Gujarat Ambuja - Redefining Operational Efficiency
 |
Details
Themes: Operational Restructuring
Period : 1993 - 2002
Organization : Gujarat Ambuja (GACL)
Pub Date : 2005
Countries : India
Industry : Cement
Buy Now
Case Code : OPER009
Case Length : 12 Pages
Price: Rs. 300;
Tools
Background Note Contd...
GACL was not only the market leader, it ALSO ranked very high on the profitability criteria. Its new plants, use of better quality limestone, innovative energy management efforts, and strong retail presence in Mumbai, Gujarat and Punjab gave it a strong edge over its peers. Its cost per rupee of sales was much lower than most of its competitors, resulting in much better operating margins (Refer Tables III, IV and Figure I).
Table II
Cement Companies - Operating Margins
|
(%) |
FY97 |
FY98 |
FY99 |
FY00 |
FY01 |
|
Grasim |
NA |
NA |
14 |
13 |
17 |
|
L&T |
NA |
NA |
11 |
15 |
17 |
|
ACC |
14 |
11 |
7 |
9 |
16 |
|
India Cements |
25 |
24 |
25 |
23 |
24 |
|
Madras Cements |
35 |
33 |
31 |
31 |
31 |
|
GACL |
36 |
36 |
36 |
36 |
37 |
Source: www.equitymaster.com
Table III
Cement Companies - Capacity Utilization (1996-97)
|
Company |
(in %) |
|
Grasim |
79 |
|
L&T |
87 |
|
ACC |
95 |
|
India Cements |
94 |
|
Madras Cements |
98 |
|
GACL |
102 |
Source: Analyst, March 1998.
Industry observers unanimously agreed that GACL was the most efficient cement manufacturer mainly because of its operational excellence. The company had done well in spite of the fluctuations in the cement industry by adopting aggressive productivity improvement and cost-cutting measures. GACL had won a host of awards for management excellence, quality, business strategy and environment management (Refer Exhibit III). Ever since its inception, the company believed in doing things in an innovative and unconventional way, so as to reap benefits in new ways, using new methods.