A recent study conducted by the Securities and Exchange Board of India (SEBI) has brought to light some concerning trends in the financial practices of listed companies in India. The study reveals that a significant number of these companies have been making substantial royalty payments to related parties, which could potentially impact their profitability and financial transparency.

According to the study, one in four listed companies have paid royalties to related parties that exceed 20% of their net profits. Over a period of ten years, loss-making companies have disbursed a staggering ₹1,355 crores in royalties to related parties. The study also found 102 instances where royalty payments ranged between 40% to 100% of net profits, and 74 instances where these payments exceeded 100% of net profits. These royalty payments typically involve technology transfer agreements or the use of trademarks and brand names, often in transactions between holding companies and their subsidiaries.

These findings raise questions about the financial practices of listed companies in India and highlight the need for further examination and scrutiny.