L & T Scrip Probe Seen This Week

The Securities and Exchange Board of India (Sebi) is expected to commence its probe into the reasons behind the spurt in cement major Larsen & Toubro's share price in the first two weeks of November sometime this week.

The idea behind the Sebi probe is to see whether insider-trading was in any way responsible for the rise in prices.

Officials said that they had no choice other than to undertake a scrutiny as the price rise coming just before the announcement of the deal was "too close for comfort".

Moreover, the name of Reliance Industries was also mentioned in rumours -- only the rumour mills talked about the company attempting a takeover bid again.

According to sources, the insistent buying would have been only because of prior knowledge of the price at which the deal was struck and that could have been known only by an insider.

Grasim is paying Rs 306.6 per share to RIL for acquiring a 10 per cent stake in L&T -- the price is at a 47 per cent premium to last week's closing price of Rs 208.50.

Today the L&T scrip price rose in intra-day trades to a high of Rs 223.70, but lost the gains latter to close at Rs 202. According to market sources, most of the gains during the day were due to the considerable premium at which Grasim is buying the shares.

However, uncertainty over the company's plans to demerge its cement business led to the pessimism in the stock, analysts said.

The market was also agog with rumours that Grasim might buy more L&T shares -- either from the market or through an open offer in order to consolidate its holding in the company and to acquire a modicum of power in the boardroom.