At Dalmia Bharat we have been committed to the tenet of "People.Planet. Performance" and an interplay of the three forms an integral part of ourdecision making. As the COVID-19 pandemic engulfed the globe at the end of financial year2020 the commitment of our Group towards the three Ps gained an ever more significance.
The pandemic came as a double-blow to a global economy that was anywaysubdued marked by weaker consumer sentiment and spending. Following the enforcement oflockdowns and decline in cross-border movements of cargo and people the global economyweakened further and it would be reasonable to believe that the current calendar andfinancial years could be marked by a de-growth for the global economy in general and mostcountries in particular.
As a concerned corporate citizen we have been particularly sensitiveto the need for the safety and well-being of its people and other stakeholders.Immediately after the government had announced a complete national lockdown wetemporarily suspended our various plant operations created rapid action teams within eachcritical business vertical and we increased our stakeholder outreach.
Our Group's past investments and focus on technology made thetransition to working from home seamlessly possible; the Group productively utilised thelockdown as an opportunity to mentor talents and trade partners engaged with theirfamilies in wellness & value-building activities and we revisited our existingpolicies and procedures. The commitment and motivation of our people coupled with theforesight and agility of our leadership team strengthened our relative competitivenesswithin the Indian cement industry at a time of economic weakness.
Our strong business fundamentals technology orientationprocess-oriented behaviour talented workforce and strong stakeholder network helped itemerge stronger reflected in its strongest performance in the following quarter. Thisimprovement was also facilitated by a strengthening Balance Sheet whereby we maintainedour focus on periodically moderating our gross debt and improving our working capitalcycle.
The Economic Growth & the Sustainability Quotient
India is aiming to emerge as a US$ 5 trillion economy by 2025.
This indicates that India is likely to add nearly 70% of its existingGDP in just five years. There is a possibility that with the exception of China and US noother economy will grow at this scale.
This prospect places a premium on our ability to not just groweconomically but do so at a disproportionately lower impact on ecological balance.
India is amongst the few nations who have below 2 degree compatibleNDCs (Nationally Determined Contributions) under the Paris Climate Agreement. The countryhas committed to reduce the emission intensity of GDP in the range of 33-35% by 2030 incomparison to 2005 baseline.
India's cement industry has a large role to play in thesustainability of heavy-industry sector. As India grows there will be a larger investmentin infrastructure which in turn will generate a larger consumption of cement. Thisreality makes it imperative to manufacture more cement with optimum utilisation ofresources and energy.
At Dalmia Bharat we have committed to doing so by laying down along-term direction medium-term objectives and short-term term targets. We are humbledthat our sustainability initiatives were globally appreciated; more recently the UNSecretary General acknowledged our company for its sustainability initiatives.
We are only cement company that declared its commitment to becomecarbon-negative by 2040.
This commitment is requiring us to question every convention we helddear. At Dalmia Bharat every decision is passed through the screen of Will it begood for the earth?' before we ask Will it be good for the Group?'
The result is the coming together of new priorities investments andpractices that are increasing the green' quotient in the cement that wemanufacture. Within the overall objective of becoming carbon negative by 2040 we signedfor EP100 & RE 100 as per which we intend to double our energy productivity and use100% renewable energy by 2030. We are working extensively in increasing the use ofalternative fuel in our overall fuel mix while increasing the proportion of blendedcement in the sales mix. We intend to build on what we have achieved till now. We wereranked #1 in the global cement sector on business readiness for low carbon economytransition. We moderated our emissions and made commitments in line with the Paris ClimateAgreement and 1.5 degree scenario.
What makes our commitment credible is that it is not just a wish list.The
Group has drawn out medium-term targets for a programmed improvement inits carbon footprint energy productivity fossil-free electricity generation non-clinkerproportion in cement water utilisation and alternative fuel consumption. In turn theseimprovements have been and will continue to be backed by timely capital expenditure andtechnology investments to keep the Group ahead of the curve.
We believe that the complement of resource conservation superior wasteutilisation and a green' perspective will not only make us more sustainable butalso make us more profitable.
More than that we believe that a stronger image of environmentresponsibility will do something more for us: it will enhance our respect in the world asa statesman and thought leader enhancing our sustainability.
In addition to our consistent focus on environment-focusedsustainability we believe we are attractively placed to enhance value for each of ourshareholders.
As a Group we have prioritised the importance of prudent capitalallocation. We are set to commission an incremental cement manufacturing capacity at acost lower than the prevailing benchmark; this was funded completely through internalaccruals. Even as the external market place reality has been volatile our costs have beendeclining. Our moderated cost structure will empower the Group to remain viable acrossmarket cycles.
Our teams have continued to focus on product improvement. We areworking extensively to increase the premium share in our product mix not merely toenhance realisations from a given sales throughput but sell faster than competitionirrespective of the prevailing market conditions. Our digital initiatives are empoweringus to expand market reach and market share without materially increasing correspondingcosts.
We believe that during these turbulent times our existing model isattractively placed to protect or enhance the solvency of the business while maintainingprofitability. Our controls have been further strengthened and the review mechanism ismore robust. While there is no cue to suggest when consumer sentiment will normalise andthe economy will return to complete health we are optimistic that we have a right-sizedbusiness architecture to capitalise with speed and sustainability.
Gautam Dalmia and Puneet Dalmia
Managing Director(s) Dalmia Bharat Limited