Friday, 13 December 2019
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Nestle to shell out more in royalty

FMCG major Nestle on Friday approved a one percentage point increase in royalty

NEW DELHI: FMCG major Nestle on Friday approved a one percentage point increase in royalty to be paid to its parent company Nestle SA from 3.5% to 4.5% of sales. The increase, which will be paid over a five-year period at the rate of 0.20%, will be effective starting January 1, 2014. "This will ensure ongoing access to the entire capabilities of Nestle... and will enable Nestle India to continue to deliver long term sustainable profitable growth and create shared value for society and its shareholders," chairman and MD of Nestle India, A HelioWaszyk, said.
Nestle's decision comes months after consumer goods giant HUL declared a higher royalty for its Unilever.
Analysts said that while the increase in royalty will be a negative step for shareholders, an increase in a phased manner of five years is likely to dilute the impact, but only if it translates into a greater focus by the global brand on the Indian market.

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