Atul (SCM)
Atul (SCM)
Atul (SCM)
CHAPTER -1
INTRODUCTION
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INTRODUCTION
Atul Ltd is one of the diversified industries of the Lalbhai group and it
deals with the production of the various chemicals & dyes intermediates. Color
division is one of the six division which are governed by Atul Ltd. The project
aims at highlighting the importance of Supply Chain Management at Atul Ltd.
Various departments are studied in the course of the project report. This
include the order tracking system, the standardization process, the purchase
department, marketing department, manufacturing plant, storage room.
The project deals with the study of how supply chain management is
done in Atul Ltd. I also study the Order processing, Physical distribution,
Inventory management of various depots.
The Indian dyestuff industry is only about 40 years old though a few
MNCs set up dyestuff units in the pre independence era. Like the rest of the
chemical industry, the dyestuff industry is also highly fragmented. The industry
is characterized by the co-existence of a small number of players in the
organized sector (around 50 units) and a large number of small manufacturers
(around 1,000 units) in the unorganized sector. The distribution of these units is
skewed towards with western region (Maharashtra and Gujarat) accounting for
90%. In fact, nearly 80% of the total capacity is in the state of Gujarat, where
there are nearly 750 units.
Over six hundred types of dyes and organic pigments are now being
manufactured in the country (both by the organized and the unorganized
sector). But the per-capita consumption of dyestuffs is lower than the world
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average. Dyes are soluble and essentially used in textile products. Pigments, on
the other hand, are insoluble and are important imports to product such as
points.
During the past two years, the dyestuff industry was overtaken by a series
of fast changing events in the international arena. Indian companies failed to
keep pace with the changing trends. The biggest market for dyestuffs has been
the textile industry. The dominance of polyester and cotton in the global
markets has decisively shaped the demand for certain types of dyestuffs. On the
other hand, the demand for polyamides, acrylics, cellulose and wool was more
or less stagnant. Differences in the regional growth rates of textile products too
affect demand. The Asian region saw the biggest growth in textile production,
followed by North America, Latin America and Western Europe. This suggests
the shift in the global textile industry towards Asia. As a result, Asia leads in
dyestuff production both in terms of volumes and value, with a 42 % share of
the global production; the US is next with 24 % and Europe has around 22 %.
Due to a greater use of polyester and cotton-based fabrics, there has been a shift
towards reactive dyes, used in cotton-based fabrics, and disperse dyes, used in
polyester. These two dyes have been dominant in all the three regional global
market, especially Asia. Adding to the shift in textile usage pattern and regional
developments is the extent of over capacity in the global dyestuff industry.
Capacity is estimated to be around 1.2 million tones, with consumption at 0.8
million tones, leaving a clear gap of 0.4 million tones.
Within India, the major players in the pigments industry are Color Chem.
and Sudarshan Chemicals while in the dyestuff industry companies such as are
Atul, Clariant India, Dystar, Ciba Specialties and IDI are important players in
terms of market share. The Indian companies together account for around 6 %
of the world production.
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Fiscal policies and changes in the usage pattern of the global dyestuff
industry have changed the market shares of Indian companies. Excise
concessions for the small-scale sector in the mid and the late 1980s spawned
numerous units in Maharashtra and Gujarat. At one stage, there were in the
unorganized sector around 1,000 units, with most of them located in Gujarat
and Maharashtra. This also led to large-scale evasion of duties. However, since
the early 1990s, there has been a gradual reduction in the excise duty rates
applicable to the organized sector. From 25 % in 1993-94, the excise duty rates
were reduction to 20 % in 1994-95 and further to 18 % in 1997-98.
The latest Union Budget further reduced these rates to 16 %. This gradual
reduction in the duty rates blunted the competitive edge of the unorganized
sector. The organized sector, with better product range, technology and
marketing reach, was able to increase its market share. But more important
changes have come through the German ban on certain dyestuffs, followed by
the implementation of the local pollution control laws. While the organized
sector has been able to phase out the production of dyes based on the 20 banned
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amines by the German legislation, many in the unorganized sector were forced
to exit. This was compounded by the local pollution laws, which required
setting up of effluent treatment plants, and pushed out companies in the
unorganized sector.
Application
Group
Acid Wool, silk, paper, synthetic fibers, leather
Azoic Printing Inks and Pigments
Basic Silk, wool, cotton
Direct Cotton, cellulosic and blended fibers
Disperse dyes Synthetic fibers
Reactive Cellulosic fiber and fabric
Organic pigments Cotton, cellulosic, blended fabric, paper
Sulphur Cotton, cellulosic fiber
Vat dyes Cotton, cellulosic and blended fiber
With the change in the product profile of the textile industry from the
high-cost cotton textiles to the highly durable and versatile synthetic fibers, the
consumption pattern of dyes has also been changing. Polyesters are projected to
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1.1.2 Technology:
The dyestuff industry is one of the heavily polluting industries and this
has resulted in the closure of units internationally and shifting of units to the
emerging economies. Most of the international manufacturers have transferred
the technology to developing nations like China, India, Indonesia, Korea,
Taiwan and Thailand. This shift of manufacturing capacities is because the
industry is perceived as a high-cost and low return one. The batch processing
also makes it a labor- intensive industry. Thus, the competitiveness of
developing economies increases. However, the judiciary has come down with a
heavy hand on several manufacturing units, especially in Gujarat.
1.1.3 Restructuring:
There has been severe a drain on the profitability of the industry. This is
due to entry of many new players in the last few years resulting in severe
competition and price wars. Restructuring of the Indian dyestuff industry,
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initiated a couple of years ago, is in progress. The trend was set last year by the
market leader Colour-Chem. Ltd, which decided to opt out of the dyestuffs
business. It has entered into a toll manufacturing agreement with Dystar India
Ltd. There have been other alignments, which would result in improving
capacity utilization at manufacturing facilities and also obtain better reach of
export markets.
Ciba India and IDI have signed a pact to market polyester and cellulose
dyes. IDI has also tied up with Ciba for the manufacture and marketing of dyes
and pigments. Atul products has completed the acquisition of Zeneca’s 50%
stake in Atic Industries Ltd and tied up with BASF, Germany to market 50 % of
its production of vat dyes.
The restructuring of Sandoz, consequent to the merger with Ciba, has led
to the creation of Clariant AG. The dyestuffs manufacturing division of Khatau
Group has been merged with its marketing company, Indokem Ltd.
Gujarat Dyestuff Industries Pvt. Ltd. was set up in the year of 1981. The
company shifted the manufacturing base from Textile Dyes & Chemicals to
PPP/HDPE Woven Bag/Sacks/Fabrics and PE Liner in the year of 1985.
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Bag/Sacks/Fabrics and PE Liner etc. Encored with good demand the company
implemented expansions in quick succession from time to time.
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Atul Ltd is a member of Lalbhai group, one of the oldest business houses
of India, with interests mainly in textiles and chemicals. The group is strongly
committed to serve the society in the field of education, health as well as
culture.
Over the year, Atul Ltd joined hand with American Cyanamid crop
(1952), Imperial chemical industries plc (1955) and Ciba-Geigy Ltd (1960) to
from Respectively 3 joint venture companies, namely, Cyanamid India Ltd,
Atic industries Ltd and Cibatual Ltd respectively. Consequent to worldwide
divestment of the days and polymers business by ZENECA plc (formerly a part
of ICI plc) and Ciba Ltd respectively, Atic industries Ltd and Cibatual Ltd were
merged into Atul Ltd in 1995 and 1998 respectively.
and has over 35000 shareholders. Atul also has office in the USA, the UK,
Germany, and Vietnam that service its international customers.
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Agrochemicals Division:
In 1967, Atul Limited started manufacture of phenoxy herbicides and in
subsequent years added more products to the range, including urea &
sulfonylurea herbicides, triazole fungicides and carbamate; neonicotinoid;
organophosphorus & pyrethroids insecticides. Phosgene, a vital raw material is
manufactured by the division.
Aromatics Division:
Aromatics Division is one of the world’s largest manufacturers of Para
anisic aldehyde, Para cresol and Para anisic alcohol, supplying its products to
diverse industries, including cosmetics, flavours and fragrances, bulk drugs, dye
intermediates; and plant and animal micro-nutrients.
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Drawing on its strong research base and flexible manufacturing capabilities, the
division now manufactures numerous intermediates for dyes and semi-
speciality chemicals for customers world-wide.
Colors Division:
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For over two decades, this unit manufactured Sulpha Drug Intermediates
for Ciba Geigy. Now, as a separate Division of Atul, Pharmaceuticals
Intermediates has diversified into a wide range of specialty intermediates and
APIs.
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Atul is the world leader in Dapsone, an anti-bacterial drug. A newly built GMP
manufacturing plant, supported by an approved DMF, assures you a high
quality and regular supply.
Polymers
Lapox Epoxy Resins and Hardener systems are manufactured and
marketed by Polymers division of Atul Limited. The manufacture of Epoxy
systems began in 1968 in a company established as
a joint venture between Atul and Ciba,
Switzerland. In 1999, on the merger of the JV with
the parent company, the Epoxy operations became
a part of Atul Limited.
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The company has geared itself to delight epoxy users with Lapox in the
global niche markets.
Floras Division
Floras was started with a view of productive utilizing of large land
holdings of Atul Ltd. Its objective is to give genuine herbal extracts which are
obtained from scientifically grown crops.
Floras has ensured that its products meet the perfumery and cosmetic
industry’s needs for genuine natural essential oils.
In any organization only their employees are the real assets. This is the
only asset, which make use of all the resources and can generated revenues
from business. Employees are human beings and they have their own beliefs,
attitudes, personality and goals to achieve from the organization. As
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In Atul ltd, Human Resource Department manages all the employees very
effectively and efficiently.
C -Competences building
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Safety:
Health:
Environment:
A. Water:
The factory sites have extensive pipeline system to keep ground water
free of any contamination. The state-of-the-art effluent treatment plants are
of large capacity to fully treat all effluence from the manufacturing facilities.
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B. Air:
Numerous scrubbing systems are integral part of the manufacturing
facility of Atul ltd. Analyses of vent gases and monitoring of ambient air
are done routinely.
C. Soil:
Organic chemical wastes are incinerated in the incinerators of Atul
ltd. Incinerator ash and solid wastes generated from manufacturing
process are carefully monitored in line with prevalent rules and
regulation.
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Research Design:-
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This study shows all the processes starting from the procuring of the raw
material to the distribution of the finished products. This study gives the
information regarding purchasing of raw material, which are the different
processes necessary for testing the quality of the raw material, how the
inventory is managed at the each and every stage of the production process.
This study gives the information about the necessary steps taken for testing the
quality of the finished product. The study also shows the necessary arrangement
required at the dispatch area. The study gives information to the management
that how they can add the value and reduce the total cost across the entire
process. It gives information about which are the value added process and
which are not. So that they can eliminate that non value added processes.
Thus this study gives full information starting from receiving order to
the distribution of the finished product. It also focus on the weak area of the
company and where it required the proper attention.
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Introduction
The model of the Five Competitive Forces was developed by Michael E. Porter
in his book „Competitive Strategy: Techniques for Analyzing Industries and
Competitors“
Porters model is based on the insight that a corporate strategy should meet the
opportunities and threats in the organizations external environment. Especially,
competitive strategy should base on and understanding of industry structures
and the way they change.
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Porter has identified five competitive forces that shape every industry and every
market. These forces determine the intensity of competition and hence the
profitability and attractiveness of an industry.
· The customer don’t knows about the production costs of the product
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The competition in an industry will be the higher, the easier it is for other
companies to enter this industry. There is always a latent pressure for reaction
and adjustment for existing players in this industry.
· Existing players have close customer relations, e.g. from long-term service
contracts,
A threat from substitutes exists if there are alternative products with lower
prices of better performance parameters for the same purpose. They could
potentially attract a significant proportion of market volume and hence reduce
the potential sales volume for existing players. This category also relates to
complementary products.
· Current trends.
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· Low market growth rates · Barriers for exit are high (e.g. expensive
and highly specialized equipment).
CHAPTER 2
THEORITICAL FRAMEWORK
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levels are critical, since they are primary determinants of customer service
levels.
The mode choice aspect of these decisions are the more strategic ones.
These are closely linked to the inventory decisions, since the best choice of
mode is often found by trading-off the cost of using the particular mode of
transport with the indirect cost of inventory associated with that mode. While
air shipments may be fast, reliable, and warrant lesser safety stocks, they are
expensive. Meanwhile shipping by sea or rail may be much cheaper, but they
necessitate holding relatively large amounts of inventory to buffer against the
inherent uncertainty associated with them. Therefore customer service levels,
and geographic location play vital roles in such decisions. Since transportation
is more than 30 percent of the logistics costs, operating efficiently makes good
economic sense.
Supply chain management flows can be divided into three main flows:
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Distribution Strategy:
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activities. These trade-offs are key to developing the most efficient and
effective Logistics and SCM strategy.
Information:
Cash-Flow:
Today's business climate has rapidly changed and has become more
competitive as ever in nature. Businesses now not only need to operate at a
lower cost to compete, it must also develop its own core competencies to
distinguish itself from competitors and stand out in the market. In creating the
competitive edge, companies need to divert its resources to focus on what they
do best and outsource the process and task that is not important to the overall
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objective of the company. SCM has allowed company to rethink their entire
operation and restructure it so that they can focus on its core competencies and
outsource processes that are not within the core competencies of the company.
Due to the current competitive market, it is the only way for a company to
survive. The strategy on applying SCM will not only impact their market
positioning but also strategic decision on choosing the right partners, resources
and manpower. By focusing on core competencies also will allow the company
to create niches and specialization of core areas.
Non added value activities are considered to be waste and therefore must
be eliminated. Such non added value activities are overproduction, waiting,
unnecessary transport, over processing, excess inventory, unnecessary
movement, defects and unused employee creativity.
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Value chain analysis is a powerful tool for managers to identify the key
activities within the firm which form the value chain for that organization, and
have the potential of a sustainable competitive advantage for a company.
Therein, competitive advantage of an organization lies in its ability to perform
crucial activities along the value chain better than its competitors.
The value chain analysis essentially entails the linkage of two areas.
Firstly, the value chain links the value of the organization’s activities with its
main functional parts. Then the assessment of the contribution of each part in
the overall added value of the business is made.
In order to conduct the value chain analysis, the company is split into
primary and support activities (Figure). Primary activities are those that are
related with production, while support activities are those that provide the
background necessary for the effectiveness and efficiency of the firm, primary
and secondary activities of the firm are discussed in detail below.
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Inbound Logistics
These are the activities concerned with receiving the materials from
suppliers, storing these externally sourced materials, and handling them
within the firm. So all these activities related with bringing the raw
material, keeping them in the store and managing the for the production
process. The following are the various processes which are used in the
inbound logistics.
Transportation
Material handling
Material storage
Communications
Testing
Information systems
Operations
These are the activities related to the production of products and services.
This area can be split into more departments in certain companies. It consist
of various plants where the production is done. Here the inventory should
be managed at each level of production process. So here all the production
process is included. The following are the various processes which are used
in operation.
Process
Materials
Machine tools
Material handling
Packaging
Maintenance
Testing
Building design & operation
Information systems
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Outbound Logistics
These are all the activities concerned with distributing the final product
and/or service to the customers. All the process related with handling the
finished product and distribution of these product are there in the outbound
logistics. The following are the various processes which are used in the
outbound logistics.
Transportation
Material handling
Packaging
Communications
Information systems
This functional area essentially analyses the needs and wants of customers
and is responsible for creating awareness among the target audience of the
company about the firm’s products and services. Companies make use of
marketing communications tools like advertising, sales promotions etc. to
attract customers to their products. The following are the various tools
which are used in the marketing and sales.
Media
Audio/video
Communications
Information systems
Service
Testing
Communications
Information systems
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Procurement
This function is responsible for purchasing the materials that are necessary for
the company’s operations. An efficient procurement department should be
able to obtain the highest quality goods at the lowest prices. It is the
responsibility of the procurement department to purchase the good quality
goods so that product can achieve higher quality. It is the responsibility of the
department to order the sufficient amount of the quantity at the lower price.
Technology Development
Firm Infrastructure
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Margin
The word ‘margin’ is used for the difference between the total value and
the cost of performing the value activities. Means the value achieved by
selling the product or the services the customer and the cost occurred in
the process of manufacturing product or service. This difference is
shown by margin here.
Sometimes however, the firm may be able to reduce cost in one activity
and consequently enjoy a cost reduction in another, such as when a design
change simultaneously reduces manufacturing costs and improves reliability so
that the service costs also are reduced. Through such improvements the firm has
the potential to develop a competitive advantage.
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CHAPTER 3
SUPPLY CHAIN MANAGEMENT AT
ATUL LTD.
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This chapter is about how the supply chain management is done at Atoll
ltd. It shows the whole process of supply chain management. Staring with
taking the order to the dispatching of the finished products. The order is taken
by e-mail or fax or on the telephone by the marketing department. According to
the order quantity they inform the production department to plan for the
required order quantity.
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Getting Stock detail and merge req. for East & West
Calculating quantity to
be order
Receipt of Quotation
Reminder for
Quotation
Evaluation of
Quotation
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Negotiation
1st Level
2nd Level
Approval of
3rdQCS at different level
Level
Asst. Mgr
GM
Sr. Mgr
Preparation of Order
Signature of Order
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Staking of Receipt
Intimation to Lab/Excise/Finance
Sampling of Consignment
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After purchasing raw material, it is given to the testing for the testing
department. Testing department has taken some sample from this raw material
and check the quality of this sample. We are prepared following flow chart of
the raw material testing activities.
Sampling
Report printing
Distribution of Reporting
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Distribution of Reports
Consignment/Deduction
After the testing of the raw material, raw material is sent to the
production plants and depending upon the requirement of product, process is
done to produce the product. Vat dyes takes longer time to be prepared
compared to the other dyes. Vat green dyes is the monopoly of the Atul Ltd.
60% market of the vat green in India is captured by Atul Ltd. Here, general
routine procedure is followed, every day in the morning they take Tempo to the
shed D which is for reactive, there is a person who checks all the material while
loading, the material is then send to the warehouses and it is arrange out there.
After finishing with shed D, the tempo goes to shed E for carrying the vat dyes.
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Arrange goods in
Receiving the packing Warehouse
advice and makes its
entry
Repaint the
drums
The product that comes from the finishing plant is not properly arranged
so they have difficulty in spotting the product of particular blend and this leads
to delay.
The drums that are brought from the store are not properly kept and due
to which they have to repaint the drums for export before making and markings.
So painting and drying of drums consumes lot of times.
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3.6 DISPATCH
In east site they keep finished goods inventories so generally they do not
determine the critical time of dispatch. The critical time is determined by dyes
coming to the bonded warehouses in the West site. The palletisation of drums is
also done in the bonded warehouse.
For dispatch of the material they get intimation from logistics National
regarding dispatch of the material, then they make necessary arrangements. And
on the receipt of weight list from excise they keep cargo ready in the
dispatched area. The cargo is loaded in the presence of the security. Person
checks the materials according to the weight list. Incase if cargo is at east site
warehouse, then first the east site cargo is loaded then the truck comes to the
west site.
They are responsible for giving ARE-I form, which is required for custom
purpose. On the day dispatched value sheet and invoice copy goes to them.
They also get the packing data from the packing department. These ARE-I
forms are made scheme wise and party wise. They hardly required any time to
make ARE-I form and weight list, which goes to the warehouse. Normally 6
copies of the ARE-I forms are made which are modified according to the
different purpose.
Among six copies original, duplicate and triplicate copy goes with the
driver, out of which original and duplication are returned back to the factory the
third copy is kept by driver. Before giving it to driver the triplicate copy goes to
the logistics international. After dispatch, some copies of ARE-I form goes to
central excise to the endorsement, this is done within 24hrs.
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CHAPTER 4
SUGGESTION & RCOMMENDATION
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Proper care should be taken in weight of the product when the container
is loaded at the warehouse because any careless will rise into the delivery
of wrong amount of product and it will cost to the company.
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ANNEXURES
1 ) Key Products of Aromatics Division:
Perfumery Grades
Para Anisic Aldehyde
Para Anisyl Alcohol
Para Anisyl Acetate
Para Cresyl Methyl Ether
Para Cresyl Acetate
Para Cresol
In organics
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Anisole
Ortho Methoxy Toluene
Para Methoxy Acetophenone
Para Toluene Sulphonic Acid
p-Cyanophenol
1,3-Cyclohexanedione
Benzophenone-12
4-Hexylresorcinol
These all Chemical products are used in the production process of dyes.
Fungicides
Triazoles
Organo sulphur
Insecticides
Neonicotinoids
Pyrethroids
Carbamates
Intermediates
Chlorophenols
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Benzyl Chloroformate
Centralite I (N,N’-Diethyl – N, N’ diphenyl urea)
These all Chemical products are used in the production process of
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Domestic International
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These all Dyes are used in the textile industries for the printing purpose. The
following are the major buyer of these dyes.
Alok Industries.
Welspun.
Arvind Mills.
Raymond.
Vardhaman Industries.
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BIBLIOGRAPHY:
Books Referred:
Websites Referred:
http://www.en.wikipedia.org/wiki/Supply_chain_management
http://www.supplylogistic.blogspot.com
http://www.EzineArticles.com/?expert=Razamith_Sovereign
http://www.coursework4you.co.uk/essays-and-dissertations/value-chain-
analysis.php
Other References:
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