Rs 200 crores! Using Tata's brand name becomes costlier for TCS, Tata Steel, Tata Motors, others
rs 200 crores! using tata’s brand name becomes costlier for tcs, tata steel, tata motors, others
Tata Sons has decided to double the royalty fee for companies utilizing the esteemed Tata name. Effective immediately, entities like TCS, Tata Steel, and Tata Motors will now be required to pay Rs 200 crore to Tata Sons, marking a significant increase from the previous Rs 100 crore fee.
According to a report by TOI, this decision announced on friday, comes after a five-year period of maintaining the royalty fee at Rs 100 crore. Notably, Tata Sons has been intensifying efforts to enhance the visibility and prestige of the Tata brand, recently exemplified by its title sponsorship of the IPL.
Tata Sons: Doubles Royalty Fee to Rs 200 Crore
The move to raise the royalty fee was disclosed by TCS in its communication to shareholders, revealing a payment of Rs 200 crore to Tata Sons during the fiscal year 2024.
Originally introduced by Ratan Tata, the brand subscription scheme in 1996 mandated Tata group companies using the Tata name to pay either 0.25% of their annual revenue or 5% of their pre-tax profit, whichever was lower. Under the stewardship of the late Cyrus Mistry in 2015, Tata Sons set a maximum limit for the fee at Rs 75 crore. However, this limit was subsequently raised by 33% under the current chairman, N Chandrasekaran.
According to a source, Tata Sons has increased the maximum limit to Rs 200 crore and eliminated the fee based on a company’s pre-tax profit. Instead, operating entities are now required to pay 0.25% of their annual revenue, with the maximum fee capped at Rs 200 crore.
One of Tata Sons’ significant revenue sources is the brand subscription fee, which generated Rs 1,008 crore in income during the fiscal year 2023. This fund plays a crucial role in promoting and safeguarding the Tata brand, valued at approximately $29 billion (Rs 2.4 lakh crore) by the international consultancy firm Brand Finance.
With a 23% increase in brand subscription income from FY22 to FY23, Tata Sons’ move to double the royalty fee underscores its commitment to reinforcing the Tata brand’s prominence.
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