Abstract
This case describes how one company in the textile sector of Pakistan is employing innovative ways to overcome the energy crisis which is seriously impacting its production processes. The case starts in August 2008 when the company’s Chief Executive, Shujaat Mirza, in consultation with his team members, had to take a number of decisions about an alternative energy source for steam generation. Steam is an important component required in the process of manufacturing denim jeans. The decisions were about procurement of alternative biomass-based fuel and the related machinery to effectively burn the biomass fuel and produce process steam. Part A of the case ends at the point where all the important factors affecting decisions have been laid out. Part B explains what actually happened after the team had taken up and implemented the alternative system. This part also offers a follow-up to this alternative steam generation system regarding its status in September 2014. The case can be taught to explain the processes, prospects and problems of innovative ventures and to highlight the strengths and limitations of managerial decision-making.
In the first week of August 2008, a group of three men was busy in an office in the vicinity of Lahore, Pakistan, trying to make some sense out of a feasibility report. This group was led by Shujaat Mirza, 1 the director of US Denim Mills, Lahore, Pakistan, a local company that produced export-quality denim cloth. The company provided cloth to international brands such as Levis and Jordache. The feasibility report was related to a number of alternatives for producing steam needed at crucial points in the manufacturing process of denim cloth. All of these alternatives were biomass/agri-based fuels, namely, corn cob, rice husk and wood. At the time, the company was primarily using natural gas to run its boilers for the process of steam production. The company used furnace oil or diesel when natural gas was not available.
Earlier that year, the company had faced a total of twenty-eight days natural gas shut-down in January and February 2008. It used state-supplied natural gas to run its boilers for steam generation and to run the turbines for auxiliary electricity generation. The gas shortage forced the company to shift to a more expensive option, furnace oil, for steam as well as power generation. Anticipating shortage in the coming winter, the Company started exploring alternative sources for steam generation. Preliminary work was completed by August 2008. This mainly included locating the alternative energy sources, identifying the technology needed to effectively burn these to produce steam and assessing the local and foreign vendors who could undertake the manufacturing, installation and sustenance of this alternate setup. In the meanwhile, the gas shortages were supplemented by frequent electricity shutdowns in the local area. The company’s reliance on furnace oil grew further as now both the required steam and power were generated through furnace oil. During this time, there was an unprecedented increase in furnace oil prices at the global level. Thus, the company was finding it increasingly difficult to keep using furnace oil and meeting its targets for export-quality denim at competitive prices.
The decision for alternative fuel was not straightforward. Theoretically, a biomass-based fuel could save the company anywhere from Pakistani rupee (PKR) 2 13 to 15 million in running cost in just one month. But it was more complex. There were many factors other than the cost of fuel which impacted the decision. These included burning characteristics of the alternative, ash content it created after burning and special machinery requirements to effectively burn the fuel. Then there were sourcing, storage and handling issues associated with each of the options. As these factors varied for each option, it was not possible to consider just the cost of alternative fuel as a criterion to decide in favour of a given fuel.
If the gas shortage struck again in the coming winter, the company would have to shift to furnace oil under the existing setup. This meant that at the projected requirement 3 of 5,225 tonnes of steam for one month, the US Denim Mills (Lahore) had to bear an additional running cost of PKR17.68 million. In comparison these agri-based alternatives (mainly rice husk, corn cobs and wood) offered a range of options, reducing the additional running cost anywhere between PKR2.7 million and PKR4.6 million per month. As for fixed costs, they mainly comprised cost of machinery and installation. The price of machinery required for the new setup ranged from PKR 7.3 million to PKR37.5 million. The installation cost amounted to PKR3.50 million (Exhibit 15).
Shujaat Mirza had to quickly finalize an alternative fuel option and give a go-ahead for the procurement of related machinery and parts as the expected gas shutdowns were only 4 to 5 months away. In this time, the team had to arrange and install the machinery, arrange alternative fuel and make in-house changes in the existing setup, while ensuring that the steam supply for running production was not interrupted in any way. Shujaat Mirza had confidence in his team but wondered whether they could accomplish all these tasks in such a short time. This was so because the team had to rely on new vendors for machinery manufacturing and supply of alternate biomass fuel. He was also conscious of the possibility of slump in oil prices, which could fundamentally unsettle his calculations, forecasts and ultimately the decision. ‘If only I could see a few months into the future…’ Mirza mumbled, while the other team members looked towards him expectantly.
Energy Crisis in Pakistan
Pakistan used to be counted among those countries which had abundant natural gas reserves. According to a recent estimate 4 the country owned around 27 trillion cubic feet of proven natural gas reserves in 2014 (Exhibit 2). In contrast to many of the other countries, Pakistan used its existing natural gas reserves lavishly. Thus, natural gas comprised almost 50 per cent of the total energy consumption of the country in 2008 (reduced to 44 per cent in 2013; see Exhibit 3). The main usage for natural gas besides domestic consumption was in the power sector, transport and other industries such as fertilizer manufacturing. In 2007, many of the country’s thermal-powered power plants, whether state-owned or privately owned (IPPs) 5 were being run on natural gas. The private sector industry such as textile mills had also installed small-scale power plants for in-house use. These in-house plants also used natural gas as primary fuel. Furnace oil and diesel were only used as an emergency alternative in these plants. Another use of natural gas was in the form of compressed natural gas (CNG) for running private and public vehicles.
As a result of a sharp increase in natural gas demand and relatively minor increase in the new reservoirs, the supply of natural gas gradually declined after 2006. The effects of this decline were widely felt in the winter of 2007. By that time the domestic, industrial and commercial usage of natural gas had increased manifold. This resulted in severe gas shutdowns throughout the country, starting from 2007. Industrial sector was the worst affected by this crisis, and many industries which had designed their power and energy generation systems around natural gas faced huge losses.
US Denim Facing the Energy Crisis
Company Introduction 6
US Denim Mills was formally established in April 2006 as a denim cloth-manufacturing concern. This company was a sister organization of US Apparel, which was into jeans manufacturing since 1974. Both companies were owned by Leads Group, Pakistan, a well-known brand name in the country since the early 1970s. The company was 100 per cent self-financed 7 and had state-of-the-art facilities in various areas. For instance, it had installed the latest machinery for production purposes and a fully operational, end-to-end Oracle-based enterprise resource planning (ERP) application for all the functional areas.
The owners had given full control of US Denim Company to the professional management. This management setup was led by Shujaat Mirza in 2006, who claimed to be a firm believer himself of decentralized management. Explaining the management under his supervision 8 he said, ‘We have a decentralized management system, and we have given a lot of freedom and a sense of responsibility to our people to do their work.’
Under this management, US Denim made an impressive head-start and in its first year of operations ending June 2007, it made sales worth PKR 653 million. In the second year, the company had originally planned for a growth in sales of 80 per cent but managed to fare even better. Perhaps because of an aggressive marketing campaign, the end of June 2008 saw the company achieving a growth rate of 130 per cent. This amounted to a sum of PKR 1,498 million. The company had aimed for a growth in sales of around 50 per cent for the year 2008–09 and a growth rate of 25 per cent for subsequent years; however, it was hit by the energy crisis during this period. In an interview in 2008, Shujaat Mirza, the Company Director at the time, explained his strong belief in growth as a source of company’s performance:
When a company stops growing, no matter how profitable it is, its people start to become stale, so it is one of the policies of our management that we chase growth. We are an explosively growing company. . . . When there is growth everybody is charged up, no matter what his age is; otherwise you can have a group of very young people and you put them in a situation where there is no growth and I can tell you that within one year they will become very stale . . . when you have growth you have new opportunities, and when you have new opportunities you can give people promotions (incentives), and that is how the things work. When you have no growth, you have nothing to offer to your people and everybody would start to become cannibalistic, I would say.
This growth in production mainly served export orders. The company supplied to well-known brands such as Levis, GAP, Jordache, Esprit and Polo Ralph Lauren. Around 60 per cent of the company’s production was exported and the rest was consumed locally by its sister organization, US Apparel. In order to effectively serve its customers and increase its market share world over, the company had opened up offices in the USA, Germany, England and Turkey. The company’s commitment to its clients was evident from its vision, which stated:
We see ourselves as the foremost source of innovative textile products for today’s apparel world and are committed to delivering value to our customers in terms of product development, on time delivery and high quality. We are (also) responsible to our shareholders for a good return on investment.
The company’s management was also conscious of corporate social responsibility requirements. In the interviews it admitted its responsibility towards its community and the environment. As stated by the management, the company’s emphasis on corporate social responsibility rested on two basic themes: coexistence with the society and protection of the global environment.
As corporate citizens we work towards achieving the best environmental and ethical practices.
Process of Denim Manufacturing 9
The process of denim fabric manufacturing starts with yarn ‘spinning’. The raw material for this operation is in the form of yarn, wrapped on big spools. The complete process consists of around seven main stages through which the yarn is converted into denim cloth (see Exhibit 6). Steam plays a critical role in two of these stages. These stages are ‘dyeing and sizing’.
The first operation in which steam is excessively used is dyeing. After rinsing following indigo dyeing or rinsing following sulphur topping, the yarn ropes pass through the rolls which mechanically squeeze these in order to extract water. The yarns are then dried and coiled into large tubs. The typical drying apparatus is a multiple stack of drying cylinders. These metal cylinders, which in most cases are Teflon covered to prevent yarns from sticking, are filled with steam under pressure. Maintaining a consistent pressure of steam within the cylinder can accurately control the temperature of the surface of each cylinder. Care must be taken not to attempt to dry the yarn too quickly because it may cause the dye to migrate to the surface of the rope. In addition, if the surface of the drying can is too hot, the yarn can get overstressed, producing an undesirable glazed appearance that reduces absorbency in later processing. Overdrying of yarns can weaken them considerably and affect their quality adversely at the later stages, such as re-beaming, slashing and weaving.
The other operation which requires steam is ‘sizing’. The main purpose for sizing is to put a protective coating (normally of starch) over yarn. This protective coating reduces yarn abrasion that takes place during the subsequent weaving operation. The coating also reduces yarn hairiness, thus preventing adjacent yarns from entangling with one another at the weaving machine. Here the yarns are prevented from drying up completely. A moisture content of 6 to 8 per cent is maintained at this stage of the process.
Impact of Gas Shortage on US Denim Mills
US Denim was only in its second year of production when it was hit by the natural gas crisis in the winter of 2007–08. The company had two main uses of natural gas: generation of auxiliary electricity and generation of process steam. Requirement of electricity was approximately 1.8 MW in January 2008, which rose to 2.8 MW in July 2008, owing to growth in the production of denim fabric (Exhibits 7 and 8). The company had installed three gas turbines of combined capacity of 3.3 MW for electricity generation. The power from these turbines supplemented the power from LESCO 10 during peak loads. The company had also installed two diesel generators with a combined capacity of 1.7 MW. These acted as standby to the gas-fired turbines used for auxiliary electricity generation.
The company had installed a boiler with a capacity of 15 tonnes per hour (TPH) for generation of process steam. This boiler used either natural gas or furnace oil as fuel for its operation. The requirement of process steam on average was approximately 4 TPH in January 2008. This rose to around 7 TPH in July 2008 (see Exhibit 7) and remained at more or less the same level till the end of December 2008.
During January–February 2008, natural gas was not available for twenty-eight days. During this shutdown, the company had to generate around 2,916 tonnes of process steam from furnace oil instead of natural gas. Thus, the total loss incurred by the company on producing steam by using an expensive fuel was PKR 4.84 million (see Exhibit 4 for relative prices of fuels in January, July and December 2008).
Quest for Alternative Energy
While the energy crisis was still on, Shujaat Mirza visited India in early 2008 to attend an exhibition. He met with a number of industrialists in the Indian Eastern Punjab, who informed him of their successful experience with agri-based fuel as an alternate source for steam and power generation. The Indian industry and infrastructure was far more advanced in this technology than Pakistan. Inspired by the success of his Indian counterparts, Shujaat started to think in terms of replicating the Indian experience in the Pakistani industry. On his return, Shujaat Mirza discussed the idea with one of his friends in the business of boiler manufacturing in Pakistan. Both of them agreed that with the help of an Indian consultant, the technology could easily be developed for their home industry. The idea of engaging an Indian consultant could not mature but Shujaat asked his team to explore various options in as early as February 2008. The team was directed to make a feasibility report for the implementation of an alternate source of steam generation, fuelled through solid-wastes and mostly agri-based fuels.
The Team
Besides Shujaat Mirza, three other managers of the company were directly involved in the project. The company co-director, Amjad Hameed, was equivalent in rank to Mirza. Furthermore, Hameed directly headed the services department which had the responsibility of process steam provision. 11 In the organizational setup, 12 Amjad Hameed was looking after the production of cloth and engineering facilities and provision of utilities, whereas Shujaat Mirza was responsible for finance, administration and marketing.
Mirza, who acted as an informal CEO of the company, was eager to bring this energy venture to fruition before the next winter. This meant that he sometimes had to intervene in Amjad Hameed’s domain. However his involvement in the project did not seem to have any impact on the two directors’ working relationship. Hameed and Mirza had a history of working together in a number of organizations before both of them joined US Denim, and both appeared to be comfortable working in unison. Explaining his involvement in the alternative energy venture Mirza said, ‘There is no hard and fast distinction, and both of us chip in for each other whenever required.’
The other active members in the quest were Atique Ahmad, the plant manager for power and utilities, and Shahid Younas, his deputy manager. Atique Ahmad was a mechanical engineer by profession and had fifteen years of experience of handling different types of power plants in different companies. His deputy, Shahid Younas, had over twelve years of experience of working in similar setups in both local and multinational firms.
The team first performed some basic calculations. The average requirement of steam was 7 TPH in July 2008, which would reach as high as 10 TPH during peak hours. The steam was mainly used in sizing and dyeing processes (see Exhibit 7). Furthermore, there were two machines in the finishing range which needed this steam for operation. Based on the information and statistics for the month of July 2008, the team calculated that steam generated through natural gas would cost the company PKR 826 per tonne per hour of steam whereas the steam generated through furnace oil would cost them somewhere around PKR 4,010 per tonne per hour of steam.
Ahmad and Younas started with a broad repertoire from which to select the alternative fuel. These included coal as well as some biomass fuels such as bagasse, 13 wood of different types, rice husk, corn cobs and so on. After having made a few visits to the market and contacting some relevant professionals in the field, they soon discovered that each option had its own set of limitations. For instance, the use of coal offered an altogether different set of handling and storage issues. The coal that was available locally was of inferior quality and required a special type of boiler (fluidized bed combustion type) for burning. Since coal was not biomass, it would involve higher carbon emissions into the atmosphere.
Options for the Biomass Fuels
One of the first options US Denim explored was bagasse, mainly because of its better burning characteristics. However, bagasse was not available in bulk quantities. Sugar factories were already using this for producing electricity as well as process steam. In comparison wood of different types was available in large quantities throughout the year. The team found that wood could be procured any time, especially acacia (keekar) and sissoo (sheesham). Ahmad was also interested in exploring the scope of another option, that is, using bark (protective covering of woody stem) of eucalyptus as a fuel. He had learnt that this bark could be a very efficient burning fuel in the boilers. However, he was disappointed to find out that there was no company or individual in the market who would agree to provide this fuel in the required quantities. Thus, the initial short-listing of fuel options left the US Denim team with the following three biomass-based options: rice husk, corn cobs and wood.
The ash produced by biomass fuels was a particular concern for the project team. Once they shortlisted the options, the team practically checked the ash produced by burning 1 kg each of rice husk, corn cobs and wood (acacia–keekar). It was found that the amount of ash produced was approximately 20 to 25 per cent of the original weight burnt for rice husk, 2 to 3 per cent for corn cobs and 0.5 to 1.5 per cent for wood (see Exhibit 17). The company was expecting to have a consumption of around 50 tonnes per day of biomass-based fuel in the coming months. A larger ash content would have caused problems for the company in appropriately disposing off the leftovers. The company was surrounded by housing societies and educational institutions, and there was no appropriate dumping site in the vicinity of the factory.
As for the storage issues, rice husk appeared to be the most problematic one. It needed a closed storage place because of its low weight and density. The other two raw materials, corn cobs and wood, could be stored in an open but separate yard (see Exhibit 16). The calorific value per kilogram of each of these alternative fuels was much lower than that of the furnace oil (2,700 to 4,500 Btu for these biomass fuels as compared to 18,000 Btu for furnace oil). This essentially meant the company needed to have large quantities of biomass fuels to produce the required steam. Thus, for producing 1 tonne per hour of steam, the team calculated that it would need 3.5 tonnes of rice husk or 3.5 tonnes of corn cobs or 4 tonnes of wood, whereas for producing the same amount of steam the furnace oil requirement was just 62.5 kg. 14
The availability of these alternative fuels varied across different options. Wood was available throughout the year. Thus, it could be procured close to the actual requirement period, thereby reducing the inventory cost. However, availability of rice husk was only for a window of two months, in November and December. The availability window for corn cobs was for three months, between August and October.
The prices of these alternatives were collected from the local suppliers in July 2008 (see Exhibit 12). The difference between the prices of these biomass fuels was not much; rice husk was the cheapest, whereas wood was costlier than the other two options.
Options for the Machinery
Boiler
A boiler is a vessel which is used for heating up water to produce steam at the required temperature and pressure. Two parameters are considered most important while determining the capacity of a boiler: the quantity of steam that would be produced in unit time (usually stated in tonnes of steam per hour or simply TPH), and the pressure it is able to withstand (usually stated in pounds per square inch [psi or kg/cm²]). The other important considerations in selecting a boiler are as follows: Which type of fuel could be used—natural gas, diesel or furnace oil? Is it a water tube boiler (the water is inside the tubes) or fire-tube boiler (fire is inside the tubes and water around it)? What alterations are required if one wants to convert a gas-fired boiler into a biomass fuel-fired boiler? What is the efficiency of a biomass fuel boiler (i.e. how effectively the heating value of a fuel is transferred into steam generation)?
The existing steam generation capacity was 17 TPH. Of this 15 TPH was produced by the conventional boiler. This was a fire-tube boiler, which could be fuelled through natural gas or furnace oil. It had a running efficiency of 93 per cent. It was forced draft, meaning the flame was transmitted across the length of the boiler by forcing it with the help of fans on the front side. The remaining 2 TPH was generated through waste heat recovery boilers. These boilers had been installed at the outlet of a series of three (gas-fired) engines, which produced electricity, having a combined capacity of 3.3 MW (see Exhibits 9 and 10 for original and proposed steam supply systems).
After evaluating the requirements for the biomass-based boiler the team realized that the existing boiler could not be converted into a makeshift biomass-based boiler. Thus, a new boiler had to be arranged. Ahmed then checked with the local boiler manufacturing companies. There were two reputable companies in the private sector which manufactured conventional boilers, DESCON and DDFC, both located in Lahore. Then there was a public sector company, Heavy Mechanical Complex (HMC), located in Taxila at a distance of around 350 km from Lahore, which could manufacture the required boiler. HMC was known for bureaucratic delays, and it was unlikely that they would provide the required specifications boiler before the coming winter. Thus, Ahmed focused on DESCON and DDFC. Both the companies had no prior experience of manufacturing biomass-based boilers. However, after consultations with these companies, Ahmad and Younas learnt that both these companies could manufacture the boiler within the required specifications. The cost for a 15 TPH boiler (which needed an additional furnace for biomass fuel burning) was quoted at PKR 34.5 million by DESCON Lahore and PKR 25.1 million by DDFC. The delivery period mentioned by both these companies was a minimum of nine months. This delivery time effectively eliminated these options as well. US Denim wanted the alternative energy system up and running before the start of the upcoming winter. A new alternative fuel setup seemed unlikely now. The team remained persistent, however.
Ahmad and Younas, through their vast experience in the field, knew that there were reconditioned boilers available for sale in the local market. These were relatively cheaper and could well serve the purpose given the time constraints. The only problem was to locate one. One needed some time and a bit of luck to locate a boiler that could meet the specifications. The team was looking for a boiler which could provide 12 to15 TPH at 150–250 psi, having a heating surface area of 3500 to 5000 square feet. They were expecting the boiler to give an efficiency of at least 75 per cent on bio mass-based fuel. After searching for a few weeks, the team was able to trace a number of second-hand reconditioned boilers which seemed appropriate for burning biomass fuels (see Exhibit 13 for a comparison of various boiler options).
Furnace
After some preliminary exploration, Ahmad figured out that the company would need to have a tailor-made furnace, designed and fabricated from the local market for the specific purpose of burning biomass fuels. This furnace would burn the solid fuel and the heat generated would then be fed into the boiler through a vacuum produced by induced draft fans. These fans worked at the other side of the boiler. Ahmad started to investigate and collect quotations from the local manufacturers who could manufacture this system. Three local companies responded (see Exhibit 14, for comparative quotations and Exhibit 15 for installation costs). Two of these companies only quoted for the solid fuel furnace and not for some additional features which the US Denim team demanded. These were provisions for production of 2 TPH steam within the furnace and automation and efficiency control systems.
One company, FBL, agreed to manufacture the furnace along with all the required accessories. FBL had some prior experience in manufacturing furnaces for solid fuels, mainly wood. However, this company had never designed or manufactured any furnace for burning rice husk or corn cobs. Ahmad was a bit sceptical about the capabilities of FBL when he compared it with reputable companies such as DESCON. Furthermore, at that time FBL was engaged in many small- and medium-scale projects mainly for furnace manufacturing. When FBL quoted to US Denim, it was already involved in over 30 projects. Ahmad feared that FBL had more on its plate than it could chew. However, by that time the team felt pressed for time given the deadline it had set for itself. Choice was a luxury that US Denim did not seem to have.
As the team was busy in exploring different alternative energy sources, oil prices steadily rose to unprecedented levels, reaching an all time high at US$120 per barrel in August 2008. With these revised prices, the additional cost of fuel – if the company again used furnace oil as it did in the previous winter – was coming out to be PKR 17.68 million (Exhibit 11). It was now too late to hire an Indian consultant for supervising the design, manufacturing and installation of alternate steam generation system. Determined to avoid the previous winter’s situation, Shujaat Mirza called all his team members to his office and asked them to bring all the relevant data, calculations and analysis with them. Mirza knew he had to make the decision now and give his team a go-ahead, if he wanted the alternative system running before the gas shutdowns. He had to select the alternative biomass fuel based on the acquired information. Furthermore, he also had to select the appropriate boiler and furnace system from the available options for producing process steam from this fuel.
Exhibits
Profile of the Team Members
Shujaat Mirza, Company Director
Shujaat Mirza graduated from UET Lahore 15 with a degree in 1987, in electrical engineering. He did his masters in business administration from LUMS 16 in 1991. After completing his education, he first worked in Nishat Textile Mills, a setup associated with one of the biggest business groups in Pakistan, for two years. In 1993 he shifted his job to Halima Garments Pvt. Ltd., Lahore (the first garment manufacturer in Pakistan for Polo Ralph Lauren), where he worked as Executive Director and Production Head.
In 1995, Mirza went back to Nishat Mills Group and worked there till 2002 in various capacities. He was Marketing Head of Nishat Fabric (a weaving unit) in Shaikupura, Pakistan. Then he worked as the General Manager of exports for Nishat Mills Faisalabad. Mirza took a number of product- and process-related innovative steps to turn this loss-making company into profitable one. From 1999 to 2002 he worked in the capacity of director with Nishat Chunian Ltd and as director-project with Nishat Dyeing and Finishing Plant, Lahore, Pakistan. He liked to work in multiple areas simultaneously such as production, marketing, accounts and finance and administration.
In 2003, Shujaat Mirza again left Nishat Mills and started his own business, in collaboration with Amjad Hameed, one of his former colleagues in Nishat. Together they first set up a textile buying house for export purposes and then complemented this with a garment manufacturing factory. This factory produced knitwear garments which were mainly exported to USA.
In 2004, Shujaat Mirza was offered a partnership business by Mian Ahsan, who was one of the two owners of US Apparel, a manufacturer of export-quality jeans. The offer was to set up a denim cloth manufacturing factory, mostly for export purposes. Work at the US Denim Mills started in January 2005, and all the installation work was completed within ten months. Trial production started in May 2006 and commercial production started in July 2006.
Amjad Hameed, Director Technical
Amjad Hameed received BTEC, Certificate of Higher Education in Textile Studies from Bolton Institute of Higher Education, UK, in 1992. He obtained his BSc in Textile Studies from the same institute in 1995. He worked as Production Planning Manager in Nishat Group’s processing unit in Faisalabad from 1995 to 1999. Later he moved to Nishat’s dyeing and finishing project in Lahore, where he worked till April 2003. He joined Shujaat Mirza to start their private business of garment manufacturing and exports in 2003. He joined US Denim Mills in January 2005 along with Shujaat Mirza, where he was working as co-director, at the time of this study in 2008. In this setup, he was responsible for all the production-related operations, starting from yarn to finished fabric, as well as for engineering services and utilities. He was also responsible for procurement of production-related materials, machinery, chemicals and so on. He also looked after new projects, starting from conception, feasibility studies, up to the execution of the project.
Atique Ahmad, Plant Manager in 2008 (Deputy General Manager in 2014)
Atique Ahmad completed his Bachelors in Electrical Engineering from the University of Engineering and Technology, Lahore, Pakistan, in 1992. At the time of this study, Ahmad was working as a Plant Manager and had over fifteen years of experience in the area of power plants. His professional career started with a job in an edible oil-producing company where he ran a diesel engine-based power plant with a capacity of 3 MW. He worked in a number of organizations before joining US Denim Mills in October 2006. His experience had mainly been in power plants with capacity ranging from 02 to 32 MW, and in operating waste heat recovery boilers, package-type steam boilers and steam absorption chillers. He worked on diesel engines, gas engines, gas turbines based on dual-fuel, bi-fuel and mono-fuel combinations. At the US Denim Mills, Ahmad’s responsibilities included operation and maintenance of utilities, maintenance of process machines, R&D for energy conservation and erection of new projects.
Shahid Younas, Deputy Manager, Power, in 2008 (Manager in 2014)
After completing his Bachelors in Science from Punjab University, Shahid Younas acquired first-class boiler engineering certificate from the sGovernment of Punjab, Pakistan. He worked in a fertilizer factory, a power-producing multinational company and a sugar factory, for an overall period of thirteen years before coming to US Denim Mills in March 2006. The set of skills he acquired over the years included maintenance and operation of high-pressure water-tube and fire-tube boilers, all kinds of valves, furnaces, dampers, fans, steam heaters, economizers, pre-heaters, air heaters and heat exchanger piping. He also had the experience in handling fuel and water pumps, compressors, water services and mechanical workshop. At US Denim Younas was responsible for operation and maintenance of 3.3 MW gas engines and 2.2 MW diesel engines, existing gas-fired boiler with a capacity of 15 tonnes/hour, waste heat recovery boiler with a capacity 1.7 TPH and other accessories associated with this equipment. He also handled the air-conditioning system of the factory.
Proven Reserves of Natural Gas (Trillion Cubic Feet)
Source: EIA (2014).
Pakistan’s Energy Supply Mix in 2013
Comparison of Furnace Oil and Natural Gas Prices in 2008
Company Organogram in 2008
The Process of Denim Fabric Manufacturing
Consumption of Steam and Electricity in 2008
Steam Supply during Normal Working on Natural Gas
Original Steam Supply System Based on Natural Gas
Prospective Steam Supply System Based on Biomass Boiler
Additional Expense (for one month—calculated in July 2008—Producing Steam through Furnace Oil
Cost Comparison of Biomass Fuels with Natural Gas
Comparative Prices of Imported (Reconditioned) and New Boilers
Prices Demanded for Biomass Fuel Furnace
Estimated Installation Cost
General Layout of US Denim Mills in 2008
Ash Produced from 1 Kg of Rice Husk, Corn Cob and Wood (from L to R), respectively
Footnotes
Acknowledgements
This case study was written by doctoral candidate Ashar Saleem (ashar.saleem@lums.edu.pk) under the supervision of Professor Syed Zahoor Hassan (zahoor@lums.edu.pk) at the Lahore University of Management Sciences to serve as basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. This material may not be quoted, photocopied or reproduced in any form without the prior written consent of the Lahore University of Management Sciences.