Cement manufacturer Dalmia Bharat Ltd, which is currently executing an expansion plan, is working on its next phase of expansion that will take its capacity to 75 million tonnes per annum (mtpa) by 2027 and set it on its course to be a pan-India player.
Under its current expansion plan, it will be reaching an annual capacity of 54 mtpa by the end of FY24, from its current capacity of 39 mtpa.
In a recent meeting with select analysts, the company’s management said that it was firm on allocating capital for its core businesses while it would be divesting non-core holdings such as its stake in India Energy Exchange to focus on its growth. It has sold about 5 per cent stake in the energy exchange and still holds about 15 per cent stake in it.
Over this financial year and the next, the company’s capex of about ₹10,200 crore will be partly met through operating cash flows of ₹6,400 crore.
Pan-India presence
Dalmia Bharat’s management expects cement demand to grow faster than the country’s GDP and the expansion plans that have been set in motion will equip it to meet that demand and aid it in its goal of becoming a pan-India player.
Through its expansion, the company aims to reduce its exposure to the east-south region of the country and by the end of 2024 to be present in the western, mid, and northern regions as well.
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The current capacity expansion includes the 5 mtpa added through the acquisition of some assets of JP Associates by Dalmia Bharat’s subsidiary, Dalmia Cement Bharat. It also expects to acquire another 4 mtpa from JP Associates.
Laying the groundwork for its next phase of expansion, Dalmia Bharat has been actively participating in limestone auctions. To reduce its dependence on Coal India for its coal requirements, the company is also in line to acquire coal mines.
In the big league
Other cement companies are expanding too. Industry leader UltraTech Cement is adding to its capacity and will be reaching 142.65 mtpa by FY25 with an expenditure of close to ₹13,000 crore. The Adani group, which acquired ACC and Ambuja Cements from Holcim last year, is also gearing up for the competition and recently announced plans to spend ₹46,000 crore to take its capacity to 140 mtpa by FY28. Shree Cement has also set itself a more modest target of reaching 80 mtpaby 2030.
To prepare to be in the big league, the management indicated that it is drawing up succession planning strategies for various leadership roles for a smooth transition.
For the year ending March 31, 2022, the cement company reported a net profit of ₹1,138 crore on revenue of ₹11,286 crore.