Operation Management Case Study On "GUJRAT AMBUJA"

Operation Management
Case study on “GUJRAT AMBUJA”
– Apoorva N Pai-19020841002
– Arujun Kumar-19020841004
– Nandini Likhar-19020841020
– Aritra-19020841003
Gujarat Ambuja Cement Limited
MISSION VISION
• To be the most sustainable and competitive
• To create value for all
company in industry.
• Delighted Customers
• Inspired Employees
• Enlightened Partners FACTS
• Energized Society • 48,000+ Dealers & Retailers
• Loyal Shareholders • 4 Captive Ports

• 29.65 million tonnes Capacity
• Healthy Environment
• 27 Knowledge Centres
• 8 NABL Accredited Concrete Future Labs
Introduction
– It is among technologically advanced cement manufacturers in just 10 years of existence.
 Driving force for establishment:
• Limited competition
• Product stability
• Stable demand
– It is possible because of qualities like

• Cost efficiency
• Following global best practice
• Strategies like Energy efficiency
• Continuous innovations have created major strategic advantages in marketing and
distribution, particularly in areas such as brands and logistics.
• GACL has primary manufacturing facilities at two locations-
Gujarat (which gives access to the markets of Gujarat, Kerala, Mumbai and
exports)
Himachal Pradesh (which gives access to the high growth markets of Punjab,
West UP, and Haryana).
• GACL is one of the largest exporter of cement in India with major markets
being Bangladesh, Sri Lanka and the Middle East.
Growth Strategy
• Cement is 40 percent capital cost and another 40 percent energy cost and mostly a
commodity.
• To develop a market share it is important to have the lowest capital cost per ton of
cement.
• For achieving this you need to focus on:
• Large plant capacities with 100% capacity utilization,
• Power consumption to be the lowest,
• Develop new markets, new products, and establish brand equity.
Future Plans & Strategic Investments
• Clear growth strategy of getting volume and achieving dominant market shares.
• Over the next 2 years, debt-financed expansions will drive volume 28 percent
annually and GACLs volumes will rise from 3.1 million tonnes in 1996 to an
estimated 10 million tonnes by 2002 AD.
• Exports and foreign operations which already account for approximately 15
percent of sales are expected to contribute up to 25 percent within next 3 years.
• This would come through creation of new plants, expanding capacity of existing
plants.
• Unit at Himachal Pradesh
Bulk Cement Transport
• In September 1993 Ambuja Shikhar became the first ship in the country to
carry bulk cement.
• It resulted in a reduction of 40% transport costs. Transformed the packaging
and transport of cement.
• Connected the route Ambujanagar – Muldwarka – Mumbai. Mumbai
Consumes above 2 lakh tonnes per annum.
• Rail distance: 1060 Km, While ship is 315 Km
Cement Transport Systems
– Use of Sealed tankers.

– The cement is first transferred from Ambujanagar to Muldwarka silos via
road.
– From the Muldwarka silos, the cement is loaded on ships via conveyers.
– The ships are equipped with specialized cement discharge machinery on
board to unload cement to conveyers at Magdalla and Ulwa Ports.
Process & Product Innovation
• In 1992-'93, the company's engineers ran the existing plant at 149 percent
capacity, as opposed to the previous year's 143 percent.
• Coal consumption was brought down from 761 to 720 kcal per kg. of clinker.
• Solution for protection sugar cane fields surrounding the limestone mines at the
factory.
• Use of Australian Surface Miner to minimize noise & Vibrations.
• Produced new type of cement - PPC for Bharat Diamond Bourse.
Employee Involvement through Empowerment
• According to a study about working individuals, one factor that stood out as the
major motivator for employees is through Employee Involvement.
• So GACL applied this factor in a very smart way by implementing the ‘I can’
culture and positive peer pressure.
• They put the faith into the employees who worked day and night on the plant
,that they would make a better decision then a person who is not physically
present.
• The whole Ideology was that the costs they would incur in the time lost in
communication will be more than a wrong decision by the on field employee.
Brand Building – Shift from Product to a Brand
a) A company which has a better track record of financial performance.

b) A low-cost advantage player(across important parameters like power and
coal consumption and cost of transportation)
c) A brand that commands a premium.
d) A steady company despite the industry’s susceptibility of fluctuating prices
&pressures on profits.
Environmental Management & Rural
Development
• Company took up the task of improving the general standard of environment.

• Channelizing rain water into pits to maintain water table.
• Built Check dams.
• Provide healthcare facilities to various villages via mobile dispensaries
New Acquisitions
• GACL acquired stake in DLF Cement taking its holding in the company to
42.2 %.
• - This increased GACL capacity in north to 4 million tonnes.
• - It helped GACL gain presence in Delhi.
• - DLF’s debt interest outgo decreased from 52 crore to 36 crore by
retiring old
• debt and fund infusion.
• - Overall capacity increased to 8 million tonnes.
• GACL took up 7.2 % stake in ACC cement (India’s largest cement
company having 12 million tonne capacity) by on spot delivery from
TATA.
- Both companies now had 7.2 % stake each in ACC cement.
- Both companies agreed to work for mutual benefit till TATA divested
its stake
to be brought by GACL.
The company also acquired Modi Cements to gain foothold in the east.
Further Expansions
– GACL was aiming a 10 million tonne capacity in 5 years.
- The company was planning to invest 1500 crores.

- It had a history of continuous expansions.
- It was able to realize this due to healthy increase in turnover and volumes during
the ‘90s.
– After some years it announced another capacity increase from 15 million tonnes to
20 million tonnes over the next three years.
- Potential in housing and infrastructure sector.
- Other favourable factors such as rising incomes, low interest rates and realistic
real estate rates
Second Quarter Second Quarter Percentage Six Month Period Six Month Period Percentage
(ending Dec (ending Dec (Jul ’98- Dec ’98) (Jul ’99- Dec ’99) Change
‘98) ‘99) Change
Net Profit 29 crores 55 crores 90 46 crores 105 crores 128
Turnover 312 crores 331 crores 6 554 crores 612 crores 10.5
Interest 28 crores 22 crores 21 55 crores 44 crores 20

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Operation Management

Case study on “GUJRAT AMBUJA”

• Loyal Shareholders • 4 Captive Ports

– It is possible because of qualities like

– Use of Sealed tankers.

a) A company which has a better track record of financial performance.

• Company took up the task of improving the general standard of environment.

– GACL was aiming a 10 million tonne capacity in 5 years.

- The company was planning to invest 1500 crores.

Interest 28 crores 22 crores 21 55 crores 44 crores 20

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