Business – HUL agrees to pay more in fees to Unilever
MUMBAI: Hindustan Unilever (HUL) has agreed to pay more to Unilever in the form of technical fees for using products of its Anglo-Dutch parent,
which tries to earn more from emerging markets to offset slowing growth in developed markets.
The HUL board on Tuesday approved amendments to the existing technical collaboration agreement with Unilever Plc to include additional product categories, where technical inputs are provided by Unilever, the company said in a filling with stock exchanges. The amended agreement will come into effect from January 1, 2010. The existing agreement was signed in 10 years ago.
The agreement would also include products of specified categories manufactured by third party producers, where technical inputs developed by Unilever are made available to them. The existing agreement covers only the manufacturing facilities owned by HUL. The HUL board also signed a trademark license agreement with its parent Unilever, under which it would pay one per cent of net sales on specific brands as royalty to its UK-based parent.
“Unilever is trying to ensure higher income from the Indian subsidiary over and above dividend. The updated change reflects the current role Unilever plays within HUL’s operations in the country,” said an official close to the development. HUL owns the trademark in most categories. There are very few Unilever trademarks in the country such as Knorr or Dove.
Analysts said HUL which is present in 12 product categories in the consumer goods segment will be able to introduce more Unilever brands in new product categories, post the revised agreement.
While the Sensex closed the day at 16,877.2 points, lower by 1.3%, HUL’s stock price closed marginally lower by 0.8% at Rs 265.80.
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