The Rawan plant of Grasim was commissioned in March 1995 with a capacity of one million tonne per annum (mtpa), which was scaled up the very next year to 1.7 mtpa. The idea was to serve the eastern markets where demand far exceeded supply at that time. But when competition (other cement plants in the Bilaspur cluster) flooded the market with their products, the situation reversed; there was far more supply and not enough demand. In such a scenario, Grasim, though a modern plant with state-of-the-art technology, became a high-cost island. It started losing its competitive advantage and running up losses. Faced with a do-or-die situation, the team launched a revolutionary cost management concept.

The questions they asked themselves were: How can we increase productivity on all fronts? How can we reduce cost of operations? How can we improve the quality of our products? How can we create value for our customers?

In order to strategize the thinking process and reorient their efforts, a SWOT analysis was conducted involving the workers, staff and managers. All were asked to identify the scope for improvement - big or small - in all areas of operations, whether related or unrelated to them. Areas of improvement were identified in operations, human resources, input costs, resource utilisation and supply chain management.

The only major capital expense (Rs. 4.68 crore) was incurred in installing bucket elevators in place of the power-hungry pneumatic conveying system. This led to a saving of Rs. 9.95 crore over a period of two years. The unit has the lowest power consumption per metric tonne and the lowest heat consumption per kilogram of clinker among the companies in that cluster. An excellent example of networking can be seen when concessional power tariffs were negotiated with the state electricity boards of the newly formed Chattisgarh state, which has a large capacity to generate power. Similarly, the railways department was influenced to lay a 3 km long railway line exclusively for the movement of slag.

Right-sizing through systematic manpower study was among the major manpower initiatives undertaken. The contract system was changed from labour supply to job contract. Redundant positions were identified and excess staff absorbed in other group units. Packer productivity was increased from 700 to 1040 mt per shift per packer, thus giving a saving of Rs 1.02 crore.

Resource optimisation
A significant project that gave huge benefit and demonstrated the value of optimum resource utilisation was the picking up of sweetener grade limestone from the waste dump. Contract workmen were given training on identifying the good limestone from the bad. This unique resource conservation initiative was appreciated by the Indian Bureau of Mines and it resulted in a saving of Rs 2.25 crore over a two-year period. Use of redundant wagon tippler for unloading of raw materials instead of doing it manually saved another Rs. 76 lakh.

Various other initiatives such as reduction in hired vehicles, use of e-mail and v-sat instead of phone lines and reduction in travelling expenses also helped to tighten the belt. Costs were made the responsibility of the person in charge of the production process, instead of being monitored by the accounts department or senior managers. This ensured accountability and ownership of the process.

In the supply chain management process, there was improvement in overall truck turnaround time. Efforts were made to increase the reliability and quality of supplies. Visits of dealers, end users and opinion influencers were organised to the plant to build their confidence in the company's products and systems.

The most distinctive feature of the cost management exercise was that it was achieved with minimum investment, through better planning, negotiations and collaborations. For the first time, the unit was able to reduce the input cost of raw materials such as coal, power and slag. Maximum cost advantage was derived from collaborative efforts involving external agencies such as cement manufacturers in the Bilaspur cluster and Govt departments.

Less cost, better product
An important fallout of the cost reduction exercise was the drastic improvement in product quality leading to better positioning and higher realisation. The production of portland pozzolana cement increased by 61 per cent. This formed a part of the unit's strategy to promote blended cement to create more value for customers as well as stakeholders. The capacity utilisation at 94.12 percent was the highest amongst competitors in that area.

According to the Whitehopleman Global benchmarking data, Grasim Cement Rawan is amongst the 25 per cent best cement plants in the world in power and fuel consumption. Today, the Grasim Cement team at Rawan is charged to take on more challenges with renewed vigour and focus on the three Cs - cost, customer and competition.