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Bajaj Hindustan   Pratappur Sugar
 

Bajaj Hindustan Pratappur Sugar

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Mergers & Acquisitions

Mergers & Acquisitions

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    Bajaj Hindustan   Pratappur Sugar Bajaj Hindustan Pratappur Sugar Presentation Transcript

    • BAJAJ HINDUSTAN & PARTAPPUR SUGARS Group 4 Navin Bafna Preet Sabharwal Hardik Doshi Sajeev Rao
    • The Deal………..
      • 30 th August 2005
      • Bought 55% though SPA @ Rs55/- per share
      • Bought another 4.81% through open offer @ 63.50/- per share
      • Plant capacity 3200 Tcd
      • Located in eastern UP
    • VALUATIONS
      • Market Price of the share using the SEBI formula Rs 56.80/-
      • Book Value Rs 13.47/-
      • EPS for 2005 was negative Rs -1.62/-
    • Valuation in Sugar Industry
    • Book Value = Rs13.47 Replacement Cost = Rs 132 EPS Last 3 Yrs = Rs 1.2 Industry PE = 11.6 Value = 13.92 Market Price = Rs 56.8 Acquisition Cost = Rs 55.70
    • Synergy……………
      • Most of the big capacities are in West UP
      • Pratappur was in eastern UP
      • Most of the government factories were in eastern UP
      • The idea was to get relations with farmers before hand
      • After 14 months Shishir Bajaj bid for 11 east UP factories
      • It gives him direct route to Bihar and other states
      • The Travelling time between Agricultural land and factories is a major factor in Sugar business
      • Only 1/5 of the possible land was under efficient sugar cultivation in East UP due to government inefficiency
    • DCF valuation not Jusitified
      • As the revenues coming from sugar sell are market priced
      • The sugar cane prices are also uncertain
      • Sugar cane prices comprises more than 70% of the total costs
    • Business Intelligence
    •  
    • Capacity Expansion SS 2008 -3 new Sugar mills with 34,000 TCD Capacity taking total capacity to SS 2006 SS 2007 40,000 TCD 1 Mill, 3200 Cap expanded - New Distillery of 160 TCD to 6000 TCD KLPD - Exportable Co-gen 15 MW 210 44
    • Company Overview 1. BHSIL among India’s top 5 Sugar manufacturers 2. Capacities in place: Sugar : 40,000 TCD (4 Units, all in Eastern UP) Distillery : 160 KLPD Co-Gen : 15 MW Exportable surplus 6. Ideally positioned to service sugar deficient North Eastern / Eastern markets, where Sugar realisations are marginally higher 7. Synergies with parent which has mills in Western & Central UP 8. Close proximity to Kolkata provides opportunity to export sugar, if reqd. 9. Support from multilateral agencies like IFC through subscription to FCCBs indicates confidence in business model and the company management 43
    • Thank You 56