Gujarat Ambuja: Redefining

Operational Efficiency
 Introduction
• Indian Cement Industry
– Second largest producer
• 6% of world production
• 147.8 mt production
• 165 mt installed capacity
• 130 large plants and 365 mini plants
– 9.1% growth during FY‘06-07
– International standards
– Lower cost
 Gujarat Ambuja Cements Ltd(GACL)

• Established in 1981
• Narotam S. Sekhsaria with Suresh & Vinod
Neotia
• 0.7 mt pa plant at Ambuja Nagar
• Plants at Ambuja Nagar(3),Suli(HP)
Ropar(Punjab)
• Expansion
• By Acquisition of plants and stakes in companies
• Limestone mines in A.P
 Strengths
• Efficiency, Technology and Quality
• New Plants
• Quality Limestone
• Modern Energy management policies
• Large distribution network
• Emphasis on Brand building
• Strong retail presence
• Very high operating Margins
 Case Study
• Is the company’s success attributed to its
• Project location
• Design & Implementation decision

?
 Location of Plants
• Locating plants in backward areas
– Tax holidays
– Power availability
• Assured Power
• Constant rates
– Proximity to mines
• Limestone mines
• Coal Mines
 Design and Implementation
• Conveyor in HP plant
• Larger pre-heater for Gujarat plant
• Commissioning plants near Mines
• Ports and Freight terminals
• Electronic rotary filling machines
• Usage of non-conventional fuels
 Excellence in stride
• Empowering employees
– Authority to take decisions
• Improved response time
• Advance order of Equipments
– Clear definition of Jobs and schedules
• Savings
– Commissioning time
– Inflationary costs
– Interest costs
 Excellence in stride (contd.)
• Total Cost Management
30
1. Enhancing Productivity 25

2. Cutting Costs 20

15

10

0
Fuel Materials Power Others
 Case study
Is GACL’s cost management the
biggest factor responsible for their
success
 Two pronged approach for
Total Cost Management
I. Enhancing productivity
II. Cutting Costs
Enhancing Productivity
Focus on
•Mining expenses
•Kiln operations
•Quality of materials
•Pollution Control
 Enhancing Productivity
1. Focus
• Mining expenses
Problems
1. Pollution concerns
2. Objection by locals
3. Huge Operating expenses
4. Non availability of explosives
Solutions
1. Training Engineers
2. Surface miner
Results
1. Higher Energy efficiency
2. Better mining
 Enhancing Productivity
2. Focus
• Kiln operations
Problems
1. Quality of Cement
2. Efficiency of operations
3. Power consumption
Solutions
1. Visit to Japanese plant
2. Microstructure analysis of Clinkers
Results
1. Lower power costs
2. Better Quality
 Enhancing Productivity
3. Focus
• Quality of materials
Problems
1. Maintaining of Optimum operational conditions
2. Optimum utilization of raw materials
3. Consistent quality
Solutions
1. A computerized process control system
2. Raw material management software
3. Weekly checks and 24h monitoring system

Results
1. Quality ensured at every step of production
2. More than 100% percent capacity utilization
 Enhancing Productivity
4. Focus
• Pollution Control
Problems
1. Dust generated in process
2. More Wear and Tear of Machines
3. Environmental degradation
Solutions
1. Pollution control Equipment
2. Planting trees
3. Covered conveyer belts
4. Reclamation of exhausted mines
Results
1. Reduced Wear and Tear
2. Longer Life and lesser break downs
 Cutting Costs
Focus on
• Power
• Fuel
• Freight
 Cutting Costs
1. Focus
• Power

Problems
1. Unreliable and Costly power

Solutions
1. Established captive power plants
2. Modifications to Fans and Coolers

Results
1. Consumption reduced to 90upmt from 120upmt
2. Income from selling excess power
 Cutting Costs
2. Focus
• Fuel
Problems
1. Transportation
2. Quality of Coal

Solutions
1. Import of cheap, higher quality coal from S.A
2. Use of agricultural waste in kilns
3. Use of fluorspar
4. Use of Improved versions of mechanical conveyor belts and Fans

Results
1. Reduction in Fuel bills
2. Reduction in consumption
 Cutting Costs
3. Focus
• Freight
Problems
1. Huge Freight cost
2. Time delays
3. Higher Import costs
Solutions
1. Use of sea route
2. Setting up of modern port
3. Freight handling terminals at ports
4. Custom made ships and trucks for transport
Results
1. Reduction in time from factory to site
2. Flexibility in mode of transport
3. Reduction in cost of transport
4. Less wastage due to spillage
5. Lower finished goods inventory
 Future Perfect
• Surviving over capacity scenario
• Surviving the recession
• Innovations in cost cutting

In short, Future is Perfect

Questions
???