Nestle India will pay royalty at the current rate of 4.5 per cent of net sales and net of taxes to its parent Nestle S.A. The company’s board on Wednesday approved a proposal of continuation of payment of general licence fees at the existing rate of 4.5 per cent to Société des Produits Nestlé S.A, a BSE filing stated.
On May 17, Nestle India’s shareholders had rejected a proposal of the company to hike the royalty payment rate to 5.25 per cent of net sales, net of taxes in a staggered manner over a period of five years. Nearly 57.18 per cent of the valid votes cast by the shareholders were against the motion.
“Respecting the decision of the members and feedback from other stakeholders, the Board of Directors on the recommendation of the Audit Committee, with only the Independent Directors voting and the Executive Directors recusing, approved continuation of payment of general licence fees (royalty) by the company to Société des Produits Nestlé S.A. at the current rate of 4.5 per cent, net of taxes, of the net sales of the products sold by the company,” the BSE filing stated.
“This board has recommended the same for approval of the members of the Company by way of an Ordinary Resolution at the 65th AGM,”it added.
The Indian subsidiary of the Swiss packaged food major added the approval of the shareholders on the issue of royalty will be taken every five years in compliance with laws.
The company’s board also approved a revised date of July 8 for the 65th Annual General Meeting. It also approved the appointment of Sidharth Kumar Birla as an Additional Director and Independent Non-Executive Director of the company for a period of five years.