Adani Wilmar Limited (AWL)
This case study was prepared by Sarang Deo, Sanjay Kumar Singh, G. Raghuram and Sanjay Choudhari. Sarang Deo and Sanjay Singh were PGP II students during 1999–2001 at Indian Institute of Management, Ahmedabad (IIMA). Presently, Sarang Deo is on the Faculty at Kellogg School of Management, Northwestern University, USA. Sanjay Kumar Singh runs a healthcare services company named SWAS Healthcare from Ahmedabad. G. Raghuram is an Indian Railway Chair Professor at IIMA. Sanjay Choudhari is PhD student at the Indian Institute of Technology, Bombay and associated with National Institute of Construction Management & Research Pune as a Faculty. This case is prepared solely to provide material for classroom discussion. It is not designed to present illustrations of either correct or incorrect handling of administrative problems. Authors acknowledge the help and contribution provided by Mr. Pakarashi, Logistic Manager of Adani Wilmar Limited. Please address all correspondence to Sanjay Choudhari, Shailesh J. Mehta School of Management, Indian Institute of Technology, Bombay, Powai, Mumbai 400076, India. E-mail: email@example.com.
It was one hazy morning in August 2000. Sitting in his cabin, the Logistics Manager of Adani Wilmar Limited (AWL), Mr. Pakarashi, was working on the distribution network for the new brand of edible oil to be launched by the company. Edible oil was still a commodity in India. Since there was little difference in the raw material and processing cost for different companies, one of the major areas where one could get a competitive advantage was in managing the supply chain. Transportation accounted for approximately 70% of the total supply chain cost. This meant that setting up of an optimal distribution network focused on transportation costs was important for success in this business. AWL was setting up a reﬁnery of 600 tons per day (tpd) capacity at Mundra, a port on the Gulf of Kutch in Gujarat. This reﬁnery was the largest in the country and was expected to become fully operational by September 2000. (The National Dairy Development Board (NDDB), a cooperative, currently owned the biggest edible oil reﬁnery with a capacity of 250 tons per day.) The reﬁned stocks would have to be distributed to dealers initially in western and northern India. Issues under consideration were the location of warehouses, allocation of dealers to warehouses and choosing the mode of transportation from the reﬁnery to the warehouse. COMPANY BACKGROUND AWL had started as a trading company, mainly exporting commodities. After a fast growth over 10 years, it had a turnover (value of goods traded) of Rs.35 billion in 1999–00, with net proﬁt of Rs.1.2 billion. It had recently entered into
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the infrastructure sector, with the building of the Mundra port through a 50–50 joint venture with the Government of Gujarat (represented by Gujarat Port Infrastructure Development Company Limited, promoted by Gujarat Maritime Board and Gujarat Industrial Investment Corporation Limited). The port was built with an investment of Rs.3.9 billion and was designed for a throughput of 1.7 million tons per annum (mtpa). The port started operations in October 1998 and handled a cargo of 293,000 tons in 1999–00 and 122,000 tons between April and June, 2000. A further investment of Rs.4 billion was being made to enhance the port capacity, along with a 57 km railway siding for evacuation. The AWL was the result of a 50–50 joint venture between the Adani group and Wilmar Trading Private Limited (WTPL) of Singapore, made in June 1999, to enter into the edible oils business. WTPL had a turnover of US$2.1 billion in 1999. It was the world’s second largest player in edible oil trade, having its own plantations in Malaysia and Indonesia, and also owned a ﬂeet of vessels to transport the products to...