A top company source told The Financial Express that it had been decided to transfer the business to a wholly-owned subsidiary rather than set up a new wholly-owned subsidiary. However, it has not chosen the subsidiary which will get the business.

HLL's AFS business includes the manufacture and sale of cattlefeed, fish feed, broiler feed, poultry feed and other related products. The transfer will be done at Rs 16 crore.

The AFS business consists of nine manufacturing plants, three branch and sales offices and a research and development centre at Bangalore. The company also owns trademarks including `Gold Mohur' and `OK'. HLL also buys sizeable quantities of animal and poultry feeds from third parties who manufacture and supply the goods or convert the raw materials provided by the company intofinished goods.

Following parent Unilever's decision to exit from the AFS business worldwide, HLL felt that it was no longer in a position to benefit from the R&D and technology support in this category or derive any benefit from the knowledge of global commodity markets useful in animals feeds business and hence decided to sell of this business.

Although a number of companies put their indicative and final bids, the management of the company rejected all bids as none of them met their expectations.

The HLL management has thus decided to retain the business with the group and provide greater focus by transferring the business to a wholly-owned subsidiary of the company ensuring that the concerned employees would have continuity of service and full protection of their terms and conditions of service with the wholly-owned subsidiary company being the new owner of the AFS undertaking.

The proposed transfer to a wholly-owned subsidiary could provide a structure that would enable the company to transferthe AFS undertaking to a suitable buyer at a negotiated price at a future date. The business employs about 390 permanent employees including about 245 in manufacturing and 62 in sales and distribution.

The AFS business reported a turnover of Rs 278 crore in 1998.