The Larsen & Toubro board will consider the demerger of its cement business on May 29. The report of the Investment Credit Rating Agency on the mode of the demerger is also expected to be tabled at the meeting.

The timing is significant because the meeting will take place barely seven days before Grasim's 20 per cent open offer for Larsen & Toubro closes. Securities and Exchange Board of India regulations permit changes in terms up to seven days before an offer closes.

The Icra report is expected to have a bearing on the success of the open offer. The financial institutions, with 40 per cent stake in Larsen & Toubro, are unlikely to take a view on whether to participate in the offer till Icra tables the report.

"We are waiting for the report before deciding whether to sell our shares to Grasim," an executive with an institution said.

Grasim has proposed that the cement business be demerged vertically, that is, with shareholders getting shares in the cement arm in proportion to their holdings in Larsen & Toubro.

However, the management of Larsen & Toubro has suggested that only 25 per cent stake of the cement subsidiary be given to the existing Larsen & Toubro shareholders.

Grasim has also proposed a second open offer for the demerged cement company at Rs 130 a share.

This offer effectively values Larsen & Toubro at Rs 292 a share, against the current price of Rs 190. Grasim already holds 15.35 per cent stake in Larsen & Toubro.

The company's board had appointed Icra to evaluate the demerger proposals of the Birlas and the Larsen & Toubro management and give its opinion on the two proposals.