Private and confidential | For class room 11/29/2023

discussion PGDM 23-24

Corporate Restructuring and

Valuation

Session 3&4

Dr. Jinesh Panchali

Date: 28th November, 2022

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Contents Popular frameworks

1. Popular frameworks 1. Product – Market matrix (Ansoff framework)
2. Acquisition strategy as a part of growth strategy 2. BCG portfolio framework
3. Journey of Vodafone Idea 3. Porter’s industry framework
4. Other Indian examples 4. Core competency
5. Blue ocean

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2 principles for securities market professionals:

Blue Ocean Applied in this domain too.
1. Creating new market space and making
competition irrelevant
2. Doing business where there is no effective Maintaining confidentiality
competition – Avoid competing in crowded
market
Avoiding conflict of interests
3. It is a combination and pursuit of low cost plus
differentiation strategy to penetrate existing
market and create new demand – market
4. Uncontested and growing market
5. For example Discount brokerage house

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Vedanta: Overall Strategy: AR 21-22

Strategic Choices

Organic vs. inorganic growth

Related vs. unrelated expansion

Idea – Vodafone snapshot
Deepening vs. expanding the market

First mover vs. efficient imitator

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Vedanta: Overall Strategy: AR 21-22 Vedanta: Overall Strategy: AR 21-22

Idea – Vodafone snapshot Idea – Vodafone snapshot

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Strategic choices: M&A Strategic Thought: Core processes

Advisory: To what extent: Own vs. outsourced
Product innovation
Nature of target:
Turnaround vs. profit making vs. growth oriented Conceive of attractive new products and services and
commercialise them
Route: Hostile vs. Friendly

Geographical: Domestic vs. Cross border

Customer relationship management
Ownership and control: How to associate or control
Division – WOS – Subsidiary – Broad representation Identify, attract and build relationships with customers
Financing: Cash – Debt – Equity – Mezzanine

Structuring of the deal: Merger | Takeover

Infrastructure management
Build and manage facilities for high volume repetitive
Integration: Absorption – Accommodation - Transformation operational tasks

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discussion PGDM 23-24

Core processes Growth strategy and stages of Industry life cycle

Product innovation Customer relation Infrastructure management

Economics Early market entry allows Economies of the Economies of scale is
for a premium price and scope is the key; High essential; High fixed cost;
large market share; speed cost of customer large volume are necessary to
is the key acquisition makes it achieve low cost; Maturity
imperative to gain large
share Size of
Culture Employee centered Highly service oriented; Cost focussed; business
customer comes first standardisation is the key Growth Decline
CompetitionBattle for talent; low entry Battle for scope; rapid Battle for scale; rapid
barrier; small player thrive consolidation; a few big consolidation; few big players
players dominate will dominate
Introductory

Life (in years)

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Snapshot of Vodafone Idea Journey

Idea – Vodafone snapshot

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Idea – Vodafone snapshot Idea – Vodafone snapshot

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discussion PGDM 23-24

Idea – Vodafone snapshot Idea – Vodafone snapshot

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Vodafone Idea: Post merger Performance Vodafone & Idea

Vodafone Idea Post merger Performance
ANNUAL FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Investors Presentation is separately provided in reference
Total Assets 2,03,481 2,26,920 2,29,700 98,577 96,705
Total Assets Growth (%) -10 -1 133 2 21 readings.
Total Liabilities 2,41,709 2,20,940 1,70,065 71,315 71,972
Total Liabilities Growth (%) 9 30 138 -1 27
Total Equity -38,228 5,980 59,635 27,262 24,732
Total Equity Growth (%) -739 -90 119 10 5
Current Ratio (x) 0 0 0 1 0
Total Debt to Equity (x) -4 16 2 2 2
Contingent Liabilities 25,349 18,482 41,202 31,231 0

ANNUAL FY 2021 FY 2020 FY 2019 FY 2018 FY 2017

Total Revenue 42,126 45,997 37,824 28,632 35,883
Total Revenue Growth (%) -8 22 32 -20 -1
Total Expenses 66,643 69,793 57,048 35,453 37,139
Total Expenses Growth (%) -5 22 61 -5 16
Profit after Tax (PAT) -44,233 -73,878 -14,604 -4,168 -400
PAT Growth (%) - - - - -115
Operating Profit Margin (%) -16 -19 -26 -7 8
Net Profit Margin (%) -105 -164 -39 -15 -1
Basic EPS (₹) -15 -27 -21 -11 -1

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Holcim entry - leadership – exit Holcim entry - leadership – exit

• Holcim and Lafarge rivalry at global level
• Holcim was unsuccessfully trying to enter Indian
market
• Lafarge meanwhile acquired Tata Steel Cement Unit
in one of the first slump sale transactions
• This has created a clear gap in Holcim portfolio
• In India meanwhile, Gujarat Ambuja has acquired
stakes in ACC, and control over Ambuja Rajasthan
(erstwhile DLF Cement) , and Ambuja Eastern Ltd.
(erstwhile Modi Cements) – so how geographical fit it
had created.
29-11-2023
• Investment in these two companies were vested with
Ambuja Cement India Ltd. Its 40% stake was sold to
Financial Investors to fund its investment.
• Holcim had also tried for L&T cement division but
Grasim was also vying for the same
• Gujarat Ambuja was struggling for financing of its
acquisitions to acquire complete control
• This set a perfect road map for Holcim to enter and
consolidate its position
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Holcim entry - leadership – exit

Piramal Group: 1980 to 2021
• In 2005, Holcim buys 67 per cent in Ambuja Cement. It also
bought just less than 15% - 14.8% in Gujarat Ambuja. Later Acquisitions: 35
through open offer it raised this stake to about 35%
Joint Ventures: 2
• With this transactions, finally Holcim has effective control over
I. Gujarat Ambuja Tie ups: 1
II. Ambjua Cement India (renamed as Holcim India) Fund raising : 4 | Rights issues : 3 | Stock split: 1
1. ACC Exits: 3
2. Ambuja Eastern
3. Ambuja Rajasthan
• Later on through series of transactions – it consolidated its Last 33 years:
position through merger, open offer, etc. Revenues CAGR: 22%
• Holcim India finally account for 25% stake in Indian cement
industry Normalised PAT: 28%
• Ultimately in 2023, Holcim exited as a part of its global
strategy from India by divesting its stake to Adani.
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Piramal Group: 1980 to 2021 A few other Indian business houses

• Growth of Adani

• Growth of Reliance

• Growth of HUL

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HUL mergers and HUL mergers and demergers

demergers

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Data for calculating swap ratio (2018-19; indicative)

HLL GSK
Paid up capital Rs. In crores
No. of shares In crores 216.4 4.2
face value Rs. 1 10
Reserves Rs. In crores 6859 3443 Thank you!!!!!
Sales Rs. In crores 35094 4635
PAT Rs. In crores 5237 700
For further interactions
Promoter % 0.67 0.72
Non promoter % 0.33 0.28
Price Rs. 1656 6861
Market cap Rs. In crores 358358 28816 Dr. Jinesh Panchali
Mobile: 8779304026 / 7506351972
Net Worth Rs. In crores 7075 3485
Consider valuation is decided on market price
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