The Telegraph
Since 1st March, 1999
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L&T Cement riddle gets new twist

Mumbai, Feb. 1: The tug of war over the proposed demerger of Larsen and Toubro’s cement business has entered a new phase. The latest question doing the round is whether CDC Capital, the UK-based venture capital firm, is still in the race or not.

While an anxious L&T management maintains that the venture capital firm is in the fray to pick up a 6.8 per cent stake in its cement business, there are others who maintain that CDC is pulling out of the deal.

Going by the rumours swirling in the market, CDC has suddenly lost interest in its proposal to invest in L&T’s cement business. This is largely because of the L&T management’s inability to get its investment proposal cleared and the pressure on the UK-based firm to tone down its drag-along conditions.

Sources close to the L&T management, however, point out that the company is attaching a lot of importance to the current developments and Holck Larsen, one of the two founders of the engineering company, was present at the last board meeting to lend his weight to the professional management that is running the company.

Corporate observers believe that Larsen’s presence was merely to ensure that the nominees of the financial institutions take notice of the perceptible opposition within the top management to the Grasim proposal.

This is significant since the financial institutions, which hold more than 40 per cent in L&T, have veered to the view that they might entertain Birla’s bid for the cement business as CDC’s iron-fisted clauses peeved them. The financial institutions are the single largest shareholders in the company.

“The CDC proposal is very much alive. In fact, it will again be discussed, along with the Grasim Industries proposal, after three weeks”, a source close the L&T management said.

Sources said the L&T management will shortly convey to CDC that though the company’s board could not take a decision on its proposal last week, it would again come up for discussion after three weeks where a final decision is likely to be taken.

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