Hindustan Unilever Ltd Q3 net profit up 16% at Rs 871 cr
"Given the need for increased levels of service and the consequential additional costs, Unilever asked for a review of the royalty arrangements in order to ensure a fair recovery of costs," the company said.
HUL currently has a technical collaboration agreement (TCA) with and a trade mark license agreement with Unilever.
The total impact of both these agreements comes out be the royalty cost of 1.4 per cent of turnover, the company said.
"The board is satisfied that appropriate due diligence has been done and that the new arrangements reflect fair payment for the services and benefits that HUL will continue to receives," it added.
HUL Chairman Harish Manwani said in an environment that continued to be challenging, the company has delivered another quarter of broad based growth and margin expansion.
However, Angel Broking FMCG Research Analyst V Srinivasan said: "HUL has delivered a disappointing set of numbers..with 5 per cent underlying volume growth for the domestic consumer business being the lowest in three years."
Shares of HUL today closed at Rs 481.55 on the BSE, down 2.88 per cent from their previous close after falling 5 per cent intra-day. In anticipation of earnings, the HUL counter had rallied to Rs 505.40 intra-day.
The company said its domestic consumer business grew at 15 per cent during the third quarter ended December 31, 2012, as compared to the same period of previous fiscal.
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