Two of India most valuable companies Larsen and Toubro Ltd (L&T) and Grasim Industries Ltd, which have been at loggerheads since the early 2000s over cross-holdings, are facing another contentious issue over L&Ts 11.49% holding in UltraTech Cement Ltd, which is now majority-owned by Grasim.
L&T, India largest engineering and construction company, has to exit its stake in Ultra Tech the former L&T Ultra Tech Cement Ltd December 2009, as per a 2005 agreement.
The agreement gives Grasim, part of the Aditya Birla Group, the first right of refusal. And, if Grasim refuses to buy the shares, L&T can only sell its stake in tranches to a scattered group of investors, with each potential investor allowed to own less than 1% of the L&T shares. On top of that, the engineering firm is barred from selling these shares to any cement makers who could compete directly with Grasim.
