Nestle India has announced it will continue paying a royalty license fee of 4.5% to its Swiss parent company, Société des Produits Nestlé S.A., following approval from its Board of Directors. This decision, detailed in an official exchange filing on Wednesday, keeps the royalty fee unchanged from its current rate and adheres to the existing general license agreements with the Swiss parent.
In its statement, Nestle India confirmed that the board’s approval for the royalty rate will be subject to a review every five years, as required by regulatory guidelines. The company emphasized that this review process ensures compliance with legal standards and allows for adjustments based on stakeholder feedback and market conditions.
“Respecting the decision of the members and feedback from other stakeholders, the Board of Directors, on the recommendation of the Audit Committee, and with the Executive Directors recusing themselves, has approved the continuation of the payment of general license fees (royalty) to Société des Produits Nestlé S.A. at the current rate of 4.5%,” said a spokesperson from Nestle India.
The royalty fee, net of taxes, is paid to the Swiss parent as part of the licensor agreement. This arrangement allows Nestle India to continue leveraging the brand and proprietary technology provided by its parent company.
In addition to the royalty payment decision, Nestle India also announced the appointment of Sidharth Kumar Birla as an Additional Director and Independent Non-Executive Director for a five-year term. Birla, a veteran in the finance sector, brings a wealth of experience to the board.
Furthermore, Nestle India has rescheduled its 65th Annual General Meeting to July 8, 2024. During this meeting, shareholders will vote on the final dividend, which, if approved, will be distributed on August 6, 2024.