FMCG major Hindustan Unilever (HUL) has formed a new subsidiary, Kwality Wall’s, for the proposed demerger of the company’s ice cream business.
“Kwality Wall’s (India) Ltd (KWIL) has been incorporated for the purpose of the proposed demerger of the ice cream business of the company, which is currently under evaluation by the board of directors of the company,” it said. the FMCG major in a regulatory filing in January. 10.
HUL will hold 100 per cent of the issued and subscribed share capital of KWIL. The newly created entity has an authorized capital of Rs 250 crore, according to the disclosure.
Earlier, on November 25, 2024, HUL approved the demerger of the ice cream business, which owns brands like Kwality Wall’s, Cornetto and Magnum, into an independent listed entity.
Existing shareholders of the FMCG major will get shares in the new entity in proportion to their stake in HUL, it had said.
The HUL board has decided to demerge the ice cream business, based on the recommendation of the independent committee, formed by the FMCG major earlier in September 2024.
The company highlighted that the ice cream category is a high-growth market that contributes around 3% to HUL’s total revenue. To fully unlock the potential of this market, significant investments are required.
The ice cream business operates under a unique model that includes specialized cold chain infrastructure and a distinct channel landscape, which limits potential synergies with the rest of HUL’s operations.
The company restructuring aims to prioritize HUL’s core business areas and expand its presence in growing sectors like beauty, food, health and wellness. By divesting its ice cream business, HUL will provide greater flexibility and focus on this segment, thereby maximizing shareholder value.
Earlier this year, HUL’s parent entity Unilever PLC had expressed plans to separate its global ice cream businesses across jurisdictions. For the financial year ended March 2024, HUL’s revenue from product sales stood at Rs 59,579 crore.
