Nestle India Ltd, a fast-moving consumer goods (FMCG) company, announced that its board has greenlit a proposal to incrementally raise royalty payments to its parent company by 0.15 percent annually over the next five years. This adjustment will elevate the royalty rate to 5.25 percent of net sales.
The board of directors, based on the Audit Committee’s recommendation, has approved the company’s payment of general license fees (royalty) to Societe des Produits Nestle SA (licensor). The approved rate will not exceed 5.25% of the net sales of the products sold by Nestle India Ltd, as stated in a regulatory filing.
The increase will follow the terms and conditions of the current general license agreements. It will be implemented gradually over a five-year period, with an annual increment of 0.15% over the existing license fee of 4.5%, starting from July 1, 2024, as stated.
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The board has suggested the same for approval by the company’s shareholders via a postal ballot, it stated.
Previously, Nestle India, which operates on a January-December financial year, had approved the shift to a financial year starting on April 1 and concluding on March 31 of the following year.
In 2023, Nestle India recorded sales revenue of INR 19,021.05 crore, marking a 13.3% increase from the previous year.
In 2013, Nestle India’s board sanctioned a yearly increase of 0.20% in royalty payments to its parent company over a five-year period, raising it to 4.5% of the sales.
In a separate decision, Nestle India announced that its board has sanctioned the appointment of Suneeta Reddy, Managing Director of Apollo Hospitals Enterprise Ltd, as an Additional Independent Non-Executive Director, effective from April 5, 2024. She will serve a term of five consecutive years until April 4, 2029, pending shareholder approval.
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