Higher royalty to impact Nestle India

K.S. Badri Narayanan | Updated on November 21, 2017 Published on March 24, 2013


The stock of Nestle India may come under pressure this week as the company increased its royalty rate to 4.5 per cent from the earlier 3.5 per cent of sales. FMCG major Nestle India's board on Friday approved an increase in royalty payment by 0.20 per cent a year for the next five years to its parent firm. Nestle SA had asked two years ago for a review of the two decades old royalty rates.

The Indian arm negotiated with Nestle SA and accepted the increase from January 1, 2014.

Though the increase in royalty will be a negative step for shareholders, increase in a phased manner will, however, mitigate the impact. The stock, which Friday closed at Rs 4,730, touched an all-time high at Rs 5,040 early this year.

Published on March 24, 2013
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