Mumbai: In a departure from past practice, the Aditya Birla Group has introduced a royalty fee for its operating companies using its brand name, the top bosses of group companies Hindalco Industries Ltd and Grasim Industries Ltd said in their latest investor calls.
The move brings the group’s practice in line with that of some peers, including Tata Group, Vedanta and JSW Group.
Mint’s calculations show the fee could generate more than ₹1,000 crore a year for the group’s privately owned promoter entity Birla Group Holdings Private Limited (BGH).
The promoter entity will receive a fee equivalent to 0.25% of the standalone revenue of all listed and unlisted group companies using the brand, capped at a maximum of ₹225 crore. The fee will be levied from 1 June 2026.
The Aditya Birla group has 11 listed companies including Hindalco, Grasim, UltraTech Cement, Novelis, Aditya Birla Capital, and Aditya Birla Fashion and Retail, among others, and significant unlisted companies include Aditya Birla Renewables Limited and Birla Carbon.
The Aditya Birla Group did not disclose the new levy to investors as it did not breach the threshold beyond which related-party transactions become material and require shareholder authorization. The threshold for materiality is ₹1,000 crore or 10% of revenue, above which shareholder approval is needed for related-party transactions. For brand fees and royalty, it is 5% of the revenue.
The royalty fee became public knowledge after Novelis Inc., the US-based subsidiary of Hindalco, disclosed it as part of its quarterly regulatory filings.
A spokesperson for the Aditya Birla group did not respond to Mint’s request for a comment.
“At the Aditya Birla Group, the parent brand to us is the most valuable asset and a source of competitive advantage. It’s an intangible platform that systematically builds trust and reduces friction, and enhances long-term growth potential of our group companies,” Himanshu Kapania, managing director of Grasim said in an investor call on Tuesday.
“All our subsidiaries will pay as a brand value under their line of business. Whether it is AB Renewables, whether it is Aditya Birla Capital, whether it is Ultratech. All will be paying on their own. Grasim will pay for its standalone direct business,” he said.
“In the past, BGH has not charged any royalty for the use of ABG marks, making it one of the exceptions among large Indian conglomerates,” Satish Pai, managing director of Hindalco said in an investor call on Friday. “So, what is happening is that this brand royalty, this framework, marks a transition from family-driven stewardship to structured governance.”
The closest benchmark for Aditya Birla’s brand fee is the Tata Group. Tata Sons, the group’s holding company, levies a brand subscription fee of 0.25% of revenue on companies directly using the Tata brand and 0.15% for companies indirectly using the brand, like Titan. The fee is capped at ₹200 crore. Tata Sons made ₹2,195 crore from brand subscription income in FY26, as per its annual report.
Not all large Indian conglomerates charge a brand fee. For instance, the Adani Group does not charge any brand fee on its operating entities. Reliance Industries also recently decided not to levy any fee on IPO-bound Jio Platforms for the Jio brand.
Brand royalty is a legitimate payment for tangible and intangible services like marketing and name recognition benefits received by operating companies, said Sanjay Kallapur, professor of accounting at the Indian School of Business (ISB). For instance, when foreign companies decide to set up a joint venture with a company, the brand and pedigree of the promoter is a key consideration, he said.
Benchmarking the brand fees was difficult as each of these transactions was bespoke and the circumstances change from conglomerate to conglomerate, he said. “It is impossible to compare what Birla Sun is getting from Aditya Birla versus what Tata AIG is getting from Tata Sons.”
Zia Patel, brand strategy director at Ochre Brands, a brand consultancy, said it was a “smart move” on behalf of the Aditya Birla Group to institutionalize brand usage fees.
“The royalty gives the group a large pot of money to invest in building the brand. This is something we know the group is starting to invest in, as Ochre has done the endorsement project for building the group’s presence,” she said.
The arrangement also makes the group accountable and transparent in explaining the value exchange that underpins the endorsement of its operating units, she said.
Dipali Banka in Mumbai contributed to this story