Grasim seeks to integrate Cemco into its fold
By Pradeep Rane | 06 Jul 2004
Grasim
had received an overwhelming response to the 30 per cent
open offer made for Cemco Limited which closed on June
21, 2004. The cement business of Larsen & Toubro was
recently demerged into Ultra Tech Cemco. Grasim is now
seeking a smooth transition of the L&T cement brand,
which is likely to end by April 2005.
In order to achieve its objective, the company plans to undertake aggressive advertisement spending and direct contact with intermediaries. The Birla group company has earlier shown its ability to successfully integrate entities that were acquired in related businesses, a fact that has already been demonstrated in case of Indal, which was acquired by Hindalco. It is expected that Cemco's profitability would improve on account of full utilisation of assets and synergy gains.
The
cement business, now accounting for almost half of Grasim's
total revenue, would be a major growth driver going forward
for growth in the coming months. According to analysts,
Grasim, with its robust cash flows and strong balance
sheet, would be able to capitalise on opportunities in
the rapidly growing Indian cement industry. Analysts said
that Grasim is the most attractive investment in
the cement sector on the back of healthy financials and
undervaluation compared to its peers. With a 116-million
tonne demand, India is the second largest cement market
in the world.