2 weeks ago
Aditya Birla group firms to pay 0.25% brand royalty
The Aditya Birla Group is a big family of companies in India.
A special owner company called Birla Group Holdings owns the 'Aditya Birla' name.
Before now, companies in the group could use the brand name without paying anything.
Starting 1 June 2026, each company will pay a small fee for using the brand.
The fee is 0.25% of the money the company earns, up to Rs 225 crore in a year.
If a company loses money during the year, it does not have to pay anything.
Some shares fell a little after the news because investors were checking how much it will cost.
The money can be used to make the Aditya Birla brand even stronger.
Other big groups, like Tata Sons, already do something very similar.
Aditya Birla Group has introduced a formal framework under which listed subsidiaries will pay a 0.25% brand royalty on revenue to promoter entity Birla Group Holdings.
The framework is effective 1 June 2026 and caps annual royalty at Rs 225 crore per company.
No royalty will be payable in a financial year if a company reports a loss before tax.
Shares of Grasim Industries and Hindalco fell on Thursday as investors assessed the earnings impact, closing down 2.65% and 1.33% respectively on the BSE.
Grasim expects annual payment of about Rs 125 crore, while Hindalco and Novelis will adopt the structure from fiscal year 2027.
The move aligns Aditya Birla Group with practices at Tata Sons, which charges 0.25% of revenue with a Rs 200 crore cap.
- Who
- Aditya Birla Group companies, including Grasim Industries and Hindalco, and promoter entity Birla Group Holdings
- What
- Introduced a formal brand royalty framework requiring group companies to pay 0.25% of revenue for use of the Aditya Birla brand
- Where
- India, involving companies listed on the BSE
- When
- Effective 1 June 2026, with market reaction seen during Thursday's trading session
- Why
- To formalise ownership and stewardship of the brand and create a clearer economic relationship between the promoter entity and operating companies
Key facts
- Royalty rate
- 0.25% of revenue
- Effective date
- 1 June 2026
- Annual cap
- Rs 225 crore per company
- Loss exemption
- No royalty payable in a financial year with a loss before tax
- Grasim expected payment
- About Rs 125 crore annually, based on a Rs 50,000 crore revenue run-rate
- Jefferies estimate
- Rs 100-120 crore per year for Grasim, less than 5% of EBITDA
- Hindalco and Novelis adoption
- From fiscal year 2027
- Tata Sons comparison
- 0.25% of revenue capped at Rs 200 crore; Rs 2,285.52 crore brand subscription income received in FY26
Quotes
Himanshu Kapania
Managing director of Grasim Industries
“the company expects the annual payment to be about Rs 125 crore, based on an estimated revenue run-rate of Rs 50,000 crore.”
financialexpress.com
“the payment remains below the company’s materiality threshold.”
financialexpress.com
Sources
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