Financial institutions (FIs) having a stake in Grasim Industries are planning to chalk out a joint strategy on the Grasim’s $2-billion deal involving the sale of its cement division, of which it owns 55%, to UltraTech. Financial institutions, including banks and insurance companies, have stakes in both Grasim and Ultratech.

Sources in the financial institutions confirmed that Aditya Birla Group chairman Kumar Mangalam Birla has met Yogesh Lohiya, chairman and managing director of GIC Re, and TS Vijayan, chairman of Life Insurance Corporation, to discuss the proposal.

Speaking to FE on the condition of anonymity, a senior official of LIC said, “We are waiting for the proposal to come from Grasim to decide on an action plan. The board of Grasim will meet tomorrow to discuss the issue. Even if the board approves of the matter, the entire process will take six to eight months, as it will be heard in a court during the period. That will leave us enough time to take any action, in case it happens.”

A GIC Re official added that one has to consider the entire implications of the issue.

The good thing is that the major shareholders will be getting some additional shares in the special purpose vehicles (SPV) to be formed by Grasim Industries.

Secondly, the move is being looked at by the FIs as a step by Grasim Industries toward bringing its both cement manufacturing companies under one arm.

The insurance companies in total hold 15.51% share in Grasim Industries. While LIC has 12.59%, GIC Re owns 1.19% and Bajaj Allianz Life Insurance Company has a stake of 1.25%. Similarly, UTI (now SUUTI) has 1.27% shares in the company.

On similar lines, in UltraTech, all the insurance companies put together own 8.80% stake. These include LIC (6.68%) and Bajaj Allianz Life Insurance Co (2.64%). All the financial institutions own merely 0.09% of shares in the company.

Earlier on Thursday Grasim had announced that UltraTech will buy Grasim?s cement division to facilitate consolidation of the group’s cement business under a single roof.

Grasim cement plants have an annual production capacity of 22 million tonnes. This transaction will create India?s single-largest entity in the cement industry.