The Birlas will submit an alternate demerger proposal for Larsen &Toubro's cement business when the board of the diversified conglomerate meets next week. The meeting is set to take place on January 10.
The decision of the Birlas, sources said, came in the wake of the financial institutions, the largest shareholders of L&T, insisting on a fresh strategy as the AV Birla group had earlier opposed L&T's cement demerger plan.
Grasim appears to have gone one up on the L&T management as the FIs had initially favoured L&T but now seem to have bought the Birla logic against the demerger.
The Birlas want a vertical split of the business, which will result in a mirror shareholding pattern in the demerged business.
Birla group sources said Grasim was open to offering a higher price for the cement business, in case the demerger was along the lines of what they proposed, but were unlikely to increase the size of the offer from the current 20 per cent.
In that case, however, it was unlikely that the FIs would be able to sell their entire stake.
But Grasim could still sweeten its offer from the current Rs 190 a share if the institutions allowed it to take control.
"We could include a control premium element, depending on how other shareholders react," Birla sources said.
The demerger proposal of the L&T management will give existing shareholders only about 26 per cent in the cement arm.
The Birlas feel this is not shareholder- friendly. They also oppose the various drag-along clauses in the CDC proposal.
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