ACC and Ambuja Cements: Missing the message

Result of voting on postal ballot on increase in royalty

69.3% of ACC’s shareholders and 78.6% of Ambuja Cements shareholders voted on the postal ballot for increase in royalty to 1.0% of net sales to Holcim, its parent. Both resolutions were carried by way of an ordinary resolution. Impressive, till you realize that it is 69.3% and 78.6% of those present and voting. Now unpeel the data. 52.4% of ACC’s shareholders voted for the resolution and Holcim owns 50.3% of the company. A total of 56.5% of Ambuja Cements shareholders supported the royalty increase and Holcim owns 51.9% of this company.

Hobsons choice

As it was proposed as an ordinary resolution, investors all along knew that the resolution will be carried: 50% of the shareholders support to carry the resolution was assured given that Holcim, the parent and recipient of this higher amount of royalty, would support it. Yet a large number of investors in both companies were incensed enough to voice their opposition to the increase in royalty. This data is impressive. It shows that for ACC, 38.2% of the ‘public’ shareholders chose to vote, and 88.6% of those voting opposed the resolution. In the case of Ambuja, 55.6% of the ‘public’ shareholders chose to vote, with 83% of these opposing the resolution.

While institutions are often mandated to compulsorily vote, there is no such pressure on retail and high networth individuals. Yet enough of them seem riled by the proposal. Ambuja Cements which disclosed this data indicates that 43.5% of the ‘non-institutional’ public investors chose to vote, with 81.9% opposing the resolution, not dissimilar to the 83% in the case of institutional investors.

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