Case Study- Insta Cement Industries BACKGROUND India is the second largest cement producer in the World, after China and the production capacity is expected to reach 550 Million Tonne by 2025 with large concentration in Western and Southern Parts of the country. The Industry is expected to grow at 9% CAGR between FY18 to FY20, on the back of increased spends on roads and railways, push towards affordable housing by central government and materialization of pent-up demand. CASE STUDY Insta Cement Ltd enjoys 40 percent market share in the western parts of the country, along with a value premium. It has a strong consumer-based brand equity developed over a period due to its quality consistencies and delivery commitments. The company enjoys 26% market share pan India and has built up its long term strategy to penetrate in rural markets. Insta Cement Ltd has relatively low share market in rural area especially in the east region. In West Bengal there are 32 small island in Sunderban region, these islands are high potential market of 40000 Metric Tonne with high profit. Currently, the cement demand are mostly catered by the local players in this region. Insta Cement Ltd. manufacturing unit is 300km away and to come from the plant it has to pass through Kolkata. Kolkata has no entry for heavy vehicle from 8am-8pm. To enter the island the only way is through waterways. Insta Cement Ltd has started its operation in the island from last one month but is facing a lot of issues. West Bengal is also known for its strong labour Union, Insta Cement Ltd strongly follows its processes and does not indulge in wrong practices. Other cement players in order to push its sale pays 5 Rupees directly to the labours for unloading charges whereas Insta Cement Ltd pays 7 rupees directly into the contractors’ account and then the contractor pays to the labours. This has not only increased its total logistics cost but also the labours are not willing to unload the bags as they get paid directly from other cement players. Following are some data for your reference:- Total Logistics Cost is 20% of the gross sales price. Price per bag- 325 Rs 1 METRIC TONNE=20 bags 1 bag= 50 kgs Number of labour required for unloading a 16 METRIC TONNE = 5 labours Suggest ideas through which we can reduce our Total Logistics Cost and cater Sunderban market in the most efficient way.
Case Study- Insta Cement Industries
BACKGROUND
India is the second largest cement producer in the World, after China and the production capacity is expected to reach 550 Million Tonne by 2025 with large concentration in Western and Southern Parts of the country. The Industry is expected to grow at 9% CAGR between FY18 to FY20, on the back of increased spends on roads and railways, push towards affordable housing by central government and materialization of pent-up demand.
CASE STUDY
Insta Cement Ltd enjoys 40 percent market share in the western parts of the country, along with a value premium. It has a strong consumer-based brand equity developed over a period due to its quality consistencies and delivery commitments. The company enjoys 26% market share pan India and has built up its long term strategy to penetrate in rural markets.
Insta Cement Ltd has relatively low share market in rural area especially in the east region. In West Bengal there are 32 small island in Sunderban region, these islands are high potential market of 40000 Metric Tonne with high profit. Currently, the cement demand are mostly catered by the local players in this region. Insta Cement Ltd. manufacturing unit is 300km away and to come from the plant it has to pass through Kolkata. Kolkata has no entry for heavy vehicle from 8am-8pm. To enter the island the only way is through waterways. Insta Cement Ltd has started its operation in the island from last one month but is facing a lot of issues.
West Bengal is also known for its strong labour Union, Insta Cement Ltd strongly follows its processes and does not indulge in wrong practices. Other cement players in order to push its sale pays 5 Rupees directly to the labours for unloading charges whereas Insta Cement Ltd pays 7 rupees directly into the contractors’ account and then the contractor pays to the labours. This has not only increased its total logistics cost but also the labours are not willing to unload the bags as they get paid directly from other cement players.
Following are some data for your reference:-
Total Logistics Cost is 20% of the gross sales price.
Price per bag- 325 Rs
1 METRIC TONNE=20 bags
1 bag= 50 kgs
Number of labour required for unloading a 16 METRIC TONNE = 5 labours
Suggest ideas through which we can reduce our Total Logistics Cost and cater Sunderban market in the most efficient way.
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