The stock of Nestle India rose 3% to an intraday high of Rs 2,614.45 after the company continued to pay a general licence fee, or royalty, to its parent company, Societe des Produits Nestle S.A. The current royalty rate is at 4.5% of the net sales.
“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. (“Licensor”), being a related party as per the Regulation 2(1)(zb) of the Listing Regulations, at the current rate of 4.5%, net of taxes, of the net sales of the products sold by the company as per the terms and conditions of the existing General Licence Agreements with the Licensor, and recommended the same for approval of the members of the company by way of an Ordinary Resolution at the 65th AGM. Following high standards of corporate governance including shareholder rights, the aforesaid approval of members shall be sought by the company every 5 (five) years in compliance with the applicable laws and regulations,” said Nestle (India) in an exchange filing.
Shares of Nestle India have given a return of more than 3% in the last five days. The scrip has risen over 2% in the past six months. It raised investors’ wealth by 14% in the last years and 123% in the past five years.
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To compare, the benchmark index, Nifty 50, has risen 2% in the past five days. The index has given a return of 12% in the past six months. The index has risen 25% in the past year and 100% in the last five years.