Small shareholders with around 60 per cent of the public holding in Narmada Cement, it is learnt, have opted to grab the open offer and lodged their equity for transfer to L&T. Although they have a combined stake of less than 20 per cent in Narmada Cement, the positive response may enable L&T to hike its post-offer holding in Narmada Cement to a comfortable level.

Of the 75 lakh-and-odd shares held by small shareholders, it is reliably learnt that around 40 lakh shares have been lodged for transfer. The L&T open offer for Narmada Cement closed on April 3.

Financial institutions, which hold around two per cent in the cement company, have also decided to grab the open offer to L&T. ``The FIs have made it clear thatthey have no reservations to sell their stake to the acquirers,'' said sources closely associated with the deal. However, the deadlock between the Chowgules and Gujarat Government, sources say, may jeopardise a smooth transfer of around 22 per cent stake (which constitute the initial capital of the promoters) to L&T.

Although the Chowgules have already struck a deal with L&T to sell their entire 65 per cent-plus stake, the transfer of Ashok Chowgule's holding to L&T may not materialise soon. The Chowgules, it is learnt, have been unable to reach an agreement with the Gujarat government on transfer of the initial promoters' holding. This might adversely affect the transfer of the state government's stake in the company as well. The Gujarat government has an equity stake of around 11 per cent in Narmada Cement. ``I would not like to comment on the matter,'' is all Ashok Chowgule had to say.

L&T has expressed its intentions of taking Narmada Cement private and eventually merging the cement company with itsown cement division. But this might prove to be difficult unless L&T raises its stake to at least 90 per cent.

The state government, as was reported earlier in The Financial Express, has said that 11 per cent stake of the Chowgules, which is guided by the promoters' agreement, would have to be first sold to the state government at the agreed price (according to a specific formula) of Rs 31.50 per share, as the state reserved the right of first refusal. The offer price of L&T is at Rs 34 per share, and the state has made known its intention of buying out part of the Chowgule stake at a lower price, as spelt out in the promoters' agreement, before on-selling the same to L&T.