After a conference call with company representatives on 27 July 2013, SES has reiterated the transaction is heavily loaded in favour of promoters and takes care of their tax considerations and need for cash while ignoring the minority shareholders.
SES recommends that HIL should be merged with Ambuja Cements as it is, and that shares of Ambuja Cements should be issued to Holcim in lieu of the HIL valuation. Although such a scheme would increase dilution by 3.45%, it would ensure that R35 billion (R3,500 crore) in cash does not flow out of the company. It will still retain all other benefits of restructuring explained by the company in its presentation, said SES.
SES has observed that the directors of Ambuja Cements were made aware of the plans to purchase 24% equity in Holcim India only a few days prior to 27 July, 2013. Prima facie, it appears the Board was involved at a very late stage in the entire process. SES believes the role of the board is to provide oversight to the management and this includes the duty to provide strategic guidance to the management. However, in the current case, it appears that the Board has been used to approve the scheme once the entire scheme was already mapped out by the management of the company with the promoter group, stated the SES report.
According to SES, the company has disclosed that the valuation has been done by two independent valuers, BSR and Associates and Price Waterhouse & Co, and a fairness opinion had been obtained from investment bank Axis Capital.