Gujarat Ambuja - Cost Leader in the Indian Cement Industry
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Case Details:
Case Code : OPEA002
Case Length : 16 Pages
Period : 2000 - 2003
Organization : Gujarat Ambuja
Pub Date : 2004
Teaching Note :Not 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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Background Note Contd...
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In 1983, the company floated a public issue and its name was changed to GACL.
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 set up 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).
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In 1996, 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 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.
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After the acquisition, GACL revamped its processes to bring them on par with
the standards of its other plants. In 1998, GACL acquired the Nadikudi
(about 100 kms from Guntur) and Proddatur (near Cuddaph) limestone mines in
Andhra Pradesh to strengthen its presence in southern India.
In December 1999, GACL paid Rs 3.5 billion to acquire a 51% stake in Delhi
based DLF Cement. DLF Cement had started its operations in 1997 in Rajasthan
with a plant capacity of 1.4 mtpa. After this merger, GACL became the fourth
largest cement manufacturer in India after ACC, L&T and Grasim. In the same
month, GACL also acquired a 7.2% stake in ACC for Rs 4.55 billion. |
With 14 manufacturing units in India, ACC had a total capacity of over 11 mtpa.
It was one of the largest integrated cement companies in the world. In December
2001, GACL began trial production at a new 2 mtpa plant in Chandrapur,
Maharashtra, taking its total capacity to 12.5 mtpa. In FY 2003, the company
recorded a sales figure of Rs 2173 crores and a PAT of Rs 293 crores...
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