FUELS CHEMICALS PACKAGING PROCUREMENT MAJOR FUELS CHEMICALS PROCURED

FUELS, CHEMICALS &PACKAGING PROCUREMENT

MAJOR FUELS &CHEMICALS PROCURED Fuels (Total spend: Rs. 37500 Lacs) � Coal � Lignite � Coke breeze � Binder Chemicals (Total spend: Rs. 2000 Lacs) � Ammonia � Sodium Sulphide liquid � Caustic Soda Lye � HCL � Water treatment chemcials

FOCUS AREAS Ensuring continuous supply of material, for daily consumption Bulk material supply heavily depends on transport conditions and availability of suitable vehicles Pre planning of material during festival seasons has to be ensured Stock situation has to be reviewed on daily basis – to avoid stock outs as well as excess supplies Market price trends and interdependence of commodities has to be closely monitored Constant followup required to maintain stock conditions – Contact has to be maintained at various levels for the purpose Close coordination with users at plant for timely unloading of material

OVERVIEW OF FUELS PROCUREMENT

SPEND MIX - FUELS Spend Rs. L Coal Coke 1500 4% 6090 16% Coke breeze 17500 47% 8000 21% 4500 12% Starch Binder Lignite (Captive + Purchased)

COKE Annual Spend: Rs. 4500 Lacs Quantity Procured: 25000 MT pa Purpose: Used in Lime. Kiln for Limestone burning Period of Usage: Mostly during monsoon Type: High GCV Coke (6800 GCV) Challenges: Stringent quality requirements � High fluctuation in prices due to international coking coal prices � Sources: 5 suppliers (Preferred – Mahashakti & BLA Coke) Procurement Pattern: Seasonal (Apr to Sep – Single contract) Takeaway from recent contract � Continuous feedback on international pricing parity, helped in better negotiations

COKE BREEZE Annual Spend: Rs. 8000 Lacs Quantity Procured: 75000 MT pa Purpose: Used for briquetting and then in Lime Kiln for Limestone burning Advantage: High cost saving as compared to Coke Period of Usage: Other than monsoon Quality: 0 to 4 mm size (5500 GCV) Challenges: � � � Sources: 5 suppliers (Preferred – Mahashakti & BLA Coke) Procurement Pattern: Other than monsoon (Single contract) � Stringent quality requirements in terms of size & moisture content High fluctuation in prices due to international coking coal prices Availability is dependent on coke consumption in other industries viz. Steel manufacturing Likely to be used during monsoon post commissioning of briquette drier unit Takeaway from recent contract � Depending on market situations, feasibility to switch over between coke and coke breeze to be analyzed

BINDER Annual Spend: Rs. 1500 Lacs Quantity Procured: 4000 MT pa Purpose: Used for coke breeze binding, to produce coke briquette Period of Usage: Other than monsoon Quality: Pregelitised Starch Binder, to pass absorption test Challenges: � � � Sources: 3 suppliers (Since current season) Procurement Pattern: Other than monsoon (Single contract) � Stringent quality requirements in terms of absorption test High fluctuation in prices due to maize starch prices Till previous season only Anil Ltd. was approved supplier Likely to be used during monsoon post commissioning of briquette drier unit Takeaway from recent contract � Reduced dependence on single supplier by developing new suppliers to ensure uninterrupted material supply at competitive price

COAL & LIGNITE Annual Spend • Coal: Rs. 17500 Lacs • Lignite (Captive): Rs. 5570 Lacs • Lignite (Purchase): Rs. 520 Lacs Quantity Procured • Coal: 250 L MT pa • Lignite (Cap): 2 L MT pa • Lignite (Pur): 0. 2 L MT pa Sources • Coal: Indonesia & Africa • Lignite (Cap): Khadsaliya, Bhavnagar • Lignite (Pur): GMDC – Bhavnagar Purpose: Used in boiler as fuel Presently Coal procurement is being handled from Noida office Captive Lignite mines are operated by GHCL and mining contract is assigned to Ahmedabad based contractor Lignite purchase is being handled by separate team

OVERVIEW OF CHEMICALS PROCUREMENT

SPEND MIX - CHEMICALS 150 8% 50 3% 150 8% Ammonia Spend (Rs. L) Sodium Sulphide Liquid Caustic Soda Lye HCL Water treatment chemicals 550 26% 1100 55%

AMMONIA Annual Spend: Rs. 1100 Lacs Quantity Procured: 3000 MT pa Purpose: Used in SA manufacturing process Challenges: � Highly hazardous material � High fluctuation in price depending on availability & import price � Limited storage capacity at plant + under utilization of available capacity � Material unloading at plant Sources: 2 suppliers Procurement Pattern: Quantity contract

SODIUM SULPHIDE (LIQUID) Annual Spend: Rs. 550 Lacs Quantity Procured: 1200 MT pa (on 100% basis) Purpose: Used in SA manufacturing process to maintain SA quality Challenges: � � Highly hazardous material Prices depends Caustic lye & sulphur price Material availability Material unloading at plant Sources: 3 suppliers Procurement Pattern: Quantity contract Take away: Stock of Sodium sulphide (flakes) is always maintained at plant as backup incase of scarce availability of Na 2 S (Liq) � Development of additional transporter �

CAUSTIC SODA LYE & HCL Annual Spend (Rs. L) Caustic Soda Lye HCL Quantity Procured (MT) 150 50 Procurement Pattern 500 Monthly contract 5000 Annual contract Purpose: Used in resin cleaning for DM plant Sources: Aditya Birla (Indian Rayon) / GACL Challenges Aditya Birla being close to plant becomes most preferred supplier due to transportation cost – At time supplier takes location benefit � Pricing depends on demand – supply conditions � Take away Avoid dependence on single source and continue procurement from alternate source (if required at differential price) � Attempt to have data regarding import scenario of Caustic soda lye �

OVERVIEW OF PACKAGING MATERIAL PROCUREMENT

SPEND & VOLUME MIX - PACKAGING 1600 1420 1400 1200 1000 Volume (Nos. in L) 800 690 Spend (Rs. L) 600 400 280 80 130 30 0. 38 0. 8 0 50 kg HDPE laminated 50 kg HDPE liner 750 kg FIBC Jumbo 1300 kg FIBC Jumbo bag

PACKAGING MATERIAL Annual Spend: Rs. 2500 Lacs Quantity: 110 Lacs bags pa Purpose: Packing of LSA & DSA Challenges: Mismatch between Production, Sales and bagging plan � Labour intensive manufacturing – hence sudden demand variation cannot be catered � Careful preplanning required during festival season � Sources: 3 + 2 suppliers Procurement Pattern: Monthly contract based on sales plan Take away: Ensuring 15 -20 days inventory at plant � Close monitoring of stocks on daily basis �

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