Ambuja, ACC rally up to 10% on renewal of tech fees agreement with Holcim

Shares of Holcim-promoted cement companies – Ambuja Cements and ACC – rallied up to 10 per cent on the BSE on Thursday after the companies received board approval for paying technology fees to their parent company, Holcim Ltd. The TKH fees with the foreign promoter Holcim has been kept at 1 per cent of net sales every year for two years with effect from January 1, 2021.

Among individual stocks, Ambuja Cements has rallied 10 per cent to Rs 261, while ACC jumped 7 per cent to Rs 1,692 on the BSE in intra-day trade. At 09:53 am, Ambuja Cements was trading 6 per cent higher at Rs 251 and ACC was up 4 per cent at Rs 1,647, as compared to 0.78 per cent rise in the S&P BSE Sensex.

In the past three weeks, Ambuja Cements and ACC had underperformed the market by falling 10 per cent and 9 per cent respectively, against 4 per cent decline in the benchmark index, till Wednesday.

Both the Indian companies have been paying a certain part of their annual sales to Holcim Support and Holcim Services Group as fee for accessing its technology and support.

The board of directors of Ambuja Cements and ACC at their meeting held on December 23, 2020, has approved the renewal of the current Technology and Know-How Agreement (''TKH Agreement'') with Holcim Technology Limited (HTL) pursuant to which the Company pays TKH fees @ 1 per cent of net sales each year, to HTL, for a period of 2 years w.e.f. January 01, 2021 on the same terms as the present TKH Agreement, these companies said in a regulatory filing.