Description
Ambuja Cement came into existence at a time when the country was growing at what wags called the Hindu Rate of Growth – a paltry 3% or less. In those days the government’s spending on infrastructure and development was well below par.
Market
The India-versus-China story – the competition for the next economic superpower status – has China leading the race in all sectors except Telecom and IT. What could skew this equation a little, however, is the success story of Indian cement. During the last decade this segment has chalked up an astonishing compound annual growth rate (CAGR) of 8% compared to the world cement industry average of 3.5% and China’s 7.2% (Source: Indian Brand Equity Foundation). Even though the Indian cement business is more than 100 years old, it was sluggish and inefficient, languishing under government controls until the early 1980s. Post-liberalisation, however, the industry has matured and is flourishing under the open regime. It has grown to a production capacity of 154 million tonnes per annum (MTPA). This record not only beats that of developed countries like the US and Japan, but also firmly establishes India as the second largest global player after China. The Indian government’s better-late-thannever awakening to the importance of infrastructure and concomitant support for its development, gave cement its rightful place in the economy. As the housing sector boomed and projects such as state and national highways took wing, the Indian cement industry’s production capacity leap-frogged. The world’s largest cement companies – Lafarge and Holcim – have now entered India.
A spate of mergers and acquisitions – designed to exploit the growth in demand – have since occurred. Two large groups – the Ambuja/ACC combine and Grasim contribute almost 35 MTPA each to the country’s total annual capacity. By no means has demand for cement peaked. As development picks up greater momentum, cement companies will continue to surge ahead. The one strong pointer to the opportunities is a simple fact: the world’s average per capita consumption is 260 kilograms. In India it is still trailing at 136 kilos. Ambuja Cement is wellplaced to build on its strong position in this growing market.
Achievements
Ambuja Cement came into existence at a time when the country was growing at what wags called the Hindu Rate of Growth – a paltry 3% or less. In those days the government’s spending on infrastructure and development was well below par. Thanks to huge capacities that companies had built, there was oversupply of cement, prices were low and margins, therefore, under great pressure. However, even in this dark scenario Ambuja Cement saw a positive aspect in the steadily growing retail segment. To make most of this opportunity required some deft, out-of-the-box thinking, different from the normal commodity mindset. By churning out a palpably superior product, building a strong retail network and using unflagging communication, it built a solid brand. The result is that the brand today commands a 20% share at a premium of 2%-3% in its key markets. It is no surprise that the top line is healthier than the industry average. The higher realisation in the market and the continuous effort the company has made to increase efficiencies have contributed to the 30% earnings before interest and tax that the company has declared each year in the last two decades. Ambuja Cements has done many things right; it showed off its intent in its earliest, most formative days when it commissioned its manufacturing facilities in twelve to nineteen months – a time frame no one had ever heard of. By applying its mind to ways of reducing energy consumption, a primary expense head, the company
has been able to achieve one of the lowest operating costs in the industry. Another important decision that helped Ambuja Cement reduce transportation cost was setting up grinding units and bulk cement terminals closest to some of the biggest cement markets in India. Where such initiatives were not possible, Ambuja Cement did something else: it pioneered the concept of using ships to transport bulk cement.
History
Ambuja Cement is just twenty years old. A cotton trader from Mumbai and a reputed trading family from Kolkata came together to float a cement company. They knew very little about cement manufacturing. Both, however, recognised the inherent strengths of the business: cement was a core industry and would play a crucial role in a developing country like India. Moreover, there was little technological obsolescence and the product would never go out of fashion. Ambuja Cement established its first plant with a 700,000 metric tonnes per annum capacity in western India in 1986. By 1993, the company had increased this to three million tonnes. In addition, it had set up India’s first bulk cement sea transport system to connect to India’s largest cement market – Mumbai. In 1995, this Gujarat-based company set up an integrated plant in Himachal Pradesh and a grinding unit at Ropar in Punjab. This was Punjab’s first cement plant. Later, it acquired Modi Cements to stamp a giant footprint in East India. At the turn of the 20th century, Ambuja Cement bought out DLF Cement in Rajasthan to consolidate its position in North India. Two years later, the company constructed a green field plant in Maharashtra to build capacity to 12 million tonnes. By further expanding this, it upped capacity to 15 MTPA by 2005. In twenty years, the company had grown more than twenty times – effectively doubling its initial capacity every year.
Product
With the focus on providing solutions to clients, Ambuja Cement has adopted a multi-faceted approach to meet the needs of different
segments of customers. Armed with a 120-man team of engineers, Ambuja reaches out to the retail consumer – the home owner who builds a house with the help of a local contractor or mason – in small towns. For the more sophisticated customer in mega cities – a commercial developer of mass housing projects or commercial buildings – the company extends the service of mix design workshops and customised solutions.
Recent Developments
In 2006, the original promoters sold their stake to Holcim – the world’s number one cement and building materials company, headquartered
in Switzerland. The Group has substantial interests in more than 70 countries on all continents and employs some 90,000 people. Worldwide, Holcim manufactures approximately 200 million tonnes of cement. Within six months of entering India, Holcim with a production capacity of 34.2 million tonnes had become the number one player. The new owners have introduced global best practices to bolster the entrepreneurial spirit of the company. They have also augmented their supply line with crushed stone, sand and gravel as well as ready-mix concrete and asphalt.
Promotion
Based on its positioning as the strongest cement, the brand adopted the mnemonic of a giant carrying the weight of huge structures. Overnight the giant appeared on billboards, press ads and TV giving the brand a very distinct identity. In fact, Ambuja Cement was the first cement company in the country to translate the word ‘strength’ into a unique and easily identifiable symbol. In the market, where pictures often speak louder than words and the large part of the workforce is unlettered, this graphic representation was soon adopted into several colourful forms; each adding to the brands’ stature. The strongest cement brand in the country was on its way to becoming a reality. It is, however, a proven fact that brands need more than just advertising and more than small pockets of support to transcend from the ordinary to the extraordinary. Taking cognisance of this, Ambuja created a number – and variety – of service programmes designed to reach a larger influencer audience base. Today, the company reaches out to contractors and masons with tips and guidance through meetings, camps, supervision at construction sites, high-tech concrete testing service and training programmes. Every one of these helps ensure that the company stays top-of-mind. At the trade level, too, a number of initiatives ranging from dealer relationship workshops to customer camps and mason meets have helped the company keep in regular contact with this vast group of influencers. The ensuing knowledge base has driven the development of other customer-focused programmes and added vigour and vitality to the offerings Ambuja has made.
Given this line of thinking, empowerment was not just going to be a fashionable term at Ambuja. It was the only way to achieve goals. If costs had to be controlled, it seemed absurd for engineers not to be able to take on-the-spot decisions. The same philosophy applied to controlling power consumption. Who better than the engineers to suggest ways to cut costs? They knew the plants inside out. It made sense to listen to them. This has bred a unique work culture at Ambuja Cement. The company’s professionals set their own targets and are given the freedom and authority to achieve them. Tasks are no more seen as tasks but rather as personal missions. Over time, two words have become inextricably interwoven into the company’s lexicon, work culture and ethics: I can.
www.gujaratambuja.com
Brand Values
Ambuja Cement’s USP has always stood for Giant Strength. Over the years, this core value of the brand has been continuously reinforced. The company achieves this by product innovation and through communications stretching from the dealer level to the end consumer. Right from its inception, Ambuja has approached the cement business with an open mind. Some things were evident immediately. To compete with the older, established players who had already amortised their plant cost, it was important to have the lowest capital cost per tonne of cement. Plants would have to be set up in record time to reduce the burden of interest, capacity utilisation would have to be above 100% and power consumption would need to set a record low.
THINGS YOU DIDN’T KNOW ABOUT
Ambuja Cement
Ambuja was India’s first cement brand to advertise on television Agro waste helps the company reduce power cost Ambuja plants are one of the cleanest in the industry and have won awards for pollution control A dedicated port and dedicated ships carry cement in bulk to Mumbai from Ambuja’s plant in Gujarat
doc_812697700.pdf
Ambuja Cement came into existence at a time when the country was growing at what wags called the Hindu Rate of Growth – a paltry 3% or less. In those days the government’s spending on infrastructure and development was well below par.
Market
The India-versus-China story – the competition for the next economic superpower status – has China leading the race in all sectors except Telecom and IT. What could skew this equation a little, however, is the success story of Indian cement. During the last decade this segment has chalked up an astonishing compound annual growth rate (CAGR) of 8% compared to the world cement industry average of 3.5% and China’s 7.2% (Source: Indian Brand Equity Foundation). Even though the Indian cement business is more than 100 years old, it was sluggish and inefficient, languishing under government controls until the early 1980s. Post-liberalisation, however, the industry has matured and is flourishing under the open regime. It has grown to a production capacity of 154 million tonnes per annum (MTPA). This record not only beats that of developed countries like the US and Japan, but also firmly establishes India as the second largest global player after China. The Indian government’s better-late-thannever awakening to the importance of infrastructure and concomitant support for its development, gave cement its rightful place in the economy. As the housing sector boomed and projects such as state and national highways took wing, the Indian cement industry’s production capacity leap-frogged. The world’s largest cement companies – Lafarge and Holcim – have now entered India.
A spate of mergers and acquisitions – designed to exploit the growth in demand – have since occurred. Two large groups – the Ambuja/ACC combine and Grasim contribute almost 35 MTPA each to the country’s total annual capacity. By no means has demand for cement peaked. As development picks up greater momentum, cement companies will continue to surge ahead. The one strong pointer to the opportunities is a simple fact: the world’s average per capita consumption is 260 kilograms. In India it is still trailing at 136 kilos. Ambuja Cement is wellplaced to build on its strong position in this growing market.
Achievements
Ambuja Cement came into existence at a time when the country was growing at what wags called the Hindu Rate of Growth – a paltry 3% or less. In those days the government’s spending on infrastructure and development was well below par. Thanks to huge capacities that companies had built, there was oversupply of cement, prices were low and margins, therefore, under great pressure. However, even in this dark scenario Ambuja Cement saw a positive aspect in the steadily growing retail segment. To make most of this opportunity required some deft, out-of-the-box thinking, different from the normal commodity mindset. By churning out a palpably superior product, building a strong retail network and using unflagging communication, it built a solid brand. The result is that the brand today commands a 20% share at a premium of 2%-3% in its key markets. It is no surprise that the top line is healthier than the industry average. The higher realisation in the market and the continuous effort the company has made to increase efficiencies have contributed to the 30% earnings before interest and tax that the company has declared each year in the last two decades. Ambuja Cements has done many things right; it showed off its intent in its earliest, most formative days when it commissioned its manufacturing facilities in twelve to nineteen months – a time frame no one had ever heard of. By applying its mind to ways of reducing energy consumption, a primary expense head, the company
has been able to achieve one of the lowest operating costs in the industry. Another important decision that helped Ambuja Cement reduce transportation cost was setting up grinding units and bulk cement terminals closest to some of the biggest cement markets in India. Where such initiatives were not possible, Ambuja Cement did something else: it pioneered the concept of using ships to transport bulk cement.
History
Ambuja Cement is just twenty years old. A cotton trader from Mumbai and a reputed trading family from Kolkata came together to float a cement company. They knew very little about cement manufacturing. Both, however, recognised the inherent strengths of the business: cement was a core industry and would play a crucial role in a developing country like India. Moreover, there was little technological obsolescence and the product would never go out of fashion. Ambuja Cement established its first plant with a 700,000 metric tonnes per annum capacity in western India in 1986. By 1993, the company had increased this to three million tonnes. In addition, it had set up India’s first bulk cement sea transport system to connect to India’s largest cement market – Mumbai. In 1995, this Gujarat-based company set up an integrated plant in Himachal Pradesh and a grinding unit at Ropar in Punjab. This was Punjab’s first cement plant. Later, it acquired Modi Cements to stamp a giant footprint in East India. At the turn of the 20th century, Ambuja Cement bought out DLF Cement in Rajasthan to consolidate its position in North India. Two years later, the company constructed a green field plant in Maharashtra to build capacity to 12 million tonnes. By further expanding this, it upped capacity to 15 MTPA by 2005. In twenty years, the company had grown more than twenty times – effectively doubling its initial capacity every year.
Product
With the focus on providing solutions to clients, Ambuja Cement has adopted a multi-faceted approach to meet the needs of different
segments of customers. Armed with a 120-man team of engineers, Ambuja reaches out to the retail consumer – the home owner who builds a house with the help of a local contractor or mason – in small towns. For the more sophisticated customer in mega cities – a commercial developer of mass housing projects or commercial buildings – the company extends the service of mix design workshops and customised solutions.
Recent Developments
In 2006, the original promoters sold their stake to Holcim – the world’s number one cement and building materials company, headquartered
in Switzerland. The Group has substantial interests in more than 70 countries on all continents and employs some 90,000 people. Worldwide, Holcim manufactures approximately 200 million tonnes of cement. Within six months of entering India, Holcim with a production capacity of 34.2 million tonnes had become the number one player. The new owners have introduced global best practices to bolster the entrepreneurial spirit of the company. They have also augmented their supply line with crushed stone, sand and gravel as well as ready-mix concrete and asphalt.
Promotion
Based on its positioning as the strongest cement, the brand adopted the mnemonic of a giant carrying the weight of huge structures. Overnight the giant appeared on billboards, press ads and TV giving the brand a very distinct identity. In fact, Ambuja Cement was the first cement company in the country to translate the word ‘strength’ into a unique and easily identifiable symbol. In the market, where pictures often speak louder than words and the large part of the workforce is unlettered, this graphic representation was soon adopted into several colourful forms; each adding to the brands’ stature. The strongest cement brand in the country was on its way to becoming a reality. It is, however, a proven fact that brands need more than just advertising and more than small pockets of support to transcend from the ordinary to the extraordinary. Taking cognisance of this, Ambuja created a number – and variety – of service programmes designed to reach a larger influencer audience base. Today, the company reaches out to contractors and masons with tips and guidance through meetings, camps, supervision at construction sites, high-tech concrete testing service and training programmes. Every one of these helps ensure that the company stays top-of-mind. At the trade level, too, a number of initiatives ranging from dealer relationship workshops to customer camps and mason meets have helped the company keep in regular contact with this vast group of influencers. The ensuing knowledge base has driven the development of other customer-focused programmes and added vigour and vitality to the offerings Ambuja has made.
Given this line of thinking, empowerment was not just going to be a fashionable term at Ambuja. It was the only way to achieve goals. If costs had to be controlled, it seemed absurd for engineers not to be able to take on-the-spot decisions. The same philosophy applied to controlling power consumption. Who better than the engineers to suggest ways to cut costs? They knew the plants inside out. It made sense to listen to them. This has bred a unique work culture at Ambuja Cement. The company’s professionals set their own targets and are given the freedom and authority to achieve them. Tasks are no more seen as tasks but rather as personal missions. Over time, two words have become inextricably interwoven into the company’s lexicon, work culture and ethics: I can.
www.gujaratambuja.com
Brand Values
Ambuja Cement’s USP has always stood for Giant Strength. Over the years, this core value of the brand has been continuously reinforced. The company achieves this by product innovation and through communications stretching from the dealer level to the end consumer. Right from its inception, Ambuja has approached the cement business with an open mind. Some things were evident immediately. To compete with the older, established players who had already amortised their plant cost, it was important to have the lowest capital cost per tonne of cement. Plants would have to be set up in record time to reduce the burden of interest, capacity utilisation would have to be above 100% and power consumption would need to set a record low.
THINGS YOU DIDN’T KNOW ABOUT
Ambuja Cement
Ambuja was India’s first cement brand to advertise on television Agro waste helps the company reduce power cost Ambuja plants are one of the cleanest in the industry and have won awards for pollution control A dedicated port and dedicated ships carry cement in bulk to Mumbai from Ambuja’s plant in Gujarat
doc_812697700.pdf