Tata Sons doubles royalty fee to Rs 200 crore

MUMBAI: Tata Sons, owner of the Tata brand, has doubled the royalty fee - paid by its operating companies - to Rs 200 crore. Companies like TCS, Tata Steel and Tata Motors pay the royalty fee for using the Tata name.
Tata Sons has doubled the fee five years after fixing it at Rs 100 crore. Simultaneously, the holding company of Tata Group is ramping up its brand-building exercise through the title sponsorship of IPL, among other initiatives.

TCS, in its notice to shareholders, revealed that it made a royalty payout of Rs 200 crore to Tata Sons in FY24.
Tata Sons chairman emeritus Ratan Tata had introduced the brand subscription scheme in 1996 that required a group company, using the Tata name directly, to shell out 0.25% of its annual revenue or 5% of its pre-tax profit, whichever was lower, whereas a group entity, using the Tata name indirectly, has 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 was subsequently increased by 33% by current chairman N Chandrasekaran. For fiscal years 2023 and 2022, TCS shelled out Rs 100 crore each to Tata Sons.
A source said besides revising the upper limit to Rs 200 crore, Tata Sons has done away with the fee based on a company's pre-tax profit. In other words, an operating entity has to pay 0.25% of its annual revenue, with the maximum fee now set at Rs 200 crore.
Brand subscription fee is one of the revenue streams of Tata Sons. In FY23, it earned Rs 1,008 crore as brand subscription income.
This kitty has swollen over the years as fortunes of operating companies changed drastically with multi-billion-dollar businesses built through acquisitions and expansions. Tata Sons' FY23 brand subscription income saw a jump of 23% from Rs 820 crore in FY22. The holding company uses the brand subscription fund to promote and protect the Tata brand, which is worth $29 billion (about Rs 2.4 lakh crore), according to international consultancy firm Brand Finance.