The company's board has also allotted 21.93 lakh fully-paid equity shares to The Industrialisation Fund for Developing Countries at a premium of Rs 20 a share. The fund has been also allotted 21.19 lakh zero per cent convertible preference shares of Rs 100 each.

The preference shares will be convertible into equity within 18 months from the date of allotment in the ratio of one equity share of Rs 10 each at a premium of Rs 20 per share fully paid for every three convertible preference shares held.

With this allotment, the Saurashtra Cement takeover drama has taken a climactic twist, as it will be the first-ever instance of a major foreign co-promoter in a domestic cement company.

Post-conversion, the stakes of FL Smidth and the fund are expected to go up to 21.11 per cent and 7.21 per centrespectively, giving them together an equity holding just less than 29 per cent, while the domestic promoters' stake (with associates) will decline from 64.5 per cent to about 29.3 per cent.

Currently, the Danish cement machinery major and the fund hold 6.85 per cent each in Saurashtra Cement. Two expatriate additional directors nominated by the foreign partners---Peter Gorn Christiansen and Martin M Kristensen---are being taken as wholetime directors on the board. Saurashtra Cement has categorically stated that the move is not a step towards the company's takeover by the foreign players.

This will stymie the Autoriders group's effort to take over Saurashtra Cement, unless they can prove that a previous controversial preferential allotment, assumed valid by the Mehtas, was in violation of the Securities & Exchange Board of India (Sebi) guidelines.

The fund, a foreign institutional ally of FL Smidth, will, upon such conversion, hold 7.21 per cent, so that roughly, the domestic and foreign promoters willhold the same percentage of equity in the company.

Saurashtra Cement is passing through troubled times as realisations have dropped sharply in the Gujarat region, and the fresh infusion of funds could not have come at a more appropriate time. Analysts expect the company's 1997-98 losses to mount to over Rs 20 crore, from Rs 8 crore in 1996-97.