Nestle India: Board Approves Continuation of Royalty Payments to Parent Company

Nestle India’s Board of Directors approved a hike in royalty payments to the Swiss parent company in April 2024. The hike would have led to an increase in royalty payments to 5.25% of net sales over the next 5 years, up from 4.5% effective 1 July. However, the company’s proposal was rejected by its shareholders on May 17. 

How did the decision come by?

This decision was supported by a total of 57.18% votes. Concerning this decision of the members and feedback from its stakeholders, the company decided to approve the continuation of payment of general license fees (royalty) at the current rate of 4.5%, net of taxes of the net sales, to Société des Produits Nestlé S.A. The board has also revised the 65th Annual General Meeting to July 8, 2024. The final dividend, if declared by the members in that meeting will then be paid on and from 6th August 2024. In addition, Mr. Siddharth Kumar Birla is appointed as an additional director and independent non-executive Director in the company, starting on 12 June, for 5 years.

More about Nestle India:

Nestle India Limited is the Indian subsidiary of Nestlé S.A., a Swiss multinational Company. The company is in the food business and includes product categories like milk products and nutrition, powdered and liquid beverages, confectionary, prepared dishes, and cooking aids. Headquartered in Nestle India, the company employs a total of 8,117 employees.

Stock and Financials:

Nestle India has reported a 27% YoY increase in its net profit at Rs. 934.1 Crores in Q4FY24. The company’s profit beat expectations of Rs. 847Crores. Reacting to the regulatory filing, shares of Nestle India rose by 1.4% since the last intra-day close and opened at Rs. 2569.25, today. 

Conclusion:

Nestle India’s board of directors’s decision withholded by the shareholders, leads to an increase in its share price.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.