Dalmia Bharat on tough terrain as sector woes dim prospects
Subscribe to enjoy similar stories. As the cement sector struggles with muted prices, some firms may feel more heat than others. A case in point here is Dalmia Bharat Ltd.
Its two core markets– east and south–are poised to see increased pricing pressure. A spree of capacity additions in the east by various cement companies would lead to a significant influx of cement supply going ahead. In the south, industry dynamics are fast changing due to consolidation.
The fight for volume share in this region is set to intensify now that pan-India-focused companies Ambuja Cements Ltd has acquired Penna Cement Industries, and UltraTech Cement Ltd has bought a stake in The India Cements Ltd. Further, with Jaiprakash Associates (JAL) entering insolvency proceedings, there are concerns over Dalmia Bharat’s medium-term capacity expansion target. A BOB Capital Markets Ltd report dated 12 December said, Dalmia Bharat’s drive to add market share through expansion could receive a setback with limited alternatives for JAL assets in central India.
Dalmia Bharat targets 75 million tonnes per annum (mtpa) capacity by FY28 from 46.6 mtpa currently. With these unfavourable factors at play, the positives of tight cost control are overshadowed. Dalmia Bharat’s focus on cost savings by cutting energy expenses has helped it become one of the lowest-cost producers in the industry.
It aims to increase the share of renewable energy from around 39% currently to 45% and 50% by FY25 and FY26-end, respectively. Also Read: Cement makers are buying green power and private ships. Here's why It is also working on achieving cost savings of ₹150-200 per tonne in the next few years via various initiatives.
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