Forbes India 15th Anniversary Special

Entrepreneurs should not get scared of multinationals and companies with a lot of money: Puneet Dalmia

Dalmia Bharat's managing director talks about lessons from his entrepreneurial journey and what it takes to carry a rich family legacy forward while adapting to changing market dynamics

Neha Bothra
Published: Oct 31, 2023 03:03:16 PM IST
Updated: Oct 31, 2023 04:37:37 PM IST

Entrepreneurs should not get scared of multinationals and companies with a lot of money: Puneet DalmiaPuneet Dalmia, managing director, Dalmia Bharat

When the first-generation entrepreneurs of the Dalmia Group decided to foray into the cement industry, the only other company with a foothold in this domain was ACC. Selling the government-controlled commodity during the challenging days of License Raj was tough business. “No fresh investments were coming into cement,” recalls Yadu Hari Dalmia, 76, the second-generation to join the family business in 1969, in an exclusive interaction on Forbes India Pathbreakers. But his father, late Jaidayal Dalmia, was quick to grasp the nuts and bolts of the cement industry despite, at the time, a fierce competition between ACC and Dalmia. “Both were losing money,” he says.

Eventually, Jugal Kishore Birla had to step in and urge the companies to enter an agreement to end the price war and contribute towards independent India’s growth and development.

Despite being early entrants in the cement sector, the Dalmia family was unable to scale operations and expand its presence across the country. Largely, its strategy was to invest in improving operational efficiencies over increasing capacity. So, after the cement sector was decontrolled in 1989, the Dalmia Group invested in modernising its factories to switch from the coal-guzzling, ‘wet process’ to the ‘dry process’ of making cement.

“Then the second stage came after we were able to repay our debt and started having internal generations again. At that time, we thought of going for expansion,” says the family scion and non-executive director of Dalmia Bharat. This was also the period when his son, Puneet Dalmia, an IIT-Delhi and IIM-Bangalore graduate, joined the family business after an entrepreneurial stint as the founder of one of India’s first dotcom companies,, which US-based bought in a Rs 40-crore deal in 2004.

That same year the company decided to ramp up its production capacity of 1 mtpa and went ahead with its first big-ticket expansion project of Rs 500 crore. The father-son duo says this step changed the fortunes of the company. “It was unimaginable and beyond expectations. You can only call it luck,” the senior Dalmia exclaims. Over the next two to three years, the company’s Ebidta increased from Rs 40-50 crore to Rs 350 crore. Here on, the company entered a rapid growth trajectory to become India’s fourth largest cement company with a production capacity of over nearly 43 mtpa.

In part one of a wide-ranging interview on Forbes India Pathbreakers, Puneet Dalmia, managing director, Dalmia Bharat, talks about his entrepreneurial journey of transforming a family business into a leading player in the cement space. “Family and business are two very different ecosystems, and if you are unable to leverage the contradictions in these two systems, it can create an explosion,” he says.

Edited excerpts:      

Two big lessons: ‘It shaped me as a leader’

From 1997 to ’99, I played a role in sales and marketing in the family business. After that I realised that we are a very small company, but very efficient and very profitable. We were probably number 20th in India. So, I told the family council and my father that we should expand: It was a brownfield expansion, same markets, and it would not be very high-risk because the brand was established, distribution network was there and project execution is not that difficult because it's the same location.

My father asked me how much it would cost. And at that time, it was Rs 500 crore. It was a lot of money and he asked who was going to do this project. So, I said I will do this project. Then he told me, Puneet, I cannot put Rs 500 crore behind you. I asked him why and he said because you don't have credibility. So, I was a little taken aback by the frankness of the conversation, but I thought it was the right conversation. And I said, OK, so what do I need to do to earn credibility? And he was very generous. He said I am going to give you Rs 2 crore of my personal money. Take it, do something, and demonstrate it to me.

So, then I quit the family business and started a dotcom company called with a friend of mine who was my senior at IIT Delhi. We co-founded the company and it gave us tremendous experience. We raised capital, we went through ups and downs. You know, we had to pivot in terms of starting revenue very quickly. There was local and global competition, and competition from traditional media. I think once we sold jobs in 2004 it gave me a lot of confidence. It shaped me as a leader and I think it gave me a lot of credibility in the company. It was a modest outcome. We sold it for Rs 40 crore. It was not a great outcome, but at the same time, at least we didn't lose money.

Also read: Why Gujarati business families taste success

I want to share two big things that I learned. First: Things will go up and down, and when things go bad, leaders should take accountability. Second: You should not get scared of multinationals and companies with a lot of money. So, when Monster and Times of India entered the market, we got scared because we had just navigated a challenging phase. In 2004, we sold the company to Monster at Rs 40 crore… six times earnings. In 2007, went public at 100 times earnings. What I learned was that agility and innovation is what wins in the marketplace. It's not money and resources or a big footprint. We applied this in Dalmia.

We were a small company of 1 mtpa capacity. There were competitors who were much bigger than us; global companies, Indian companies. We have been very fortunate. We have scaled-up the company and we made big, bold bets. We are the fourth largest today. We were 1 mtpa in 2004 and now we have a capacity of 40 mtpa. Our plan is to go to 100 mtpa by 2031. We have a lot more confidence, resources, a great team and some very powerful positions in the market.

Family business: ‘You have to take some risks’

On one hand, you certainly get a lot of power and influence because you come from a family that controls a large part of the shareholding. On the other hand, since you are new and young and it's a successful company, you have to prove yourself. Everybody who's there knows more than you, or at least they think they know more than you. When we come in, we are young and we want to change the world. And you know, we can see things that have to be changed and it's not easy to enrol people on why things need to change because people have been successful and there is a formula for success. And if you come and challenge the status quo without much credibility, it is not an easy path. So, you have to earn credibility. But you have to make your chances. Some things you have to drive with conviction, but if you can't carry everybody along on something. You have to take some risks and still continue to drive.

Family and business are two very different ecosystems where different things are valued. In a family, it is love, equality, empathy, sensitivity. In a business, it is meritocracy, profits, accountability, results. If you can combine these two different ecosystems, you can really create magic. But if you are unable to leverage the contradictions in these two systems, it can create an explosion, and it can actually create big problems.

We worked really hard to think through how we can create a business ecosystem where family members are treated as professionals and professionals are treated as family members. So, if there are professionals, you allow them to take risks, give them more freedom, just like you would give a family member. And if they make mistakes, accept it and at the same time give them love and care. For a family member, you look at who has what skills and how you can leverage each person's skills in the best possible way.

I will give you an example of how we applied it. We wrote a family constitution where we said we are four people. My uncle, my father, my elder brother, and me. There are four people in the family council. We said four people bring four different skill sets. So let us look at how we can leverage these four skills sets. I will give you one example. So, we had maybe 30-40 types of decisions which would go to the shareholder level, and some decisions would go at the operating management level.

For family compensation, we wanted to run the business like a capitalist, but family like a socialist.

So, we gave my uncle, who is the eldest in the family, the casting vote. So, if it is two all, my uncle would decide how to do the family compensation. And if he is being too traditional, the world has changed, moved forward, then three people can overrule him. So, I think we leveraged the skill sets of each family member to get the best result.

Similarly, when we look at professionals, we empower them, we trust them. We encourage them to think long-term and this creates a very good harmonious environment where people can have a performance-oriented culture and a caring culture.

Also read: Only smoke, no fire: Raamdeo Agrawal and Motilal Oswal on market rumours of a rift between them

Family legacy: ‘We are custodians of wealth’

Apart from business, I am involved in education. [He is a founder and trustee of Ashoka University.] Ashoka is an institute that some of my friends started, people who are accomplished and who I respect and look up to. If they are committing their time and capital, then something good will come out of it. Now, I am the chairman of IIM-Raipur. And that is the institute I want to focus on, to give direction to it and work with the director and faculty members to position it as one of the most respected and world-class management institutes in the next five to 10 years.

Education is an area which is very close to my heart.    

The second area that we really like is India’s soft power, and India has a lot to offer to the world. It is just that we have not marketed our heritage sites in a manner that is engaging to the youth. There was an ‘Adopt a Heritage’ scheme by the Government of India in which Dalmia Bharat has adopted Red Fort and we have created three products there that are very engaging.

One is a product called Mathrubhumi. It's a laser show on the ramparts of the Red Fort, which tells the 5,000-year-old journey of India as a civilisation and how scientifically and spiritually advanced India was. Then we have made a museum inside the Red Fort and finally, we have created a sound and light show with 70 live actors. It is like a Broadway musical, a first time in a Unesco World Heritage Site. It is called ‘Jai Hind’ and it tells the story about India's freedom struggle.

A lot of people contribute to all the wealth that you generate or all the material success that you achieve. So , whatever you earn, a large part of it has to go back to society and it has to go for public good. We don't need too much to sustain ourselves. We believe that we are custodians of wealth. We are fortunate to have received this and we have to use this wealth to do maximum good for people around us and for society. That is the best use of wealth.

In our country there is still so much to be done. The government can do this much. It is doing a lot, but the private sector has to come forward and play its role in uplifting people. I'm sure everybody is doing it in their own way. But can we just multiply this effort faster, bigger and think beyond ourselves to build a great country? That is what wealth means to me and that is what inspires me. It's a great tool to have. It helps you do a lot of things, but it should be used for good rather than for self.

Watch the full interview with the father-son duo, Yadu Hari and Puneet Dalmia, on November 1 for insightful lessons on entrepreneurship, strategy and values.

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