By Vineet Kumar 
HUL Approves Demerger of Ice Cream Business into Independent Listed Entity
Hindustan Unilever (HUL) has granted in-principle approval for the demerger of its ice cream business into a standalone entity, which will eventually be listed as an independent company. This strategic move is aimed at unlocking value for shareholders and giving them the flexibility to participate in the growth of the ice cream segment.
In its announcement to the stock exchanges on November 25, HUL emphasized that the decision is subject to the approval of the board and shareholders. The scheme of demerger will be presented for final approval early next year. The board, after evaluating various modes of separation, concluded that demerging the ice cream business would best serve the interests of all stakeholders.
Shareholder Benefits
HUL clarified that shareholders would receive shares in the new entity in proportion to their current shareholding. This arrangement ensures continuity while offering shareholders the opportunity to remain invested in the high-growth ice cream segment.
“A separate listed entity will unlock fair value for HUL shareholders and give them the flexibility to stay invested in the ice cream’s growth journey,” the company stated.
Background of the Decision
The separation of the ice cream business has been under consideration for some time. In September, HUL formed a committee to evaluate potential options for the segment. Based on the committee’s recommendations, the board announced its intention to separate the business in October.
During the September quarter earnings call, HUL CEO Rohit Jawa had outlined two primary options for the segment: selling the business or demerging and listing it separately. After careful deliberation, the board opted for the latter, citing its potential to maximize shareholder value.
The Ice Cream Business at a Glance
HUL’s ice cream portfolio includes strong brands like Kwality Wall’s, Cornetto, and Magnum, which operate with mid-to-high single-digit profitability. Despite global separation efforts by Unilever, the parent company, HUL noted that managing the ice cream business locally would require significant investment in brand and technology development.
HUL further stated that the demerger would lead to the creation of a “leading listed ice cream company in India” with focused management and greater operational flexibility to adapt to market dynamics.
This move highlights HUL’s strategy to streamline its operations while empowering its high-growth segments to thrive independently. Shareholders can look forward to participating in the success of a dedicated, agile, and market-focused ice cream business.
Stay tuned for more updates on this development.
