Gujarat Ambuja - Redefining Operational Efficiency

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Working Hard Towards Operational Excellence Contd...

This empowerment of engineers proved to be very advantageous for the company: job functions were more clearly defined and response time was reduced by as much as 90% since engineers did not have to wait for approvals. GACL's plant engineers placed orders for machinery well before the site was chosen. So the equipment was ready for installation by the time the site engineers had acquired the land. As a result, GACL was able to cut down substantially on the commissioning time of its plants. The very first plant at Ambuja Nagar was commissioned in just 22 months. This was a significant achievement, as a plant of similar size normally took three years to install. Even the second plant was commissioned in a record time of 13 months. GACL was able to save a lot of money just in terms of inflationary costs. Anil Singhvi (Singhvi), Treasurer, GACL said, "By squeezing the project time, you save 10 per cent on account of inflation alone; plus we estimated an interest cost savings of around Rs 250 million."

Once GACL got the plants running, it realized that to compete with the established players, who had larger plants and economies of scale, cost control would be important. The major cost components of cement are fuel (20%), freight and raw material (17% each) and power (16%), with other components accounting for the balance 30%. GACL decided to adopt a two-pronged strategy to achieve total cost management (TCM): enhancing plant productivity and reducing costs on each of the cost components individually.

Enhancing Productivity

GACL worked hard to reduce mining expenses. Cement companies normally operate their own limestone mines. Mines were not only extremely destructive environmentally, they were also expensive to operate. The explosives used for mining were on the negative list of imports and substantial costs were involved in implementing safety measures. In 1997, GACL sent its engineers to Australia to study the extraction of metals. On their return, GACL implemented new technologies that could access limestone in smaller areas where blasting was not possible. To reduce the noise and vibration that occurred during the conventional drilling, blasting and crushing process, the company introduced an Australian device called Surface Miner. The Surface Miner was not only energy efficient, it also recovered more material from a given area.

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