Dalmia Bharat to ET NOW: First cement company to announce we will be net carbon zero by 2040

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Mumbai: In a freewheeling chat with ET NOW, Puneet Dalmia, Managing Director of Dalmia Bharat shared his views on the cement industry, their expansion plans and overall trends in terms of sector consolidation

FLASHES:

1. Saw a V-shaped recovery in construction
2. People were building extra rooms & extra houses in rural
3. Believe good infrastructure and housing demand is sustainable in India
4. India being an alternative to China will bring capex in India and bring infrastructure demand
5. NCLT and insolvency laws created uncertainty among entrepreneurs
6. Global commodity cycle is helping rapid deleveraging by commodity players
7. Long term vision is to become a pan India pureplay cement company with a 100-120 MT cement capacity
8. Looking at creating predictable and sustainable growth for shareholders
9. India can grow at 7-8% per annum
10. Cement industry can grow at 9-10% per annum, higher than GDP growth
11. Organized larger players can gain market share from smaller players
12. India has enough headroom for demand growth from 200Kg/capacity vs global avg of 500kg/capita
13. Immediate plan to become 36MT by FY22 and 48MT by FY24
14. Expansion is mainly via planned organic growth
15. Any issue with cash flows, we believe that we can be flexible in expansion plans
16. Have kept some space for strategic inorganic expansion
17. Looking at keeping net debt to EBITDA under control
18. We will bring back net debt to EBITDA under control even if we exceed for some time for inorganic expansion
19. Looking to be a sizable player with 15-25% market share in any market we operate
20. Need to be able to go down on the cost curve
21. Investing heavily in cost control measure to bring down cost controls in future
22. Biggest differentiation for Dalmia will be sustainable and profitable growth
23. We are much lower than India and global peers in terms of carbon footprint
24. First cement company to announce we will be net carbon zero by 2040
25. Steel industry mainly has 4 players driven IBC & insolvency cases
26. Cement has many regions and many players
27. Top 5 cements control ~57% only in Indian market, see it going to ~65% in future
28. The issue of carbon costs may hasten consolidation
29. Large players trying to build brands and attempting premiumisation of products
30. Utilisation rates for industry ~70% , can move upto 85% in next few years
31. Petcoke, coal & diesel prices have all gone up significantly
32. Looking to constantly reduce dependence on fossil fuels
33. Entry barriers in cement business is rising, limestone is getting auctioned
34. Consolidation also being seen and will make entrepreneurs hesitant to enter the business.