RTI Judgement Series
RTI Judgement Series: PIO's exemption upheld by CIC since matter was under investigation

The CIC upheld the PIO's claim for exemption since the ESIC department was investigating the total liability of the appellant's unit. This is the 71st 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), while disposing an appeal upheld the denial of the information by the Public Information Officer (PIO) of Employees Provident Fund Organization’s (ESIC) sub-regional office at Rohtak, under Section 8(1)(h) of the RTI Act.


While giving this important judgement on 3 January 2011, Shailesh Gandhi, the then Central Information Commissioner said, “... it appears that the PIO's contention that disclosing the records may lead to altering/modification of certain records which would impede the process of investigation.”


Hisar (Haryana) resident Anita Gupta, on 12 August 2010, sought information under the Right to Information (RTI) Act from the PIO of the ESIC’s sub-regional office at Rohtak. She sought information regarding records about a raid on her firm for applicability of provident fund. Here is the information she sought...


1. Complete copy of 7(a) proceeding in respect of M/S Ridhhi Sidhhi Industries, in which the 7(a) order dated 10 June 2010 has been passed by HC Malhotra, APFC, including the complete squad’s report dated 24 June 2009.

2. Order sheets of proceedings held on dates as mentioned in the RTI application.

3. Notices of proceedings, if any, sent to employer.

4. Statement of PD Sinhman, EO submitted on 16 October 2009.

5. All other related documents relied upon by the authority for passing the 7(a) orders.


In his reply, the PIO stated that the information cannot be provided under Section 8(1)(j) of RTI Act. “The records asked by the applicant are still into enquiry under 7(a) proceedings, and thus, can be seen by applicant once they are all received by EPFO of sub-regional office in Subhash Road, Rohtak,” he said.


Citing unjustified and specious information provided by the PIO, Gupta filed her first appeal. The First Appellate Authority (FAA) while rejecting the appeal said the reply given by the PIO was sufficient.


Gupta then approached the CIC with her second appeal.


During the hearing, Mr Gandhi, the then CIC noted that the appellant (Gupta) runs a firm which was raided for applicability of provident fund to the establishment. The Department’s team stated that it found 49 employees working in the unit and has therefore started an investigation to determine the liability and also the past liability of the unit.


The Department passed an order under Section 7(a) and was in the process of determining the liability of the unit.


The appellant (Gupta) wanted records which are available to the Department and the Department is claiming exemption under Section 8(1)(h) of the RTI Act, the Commission noted.


The PIO also claimed that the cash book, balance-sheet and ledger of the establishment have not been presented before the department while Gupta said she was not aware about this.


Mr Gandhi, based on the available evidence and statements produced before the Commission, said, “It appears that the PIO’s contention that disclosing the records may lead to altering/modification of certain records which would impede the process of investigation. The Department claimed that the investigation into the issue of total liability of the appellant’s unit was still in the process of determination.”


While disposing the appeal, the Commission upheld the denial of information by the PIO under Section 8(1)(h) of the RTI Act.




Decision No. CIC/SG/A/2010/003234/10749


Appeal No. CIC/SG/A/2010/003234



Appellant                                            : Anita Gupta,

                                                            Hisar - 125005, Haryana


Respondent                                        : MS Arya

                                                            Public Information Officer/ RPFC-II,

                                                            Employees Provident Fund Organization,                                                                         Sub-regional Office, 1st and 2nd floor,

                                                            Ganga Palace complex, Subash Road,

                                                            Rohtak - 124001




4 years ago

Do Private Devaswoms come under RTI Act?

(Devaswom - administration of Property of God)

In Kerala Hindu temples are administered either by government Devaswom Boards or by private Devaswoms.

(Devaswom Board (Kerala Government) have supervisory power over private Devaswoms)

Nomura positive on Diageo-United Spirits deal

According to Nomura, one of the key triggers for Diageo in India will be a reduction in the import duty on imported scotch. One of the most immediate benefits for United Spirits’ shareholders is the potential capital infusion helping to reduce the debt and improve both the profit & loss and the balance sheet

United Spirits has received all regulatory approvals with respect to the stake sale to Diageo.  As previously announced, there are three phases of the deal. Importantly, there is no change to either the phased manner of the deal or the open offer for minority shareholders against what was previously announced. The stock has held up well despite news flow which has been sometimes concerning, according to Nomura Equity Research.
Nomura believes that although the deal closure has been delayed, it has been due to the more time that Diageo and United Spirits have had to wait for regulatory approvals. These approvals have had to come in from the relevant authorities such as the Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI) and Reserve Bank of India (RBI).
Long-term structural story of premiumisation in an attractive underpenetrated category remains intact. Valuations at 25x FY15F P/E versus the sector average of around 24x is reasonable, in our view, given the strong earnings growth expected over the next couple of years. Nomura recommends buying in United Spirits at current levels, ahead of several catalysts that are coming up in FY14F.
With approvals from all the three authorities now in place, the company has finally received the go-ahead to launch its open offer to acquire further shares from minority shareholders. The open offer is scheduled to start from 10th April and shall close on 26 April 2013. The price for the open offer is Rs1,440 per share, in line with the previously announced price and, at the same level that Diageo is acquiring shares from the current promoters of the company. 
The foreign company made it clear that there was no case to increase the open offer price and that all the shares would be acquired at the same level as they pay to the existing promoters of the company. However, with the current share price at Rs1,797 (as of 8 April 2013), the brokerage believes Diageo is unlikely to get any shares tendered in the open offer.
According to the contours of the deal, UB Holdings and other promoters of United Sprits will offload 12.8% of their total holding. This stake would works out to 16.7 million shares at Rs1,440 per share and the total value of that would be Rs24.1 billion.
United Spirits has treasury shares totalling 6.5% which will be sold to Diageo. This money will flow through into United Spirits. This will essentially work out to aroundRs12 billion. Post this stake sale, the shareholding structure for United Spirits will be UB Holdings (+group/ other promoters) having around 14.9% stake and Diageo having 19.3%. Diageo would then be issued additional 10% (post-equity) stake in United Spirits. The total value to that would amount to Rs21 billion. This money will also flow into United Spirits.
The next step is for Diageo to make an open offer to minority shareholders and that would entail an investment of Rs54.4 billion (assuming 100% subscription at Rs1,440 per share). Post completion of this offer, Diageo will hold 53.4% of the enlarged share capital of United Spirits.
Nomura’s analyst spoke to the management of Diageo. The CEO of Diageo also stated that the company is always confident of making bolt-on deals work in emerging markets. However, it will not be pressured into paying up over the odds for any acquisition. This is also evident in the recent potential deal with the Jose Cuervo tequila brand, where Diageo walked away as valuations were not right.
The management added that over the longer-term, Diageo does not intend to own 100% of United Spirits.  It wants to have a local face for its business; however, the key thing is they do want to have a controlling interest in the longer-term. This is one of the primary criteria when they look at acquisitions.
The management stated that Diageo’s experience in other emerging markets where it has made acquisitions like Turkey will help it and lends confidence that the United Spirits acquisition will be positive over the medium-term. The CEO specifically cited as an example of Mey Icki in Turkey, where the company is a market leader in local spirit, Reki, but had a strong route to the market. Diageo was able to leverage this strength and drive its share of scotch higher over a year. Having a good route to market is a significant source of competitive advantage in emerging markets and Diageo will look to use United Spirits’ distribution to push through sales of its global brands.
According to Nomura, one of the key triggers for Diageo for its India business will be a reduction in the import duty on imported scotch. In the case of such an event, the company expects it to happen in a phased manner over 5-8 years. However, Diageo will want to have complete clarity on any such move before it invests or plans on getting its global brands into India at a faster clip.
Investor concerns on the Diageo-United Spirits deal
The short-term concern that the deal will not go through as United Spirits’ current promoters have pledged their shareholding to banks who, in turn, have been selling off the shares in the open market; and the longer-term concern is that Diageo being a majority stakeholder does not result in any significant improvement in profitability as is being built into the stock price currently.
However, Nomura has assessed both these concerns and believes that while the pace of operational improvement may be slower, there is enough room for Diageo to deliver a cleaner, leaner and more profitable company to shareholders over the next 3-5 years.
United Spirits’ shares which are held by the current promoters of the company have been pledged to banks as collateral for loans given to both Kingfisher Airlines and United Breweries Holdings. Nomura’s Banks Research team has worked extensively on understanding the nature of these pledges, and also who are the lenders who own most of these shares as collaterals. Nomura’s banks team expects smaller PSU banks to take a big haircut on their Kingfisher exposure (likely to be spread over the next two-three years through incremental provisions) in the absence of solid collaterals and difficulty in invoking corporate guarantees going by recent history.
According to Nomura Equity Research, one of the most immediate benefits for United Spirits’ shareholders is the potential capital infusion helping to reduce the debt and improve both the profit & loss and the balance sheet. As at the end of FY12, United Spirits had a debt of Rs75 billion on which the interest payments were Rs8.7 billion. The debt/equity stood at 1.6. The deal is expected to go through in 1QCY13, so benefits of this transaction will only flow through in FY14F.
Once the preferential allotment goes through, and new equity is infused into the company, we expect United Spirits will benefit to the tune of Rs33 billion, which Diageo has confirmed will go towards debt repayment. As a result of this change alone, interest repayment in FY14F will go down to Rs4.7 billion. The balance sheet will improve substantially with debt/equity improving from 1.6 in FY12 to 0.5 in FY14F, according to Nomura.
Nomura reiterates a ‘Buy’ rating on the stock and believes that United Spirits will be one of the best consumer stories over the next two years. It notes there are several catalysts which should keep the share price buoyant. Profitability improvement will be one of the key things to watch and Diageo should be able to deliver consistent improvement, post a year of investment in FY14F. “Our numbers already build-in a V-shaped recovery into FY15F. United Spirits currently trades at 25x FY15F P/E against the sector average of around 24x. We reiterate our long-term structural Buy case on United Spirits at these levels,” says Nomura. 


Oil marketing companies likely to post subdued earnings for the fiscal 2012-13

Financial health of companies in the oil and gas sector is under a cloud. Will the government help out, asks Nomura

Nomura Equity Research, in its fourth quarter earnings preview for the Indian oil & gas sector believes that upstream public sector units (PSUs) are expected to report weak numbers while oil marketing companies (OMCs) are likely to post subdued earnings for the fiscal 2012-13 ending March 2013.

To be in profit for FY13F, OMCs need at least 100% compensation from the government, as per Nomura's thinking. They need further support of Rs612 billion (Rs366 billion for 4QFY13F + unpaid Rs246 billion for the nine-month period of April-December 2012). On the other hand, upstream PSUs hope their share in the compensation to OMCs would remain at Rs151 billion. Thus, the Government of India (GoI) needs to pay Rs461 billion for FY13F, but nothing is left from FY13 budget. As in previous years, GoI is likely to tap into next year's budget (Rs618 billion allocated for FY14). But if a large amount is brought forward, next year's fiscal targets would be at risk, feels Nomura.

For 4QFY13F, Nomura assumes that OMCs may receive Rs151 billion from upstream and Rs461 billion from the GoI. But, the risk is high that GoI support will be far less, the brokerage added. If government support is only Rs250 billion (similar to that in the December quarter), the upstream burden may be far higher at Rs362 billion, and upstream PSUs may report losses. If OMCs receive less than 100% support, they could report full-year losses for the first time, as per Nomura's analysts.

Nomura expects Reliance Industries' (RIL) refining margins to improve to $10 per barrel (bbl), but refining EBIT may fall by 5% due to maintenance shut down. It expects further recovery in the company's petrochemicals business, and further declines in exploration and production (E&P).  The brokerage sees the decline in oil/ gas production from KG-D6 block to decline.

For Cairn India, oil production and prices are largely flat q-o-q. Nomura expects flat EBITDA, but around $50 million drywell write-off could impact Cairns profit after tax (PAT). Nomura estimates Cairn's EBITDA at Rs33.9 billion (up 14% y-o-y, 3% q-o-q).

Nomura Equity Research expects a 14% q-o-q decline in 4Q PAT with downside risks. At upstream subsidy share of Rs151 billion, it expects GAIL's subsidy share at Rs7 billion (similar to the past three quarters). But, there is a risk of higher upstream subsidy burden and GAIL's share of subsidy. In such a case, GAIL could report losses in the fourth quarter, according to the brokerage.

Nomura also believes the decline in GAIL's transmission volume would continue. It expects PLNG's utilisation to fall to 105% due to high LNG prices affecting demand in January-February.

For Petronet LNG, Nomura expects 4Q PAT at Rs2.7 billion (up 10% y-o-y, down 15% q-o-q). It expects PLNG's utilisation to decline to 105% due to high LNG prices impacting demand in Jan-Feb. It assumes gross margins to moderate q-o-q despite 5% increase in re-gasification tariff from 1 January.

For Gujarat State Petronet, the brokerage estimates 19% y-o-y and 12% q-q decline in 4Q PAT. GSPL would provide for zonal tariff order and SUG charges from February 2013 (Rs166 million as estimated by Nomura).

Indraprastha Gas is expected to report 4Q PAT at Rs841 million (up 5% q-o-q, down 3% y-o-y), as per Nomura Equity Research. Volume growth is likely to remain muted in 4Q in both CNG and industrial segment. The brokerage expects EBITDA/standard cubic metre (scm) to moderate due to increasing share of LNG and firmed up LNG prices.

With rising share of LNG and high volatility in LNG prices and currency, but not-so-frequent price changes (only once a quarter), Gujarat Gas's margins have been quite volatile. It expects gross margins at Rs5.5/scm, down 3% q-o-q.

Indian Oil Corporation (IOC) is expected to report PAT of Rs142.4 million for the 4Q, up 1% y-o-y and 12%-q-o-q. EBITDA is likely at Rs182.9 million.

Bharat Petroleum Corporation (BPCL) is expected to see PAT at Rs49 million for the 4Q, up 24% y-o-y and 198% q-o-q. EBITDA is expected at Rs68.5 million.

Nomura believes that Hindustan Petroleum Corporation (HPCL) remains in a precarious situation (compared to other OMCs) and even 100% of under-recoveries compensation would not suffice for HPCL to remain in the black for FY13F. The company is expected to see PAT of 61.6 million and EBITDA of Rs62.6 million for the fourth quarter.

ONGC's PAT is estimated at Rs52.5 million, down 7% y-o-y and 8% q-o-q. EBITDA is expected to come in at Rs112.2 million. Nomura Equity Research further states that the reported numbers would depend on the government decision on subsidy sharing, where there remains no pending clarity, it assumes upstream to share Rs151 billion in 4Q (similar to the past three quarters).

Oil India's PAT is expected at Rs8.5 million for the fourth quarter, up 91% y-o-y and down 10% q-o-q. Nomura estimates EBITDA at Rs10.1 million for the last quarter.


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