Packaged foods major Nestle India on Wednesday said that it would pay royalty to its parent Société des Produits Nestlé, at its current rate of 4.5%.
The announcement comes after over 57% shareholders last month had rejected the company’s proposal to hike the royalty rate to 5.25% over five years. Proxy advisory firm IiAS had also advised shareholders to vote against the proposal.
Nestle said that its decision to continue with the current rate of royalty was done “respecting the decision of the (board) members and feedback from other stakeholders”.
Had the proposal to increase royalty gone ahead, then Nestle’s royalty rate would have been amongst the highest in the domestic fast-moving consumer goods industry. Companies such as Colgate-Palmolive India, Procter & Gamble Hygiene and Healthcare and Hindustan Unilever (HUL) pay royalty of 4.5%, 5% and 3.45% each of their turnover, sector analysts said.
The company added that approval of the board would be sought every five years with respect to royalty and in compliance with regulation.
The company also announced the appointment of veteran finance professional Sidharth Kumar Birla as an additional director and independent non-executive director for a period of five years.
The board has also revised the date of the company’s 65th Annual General Meeting to July 8, where a decision on final dividend will be taken, and if declared, shall be paid on August 6, 2024.