The owner of the Tata brand name maintained the royalty fee at Rs 100 crore for five years, then doubled it. Now, TCS, TaMo, and others must pay Tata Sons Rs 200 crore as royalty fee.

ToI reported on May 10 that TCS, Tata Steel, Tata Motors, and others must now pay Tata Sons double the previous royalty fee amount.

According to a report by Reeba Zachariah, companies utilizing the Tata name must pay royalty to Tata Sons, the brand’s owner. Tata Sons recently doubled the royalty fee to Rs 200 crore.

After maintaining it at Rs 100 crore for five years, Tata Sons has decided to double its fee. Simultaneously, the company, overseeing the Tata Group, is ramping up efforts to boost brand recognition, such as becoming the title sponsor of the IPL.

TCS informed shareholders it disbursed a Rs 200 crore royalty to Tata Sons in FY 2024.

Ratan Tata, chairman emeritus of Tata Sons, introduced the brand subscription scheme in 1996. Under this, direct users of the Tata name paid 0.25% of annual revenue or 5% of pre-tax profit, whichever lower. Indirect users paid 0.15% of annual revenue.

TCS Pays Rs 200 Crore Royalty Fee to Tata Sons in FY 2024

Under the late Cyrus Mistry’s leadership in 2015, Tata Sons capped the brand subscription fee at Rs 75 crore, later increased by 33% under current chairman N Chandrasekaran. In FY 2023 and 2022, TCS paid Tata Sons Rs 100 crore each for this subscription fee.

A source reveals Tata Sons raised the maximum limit to Rs 200 crore and removed the fee based on pre-tax profit. Operating entities now pay 0.25% of annual revenue, capped at Rs 200 crore.

In FY 2023, Tata Sons earned Rs 1,008 crore from brand subscription fees, one of its revenue sources.

Over time, the brand subscription fund has grown substantially, reflecting the significant changes in operating companies’ fortunes, including the development of multi-billion-dollar businesses through acquisitions and expansions. Tata Sons experienced a 23% increase in brand subscription income in FY23, rising from Rs 820 crore in FY22 to Rs 1,008 crore. This fund is utilized by the holding company to promote and safeguard the Tata brand, valued at $29 billion (approximately Rs 2.4 lakh crore) by the international consultancy firm Brand Finance.

You might also be interested in – Sensex, Nifty plunge in volatile trading; Tata Motors declines by 8%