Preface

This report is not an academic requirement but also gives students a practical vision of
operations of company. It provided me an opportunity to perceive what is the difference
between theoretical studies and activities.

By the grace of God, I applied all the learning, which was taught to me by my honourable
teachers , and the books which I read. Some concepts and applicable at DG Cement
Factory while the others are not. Nevertheless, it gives me a greater practical knowledge
about operations of cement industry. Maximum efforts have been given to make this
report easier to understand for its readers.

I hope that the reader will find this report useful and practicable.
Executive Summary

DG Khan Cement Factory is one of the computerized cement factories in Pakistan. It

produces the cement by adopting dry process.

Production Process

These are three raw materials of Cement:

• Lime Stone
• Shale and
• Gypsum

Limestone and shale is taken from quarry with the help of 7-Km long conveyor belt. The
both raw material and mixed in raw mill, heated in kiln upto 1600 OC ground in cement
mill along with gypsum almost 5%. The final product cement is prepared.

Location:

The company is located at Sattai Khofli, which is about 40 Km from city of Dera Ghazi
Khan.

Capacity:

The company has two plants

1. Existing

2. Expansion

Both the plants capacity is 2200 ton and 3300 ton clinker per day respectively.

Quality Control
The company believes on quality assurance not on quantity inspection. So they have got
ISO 9002 certification. Following tests are performed at different stages of production
process.

1. Raw Materials
Test on these material are performed
2. Raw Mill
Following Tests are applied
a. Hydraulic Modulus
b. Silica Modulus
c. Limestone Factor
3. Kiln
Same tests are performed as in raw mill.
4. Clinker
Tests are performed to see the quality of clinker.
5. Cement
Following physical tests are performed:
• Expansion
• Fineness
 • Strength
6. Loading
Tests are performed after loading.

Aggregate Planning

Aggregate planning is done to cope with demand by using both demand and capacity
alternatives.

Purchasing

Purchasing of items is the duty of purchase department. Need is recognized when the
indentor raises the demand notice. The purchase department identifies and selects the
supplier and order is placed. Placed order is checked by store department and indentor to
accept the order.

Inventory Control

The store is responsible to manage and control the inventory of inputs. The inventory of
outputs (cement) kept in silos. The received order is inspected by store department. And
accepted material is stored in the store.

Distribution

The company has four sales offices in the following cities:

 Multan
 Lahore
 Karachi
 D. G. Khan

These sales offices accumulate demand of their respective regions and send the orders to
the head office Lahore.

Introduction
State Cement Corporation of Pakistan (S. C. C. P) was established in 1984 managed by
the Federal Government. In the beginning, existing plant was purchased from U.B. E.
industries of Japan. It had installed capacity of 2700-ton clinker daily and started its
production in April 1986.
The main purpose for the establishment of plant was to fulfil the demand of Northern
Marketing zone. In 1977 the annual demand for cement in Pakistan was about at 3.7
million tons while the production was about 3.1 m. To fulfill 0.6 million gap, a new plant
was required. After a detailed investigation, they selected a place D. G. Khan City where
large high quality material reserves were available at least or 100 years. The location is
ideal because it is near to market as well as prior to raw material.

The govt. privatized the SCCOP, first purchased by Segol Group of Industries and Nishat
Group of Industries combinely. In 1992, the company purchased by Nishat Group of
Industries solely. After privatization it name changed from SCCOP to D. G. Khan
Cement Factory. Before the establishment of expansion plant (new plant) in 1997.

The cement was brought to this and either from Maple Leaf Cement Factory Mianwali
and Zeal Pak Hyderabad and ACC Rohi. The new plant is the relief for Bhawalpur,
Lodhran, Khanewal Muzafargurh, Bhawalnagar, Vehari. It was purchased from F. L.
Smith of Denmark. Its design capacity of 4000 ton clinker per day.

Types of Cement

The company has following types of cement:

1. Ordinary Portland Cement

2. Sulphate Resistance Cement
3. Black Cement
4. Heat Resistance Cement
5. White Cement
6. Slag Cement
7. Quick Setting Cement
8. Under Water Setting Cement
9. Acid Resistant Cement

Mission Statement
The mission statement of D. G. Khan Cement Company is:

“D. G. Khan Cement Company committed to produce and supply high quality
conforming the local and international standards adopting modern technique satisfying
the customer requirements the most competitive prices.”

Production Process
D. G. Khan Cement factory adopt true dry production process for the manufacturing of
cement. This process consists of following steps.

Drilling

Drilling is done in the quarry with the help of drilling machine. They create a space for
the powder explosive.

Blasting

The powder explosive is blasted under a controlled process to get different small
segments of limestone. The large segments are also converted into small segments which
is called crushing process.two hammer crushers are installed on quarry site having
capacity of 800ton/hr and 300 ton/hr.

Transportation
The small fragments are loaded on the 7-Km long 3 belts conveyor system running over
rough terrain. This conveyor takes the new material from quarry to the factory site. The
limestone and shale to stored in the open space.

Grinding

After storage, the stored limestone and shale are fed to the raw mill with the help of two
hoppers according to predetermined mixed proportion. The roughly crushed material
passed through 3 rollers. The mixture is dehydrated, sized, and fine particulars are
separated.

The cyclone extracts different gasses, which are emitted in this process. The collected
separated mixture is called raw meal. It is stored in a silo of 15000 ton. During the
process water is also used with the purpose:

• To lower the gas volume

• To control the variation

• To maintain the temperature

Clinker

The raw meal is fed into kiln shell. The kiln shell has following particulars.

Length of shell 45 m

Diameter 3.5 to 6.5 m

Slope 1.5o

In this kiln shell following reactions take place.

CaCo3  CaO + O2 (Calcium Oxide)

CaCo + SI O2  CaoSio2 (Calcium Silicate)
CaOSio2 + CaO  2 CaoSio2 (Dicalcium Silicate)

2CaoSio2 + CaO  3CaoSio2 (Tricalcium Silicate)

CaO + Al2 O2  CaO Al2 O3

CaO Al2 O3 + CaO  2 CaO Al2 O3

2 CaO Al2 O3 + CaO  3 CaO Al2 O3

 3 CaO Al2 O3 + CaO + Fe2 O3  C4AF*

(Tetra Calcium Aluminum Fersite)

The kiln shell can be divided into four portions.

Firstly, the incoming raw meal is heated with the help of preheated air which comes from
the cooler at the terminal end of the kiln. Heat is provided by the combustion of the
furnace oil. The raw meal is moved on the sloped shell which have four zones of
temperature.

1. Calcination zone 1200 OC

2. Transition zone 1250 OC

3. Sintering zone 1300 OC

4. Burning zone 1400 - 1500 OC

After the position of burning zone the mixture is cooled down with the help of air fans of
graze cooler. The heated is omitted which reduce the temperature of mixture. This heated
air is used to raise the temperature of raw meal entering into the kiln. The finished
product is called clinker, which is stored in an open yard having capacity of 30000 tons.
Grinding

Now the clinker enters into Cement Mill. In this mill clinker is ground with gypsum.
Almost 5% of gypsum is added. The main purpose of addition of gypsum is to increase
the setting time.

The final product cement is prepared. It is stored in the silo having capacity of 10,000 ton
each.

Packing

In the packing unit, there are 4 rotary packers and each packer has 8 nozzles. The whole
packing process is automatic. Cement bags are loaded on the trucks and heavy trollers
automatically. Each cement bag has 50 Kg weight. Sometimes heavy users ask for bulk
quantity of cement without packing. It is loaded into the truck.

Computerized production process flow is attached at the end of the report.

Quality Control
Quality a Competitive Priority

There are four competitive priorities

1. cost

2. time

3. flexibility

4. quality

The product like cement cost priority is not best because of legal consideration and suffer
heavy losses. Time can be used as competitive priority. On time delivery is most
important but the sometimes demand is very high the company is unable to provided on
time delivery. The flexibility is less because cement is standardized product. The only
one competitive priority is the main base which offer the competition. This is achieving
the high quality. As it was mentioned in the mission statement of the organization.
Provide the high quality cement at competitive prices. Because the prices of cement are
fixed so quality is the only competitive weapon through which a company can compete
the market. Keeping this in its view, D. G. Cement Factory applied for ISO 9000
certificate.

ISO 9002
D. G. Khan cement factory is providing high quality cement for its beginning. After the
establishment of expansion department. The company No. 1 in the cement industry
Pakistan.

To cope with the environment they apply for ISO 9002 certificate. The company hired
Shakeel and Company Lahore as consultant to get ISO 9002 certificate. A committee is
formed under the control of GM of the company Mr. Dr. Asif Bashir to be certified as
ISO 9002.

The company get the ISO 9002, certificate in the long run. The main aim to get the
certificate is to provide the customers the quality cement and competitive prices.

After getting the ISO 9002 certificate. The company reduce its inefficiencies in
management as well as in production. It reduce in rework cost because of clear cut
responsibilities are awarded to employees. It also increase the reliability of employee
upon the D. G. Cement.

• Modern equipped laboratory establishment

• Quality to check according to plan at each stage.

Cement x-ray Spectrometer is used to check the quality of the product at different stage.
It takes 5 minutes to assess the ingredients of the product. There are six tests for the
quality assurance at different stages of the production process.

Raw Material
Raw material of cement can be categorized in three types:

♦Limestone

♦Shale

♦Gypsum

Lime Stone

The sampling point of limestone after blasting the rocks. The fragments of the rocks are
taken and check its chemical composition. Several benches have been opened and
abandoned if found to be lantern* low grade limestone. The main components of
limestone is calcium oxide (CaO). The following equation shows the %age of CaO

Heat

CaCO3 CaO + CO3

100% 56% 44%

The production department accept only those limestone having at least 52% of CaO.

Shale or Clay

Th second component of cement is shale. Shale can be found near the quarry. They take
different samples of shale at different points to find out which shale has high quality.
They utilize these shale first and then any other next.

Gypsum

Gypsum is another component of cement. It is 5% of the whole cement. It is mostly taken

from outside supplier. Its quality is checked at the entering gate. If it is according to
contsuit* then it is selected otherwise rejected to suppliers.

Raw Mill

When the mixture reach in raw mill, three sophisticated chemical tests are performed.

They take different samples having different composition of two raw material (limestone
& shale). Usually six samples of following composition is taken.

Sample No. Limestone %age %age of Shale

1. 77% 23%

2. 78% 22%
3. 79% 21%

Hydraulic Modulus (HM)

In hydraulic modulus the above taken samples are taken and put the %age values of
composition of different compound in the following formula.

HM = = 2.1-/+ 0.2

CaO
Si2O + Al2O3 + Fe2O3

The standard values is 2.1 and + 0.2 variation is allowed. The above formula tell us by
changing the composition CaO we can get the exact result.

Silica Modulus

The test is also performed similarly to the above by taking different ingredients. The
formula is given below

SM =

SiO2
Al2 O3 + Fe2O3

The SiO2 is the main component of shale. By changing the composition we can get the
standard result.

Ume* Saturation Factor (LSF)

This test is applied to find out the amount of CaO in the mixture. We can calculate the
LSF factor by the following formula

LSF = = 90 + 3

CaO
28Si2O + 1.2Al2O3 + 0.65FerO3

90% of lime in mixture is a standard value while + 3 stands for variation.

Kiln

When the raw meal is fed to the kiln, it is also checked chemically by taking different
samples. Some test of hydraulic modulus, silica modulus and lime saturation factor is
applied to raw meal as well. The main purpose of the raw meal test is to find out the
temperature required to heating purpose of raw meal.
Clinker

When the raw meal passes through kiln shell and take a form of clinker. A sample is
taken manually at this moment and then it is analyzed chemically with the help of cement
x-ray spectrometer. Clinker is a hasd* granular material. They grand into powder form
and analyze. If the result is not according to standard they dispose it otherwise mixed in
high quality clinker.

Cement

When the 5% gypsum is added to ground clinker, the final product is cement. They take
the sample of cement to find out the right %age of gypsum in cement. As well as the
fineness of cement.

Following tests are performed for quality assurance of cement:

1. Expansion

2. Setting Time

3. Fineness

4. Strength

Expansion

The expansion test check that upto what extent the cement is expanded after addition of
water. It is a complex test. According to world standard the expansion of cement should
not be more that 10-mm. The company mostly test shows the expansion of 0.5 to 5.5 mm.
Which is obviously excellent.

Setting Time

The setting time shows the time taken by cement to become solid.

There are two types of setting time.

Initial Setting Time

Initial setting time is the time when we can penetrate the specific middle exact half
position of the cement block.

Final Setting Time

It is the time when we can’t penetrate the specific needle into cement block.

We can compare initial and final setting time of D. G. Cement with the world standards.

Setting time DG Cement World Standard

Initial Setting Time 150 minutes at least 45 minutes
Final Setting Time 200 minutes at least 10 hours

Fineness Test / Blaine Test

Blaine test measures the small size of the particles in specific weights. The world
standard for the fineness test is that the should not be less than 2250 cm2/gm while in D G
Cement it is 2800 Cm2/gm.

Strength Test

The strength test check the strength of cement after passing different number of days.

The world standard and their standard are given below:

Strength Unit Company Std. World Standard

3 days PSI 3800-4400 2200
7 days PSI 4800-5400 3400
28 days PSI 6000-7000 5000

Loading
The final sample is taken when the packed cement is loaded on the truck. The some four
tests are performed as it is performed in cement mill. If the cement is not upto the mark
dispatch is stopped otherwise no problem.

Location
The location of plant is at Sattie Khofli 40 Km away from the Dera Ghazi Khan City.
Different factors are considered for the location selection of the factory. The plant is
located at sattai Khofli 40 Km away from the Dera Ghazi Khan City.

Cement industry is heavily raw material based industry. Without proper availability of
raw material, no one can think of establishment of the factory. If we look at the Southern
Punjab region. No other place is suitable when limestone and shale is available. So,
availability of limestone and shale is a dominant factors. If we consume these resources
at the present level, it is sufficient for at least 100 years.

The daily design capacity of both production plants is 56000 tons. So, it requires 9520
tons raw material.

1 ton clinker equals 1.7 ton of raw material. The company is located near to the raw
material. It will reduce its transportation cost.

The one of the secondary factor is prior to market. The market is exclusive plans is
located in the heart of the market. Another nearest plant is 300 Km away. The dealers can
be receive their order within one day.

The second secondary factor is availability of labor. The factory is located at remote area.
Labor is available at cheaper rate without any shortage. Higher level managers and
technician staff are hired from the whole Punjab.

The third secondary factor is govt. legislation. The factory location is not contradicted
with any rule of the govt. firstly, the govt. want all these types of factories outside the
city.

The govt. declared this zone as tax free zone in order to give prosperity to backward area.
It was complemented in the beginning but not now.

Capacity
Capacity is a maximum rate of output for a factory. According to engineers the capacity
of both plants is

Plant Name Capacity Clinker per day

Existing Plant 2700 tons

Expansion Plant 4000 tons.

During peak seasons both the plants are working above their allocated capacity while
during off season it works slow their allocated capacity. It is harmful for the plant to run
it above their recommended capacity.

Distribution Requirement Planning

All the dealers are allotted the dealership number. They booked their orders in one of the
sales office. For all orders, dealers have to pay the amount in advance. The sales office
clerk accumulates all these orders and sends to the head office in two ways. Either he
filled customer order form or telephone.

The Head office (Lahore) make the distribution requirement planning. How much amount
of dispatch needed for coming days. Usually dispatch lot size is dependent on two things.

1. Quota imposed in distribution

2. Non-quota distribution

Head office informs the GM for daily dispatch all the dispatch process is done on
automatic machines. 40% of excise duty is paid on each bag. All the transportation cost
paid by dealer.

Although the lead-time is one day but it takes more than one day because of any
disturbance in market and operation.

Aggregate Planning
D. G. Khan Cement Factory has a family of cement types which consists of three cements
ordinary port land cement, black cement and sulphate resistance cement. They make their
aggregate plan keeping in view the demand of cement and capacity of plant. There are
two types of alternatives:

1. Demand alternative (Reactive Alternatives)

2. Capacity alternative (Aggressive Alternatives)

D. G. Khan cement factory apply both the alternatives to aggregate planning. We discuss
these alternatives one by one.
Demand Alternatives (Reactive Alternatives)
This alternative is apply to cope with demand of the cement. In summer, the demand of
cement is very high. To cope with this demand, they hire extra unskilled and semiskilled
labor. They also offer overtime to highly specialized and skilled person. Mostly unskilled
labor is taken from subcontractors.

The Company allows vacation schedule in winter, the month of Ramazan and rainy days.
The plant is shut for repairing and maintenance work.

The company always keeps the anticipation inventory to meet the unexpected demand
e.g. in the peak season both the silo are filled most of the time to cope with any mishaps
sometimes the bricks of the kiln shell were broken and work was stopped at least 3 days.
During these 3 days anticipated inventory cope with the demand.

The company also gives relaxation to their workers during the peak season. Schedules are
formed to give the employee more rest.

Capacity Alternatives (Aggressive Alternatives)

The company uses these alternatives during the slack. When the demand is less than their
capacity. How to utilize their idle capacity? The answer is to apply the aggressive or
capacity alternatives. Aggressive alternatives allocation that attempt to modify demand
and resource requirement.

In the slack season the demand of ordinary postcard cement is low the company change
the production OPC to sulphate resistance cement and supply into the Karachi.

Another method is also used to enhance the demand by lowering the prices. When the
price of cement will reduce the demand will increase.

Inventory Management
We can divide inventory management broadly in two ways.

1. Inventory Management of Output (Cement)

2. Inventory Management of Inputs

D. G. Cement factory has no inventory in bags. They keep the cement in the 10000 tons
capacity silos.

The main problem of inventory management of inputs. Each and every department is
responsible for its inventory. Each department has to raise the demand notice to the
purchase department. The store department provides them the required. In the case of
shortage, the purchase refer it to purchase department.

Types of Inventory in Store Department

The store department provides the inventory of inputs to each department. Its main
purpose is to control and manage the inventory.

The store department categorizes its inventory of two types as:

1. Immediately consumable goods (Fast Moving Goods)

2. Non-consumable goods (Slow Moving Goods)

Immediately Consumable Goods

Immediately consumable goods are those goods which lose their quality and quantity
with the usage of items e.g. explosive, stationary, soap, towel, oil etc.

Non-consumable Goods

Non consumable goods are those goods which do not lose their quantity and quality with
the usage and time. These are everlasting items e.g. spare parts, machinery, either moving
equipment or plant assets.

Functions of Store Department

The store department performs two basic functions:

• Management of Inventory

• Controlling of Inventory

Management of Inventory

The store department perform follwing functions for management of inventory.

1. the inward card is issued when the truck passes through factory gate.

2. Inspection of quantity of material done on the gate. Inspection note is sent

to the concerning department. The manager or incharge who raise the
order called indentor write the remarks upon it after checking the quality.
It is the duty of indentor to write the acceptance and rejection note upon it.

3. All accepted material is stored by store department and write material

receiving report.
One of copy of material receiving report is sent to following departments.

1. Finance department

2. Store department

3. Purchase department

4. MIS department

5. Supplier

All the received items are written in the records books.

Control of Inventory

The store department controls the inventory both manually and by computer. Two
systems are introduced for physical control of inventory.

Computer Records

The second system for controlling of inventory is computer records. All the transactions
are updated in the computer.

The store department manages and controls 22000 inventory items for all the
departments. In any of stock out (the inventory level down the minimum level) store
department is responsible for the replenishment. He order to the purchasing department
for purchasing of goods.

Matching the tow systems

Both the systems records are matched at the end of accounting period in order to check
the correctness of records.

In any disturbance in the records the physical inspection is also done.

The possible causes for disturbance of balance for an item may be the following.

1. Misplacement of inventory

2. Mistake in records calculating

3. Due to theft

In order to reduce the theft, the department due the physical inspection after every these
months. It also reveals some other problems with the inventory.
Purchasing
The purchasing of or different items done by the purchase department of the D. G. Khan
Cement Factory. The purchase department not only purchase for the factory as well as for
the sales offices. Usually the department purchases machinery furnace oil, office
equipment, supplies, paper sacks, explosive etc:

The purchase department acquire the things through the acquisition process.

The Acquisition Process

The acquisition process consist of following steps.

Need Recognition

Need for the acquisition of raw material arises when the production department asks to
the store department of some particular item. The store department is unable to fulfil the
need. So he recommends to the purchase department.

Production
Department

Needs a calculator

Store Department

Calculator is not available

Purchase
Department

Need to Purchase calculator

Supplier Selection
In the supplier selection stage, Different suppliers are identified. Suppliers are of two
types.

1. Permanent Suppliers

2. Random Supplier

The company has permanent contractor to the different items. Contracts are of long term
in nature. So they don’t need any frequently selection of random supplier. The company
selected the supplier do to following characteristics.

• Past experience
• Past performance
• Financial strength
• Quality of material supplied
• Price charges
• Nature of relationship with the supplier

One of these factors can change the decision.

Placing the order

The purchase department has authority to buy the items. The purchase is done once the
particulars given by the store department. The following particulars are given in the
indent form:

• Name of the department

• Description of the item needed
• Last purchase date
• Quality of item
• Quantity of item

The order placement is dependent upon the requirement of item. Different purchases
procedure are adopted depending upon

 Urgency

 Availability

 Importance
There are three types of purchase processes:

 Regular Purchase

 Spot Purchase

 Importance

Regular Purchase

Regular purchase is the purchase of those items which they are required after the certain
period with regularity. It exhibits the follwing characteristics.

 Such items are very expensive

 Such items are not needed urgently

 These are consumable goods.

The order is placed in the newspaper in the form of tender notice. The terms and
condition are mentioned in the tender notice. The supplier get the tender form from the
nearest sales office (mentioned in the newspaper) on submission of fee. In this tender
notice all the description of item is mentioned. The supplier fills the form and submits to
department with a security fee. The supplier is selected on the basis of low bid of the
supplier. In case, the company accepts the tender notice of supplier who give maximum
discount.

Sometimes the indentor is also considered for the selection of supplier which negotiate
with the supplier in term of quality of item.

After the supplier has been identified and selected the company will issue purchase order
to the supplier.

Spot Purchase

Sometimes, different items are purchased on the spot. These items are urgently needed,
having more alternative and payment made in cash e.g. towels, tube lights, stationary,
bullets, bed sheets and spoons, dishes etc. Spot purchase is done through spot purchase
committee which is consists of

• Indentor or end user

• Purchase department representative
• Commercial
The spot committee visits different suppliers evaluate the items in terms of price, quality
and delivery date. The committee make the payment to the supplier on the spot. One
month is needed for the spot purchase to be completed.

Import

The company imports those items which are not available here or having low quality.
Import is a long and complex process, it takes six months for an import purchase to be
completed mostly earth moving machinery, fire bricks and spare parts are imported.

Track the order

Track the order means routine follow ups of orders to anticipate late deliveries or
probable deviations from requested order quantities. Different modes are used or tracking
the orders e.g. telephone, letter, fax. The company usually tracks the order when some
delay will stop the production.

Receiving the order

When the order is received from the supplier, the indentor checks the quality of the
incoming materials. The indentor writes the remarks about items either it is accepted or
rejected. Acceptance or rejection note is issued by the store department. If the materials
are accepted the store department issues material receiving report. One copy of the
material receiving report is issued to each of the following department.

• Supplier
• Finance Department
• MIS Department
• Store Department
• Purchase Department

The rejection of items is informed to the purchase department and they return to the
supplier. The purchase department also maintain and updates their records of different
supplier on punctuality, quality, quantity deviations and price. All these information help
for future evaluation of supplier.

When the finance department has received the material receiving report from the store
department supplier as paid and entries are passed in their records.