Tata Sons, the proprietor of the Tata brand, has reportedly increased the royalty fee to Rs 200 crore, which its subsidiary companies such as TCS, Tata Steel, and Tata Motors pay for using the Tata name.
Five years after setting the amount at Rs 100 crore, Tata Sons has doubled the fee. As per a report by the Times of India. The parent company is also putting more focus on enhancing its brand name. This was quite visible when the brand bought the title sponsorship of IPL.
TCS, the IT arm of the group, disclosed a royalty payment of Rs 200 crore to Tata Sons in the fiscal year 2024.
The brand subscription scheme, started by Ratan Tata in 1996, mandates that a Tata Group company directly using the Tata name pays either 0.25 per cent of its yearly revenue or 5 per cent of its pre-tax profit, whichever is lower. For group entities indirectly using the Tata name, the payment is set at 0.15 per cent of their annual revenue.
Under the leadership of the late Cyrus Mistry, Tata Sons had set a maximum limit of Rs 75 crore for the brand subscription fee in 2015. However, the current chairman, N Chandrasekaran, later raised this limit by 33 per cent.
The brand subscription fee is one of the many Tata Sons' revenue streams. In the fiscal year 2023, it generated Rs 1,008 crore in brand subscription income.
TCS, which is also one of the largest companies under the Tata group with a market cap of nearly Rs 14.10 trillion, was trading at Rs 3,899 price level at 12:02 pm on Friday, down by 1.52 per cent on the NSE.
