L&T has asked the possible partners to submit non-binding, indicative price bids for the cement company partnership by January 31, 2001.

L&T has proposed a two-phased entry for the foreign partner, which will eventually lead to a situation where L&T and the partner will hold equal stakes in the joint venture.

Industry sources said on Saturday that representatives from the prospective partners were in Mumbai last week for talks with L&T brass, and did not appear too keen to accept the L&T proposal for phased entry of the partner.

L&T is understood to have suggested that initially, the partner will come into the company with a 24 per cent stake, with L&T holding 51 per cent, and the company will go for an initial public offer of 25 per cent equity. The second phase will then consist of the partner upping its stake in the company by creeping acquisitions, and L&T matching the partner's stake and the two sides having equal stakes. L&T is also understood to have suggested that for the 24 per cent stake, the partner will have two seats on the board. While the chairman and chief executive officer will be from L&T, the partner will have the right to appoint a chief operating officer (COO).

L&T managing director AM Naik could not be reached for comment. When contacted, L&T general manager N Sivaraman said: "At this stage, we can only say that the stated objective from L&T on the cement business is to eventually reach a level where both sides hold equal stakes in the venture."

Mr Sivaraman declined to spell out other details or who were the contenders to partner L&T in the venture.

However, industry sources tracking the developments said the foreign players are not too keen on this formula, since there is a distinct danger of their getting stuck with a minority stake, as the second phase of increasing the stake is dependent on creeping acquisitions, which is a function of the market price.

Some of the prospective partners are believed to have expressed their keenness to entirely buy out L&T, which the company has shot down, or begin with a 51 per cent stake with L&T holding 24 per cent. The other option they are willing to accept is for both sides beginning with 37.5 per cent stakes.

The time-frame L&T is keen on is believed to be March 31, 2001, but the foreign players appear to be feeling that it would take anywhere between six and nine months. Besides, there is also the issue of mining leases in various states, where permissions from those states have to be sought by the new company. L&T's cement division achieved sales of Rs 1,935 crore for 1999-2000, and accounts for 26 per cent of L&T's sales.