Major Merger and Acquisition in Indian cement Industry 1.

Lafarge in India Lafarge, the French company, became the first multinational to enter India's cement industry. The group entered India by launching its brand in the eastern part of the country on November 1, 1999 through its acquisition of TISCO's 2 million tonnes cement operation. Three financial institutions, ICICI, HDFC and State Bank of India, together extended a loan of US$ 50 million to Lafarge India to fund its TISCO acquisition. This was followed by its second major acquisition of Raymond's Cement Division in eastern India at a price of US$ 180 million. The Raymond Cement Division plant had 2.24 million tonnes capacity located at Bilaspur in Madhya Pradesh. This helped Lafarge emerge as an important player in the East Indian markets. 2. De-merger & merger of Grasims Cement Division In its board meeting held on October 5, 2009, Grasim Industries decided to hive off its cement business into a separate entity and merge the same with Samruddhi Cement, its wholly owned subsidiary. Subsequently, Samruddhi Cement merged with UltraTech Cement, to consolidate its cement business(Figure 1). a. Demerger Scheme - Under the Scheme, first Grasim transfer its cement businesses, including related businesses / investments but excluding its investment in UltraTech, to Samruddhi. In consideration for the same, Samruddhi issued one equity share of Rs.5 each, to every one equity share of Grasim, in addition to their existing Grasim shares. After completion, Grasim shareholders directly hold 35% in Samruddhi brought down Grasim's own holding to 65%. b. Merger Scheme - In its meeting on November 15, 2009, UltraTechs board approved the merger of Samruddhi with itself. Samruddhis shareholders got four shares of UltraTech of Rs.10 face value for every seven shares of Samruddhi of Rs.5 face value each. UltraTech issued 149.5 million new shares, thereby increasing its equity capital to Rs.274.20 crore. After the merger, Grasim holds a 60.3% stake in UltraTechs expanded equity and 39.7% stake was held directly by the other shareholders of UltraTech and Samruddhi. c. The merged Entity This merger results makes UltraTech the largest cement company in India(Figure 2) and 10th largest in the world. The merged entity will have following capacities: 48.8 million TPA of grey cement across 22 plants 504 MW of captive power plant 11.7 million cubic metres of Ready Mix Concrete across 68 plants UltraTech at that time became a pan India player with a 20% market share. Additionally, UltraTech also added to its portfolio the specialty products of white cement & wallcare putty.

Exhibits:

Figure 1 Demerger and Merger of Grasim Cement Division

In mn MTPA

In mn MTPA

Figure 2 After consolidation UltraTech becames largest entity at that time

Figure 3 After consolidation combined entity became 10th largest cement manufacturing entity

1. 2. 3. 4. 5.

http://www.lafarge.in/wps/portal/in/1-About_us http://www.ibef.org/attachdisplay.aspx?art_id=6818

Figure 1 &2 Source Company Result, CMA Figure 3 CrisilResearch www.ultratechcement.com/investors/downloads/investor_presentation_merger%20_samr uddhi_cement.pdf grasim ultratech cement merger

6. http://www.adityabirla.com/about/Grasim-Industries-Cement-Sector