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Acquisition:
Pros and Cons
PRESENTED BY-
MILIND GOSWAMI JASWANTH RAHUL MANDA
HEMANTH GANJI CHANDRAKANTH KASARLA
HARISH KESARAPU PARAGJYOTI SAIKIA
NIRMA
Nirma Ltd is a company based in Ahmedabad.
It has a turnover of around Rs. 3550 crores.
The most important products are Soap, detergent, Chemicals, cement.
It has a 2-million-tonne cement plant in Rajasthan.
Why Lafarge:
Lafarge India which is part of Lafarge Holcim is world's largest cement
company, with great brand value
This would help increase its capacity from 2.5 to 13 mmtpa with a foot print
in east, North and West
Nirma gets access to Lafarge's RMC business that has 71 plants
Advantages for NIRMA
Among top 10 cement players with a footprint in Eastern, Northern and Western
India
Has got one of the best distribution system in markets such as Bihar, West Bengal
and Jharkand
Access to limestone reserves in South for which all approvals are available
Nirma's marketing and distribution channels for Soda ash can be integrated with
Lafarge's and can keep costs low
Challenges for NIRMA
Large share of funds for the deal are based on a Leveraged Buy Out
Nirma is struggling to ramp-up its production with its own plants, so handling 11
million tonnes will be a challenge
Valuation is a bit expensive ($130 per tonne) in the current environment i.e, an
oversupply situation in east India with fresh capacities coming in
Its entry into the cement sector have to deal with the risk associated with early
stage operations
Nirma could have invested in assets along the coastal line. In future transportation
may be a big problem from its current location
Thank You