FMCG major Hindustan Unilever (HUL) has received a go-ahead from BSE and NSE for the demerger of the company’s ice cream business. The giant’s ice cream business includes popular brands like Kwality Wall’s, Cornetto, and Magnum and the demerger will lead to creation of a new entity – Kwality Wall’s (India) Limited (KWIL).
In a regulatory filing, HUL said that in reference to the letter dated January 22, 2025 about the decision of the company board approving the demerger, “…we would like to inform you that HUL has received observation letter with “no adverse observations” from BSE Limited on 14th May 2025 and observation letter with “no objection” from the National Stock Exchange of India Limited on 14th May 2025 in relation to the Scheme.”
Rationale for demerger
Per the official statement, the separation is in line with the demerged company’s parent entity, Unilever Plc’s intention to separate its ice cream business globally. The decision was made in view of the ice cream business’s different operating model, including differentiated infrastructure for supply and distribution, capital allocation needs, distinct channel landscape, and go-to-market strategy.
Things to know
Earlier, in a company announcement, HUL had said that KWIL will be a leading listed ice cream company in India, with an experienced management equipped with greater focus and flexibility to deploy strategies suited to its distinctive business model and market dynamics, thus realising its full potential. “Demerger will also facilitate a smoother transition for business as well as our people,” it had said.
The ice-cream category is a high-growth business for HUL. It is anticipated that the move will increase shareholder value and provide investors with direct access to the growing ice cream market. Rohit Jawa, CEO & MD, HUL, said, “The demerger will unlock fair value for HUL shareholders and give them the flexibility to stay invested in ice cream’s growth journey.”
According to the official announcement, HUL shareholders will get one equity share of KWIL for every one equity share owned in HUL. After demerger and listing, HUL shareholders will directly own 100 per cent of KWIL’s shareholding.
Per the details shared by HULThe Demerged Company and the Resulting Company shall be entitled to declare and pay dividends, whether interim or final, to their respective shareholders in respect of the accounting period prior to the Effective Date.
Key assets and liabilities transferred
Once the demerger is effective, HUL said, various assets and liabilities pertaining to the ice cream business will be transferred to the resulting company and these include:
◦ Licenses, approvals, permits, and authorizations relating to the business.
◦ Entitlements, certificates, tenancies, and accumulated tax credits (excluding input tax credit balance and GST liability balance).
◦ Properties (freehold or leasehold), plant, machinery, and equipment.
◦ Movable and immovable assets, intellectual property, inventory, cash and bank balance, debtors, loans, advances, and investments.
◦ Benefits of agreements, contracts, arrangements, and insurance policies exclusively relating to the ice cream business undertaking.
◦ Ongoing research and development projects exclusively or primarily relating to the business.
◦ All records, files, papers, and data relating to the business.
◦ All liabilities of the demerged company in relation to the ice cream business undertaking, whether recorded or not, including specific loans and borrowings, working capital loans, guarantees, and obligations.
◦ General or multi-purpose borrowings allocated proportionally based on transferred asset value.
◦ Contingent rights or benefits and security arrangements.