Mumbai, June 17, 2003: The Board of Directors of Larsen & Toubro Limited at its Meeting today decided to demerge its Cement business into a new Cement Company (CemCo). L&T will hold 20% of the equity of CemCo, with the balance equity being distributed to its shareholders in proportion to their holdings in L&T. Investors holding GDRs in L&T will be entitled to proportionate GDRs in CemCo. The shares of CemCo will be initially listed on the Bombay Stock Exchange (BSE) at Mumbai and the National Stock Exchange (NSE).

Grasim Industries Limited (Grasim) will acquire 8.5% equity stake of CemCo from L&T at Rs. 171.30 per share and thereafter, make an open offer, at the same price, for 30% of the equity of CemCo with a view to taking management control. Concurrently Grasim and its associates will sell their entire holding in demerged L&T at Rs.120 per share to L&T Foundation/Trusts being formed.
The detailed Scheme of Arrangement will be developed in compliance with regulations, over the next few weeks and will be subject to necessary approvals.

Grasim has communicated that its Board of Directors has endorsed this transaction at its Meeting held today. This transaction will help to unlock value for the shareholders consequent to the possible re-rating of the demerged L&T as a focussed Engineering & Technology Company and the proposed Open Offer by Grasim for CemCo at Rs. 171.30 per share.

The L&T Foundation/Trusts with stake in L&T will enhance the high level of commitment and sense of belonging of L&T-ites to the Company, which they have built over many decades. This should further the cause of enhancing shareholder value.

The transaction is expected to provide CemCo an opportunity to leverage the synergies between the operations of CemCo and Grasim and strengthen its ability to compete in the Indian and overseas markets.