Dalmia Bharat bets big on solar energy with Truere Surya stake

Dalmia Bharat Limited has made a bold move to expand its renewable energy portfolio by acquiring a 26% stake in Truere Surya Private Limited. The cement giant, through its wholly-owned subsidiary Dalmia Cement (Bharat) Limited, signed a Share Subscription and Shareholders Agreement (SSSHA) to purchase 44.8 million equity shares of Truere Surya for ₹44.80 crore. This acquisition marks a significant step for Dalmia Bharat as it aims to secure a steady supply of solar power to meet its ambitious sustainability goals.

Dalmia Bharat’s Commitment to Renewable Energy

Dalmia Bharat’s investment in Truere Surya is not just a financial transaction but a strategic move to strengthen its renewable energy capabilities. Truere Surya, a special purpose vehicle (SPV), is dedicated to setting up a solar power project with a capacity of up to 128 megawatts (MW) in Tamil Nadu. This acquisition aligns with Dalmia Bharat’s commitment to the RE 100 initiative, which targets 100% renewable energy consumption by 2030. Additionally, the company has set a long-term goal to become carbon negative by 2040. By acquiring a substantial stake in Truere Surya, Dalmia Bharat aims to source solar power as a captive consumer, providing a sustainable energy solution under the Electricity Act and Rules.

A Key Step in Dalmia Bharat’s Decarbonization Plan

This acquisition is seen as a pivotal step in Dalmia Bharat’s journey toward decarbonization. The company is the fourth-largest cement manufacturer in India, with a production capacity of 41.7 million tonnes. In recent years, Dalmia Bharat has been focusing on reducing its carbon footprint by integrating renewable energy into its operations. The acquisition of Truere Surya supports this strategy, ensuring a consistent supply of clean energy that could help offset the company’s reliance on traditional energy sources.

The investment of ₹44.80 crore involves acquiring 26% of Truere Surya’s equity in multiple tranches. The transaction, subject to customary conditions, is expected to be completed within four to six months. This timeline is crucial as it allows Dalmia Bharat to integrate this renewable energy source into its operations swiftly, potentially reducing energy costs and enhancing sustainability metrics.

Financial and Market Implications for Dalmia Bharat

Despite the positive move toward sustainability, Dalmia Bharat has faced financial challenges recently. The company reported a 47.5% decline in consolidated net profit in the fourth quarter of FY24, dropping to ₹320 crore despite a 10% growth in income from operations. As of the latest trading update, Dalmia Bharat’s shares were trading at ₹1,906.05 on the Bombay Stock Exchange (BSE). While the market response has been mixed, experts believe that this shift towards renewable energy could offer long-term benefits by reducing operational costs and improving the company’s environmental, social, and governance (ESG) profile.

Expert Opinion: A Strategic Move Towards Sustainability

Industry experts view Dalmia Bharat’s acquisition of a stake in Truere Surya as a strategic move to future-proof its business. A renewable energy consultant highlighted that integrating solar power would not only help Dalmia Bharat cut down on its carbon emissions but also position the company favorably in an increasingly eco-conscious market. The consultant noted, “Dalmia Bharat is setting an example for the cement industry by aligning its business strategy with global sustainability goals. This acquisition could be a game-changer in terms of both cost management and brand positioning.”

What Lies Ahead for Dalmia Bharat?

With this investment, Dalmia Bharat is not just securing a cleaner energy source; it is reinforcing its commitment to sustainability, which is increasingly becoming a critical factor for investors and stakeholders. The success of this solar power project in Tamil Nadu could pave the way for more such ventures in the future, contributing significantly to India’s renewable energy capacity. As the global focus on climate action intensifies, companies like Dalmia Bharat are setting benchmarks for integrating sustainability into their core operations.