The Telegraph
Since 1st March, 1999
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Another meet on L&T cement demerger

Mumbai, Feb. 14: The board of Larsen & Toubro (L&T) will again meet tomorrow to discuss the contentious issue of the demerger of its cement division.

While the AV Birla group is set to present its counter-proposal at the meeting, the L&T management is expected to add an aggressive tone to the proceedings by putting forth a proposal for induction of a strategic partner. On the other hand, the controversial proposal by CDC is likely to be called off.

Senior L&T officials were not available for comment on the issue. However, sources close to the company averred that the CDC proposal is still on and talk of it being dropped by the L&T management or the company proposing a competitive bidding process to locate a strategic partner is “baseless”.

Sources close to the AV Birla group pointed out that Grasim's proposal, which calls for a vertical split, is far more shareholder friendly. The company is planning to offer a price of Rs 130 per share for raising its stake in the cement unit post-demerger through an open offer.

Late last month after L&T's board meet, CEO and managing director A. M. Naik had said that CDC had presented a softer proposal, which was being considered. However, it now transpires that the investment firm has not toned down its conditions.

While financial institutions are the largest investors holding more than 38 per cent in the diversified company, they are unlikely to support the CDC plan if presented in tomorrow's board meeting, sources said.

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.

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