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
Puneet 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, Jobsahead.com, which US-based Monster.com 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.