The Aditya Birla Group has started levying a royalty of 0.25 per cent of revenue on all stock exchange Group companies that use the Aditya Birla brand.
The royalty will be applicable from June 1 and will have an annual cap of ₹225 crore. The Birla group will be joining other leading conglomerates such as Tatas, JSW Group and Vedanta which make their group companies pay for using the parent’s brand name.
To start with, Hindalco Industries and Grasim Industries have made a public announcement on royalty.
Satish Pai, Managing Director, Hindalco Industries said both Novelis and Hindalco’s India operations will pay 0.25 per cent of revenue as brand royalty to the promoter group from FY27, subject to an annual cap of ₹225 crore.
“As far as the brand royalty is concerned, let me just give you an update. The ownership of the Aditya Birla brand has remained with the Birla Group Holdings Pvt Ltd. In the past, BGH has not charged any royalty for the use of ABG marks all these years, making it one of the exceptions among large Indian conglomerates,” he said at the recent investors call.
Pai noted that the levy of brand fee shifts the group towards a structured governance model rather than informal stewardship, and remains well below the company’s materiality threshold.
Under the SEBI regulation on Listing Obligations and Disclosure Requirements, Hindalco has to make related party transaction details biannually through Exchange Filings and it will be done in October, said Pai.
Fee by other corporates
Anil Agarwal-led Vedanta charges a brand fee of 3 per cent on all its listed entities.
Ajay Goel, CFO, Vedanta in an investor call said the brand fee for the current Vedanta structure was “about 3 per cent”.
After the demerger, Vedanta implemented an “unbundled” benchmarking framework, with separate royalty rates for each of the five new companies.
Goel said the 3 per cent rate would continue, with one key exception for the copper business, where the brand fee would be reduced from 3 per cent to 0.75 per cent.
Similarly, the listed JSW Group companies – JSW Steel and JSW Energy – pay a ‘brand usage fee’ of 0.25 per cent on net turnover to the promoters’ group company.
Tata Group charges brand subscription fee of 0.25 per cent of annual revenue or 5 per cent of pre-tax profit (whichever is lower) for direct users of the name and 0.15 per cent for indirect users.
The Group’s operating companies such as TCS, Tata Steel, and Tata Motors pay the brand fee to the holding firm Tata Sons for using the prestigious Tata name. The cap on this annual royalty fee stands at ₹200 crore. The fee was introduced by Ratan Tata in 1996 under a formal brand equity and subscription scheme.