Holcim may appoint some management consultants to provide advice on combining some of the best practices and processes in Gujarat Ambuja Cement (GACL) and ACC, according to the Economic Times of India. The move, which analysts see as a first step towards consolidation of the Holcim India empire, is aimed at cutting costs and improving efficiencies.
While the final blueprint of the grand design are still under intense speculation, Holcim feels the GACL-ACC combo could work much better by eliminating duplication and wasteful processes.
This is a part of Holcim’s plans to increase presence in India. According to sources, most of India’s leading strategy consultants and professional services firms - McKinsey, Ernst & Young, Deloitte & Touche and Boston Consultancy Group - have been sounded out.
Currently, Holcim and the two Indian companies follow their own independent processes and practices. As a result, the divergence among the three group companies is huge. For instance, the procurement processes or the supply chain structure differ in all the three companies, making it difficult for Holcim to either squeeze efficiencies from economies of scale - in terms of lower costs - or even measure outcomes against its in-house metrics.
GACL didn’t respond to an email query. A spokesman for ACC, however, said the process for maximising synergies isn’t something new. "We’ve been interacting closely with both Holcim and Ambuja Cement ever since we came to be associated with them. We have regular exchanges with each other where we share our methods and best practices.
Holcim has well documented processes in many areas that are of interest to us. These have been tried and adopted in ACC in areas such as IT systems, financial systems, waste management and project management." The spokesperson also added the three companies already have a "forum in place that enables us to meet and share useful knowledge."
Holcim indirectly owns about 38% in ACC through Ambuja Cement India and is the largest shareholder in Ambuja Cement with 28% equity holding. GACL, which has its own jetties, has a large presence in west India and is one of the few Indian cement firms with an export presence. ACC, on the other hand, is a pan-India cement company, the second largest local cement maker and is run by a team of professionals.