A crucial board meeting of Larsen & Toubro (L&T) will be held on December 7, 2002, to review the committee of directors’ report on the cement division demerger proposal. The meeting assumes significance as it will be the first board meeting since October 29, when in a surprise move, the cement demerger issue was revived by the L&T management as a supplementary agenda at the near-end of the board meeting.The investment committee, consisting of institutional and independent nominees on the L&T board, has held four-five meetings in course of the last few days. The committee is also to advice the board on the proposal by Commonwealth Development Corporation for a financial stake in the demerged cement business.“We would not like to comment at this juncture on the proposal, given the sensitive nature of the issue,” said a member on the sub-committee.It would be interesting to see what course of action the AV Birla Group will adopt as Kumar Mangalam Birla had written a letter to L&T managing director and CEO A. M. Naik, subsequent to the October 29 board meeting, asking for a detailed discussion among the directors on such an important issue as the cement demerger. Naik, subsequently wrote back on November 9, 2002 justifying the last-minute inclusion of this item in the board meeting on the ground that the matter was required to be kept confidential as it was of a ‘price sensitive’ nature. But, even subsequently, the L&T managing director did not furnish the required details, Grasim had said in its rejoinder before the Securities Appellate Tribunal.L&T sources had earlier said that the committee could also suggest to the board any modifications to the demerger process they might deem fit. Since the revival of the demerger process, relationships between the L&T management which is intent on retaining the professional character of the company and the Birla Group have soured.The demerger process seems to have been revived in an attempt to thwart the Birlas from acquiring control in the company by hiving off the cement business as Grasim had made an open offer.
