New Delhi: Ambuja Cements on Monday sought the approval of shareholders for paying 1% of its net annual sales as “technology and know-how fee” to Swiss parent Holcim.
“The board has decided to seek the shareholders’ approval in this regard, by way good corporate governance practise, although this matter is within the powers of the board and strictly does not require shareholders’ approval,” the company said in a BSE filing.
“Accordingly the company is moving an ordinary resolution through a postal ballot to enable larger participation by the shareholders in the voting process,” it added.
Ambuja Cements’s board had approved the proposal at a meeting on 13 December and on 17 December, a technology and know-how pact was signed between Ambuja and Holcim Technology, subject to the approval of the shareholders.
“The agreement is for five years. The fee shall be paid on quarterly basis and will remain firm for the first two financial years—2013 and 2014—and shall be reviewed by the board before the end of the financial year 2014,” Ambuja said.
Holcim, as part of value creation for all of its operating companies globally, keeps developing and updating its knowledge base and continues research and studies to ascertain best benchmarks, the statement added.
Ambuja Cements had paid around 0.7% of its annual sales to Holcim as technology and know-how fee in the previous two years, sources said.
In 2011, it had clocked Rs.8,602.89 crore revenue. Holcim holds a little over 50% stake in Ambuja Cements.