Larsen & Toubro garnered much attention in early trades on the strength of a major order from a Franco-Italian joint venture for $32.5 million.
By 10:01 IST, the scrip of the cement, engineering and construction conglomerate rose 0.71 per cent to Rs 207. It registered volumes of 13,147 shares on BSE by then.
The company's EPC (engineering, procurement & construction ) division, the largest of its kind in the country, has bagged orders worth $32.5 million (Rs 156 crore) from SPF-TKP Omifpro SNC, a joint venture of Snamprogetti, Italy and Technip Coflexip, France, for supply of equipment to Oman India Fertilizer Company in the Sultanate of Oman.
Obviously, the scrip was bound to react positively to the news on Wednesday. It is also being boosted by expectations of improved results for the quarter ended 31 December 2002.
Other cement pivotals are also blessed with goodwill over buoyant results anticipated for the quarter - Gujarat Ambuja Cements (up 1.21 per cent to Rs 172), ACC (up 0.50 per cent to Rs 160) and Grasim Industries (up 0.43 per cent to Rs 315.80).
In the three months between 3 October 2002 and 14 January 2003, the scrip of L&T rose 24 per cent to Rs 205.55 from Rs 166.10.
The uptrend came from some huge buying from domestic institutions, which were accumulating the L&T stock to keep the share price above the open offer price of Rs 190.
L&T is the country's second-biggest cement maker. For December 2002, cement shipments rose by 10.4 per cent from a year earlier to 8,50,000 tonnes.
Its production in December 2002 was at 9,50,000 tonnes, up 11.8 per cent from a year earlier.
In recent developments in the company, the Securities Appellate Tribunal last month upheld the Securities and Exchange Board of India directive to stall Grasim's open offer for acquiring an additional 20 per cent stake in L&T till the market regulator came out with its report examining whether there was any change in management control at L&T, after Grasim acquired a 10.05 per cent stake from Reliance Industries Ltd in L&T in November 2001.
If the probe goes against Grasim, the company will have to make an open offer for the additional 20 per cent stake in L&T at Rs 306 per share, instead of the current offer price of Rs 190 per share.
There were additional reports that Sebi had warned Grasim of strict penalties, including a ban on raising funds from the capital market, if it was found to have gained control of L&T after buying 10.05 per cent equity last year.
The open offer by Grasim to L&T shareholders was scheduled to open on 9 December 2002 and close on 7 January 2003.
J M Morgan Stanley was appointed as the transaction advisor and Mulla & Mulla and Craigie Blunt & Caroe as the legal advisers by Grasim.
Grasim's wholly owned subsidiary Samruddhi Swastik Trading was to act in concert with the company for the L&T open offer.
Grasim's interest in L&T is mainly in the cement business, where it wishes to consolidate its position. However, the L&T board at the instance of financial institutions, plan to demerge the cement division into a separate entity.
According to latest reports, Grasim and financial institutions (which hold a 36 per cent stake in L&T) have come to a compromise over the de-merger of L&T's cement division.
The settlement involves, Grasim making an open offer for 51 per cent stake in the de-merged cement division of L&T at a price to be decided by three independent valuers, so that there is no controversy regarding the pricing of the offer.
Valuers will assess the cement company on the basis of replacement cost as well as discount cash flow.
For the second quarter ended 30 September 2002, L&T registered a 4.25 per cent rise in net profit to Rs 42.18 crore (Rs 421.8 million) compared to Rs 40.46 crore (Rs 404.6 million) in the corresponding period last year. Sales increased by 18 per cent to Rs 2,094 crore (Rs 20.94 billion) from Rs 1,776.12 crore (Rs 17.761 billion) in SQ 2001.
