After 10 years, parent Unilever hikes royalty fee for HUL by 80 bps

Fast moving consumer goods major Hindustan Unilever Limited (HUL) on Thursday said the royalty fee it pays to parent Unilever Plc has been hiked by 80 basis points, and will be effected in a staggered manner over a period of 3 years.

This is the first such hike undertaken by the parent firm after 10 years. The prior agreement with the parent for technology, trademark licence and central services was entered into in January 2013 for a period of 10 years.

Under the new agreement, the royalty and central services fees will increase to 3.45% of the total turnover from 2.65% in 2021-22 (April-March), HUL said, adding that the hike is subject to appropriate regulatory approvals.

For FY22, HUL reported revenue of Rs 51,193 crore, up 11.3% from the year-ago period. It paid 2.65% of the turnover as royalty fee to parent Unilever Plc.

The 80 bps hike in the royalty fee will take place in three tranches.

HUL’s royalty fee will increase by 45 bps for February to December 2023, by further 25 bps for 2024, and another 10 bps for 2025.

The hike in royalty fee could be seen as marginally negative, given that sales and volume are yet to see strong recovery. Any impact of inflation on discretionary spending affects volumes of high-margin products, and subsequently, revenue.


On Thursday, shares of HUL closed 1.6% lower at Rs 2,643.05 on the National Stock Exchange. Royalty agreement gives HUL the right to use Unilever owned trademarks, technology, corporate logo and access to central services provided by Unilever group.

During the period of the previous contract, HUL doubled its turnover and improved operating margin by a sharp 1000 basis points.

The proposed new arrangement continues to be competitive within the range when compared against relevant comparable transactions as identified in the independent external benchmark, according to the independent external assessment undertaken by the parent.

The new arrangement will ensure that HUL continues to receive the technology, services and IP support from Unilever, the company said.

India remains one of the top three strategically prioritised markets for British consumer goods major.

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