“A STUDY ON ACQUISITION OF ADITYA BIRLA COMPANY AND COLUMBIAN CHEMICALS

COMPANY .”

MASTER OF COMMERCE

PART - I

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INDEX

Title Pg. No.

Acquisition

- Introduction

- Meaning & Types of acquisition

- Advantages & Disadvantages

- Purpose of merger and acquisition

- Reasons for merger or acquisition

- Distinction between Mergers and Acquisitions

- Mergers and Acquisitions in India

- Recent Development in Mergers and Acquisitions

- The Main Idea

- From the point of Investor

- Mergers and Acquisitions: Doing The Deal

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Aditya Birla Group

- History

- About Company

Columbian Chemicals

- HISTORY

- About the Company

- Products

Aditya Birla Group to acquire Columbian Chemicals

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Introduction

(M&A) and corporate restructuring are a big part of the corporate finance world. Indian

enterprises were subjected to strict control regime before 1990s. This has led to haphazard

growth of Indian corporate enterprises during that period.

The reforms process initiated by the Government since 1991, has influenced the functioning and

governance of Indian enterprises which has resulted in adoption of different growth and

expansion strategies by the corporate enterprises.

In that process, mergers and acquisitions (M&As) have become a common phenomenon. M&As

are not new in the Indian economy. In the past also, companies have used M&As to grow and

now, Indian corporate enterprises are refocusing in the lines of core competence, market share,

global competitiveness and consolidation.

This process of refocusing has further been hastened by the arrival of foreign competitors. In

this backdrop, Indian corporate enterprises have undertaken restructuring exercises primarily

through M&As to create a formidable presence and expand in their core areas of interest.

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Acquisitions

When a company takes over the control of another company through mutual agreement it

is called acquisition.

An acquisition may be only slightly different from a merger. In fact, it may be different in name

only. Like mergers, acquisitions are actions through which companies seek economies of scale,

efficiencies and enhanced market visibility. Unlike all mergers, all acquisitions involve one firm

purchasing another - there is no exchange of stock or consolidation as a new company.

Acquisitions are often congenial, and all parties feel satisfied with the deal. Other times,

acquisitions are more hostile.

Acquisition may be occur in this form :

Another possibility, which is common in smaller deals, is for one company to acquire all

the assets of another company. Company X buys all of Company Y's assets for cash,

which means that Company Y will have only cash (and debt, if they had debt before). Of

course, Company Y becomes merely a shell and will eventually liquidate or enter another

area of business.

In an acquisition, as in some of the merger deals we discuss above, a company can buy

another company with cash, stock or a combination of the two.

Another type of acquisition is a reverse merger, a deal that enables a private company to

get publicly-listed in a relatively short time period. A reverse merger occurs when a

private company that has strong prospects and is eager to raise financing buys a publicly-

listed shell company, usually one with no business and limited assets. The private

company reverse merges into the public company, and together they become an entirely

new public corporation with tradable shares.

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Regardless of their category or structure, all mergers and acquisitions have one common goal:

they are all meant to create synergy that makes the value of the combined companies greater than

the sum of the two parts. The success of a merger or acquisition depends on whether this synergy

is achieved.

Advantage of acquisition are :

Speed: It provide ability to speedily acquire resources and competencies not held in

house.It allows entry into new products and new markets. Risks and costs of new product

development decrease.

Market power: It builds market presence. Market share increases. Competition decrease.

Excessive competition can be avoided by shut down of capacity. Diversification is

aggrieved. Synergistic benefits are gained.

Overcome entry barrier: It overcomes market entry barrier by acquiring an existing

organization. The risk of competitive reaction decrease.

Financial gain: Organization with low share value or low price earnings ratio can be

acquired to take short term gains through assets stripping.

Resources and competencies: Acquisition of resources and competencies not available

in house can be a motive for merger and acquisition.

Stakeholder expectations: Stakeholder may expect growth through acquisitions.

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Disadvantage of acquisition are:

Integration problems: The activities of new and old organizations may be difficult to

integrate. Cultural fit can be problematic. Employees may resist it.

High cost: The acquirer may pay high cost, especially in cases of hostile takeover bids.

Value may not be added for the acquirer.

Financial consequences: The returns from acquisitions may not be attractive. Executed

cost saving may not materialize.

Unrelated diversification: This may create problem of managing resources and

competencies.

Too much focus: Too much managerial focus on acquisitions can be detrimental to

internal development.

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Purpose of merger and acquisition

 The company which proposes to acquire another company is knows differently in different

modes of acquisition, the familiar ones are; ‘predator, offer or, corporate raider (for takeover

bids), etc. The transferee company is also denoted as victim, offered, acquire or target etc. The

purpose for an offer or company for acquiring another company shall be reflected in the

corporate objective. It has to decide the specific objectives to be achieved through acquisition.

1. Procurement of supplies

a. To safeguard the source of supplies of raw material or intermediary product;

b. To obtain economies of purchases in the form of discount, savings in transportation costs,

overhead costs in buying department, etc.

c. To share the benefits of suppliers economies by standardizing the materials.

2. Revamping production facilities

a. To achieve economies of scale by amalgamating production facilities through more

intensive utilization of plan and resources;

b. To standardize product specifications, improvement of quality of product, expanding

market and aiming at consumers satisfaction through strengthening after sale services;

c. To obtain improved production technology and knowhow from the offered company to

reduce cost, improve quality and produce competitive products to retain and improve

market share.

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3. Market expansion and strategy’s

a. To eliminate competition and protect existing market;

b. To obtain new market outlets in possession of the offered;

c. To obtain new product for diversification or substitution of existing products and to

enhance the product range;

d. Strengthening retail outlets and sale depots to rationalize distribution;

e. To reduce advertising cost and improve public image of the offered company;

f. Strategic control of patents and copyrights.

4. Financial strength

a. To improve liquidity and have direct access to cash resources;

b. To dispose of surplus and outdated assets for cash out of combined enterprise;

c. To enhance gearing capacity, borrow on better strength and greater assets backing;

d. To avail of tax benefits;

e. To improve EPS.

5. General gains

a. to improve its own image and attract superior managerial talents to manage its affairs;

b. to offer better satisfaction to consumers or users of the product.

6. Own developmental plans

The purpose of acquisition is backed by the offer or company’s own development plans.

A company thinks in terms of acquiring the other company only when it has arrived at its

own development plan to expand its operations having examined its own internal strength

where it might not have any problem of taxation, accounting valuation, etc. but might feel

resources constraints with limitation of funds and lack of skilled managerial personnel.

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It has to aim at a suitable combination where it could have opportunities to supplement its

funs by issuance of securities, secure additional financial facilities, eliminate competition

and strengthen its market position.

7. Strategic purpose

The Acquirer Company views the merger to achieve strategic objectives through

alternative type of combinations which may be horizontal, vertical, product expansion,

market extensional or other specified unrelated objectives depending upon the corporate

strategy.

Thus, various types of combinations distinct with each other in nature are adopted to

pursue this objective like vertical or horizontal combination.

8. Corporate friendliness

Although it is rare but it is true that business houses exhibit degrees of cooperative spirit

despite competitiveness in providing rescues to each other from hostile takeovers and

cultivate situations of collaborations sharing goodwill of each other to achieve

performance heights through business combinations.

9. Desired level of integration

Mergers and acquisitions are pursued to obtain the desired level of integration between

the two combining business houses. Such integration could be operational or financial.

This gives birth to conglomerate combinations. The purpose and the requirements of the

offer or company go a long way in selecting a suitable partner for merger or acquisition

in business combinations.

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Reasons for merger or acquisition

There is not one single reason for a merger or takeover but a multitude of reasons cause mergers

and acquisitions which are precisely discussed below:

1. Synergistic operating economies

It is assumed that existing undertakings are operating at a level below optimum. But when

two undertakings combine their resources and efforts they may with combined

efforts produce better results than two separate undertakings because of savings in operating

costs viz. combined sales offices, staff facilities, plants management, etc. which lower the

operating costs. Thus, the resultant economies are known as synergistic operating economies.

The worth of the combined undertaking should be greater than the sum of the worth of the

two separate undertakings i.e. 2+2 = 5.Synergy means working together.

2. Diversification

Mergers and acquisitions are motivated with the objective to diversify the activities so as to

avoid putting all the eggs in one basket and obtain advantage of joining the resources

for enhanced debt financing and better serviceability to shareholders. Such amalgamations

result in creating conglomeratic undertakings. But critics hold that diversification caused by

merger of companies does not benefit the shareholders as they can get better returns by

having diversified portfolios by holding individual shares of these companies.

3. Taxation advantages

Mergers take place to have benefits of tax laws and company having accumulated losses may

merge with a profit earning company that will shield the income from taxation. Section 72A

of Income Tax Act, 1961 provides this incentive for reverse mergers for the survival of sick.

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4.Growth advantage 

Mergers and acquisitions are motivated with a view to sustain growth or to acquire growth.

To develop new areas becomes costly, risky and difficult than to acquire a company in a

growth sector even though the acquisition is on premium rather than investing in a new assets

or new establishments.

5. Production capacity reduction

To reduce capacity of production merger is sometimes used as a tool particularly during

recessionary times as was in early 1980 in USA. The technique is used to nationalize

traditional industries.

6. Managerial motivates

Manager’s benefit in rank, status and perquisites as the enterprise grows and expands because

their salaries, perquisites and status often increase with the size of the enterprise. The

acquirer may motivate managerial support by assuring benefits of larger size of the company

to the managerial staff. The resultant large company can offer better security for salary

earners.

7. Acquisition of specific assets

Surviving company may purchase only the assets of the other company in merger.

Sometimes vertical mergers are done with the motive to secure source of raw material but

acquirer may purchase the specific assets of the acquire rather than acquiring the whole

undertaking with assets and liabilities.

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The assets may also be acquired at a discount to obtain a going concern cheaply.

There can be many situations to take over the assets of a company at discount viz.

(i) The acquire may be in possession of valuable land and property shown at depreciated

value/historical costs in books of account which underestimates the current

replacement value. Thus, acquirer shall be benefited by acquiring the assets of the

company and selling them off subsequently;

(ii) to acquire non-profit making company, close down its loss making activities and sell

off the profitable sector to make gains;

(iii) The existing management is incapable of utilizing the assets, the acquirer might take

over un geared company and increase its debt secured on acquirers assets.

8. Acquisition by management or leveraged buyouts

The acquisition of a company can be had by the management personnel. It is known as

management buyout. This practice is common in USA for over 25 years and quite in vogue

in UK. Management may raise capital from the market or institutions to acquire the company

on the strength of its assets, known as leveraged buyouts.

9. Other reasons

There may be many other reasons motivating mergers in addition to the above ones

viz. profit enhancement for the company, achieving efficiency, increasing market power, tax

and accounting opportunities, growth as a goal and many speculative goals etc. depending

upon the circumstances and prevailing conditions within the company and the economy

of the country

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Distinction between Mergers and Acquisitions

Although they are often uttered in the same breath and used as though they were synonymous,

the terms merger and acquisition mean slightly different things. When one company takes over

another and clearly established itself as the new owner, the purchase is called an acquisition.

From a legal point of view, the target company ceases to exist, the buyer "swallows" the business

and the buyer's stock continues to be traded.

In the pure sense of the term, a merger happens when two firms, often of about the same size,

agree to go forward as a single new company rather than remain separately owned and operated.

This kind of action is more precisely referred to as a "merger of equals." Both companies' stocks

are surrendered and new company stock is issued in its place. For example, both Daimler-Benz

and Chrysler ceased to exist when the two firms merged, and a new company, DaimlerChrysler,

was created.

Synergy

Synergy is the magic force that allows for enhanced cost efficiencies of the new business.

Synergy takes the form of revenue enhancement and cost savings. By merging, the companies

hope to benefit from the following:

Staff reductions - As every employee knows, mergers tend to mean job losses. Consider

all the money saved from reducing the number of staff members from accounting,

marketing and other departments. Job cuts will also include the former CEO, who

typically leaves with a compensation package.

Economies of scale - Yes, size matters. Whether it's purchasing stationery or a new

corporate IT system, a bigger company placing the orders can save more on costs.

Mergers also translate into improved purchasing power to buy equipment or office

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supplies - when placing larger orders, companies have a greater ability to negotiate prices

with their suppliers.

Acquiring new technology - To stay competitive, companies need to stay on top of

technological developments and their business applications. By buying a smaller

company with unique technologies, a large company can maintain or develop a

competitive edge.

Improved market reach and industry visibility - Companies buy companies to reach

new markets and grow revenues and earnings. A merge may expand two companies'

marketing and distribution, giving them new sales opportunities. A merger can also

improve a company's standing in the investment community: bigger firms often have an

easier time raising capital than smaller ones.

That said, achieving synergy is easier said than done - it is not automatically realized

once two companies merge. Sure, there ought to be economies of scale when two

businesses are combined, but sometimes a merger does just the opposite. In many cases,

one and one add up to less than two.

Sadly, synergy opportunities may exist only in the minds of the corporate leaders and the

deal makers. Where there is no value to be created, the CEO and investment bankers -

who have much to gain from a successful M&A deal - will try to create an image of

enhanced value. The market, however, eventually sees through this and penalizes the

company by assigning it a discounted share price. We'll talk more about why M&A may

fail in a later section of this tutorial.

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Mergers and Acquisitions in India

M&As have played an important role in the transformation of the industrial sector of India since

the Second World War period. The economic and political conditions during the Second World

War and post–war periods (including several years after independence) gave rise to a spate of

M&As.

The inflationary situation during the wartime enabled many Indian businessmen to amass

income by way of high profits and dividends and black money.

There was a craze to acquire control over industrial units in spite of swollen prices of shares. The

practice of cornering shares in the open market and trafficking of managing agency rights with a

view to acquiring control over the management of established and reputed companies had come

prominently to light.

The net effect of these two practices, via of acquiring control over ownership of companies and

of acquiring control over managing agencies, was that large number of concerns passed into the

hands of prominent industrial houses of the country (Kothari, 1967).

As it became clear that India would be gaining independence, British managing agency houses

gradually liquidated their holdings at fabulous prices offered by Indian Business community.

Besides, the transfer of managing agencies, there were a large number of cases of transfer of

interests in individual industrial units from British to Indian hands.

Further at that time, it used to be the fashion to obtain control of insurance companies for the

purpose of utilizing their funds to acquire substantial holdings in other companies. The big

industrialists also floated banks and investment companies for furtherance of the objective of

acquiring control over established concerns.

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The post-war period is regarded as an era of M&As. Large number of M&As occurred in

industries like jute, cotton textiles, sugar, insurance, banking, electricity and tea plantation. It has

been found that, although there were a large number of M&As in the early post independence

period, the anti-big government policies and regulations of the 1960s and 1970s seriously

deterred M&As.

This does not, of course, mean that M&As were uncommon during the controlled regime. The

deterrent was mostly to horizontal combinations which, result in concentration of economic

power to the common detriment. However, there were many conglomerate combinations.

In some cases, even the Government encouraged M&As; especially for sick units.

Further, the formation of the Life Insurance Corporation and nationalization of the life insurance

business in 1956 resulted in the takeover of 243 insurance companies. There was a similar

development in the general insurance business. The national textiles corporation (NTC) took

over a large number of sick textiles units (2004).

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Recent Development in Mergers and Acquisitions

The functional importance of M&As is undergoing a sea change since liberalization in India. The

MRTP Act and other legislations have been amended paving way for large business groups and

foreign companies to resort to the M&A route for growth. Further The SEBI (Substantial

Acquisition of Shares and Take over) Regulations, 1994 and 1997, have been notified. The

decision of the Government to allow companies to buy back their shares through the

promulgation of buy back ordinance, all these developments, have influenced the market for

corporate control in India.

M&As as a strategy employed by several corporate groups like R.P. Goenka, Vijay Mallya and

Manu Chhabria for growth and expansion of the empire in India in the eighties. Some of the

companies taken over by RPG group included Dunlop, Ceat, Philips Carbon Black,

Gramaphone India. Even, the known and big industrial houses of India, like Reliance Group,

Tata Group and Birla group have engaged in several big deals.

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The Main Idea

- One plus one makes three: this equation is the special alchemy of a merger or an

acquisition.

- The key principle behind buying a company is to create shareholder value over and above

that of the sum of the two companies.

- Two companies together are more valuable than two separate companies - at least, that's

the reasoning behind M&A.

- This rationale is particularly alluring to companies when times are tough.

- Strong companies will act to buy other companies to create a more competitive, cost-

efficient company.

- The companies will come together hoping to gain a greater market share or to achieve

greater efficiency.

- Because of these potential benefits, target companies will often agree to be purchased

when they know they cannot survive alone.

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From the point of Investor

It's hard for investors to know when a deal is worthwhile. The burden of proof should fall on the

acquiring company. To find mergers that have a chance of success, investors should start by

looking for some of these simple criteria:

A reasonable purchase price - A premium of, say, 10% above the market price seems

within the bounds of level-headedness. A premium of 50%, on the other hand, requires

synergy of stellar proportions for the deal to make sense. Stay away from companies that

participate in such contests.

Cash transactions - Companies that pay in cash tend to be more careful when

calculating bids and valuations come closer to target. When stock is used as the currency

for acquisition, discipline can go by the wayside.

Sensible appetite – An acquiring company should be targeting a company that is smaller

and in businesses that the acquiring company knows intimately. Synergy is hard to create

from companies in disparate business areas. Sadly, companies have a bad habit of biting

off more than they can chew in mergers.

Mergers are awfully hard to get right, so investors should look for acquiring companies with a

healthy grasp of reality.

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Mergers and Acquisitions: Doing the Deal

Start with an Offer

When the CEO and top managers of a company decide that they want to do a merger or

acquisition, they start with a tender offer. The process typically begins with the acquiring

company carefully and discreetly buying up shares in the target company, or building a position.

Once the acquiring company starts to purchase shares in the open market, it is restricted to

buying 5% of the total outstanding shares before it must file with the SEC.

In the filing, the company must formally declare how many shares it owns and whether it intends

to buy the company or keep the shares purely as an investment.

Working with financial advisors and investment bankers, the acquiring company will arrive at an

overall price that it's willing to pay for its target in cash, shares or both.

The tender offer is then frequently advertised in the business press, stating the offer price and the

deadline by which the shareholders in the target company must accept (or reject) it.

The Target's Response

Once the tender offer has been made, the target company can do one of several things:

Accept the Terms of the Offer - If the target firm's top managers and shareholders are

happy with the terms of the transaction, they will go ahead with the deal.

Attempt to Negotiate - The tender offer price may not be high enough for the target

company's shareholders to accept, or the specific terms of the deal may not be attractive.

In a merger, there may be much at stake for the management of the target - their jobs, in

particular. If they're not satisfied with the terms laid out in the tender offer, the target's

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management may try to work out more agreeable terms that let them keep their jobs or,

even better, send them off with a nice, big compensation package.

Not surprisingly, highly sought-after target companies that are the object of several

bidders will have greater latitude for negotiation. Furthermore, managers have more

negotiating power if they can show that they are crucial to the merger's future success.

Execute a Poison Pill or Some Other Hostile Takeover Defense – A poison pill

scheme can be triggered by a target company when a hostile suitor acquires a

predetermined percentage of company stock. To execute its defense, the target company

grants all shareholders - except the acquiring company - options to buy additional stock at

a dramatic discount. This dilutes the acquiring company's share and intercepts its control

of the company.

Find a White Knight - As an alternative, the target company's management may seek

out a friendlier potential acquiring company, or white knight. If a white knight is found, it

will offer an equal or higher price for the shares than the hostile bidder.

Mergers and acquisitions can face scrutiny from regulatory bodies. For example, if the two

biggest long-distance companies in the U.S., AT&T and Sprint, wanted to merge, the deal would

require approval from the Federal Communications Commission (FCC).

The FCC would probably regard a merger of the two giants as the creation of a monopoly or, at

the very least, a threat to competition in the industry.

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Closing the Deal

Finally, once the target company agrees to the tender offer and regulatory requirements are met,

the merger deal will be executed by means of some transaction. In a merger in which one

company buys another, the acquiring company will pay for the target company's shares with

cash, stock or both.

A cash-for-stock transaction is fairly straightforward: target company shareholders receive a cash

payment for each share purchased. This transaction is treated as a taxable sale of the shares of the

target company.

If the transaction is made with stock instead of cash, then it's not taxable. There is simply an

exchange of share certificates. The desire to steer clear of the tax man explains why so many

M&A deals are carried out as stock-for-stock transactions.

When a company is purchased with stock, new shares from the acquiring company's stock are

issued directly to the target company's shareholders, or the new shares are sent to a broker who

manages them for target company shareholders. The shareholders of the target company are only

taxed when they sell their new shares.

When the deal is closed, investors usually receive a new stock in their portfolios - the acquiring

company's expanded stock. Sometimes investors will get new stock identifying a new corporate

entity that is created by the M&A deal.

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Mergers and Acquisitions: Why They Can Fail

It's no secret that plenty of aquisition don't work. Those who advocate acquisition will argue that

the acquisition will cut costs or boost revenues by more than enough to justify the price

premium. It can sound so simple: just combine computer systems, merge a few departments, use

sheer size to force down the price of supplies and the merged giant should be more profitable

than its parts. In theory, 1+1 = 3 sounds great, but in practice, things can go awry.

Historical trends show that roughly two thirds of big acquisitions will disappoint on their own

terms, which means they will lose value on the stock market. The motivations that drive

acquisitions can be flawed and efficiencies from economies of scale may prove elusive. In many

cases, the problems associated with trying to make merged companies work are all too concrete.

Flawed Intentions

For starters, a booming stock market encourages acquisitions, which can spell trouble. Deals

done with highly rated stock as currency are easy and cheap, but the strategic thinking behind

them may be easy and cheap too. Also, acquisitions are often attempt to imitate: somebody else

has done a big acquisition, which prompts other top executives to follow suit.

The executive ego, which is boosted by buying the competition, is a major force in M&A,

especially when combined with the influences from the bankers, lawyers who can earn big fees

from clients engaged in acquisitions. Most CEOs get to where they are because they want to be

the biggest and the best, and many top executives get a big bonus for acquisition deals, no matter

what happens to the share price later.

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The Obstacles to Making it Work

If the corporate cultures of the companies are very different. When a company is acquired, the

decision is typically based on product or market synergies, but cultural differences are often

ignored. It's a mistake to assume that personnel issues are easily overcome. For example,

employees at a target company might be accustomed to easy access to top management, flexible

work schedules or even a relaxed dress code.

These aspects of a working environment may not seem significant, but if new management

removes them, the result can be resentment and shrinking productivity.

Companies often focus too intently on cutting costs following acquisitions, while revenues, and

ultimately, profits, suffer. Merging companies can focus on integration and cost-cutting so much

that they neglect day-to-day business, thereby prompting nervous customers to flee. This loss of

revenue momentum is one reason so many acquisitions fail to create value for shareholders.

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Aditya Birla Group

History

He roots of the Aditya Birla Group date back to the 19th century in the picturesque town of

Pilani, set amidst the Rajasthan desert. It was here that Seth Shiv Narayan Birla started trading in

cotton, laying the foundation for the House of Birlas.

Through India's arduous times of the 1850s, the Birla business expanded rapidly. In the early part

of the 20th century, our Group's founding father, Ghanshyamdas Birla, set up industries in

critical sectors such as textiles and fibre, aluminium, cement and chemicals. As a close

confidante of Mahatma Gandhi, he played an active role in the Indian freedom struggle. He

represented India at the first and second round-table conference in London, along with Gandhiji.

It was at "Birla House" in Delhi that the luminaries of the Indian freedom struggle often met to

plot the downfall of the British Raj.

Ghanshyamdas Birla found no contradiction in pursuing business goals with the dedication of a

saint, emerging as one of the foremost industrialists of pre-independence India. The principles by

which he lived were soaked up by his grandson, Aditya Vikram Birla, our Group's legendary

leader

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About Company

Chairman- Kumar Mangalam Birla

Headquarter- Mumbai,Maharashtra (India)

The Aditya Birla Group is an Indian multinational conglomerate corporation headquartered in

Mumbai. It operates in 33 countries with more than 136,000 employees worldwide.

Product

The group has diversified business interests and is dominant player in all the sectors in which it

operates such as viscose staple fibre, metals, cement, viscose filament yarn, branded apparel,

carbon black, chemicals, fertilizers, insulators, financial services, telecom, BPO and IT

services.

The Aditya Birla group is a US$ 40 billion conglomerate which gets 60% of its revenues from

outside India. The Aditya Birla Group has been adjudged the best employer in India and among

the top 20 in Asia by the Hewitt-Economic Times and Wall Street Journal Study 2007. The

Group has been ranked Number 4 in the Global 'Top Companies for Leaders' survey and ranked

Number 1 in Asia Pacific for 2011.

In Countries

Over 53 per cent of its revenues flow from its overseas operations. The Group operates in 36

countries – Australia, Austria, Bangladesh, Brazil, Canada, China, Egypt, France, Germany,

Hungary, India, Indonesia, Italy, Ivory Coast, Japan, Korea, Laos, Luxembourg, Malaysia,

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Myanmar, Philippines, Poland, Russia, Singapore, South Africa, Spain, Sri Lanka, Sweden,

Switzerland, Tanzania, Thailand, Turkey, UAE, UK, USA and Vietnam

Vision & Mission

To be a premium global conglomerate with a clear focus on each business.

To deliver superior value to our customers, shareholders, employees and society at large.

The Aditya Birla Grouop Logo

The name “Aditya Birla” evokes all that is positive in business and in life. It exemplifies

integrity, quality, performance, perfection and above all character.

Our logo is the symbolic reflection of these traits. It is the cornerstone of our corporate identity.

It helps us leverage the unique Aditya Birla brand and endows us with a distinctive visual image.

Depicted in vibrant, earthy colors, it is very arresting and shows the sun rising over two circles.

An inner circle symbolizing the internal universe of the Aditya Birla Group, an outer circle

symbolizing the external universe, and a dynamic meeting of rays

converging and diverging between the two.

Through its wide usage, we create a consistent, impact-oriented Group

image. This undoubtedly enhances our profile among our internal and

external stakeholders.

Our corporate logo thus serves as an umbrella for our Group. It signals the common values and

beliefs that guide our behaviour in all our entrepreneurial activities. It embeds a sense of pride,

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unity and belonging in all of our 136,000 colleagues spanning 36 countries and 42 nationalities

across the globe. Our logo is our best calling card that opens the gateway to the world.

Globally, the Aditya Birla Group is:

A metals powerhouse, among the world’s most cost-efficient aluminium and copper producers.

Hindalco-Novelis is the largest aluminium rolling company. It is one of the three biggest

producers of primary aluminium in Asia, with the largest single location copper smelter.

- No.1 in viscose staple fibre

- No.1 in carbon black

- The fourth-largest producer of insulators

- The fifth-largest producer of acrylic fibre

- Among the top 10 cement producers

- The largest Indian MNC with manufacturing operations in the USA

- Among the best energy-efficient fertiliser plant

In India:

- A top fashion (branded apparel) and lifestyle player

- The second-largest player in viscose filament yarn

- The largest producer in the chlor-alkali sector

- Among the top three mobile telephony companies

- A leading player in life insurance and asset management

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- Among the top two supermarket chains in the retail business

- Among the top 10 BPO companies

Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not

come in the way of the need to keep learning afresh, to keep experimenting.

Beyond business - The Aditya Birla Group:

- Works in 3,000 villages.

- Reaches out to seven million people, annually through the Aditya Birla Centre

for Community Initiatives and Rural Development, spearheaded by Mrs.

Rajashree Birla.

- Focuses on healthcare, education, sustainable livelihood, infrastructure and

espousing social reform in India, Asia, Egypt, Philippines, Thailand, Laos,

Indonesia, Korea and Brazil

  In India:

- Our Group runs 42 schools, which provide quality education to 45,000

children. Of these, over 18,000 children receive free education.

- Its 18 hospitals tend to more than a million villagers.

- In line with its commitment to sustainable development, has partnered with

the Columbia .

- University in establishing the Columbia Global Centre’s Earth Institute in

Mumbai.

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Achievement in 2012

Aditya Birla Retail Ltd was presented with the "Master Brand Award 2012" By the World

Brand Congress on 14th February 2012 in Mumbai.

The Master Brand Award is conferred upon those brands that appeal to a large set of consumers

from premium to mass while constantly keeping in mind a consumer centric approach.

Aditya Birla Retail Limited was presented the prestigious "Retail Best Employer of the

Year" award by the global jury of the Asia Retail Congress 2012 in Mumbai.

At the same event, CEO Mr. Thomas Varghese was awarded "CEO of the Year" by the Asia

Retail Congress, 2012.

The Asia Retail Congress is Asia's single most important global platform to promote world-class

retail practices. These awards are aimed at honouring the best, in the Asian retail scenario. The

Asia Retail Congress is represented by 100 countries across the world

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Columbian Chemicals

History

Columbian’s history dates back to the 1860s when carbon black was first utilized

for industrial applications.  The company’s name today evolved from Columbian

Carbon Company, which was formed in 1922 from the consolidation of several small carbon

black manufacturers.  Throughout its rich history, Columbian has led the way in many areas of

the carbon black industry.  Here is a sampling of the many “firsts” that Columbian

Chemicals brought to the industry: 

First to produce carbon black to reinforce rubber

First to produce carbon black beads (Micronex Beads)

First to produce coarse, fine, and very fine furnace black

First to study the surface activity of carbon black (pH) 

First to study the absorptive of carbon black (DPG)

First to use electron microscopy to study carbon black

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About the Company

Chief executive & president - Mr. Jae Sup Lee

Headquarter- Marietta, Georgia (United State)

In 1986 Columbian was acquired by Phelps Dodge Corporation and over the next two decades

the company expanded its operations in Europe and acquired operations in South America and

Asia. 

In 1999, Columbian opened its current Headquarters and Technology Center in Marietta,

Georgia, centralizing its support functions and bringing cutting-edge technology to the carbon

black industry.  In its state-of-the-art labs, Columbian Chemicals is moving rapidly into the 21st

century, developing ever better carbon black products and capitalizing on its carbon-related

expertise to explore new avenues of growth.

In March of 2006, Columbian was acquired by a company jointly owned by DC Chemical Co.

and One Equity Partners. DC Chemical is a leading South Korean company, based in Seoul. One

Equity Partners is a private equity affiliate of J.P. Morgan Chase & Co.  In November 2009, One

Equity Partners bought out the controlling interest in Columbian.

In 2011, Aditya Birla Group acquired Columbian Chemicals company to become the largest

Carbon Black producer in the world.

Columbian Chemicals Company, located in Southwest Kansas, United States, manufactures

carbon black, a fine powder used as a pigment and reinforcing agent in rubber, plastic and liquid

products. Committed to the environment and to operational excellence, Columbian Chemicals

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achieved ISO 14001 environmental management system registration of its 11 carbon black

manufacturing facilities in June 2005.

They are a global provider of high-quality carbon black additives for rubber, plastic, and liquid

products. Their products add strength, durability, and enhanced performance to products

consumers use every day such as automobile tires and toner in printers.

Their company has been in business for more than 100 years, and this is attributable in part to

Their commitment to providing value to Their customers. They believe that each customer is

unique, with a different set of needs based on individual markets, strategies and competitive

dynamics.

At Columbian Chemicals Company, we are committed to understanding your needs so that we

can better help you succeed. They offer a wide range of carbon black products for rubber, plastic,

liquid, and other industrial applications that are designed.

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Products

- Columbian Carbon Blacks

Carbon black is the product of combustion – pyrolytic process.  The process typically converts

petroleum-based feedstock oil into carbon black by injecting oil into a reactor, which “cracks”

the oil at temperatures in excess of 1000°C.  The reaction process, occurring in milliseconds,

ends with a quenching step at the reactor’s outlet.

A carbon black aerosol stream emerges from the reactor and then passes through a series of

filters to separate the carbon black from the combustion gases.  The carbon black is collected as

powder or granular product and packaged for delivery to customers in every part of the world.

Carbon black colloidal and performance properties are a function of a number of process factors. 

Columbian adjusts these properties to produce high quality ASTM grades and specialty grades to

meet the specific end-market requirements where carbon black is consumed.

- Industrial Carbon Black Products

Columbian Chemicals Company produces a wide range of specialty carbon black grades

specifically designed to meet the needs of plastics, inks, coatings manufacturers.  Look for

Columbian’s Raven, Conductex, and Cope black carbon black grades to solve their most

challenging problems and to provide unparalleled performance for your products.

- Rubber Carbon Black Products

Columbian Chemicals Company produces a complete line of high quality ASTM furnace carbon

black grades, trademarked as Statex and Furnex. 

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Aditya Birla Group to acquire Columbian Chemicals

“BIRLA CARBON”

In Value acquire

The acquisition of US-based carbon black specialist Columbian Chemicals by the Aditya Birla

Group for $875 million ( 4,016 crore) creates strategic value, pitch forking the Indian major,

with a combined capacity of 2 million tonnes, as the world's largest producer by volume of

carbon black, a crude oil derivative used in the rubber industry for tires and as pigment for paints

and inks.

Group company Hindalco is already the world's largest rolled-aluminium producer, after its

purchase of can maker Novelis in 2007.

ABG has formed a new board of directors for CCC with Mr. Kumar Mangalam Birla, the

chairman of ABG, as the new chairman of CCC. Other Directors in the Board include Rajashree

Birla, Rajiv Dube, Santrupt Misra, D D Rathi and Kevin Boyle, CEO, Columbian Chemicals.

Debt for acquisition

The group will raise debt for the acquisition, because of which two of its three associate

companies will see $450 million in debt on their balance sheet for funding the acquistion.

ANZ, BankAM, HSBC, RBS and StanChart are participating in the financing of the

transaction and were also the financial advisors for the acquisition, which according to Birla will

yield cost-savings of $50 million every year.

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Why CCC targeted

Columbian Chemicals is among the world's leading producers of carbon black. Based in

Marietta, Georgia, the company and its affiliates own and operate 12 manufacturing facilities in

the US, Brazil, Canada, China, England, Germany, Hungary, Italy, Korea and Spain, employing

1,300 people.

CCC has annual revenues of $1 billion and operating profits of $140 million. Hit by the global

slowdown, CCC is currently in the red but is expected to turn around by 2012, he added.

What Expected in coming year

The group has restructured the carbon black business based on geographical demarcations.

Indian Rayon's carbon black unit will cater to the Sri Lanka and Bangladesh markets. Thai

Carbon Black will focus on the Asian markets. Alexandria Carbon Black will handle the US and

East European markets.

The group has unified its product branding. All companies now market their products under the

common brand name of Birla Carbon. The demand for carbon black, used to manufacture tyres,

accessories and consumer products, has been growing due to rising sales of automobiles.

The acquisition will add two million tonnes of carbon black capacity to the Group and extend its

reach in the markets of North America, Canada, Brazil, Germany, Italy and China, besides

enabling it tap the CCC technology and its research and development team.

The combined revenue of CCC and Aditya Birla Group's carbon black business is about $2

billion. But CCC will continue to remain a separate company.

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Benefit for Aditya Birla Group

The deal would help the group leapfrog from a modest fourth position to the numerous position

in carbon black in terms of volume. Post acquisition, Aditya Birla Group’s carbon black business

would have consolidated revenue totaling $2 billion and earnings before interest, tax,

depreciation of $140 million.

The group is now positioned 3% higher than the erstwhile biggest company - Massachusetts-

based Cabot - and a staggering 47% higher than German-based Evonik in terms of capacity. In

fact, Evonik too has been on the group’s radar for quite some time.

With this acquisition in the carbon black sector, looking at a global market dominance in each of

the three verticals in the coming few years

With 16 manufacturing facilities located in nine countries, Columbian Chemicals will help the

group in bringing mature markets of North America and Europe under its umbrella, which

together constitute a capacity of 3.24 million tonne, a share of 22% of the total 14.26 million

tonne global carbon black pie.

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Conclusion

One size doesn't fit all. Many companies find that the best way to get ahead is to expand

ownership boundaries through mergers and acquisitions. For others, separating the public

ownership of a subsidiary or business segment offers more advantages. At least in theory,

mergers create synergies and economies of scale, expanding operations and cutting costs.

Investors can take comfort in the idea that a acquisition will deliver enhanced market power.

By contrast, de-merged companies often enjoy improved operating performance thanks to

redesigned management incentives. Additional capital can fund growth organically or through

acquisition. Meanwhile, investors benefit from the improved information flow from de-merged

companies.

M&A comes in all shapes and sizes, and investors need to consider the complex issues involved

in M&A. The most beneficial form of equity structure involves a complete analysis of the costs

and benefits associated with the deals.

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