Nestle India on Friday said its board has approved a “staggered” increase in the royalty payment rate to its parent company over a period of five years. In a regulatory filing, the company said that its board has approved increasing royalty payment to Société des Produits Nestlé S.A. by 0.15 per cent annually for the next five years, enhancing it to 5.25 per cent of net sales. This will be effective from July 1, 2024.

It currently pays royalty at the rate of 4.5 per cent of net sales per annum to Société des Produits Nestlé S.A.

In a BSE filing, Nestle India said that the board of directors, on the recommendation of the Audit Committee, approved “the payment of general licence fees (royalty) by the company to Société des Produits S.A. (licensor), at the rate not exceeding 5.25 per cent, net of taxes, of the net sales of the products” sold by the company. It added that this increase will be as per the terms and conditions of the existing general licence agreements, “payable in a staggered manner over the period of five years by making an increase of 0.15 per cent per annum over the current license fees of 4.5 per cent per annum effective from July 1, 2024.” The company’s board has recommended the same for approval of the Members of the Company by means of Postal Ballot.

The company’s total sales in 2023 grew 13.3 per cent to ₹19,021.05 crore year-on-year.

In 2019, the India unit of the Swiss packaged food major had said that it will seek shareholders’ approval every five years for royalty payments to its parent company. This was done after it received investors and proxy advisor firms.

In a BSE filing Nestle India said that its board has also approved the appointment of Suneeta Reddy, Managing Director of Apollo Hospitals Enterprise Ltd, as an Additional Independent non-executive Director with effect from April 5, 2024, for a term of five consecutive years, subject to shareholders approval.