Gujarat Ambuja: Redefining Operational Efficiency

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Case Details:

Case Code : OPER009
Case Length : 12 Pages
Period : 1993 - 2002
Organization : Gujarat Ambuja (GACL)
Pub Date : 2005
Teaching Note : Available
Countries : India
Industry : Cement

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Gujarat Ambuja Cements is the most productive, cost efficient and well managed company in the world."

- Global Investment Banking Major, Credit Suisse First Boston, in 2000.

Background Note

Gujarat Ambuja Cements Ltd. (GACL) was established as Ambuja Cements Private Ltd. (ACPL) in 1981 by Narotam Satyanarayan Sekhsaria (Sekhsaria), a businessman from the western Indian state of Gujarat. Originally a cotton trader, Sekhsaria entered the cement business because of factors such as stable demand, lack of substitutes and limited competition.

With the support of Gujarat Industrial Investment Corporation's (GIIC1), Sekhsaria and his two partners, Suresh and Vinod Neotia, set up APCL. Suresh Neotia was appointed Chairman while Sekhsaria was made the Managing Director. In 1983, the company floated a public issue and its name was changed to GACL.

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The same year, production started at a 0.7 million tons per annum (mtpa) plant, named Ambuja Cements, in Ambuja Nagar, Gujarat. GIIC sold its stake in GACL in two tranches to Sekhsaria in 1987 and 1990.

In 1993, GACL commissioned its second cement plant at Ambuja Nagar (capacity 1 mtpa), named Gujambuja Cements. Attracted by buoyant cement demand in the northern regions, GACL commissioned a 1.5 mtpa plant at Suli in Himachal Pradesh (HP), named Ambuja Cements Himachal Unit in 1995. In the same year, GACL floated a wholly owned subsidiary in Mauritius - Cement Ambuja International Ltd. (CAIL). A year later, GACL floated another subsidiary, Ceylon Ambuja Cements (Private) Ltd., through which it acquired a small company, Midigama Cement, in Sri Lanka. In 1996, GACL set up its third 1 mtpa plant at Ambuja Nagar, named Guj Line - II (capacity 1 mtpa).

GACL also established grinding and packing units at Ropar (Punjab) and Panvel (Maharashtra). In 1997, GACL acquired Modi Cements' sick 1.4 mtpa plant at Raipur (Madhya Pradesh) for Rs 1.66 billion. This plant was renamed Ambuja Cement Eastern Ltd. After the acquisition, GACL revamped its processes to bring them at par with the standards of its other plants. In 1998, GACL acquired the Nadikudi (around 100 kms from Guntur) and Proddatur (near Cuddaph) limestone mines in Andhra Pradesh to strengthen its presence in southern India.

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1] GIIC is a project financier and term landing institution involved in industrial promotion in Gujarat.


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