According to sources the company's Chairman and Managing Director Suresh Narayanan told Nestle India does not intend to raise royalty payout beyond 4.5% and the remark comes even as shareholders were waiting to see whether Nestle India will seek minority shareholders' approval to pay over 4.5% in royalties. Royalty is a sum paid to a patent for use of a patent. Narayanan said "There has been no discussion on this".
Furthermore after Nestle India announced December quarter results, brokerage houses including JP Morgan and ICICI Securities said updates on the royalty structure will be closely watched. ICICI Securities said in a post results report "Consensus is interpreting this as a precursor to a royalty increase proposal". Previously in 2014, the board of Nestle India had approved a 100 bps increase in royalty paid to parent Nestle SA to 4.5% through a staggered increment of 20 basis points (100 bps=1 percentage point) each over the next five years.
Moreover Narayanan said technology, brands and processes used by Nestle India belong to the global parent and these are of global standard adapted locally in the country. He added "There is no patented technology that India has put forward”.
