89% minority votes against royalty hike at Holcim units

MUMBAI: Swiss cement maker Holcim’s Indian subsidiaries ACC and Ambuja Cements have obtained approval for the contentious resolution to hike royalty fees to the parent, even as minority shareholders overwhelmingly voted against the proposal.

Had the new Companies Act taken effect, the proposals would have failed to pass muster as the new provisions require the passage of a special resolution, where only non-interested shareholders can vote, to pass a related party transaction.

Based on the voting results disclosed by the company, of the non-interested shareholders (minority) that participated in the postal ballot, almost 89% voted against the resolution, said proxy advisory firm SES, which had recommended shareholders to vote against the resolution.

While opposing the move SES had cited reasons like “inadequate disclosures on calculation of fee, which is 1% of the net sales, same fee for both Ambuja Cements and ACC despite diversities of both companies , no disclosure of the scope, deliverables, delivery milestones and performance evaluation benchmarks for services provided by Holcim and complete discretion to the board of the company to revise the fee after FY2014.”

The boards of ACC and Ambuja Cements approved payment of 1% royalty fee against the current 0.5% to Holcim for providing technology know-how late last year.