L&T Board Was Unanimous In Forming Cement Demerger Panel

Mumbai, November 26: | Updated: Nov 27 2002, 05:30am hrs
The decision taken at Larsen & Toubros (L&T) October 29 board meeting on the formation of a committee to look into its cement demerger proposal was unanimous, with approvals from the two AV Birla group nominees - Kumar Mangalam Birla and Rajashree Birla.

Accenture To Devise Cement Cost Cut Policy

Mumbai, November 26: Irrespective of the fate of its joint initiative with Grasim Industries, Larsen & Toubro (L&T) is independently pursuing an aggressive strategy of cost reduction in its cement business. The company has hired Accenture to do an operations research study to reduce freight and logistics cost in the cement business.

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The panel of directors set up to evaluate the cement demerger proposal, is expected to submit its report by the year-end, senior L&T officials said. The panel, which consists of five-six independent directors, will evaluate the proposals received by L&T for financial/strategic investment in its cement business. Company officials refused to elaborate.

On the approval by the Birla group nominees, to the addendum on the agenda at the October 29 board meeting, sources close to the Birlas said there was no question of disapproving as the matter was discussed for exactly one minute. The AV Birla group spokesperson refused to comment.

Sources said the directors were informed about the matter two hours before the board meet, and this highlighted the fact that the Birlas had no control of L&T.

According to the definition of control in chapter I (c) of the Sebi (substantial acquisitions of shares and takeover regulations, 1997), control shall include the right to appoint majority of the directors or management or policy decisions exercisable by a person/persons acting individually or in concert, directly or indirectly, including by virtue of their management rights or shareholders agreements or voting agreement or other manner.

Sources close to the Birlas said a company could not gain control with just two members on the board, adding the nominees of the stature of Mr Kumar Mangalam Birla and Mrs Rajashree Birla were placed on the L&T board after the buyout of Reliances 10.05 per cent stake last year, so as to give a level of comfort to the L&T management, as these Birla nominees would not be involved in the day-to-day management of the company. Sources said these points highlighted that there was no control of L&T by the Birlas.

The Securities Appellate Tribunal hearing on the issue of Grasims open offer for an additional 20 per cent L&T stake, will be held on Wednesday. The Birlas have filed an appeal with SAT, against the Sebi order which asked Grasim not to proceed with the open offer until further orders.

In an appeal to SAT, the Birlas sought an interim relief so that open offer proceedings were not stalled even as Sebi continues with its probe into the matter of whether the Birlas have gained control of L&T.