HUL to list Kwality Walls shares on BSE, NSE under demerged ice cream biz, 1:1 share ratio declared for shareholders
- HUL demerger: Per the demerger, every shareholder will receive one Kwality Walls share for each HUL share owned. The move was approved during the board meeting today when HUL announced a 1:1 share ratio for its existing shareholders
Hindustan Unilever Ltd (HUL) announced on Wednesday, January 22, that its board approved the spin-off of its ice cream business, Kwality Walls (India) Ltd, into a separately listed entity. India's largest fast-growing consumer goods (FMCG) giant, while announcing its October-December quarter results for fiscal 2024-25 (Q3FY25) today, said that shares of Kwality Walls will be listed on stock exchanges BSE and NSE, subject to regulatory approvals.
Earlier this month, the HUL board incorporated Kwality Walls (India) as its wholly-owned subsidiary to demerge its ice cream business into Kwality Walls. Upon the listing of Kwality Walls shares, the entire shareholding of Kwality Walls (India) Ltd will be held directly by the shareholders of HUL.
HUL approves demerger of Kwality Walls as listed entity: Here's what shareholders must know
Per the demerger, every HUL shareholder will receive one Kwality Walls share for each HUL share owned. The move was approved during the board meeting held today when Unilever’s India unit announced a 1:1 share ratio for its existing shareholders. HUL will own 100 per cent of Kwality Walls' issued and subscribed share capital.
“For every 1 (one) equity share of face value of Re. 1 fully paid up held in the demerged company, 1 (one) equity share of face value of Re. 1 credited as fully paid up will be issued in the resulting company," said HUL.
Rohit Jawa, CEO and Managing Director, HUL said: “Our ice cream category is a high-growth business with iconic brands such as ‘Kwality Wall’s’, ‘Cornetto’ and ‘Magnum’, operating in an attractive segment. The demerger will unlock fair value for HUL shareholders and give them the flexibility to stay invested in ice cream’s growth journey.”
Also Read: Hindustan Unilever acquires over 90% stake in premium skincare brand Minimalist for ₹2,955 crore
"The scheme of arrangement is as per provisions of the Companies Act, 2013 and other applicable laws. The demerger is subject to statutory and regulatory approvals," said HUL in a regulatory filing to the stock exchanges.
HUL added that Kwality Walls (India) will be a leading listed ice cream company in India, with 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.
“The business will continue to be equipped with the portfolio, brand and innovation expertise from the largest global ice cream business enabling it to keep winning in the marketplace. Demerger will also facilitate a smoother transition for business as well as our people,” said HUL in its exchange filing.
The demerger will enable HUL to drive sharper focus in the business as it further accelerates its play in high-growth demand spaces, strengthening its future fit portfolio. It would also unlock value for all shareholders.
The turnover of the ice cream business undertaking for the year ended March 31, 2024 was ₹1,595 crore, representing 2.7 per cent of the total standalone turnover of the company for the year ended March 31, 2024. The action would not result in a change in the shareholding pattern of the demerged entity.
Kwality Wall’s (India) Ltd has been incorporated "for the purpose of the proposed demerger of the company's ice cream business, which is currently under evaluation by the Board of the company," the FMCG major said in a regulatory filing to the stock exchanges on January 10, 2025.
Earlier on November 25, 2024, HUL approved the demerger of the ice cream business, into an independent listed entity. The board of HUL decided to de-merge the ice cream business based on the recommendation of the Independent Committee, which was formed by the FMCG major earlier in September 2024.
The Independent Committee said the ice cream business has a different operating model, including cold chain infrastructure and a distinct channel landscape, which limits synergies with the company's other businesses. Earlier this year, HUL's London-based parent entity, Unilever PLC, expressed its intention to separate its global ice cream business across jurisdictions.
HUL Q3 Results
HUL reported a 19 per cent year-on-year (YoY) rise in its consolidated net profit (attributable to owners) for the fiscal's third quarter ended December to ₹2,984 crore. It had reported a profit of ₹2,509 crore in the year-ago period. The home care business grew 5.3 per cent, while its food business grew 0.5 per cent YoY.
HUL's consolidated total income stood at ₹16,050 crore during the quarter ended December 2024 from ₹15,781 crore in Q3FY24, logging an annual rise of 1.7 per cent. Sequentially, the revenue was down by nearly one per cent. The Beauty segment grew 1.5 per cent and personal care dropped three per cent compared with a year ago.
HUL gets roughly 60 per cent of its overall sales from urban markets. The 'Clinic Plus' shampoo maker forecast near-term margins at the lower end of its previous forecast range of 23 per cent-24 per cent as subdued urban demand outweighed a revival in rural demand and as commodity costs rose.
On the operational front, earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter ending in December was ₹3,695 crore, compared to ₹3,666 crore in Q3FY24. The EBITDA margin was recorded at 23.7 per cent, reflecting a decrease of 30 basis points from Q3FY24.
HUL announced a 90 per cent acquisition of niche beauty brand Minimalist, to tap into the fast-growing affluent and luxury market in India. HUL shave gained 0.7 per cent this year, after a 10.8 per cent drop in 2024. On Wednesday, shares settled 0.11 per cent higher at ₹2,342.95 apiece on the BSE.
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