Gujarat Ambuja - Cost Leader in the Indian Cement Industry

Gujarat Ambuja Cement Ltd (GACL), which had grown tenfold during the late 1990s, was the third largest producer of cement in India in 2004 next only to Birla Groups (consisting of Grasim Cements and Larsen & Toubro Cements) and Associated Cement Companies (ACC) &. In 2003, GACL had a capacity of 12.5 mn tonnes and generated revenue in excess of Rs. 2,500 crores. The company had posted a net profit of Rs 221.73 crore for the year ended June 30, 2003. GACL was the lowest cost producer in the Indian cement industry.

GACL's quest for cost leadership had been driven by productivity improvement and cost cutting measures.

GACL had cut energy costs by reducing the usage of coal through use of substitutes like crushed sugarcane. GACL operated most of its plants at above 100% capacity utilisation. The company had pioneered the use of ship transportation to cut freight costs and also established the necessary infrastructure like ports, freight and handling terminals.

Low-cost funds had helped GACL to cut the cost of capital. The company's engineers had picked up best practices during visits to overseas plants in countries like Japan and Australia. GACL had also reduced pollution levels at its cement production plants and complied with the Swiss standards of 100 milligrams per cubic nanometer.