UNIVERSITY OF THE EAST CALOOCAN

CAMPUS
CALOOCAN

CASE STUDY

SUBMITTED BY:
JENYZA B. DIMACALI

SUBMITTED TO:
PROF. ROSALINDA LACERONA

Philippines, 1988
J.K. Cement Ltd is an affiliate of the multi-disciplinary industrial conglomerate
J.K. Organization which was founded by Lala Kamlapat Singhania. For over four
decades, J.K. Cement has partnered India's multi-sectoral infrastructure needs on the
strength of its product excellence, customer orientation and technology leadership The
Company has over four decades of experience in cement manufacturing.
The Company is the second largest manufacturer of white cement in India, with
an annual capacity of 600,000 tonnes in India. They are also the second largest
producer of Wall putty in the country with an annual installed capacity of 700,000
tonnes. J.K Cement is also the first cement Company to install a waste heat recovery
power plant to take care of the need of green power. Today at its different locations, the
Company has captive power generation capacity of over 140.7 MWs which include 23.2
MW of waste heat recovery power plants.
The Company has made its first international foray with the setting up of a greenfield dual process white cement-cum-grey cement plant in the free trade zone at
Fujairah, U.A.E to cater to the GCC and African markets. The plant at Fujairah has a
capacity of 0.6 million tonnes per annum for White cement with a flexibility to change
over its operation to produce up to 1 million tonnes per annum of Grey Cement. The
commercial production from Fujairah Plant started from Sep'2014.With this, J.K Cement
Ltd has become the second largest White Cement Producer in the World.
JK Cement started operations in the Philippines in 1968. It is located near in
Metro Manila where the demand for cement is most concentrated. JK Cement makes
use of the dry production process. By 1988, the company supplied 10 percent of the
domestic market and 1 percent of the Metro Manila market.
The issue of expanding JK Cements capacity could not have come at more
appropriate time. In 1988, the cement industry was suffering from shortage and as
much, the country had to rely on imports to meet total demand. For the next years, the
construction industry was expected to grow at 16.5 percent. With the increase in
construction activity, cement demand was also expected to increase.

I.

OBJECTIVE/S
1. To evaluate whether JK Cement should go design and build the new plant
or contract it out as a turnkey basis in order to expand.
2. To determine the best design, construct, and setup of plant operations, for
the expansion of JK Cement.
3. To analyze risk and to formulate risk reduction strategy.

II.

CENTRAL PROBLEM
How should the JK Cement expand in order to increase their productions
to supply the projected demands?

III.

AREAS OF CONSIDERATION
a. STRENGTH
1. JK Cement possess good brand image in the existing market which is
definitely a part of pavement brick for it.
2. JK Cement has an operational experience of over 3 decades and the
expansion is not new to the group.
3. The designer of the expansion, Mr. Geroso has a lot of experience.
b. WEAKNESSES
1. It has major operations in Rajasthan and Karnataka only.
2. The merging of old and new equipment may not work properly.
3. Some of the developments may cost more funds.
c. OPPORTUNITY
1. It should expand its operations to other parts of the country.
2. It can enter into untapped markets.
3. Lesser cost in expansion, more capital for other purposes.
d. THREATS
1. JK Cement would face strong competition when it enters new markets.

2. Increasing cost and fluctuating construction business scenario

3. Instances of delay in the expansion.
IV.

ALTERNATIVE COURSE OF ACTION

These are the possible solutions to the problem with corresponding
advantages and disadvantages:
1. JK Cement will enter into a turnkey agreement with a foreign supplier.
Advantage:
- Entering a turnkey, the foreign suppliers gives the company a
quotation and they bears all the risk with regards to cost
overruns.
- With this the output was expected to be more than a double.
Disadvantage:
- The exchange rate may affect in buying the equipment and
spare part to the new operation setup.
- The company cant develop local know-how and have to be
dependent on foreign suppliers.
2. JK Cement will rely on local or in-house engineering and upgrade the
output capacity of the plant.
Advantages:
- Substantial cost saving
- Ability to maximize local content
- Flexibility in hiring local contractors
Disadvantages:
- Hard to convince creditors for money.
- Not as many output as turnkey.

V.

STRATEGY FORMULATION / RECOMMENDATION

I therefore conclude that the best solution to the problem is alternative
course of action no.3. JK Cement will rely on local or in-house engineering and
upgrade the output capacity of the plant, because it is more effective and
efficient, and provides more opportunities for the company, inside and outside.

VI.

PLAN OF ACTION
1. Conduct research to gather significant data about the expansion to have
more bases in decision making.
2. Conduct other studies to compare the avantages and disadvantages of
both side of the expansion strategy.
3. Consult the expert engineer.

VII.

POTENTIAL PROBLEM

1. What if there is no budget for the research?

2. What if the creditors arent convinced that the company needs money for
expansion?
3. What if it costs more than the other strategy?
VIII.

CONTINGENCY PLAN
1. Find more creditors or investors to fund the expansion.
2. Find sponsors for the studies, research and consultations.
3. Find other unbiased decision.