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‡ 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.


‡ 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, (Andhra
Pradesh) and Grasim taking over Dharani Cement and Shri
Digvijay Cements...
‡ In early 1998, ICL had six cement plants, three each in Tamil
Nadu and Andhra Pradesh.
‡ ICL entered Andhra Pradesh by acquiring the Chilamakur plant
from Coromandel Fertilizers in 1990.
‡ N.srinivasan ± vice chairman of ICL
 m 
|  !!"
‡ Low cost Producer. ‡Growth in housing sector -
‡ Having 39.5% share of key demand driver
SVCL

#$"" #"
‡Weak marketing Set-up. ‡Close to a weak colleague
‡NO sons, only sons-in-law. always dangerous.
one of them may sell share ‡Government intervention to
to others. adjust cement prices.
 m

|  !!"
‡One of the largest cement producers ‡ Demand and supply Gap - Additional
in south India. capacity of 20 million tons per annum will
‡Cement demand has grown be required to match the demand.
tremendously on par with strong ‡Interchangeable use of names of taken
economic growth over companies.
‡39.5% share of SVCL

#$"" #"
‡ Cement Industry is highly ‡Raw material prices climbing up
Fragmented. ‡Pakistan and north Indian competitors.
‡Low ± value commodity makes
transportation over long distances -
uneconomical
m !"#
‡ ³Takeover´ is a transaction whereby a person (individual, group
of individuals or company) acquires control over the assets of
the company either:
- directly by becoming the owner of those assets; or
- indirectly by obtaining control of the management of the
company

‡ ³Take Over´ ± taking over the control of management.

‡ Takeover bids may be classified as under:

1) Hostile takeover
2) Friendly takeover
3) Bailout takeover
!$
‡ "!%#$&
The method of trying to take the control of the company
without the knowledge of the existing management is known as
³Hostile takeover´.

‡
#!% #$&
Taking over of the management of such weak companies for
nurturing them back in normal activities by a company having
expertise and resources is known as ³Bailout takeover´.

‡ !'%(#$&
A friendly corporate body or group of companies may come to
the rescue by buying shares of the company in the open market
and/or by pumping resources to help the management.
m
 
  
‡ "!%#$& - The method of trying to take the control of the
company without the knowledge of the existing management is
known as ³hostile 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.
mm
m
‡ Earlier,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, both through open market purchases as well as
by buying out the stake of an estranged faction 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.
!$
‡ 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

!!!%

‡ !"!) a readiness to cultivate a global mindset,
effectiveness, harnessing of human resources to enhance job
and knowledge skills of employees, a strong accent on R & D
and innovation and a move away from selling, to innovative
marketing in recognition of the fact that  * "+!" %(
!, are some of the strategies that will help corporate to
survive and succeed.

‡ !""!, We should be one of the %#"*+

*+#!" in the Country. Our growth in size will be through
continuous review of potentials of the existing manufacturing
resources, strategic acquisitions and expansions . ' -
. #%!(/-"!"-(#'- "+"&!- will be pursued as
an act of faith throughout the organization. ICL will continuously
strive to enhance its value to its customers, Shareholders and
Employees.
ï

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 !"#'
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‡Increase in capacity (The ‡Expansion
addition of Raasi's 2 mtpa and ‡ Demand and supply can be
SVCL¶s 1mtpa) coup up
‡Increase in market value.

#$"" #"
‡Burden of debt. ‡Raasi had sold 39.5% share of
‡Have to maintain more SVCL to some promoter's
fragmented Acquired Cement group companies/is
Industries. SEBI,BIFR helps to get back ?
(
)*
‡ SVCL (sri vishnu cement limited ) which was the
subsidiary of RCL was transferred by Raju to nine of his
associates after the purchase by ICL of Raju¶s shares in
RCL. This was violation of 23 of takeover code which
prohibits the target company from transferring its assets
after a public announcement has been made by the
acquirer to make open offers for purchase of shares from
public.

‡ Raju tried to increase his stake more than 90%,so only

even after giving to ICL he can manage to have stack
more than 50%.
P!m !"# #(
‡ 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.
!$
‡ Burden of debt due to acquisition is very high seen
from rising debt equity ratio.
‡ Profitability of the merged firm has gone down from
8% to 4% in 2001 leads to lack of realization in
synergy.
‡ In order to realize the synergy the leverage should be
brought down and cash flow should be generated.
‡ Existing distribution infrastructure of Raasi helps ICL
to leverage this to reduce the freight and other costs.
+
!, -..!/.01 !
.
P#%!#!%
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