Gujarat Ambuja - Cost Leader in the Indian Cement Industry.

1. Gujarat Ambuja
Cost Leader in the Indian Cement Industry

2. Introduction
• Ambuja Cements Private Ltd was established by Satyanarain Sekhsaria in
1981 with two partners Suresh Neotia and Vinod Neotia
• In 1983 the company floated a public issue and its name was changed to
Gujarat Ambuja cements limited.
• GACL experienced tremendous growth in the late 1990’s
• Third largest producer of cement in India with the net profit of 221.73
crore for the year 2003.

3. • Lowest cost producer in the Indian Cement Industry.
• Innovative and unconventional.
• Cost Cutting Measures.
• Trained Company Engineers.

4. Plant Locations and Their Capacities (June 2003)
Location Capacity Production qty
'000 tonnes '000 tonnes
Ambujanagar (Amreli, GUJ) 4150 4876.45
Bhatinda (Bathinda, PUN) 520 335.42
Chandrapur (Chandrapur, MAH) 1730 1734.67
Daburji (Rupnagar, PUN) 1400 1918.96
Suli (Solan, HP) 1200 974.8
Capacity by Region: GACL & Its Subsidiaries (2003)
Gujarat 4.00
Himachal Pradesh/ Punjab 3.00
Rajasthan 1.50
Chattisgarh/ West Bengal 2.00
Maharashtra 2.00
Total 12.50

6. Information
• The company started its production in 1983 with a a plant in
Ambuja nagar in Gujarat – Ambuja Cements
• In 1993 GACL commissioned its second plant in Ambuja Nagar –
Gujambuja Cements
• In 1996 GACL set up its third Plant in Ambuja nagar – Guj Line
2
• In December 1999 GACL acquired 51% stake in DLF Cements
and 7.2 % stake in ACC Cements
• In 2003 the company recorded a sales figure of Rs 2173 Crore

7. Indian Cement Industry
• With 144mn tonnes(in 2003) Indian Cement industry ranks second
in world.

8. In India there were 50 companies with 120
plants working
Market Share (2003)

10. The Cement Industries demand was always there as there was overall
infrastructure development for National Highway building, Concrete
Roads were made. Due to which cement consumption was high

11. Manufacturing of Cement
• Raw material- limestone,
clay, silica, gypsum.
• Steps including-
1) Quarrying & Crushing
2) Grinding & Blending
3) Clinker Production
4) Finish Grinding

13. Cement Capacity in India (Break up by process)
Process Capacity (TPD ) %age to Total
Dry 3,21,695 94
Semi-Dry 5,930 2
Wet 13,220 4
Total: 3,40,845 100

15. GACL’s Efficient Practice
• Raw material usage- Good Limestone quality, hence high efficiency.
• Total cost management (TCM)- productivity and consumption of coal and
power.
• 100% capacity utilization.
• Consumed only 96 Kwh power
• Reduced dependence on expensive power supply.
• Coal consumption low- 170kg/ tonne of cement.
• Used substitute for coal- groundnut husk and crushed sugarcane.
• Energy Bill down by Rs.20 for every tonne of sugarcane used.

16. Processing control:-
• Replaced V-belts by flat belts
• Mechanical conveyor to eliminate drawbacks.
• Determine crystal structure of clinker.
• Reduced mining expenses- sent engineers to Australia to
study extraction of metals (Surface Miner)
• Used Ripping technology.
• Computerized Process control and central room control.
• Quality control practices streamlined- 48 times a day.
• Right quantity of cement in bags.

17. Logistics
• GAGL was one of the first cement producers of the country to
introduce an Integrated logistic system
Order processing Systems
• Linked with WAN(Wide area network), EDE(Electronic data
exchange), MRP(Material resources Planning)

18. Inventory Management
Inventory decisions involved knowing both, When to
order(timing) and how much to order(Quantity).
Packing
GACL was the first to use paper bags for cement packaging
which offered a significant advantages such as better
preservation and appearance.

19. Transportation
• Economic Impact On Transportation
• GACL become the first cement company to use water
transportation
- Reduce transportation cost
- GACL Freight mix was Road 40% , Rail 30% and Sea 30%
- 350 self financed track & railway siding in its factory premises.
• Route Survey

20. Warehousing & Distribution
• The Dumps
• Trans-shipment point storage
• Connected online with various departments- efficient
delivery.

21. Future Outlook
• To become leader in cement industry, GACL is pursuing a
combination of strategies
• The company had set up 2 million ton Greenfield cement unit in
Maharashtra worth Rs.500 crores and is also planning to set up 2
million ton Greenfield project in Andhra Pradesh worth Rs.600
crores
• It has also set up 1 million ton grinding units, one at Bhatinda and
other at West Bengal
• GACL had also started offering ready –mix cements, the demand
for which was expected to grow in future

22. Production Function
• Technical relationship between factor inputs and outputs.
• Function showing the highest output for every specified
combination of inputs.
푞 = 퐹(푘, 푙)
• Long run v/s Short run.
• Increasing returns to scale.
• Constant returns to scale.
• Decreasing returns to scale.

23. Applying Economics concepts:
• Expansion- Gujarat Ambuja to GACL.
• Demand analysis- infrastructure development.
• Production function- efficient combination of inputs.
• Power cost
• Fuel cost
• Cost of production
• Direct cost.

24. Power Cost
Oct-Dec Jul-Sept
2003 2002 2003
Units consumed 85 86 90
Cost (Rs./Ton) 180 187 183
Fuel Cost
Oct-Dec Jul-Sept
2003 2002 2003
K. Cal/ Kg of Clinker 718 729 727
Cost (Rs./Ton) 229 224 230

25. Cost of Production
Oct-Dec Jul-Sept
2003 2002 2003
Power 180 187 183
Fuel 229 224 230
Raw material 146 134 140
Consumables 51 56 67
Direct cost 606 601 620
Expenses (Rs. / tn)
FY 2003 FY 2002
Increase /
(Decrease) (%)
Power 187 179 4
Fuel 227 254 -11
Raw material 136 133 2
Consumables 47 48 -2
Direct cost 597 614 -3

26. • Opportunity cost- clinker, coal, electricity, etc.
• Social cost- mining
• Economic cost- replacing coal with husk & sugarcane.
• Isocost curves- capital and raw material combinations.

27. Conclusion
• The company followed different measures like Raw
material control, Power, Energy, Inventory Management,
Quality control due to which the profits were maximized
• Controlled Pre-Production, Production and Post-Production
in such a way that they get maximum output.
• This helped the company to become Market Leaders.
• Always look forward to ideas which would reduce their
input cost

29. Presented by-
• Asmita Patil
• Dhaval Patil
• Jugal Thakkar
• Nita Prasad
• Rajath Shetty
• Rhythm Mitra
• Ujwal Suvarna

30. THANK YOU