Group 3

Thibault Angelloz
Oumaima Belgarch
Marion Fenetaud
Gauthier Riesi
Shubhankar Shakhari
Rahul Sarkar

Timeline
Grasim

SEBI prevent
Grasim to continue
the offer

Nov. 2001

Nov. 2002

1980s

Oct. 2002

Reliance

Public Annoucement

Reliance had
acquired an equity
stake in L&T

SEBI

Grasim acquires
Reliance Industries
10.05% stake in
L&T

Open offer by
Grasmin to acquire
20% stakes

April 2003
SEBI

Grasim cleared of
allegations of
intention to
control by SEBI.
To proceed with
open offer

Cement Business

Why is it a lucrative business ?

Entry Barriers

Economies of scales

Government
regulation

Government investment

Less number of new entrant

High entry barriers
High capex requirement

Favoring existing companies

10% difference in size, cost of

production could differ by 1.4%

Large government investments in

Infrastructure sector

Cement Business

Why is it a critical business ?

High forecasted
Cost competitiveness 25-30% profit margin
operating rate in West

26% of the revenues Internationalization

Market leader in West India
Competencies & Scope for L&T
Cost reduction mainly through global sourcing, e-procurement, value engineering
and efficiency improvement in plant operations
L&T being international brand has the ability to export cement to other nations
4

Takeover Fiasco
Conspiracy between Reliance & Grasim

Role of RIL

Clandestine
nexus between
Reliance &
Grasim to
acquire cement
division of L&T
Reliance
increased their
share from 6.8
to 10 just before
selling their
stake to Grasim
Previously
Reliance was
convicted of
using L&T
resources for

Role of
Grasim
Paid
Rs 305 to

Reliance, but only

willing to pay
Rs.190 for buying
10% of share
L&T suspected
Grasims
acquisition
motive, not
invited for
strategic
partnership
Grasims move
for L&T is
investorunfriendly.
Grasim opted for
vertical demerger
when L&T was

Why Grasim should not have control

Unethical practices of Reliance

Unethical practices of
Reliance
Grasim will not pay price
premium
Corporate restructuring and strategic
partnership
Increase share price
History of domestic
takeover

Insider trading done by Reliance has led

Grasim into the L&T shareholder list and
started the crisis

Grasim will not pay price

premium
Unlike Reliance, other shareholders
will not get price premium on their
Corporate restructuring and
shares

strategic partnership

L&T has taken bold steps in

restructuring and is planning to bring
in international partners

Increase in share price

Increase in share price indicative of
company turnaround

History of domestic takeovers

Historical data suggests that
domestic takeovers never achieves
the synergies and hence ultimately
fails its purpose

Sound Financial Status of L&T

What is there for shareholders

L&T Figures :

PAT 2002 : 346.8 vs 302.96

PAT 2003 : 433.1 vs 367.58
Growth of 24.88% VS Grasim Growth of
15%

Dividends 2002 : 174.34

Dividends 2003 : 210.73
Growth of 20,87%

Thank You