Gujarat Ambuja- Redefining Operational

Efficiency

-Swapnil Zeple (14344)

• GACL was established as ACPL in 1981 by Narotam Satyanarayan Sekhsaria

• Advantages of cement businessi. Stable demand, ii. Lack of substitutes iii. limited competition

• Started at a 0.7 million tonnes per annum (mtpa) in Ambuja Nagar, Gujarat

Introduction

Introduction

• In 1997, GACL became fourth largest cement manufacturer in India.

• By the late 1990s, GACL had emerged as one of the most energy efficient and technologically advanced cement manufacturer in India.

• GACL had large distribution network of 11,500 outlets.

• GACL was not only the market leader; it also ranked very high on the profitability criteria.

• Competitive advantages of GACLI. Use of better quality limestoneII. Innovative energy management effortsIII. Strong retail presence in Mumbai, Gujarat and Punjab

Introduction

Indian Cement Industry-Companies and their Market share (%) in 2001

Introduction

22%

24%

5%5%

5%

3%

36%

Market share (in %)

Grasim-L&T combine

GACL-ACC

JK Group

India Cements

Madras Cements

Lafarge

Others

Location of a Plant Take advantages of substantial sales tax and income tax

incentives

Gujarat, HP, Punjab plants get sales tax benefit of about 90% of its fixed assets for a period of 14 years

Chandrapur plant got sales tax benefit for 18 months

HP plant- a. prioritized power supply at a guaranteed cost for five years

from the date of commissioningb. This region was cement deficit at that point of timec. Plant was closer to the mines and the Punjab grinding unit.d. Area had substantial limestone deposits

Operational efficiency

Infrastructure development GACL built a conveyor across three valleys on its own within 18

months Cut down the distance from 17 km to just 2.8 km. The belt moved 800 tonne of limestone per hour.

Reduction in set up time Empowerment of engineers They define their own job Authority to take on-time decisions Allow to set daily, weekly and monthly targets

First plant was commissioned within 22 months instead of 3 yearsAnd second plant was commissioned within in a record time of 13

months

Operational efficiency

Major cost components

Fuel- 20%

Freight- 17%

Raw material- 17%

Power- 16%

Adopted a two-pronged strategy

Enhancing plant productivity

Reducing cost of each cost component

Total Cost Management

Mining Process

• GACL worked hard to reduce mining expenses• The company introduced an Australian device

Surface Miner• Surface miner is energy efficient and it also

recovered more material from a given area.

Kiln Operations•Required high power and directly related to the cement quality.•GACL arranged training in Japan cement plant for engineers.•Brought down power cost from 120 units/ton to 90 units/ton.

Kiln Productivity •Implementation of larger pre-heater•Productivity increases by 12.5%

Enhancing Productivity

Quality •GACL installed a centrally operated computerized process control system •Useful to evaluate optimum mix of raw material and redesign accordingly

Capacity Utilization•GACL installed 24-hour monitoring system and introduced weekly checks•Run its plants for 40 days continuously•GACL achieved more than100% capacity utilization during 1999

Quality Control •The practice of reporting quality related data 48 times per day

Enhancing Productivity

POWER Setup of fuel based captive power plants in

Gujarat and Himachal Pradesh in 1998

Selling extra power generated

Small measures reduced GACL’s power consumption from 120 units/tonne of cement to 88-90 units/tonne of cement

Cutting Costs

FUEL Import cheaper higher quality coal from South

Africa

Import of better quality furnace oil for its diesel generator

Use of groundnut husk instead of coal .Overall coal consumption reduced by 3%

Replacement of v belt drives by flat belt drives

Cutting costs

FREIGHT Use of sea route

Set up of modern ports & freight handling terminals at Muldwarka,Surat and Panvel

Cost of transporting cement to Mumbai by road worked out to be 1800 per tonne and 400 per tone by sea.

GACL saved roughly 160 million annually.

Cutting costs

Cement production in the World

Types of modern Cement Portland Cement - Portland cement is by far

the most common type of cement in general use around the world

Masonry cements are used for preparing bricklaying mortars and stuccos, and must not be used in concrete.

Expansive cements are designed to offset the effects of drying shrinkage that is normally encountered with hydraulic cements.

• White blended cements may be made using white clinker

• Colored cements are used for decorative purposes.

• Very finely ground cements are made from mixtures of cement with sand or with slag or other pozzolan type minerals that are extremely finely ground together.

Types of modern Cement

"Natural" cements correspond to certain cements of the pre-Portland era, produced by burning argillaceous limestones at moderate temperatures

Geopolymer cements are made from mixtures of water-soluble alkali metal silicates and aluminosilicate mineral powders such as fly ash and metakaolin.

Types of modern Cement

Cement Industry in India

Current production capacity – Around 366 MT

India is the second largest producer of cement in the world

In India, the housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption. The other major consumers of cement include infrastructure at 13 per cent, commercial construction at 11 per cent and industrial construction at nine per cent.

67%

13%

11%9%

Cement consumption

Housing sector

Infrastucture

Commercial construction

Industrial construction

Top 10 Cement companies in India

ACC Ltd. Gujarat Ambuja Cements Indian Cement UltraTech Cement Jaypee Cement JK Cement Ramco Cement Prism Cement Shree Cement Rain Cement

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