Hike in royalty payout to parent could weigh on Hindustan Unilever margins

Analysts say impact depends on commodity and energy prices


The company also has the option to pass on the higher royalty to customers through price hikes

Krishna Kant Mumbai
The decision of fast-moving consumer goods major Hindustan Unilever’s management to increase the payment of royalty and technical fees to its parent Unilever could have an adverse impact on the company’s operating margins and earnings, at least in the short term.

The company announced on Thursday that it had entered a new agreement with Unilever, under which the royalty and central services fees would increase from 2.65 per cent of turnover in financial year 2021-22 (FY22) to 3.45 per cent. This will be staggered over three years, starting with a 45 basis point (bp) increase in effective cost for

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jan 19 2023 | 10:20 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on business-standard.com are available only to BS Premium subscribers.

Register to read more on Business-Standard.com