Heard on the street: Edelweiss stops charging brand usage fee from units

‘What’s in a name?’ asked the Bard. Even the respected Bard would have hung his head in shame if he had known that the nine-letter word Edelweiss, which is an Alpine flower and also the name of an Indian brokerage firm, is worth about Rs3.6 crore every year.

Edelweiss Financial Services, which announced results on Wednesday, has indicated in its notes to account that the company has ceased to charge brand usage fees from its subsidiaries from April 1, 2011.

Had Edelweiss continued to charge brand fees, its income from operations for the whole year would be higher by Rs43.80 crore for the year ended March 31, 2012, the ‘note’ to accounts said. The company collected “brand fee” from 12 “money-making” subsidiaries out of the 40-odd Edelweiss companies.

Estimates show the company collected an average of over Rs3.5 crore from every subsidiary till March 31, 2011. However, the company has decided to stop ‘selling’ its brand name to subsidiaries from the last fiscal onwards.This means the income from operations of standalone companies will be down Rs44 crore every year.

“The charging of these fees (or the discontinuation thereof) does not have any impact on the consolidated financials of Edelweiss Financial Services Limited, as this being an intra-group transaction, the same is eliminated in the consolidated P&L account. The note specifically indicates that this is a standalone entity financial impact item,” said an Edelweiss official when contacted. Shares of Edelweiss Financial Services ended down 1.2% at Rs 27.10.