The role of the independent directors of Ambuja Cements has come under the scanner after a deal to buy parent company Holcim’s stake in ACC has been panned for being anti-minority shareholders by almost all investor groups and institutional investors.

The transaction was unanimously approved by the board, which, investor associations say, is not in the interest of minority shareholders of Ambuja, and the independent directors, at the very least, should have voiced their concern and put it on record. “Investors should write to the independent directors stating their angst. Investors should file complaints with the stock exchanges and Sebi (markets regulator Securities and Exchange Board of India), as this will add to the complaints record,” said Shriram S of Ingovern Proxy Advisory.

Holcim-Ambuja deal gets thumbs down from institutional investors

“Investors should vote against the transaction when it comes up for shareholder approval through a postal ballot. Majority of minority investors will need to approve the transaction, with the promoter getting no vote,” he said. When contacted, Shailesh Haribhakti, an independent director on the board of Ambuja Cements, said if the company had to buy shares of ACC, then it would have to pay for it. “Though there were several options before the board, this was the best possible deal for Ambuja,” he said. Other independent directors refused to comment on the transaction.

Onne var der Weijde, managing director of Ambuja Cements, told Business Standard: “There were probing questions about what’s happening. There was a good dialogue with them. It did not take long time to convince them. I wanted to make sure that they really understand the transaction and its benefits. I wanted to make sure they have the right advice and have time to ask questions. By guiding and explaining to them, I think it was a very appealing business case, which i had to present. I had to convince and demonstrate to the independent directors that this was for good value. And, ultimately, I did it. And they approved the deal unanimously.”

Rude shock for Ambuja minority shareholders

Independent directors on the board of Ambuja Cements are: DCB Bank Chairman Nasser Munjee, economist Omkar Goswami, chartered accountants Rajendra Chitale and Shailesh Haribhakti and corporate lawyer Haigreve Khaitan.

Under the scheme, Ambuja Cements will first acquire from Holder Investments Mauritius Ltd a 24 per cent stake in Holcim India for a cash consideration of Rs 3,500 crore followed by a merger of Holcim India into Ambuja Cements. The intra-group transactions will result in Ambuja Holding 50.01 per cent stake in ACC.

Minority shareholders say Rs 3,500 crore is paid out of Ambuja Cements to Holcim, which is effectively Holcim taking an indirect dividend without losing control of both Ambuja Cements and ACC. Holcim gets Rs 3,500 crore and 10.85 per cent additional shares in Ambuja Cements, while giving away 19.42 per cent beneficial interest of ACC. Minority shareholders of Ambuja are indirectly paying for the shares of Holcim in ACC, say investor groups.