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Captured Regulators

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IiAS advices voting against Ambuja Cement's proposal to increase royalty to Holcim

Ambuja Cement’s margins have fallen to 26% in 2011 from 53% in 2007, the period in which it paid know-how fees to Holcim. Now the cement maker is proposing to increase the fees by almost two-folds without disclosing additional benefits it would receive from its parent

Institutional Investor Advisory Services (IiAS) has advised shareholders to vote against Ambuja Cement’s proposal to increase technical knowhow fees to its parent Holcim.


Even though seeking shareholder approval (which is non-mandatory as per current regulations) is a right step towards good governance, IiAS says it find that the know-how fees will increase substantially (almost two-fold) after the modification. “Ambuja has not disclosed any additional benefits which it may or would derive in order to justify such a significant hike in payments. Further given Holcim’s over 50% ownership in the cement maker, this ‘ordinary’ resolution serves limited purpose, unless Holcim chooses not to vote,” the advisory firm said in a note.


The Holcim group (controlling shareholders of Ambuja) currently provides various research and training modules to Ambuja, aimed at enhancing its “knowledge repository” and “strengthening the business model”. The charge for such services is borne by Ambuja and is reflected as training and technical consultancy fees in the P&L account. The payments are made on a case-to-case basis, which amounted to 0.7% of net sales for the year ended December 2011.


Ambuja Cement is proposing to adopt a more streamlined pricing model and fix the technology and know-how charges at 1% of net sales from 1 January 2013) as it believes that such a mechanism will better reflect the benefits derived from these services.


“Investors should note that the margins have fallen from 53% in 2007 to 26% in 2011—over which period, Holcim charged Rs180 crore as technical know-how fees. IiAS believes there is little to justify aligning royalty to sales, especially when Holcim does not even use its brand. Paying ‘royalty’ only if the 2007 EBIDTA margins are exceeded may be equitable to minority investors,” the advisory firm said.


IiAS said, considering that the promoters (Holcim) already have 50.6% stake ni the company, it at least expects the cement maker to pass a special resolution requiring 75% approval from all shareholders, similar to recent royalty proposals of Rolta India.


RTI Judgement Series: Public interest supersedes individual’s interest

Even though the applicant wanted to withdraw her appeal after receiving a ration card, the CIC said in larger public interest it is necessary to provide info about the delay. This is the 33rd in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC) directed the Public Information Officer (PIO) to provide the information in larger public interest even though the applicant wanted to withdraw her complaint after receiving a ration card. While giving this important judgement, Shailesh Gandhi, former Central Information Commissioner said there is clearly a public interest in knowing the truth of why the card was not given.


“The PIO is directed to provide complete information as per the available record and send a copy to the appellant and the Commission before 25 November 2009,” the CIC said in its order issued on 10 November 2009.


Delhi resident Shrimati Virbati, on 16 March 2009, sought information about her ration card from the Food and Supplies Department of the Government of the National Capital Territory of Delhi (GNCTD). On the basis of her application for a ration card under the “below poverty line” (BPL) category, she sought information about...


1. Copy of the daily progress report on the application for a BPL card.

2. The name, designation, phone, address and time taken by each official to process the file regarding the BPL application.

3. The time taken to process the entire application as per the norms, rules and regulations.

4. Whether any officials are responsible for dereliction of duty and a copy of the duties of these officials.

5. Copy of rules which state the time duration to process the BPL application.

6. The reasons for the appellant being asked to fill up a form for the second time for a BPL card.

7. The name, designation and phone no of person responsible for the delay of the BPL card.

8. The action and the time that can be taken against the official responsible for the delay.

9. Till what date the ration will be given on the receipt. 

10. The time duration when the appellant will get the BPL card.


The PIO in his reply on 9 April 2008 said:


1. The department does not make a Daily Progress Report.

2. The concerned officials have been transferred.

3. Action has been taken within the stipulated time.

4. Action has been taken as per procedure.

5. The time limit to issue APL card is 45 days but there is no time limit prescribed for BPL cards.

6. No order has been issued to fill the form a second time.

7. The appellant has not been issued BPL cards due to non-eligibility.

8. Same as above.

9. Ration can be availed till advance orders.

10. The appellant has not been issued a BPL card due to non-eligibility.


Not satisfied with the PIO’s reply, Virbati then filed her first appeal before the First Appellate Authority (FAA). The FAA, in an order on 29 May 2009, asked the PIO to give precise reasons to the appellant for the rejection of BPL cards within 30 days. Since the PIO failed to provide the information within 30 days, Virbati then approached the CIC with her second appeal.


During the hearing 10 November 2009, the PIO brought a letter from the appellant (Virbati) stating that she wishes to withdraw the appeal. “It is evident that a BPL card which should have been given two years back was denied without any stated reasons and the card was now been given because of the RTI application. There is clearly a public interest in knowing the truth of why this card was not given,” Mr Gandhi said in his order.


The Commission then directed the PIO to provide complete information as per the available record and send a copy to the appellant and the CIC before 25 November 2009.




Decision No. CIC/SG/A/2009/002309/5447

Appeal No. CIC/SG/A/2009/002309



Appellant                                          : Smt Virbati,

                                                            Delhi- 110093                                                                          


Respondent                                       : Subodh Sharma

                                                            Public Information Officer & AC (NE)

                                                            Government of NCT of Delhi

                                                            O/o Assistant Commissioner, North Zone,

                                                            Food and Supplies Department, Bunker Complex,

                                                            Nand Nagari, Delhi- 110093


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