Enhancing Value Of Stakeholders
The year FY19 was a watershed year wherein the promoters restructured and amalgamated the multiple subsidiaries into Dalmia Bharat
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In 2018-19, the management and promoters got together to successfully integrate the multiple subsidiaries into one listed entity so as to present the stakeholder a structure that enhanced simplicity and clarity. Having a single listed entity, the company says, will further strengthen their principal objective of constantly enhancing the stakeholder value.
Dalmia Bharat increased its manufacturing capacity from 1.2 MTPA in 2004 to 26.5 MTPA in 2019 and simultaneously attained a leadership position in profitability per tonne over the last decade. The company achieved one of the fastest growth rates in the Indian cement sector. “We will endeavour to sustain this growth appetite on the back of an integrated organisational framework that is simplified, more transparent and invested with stronger processes and controls,” said Gautam Dalmia, MD, in the company’s latest annual report.
On the business front, there was a steep escalation across cost parameters that impacted annual profitability for the cement industry in 2018-19, the company said. “We limited the impact of this slowdown through proactive initiatives like use of multiple fuel, pioneering the Portland Composite Cement category and strengthening cost management,” said Dalmia.
The company says its commitment to achieve sectoral cost leadership continues to be driven by an ongoing process reassessment, deeper employee empowerment, and investments in technology as well as strengthening vendor and customer relationships. The 10 per cent annual volume growth reported by the company in 2018-19 was well in line with the broad industry growth. Net sales rose 11 per cent to Rs 9,484 crore; EBITDA was Rs 942 crore. As a company, Dalmia Bharat continues to seek opportunities and undertake capacity expansions for enhancing market share and diversifying locations. With that objective the company had bid for Binani Cement’s assets but with the IBC law still evolving and our insistence on maintaining financial discipline, we were unable to acquire the asset despite higher initial bids, the promoters said in the annual report.
However, Dalmia Bharat’s acquisition strategy has been integral to its accelerated growth aspiration and nearly 57 per cent of its present installed capacity was acquired inorganically over the last decade, it said.
The company’s planned capacity expansion in East India is well on schedule. The company expects to commission the clinker line and almost half the grinding capacity by March 2020 with the entire capacity on stream by March 2021. The company believes that with an enhanced capacity, it will consolidate its position deeper in the eastern market, potentially leading to leadership across the foreseeable future. “Even as we grew our manufacturing capacities at a CAGR of 15 per cent over the last decade, we intend to add almost 40 per cent to our existing capacity over the next two years,” Dalmia said, adding, “We are well capitalised and structurally equipped today to take advantage of all opportunities...”