How did Shree Cement go about with its cost reduction programme?
When companies discuss cost-cutting, they do so with a narrow reference to overheads and manufacturing expenses only. They seldom talk of quality as a cost reduction initiative. Shree did so in 2000-01 with remarkable results. Our cement sold faster because we reported an improvement in setting time and compressive strength. We reduced our receivables from 43 days of turnover to 27 days. Inventories were reduced to Rs 34.72 crore from Rs 66.78 crore. Working capital was also reduced by 28 per cent and the overall cost of finance was also brought down to 13.50 per cent from 16.50 per cent. Our cost of production is one of the lowest in the world. There is another aspect of cost-cutting. Reduction of cost can also be achieved through production of better quality cement. Indian consumers, I still believe, are willing to pay a premium if they get a good quality item. Hence, we have decided to introduce a new-generation cement and it is called Shree Ultra. This is a special product which pr
