FMCG giant HUL to demerge ice cream business into listed company

MUMBAI: FMCG giant HUL's board has decided to demerge its ice cream business into an independent listed entity, the company said in a statement on Monday. It has been proposed that the shareholders of HUL will receive shares in the new entity in proportion to their shareholding in the firm.

"The demerger of ice cream business will create a leading listed ice cream company in India, which will have a focused management with greater flexibility to deploy strategies suited to its distinctive business model and market dynamics thus realising its full potential," HUL said, adding that a separate listed entity will also unlock fair value for the company's shareholders.

HUL's ice cream portfolio which includes brands like Kwality Wall's, Magnum and Cornetto contributes about 3% to its revenues. In the ice-cream category, HUL competes with homegrown brands like Amul, Mother Dairy, Vadilal, Naturals as well as global brands like Baskin Robbins. India's ice cream market is expected to surpass $5 billion by FY25 on the back of growing demand for premium ice creams, a report by retail consulting firm Wazir Advisors said. HUL's premium ice cream segment has been faring well on the back of Magnum and in-home ordering through online platforms. "Our premium ice cream continues to accelerate significantly ahead of the category," the firm had said in its FY24 annual report.

In Sept, HUL had set up a committee of independent directors to evaluate the prospects of the company's ice cream business following parent Unilever's decision to separate its ice cream unit across markets. The decision to demerge is subject to approval of the board and the shareholders to the scheme of demerger to be placed before the board early next year. Analysts said that demerger is a good move by HUL and will allow existing investors to also have a pure play ice cream entity.