The Telegraph
Since 1st March, 1999
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L&T deal sets benchmark

New Delhi, June 29 (PTI): The price which Grasim had agreed to pay for L&T’s cement unit will form the basis for future mergers and acquisitions in the cement industry, said the Cement Manufacturers’ Association (CMA). It cautioned global companies that they cannot just acquire domestic firms at a cheap price.

“The deal (between Grasim and L&T) will benchmark future mergers and acquisitions of brownfield cement plants at $ 76-78 per tonne capacity,” CMA secretary general A. V. Srinivasan said.

Even global players would refer to the deal price while picking up large capacities, he added.

In the past, global companies offered a price as low as $ 60 per tonne for picking up stakes in domestic firms, he said. Most of the local firms had refused to accept such a low offer, he added.

The deal would benefit Grasim in consolidating its grip over the domestic market. The company would save around Rs 80-100 crore due to freight rationalisation.

“Grasim will not have to face the criss-cross situation any more as it would pick up the nearest L&T’s production unit to sell its product,” he said.

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