In what now looks like a compromise solution being hammered out by financial institutions (FIs), the AV Birla group will now be given a broad proposal on the possible demerger mode by FIs by this week-end. The proposal will envisage the creation of a demerged cement entity and a hundred per cent subsidiary of L&T. The details of the stake to be picked up by Grasim albeit at a higher price as compared to what CDC has offered in the new entity are now being worked out, sources added.
The note on the deferment of the board meeting was sent out to L&T directors on Tuesday. The note says that the board meeting scheduled for December 28 will now take place after January 6, 2003, to the convenience of certain directors.
L&T officials were unavailable for comment on the issue.
The CDC proposal, initially slated for expiry in November, has already been extended once till December-end this year. CDC, however, does have the option of talking afresh with L&T if it wants to renew the proposal.
Donald Peck, head of CDCs investment team in India, could not be contacted as he is currently away in London.
However, the fact that the L&T board meeting would take place in the second week of January would imply that it would be quite close to the completion of the Sebi probe on whether Grasim has already acquired control in L&T. Sebi chairman GN Bajpai has indicated that the probe would be over by early February.
The direction which the L&T demerger drama will now take hinges on the stance taken by FIs, which now hold a combined 40 per cent stake in L&T.
FE had earlier reported that the FIs may persuade the Birlas to take a pie in the demerged cement business and put off its interest in the parent company. Grasims open offer for an additional 20 per cent stake in L&T has been put on hold following a Sebi directive. The market regulator is currently probing whether Grasim has gained control over L&T.
CDCs proposal to pick up a 6.8 per cent stake in L&T for Rs 291 crore has been in the eye of a storm as there has been persistent criticism over conditionalities attached. The proposal has around 30 riders attached to it, which also include among others requirement of CDCs consent for a number of day-to-day operations of the cement entity.