logging in or signing up Ici Columbia Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: Embed: Flash iPad Copy Does not support media & animations WordPress Embed Customize Embed URL: Copy Thumbnail: Copy The presentation is successfully added In Your Favorites. Views: 2520 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: February 20, 2008 This Presentation is Public Favorites: 1 Presentation Description No description available. Comments Posting comment... By: shraddha.samani (44 month(s) ago) i m an mba studentand would like to refer this case for project ppt.request you to allow me download this ppt. Saving..... Post Reply Close Saving..... Edit Comment Close By: surinderkaul (47 month(s) ago) sir, please aloow me to down load as i need to present case study on paint industry Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Paint Wars ICI’s Bid to buy Asian Paints India Ltd. : Paint Wars ICI’s Bid to buy Asian Paints India Ltd. February 21, 2000 Ankur Meattle Rohit Rathi Brad Winer Wee YeeAgenda: Agenda Introduction The Environment The Players The Bid The Hold-up Options Conclusions Introduction: Introduction Setting Bombay, October 1997 Raj Purohit An associate’s dilemma Kotak Mahindra Capital Company The story Deal gone sour ! Investing in India: Investing in India Economic Reforms Major areas in 1991: Licensing Privatization Foreign Investment Corporate Governance ProblemInvesting in India: Investing in India Uncertainty in Policy Changes since 1960 1960: Investment encouraged 1973: 40% limit placed on foreign ownership 1980: Modified 1991: Changed again to allow majority Add to this the dimension of industry and sectorsInvesting in India: Investing in India Three Regulatory Bodies Foreign Investment Promotion Board Ministry of Industry - Policy Reserve Bank of India - Central Bank Latest Guidelines in Jan 97 “...an overseas corporate body can buy into or enlarge its holding .. only if the board of the domestic company allows it to.”The Paint Industry: The Paint Industry Not protected or priority sector Two Strategic Groups ORGANIZED SECTOR Large Companies Quality Higher Cost Structures 70% of Market Share SMALL SCALE Low O/h 30%Indian Paint Industry: Indian Paint Industry Industrial (30%, Rs. 6,442 MM) Automotive, Special Purpose, Marine etc. Decorative (70%, Rs. 15,033 MM) Interior Finishes Indian ratio will converge to World trend (50-50) in 10 years Indian Paint Industry: Indian Paint Industry ORGANIZED SECTOR BY MARKET SHARE # 1 Asian Paints (33%) # 2 Goodlass Nerolac (18%) # 3 Berger Paints (14%) # 4 ICI India (11%) # 5 Jenson and Nicholson (6%) Total Market: Rs. 21,476 MM Players - Asian Paints: Players - Asian Paints Rs. 6980 MM ($175MM), Rs. 378 per share on 8/1/97 Market leader with strengths in Distribution, Management, Decorative Paints Majority held by 4 promoters Chokseys 9.5% Danis, Vakils, and Chowksis 41.06% Public and Mutual Funds 28% Players - ICI Plc., UK: Players - ICI Plc., UK $15 BN, Diversified, ICI India - Rs. 2,254 MM -- < 1/2 of Asian Paints Strengths Financial, Industrial Paints ICI India Paints 43% of sales - thrust area! ‘The 10 X Plan’The Bid - Motivation: The Bid - Motivation Real Option Value Expandability Import Barriers Management Brand Name SynergiesThe Bid - Valuation: The Bid - Valuation Naïve Method P/E and DCF Used Indian CAPM for WACC = 16.5% Value Rs. 346/share Problem Areas International WACC ~ 20 - 27% Value Rs. 220 - Rs 170/shareThe Bid - Real Option: The Bid - Real Option Naïve Method P/E (23) regressed on Market Share New value calculated at P/E = 27 Option Value = (Forecasted - Current) Problem Areas P/E Method is faulty, Ignores discounting Probabilities of various failures of takeover or strategic alliances ignoredThe Hold-Up: Nov 1, 1997: The Hold-Up: Nov 1, 1997 Asian Paints refuses to transfer shares, reasons provided FIBP Guidelines Sham Transaction “No Value Added to Investors” Stock price plummets to Rs. 280 per share KMCC sitting on lossesOptions for KMCC : Options for KMCC Sell back to 3 promoters Negotiate with ICI, share/bear all losses (ICI has favorable contract) Appeal to FIPB, MoI Sell to 3rd party Sell to ICI India CombinationWhat Happened: What Happened Stock hit an all time low on 23rd June 1998 at Rs. 198 per share KMCC had to sell 4.5% to Unit Trust of India (mutual fund) and remaining back to the promoters at an average of Rs. 280. KMCC/ICI - UK bore huge losses Rs 245 MM (ICI Rs 140 MM, KMCC Rest)Q&A: Q&A You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
Ici Columbia Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINTLite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: Embed: Flash iPad Copy Does not support media & animations WordPress Embed Customize Embed URL: Copy Thumbnail: Copy The presentation is successfully added In Your Favorites. Views: 2520 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: February 20, 2008 This Presentation is Public Favorites: 1 Presentation Description No description available. Comments Posting comment... By: shraddha.samani (44 month(s) ago) i m an mba studentand would like to refer this case for project ppt.request you to allow me download this ppt. Saving..... Post Reply Close Saving..... Edit Comment Close By: surinderkaul (47 month(s) ago) sir, please aloow me to down load as i need to present case study on paint industry Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Paint Wars ICI’s Bid to buy Asian Paints India Ltd. : Paint Wars ICI’s Bid to buy Asian Paints India Ltd. February 21, 2000 Ankur Meattle Rohit Rathi Brad Winer Wee YeeAgenda: Agenda Introduction The Environment The Players The Bid The Hold-up Options Conclusions Introduction: Introduction Setting Bombay, October 1997 Raj Purohit An associate’s dilemma Kotak Mahindra Capital Company The story Deal gone sour ! Investing in India: Investing in India Economic Reforms Major areas in 1991: Licensing Privatization Foreign Investment Corporate Governance ProblemInvesting in India: Investing in India Uncertainty in Policy Changes since 1960 1960: Investment encouraged 1973: 40% limit placed on foreign ownership 1980: Modified 1991: Changed again to allow majority Add to this the dimension of industry and sectorsInvesting in India: Investing in India Three Regulatory Bodies Foreign Investment Promotion Board Ministry of Industry - Policy Reserve Bank of India - Central Bank Latest Guidelines in Jan 97 “...an overseas corporate body can buy into or enlarge its holding .. only if the board of the domestic company allows it to.”The Paint Industry: The Paint Industry Not protected or priority sector Two Strategic Groups ORGANIZED SECTOR Large Companies Quality Higher Cost Structures 70% of Market Share SMALL SCALE Low O/h 30%Indian Paint Industry: Indian Paint Industry Industrial (30%, Rs. 6,442 MM) Automotive, Special Purpose, Marine etc. Decorative (70%, Rs. 15,033 MM) Interior Finishes Indian ratio will converge to World trend (50-50) in 10 years Indian Paint Industry: Indian Paint Industry ORGANIZED SECTOR BY MARKET SHARE # 1 Asian Paints (33%) # 2 Goodlass Nerolac (18%) # 3 Berger Paints (14%) # 4 ICI India (11%) # 5 Jenson and Nicholson (6%) Total Market: Rs. 21,476 MM Players - Asian Paints: Players - Asian Paints Rs. 6980 MM ($175MM), Rs. 378 per share on 8/1/97 Market leader with strengths in Distribution, Management, Decorative Paints Majority held by 4 promoters Chokseys 9.5% Danis, Vakils, and Chowksis 41.06% Public and Mutual Funds 28% Players - ICI Plc., UK: Players - ICI Plc., UK $15 BN, Diversified, ICI India - Rs. 2,254 MM -- < 1/2 of Asian Paints Strengths Financial, Industrial Paints ICI India Paints 43% of sales - thrust area! ‘The 10 X Plan’The Bid - Motivation: The Bid - Motivation Real Option Value Expandability Import Barriers Management Brand Name SynergiesThe Bid - Valuation: The Bid - Valuation Naïve Method P/E and DCF Used Indian CAPM for WACC = 16.5% Value Rs. 346/share Problem Areas International WACC ~ 20 - 27% Value Rs. 220 - Rs 170/shareThe Bid - Real Option: The Bid - Real Option Naïve Method P/E (23) regressed on Market Share New value calculated at P/E = 27 Option Value = (Forecasted - Current) Problem Areas P/E Method is faulty, Ignores discounting Probabilities of various failures of takeover or strategic alliances ignoredThe Hold-Up: Nov 1, 1997: The Hold-Up: Nov 1, 1997 Asian Paints refuses to transfer shares, reasons provided FIBP Guidelines Sham Transaction “No Value Added to Investors” Stock price plummets to Rs. 280 per share KMCC sitting on lossesOptions for KMCC : Options for KMCC Sell back to 3 promoters Negotiate with ICI, share/bear all losses (ICI has favorable contract) Appeal to FIPB, MoI Sell to 3rd party Sell to ICI India CombinationWhat Happened: What Happened Stock hit an all time low on 23rd June 1998 at Rs. 198 per share KMCC had to sell 4.5% to Unit Trust of India (mutual fund) and remaining back to the promoters at an average of Rs. 280. KMCC/ICI - UK bore huge losses Rs 245 MM (ICI Rs 140 MM, KMCC Rest)Q&A: Q&A