May 18th 2024.
At a recent meeting in Mumbai, the shareholders of Nestle India made a decision that has caught the attention of many. In a regulatory filing, it was revealed that the shareholders voted against a proposal made by the company's board of directors to increase royalty payments to its Swiss parent company, Nestle SA. The motion, which aimed to raise the royalty paid to the parent company from its current level of 4.5 per cent to 5.25 per cent over a period of five years, was rejected by shareholders holding a total stake of 57.18 per cent.
The proposal had suggested an annual increase of 0.15 per cent, and was brought forth as a result of Nestle India's commitment to seeking shareholder approval every five years for royalty payments to its parent company. This decision was made after receiving feedback from investors and proxy firms on the issue. However, it seems that the majority of shareholders were not in favor of this increase.
Despite this news, Nestle India's financial performance has been on the rise. In the January-March quarter of 2023-24, the company reported a 27 per cent increase in standalone net profit, reaching Rs 934 crore compared to Rs 737 crore in the same quarter last year. Additionally, the company's revenue also saw a considerable jump of 9 per cent, reaching Rs 5,268 crore on a year-on-year basis.
This decision by the shareholders has stirred up discussions and raised questions about the company's future plans and strategies. Many are curious to see how Nestle India will navigate this rejection and continue its growth trajectory in the coming years. Only time will tell how this decision will affect the company and its relationship with its parent company.
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