Grasim found itself the subject of speculation that its open offer for a 20% stake in L&T may garner the benevolence of market regulators.

This renewed hope pushed the scrip of the A V Birla group cement and VSF maker higher by 1.91% to Rs 364.50 on BSE by 11:05 IST. A total of 31,626 Grasim shares were traded on BSE thus far.

In fact, the scrip has been moving strong of late. Between 17 December 2002 and 21 February 2003, Grasim Industries had risen 21.4% to Rs 340 from Rs 280.

Reports have surfaced that the Securities and Exchange Board of India is likely to permit the company to go ahead with its open offer for acquiring an additional 20% stake in L&T.

However, the company may be asked to make additional disclosures in its public announcement and offer documents to L&T shareholders, according to the reports. The disclosures could pertain to the terms of its deal with the Reliance group, from whom Grasim Industries had bought slightly over 10% shares at a price of Rs 306 per share in November 2001.

The disclosures could also relate to the financials of L&T and Grasim Industries, particularly with respect to the book value. This should help the L&T shareholders in arriving at a reasoned view on whether to accept the Grasim offer or not.

Last week, the Securities Appellate Tribunal set aside intervention applications filed by the Investors Grievances Forum and an investor association on the Grasim-L&T issue. The IGF had filed an application against Grasim's move to vacate the Sebi stay on its open offer.

Grasim is facing a Sebi investigation over the acquisition of slightly over 10% stake in L&T from Reliance Industries and the related issue of management control in the engineering and cement giant .

Grasim increased its stake in L&T beyond 15% and also made an open offer to acquire 20% additional stake at Rs 190 per share in October 2002. But, in November last year, Sebi asked the Birla group company to keep its open offer on hold.

Sebi's investigation of Grasim centers around the issue of whether Grasim has acquired control of L&T. The probe was ordered despite Grasim's claim that it would not seek any change in the management control of L&T.

The AV Birla group company has only two members - Kumaramangalam Birla and Rajashree Birla - on the L&T board, which has a strength of 18 members.

Grasim bought 10.05% stake in L&T from Reliance Industries in November 2001 at Rs 306 per share and subsequently increased its stake to a little over 14% in tranches. Later, Grasim made an open offer for Rs 190 per share for additional shares. The company had allegedly continued its purchases, through its subsidiary, Samruddhi Investments Ltd, to take its holding beyond 15%.

Meanwhile, L&T wants to de-merge its cement division with a stake from a strategic investor. Grasim has already submitted a proposal to the L&T board for this purpose.

For Q3 ended 31 December 2002, Grasim reported a 48% growth in profit after tax to Rs 132.95 crore (Rs 1.32 billion) on an 11% growth in net sales to Rs 1,166.59 crore (Rs 11.66 billion).

BSE code: 500300