Anda di halaman 1dari 11

M&A

Jaiprakash Associats & Dalmia Group

Submitted By: Group 5 NMIMS CM Harshit Jain(20), Ankit Natani(29), Chintan Vaidya(40), Mandar(51), Nirvi Ashar(56)

STRUCTURE

TRENDS

-Public and Private Partnership (PPP)/Private finance initiative (PFI) the imperative structure in the industry -Relaxing regulatory environment to encourage FDI investment -Permits 100% FDI under the automatic route for a broad range of sectors -Sector wise regulator for various infra sectors

-Growth expected to continue at 7-7.5% despite the global downturn -Tax holidays for developers of most types of infrastructure projects -Opening up of the infrastructure sector through PPPs.-Strain on Liquidity due to monetary policy changes -Avg working capital cycle from 103 days (FY 09) to 141 days (FY 11)

India s GDP Growth Rates 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Mar,08 Mar,09 Mar,10 Sep,08 Sep,09

GDP Growth IIP Growth


Mar,11 Sep,10 Sep,11

PERFORMANCE

-Roads & Railways: Annual growth is projected at over 12% for passenger traffic and over 15% for cargo traffic -Lower than expected IIP figures in the current fiscal year due to global economic pressures

Airports Ports Road and Railways Electricity

8 22 92 65 167

OUTLOOK

-India 2nd most attractive location after China for FDI

Indian Infrastructure Sector Analysis


Projected spending from FY07FY12 in selected infrastructure segments (in USD billion)

Rising interest pressures due to spiraling interest rates putting pressure on the new projects
-

-Govt. set to encourage both local and foreign private capital. Expects $150 million private investment this year -Require sooner rather than later investment for short term and long term benefits

Indian Cement Sector


Sector Overview

Not a perfect market but a Stable market due to domestic demand With total capacity of 200 mnT, India is the second largest cement producer in the world after China and cement consumption has been growing at a CAGR of over 8% p.a. in the last five years. Price pressure in the last 2 quarters, however long term scenario is stable from demand side.

Top Six Countries by Production (2010)


mnT Russia 44 South Korea 50 Japan 64 USA India China 72 200 1600 1990-2010 (CAGR) 1.10% -0.20% -2.80% -0.50% 9.10% 9.90%

POSITIVE OUTLOOK FOR CEMENT INDUSTRY

Jaiprakash Associates Limited


INTRODUCTION Inception in 1958 by Founder Chairman Sh. Jaiprakash Gaur The Jaypee Group is a 15,000 crore well diversified infrastructural industrial conglomerate in India. Present in Power, Cement, Infra, Real state and Hospitality Jaypee Cement Ltd is the 3rd largest cement producer in the country with an aggregate installed capacity of 26.20 MnTPA. Buddha International Circuit A feather in the Cap The group plans to expand its cement capacities via acquisition and greenfield additions to maximize economies of scale and build on vision to focus on large size plants from inception.
E&C Education Power

Expressways

Cement

Hospitality

Real State

Company financial Details:


Particular (Year Mar-11) Amount (Rs. Cr)

Market Cap Net Sales Net Income EPS Net Profit Margin (%) Share Price (INR) P/E Multiple

13098.83 13,539.72 1,167.78 3.62 8.62% 61.6 17.02

Jaiprakash Associates Limited


Recent Acquisitions Cement Production (MTPA) 2006: Acquisition of Cement Plants & Assets of UP State cement corporation Ltd (in Liquidation) of 2.5 MTPA capacity in 2006 2006: Acquisition of Gujarat Anjan Cement Ltd for setting up a green field cement plant of 1.2 MTPA capacity in Bhuj, District Kutch Gujarat 2007: Signing of a joint venture agreement with Steel Authority of India Ltd for setting up a 2.0 MTPA slag based cement plant at Bhilai. The company is in the midst of capacity expansion of its cement business in Northern, Southern, Central, Eastern and Western parts of the country and is slated to be a 35.90 MnTPA by FY12 up from 26.2 MnTPA in FY11.
26.2 32.8

18.6 8.8 10.2

20.5

2002 2004 2006 2008 2010 2012

Jaiprakash Associates Limited


Synergy Criterion

Strengths: Pan India Presence Diversified business, strong presence in all the sectors High Growth in in last 4 years 3 listed subsidiaries Strong Management Excess cash over Rs. 1000cr.

Acquisition Parameters: Strategic Presence Preferable in South India Acquisition in cement sector PE < 10 Long term profitability

Dalmia Bharat Group


INTRODUCTION
Power

Inception in 1938 by Jaidayal Dalmia is headquartered in New Delhi. Revenue CAGR of 36% and EBITDA CAGR of 47% between FY05-10 of cement segment Present in Cement, Sugar, Travel agency, Magnesite, refractory and electronic operations spread across the country. Strong presence in South India through its cement business and in the North India though its sugar business Strong position with sustainable high margins and strong financials backing our efforts. Cement Capacity of 4.62MTPA in southern and Eastern region Existing Power Capacity of 150MW and developing a Solar power plant with capacity of 60MW in Rajasthan

Refract ory

Cement

Sugar

Company financial Details:


Particular (Year Mar-11) Amount (Rs. Cr)

Market Cap Net Sales EBITDA PAT Enterprise Value (EV) EV/ EBITDA EV/Sales P/E Multiple P/B Multiple

727.6 1745.93 470.12 49.44 2206.9 4.68 1.16 14.68 .05

Dalmia Bharat Group


Shareholding pattern (%)

Positives:
Provides expansion to southern and eastern part in Cement plants Diversifying business with Refractory and Sugar business Clean and experienced Management Good Promoter Holding

Indian Public 15% Corporat e Bodies 5%

Others 4%

FII 18%

Promote r 58%

Negatives:
High Comparable multiples Negative Operating Cash flows Company Conservative in its business approach ROE OPM NPM(%) ROCE (%)

Financial Ratios
1.05% 22.00% 2.80% 2.20% 0.33 6.13

Debt to Equity Ratio EPS

COMPANY VALUATION:
Dalmia Bharat Enterprises
SR. NO. METHODOLOGY OF VALUATION 1 EV by Tonnage 2 CURRENT MARKET PRICE (CMP) 3 EV/EBIDTA @ 5.5x 4 PE Multiple 5 SALES Multiple Fair Value Ownership Premium @25% Mcap (Rs. Cr) Deal Size @58% Premium to Share Price VALUE (INR) 80.04 90.00 137.28 61.29 140.84 101.89 127.36 1034.19 599.83 42% WEIGHTS 1 1 1 1 1

DEAL STRUCTURE
Total Deal Size: 599.77 Cr. Implied Price per share: Rs. 127.36 Resulting Ownership of Client: 58% Mode of Payment: CASH
Peking Order

Internal Acruals

Debt

Deal Subject to financial due diligence, And operational due diligence

Preference Shares

Equity

THANK YOU.