Cement maker Dalmia Bharat Ltd has said it expects the company's profitability to gradually improve as commodity inflation cools down.
Dalmia Bharat will also establish presence in the markets of western, mid and northern regions, emerging as a pan-India pure-play cement company, the company said in its annual report.
The company's profitability will gradually improve as the prices of crude and coal have corrected from their peak, resulting in normalisation in the operational costs, it added.
Dalmia Bharat is embracing strategies that will enable it to capitalise on the large opportunity and help double its market share over the next decade, it said.
"We are more than doubling our capacity to 75 MTPA by 2027. Through this expansion, we aim to achieve a balance in our exposure mix to the different markets of India, which is currently tilted towards the east and the south," said Dalmia Bharat while sharing its outlook.
The company presently operates 14 plants in 10 states having a total production capacity of 38.6 Million Tonnes Per Annum (MTPA). For the financial year ended on March 31, 2023, its revenue stood at Rs 13,540 crore.
"We are investing to expand continuously our cement production capacity. We plan to achieve this by adding greenfield units and accelerating existing plants. Our goal is to increase our cement production capacity from 38.6 MTPA to 46.6 MTPA in FY24, and we aim to acquire Jaypee's cement capacity to reach 56 MTPA by FY24," it said.
Last year, Dalmia Bharat had announced the acquisition of cement assets of Jaypee Group's flagship company JAL and its associate firm at an enterprise value of Rs 5,666 crore. The deal would help Dalmia Bharat, a leading maker in eastern part of the country, to expand presence in central India.
Dalmia Cement (Bharat) Managing Director & CEO Mahendra Singhi said the demand for cement remained strong at 10 per cent. However, the impact of high inflation resulted in a slightly subdued sentiment and exerted pressure on margins.
However, as the inflationary pressure cools down, he is now optimistic for a robust demand outlook.
"Looking forward we are optimistic about the future based on a robust demand outlook, steady cement prices and the peak of commodity price inflation behind us," said Singhi.
He further said: "We expect profitability to gradually improve from here on, and we remain focused on delivering value to our stakeholders."
According to the company, multiple factors such as Infrastructure push by the government and growing demand from the housing sector are driving the demand.
The central government increased capital outlay by 33 per cent to Rs 10 lakh crore in the Union Budget 2023-24. This is viewed as a boost to infrastructure and construction companies.
"Further, initiatives like National Infrastructure Pipeline and PM GatiShakti, among others, are likely to drive the construction activities in the country, fuelling demand for cement," it said.
The housing sector is also on a rebound in the post-pandemic era helped by increased preference towards home ownership, favourable interest rate regime and registration and stamp duty benefits offered by several state governments across the country.
"Further, the government's increased outlay towards 'Housing for All' provided fillip to housing demand in the country," it said.
India's estimated cement demand by FY27 would be 419.92 million tonnes, in which 27 per cent would be from infrastructure, 25 per cent from urban housing and 36 per cent from rural housing, it said.
"The much-awaited theme of industry consolidation has started to play out and we are witnessing waves of changes in the industry's operating dynamics," it said.