The Grasim-Larsen & Toubro saga may be headed towards a bitter proxy war as L&T would require the approval of 75 per cent of its shareholders at an extraordinary general meeting to go ahead with the demerger of its cement division if its board clears the move on December 28.
Financial institutions, holding around 40 per cent in L&T now, have indicated they are in favour of the L&T management's proposal. A committee of independent directors has tabled its report in favour of the move.
L&T executives confirmed that if and when the board approved the move, a resolution would have to be passed by L&T shareholders that required a backing of at least 51 per cent of the members present, but accounting for at least 75 per cent of the equity. The Birlas, too, confirmed this.
It is this requirement which could effectively tilt the balance in favour of the Birlas, who with a 15.35 per cent holding in L&T, would then have to garner support or proxies from only an additional 10 per cent of the shareholders to block the demerger proposal.
Sources close to the Birlas told Business Standard the group "would do whatever it takes to defend our interests."
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