The exercise, which covers a gamut of areas including manufacturing, procurement, logistics and marketing, essentially involves enhancing revenues (using existing resources) while checking costs.

Says Business Consulting Group director, KA Ramakrishnan, "The initial diagnostics revealed that there was ample scope for operational improvements across all functional areas, which could be effected with minimal capital expenditure in the short to medium term".

The revamp has also factored in the emerging competition from Oswal Fertilisers' two million tonne facility coming up on the east coast. Godavari Fertilisers and Chemicals had earlier seen a 25 per cent decrease insales volume, while market share had dipped by two per cent to 8.3 per cent, following the decontrol of fertiliser prices in 1992.

Some of the key recommendations made by the consultancy include --- a business redefinition which meant a shift from being a di-ammonium phosphate (DAP) fertiliser company to manufacturing a range of NPKs; streamlining raw material consumption and procurement practices; and creation of new home markets and investment in market development efforts.

Says Ramakrishnan, "We found that raw material consumption levels exceeded industry norms by nearly two per cent, while streamlining of procurement practices could nip off another two per cent of cost, on an average".

The joint sector entity has since explored the option of direct buying for procurement of raw materials. The company has also realised savings in excess of Rs 2 crores by checking raw material consumption, though the potential saving in this area could be around Rs 5 crores.

The company also put in place measures toimprove throughput, both in terms of onstream hours and production rates. "This also involved sensitising the production people to the financial implications of their actions. It also involved detailed discussions with the plant operating personnel, bechmarking etc," he added.

Significantly, one of the task forces set up under this joint initiative set itself a target of 8,000 onstream hours (the average onstream hours prior to the review was around 6,400). The effort has paid rich dividends and production levels at Godavari Fertilisers and Chemicals' plant at Kakinada are already 20 per cent higher, with monthly onstream hours moving up to exceed 625, Ramakrishnan said.

The company is working on a further 20 per cent improvement in product rates and a 10 per cent increase in running time. These measures would transalate ino an incremental contribution of Rs 12 crore.

The performance improvement exercise also involves a review of working capital to improve cash flows. The key measures being implementedinclude a streamlining of internal audits and a 10-day reduction in the overall finished goods and debtors cycle. The latter is significant given that on a turnover of Rs 700 crore, a 10-day cycle reduction means reducing about Rs 19 crore of capital employed.