Jaypee deal to help Dalmia Bharat have pan-India presence: MD Puneet Dalmia

Mumbai: Dalmia Bharat will primarily use the organic route for growth, while staying open to acquiring units that are a "strategic fit," said managing director Puneet Dalmia.

"We want to build a pan-India footprint. And if you see the Jaypee deal, it is a new region for us and accelerates our entry into the central and north Indian markets," Dalmia told ET. "As long as the acquisitions meet our criteria of financial accretion as well as strategic fit, we will participate and bid."

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The country's fourth-largest producer of cement recently added 5.2 million tonnes of cement, and 3.3 million tonnes of clinker capacity for ₹2,850 crore through the buyout of Jaiprakash Associates' cement businesses from the Adani Group. Its capacity has risen to 55 million tonnes, which it plans to scale to 75 million tonnes by FY28, and 110-130 million tonnes by FY31.

Most of the company's recent capacity additions, though, have come organically. "We look at organic as the base case, and inorganic as a topping," Dalmia said.

It has already announced setting up a 3-million-tonne greenfield plant in Pune, apart from increasing capacities at its Belgaum and Kadapa plants.

The facility in Kadapa, Andhra Pradesh, in fact, is set to become one of the company's largest and most efficient. "There is a lot of clean energy available in the state which can support these investments, and this plant will also be one of the most heat efficient ones. Along with the advantage of logistics, there is at least a 5% saving in costs," Dalmia said.

The expansion in Kadapa will involve an investment of ₹3,100 crore, taking the total capacity at the plant to 9.6 million tonnes. The plant is close to Bengaluru, Chennai as well as Amaravati, making it a strategic location for the company.

Also read: Dalmia Bharat plans to raise Rs 4,000 cr; targets 110-130 MTPA cement capacity by FY31



"These are three big demand hotspots where a lot of construction is going to happen, and I think this plant will be able to serve the future demand," he said.

Southern India, which accounts for nearly a third of the market capacity in India, has seen the two largest players - UltraTech Cement and Adani Cement - vie for increased capacity and market share in the region in the last few years.

This rivalry had also cost Dalmia Bharat some market share, while keeping prices under pressure. And yet, of the 12 million tonnes additional capacity announced, Dalmia Bharat is adding three-fourths in the Southern market. "We have to take a long-term view on these things. If you are cost competitive and if your balance sheet is strong, you can you know weather the cycle, and cement is going to become a big boys game," he said.