Infrastructure sector is having roller coaster ride. How has your organization performed in the last three years?
In the coming years, we endeavor to sustain this growth appetite on the back of an integrated organizational framework. We see immense potential in India's infrastructure story as the nation is at the cusp of major transformation and we will continue to expand our cement manufacturing capacity so that we are ready to cater to rising demand. The National Infrastructure pipeline of 103 lakh crore rupees for example is a huge opportunity. Dalmia Cement has increased its manufacturing capacity from 1.2 MTPA in 2004 to 26.5 MTPA in 2019, accounting for 5% of the all-India capacity share. The company has simultaneously attained a leadership position in profitability per tonne over the last decade. In FY19, we continued to focus on achieving inclusive growth and excelling in products manufactured, services rendered and operations managed. While there has been a steep escalation across cost parameters that has impacted the annual profitability of the cement industry, we were able to manage this slowdown through our proactive initiatives. We have engaged in capacity expansion, product diversification cum innovation, thermal substitution and digitalization. This resulted in improved efficiency, enhanced competitiveness and corporate growth. The company has achieved one of the fastest growth rates in the Indian cement sector. In the coming years, we endeavor to sustain this growth appetite on the back of an integrated organizational framework. As a prominent Indian cement manufacturer, we continue to aspire to enhance value in a sustainable way for all our stakeholders- that is simplified, more transparent and invested with stronger process and controls.
Of late there is increasing focus on sustainability and the concept of sustainable (green) cement is slowly creeping in. As a responsible organization, what are the R&D efforts you are taking on sustainable cement front? Which are the sustainable cements you have introduced in the market? India being a price sensitive nation, what is the future holds for green cements?
As a company, it is our constant endeavor to create an enterprise of tomorrow in today’s environment. By following a business philosophy of Clean & Green, our purpose is to transition towards a zero-carbon company, enabling the building material segment to become carbon-negative. Our commitment towards environment protection was reflected in our achievements when we were ranked #1 in the global cement manufacturing sector by Carbon Disclosure Project for successfully transitioning into a low carbon footprint business. We have increased the proportion of alternative fuels and bio-fuels and have moderated our emissions in line with the International Energy Agency’s 2-degree scenario mandated for 2030. We are also the first global organization committed to RE100 and EP100 campaigns. In line with the Paris Agreement, we have transformed our business to emerge as one of the world’s greenest cement manufacturing companies in the world. Our product Dalmia Infra Green is among the greenest cement varieties in the world. It is a high-performance cement that is best suited for infrastructure, requires minimal water, heat of hydration, drying shrinkage and ultra-low water permeability. Our aim is to produce cement with green alternatives, keeping in mind our long-term vision on one hand and sustainability driven prosperity on the other.
What are the modernization and technology you have brought in your plant for hassle free operations?
Our information management system offers real-time data management and efficient decision making. The centralized information management systems help us organize our business processed, product quality and delivery competitiveness. Real-time value added reports facilitate efficient decision making and prudent resource allocation. Our functions are integrated in a cloud platform that helps us in strengthening our data security and cost optimization. As a company, Dalmia Cement believes in leveraging technology interventions. Our internal benchmarking and performance dashboard provide plant-specific and group-level data related to energy consumption, cement carbon footprint metrics and other operational performance indicators. These analytics forms the basis of informed decisions and new initiatives.
Limestone mining comes with its own sets of problems. The foremost being loss of forest cover, depletion of natural flora and fauna, displacement of human settlements among others. How are you ensuring environment management, resource conservation and resettlement and rehabilitations of forest dwellers?
Dalmia Cement emphasizes on material and resource efficiency with an aim of production of maximum cement with minimum resources. We have undertaken focused efforts to reduce the clinker factor and increase the percentage of blended cement in its product mix. Our cement plants also act as industrial scavengers that utilise waste materials from other industries. By doing so, we have strengthened our commitment to a cleaner world and minimised carbon footprint. With our cement production capacity expanding from 1.2 million tonnes to 26.5 million tonnes, graduating us to one of the top five cement groups in India, we have also increased our focus on replacing conventional fuels and raw materials with alternative solutions, expanding our overall renewable energy portfolio, blended cements and investment in technology to reduce the impact on our planet. As a global corporate citizen, we understand our responsibility towards preservation of land and biodiversity. The company also takes several soil erosion control measures for soil management wherein we understand the soil health and work towards its nutrition development. We have also created bird habitats with a vision to develop ecologically vibrant bird habitats and propagate biodiversity across a region in a natural way.
Dealers and distributors are the vital link between manufacturers and the end-users for the success of the products. Please take us through your dealer’s network and the various education and retention schemes you conduct for them?
The Channel network contributes to almost 60 percent of our sales volume. We have introduced a range of interventions to make dealers and distributors aware of our schemes, discount policies, loyalty programs and financial benefits by being associated with Dalmia Cement. Some retention strategies that we conduct are business meets, factory visits, sales support, CRM program among others
What are the changes Post implementation of GST has brought in for the cement sector?
Tax rates for the cement industry has been extremely complex. There are multiple excise duties applicable to cement manufacturers. There are separate rates and specific duties applicable on different types of cements depending on whether they are supplied in bulk form or in packaged form. Implementation of a standard GST in the cement sector will result in lesser compliances and complexity. It is further expected to reduce operating cost in the cement industry.
What are the challenges facing the cement industry? Please share your thoughts on Budget 2020? Has Budget 2020 addressed solution for various challenges facing the cement industry?
Some challenges faced by the cement industry are the main fuel currently being used in our cement plant and CPP is coke, the price of which is highly volatile and open indexed. In our bid to bring down the overall cost of fuel procurement we have been exploring new avenues towards fuel sourcing. Spot power prices remain high and non-captive power users were required to pay higher power tariffs. The surge in tariffs was owing to coal scarcity during peak demand period. This led to an increase in fuel and power prices. Although cement is a high-volume and low-value product, it is also a highly taxed commodity. The levies and taxes in India are higher when compared to the Asia-Pacific or developing economies. Rise in diesel prices can also have a direct impact on the margins of cement manufacturers. Those with a higher dependence on road freight for the transportation of raw materials and supply of finished cement to market will be impacted in case of increased diesel price.
The recent budget announcement gives a clear roadmap around the government’s plan to build and revitalise India's infrastructure sector with an ambitious plan of 6,500 projects with an investment of 103 lakh crore rupees in next five years. This presents a sizeable opportunity for the cement industry. Whether it is roads, ports, economic corridors, five new smart cities on PPP model or 100 more airports to be set up by 2024 to support UDAN scheme, cement is going to be the vital cog in the wheel of development. At the same time, we are bit disappointed that the budget did not address any of the specific challenges being faced by the cement industry.
@EPC World Media