Fuels, Chemicals & Packaging Procurement

1. Fuels, Chemicals & Packaging Procurement

2. Major fuels & Chemicals procured • Fuels (Total spend: Rs. 37500 Lacs) • Coal • Lignite • Coke • Coke breeze • Binder • Chemicals (Total spend: Rs. 2000 Lacs) • Ammonia • Sodium Sulphide liquid • Caustic Soda Lye • HCL • Water treatment chemcials

3. 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

4. Overview of Fuels Procurement

5. Spend mix - fuels

6. Coke • Annual Spend: Rs. 4500 Lacs • Quantity Procured: 25000 MT pa • Purpose: Used in LimeKiln 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

7. 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: • 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 • Sources: 5 suppliers (Preferred – Mahashakti & BLA Coke) • Procurement Pattern: Other than monsoon (Single contract) • 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

8. 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: • 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 • Sources: 3 suppliers (Since current season) • Procurement Pattern: Other than monsoon (Single contract) • 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

9. Coal & Lignite • 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

10. Overview of chemicals Procurement

11. Spend Mix - Chemicals

12. 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

13. 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 Na2S (Liq) • Development of additional transporter

14. Caustic Soda Lye & HCL • 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

15. Overview of Packaging Material Procurement

16. Spend & Volume Mix - Packaging

17. 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

18. Thank You