After facing shareholder pushback, Nestle India on Wednesday said it will retain the existing royalty payment of 4.5 per cent to its parent.

Last month, shareholders of the FMCG giant had rejected its proposal for an increase in royalty payout of 5.25 per cent of its net sales over the next five years.

In a regulatory filing on Wednesday, Nestle India said its board had approved continuation of “payment of general licence fees (royalty) at the current rate of 4.5 per cent to Société des Produits Nestlé S.A. (Licensor)’’.

Nestle will now place this proposal before its shareholders at its annual general meeting on July 16 through an ordinary resolution.

Ahead of the announcement, shares of Nestle India ended at ₹2532.95 on the BSE, a decline of 0.40 per cent over the last close.

Proxy advisory firms such as InGovern had recommended that shareholders vote against the resolution.

“Given that Nestle India is already paying much higher compared with peers like HUL (3.45 per cent of sales) and Colgate-Palmolive India (4.9 per cent of sales), without any proper cost benefit analysis, the increase in royalty payout will further increase the gap in royalty paid by Nestle vis-à-vis its peers,” it had said.