The Telegraph
Since 1st March, 1999
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L&T board to take up twin proposals

Mumbai, Jan. 28: After a lull of nearly a month, the Larsen & Toubro (L&T) board is meeting here tomorrow to discuss the demerger of its cement division. The board will discuss the proposals put in by both CDC Capital Partners and Grasim Industries.

The meeting, which is scheduled to begin in the evening, will see the L&T management putting forward the CDC proposal with little changes from its earlier avatar. On the other hand, the A V Birla group will present its “alternate proposal” that calls for a vertical split of the cement division.

Sources said the Birlas may seek an open offer for the demerged entity at a price that would match CDC’s valuation of about $ 75 per tonne. Grasim’s proposal is likely to speak of the company’s intention of making an open offer for 20 per cent of the demerged company.

In a letter to the stock exchanges today, Grasim while confirming the submission of an alternate proposal, said that this is being done in the “better interest of all the stakeholders of L&T and Grasim”. “Grasim recognises that it does not have any control over L&T and it will be entirely a prerogative of the board and shareholders of L&T to decide upon the proposal,” it added.

CDC had offered to pick up 6.8 per cent in the cement entity for which it is willing to pump in Rs 291 crore. While the proposal made waves for its controversial conditions, it was felt that these stipulations could also be toned down to win over the support from financial institutions who hold close to 40 per cent in the company.

Though L&T officials were not available for comment on the eve of the crucial board meet, sources close to the engineering major pointed out that there has been no major changes from the original draft of CDC.

With the likelihood of both the L&T management and Birla group nominees justifying their respective viewpoints, the institutions are thus set to play a key role. Sources close to the development said that though the FIs are yet to announce their stand, they are likely to support the counter proposal mooted by the Birla group.

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