GLOBAL COMPARISION

GLOBAL COMPARISON
INDIAN SCENARIO - CORRELATION
ROAD AHEAD EXP DEMAND BY 2025 550-600 MMTPA
MANUFACTURING COST ELEMENT ANALYSIS
INDIAN CEMENT MANUFACTURERS
 AMBUJA A BRIEF
VISION :
To be the most sustainable and competitive company in our
industry.

MISSION : value for all

Delighted customers
Inspired employees
Enlightened partners
Energised society
Cleaner environment Pollution control
Cleaner environment Natural resources
Safety
 AMBUJA A BRIEF
PHILOSOPHY :

The spirit of I CAN

Give a man orders and he will do the task

reasonably well. But let him set his own
targets, give him freedom and authority, and
his task becomes a personal mission

Promotes accountability and empowerment

Motivation to Share responsibility
 CASE BRIEF
Out of the box thinking
Inplant logistics / Production Planning
Control Vs Operational Excellance to
gain Cost leadership
Improve customer and channel
service
Brand development and
management through advertising
 CASE BRIEF
Fusion of IT with logistics
Cross functional approach to
logistics Management
Mktg, Production , S&D,
Transportation, Warehousing,
Finance
Review the process
recommend - Implement
 CASE BRIEF

Quick flow of information and

effective order processing system
Higher order inventory management
through Inter departmental
combined efforts
Packaging innovation ( Jute bag to
HDPE to Paper bags)
 CASE BRIEF
Transportation and Ware housing
CASE BRIEF
OVERVIEW OF CEMENT INDUSTRY
Regional Pricing Non uniform input costs and zonal capacity imbalances

Too many regional players, Standard Products, Simple technology and limited
Fragmented Market R&D requirement

High-entry barrier Large CAPEX requirement

Value Added Services Ready Mix Concrete, Training and site inspection by qualified engineers

Cyclic Demand Low demand during monsoon, recession

Mining site rehabilitation, Fugitive emission control, Renewable purchase

Sustainability obligation for electricity as per as SEB rules

Government Control Mining Royalty, SEB Charges, Rail Freight charges

Market Growth Largely correlated with GDP growth

SOURCING
Raw Quantity/Ton Main Source Major Cost Procurement
Material* Cement Drivers Strategy
Lime Stone 1.3 India has sufficient reserve of good quality Mining royalty, Captive mines and
limestone scattered all across India Diesel, Price plants near quarry
Coal 0.25 Domestic low quality, high ash coal is used for Linkage coal Maximize linkage
making cement which accounts for majority prices coal price
consumption. Imported coal used during peak
demand season to hedge supply risk
Fly ash 0.3 Power plants are the main source of fly ash Fuel Prices Nearest point
situated uniformly across India. sourcing
Gypsum 0.05 Concentrated around Rajasthan. Mostly Import duty, Nearest point
imported from Thailand and Middle-East Freight sourcing
charges

* All RM consumption fig. are approximate and only main raw material has been mentioned
SALIENT FEATURES
SALIENT FEATURES
Cross-functional approach
Pillars of Logistic Management System Integrated with IT Tools
Order Processing System
Inventory Management
Packaging
Transportation
Warehousing

Implementation of SAP Project Connect

Integrated Logistic System (ILS)
SALIENT FEATURES
Strategic Location of Plants
Location of dumps and Trans-shipment point type warehouses
Large distribution network over 11,500 outlets
Fleet of 350 trucks and a railway sliding in factory premises
 LOCATIONS

Integrated Units Grinding Units Bulk Cement Terminals

Ambujanagar, Gujarat Bhatinda, Punjab Cochin, Kerala
Bhatapara, Chattisgarh Dadri, Uttar Pradesh Panvel, Maharashtra
Korpana, Maharashtra Farakka, West Bengal Muldwaraka, Gujarat

Jaitaran, Rajasthan Magdalla, Gujarat Managlore, Karnataka

Darlaghat, HP Nalagarh, HP
Ropar, Punjab
Roorkee, Uttarakhand
Sankrail, West Bengal
OLIGOPOLY
Market Structure characterized by few sellers and
interdependent price/output decisions
Significant barriers to entry
Product could be homogenous (similar) or differentiated
Potential for economic profits in the long run
Incentive for illegal price setting
Competition can be vigorous among the few firms
 Stable price conditions under Kink Demand Curve

In oligopoly firms operate under imperfect competition.

Demand is relatively inelastic because all other firms leading to
similar price cut leading to price war.
With the fierce competitiveness created by sticky upward demand
curve firms use non price competition in order to accrue greater
revenue and market share.
CLASSIFICATION OF COSTS
Research & Development
Depreciation
Fixed

Rent
Advertising & Marketing

Costs Expenses
Inventory Management
Order Processing
Systems

Electricity

Variable


Raw Materials
Wages
Packaging
Costs

Transportation
Fuel
Consumables
Techniques used by GACL to reduce its cost of production:

V belt drives which consumed more energy were replaced by flat belt drives.

improved version of mechanical conveyor was used to eliminate breakdown and spillages.

Adjusted retention time,maximised temperature and the rate of cooling to reduce power
cost from 120 units per ton to 90 units per ton.

Reduced mining expenses by implementing ripping technology.

Introduced an Australian device called Surface miner to recover more material from the
given area and save energy.

Computerized process control system for easy access and regulating the production
process.

Zero Error Electronic Rotary Machines to increase capacity utilization.

Improvement in efficiency and lower shutdown rates to increase capacity utilization.

THIS CLEARLY SAYS THAT BY REDUCING THE DIFFERENT COSTS
ON THE RAW MATERIAL, POWER COST, REPAIRING COST,
SHUTDOWN COST, TRANSPORTATION COST GUJARAT AMBUJA HAS
BROUGHT DOWN ITS AVERAGE COSTS WHICH HELPS IN
INCREASING THE PROFIT.
STRENGTH
STRENGTH & OPPORTUNITIES
Efficiency
High Brand Identity
Adaptation of new technology
Use of sea route
Assets
Good reputation
Capital Intensive Industry
High level of infrastructure required
Favorable location having raw material site at a distance of 1 KM near production line
WEAKNESS AND THREATS
Do not have a huge market and hence scale of economy
Could not serve wholesale market
Lesser technological changes
Product differentiation
Freight intensive industry
Many competitors
Susceptible to Government Rules and Regulations, Recession