The Telegraph
Since 1st March, 1999
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L&T lobs demerger ball to Icra court

Mumbai, Feb. 15: Adopting a middle path, the board of Larsen & Toubro Ltd (L&T) today mandated Icra, the leading credit rating agency, to evaluate the proposals of both Grasim Industries Ltd and the L&T management on the demerger of the company’s cement division.

Though the terms of reference of the evaluation is still being worked out, L&T officials told the waiting newspersons after the company’s board meeting that “Icra will evaluate both the proposals and give its opinion to the management.”

He, however, did not divulge the timeframe that has been given to the credit rating agency to submit its proposal.

However, sources said Icra is likely to take at least 30-45 days to come out with its findings.

Grasim chairman Kumar Mangalam Birla, who attended the meeting with his mother, refused to comment on the proceedings of the board meeting.

The board meet that lasted for over an hour also saw two new nominees from the Life Insurance Corporation (LIC) being inducted into the board. They are K. S. K. Khare and Kranti Sinha. LIC’s earlier nominee A. Ramamurthy has resigned on health grounds. The life insurance major is the single largest shareholder; it has increased its shareholding in the diversified company in recent times.

While L&T officials were tightlipped about the proceedings of the board meet, they pointed out that Grasim’s proposal was discussed. Late last month, the offer made by the L&T management was considered. The decision to appoint Icra stems from the fact that the L&T board could not reach a consensus on the rival offers.

Among the two proposals, the AV Birla group has suggested a vertical demerger while the L&T management has proposed a structured demerger route according to which CDC Capital Partners will invest 6.8 per cent in the demerged entity. The investment firm was planning to pump Rs 291 crore into the demerged entity.

Meanwhile, the Securities and Exchange Board of India (SEBI) will soon pronounce its verdict on the Grasim open offer for picking up another 20 per cent in L&T.

Reports say that the market regulator is set to give its green signal to the AV Birla group to proceed with the offer in a decision to be announced next week.

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