AN ANALYSIS OF THE INDIAN CEMENT SECTOR AND EVALUATING THE IMPACT OF A POSSIBLE MERGER BETWEEN TWO TOP PLAYERS - (ACC AND AMBUJA CEMENTS LTD)

Post liberalisation, globalisation, privatisation and motorisation, legal regulations (PESTL), the construction ,real estate and infrastructure industries are on a boom . Spiral escalation of cement prices have forced competition and thusthe “One fits all “theorem has worked. This paper aims to provide an insight into the Indian cement Industry and key drivers pertaining to the industry. This paper also aims to study the scope and possibilities of mergers and acquisitions in the industry; an illustration of a hypothetical merger between ACC and Ambuja has also been shown. The industry background has been shown using parameters such as Demand analysis, Supply analysis, Cost analysis, pricing strategies, utilisations and the current valuations of the companies in the sector. In the merger between ACC and Ambuja, valuation methodologies such as DCF, Transaction Comparables and Trading comparables have been used to make the football field for the merger. Also a snapshot of the post-merger financials incorporating cost synergies has been shown for the next 5 years. Based on these financials, an accretion-dilation model has been used to gauge the effect of the merger on the shareholders of Ambuja.