This increase will be effected in a staggered manner over a period of 3 years and the arrangement is subject to appropriate regulatory approvals, the company said
Hindustan Unilever's board at its meeting held on Thursday decided to hike royalty payment to parent Unilever Group to 3.45 per cent of turnover from 2.65 per cent. HUL said its board had approved an increase in royalty and central services arrangement for the provision of technology, trademark licenses and services with the Unilever group.
This increase will be effected in a staggered manner over a period of 3 years and the arrangement is subject to appropriate regulatory approvals, the company said.
“The current Technology, Trademark license and Central Services Agreement with Unilever group was entered into in January 2013 for a period of 10 years. This granted HUL the right to use Unilever owned trademarks, technology, corporate logo and gave access to central services provided by Unilever group,” the company said in a release.
“The new arrangement envisages a staggered increase of 80 bps over a period of three years from 2.65 per cent to 3.45 per cent which includes 45 basis points (bps) increase in effective cost for February to December 2023, 25 bps further increase in effective cost for January to December 2024 and 10 bps further increase in effective cost from January 2025,” HUL added.
The new royalty and central services arrangements are proposed to be effective February 1, 2023 for a period of 5 years.
"The Board also took into consideration the findings of an independent external assessment and concluded that the proposed arrangement continues to be competitive within the range when compared against relevant comparable transactions as identified in the independent external benchmark," it added.
The company asserted that the new arrangement will ensure that it "continues to receive the technology, services and IP support from Unilever".
"India remains one of the top three strategically prioritised markets for Unilever with dialled up access to innovations, investments, capabilities, and talent development," the company said.