| PROFIT ENHANCEMENT STUDY |
|
| Vikram Cement, India (Aditya
Vikram Birla Group) |
| Vikram Cement (VC) works at Khor is among the
largest single location cement plant in India with clinker production capacity of 2.8
million tpa, from three lines. VC is a part of Grasim Cement which itself is the cement
arm of the Aditya Birla (AB) Group, that owns a capacity 11 million tpa. Limited demand
growth coupled with escalating input costs has put pressure on the margins of most of the
players in the Indian cement industry includingVC. Holtec's intervention was sought to
identify profit enhancement possibilities in the entire supply chain spanning both
conventional (capacity, power, fuel, etc.) and unconventional (inventory, overheads,
product mix, etc.) areas. The assignment involved the identification of profit potential,
its quantification, investment requirements to implement the recommendations and the ease
of implementation. Holtec has worked with the AB
group in about 60 assignments, ranging from plant conception to marketing. |
| Cost Determinants 
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Key
Assignment Information
Profit enhancement potential amounting to USD 1
million per annum was identified.
A cross-functional team spent 60 consulting days at the plant and 200 at the home office
to collect data and arrive at preliminary conclusions.
Major profit potentials were identified in capacity increase, product mix, power and raw
material consumption.
|
Objective and Coverage
- Coverage of potential areas was comprehensive including raw materials, fuel and power
costs (unit purchase cost & consumption), equipment capacity utilisation, product mix
optimisation, overheads and working capital including material inventories.
- A Situation Analysis of present plant status, operational parameters, improvement
projects under implementation/ planned and bottleneck areas was carried out to identify
focus areas.
- Benchmarking of plant operations for specific power & fuel consumption, capacity
utilisation, inventory (raw materials & spares), overheads, etc. was done against
major Indian and international players, to broadly identify gaps and savings potential.
- Detailed observations and data analysis were carried out during a 60 consulting days
plant visit by a 6-member cross-functional team. This included the following data
collection activities.
- Measurements at different input and output stages and comparing it with plant data
- Collection of specific & relevant micro level past data like, breakup of crusher
downtime due to mechanical problems, inventory levels of fast moving spares along with
other details such as supply lead times, min-max levels and consumption rates.
- Discussions with line functionaries to incorporate specific/ practical considerations.
- Profit potential was estimated for each improvement area after taking into consideration
the following;
- Profit impact of the improvement idea across the entire plant operations
- Practical factors in implementation and the feasibility of different alternative
scenarios
- Investment required for implementing the recommendations
- A road map for implementation of activities to achieve the identified savings was
prepared.
Holtec’s intervention provided VC with an
opportunity to assess itself vis-à-vis other high performing cement companies with
respect to operational performance, identify profit enhancement opportunities in both
conventional & non-conventional areas and look for process improvement possibilities.
Holtec has executed 25 similar
assignments. |