Tata Sons has multiplied its royalty fee to Rs 200 crore, doubling the previous amount.

Tata Sons’ Doubling of Royalty Fee and Brand-Building Efforts

Five years after setting it at Rs 100 crore, Tata Sons has now doubled the fee. Concurrently, the parent company of the Tata Group is intensifying its brand enhancement efforts, notably through its title sponsorship of IPL and other endeavors. TCS disclosed in its shareholder notice that it disbursed a royalty payment of Rs 200 crore to Tata Sons in FY24.

In Mumbai, Tata Sons, the proprietor of the Tata brand, has doubled the royalty fee paid by its subsidiary companies to Rs 200 crore. Entities like TCS, Tata Steel, and Tata Motors pay this fee for utilizing the Tata name.

Five years after setting it at Rs 100 crore, Tata Sons has now doubled the fee. Simultaneously, the Tata Group’s holding company is intensifying its brand-building endeavors, including the title sponsorship of IPL.

According to TCS’s shareholder notice, the company disbursed a royalty payment of Rs 200 crore to Tata Sons in FY24.

Ratan Tata, the chairman emeritus of Tata Sons, introduced the brand subscription scheme in 1996. This scheme required a group company directly using the Tata name to pay 0.25% of its annual revenue or 5% of its pre-tax profit, whichever was lower. A group entity using the Tata name indirectly had to pay 0.15% of its annual revenue.

In 2015, Tata Sons, then led by the late Cyrus Mistry, capped the maximum brand subscription fee at Rs 75 crore. This cap was subsequently raised by 33% by the current chairman, N Chandrasekaran. For fiscal years 2023 and 2022, TCS paid Rs 100 crore each to Tata Sons.

A source mentioned that besides increasing the upper limit to Rs 200 crore, Tata Sons has eliminated the fee based on a company’s pre-tax profit. Now, an operating entity has to pay 0.25% of its annual revenue, with the maximum fee set at Rs 200 crore.