Nestle India Hikes Royalty Fee To Swiss Parent To Up To 5.25%, Effective July 1
The new royalty fee will be paid in a staggered manner by making an increase of 0.15% per annum.
Nestle India Ltd. has agreed to raise the royalty payout to its Swiss parent.
Under a new agreement, the general licence fees or royalty will increase from 4.5% to 5.25% of turnover over a period of five years, the maker of Maggi noodles said in a regulatory filing on Friday.
The new royalty fee, effective July 1, will be paid in a staggered manner by making an increase of 0.15% per annum.
The Indian division of Nestlé SA announced in 2019 its decision to seek approval from shareholders every five years for royalty payments to its parent. The latest move came after receiving feedback from investors and proxy firms on the matter.
Last year, Hindustan Unilever Ltd., too, raised its royalty payout to its European parent to 3.45% from 2.65% over three years.
Nestle India had previously approved a change in its financial year to run from April 1 to March 31 of the following year, moving away from the traditional January-December period.
For 2023, the packaged food company reported total sales of Rs 16,790 crore, with a net profit of Rs 2,390 crore.
Shares of Nestle India have increased 10.7% in the last six months and 28.8% in the last one year to Rs 2,538.1 apiece, as compared with the benchmark BSE Sensex's gains of 12.5% and 24%, respectively. The stock trades at 82 times its price-to-earnings ratio.