The company is setting up a one million tonne (mt) cement grinding unit here, its fourth in the country, for which the foundation stone was laid by West Bengal Chief Minister Jyoti Basu on Friday. The other three grinding units are located at Jharsuguda in Orissa, Magdalla in Gujarat and Ratnagiri in Maharashtra. These grinding units and its five cement plants at Awarpur in Maharashtra, Hirmi in Madhya Pradesh, Kovaya and Jafarabad in Gujarat and Tadipatri in Andhra Pradesh together produce around 14 mt cement per annum.

Talking to reporters after the foundation stone laying ceremony, Mr Karnani said the name of the demerged company would be L&T Cement Ltd, for which the company was looking for a partner. Two investment bankers, JP Morgan and DSP Merrill Lynch, have been appointed to find out a suitable partner as well as to draw a blueprint for the process of demerger.

"The L&T board will take necessary decision as soon as it gets the reports from the investment bankers and we hope that the entire demerger process will be completed before the end of the current fiscal," Mr Karnani said. He said L&T was also planning to separate its engineering and IT businesses into two separate entities.

Asked whether the demerged cement entity would have a foreign partner, he said, "we are open on this issue. It may be a local partner or a foreign one." He made it clear that it would bring in both equity and technology and the demerged company will be a subsidiary of L&T.

Explaining the logic behind going in for demerger, he cited the global trend of consolidation in the cement industry. "India cannot remain isolated," he said.

At present, around 60 players in India produce just over 100 mt cement. Mr Karnani believes that although cement consumption in the country will go up to 200 mt by the year 2010, the number of players will not be more than seven. Of these, L&T would need to have a share of 30 to 35 mt if it really wanted to remain in the market, he said.