Shareholders of Nestle India have rejected a proposal to raise royalty payments to Nestle SA, the parent company of the packaged foods maker.
Nestle India Ltd shareholders have rejected the company’s proposal to increase the royalty payout to its Swiss parent. The resolution failed to pass, with 57% of shareholders voting against the plan, as reported by the packaged foods maker in a stock exchange filing on Friday.
The proposal aimed to raise the royalty by 0.15% of sales annually for a period of five years. The adjusted payout was scheduled to take effect on July 1st.
Continue Exploring: Nestle India approves 0.15% annual increase in royalty payments to parent company for next five years
Last month, the producer of Maggi noodles and Nescafe coffee unveiled a proposal to incrementally raise the licensing fees from the current 4.5% to 5.25% of net sales over a five-year period.
Seventy percent of the company’s public shareholders and 57 percent of all shareholders opposed the proposed increase in royalty payments to the Swiss parent company, which happens to be the world’s largest packaged foods maker.
Abneesh Roy, Executive Director at Nuvama Institutional Equities, expressed that this development represents a significant positive for Nestle.
Continue Exploring: Nestle India sets sights on 6 Million touchpoints, focusing on volume growth
Nestle India reported a 27% increase in net profit, reaching INR 934 crore for the fourth quarter ended March 2024, compared to INR 737 crore in the year-ago period. This growth was attributed to strong demand and lower material costs. Revenues from operations also saw a 9% increase to INR 5,268 crore in the quarter, from INR 4,830.5 crore in the year-ago period.
Continue Exploring: Nestle India’s Q4 net profit jumps 27% to INR 934 Crore amid strong sales growth
The company has now finalized an agreement with Dr. Reddy’s Laboratories to establish a joint venture aimed at introducing a range of nutraceutical brands, encompassing vitamins, minerals, herbal, and supplements sourced from Nestle Health Science (NHSc). Under the terms, Dr. Reddy’s will retain a 51% stake, while Nestle India will own 49% in the venture. Additionally, Nestle India retains the option to boost its ownership to 60% after six years, subject to fair market valuation.
Continue Exploring: Nestle and Dr. Reddy’s announce joint venture for nutraceutical brands in India
