RAASI Cement

Raasi cement promoted by B.V. Raju and N P K Raju in 1978. Main Industry is located in Hyderabad. Raasi owned 39.5% stake on sri vishnu cement Ltd.(SVCL) Raasi had a Bailout takeover on SVCL and Raasi is nurturing SVCL. Raasi's cement division had a capacity of 1.60 mtpa and it is a low cost cement producer. Other than cement, the group also had interests in ceramics and paper B.V.Raju - vice chairman of Raasi cement.

India cement limited

Indian Cement Ltd., was one of the largest cement producers in south India. Established in 1946 in Tamilnadu. Cement constituted approximately 97% of ICL's total revenues. The process of acquisitions triggered off and started with taking over of Visaka Cement and CCI's plant at Yerraguntla, (AndhraPradesh) and Grasim taking over Dharani Cement and ShriDigvijay Cements. In early 1998, ICL had six cement plants, three each in TamilNadu and Andhra Pradesh. ICL entered Andhra Pradesh by acquiring the Chilamakur plantfrom Coromandel Fertilizers in 1990. N.srinivasan vice chairman of IC

Takeover RCL - ICL case

Hostile takeover Tendency of Financial Institutions (FI) to help out Promoters in hostile takeovers However, in Raasi Cements Limited (RCL) and India Cements Limited (ICL), FIs felt cheated. ICL in its hostile bid for RCL made an open offer for RCL shares at Rs. 300 per share when the share price was at Rs. 100. Promoters of RCL sold out its 32% stake to ICL in a negotiated deal during the term of the open offer at price ranging between Rs.200 to Rs. 286 per share ICL had full control of RCL without having to purchase single share from the institutional investors.

Takeover
In 1995 Srinivasan got 4% share (0.68 m), 1996 increased to 5%, 1997 - increased to 8%. By January 1998, Srinivasan had accumulated 18.03% of Raasi's equity, (open market purchases & buying out the stake of the Raju family). In February 1998, Srinivasan announced an open offer to acquire an additional 20% of Raasi's equity. He offered Rs. 300 per share, 72.41% above the stock market price of Rs. 174 on February 26, 1998.

Takeover
On March 1, 1998, the state-owned APIDC sold its 2.13% stake in Raasi to ICL. Chennai-based stockbroker, Valampuri & Co. cornered 1.40 % of Raasi's equity from the market for Srinivasan, taking ICL's stake in Raasi to 21.56%. If it gets share from V.p. Babaria - stake will increase to 28.56% and it will become the Vito-power to the company After Negotiation ICL team bought Raasi shares for Rs. 286 a share, i.e. Rs. 1.49 billion

Raasi s Defense tactics

Option of counter offer to shareholders for Rs 100 crore. Assistance in the form of White Knight or joint participation. Expected help from state government.

Post Takeover Synergy

Combined cement capacity of ICL increase up to 8 mtpa. Operating income of ICL-Raasi combine grew by 55% due to availability of high cement capacity and steep rise in income. The company was able to reduce its freight charges and utilize resources efficiently. Synergy increase its market share from 15% in 1998 to 25 26% in 1999 Combined synergy to achieve value addition and greater penetration in southern region. Combined synergy leads to expansion of plants to enhance productivity and efficiency to produce nearly 10 million tones in 2001.