keep themselves informed about the no of arrival
of trucks 1 day in advance so that the laborers can be managed easily and the work
can be carried out without any delay. This would also help the labor contractor to
place the no of labourers required on a particular day.

• There lifting of 2 pellets by the fork lifter should be avoided which would avoid any
damage to the bags.

• Proper food facility should be provided by the contractor so as to increase the

efficiency
of the laborers.

• The forklift truck can directly be taken near the truck to be loaded so that the bags can
be directly paced inside. This would save time and less number of laborers are
required. This procedure has been successfully implemented at RIL at Hajira. But for
this the warehouse infrastructure should be modified for the smooth operation of the
forklift truck.

LIMITATION OF STUDY
• Used vary small sample size i.e. only four days out of 30 days of June.
• Time period of study was during general shift hours i.e. between 8a.m. to 5p.m. So
could not observe the activities till 10p.m.

CONCLUSION

• The standard deviation comes to nearly 182.921 minutes. Thus prolonged cycle time
can be reduced to some extent by controlling factors like labor management and
between coordination between the employees. But factors like shift change which
leads to prolong cycle time are uncontrollable.

93
 GLOSSARY

PVC – POLY VINYL CHLORIDE

LDPE – LOW DENSITY POLY ETHYLENE
PBR – POLY BUTADIENE RUBBER
PPCP – POLY PROPYLENE CO-POLYMER
PP – POLY PROPYLENE
AF – ACRYLIC FIBRE
DSF – DRY SYNTHETIC FIBRE
HDPE – HIGH DENSITY POLY ETHYLENE
DMT – DIMETHYL TERAPHTHALATE
MEG – MONOETHYLENE GLYCOL
ACN – ACRYLONITRILE
LAB – LINEAR ALKYL BENZENE
EO – ETHYLENE OXIDE
HNP – HEAVY NORMAL PARAFFINS
PEG – POLY ETHYLENE GLYCOL
DSAF – DRY SPUN ACRYLIC FIBRE
NCPA – NATIONAL COMMITTEE ON USE OF PLASTICS IN
AGRICULTURE
FGMI – THE FEDERATION OF GUJARAT MILLS & INDUSTRIES
DSIR – DEVELOPMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH
GR form - GUARANTEED REMITTANCE FORM
CIF – COST, INSURANCE AND FREIGHT
CF – COST AND FREIGHT
ICC – INTENATIONAL COUNCIL OF COMMERCE
FOB – FREE ON BOARD
L/C – LETTER OF CREDIT
CHA – CUSTOM HOUSE AGENT

94
 BIBLIOGRAPHY

BOOKS:

BOOKS AND JOURNALS OF IPCL

ANNUAL REPORTS OF IPCL
LOGISTICAL MANAGEMENT- DONALD J. BOWERSOX & DAVID J.
CLOSS
STATISTICS FOR MANAGEMENT – RICHARD I. LEWIN & DAVID S.
RUBIN

WEBSITES:

www.google.com
www.ipcl.co.in
www.myiris.com
www.hinduonnet.com
www.equitymaster.com
www.dmlogistic.com
www.indiainfiline.com

95
 ANNEXURE

OBSERVATION

TRUCK MOVEMENT TIMINGS

CYCLE TIME IN QTY.IN TIME/MT TIME/MT
Sr.No. DATE TOL INVOICE MINUTES MT IN MIN /LABOR
10 164.7
1 10/06/2006 9:48 10:09 61 6.1
10 137.7
2 10/06/2006 10:14 11:05 51 5.1
17 48.6
3 10/06/2006 11:25 11:55 30 1.8
16 261.9
4 10/06/2006 11:53 14:28 155 9.7
15 272.7
5 10/06/2006 11:54 14:25 151 10.1
16 254.61
6 10/06/2006 12:01 14:32 151 9.43
10 253.8
7 10/06/2006 13:33 15:07 94 9.4
16 251.1
8 10/06/2006 13:10 15:39 149 9.3
02 1714.5
9 10/06/2006 14:27 16:34 127 63.5
16 105.3
10 10/06/2006 14:36 15:39 63 3.90
10 116.1
11 10/06/2006 17:59 18:42 43 4.30
19 43.2
12 10/06/2006 18:24 18:55 31 1.6
10 32.4
13 10/06/2006 19:08 19:20 12 1.2

n=no of samples=13

Standard deviation= 439.9023

NO OF LABOURERS IN THE WAREHOUSE-27

96
 CYCLE TIME IN QT. TIME/MT TIME/MT
Sr.No. DATE TOL INVOICE MINUTES IN MIN /LABOR
1 12/06/2006 10:46 11:31 45 10 4.5 153
2 12/06/2006 10:57 11:36 39 10 3.9 132.6
3 12/06/2006 11:54 13:55 121 10 12.1 411.4
4 12/06/2006 13:01 14:00 59 16 3.7 125.8
5 12/06/2006 12:57 13:58 61 16 3.7 125.8
6 12/06/2006 13:04 14:01 57 16 3.67 124.78
7 12/06/2006 13:47 14:04 17 16 1.1 37.4
8 12/06/2006 14:30 15:14 44 16 2.8 95.2
9 12/06/2006 14:34 15:16 42 16 2.6 88.4
10 12/06/2006 16:04 16:53 50 16 3.1 105.4
11 12/06/2006 16:20 16:55 35 16 2.2 74.8
12 12/06/2006 16:32 17:11 39 16 2.4 81.6
13 12/06/2006 16:31 16:56 25 14 1.8 61.2
14 12/06/2006 16:34 17:23 49 16 3.1 105.4
15 12/06/2006 17:00 17:26 27 11 2.5 85
16 12/06/2006 18:00 18:43 43 15 2.9 98.6
17 12/06/2006 18:36 19:26 50 10 5.0 170
18 12/06/2006 18:40 P 19:31 51 20 2.6 88.4
19 12/06/2006 18:42 19:50 68 20 3.4 115.6
20 12/06/2006 19:28 20:18 49 15 3.3 112.2
21 12/06/2006 19:30 20:50 80 10 8.0 272
22 12/06/2006 19:52 20:51 58 10 5.8 197.2

97
n=no of samples=22

Standard deviation= 79.93431

NO OF LABOURERS IN THE WAREHOUSE-34

TIME/MT TIME/MT/
Sr.no Date TOL INVOICE CYCLE TIME IN MINUTS QT. IN MIN LABOR
1 13/6/2006 10:34 11:38 64 16 4 100
2 13/6/2006 11:32 11:46 14 10 1.4 35
3 13/6/2006 12:08 12:35 242 10 24.1 602.5
4 13/6/2006 12:18 14:10 112 10 11.2 280
5 13/6/2006 12:23 14:12 108 16 6.8 170
6 13/6/2006 13:00 14:13 74 15 4.9 122.5
7 13/6/2006 13:07 14:15 68 16 4.3 107.5
8 13/6/2006 13:12 15:53 161 16 10.1 252.5
9 13/6/2006 13:14 14:49 95 16 5.9 147.5
10 13/6/2006 13:10 14:20 70 10 7.0 175
11 13/6/2006 13:25 15:52 147 20 7.3 182.5
12 13/6/2006 13:26 16:04 158 15 10.5 262.5
13 13/6/2006 13:10 15:49 155 16 9.7 242.5
14 13/6/2006 14:19 16:39 140 15 9.3 232.5
15 13/6/2006 14:20 16:40 140 15 9.3 232.5
16 13/6/2006 14:25 16:54 150 15 10 250
17 13/6/2006 14:29 16:42 133 16 8.3 207.5
18 13/6/2006 15:16 19:33 257 15 17.1 427.5
19 13/6/2006 14:43 18:32 228 15.5 14.7 367.5
20 13/6/2006 14:39 17:12 153 15 10.2 255
21 13/6/2006 14:46 17:43 180 10 18.0 450
22 13/6/2006 14:36 17:44 188 16 11.8 295
23 13/6/2006 15:03 18:26 203 16 12.7 317.5
24 13/6/2006 15:42 19:44 242 15 16.1 402.5
25 13/6/2006 15:57 19:11 194 16 12.1 302.5
26 13/6/2006 15:59 19:20 201 10 20.1 502.5
27 13/6/2006 19:16 19:40 24 16 1.5 37.5

NO OF LABOURERS IN THE WAREHOUSE-25

n=no of samples=27

98
Standard deviation= 136.6325

99
 CYCLE TIME IN QTY IN METRIC TIME/MT TIME/MT/
Sr.No. DATE TOL INVOICE MINUTES TONS IN MIN LABOR
14/6/200 10 3
1 6 11:05 11:35 30 69
14/6/200 10 3
2 6 11:08 11:38 30 69
14/6/200 16 0.9
3 6 11:00 11:13 13 20.7
14/6/200 10 2.7
4 6 11:10 11:37 27 62.1
14/6/200 12:2 10 8.8
5 6 1 13:49 88 202.4
14/6/200 12:2 16 5.2
6 6 4 13:47 83 119.6
14/6/200 12:2 16 5.3
7 6 3 13:48 85 121.9
14/6/200 12:3 16 4.8
8 6 4 13:51 76 110.4
14/6/200 12:3 16 4.4
9 6 9 13:50 71 101.2
14/6/200 12:5 10 8.4
10 6 0 14:14 84 193.2
14/6/200 12:5 16 5.2
11 6 5 14:18 83 119.6
14/6/200 13:0 15 5.1
12 6 4 14:20 76 117.3
14/6/200 13:2 15 5.8
13 6 7 14:54 87 133.4
14/6/200 13:3 20 4.3
14 6 5 15:00 85 98.9
14/6/200 14:2 15 6.6
15 6 2 16:01 99 151.8
14/6/200 14:2 10 14.3
16 6 4 16:47 143 328.9
14/6/200 14:2 16 5.9
17 6 8 16:03 95 135.7
14/6/200 14:3 16 8.8
18 6 3 16:53 140 202.4
14/6/200 14:4 10 11.9
19 6 5 16:44 119 273.7
14/6/200 15:3 16 5.1
20 6 7 16:58 81 117.3
14/6/200 15:5 15 11.1
21 6 1 18:37 166 255.3
14/6/200 15:5 16 10.1
22 6 3 18:35 162 232.3
14/6/200 16:2 10 13.0
23 6 0 18:30 130 299
14/6/200 16:2 16 8.4
24 6 4 18:40 135 193.2
14/6/200 16:3 16 8.4
25 6 1 18:46 135 193.2
14/6/200 17:0 10 9.9
26 6 3 18:42 99 227.7
14/6/200 17:5 04 6.5
27 6 3 18:19 26 149.5
14/6/200 18:5 16 3.5
28 6 9 19:55 56 80.5

100
 14/6/200 19:4 16 3.3
29 6 5 20:37 52 75.9
14/6/200 19:4 09 6
30 6 4 20:38 54 138

n=no of samples=30

Standard deviation= 75.2148 NO OF LABOURERS IN THE WAREHOUSE-23

Average S.D. = 439.9023+79.9343+136.6325+75.2148

4
= 182.921

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Number of truck Time of TOL
14 08:00 – 12:00
51 12:00 – 16:00
25 16:00 – 20:00

TOL OF TRUCK FOR 10 TO 14TH JUNE

60 51
50
40
NO. OF 25
30
TRUCKS
14 no of truck
20
10
0
8:00-12:00 12:00-16:00 16:00-20:00
TIME

HIGHEST TOL TAKES PLACE BETWEEN 12:00 NOON TO 16:00 HOURS

102
Number of truck Time of
INVOICE
11 08:00 – 12:00
32 12:00 – 16:00
43 16:00 – 20:00

INVOICE OF TRUCKS FOR 10 TO 14TH JUNE

50 43
40
32
NO. OF 30
TRUCKS 20
no of truck
11
10

0
8:00-12:00 12:00-16:00 16:00-20:00
TIME

HIGHEST NO OF INVOICES ARE MADE BETWEEN 16:00 TO 20:00 HOURS

103
104