SUCCESS STORY OF AMBUJA CEMENT

PRESENTED BY-

STUDENT 1

NAME- PRATIK ANURAJ

ROLL NO- TM1817277
RIVER- NARMADA
SIGNATURE-

STUDENT 2

NAME- AMLAN JYOTI MISHRA

ROLL NO- MM1820512
RIVER- NARMADA
SIGNATURE-

DATE OF SUBMISSION

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 INTRODUCTION TO INDIAN CEMENT SECTOR

The Indian cement industry is the second largest market after China. It had a total
cement production capacity of about 425 million tonnes (MT) as of September 2017.
Cement is a cyclical commodity with a high correlation with GDP.

The demand for cement in real estate sector is spread across rural housing (40%),
urban housing (25%) and construction/infrastructure/industrial activities (25%). While
the rest 10% demand is contributed by commercial real estate sector.
Cement demand is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by
2025. To meet the rise in demand, cement companies are expected to add 56 million
tonnes capacity over the next three years, till 2019.

Cement, being a bulk commodity, is a freight intensive industry and transporting it

over long distances can prove to be uneconomical. This has resulted in cement being
largely a regional play with the industry divided into five main regions viz. north,
south, west, east and the central region. The Southern region of India has the highest
installed capacity, accounting for about one-third of the country's total installed
cement capacity.

Cement demand is closely linked to the overall economic growth, particularly the
housing and infrastructure sector. If the rate of growth of consumption remains low at
5-6%, the existing capacity would be sufficient to meet the cement demand for the
next few years.

As per Crisil Report, Cement demand is expected to increase by 5.0-5.5% y-o-y in

FY18 on back of increased spends on roads and railways, push towards affordable
housing by central government, materialization of pent-up demand, particularly in
rural housing and low base.

Over a five-year period, cement demand is expected to increase at 6-7% CAGR, led
by revival in government spending in housing (especially affordable housing),
marginal uptick in private housing, and fast growth in infrastructure spends
(especially urban infrastructure, road, and irrigation). At regional level, eastern
states followed by central and north regions would see healthier growth in demand
over a low base as the state governments sharpen focus on development.

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 AMBUJA CEMENT – OVERVIEW

This case study analysis report is striving to highlight, especially, the management
strategies followed by GACL, which within 10 years, has brought the company to the
top position.

This will also put some light on the market conditions existing in the country, what
other players missed .In this first section, first, an attempt is made to chart the history
of the company. All the major incidents in the growth trajectory are studied.

Secondly, the company’s present status, its position in the market, recognitions etc are
focused. In the second section, an analysis of the strategy is being done. An honest
attempt is made to perform a SWOT analysis and discuss the nature of the company’s
corporate level strategy.

In the third and last section, a discussion on the various factors that made the
company a successful enterprise is done.

ABOUT THE ORGANIZATION

a. HISTORY AND DEVELOPMENT

Ambuja Cements Ltd, a part of a global conglomerate Holcim, is one of India’s

leading cement manufacturers. With over 30 years of operations, Ambuja plays a key
role in India’s development and its blueprint for the future. Today, it is one of the
major players in the country’s cement sector.

 Founded in 1983 by Narotam Sekhsaria & Suresh Neotia.

 Started with 1 plant in AMBUJANAGAR, GUJRAT with capacity of 700,000
tones p.a in 1986.
 Initially called as Gujrat Ambuja Cements Ltd.
 Objective- To manufacture cement of better quality than other competitor.
 Over 30 years in the Indian market.

Ambuja has grown dynamically over the past decade. Its current cement capacity is
27.25 million tonnes. The company has five integrated cement manufacturing plants
and eight cement grinding units across the country. It is the first Indian cement
manufacturer to build a captive port with three terminals along the country’s western
coastline to facilitate timely, cost-effective and environmentally cleaner shipments of
bulk cement to its customers. Ambuja also has its own fleet of ships.

The company has established itself as one of the most efficient cement manufacturers
in the world. Its environment protection measures are on par with the finest in the
country. It is among the most profitable and innovative cement companies in India.
Ambuja has also pioneered the development of multiple bio-mass co-fired
technologies for generating greener power in its captive plants.

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It uses both natural and man made resoures. The company has been certified 5 times
water positive, a feat achieved through conservation efforts and increasing water
efficiency in its plants. It is also plastic positive, by burning as much as over 50,000
tonnes of plastic used. The company also generates 6.5% of its energy from
renewable resources.

Increasing volumes

Realising the importance of volumes, GACL lit a second kiln in Ambujanagar, called
Gajambujacement, which was of 1 million tone capacity, in 1993. Again, GACL
started production at the new 1.5 mt p.a kiln at Suli in Himachal Pradesh, in 1995.
GACL finished setting up this plant in are cord three months.This is a remarkable feat
given the difficult and remote terrain. The average production from this plant has been
more than 100%.
The company set up a third 1 million tone cement plant in Ambujanagar in 1996. One
more cement mill was added in Himachal Pradesh to cater to the increasing demand
from the neighboring states.
This gave a sustainable logistic advantage to the company over the competitors,
owing to the distance the competitors have to negotiate.In 1997, GACL acquired
Modi Cements, and named it as Ambuja cement Eastern Ltd, giving it good exposure
to eastern India. GACL took over DLF cement in 1999, becoming the fourth largest
cement producer in the country.

Strides in Logistics, Efficiency and Capacity

One of the most remarkable decisions taken by GACL was to ship cement from
Gujarat plant. It had the advantages of remarkable reducing the travel time, distance
and per kg cost to the company due to the bulk nature.
This also made possible to export cement to emerging markets like Middle East. But
this demanded creating infrastructure, technology and convenience. Many jetties,
ports and ships were set up.
The technology to deliver cement the way the customers demanded helped GACL
deliver cement to virtually every corner. By 1996, GACL’s three ships carried 8.24
lactones to cement. Another landmark occurred when GACL successfully handled
coal imports at Port Ambuja, by which GACL considerably reduced fuel costs. In
short, the sea movement gave GACL the advantages of scale and scope, reduced fuel
cost, and the flexibility to transcend geographical boundaries.
The strive to improve efficiency has been a continuous effort as far GACL is
concerned. All efforts to reduce power consumption has been taken by GACL and the
company has achieved remarkable fetes. A new method to crush limestone saved
considerably saved time and electricity.
The extensive tests in R&D, helped in producing types of cement as per demand.
GACL put in efforts to expand its power capacity. All efforts are directed to
strengthen Ambjua’s position as the lowest cost cement producer in India.

b. PRESENT STATUS

Currently, GACL has a port terminal at Muldwarka, Gujarat. It is an all weather port
that handles ships with 40,000 DWT.

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The port has a fleet of seven ships with a capacity of 20500 DWT to ferry bulk
cement to the packaging units. The company has bulk cement terminals at Surat ,
Panvel , and Galle. The Surat terminal has a storage capacity of 15,000 tonnes and
Panvel terminal has a storage capacity of 17,500 tonnes. Both the terminals have bulk
cement unloading facility.The port at Galle, 120 km from Colombo, Sri Lanka,
handles million tonnes of cement annually.

Major Achievements of GACL

 Most profitable cement company in India.

 Lowest cost producer of cement in the world.
 Its environment protection measures are at par with the best in the world.
 The pollution levels at all its cement plants are lower than the rigorous Swiss
standards of 100mg/nm3.
 The only cement company to be awarded with the National Quality Award.
 First cement company to first to receive the ISO 9002 quality certification.
 Received ISO 14001:2004 Certification for environmental systems.
 2010- ISO 9001:2008 certification for quality & OHSAS 18001:2007 by BSI
(UK).
 India's largest exporter of cement.
 Received Best Award for highest exports by CAPEXIL.
 First company to introduce the concept of bulk cement movement by sea in
India.
 The company has three subsidiaries, viz, Ambuja Cement
Rajasthan Limited (ACRL), AmbujaCement Eastern Limited (ACEL) and
Ambuja Cement India Limited (ACIL). Ambuja also has astrategic investment
in ACC through its subsidiary (ACIL).In 2006, the company has entered into a
strategic partnership with Holcim, the second largest cement manufacturer in
the world.
 In 2016- Ambuja cement won FICCI CSR award under ‘CATEGORY 5 Any
other’ for its water resource management program.
 2017- Notches up a perfect score bags six prestigious accolades @ CII-ITC
sustainability Awards, launches ‘ambuja plus cool walls’ in surat and punjab.
Many other such awards have been awarded to ambuja cement.

Strategic Analysis

a. SWOT Analysis

From the case, it is very evident that GACL has numerous strengths. A very efficient
management is most obviously the driving factor for the success of GACL.
The following strength can be identified in the strategy of GACL-

 GACL gave very high regard to efficiency. To improve efficiency

technological breakthroughs were made during the development. Its continous
drive for cost efficiency and quality are derived from an emphasis on
replicating global best practices and continous innovation.

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  GACL gave importance to adoption of new technology for controlling and
ensuring quality with minimum environmental hazards. The use of Australian
surface miners is an example for this.This ensured that considerable time and
cost are saved. Many such innovative leaps were taken in technology.

 GACL has planned the location of its plants very strategically. It has planned
in such away that there is maximum exposure to all parts of India.

 GACL strives to reach optimum efficiency in logistics management.

 The planning of sea route is a perfect example to illustrate this.Thismove not

only saved time and transportation cost, but gave access to new and emerging
markets.

 GACL has maximum efficiency in fuel usage.The system in place for

importing coal cut down the cost of fuel remarkably.

 GACL has its own captive power plant and this has made GACL the world
leader in low cost of cement production.

 GACL has acquired stakes in DLF, ACC and other small players, which has
given it access to a good distribution system. Within a short period, GACL has
achieved a unique position amongst the cement manufacturers in India. With
plants in Gujarat, HP, and Punjab, and a complete infrastructure of bulk
cement sea movement, the company has access to the richest markets in India.

 GACL has a very good reputation in the market and has a high brand value.

 This gives the access to large funds and the freedom to choose funding
options. Mobilisation of Rs1500 crore for expansion earlier, was achieved
easily, considerable amount being from debt markets.

 GACL has empowered employees, who are committed, motivated and

encouraged to the growth of the organization.

WEAKNESS-

 High oil prices, cost of power increased production cost.

 Supply exceeds, production lead to competition in price.
 Low qualiy as compared to international standard but improving.

OPPORTUNITIES-

 The per capita consumption of cement in India now is only 85Kg compared to
the global average of 250Kg.

 This shows that the cement industry can keep growing at a very highrate.

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  This indirectly means that the current strategy of expansion will still reap
benefits infuture.

 The cement manufacture industry is a capital intensive one.

 This will prevent the other small players from entering the market and
capturing a decent market share.

 The huge capital involved in the deals between outside companies and the
Indian ones are an indication of how capital intensive the industry is.

 The situation of restrictions for other companies to access to all geographical

areas is a big opportunity to the GACL. Any company, if from now on, wants
to expand its reach, will have to face many obstacles such as setting up new
plants, identifying proper area and accessing distribution networks.

THREATS-

 From the substitute

 Threat of new entrants
 Inter firm rivalry
 Bargaining power of buyers
 Bargaining power of suppliers
 Hike in oil prices

b. STRATEGIES ADOPTED-

During entry-

 Speedy setup of plant

 100% utilization in first 6 months only
 Emphasis on quality

Hr policy-

 Unlocking potential of employees

 Employed experienced people from other companies.
 More stress was on enthusiasm not on experience
 Motivating factor was empowerment to perform than monetary factor
 Free access to senior officials including VIP
 Communication meetings on regular basis to discuss and sort out grievances.
 Preference to existing employees for higher position.
 Reward to suggestions

Operation-

 Hub and spoke strategy- grinding close to market.

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Strong control-

 Problems is seen as joint problem not as mechanical, electrical or marketing

problem
 Modification in operation was allowed to be done by junior and after that it is
reported resulting into speed, trust and responsibility.
 Control data was generated 48 times a day for better control
 Interrupyion was reduced to 2 per day from 4-5 days.

Marketing strategy-

 Emphasis on quality & innovation

 High advertisement for branding (3 times than ACC at one time)
 Improvement in packaging by information provided by suppliers
 Extensive and primarily exclusive distribution network over 6000 dealers and
20,000 retailers.
 Promotion through seminar,workshops for masons, architects, contractors etc
by providing info on use of AMBUJA CEMENT.
 Advertising and publicity campaign

TRANSPORTATION AND LOGISTICS-

 Sea transportation – Seven vessels for faster and cheaper transportation

 GACL was the 1st cement company to use sea as transportation
 Muldwarka, gujrat- All weather sea port, 8 kms from our Ambujanagar plant.
Handles ships with 40,000 DWT. Is also equipped to export clinker and
cement and import coal and furnace oil.
 A fleet of 350 self financed trucks for easy transportation.

R&D-

 Own R&D department in 1989

 Encouraged experiments at all level
 Use of mechanical conveyors instead of pneumatic conveyers against industry
trend
 Use of industrial waste to reduce fuel consumption

Cost reduction-

 Speedy setup of plants

 Reduction in energy cost
 Captive infrastructure- Port, receiving terminal and captive power plants
260 MW
 Shift from liquid to solid fuel to reduce cost of captive energy

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ENVIRONMENT PROTECTION-

 Adopted ‘ZERO HARM’ working environment in 2008. In 2014 won

occupational Hazard and safety excellence awards.
 Adopted water conservation, measures for sustainability, agricultural
interventions project and its environment protection measures conform to the
standards set by world’s best.4 times water positive.
 Best ‘environmental excellence in plant operations’ a national award by
NCBM

CONCLUSION AND RECOMMANDATION

AMBUJA CEMENT has a good position in Indian market. It has efficient

management system good use of technology, a reputed position in the market, a good
brand value, good distribution network. With all of these, of GACL can hold on to
this the same way they have done it over the years, their ultimate dream of market
dominance is not far away from them. It has got solid market position built up within
short period of time through organic growth and acquisitions, high use of alternative
raw materials in production of composite cements, substantial Greenfield and
brownfield expansion plans to grow within attractive markets and an internal
financing capability to fund expansion projects. The organization also enjoys strong
brand by emphasis on quality make present in competitive market. The also key to
success is expansion through proper merger and acquisition at proper time.
There are other cement producers like Ultratech, which acquired Grasim Cements,
L&T, ACC , etc who are GACL’s prime competitors. To compete with them, GACL
has to give more importance to the latest technology, and also better emphasis on
marketing. Ultratech has good reach in South India, where development is taking
place in a big way. GACL should find a strategy to reach to South India in a better
way .With the promising growth in India, it is an infinite market for all players.
The only struggle is to reach first and sell most.

The company has always focused on building a brand rather than just selling a
commodity. And the ambuja giant, the company’s brand icon, is not just the symbol
of the strength of their products but also their spirit of I CAN.

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 REFERENCES

 The economic times

 Official website- www.ambujacement.com
 Ibrands360
 SCRIBD.COM

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References

www.ambujacement.com
economictimes
ibrands360

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