| Naik & Birla: War of words
Mumbai, Dec. 10: A V Birla group’s uneasiness with the demerger of Larsen & Toubro’s (L&T) cement division threatens to snowball into a long courtroom clash.
Reacting to the Birlas’ legal notice, senior L&T officials maintained that all legal formalities had been followed in discussing the spin-off proposal on December 7.
“The company has fulfilled all legal requirements in discussing the issue,” the officials added. They went on to say that the matter would continue to be discussed because the last meeting was inconclusive.
L&T wrote to stock exchanges today, saying it had complied with all legal formalities while debating the spin-off. In its letter dated December 6, Grasim had warned of a ‘serious dispute and possibility of a long-drawn litigation’ if the L&T board took up the issue on December 7.
The Birlas could not stop that from happening, ostensibly because the communication did not reach L&T on time. “Our solicitors are responding to the letter,” L&T officials said today.
An A V Birla group spokesperson confirmed that a legal notice had indeed been sent to the L&T board, but refused to be drawn on the issue, saying it was “privileged communication”. Grasim did not want the cement demerger proposal to be discussed on the ground that its open offer ‘was alive in spirit and law’.
Some observers see this as an attempt by the Birlas to buy more time till Sebi decides on the legality of Grasim’s offer, and its acquisition of L&T stake in November last year.
The regulator is re-examining the deal where Reliance sold its 10 per cent stake in the engineering major to Grasim to see if there was a change in effective control.
“It shows Grasim’s strong feelings towards the entire demerger issue,” an analyst said. Group chairman Kumar Mangalam Birla had urged managing director and CEO of L&T, A M Naik, to submit full details of the demerger proposals to him and all directors to enable them to study the matter in all its dimensions. This followed the October L&T board meeting.