Grasim-L-T

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GRASIM and L&T - Acquisition

Michael FernandoJitendra PanchalHemantha Raut

Sanjay ReddyJinal Patel

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Introduction - L&T Limited

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About It…..

TYPE – Public company listed on BSE and NSE FOUNDED – 1938 FOUNDER ( 2 Danish citizen engineer) – Henning

Holck-Larsen and Soren kristian-Toubro HEADQUARTER – Mumbai, India CHAIRMAN, MD,CEO – A.M.Naik REVENUE – 5$ billion USD (2006) EMPLOYEES – 35000(2007)

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Engineering and construction ,hydraulic equipment,electrical and electronic power services, fertilizer projects, medical electronics and information technology.

It generates almost 85% of its revenue from the construction business.

global initiative with office locations in USA,Europe, Middle East and Japan.

About It – Cont….

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• Larsen & Toubro Infotech Limited(L&T Infotech), focusing on information technology and software services.

• Larsen & Toubro EmSyS ([1]), working on the domains of embedded systems and software.

• Larsen & Toubro Finance ([2]), focused on Financial services.

• Larsen & Toubro e-Engineering Solutions ([3]), Head Quartered at Vadodara, India, focused on e-Engineering Services

Subsidiaries of L&T:-

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Introduction - ADITYA BIRLA GROUP

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About It…….

TYPE - Private Conglomerate/Listed Companies.

FOUNDED - 1900 Aditya Birla Group operates over 40

companies in 12 countries across 4 continents.

CHAIRMAN – Kumar Mangalam Birla HEADQUARTERS – Mumbai, India

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Operations in 20 countries including Thailand, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China, USA, UK, Germany, Hungary, Brazil, Italy, France, Luxembourg, Switzerland, Malaysia and Korea.

EMPLOYEES - 100000+ REVENUE - $24 billion PRODUCTS - Aluminium, Copper, Cement,

Textile Fibre etc.

INDUSTRY - Metals and several others.

About It - Cont…….

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Aditya Birla Group’s Business

It is organized into various subsidiaries that operate across different sectors.

Among these are Staple fibre, Fertilizers, Non-ferrous metals, Sponge iron, Insulators, Cement, Telecom, BPO, Filament yarn, Financial services, Branded apparel, Carbon black, Chemicals, Supermarket (More) and IT services.

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The Group consists of four main companies, which operate in various industry sectors through subsidiaries, joint ventures etc. These are Hindalco,

Grasim,

Aditya Birla Nuvo,

UltraTech Cement.

Aditya Birla Group’s Business

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The Groups cement business is under both Grasim and UltraTech cement.

Together and make the group account for a substantial share of the cement market in India.

UltraTech cement comprises the former cement business of L&T which was acquired by the group.

UltraTech announced an increase in sales by 17% and Profit After Tax by 46% for the quarter ending September 30, 2007 and is going on

Aditya Birla Group’s Business

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Introduction - Grasim Industries Limited (1948)

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Grasim: Business profile

Viscose Staple Fibre Largest producer in the World, with 14% market share 3 Fibre plants (220,775 MT), 1 pulp plant (72,000 MT) JV for Pulp with Tembec Inc., Canada

Chemicals Second largest producer of Caustic Soda in India (190,800 MT)

Cement 14 Mn TPA existing capacity across 8 locations 1.14 Mn M3 RMC capacities across 6 plants; 0.65 Mn Ton Bulk

Terminal Growing to 31 Mn. MT with CemCo acquisition Largest in India, 7th largest in the World White Cement (400,000 MT) India’s largest and World’s 6th largest

Sponge Iron (900,000 MT) 3rd largest and only gas based merchant supplier in India

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Business and Debt restructuring

Major business restructuring done in last 4 years Closure of non-viable Fibre and Pulp plants at Mavoor Fabric unit at Gwalior sold Software subsidiary hived off Trading operations phased out Capital unlocked from sale of investments in MRPL & Indo

Gulf Large scale rightsizing of work force Reduction of 8,000 persons (1/3rd of the workforce)

Significant Debt restructuring Bringing down interest cost progressively

13.2% in FY99 to 7.6% by 9MFY04 Consequent reduction in overall CoC

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Proposal for Acquisition of L&T Cement Business

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L&T CemCo Transaction structure

Step 1 : Cement Business of L&T to be de merged into CemCo

L&T (EngCo) gets 20% holding in CemCo and balance 80% to existing shareholders proportionately

Grasim gets 12.6% holding in CemCo; retains 15.7% holding in L&T (EngCo)

Appointed Date of Demerger – 1st April 2003

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Step 2A : Grasim buys 8.5% holding in CemCo from L&T – (Outflow Rs. 362 crores)

Step 2B : Grasim sells its 14.95% stake to Employee Welfare Trusts and exits L&T (EngCo) – (Inflow Rs. 446 crores)

Step 2C : Grasim to make an Open Offer for 30% of CemCo

Grasim to get management control of CemCo, on its acquiring over 50% of CemCo shares

L&T CemCo Transaction structure

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Summary of Investment and Valuationin cr.

Existing investment in L&T - 1,028 Grasim to make open offer for 30% of CemCo

- 1278 Grasim to acquire 8.5% of CemCo from L&T-

362 Total outflow for 38.5% (8.5% + 30%)- 1640 Inflow on sale of L&T (Engco) shares to L&T

Foundation/Trust - 446 Net Investment for 51.1% stake - 2222

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L&T Cement Business Valuation

Equity Value 4,348

Debts 1,911

Enterprise Value 6,259

USD/Ton $ 79.90

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Grasim + CemCo

With CemCo capacity, Grasim will be the 7th largest Cement Producer in the World.

All India Capacity Ranked No.1 31 Mn. MT Capacity 11 Composite Plants 7 Split Grinding Units 4 Bulk Terminals 6 RMC Plants Strong National Presence

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Book Value – from Rs.285 in FY99 to Rs.447

per share in FY04 Debt/Equity ratio improved from 0.93 x in

FY99 to 0.54 x in FY04

Grasim + CemCo

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Ultra Tech Cement: The Engineer’s Choice

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Introduction about ULTRATECH

A Grasim subsidiary Incorporated on 24 August 2000 as L&T Cement

Limited Chairman- Mr. Kumar Mangalam Birla An annual capacity of 17 million tonnes The cement division of L&T was demerged in 2004

after Grasim made the 30 per cent open offer for equity shares

Manufactures and markets Ordinary Portland Cement Portland Blast Furnace Slag Cement Portland Pozzolana Cement

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Slogan By Mr. Kumar Mangalam Birla

While launching ULTRATECH:

“Nothing has changed except the name. So essentially what was earlier L&T cement, now transforms into UltraTech Cement".

“Excellent product quality and customer care to remain the hallmark of UltraTech"

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THANK YOU…