Nestle India shares jump 3% as shareholders reject royalty hike

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Shares of Maggi-maker Nestle India on Saturday rose 3% to the day's high of Rs 2,514.65 after the MNC's shareholders rejected a proposal to increase royalty payments to its Swiss parent Nestle.

Results of a remote e-voting by shareholders show that 57.18% of the votes were cast against the proposal for increasing royalty from 4.5% to 5.25% in a staggered manner over 5 years by making an increase of 0.15% per annum.


Earlier in April, Nestle India board had approved paying the royalty fee to its parent company Nestle S.A.

"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," Nestle India chairman and managing director A Helio Waszyk had said earlier.


Nestle SA had asked two years ago for a review of the two decades old royalty rates.Nestle India has a General Licence Agreement (GLA) that allows it access to Nestle Group's intellectual property rights, including a global portfolio of brands, proprietary science and technology with over 1,300 patents, extensive research and development capabilities.The GLA includes access to over 6,000 brands such as Nestle, Maggi and Nescafe and technologies developed by the global network of 32 research and development centres, including the one recently inaugurated at Manesar, Haryana.Royalty payments have been a contentious issue in India Inc's debating circles ever since another FMCG giant HUL had decided to increase its fee to parent Unilever.
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