L038;T board meet deferred

In a dramatic development, the much-hyped board meeting of Larsen Toubro LT, slated for December 28, has now been postponed. This effec...

In a dramatic development, the much-hyped board meeting of Larsen 038; Toubro L038;T, slated for December 28, has now been postponed. This effectively means that the Commonwealth Development Corporation8217;s CDC proposal for picking up a 6.8 per cent stake in L038;T will be allowed to lapse as it expires on December 31, 2002.

In what now looks like a compromise solution being hammered out by FIs, the AV Birla Group will be given a broad proposal on the possible demerger mode by FIs by the end of this week. The proposal will envisage the creation of a demerged cement entity and a 100 per cent subsidiary of L038;T. The details of the stake to be picked up by Grasim 8212; albeit at a higher price as compared to what CDC has offered 8212; in the new entity are now being worked out, sources added.

The note on the deferment of the board meeting was sent out to the directors of L038;T on Tuesday. The note says that the board meeting scheduled for December 28, 2002 will now take place after January 6, 2002 due to the inconvenience of certain directors.

L038;T officials were unavailable for comment on the issue.

The CDC proposal which was initially slated for expiry in November has already been extended once till December-end this year. CDC, however, does have the option of talking afresh with L038;T if it wants to renew the proposal.

Donald Peck, head of CDC8217;s investment team in India, could not be contacted as he is currently away in London.

However, the fact that the L038;T board meeting would take place in the second week of January would imply that it would be quite close to the completion of the Sebi probe on whether Grasim has already acquired control in L038;T, which Sebi chairman G. N. Bajpai has indicated would be over by early February 2003. The direction which the L038;T demerger drama will take, hinge s on the stance taken by the FIs which hold 40 per cent stake in L038;T.

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The FIs may persuade Birlas to take a stake in the demerged cement business and put off its interest in the parent company. Grasim8217;s open offer for an additional 20 per cent stake in L038;T has been put on hold following Sebi8217;s directive . The market regulator is currently probing whether Grasim has gained 8220;control8221; over L038;T.

CDC8217;s proposal to pick up a 6.8 per cent stake in L038;T for Rs 291 crore has been in the eye of a storm as there has been persistent criticism to the conditionalities attached.