Nestle India keeps royalty fee to Swiss parent at 4.5%

Nestle India board has approved a continuation of payment of general licence fee or royalty at the existing rate of 4.5% to Société des Produits Nestlé S.A.

This comes after a majority of shareholders of Nestle India voted against a proposal for a hike in royalty payments to the Swiss parent in May. 57.18% of the company's shareholders voted against the resolution to increase the royalty payout to 5.25% of net sales over the next five years.

Respecting the decision of the members and feedback from other stakeholders, the Board of Directors on the recommendation of the Audit Committee, with only the Independent Directors voting and the Executive Directors recusing, approved continuation of payment of general licence fees (royalty) by the Company to Société des Produits at the current rate of 4.5%, net of taxes, of the net sales of the products sold by the Company,” the KitKat and Maggi maker says in a stock exchange filing.

Nestle India says the approval of the board shall be sought by every five years, in compliance with laws and regulations.

Reacting to the development, shares of Nestle India rose 3% in opening trade to hit a high of ₹2,614.20 on the BSE.

The board also revised the date of 65th AGM to July 8, 2024. The Record Date for the purpose of determining entitlement of the members to the final dividend for the fifteen months financial year ended 31st March 2024 is revised to July 16, 2024. The final dividend, if declared by the members at the 65th AGM, shall be paid on and from August 6, 2024.

The Nestle India board, on the recommendation of Nomination and Remuneration Committee, approved the appointment of Sidharth Kumar Birla as an additional director and independent non-executive Director of the company with effect from June 12, 2024 for a term of five years.

Nestle India reported a 27% year-on-year increase in its net profit at ₹934.1 crore in the quarter ended March 2024, as against ₹736.6 crore in the same period last year. The company’s profit beat Street estimates of ₹847 crore.

The FMCG major's revenue grew 9% year-on-year at ₹5,268 crore during the quarter under review, as against ₹4,830 crore in the corresponding period of the previous year. In the January to March quarter, the domestic sales of the FMCG (fast-moving consumer goods) major stood at ₹5,021.6 crore, up 8.7%, as against ₹4,612.7 crore in the March quarter of the previous year. The Nestle India board has announced a final dividend of ₹8.5 per share.