Showing loyalty with royalty

Since the rules were eased in 2008, many MNCs have squeezed local arms, leaving little for small investors

Royalty payments by the Indian arms of multinational corporations have spurted after a three year-old central government move waiving restrictions in this regard, eventually hurting minority investors. A Business Standard analysis of 75 BSE 500 companies paying royalty in 2011-12 showed these payments to the parents have trebled over four years. In comparison, between FY2008 and FY2012, sales grew 79.6 per cent and net profits of this universe showed cumulative growth of 31.2 per cent. A higher royalty payout hits the bottom line of local subsidiaries, affecting their ability to pay ...