Companies & Sectors
Chettinad Cement shareholders refuse MAM Ramaswamy’s reappointment

Shareholders have chosen “not” to  re-appoint MAM Ramaswamy, the majority stakeholder, as director of Chettinad Cement, one of the popular companies in South India

 

Shareholders of Chettinad Cement Corp has rejected the proposal to re-appoint MAM Ramaswamy, noted industrialist and promoter of Chettinad Group of companies, as director of the company.

 

“Resolved that Dr MAM Ramaswamy, Director, who retires by rotation pursuant to Section 152 of Companies Act 2013, be and is hereby not reappointed as Director of the Company”, the resolution moved in the company's annual general meeting (AGM) said.

 

Ramaswamy has been chairman of Chettinad Cement while his adopted son MAMR Muthiah serves as its managing director. At the 51st Annual General Meeting of Chettinad Cement in Chennai, a resolution seeking his non-appointment as director of the company was moved, according to shareholders.

 

Ramaswamy holds 24% of the flagship company Chettinad Cement, while his adopted son Muthiah holds 15% and his wife, Geetha Muthiah has 18% stake in the company.

 

Ramaswamy’s non-election as director of Chettinad Cement comes a day after the Central Bureau of Investigation (CBI) arrested Chennai's Registrar of Companies (RoC) for allegedly demanding and accepting Rs10 lakh as bribe from Ramaswamy.

 

The Registrar M Manu Neethi Cholan was nabbed red handed by CBI for allegedly demanding and accepting Rs10 lakh as illegal gratification from Ramaswamy to declare “null and void” the resolutions adopted at Wednesday’s meeting, where the rival group within the Chettinad Group management was planning to take control over the companies.

 

However, CBI which registered a case of bribery against Ramaswamy, did not arrest him considering his age.

 

With shareholders rejecting Ramaswamy’s reappointment as director, the post of chairman of Chettinad Cement Corporation would become vacant.

 

Apart from cement business, the Chettinad group is engaged in activities in granite, engineering, silica, garnet, Information Technology, education, healthcare, plantations, shipping, transportation.

 

Ramaswamy was also Pro-Chancellor of Annamalai University at Chidambaram in Tamil Nadu, but it was taken over by the State government due to alleged ‘financial irregularities’.

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Market valuation of large-cap companies have gone up six times more than their profits

Large-cap companies as per Moneylife’s classification reported a 11% growth in net profits for the June quarter but enjoyed a 68% jump in valuation

 

Companies classified by Moneylife as large-cap (market-cap between Rs2,000 crore and Rs10,000 crore) reported a 9% growth in aggregate sales and a 11% growth in net profit for the quarter ended June 2014 compared to the quarter ended June 2013. As many as 140 companies, of the 241 large-cap companies, reported an increase in net profit.

 

Interestingly, the market-cap of these 241 companies shot up by a 37% during the quarter. From the end of the June quarter till date, the aggregate market-cap has fallen by -1.67%.


Moneylife tracks a database of 1,294 companies, of which 1,222 companies have declared their results for the June 2014 quarter. Of these 1,222 companies, 241 are large-caps. The aggregate revenues of the large-caps form a share of 16% of the total revenues of the 1,222 companies. The aggregate net-profits of the large-caps form 11.63% of the total net profits.


Among the top performers from the large-cap sample, PTC India, Atul, PI Industries, Kajaria Ceramics and VST Industries have reported an average of 23% growth in sales for the June 2014 quarter, compared to the same period last year. The net profits of these companies have grown by an average of 51%. Companies such as Bhushan Steel, Dish TV India, Fortis Healthcare, Hathway Cable & Datacom and Indian Hotels, reported a profit for the June quarter last year, but have reported a net loss in the latest quarter. These companies have reported a drop in operating profits as well.


As many as 152 large-caps have reported a growth in operating profit and 126 companies have reported a higher operating profit margin. However, the aggregate operating profit margins were marginally lower at 14.51% for the June 2014 quarter, compared to a margin of 14.94% in June 2013. Aggregate net profit margins increased marginally to 5.38% in the quarter ended June 2014 from 5.28% in the quarter ended June 2013.


Valuations of the 241 large-caps measured by market-cap to operating profit (latest quarter annualised) increased by 68.47% to 8.5 times on 18 August 2014 compared to a year ago, when valuations were at five times. The market-cap to net profit increased by 60.85% to 22.9 times from 14.2 times over the same one-year period. Out of the 241 companies as many as 79% or 190 companies are quoting a higher valuation compared to a year ago.

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How to appoint a CIC even if there is no Leader of the Opposition

A Committee comprising PM and the Leader of Opposition, recommends CICs names. Since, at present there is no Leader of Opposition, a recently-retired CIC has not been replaced. How to get around it?

 

There is some discussion about the fact that the replacement for the Chief Information Commissioner who retired last week cannot be appointed since the Leader of Opposition is missing. This is flawed since Section 12 (3) of the RTI Act clearly says :

 
 

(3) The Chief Information Commissioner and Information Commissioners shall be appointed by the President on the recommendation of a committee consisting of—

  1. (i) the Prime Minister, who shall be the Chairperson of the committee;
  2. (ii) the Leader of Opposition in the Lok Sabha; and
  3. (iii) a Union Cabinet Minister to be nominated by the Prime Minister.
Explanation.—For the purposes of removal of doubts, it is hereby declared that where the Leader of Opposition in the House of the People has not been recognised as such, the Leader of the single largest group in opposition of the Government in the House of the People shall be deemed to be the Leader of Opposition.
Hence the leader of the single largest group can certainly be chosen and the government should stop dithering on this.
 
 
However it may be useful to consider the caliber of Commissioners appointed by this process and question it. The present Commissioners are not delivering and presently they are usually selected as a reward in dispensation of patronage.  The average disposal per Commissioner is less than 2300 annually, though its website states that there is a norm of clearing 3200 cases by each commissioner.  There is a need to set up a transparent rational process for selecting commissioners and getting them to be accountable. We should also demand that atleast 30% of the commissioners should be well recognized RTI activists so that the citizens perspective remains in the commission.  The writer suggests the following process for selection:
 

1. The Government should advertise openings to appoint Information Commissioners depending on the need atleast six months in advance. Some proper criteria must be developed for this. Eminent individuals could apply or be nominated by others.
 
2. A pre-selection committee consisting of (possibly) two members of Parliament, Chief Information  Commissioner, one Vice Chancellor, one Supreme Court judge and two RTI activists could be formed to shortlist a panel which could be three times the number of Commissioners to be selected. These could be announced with the minutes of the meeting at which the short listing is done.  
                                 
3. An interview should be conducted by the search committee in public view, to give citizens and  media the opportunity to hear the views of the prospective candidates. Citizens could give feedback and views to the pre-selection committee. Subsequently the comittee could present its recommendation for twice the number of Commissioners to be appointed. Based on these  inputs, the final decision to select the Commissioners could be taken by the Committee as per the Act consisting of Prime Minister, Leader of Opposition and one Minister.  (A similar process could be adopted for State Commissions with MLAs instead of MPs and High Court  judge instead of Supreme Court judge).

 

(Shailesh Gandhi served as Central Information Commissioner under the RTI Act, 2005, during 18 September 2008 to 6 July 2012. He is a graduate in Civil Engineering from IIT-Bombay. Before becoming a full time RTI activist in 2003, he sold his packaging business. In 2008, he was conferred the Nani Palkhivala Memorial Award for civil liberties.)

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COMMENTS

Capt Edgar Sylva

3 years ago

Why not Shailesh Gandhi as CIC- he was a IC who was approved by all parties so where is the problem.

VijayTrimbakGokhale

3 years ago

It is incorrect to say that a Committee comprising PM and the Leader of Opposition, recommends CICs names.

As per Sc. 12(3) of RTI act 2005 the members of the recommending committee are PM, Leader of opposition and a Union Cabinet minister to be nominated by PM.

It is also incorrect to say that the replacement for the Chief Information Commissioner (CIC), who retired last week cannot be appointed since the Leader of Opposition (LoP) is missing. RTI Act by way of explanation to above section clarifies that for the purposes of removal of doubts, it is hereby declared that where the Leader of Opposition in the House of the People has not been recognised as such, the Leader of the single largest group in opposition of the Government in the House of the People shall be deemed to be the Leader of Opposition. So in so far as appointment of CIC/ICs is concerned there is no difficulty .

REPLY

shailesh gandhi

In Reply to VijayTrimbakGokhale 3 years ago

I have made an error in my piece and am grateful to Mr. Vijay Trimbak Gokhale for giving the correct position. I apologise for my error

Dev

3 years ago

The opposition leader should be a leader from the combined opposition and not of a leader of the single largest party.

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