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New Royalty and Central Services arrangement with Unilever

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HUL Board approves a new arrangement with Unilever for the provision of technology, trademark licenses and services.

Logo of Hindustan Unilever Limited

The Board of Directors of Hindustan Unilever Limited (HUL) today approved the proposal to enter a new arrangement with Unilever group entities for the provision of technology, trademark licenses and services to HUL. In the new agreement, the royalty and central services fees will increase from c.2.65% (FY22) to c.3.45% of turnover. This increase will be effected in a staggered manner over a period of 3 years. This arrangement is subject to appropriate regulatory approvals.

The current Technology, Trademark license and Central Services Agreement with Unilever group was entered into in January 2013 for a period of 10 years. This granted HUL the right to use Unilever owned trademarks, technology, corporate logo and gave access to central services provided by Unilever group.

Unilever’s global brands, innovations, technical know-how, centralised services, and functional expertise enables HUL to win in the marketplace. During the tenure of the contract, HUL doubled its turnover and improved EBITDA margin by c.1000 bps.

Review of the current arrangement

On the imminent expiry of the current agreement, Unilever had requested for a review of the same. HUL has been receiving a steady stream of benefits from Unilever in terms of faster innovations, superior products and technology, greater expertise, and enhanced services. This helps HUL to continue to meet emerging consumer needs with agility and create value for all stakeholders.

The new contract terms were subject to a detailed evaluation and due diligence led by senior HUL management and guided by HUL’s Audit Committee and Board. The Board also took into consideration the findings of an independent external assessment and concluded that the proposed arrangement continues to be competitive within the range when compared against relevant comparable transactions as identified in the independent external benchmark.

The new arrangement will ensure that HUL continues to receive the technology, services and IP support from Unilever. India remains one of the top three strategically prioritised markets for Unilever with dialled up access to innovations, investments, capabilities, and talent development.

New arrangement approved by the Board

  • The new royalty and central services arrangements are proposed to be effective 1st February 2023 for a period of 5 years
  • The new arrangement envisages a staggered increase of 80 bps over a period of 3 years from c. 2.65% to c. 3.45% of Turnover:

    • c. 45 bps increase in effective cost for February to December 2023
    • c. 25 bps further increase in effective cost for January to December 2024
    • c. 10 bps further increase in effective cost from January 2025

The new arrangement positions HUL well to continue delivering Consistent, Competitive, Profitable and Responsible growth.


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