Nestle India shareholders vote against proposal to increase royalty for parent company

18 May 2024 , 12:32 PM

The majority of Nestle India shareholders have voted against the proposed increase in royalty payouts to the Swiss parent company, Nestle S.A., according to a recent exchange filing. This development has positively impacted the company’s share price, which rose by 1.48% to ₹2,505 during Saturday’s special trading session on the National Stock Exchange at 12:21 pm.

Shareholders controlling 57.18% of the company’s shareholding voted against the resolution. This decision follows Nestle India’s board’s approval nearly a month ago to increase the royalty payout to its Swiss parent. In 2019, Nestle India committed to seeking shareholder approval for royalty payments to its parent company every five years after receiving feedback from investors and proxy firms.

The motion proposed that Nestle India’s royalty payment to Nestle S.A. rise to 5.25% of net sales over five years, from the current 4.5%. The ordinary resolution outlined that the royalty payment rate would start at 4.5% of net sales and increase by 0.15% each year, beginning July 1, 2024.

In the March quarter, Nestle India reported a standalone net profit of ₹934 crore, up 27% from ₹737 crore a year earlier. Revenue for the same period increased by 9% YoY to ₹5,268 crore.

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