This increase will be effected in a staggered manner over a period of 3 years, the company said. In 2013, HUL had entered an arrangement with Unilever to pay 2.65% royalty and central services fees for a period of 10 years. This granted HUL the right to use Unilever-owned trademarks, technology, corporate logo and gave access to central services provided by the Unilever group.

As per the new agreement, there will be a 45 bps increase in royalty and service fee for February to December 2023, 25 bps for January to December 2024 and 10 bps from January 2025.

"It goes as a cost to our P&L. But we also get equivalent value from Unilever in form of better products and innovation. When we last increased our royalty fee to Unilever in 2013, we improved our operating margins by nearly 1,000 bps. We would ensure that we get value for the money we pay to Unilever,” the company's CEO has reportedly said.

Meanwhile, the FMCG major reported 12% rise in standalone net profit to Rs 2,505 crore on a 16% increase in turnover to Rs 14,986 crore in Q3 FY23 over Q3 FY22.

Hindustan Unilever (HUL) delivered underlying volume growth of 5%. Growth was significantly ahead of the market with more than 75% of the business winning value and volume market shares.

HUL said that the Home Care segment delivered another solid performance with 32% revenue growth and double-digit volume growth. Both Fabric Wash and Household Care categories grew in high double-digits with all parts of the portfolio performing very well. Liquids portfolio continued to deliver strong results driven by effective market development actions. Calibrated price increases were taken in Fabric Wash and Household Care portfolios to partly offset the input cost inflation.

The Beauty & Personal Care segment grew by 10%. Skin Cleansing delivered strong double-digit growth with volumes growing in mid-single digit. With softening in Palm Oil, price reductions were taken in soaps portfolio. Hair Care grew in high single-digit led by strong performance in Clinic Plus. Oral Care delivered steady performance led by Close-up. Delayed winter impacted growth in Skin Care, however, the non-winter portfolio delivered double-digit growth driven by continued focus on innovations and market development actions in emerging and on-trend demand spaces.

The Foods & Refreshment segment delivered 7% growth led by robust performance in Foods, Coffee and Ice-cream. Foods grew in high teens with double digit volume growth led by Jams, Ketchup and Unilever Food Solutions business. Ice Cream had another strong quarter with double-digit growth. Tea continued its value and volume market leadership and delivered mid-single digit volume growth. Coffee continues to perform well delivering double-digit growth. Health Food Drinks (HFD) grew in mid-single digit with strong performance in Boost and Plus range. HFD continues to gain market share and penetration on the back of focused market development actions.

During the quarter, the company saw inflation moderating, albeit remaining high YoY. EBITDA margin at 23.6% improved 30 bps versus SQ'22 and declined 180 bps YoY. PAT (bei) was up 13% YoY, PAT at Rs 2,505 crores was up 12% YoY.

Sanjiv Mehta, CEO and managing director, commented: “Sustaining our strong momentum, we had yet another quarter of solid all-round performance delivering double-digit revenue and earnings growth. Our consistent performance is reflective of our strategic clarity, strength of our brands, excellence in execution, and dynamic financial management.

Looking forward, we are cautiously optimistic in the near term and believe that the worst of inflation is behind us. This should aid in a gradual recovery of consumer demand. We remain focused on managing our business with agility, continue growing our consumer franchise whilst maintaining margins in a healthy range.”

HUL is India's largest fast moving consumer goods company.