The Hindu Business Line : Shareholder files affidavit against L&T-Grasim deal

AN affidavit opposing Larsen & Toubro's petition for Court sanction for the L&T-Grasim cement deal has been submitted. The petition comes up for hearing at the High Court, Mumbai, on March 18.

The objection, submitted to the advocates of L&T in the case, has been made by a Pune-based individual shareholder of L&T, Mr V.M. Raste, who says the deal is not in the public interest.

"I state that over 4,90,000 shareholders of the petitioner company and millions of units and policyholders of Unit Trust of India and Life Insurance Corporation and many others who are the real owners of UTI and LIC and other Insurance Companies, holding 40 per cent plus shares of L&T as on December 31, 2003, are being relieved of more than their undistributed profits of L&T during the company's existence for over fifty years," says the affidavit.

"I state that the management of L&T has insisted and negotiated a scheme of arrangement where Grasim is called upon to sell its 14.95 per cent (though it owns more than 15 per cent — which is a takeover trigger holding) shares of L&T (non-cement company) and that too, at a massively discounted price of Rs 120 per share. Grasim naturally got compensated through at least, equally massively discount on purchase of cement business."

Thus, the second part of the transaction i.e. the sale of massively discounted L&T shares (non-cement) go to the third party i.e. the Employees Trust, which is a totally unknown entity and about which L&T management is refusing to part with any information.

"I state that even this massively discounted price will be paid out of the funds belonging to the L&T shareholders.

"I state that there is tremendous ambiguity about the welfare of employees sought to be achieved by shares being owned by the Welfare Trust."

Mr Raste was among the shareholders who moved five amendments at the company's EGM on February 3 this year that was held to seek shareholder sanction for the same deal. All five amendments were defeated at the meeting.

Mr Raste also claims in his affidavit that the proposed amendments were available for consideration only for those shareholders who were present at the EGM and that "eleven crores of votes were not present at the meeting". These voters had no idea of the proposed amendments and had therefore no opportunity to cast their vote, his affidavit says.

The affidavit also asks for permission for scrutiny of all the relevant papers. "I state that I wish to lead evidence, especially documentary evidence, to prove my objections."

Sources at L&T said objections to its petition would not be a surprise as the company did expect a few to be made, in view of what had happened at its EGM on February 3 last month.

It is to be seen whether the affidavit will be accepted by the Court on March 18.

More Stories on : Shareholder Activism | Cement

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