Synopsis
Under the new terms, the royalty is set to increase 80 basis points (0.8 percentage points) in a staggered way from 2.65% of revenue to 3.45% over a period of three years. Considering the consolidated revenue of 2021-22, an 80 bps increase in royalty on ₹51,400 crore translates to around ₹400 crore. This, compared to the net profit of ₹9,000 crore, is not an insignificant amount.
ET Intelligence Group: Hindustan Unilever’s third quarter performance, while being good, was overshadowed by the company’s announcement of an increase in the royalty that it pays to its parent Unilever. Investors are likely to react negatively to this announcement rather than to the good quarterly performance. In January 2013, when the company announced an increase in royalty, the company’s stock opened 6.5% lower the next day. Under the new
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