Hindustan Unilever (HUL) on Wednesday announced the company board’s decision to separate its ice cream business, following a thorough evaluation by a committee of independent directors. “The Board had constituted a committee of Independent Directors of the Company (Independent Committee) to evaluate the way forward for the Business. The Board’s decision to separate is in line with the recommendation made by the Independent Committee following a comprehensive review of the Business,” HUL said in a regulatory filing.
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The Independent Committee looked at several important factors before arriving at its decision to separate the Business: a) The committee acknowledged that while ice cream business contributes only 3 per cent to HUL’s turnover, it is a high-growth category that needs significant investments to realise its full potential; b) Given that Unilever owns the trademarks and know-how and has announced the separation of its ice cream business, local capabilities will need to be developed to continue running the Business; c) Ice Cream has a different operating model including cold chain infrastructure, and a distinct channel landscape, which limits synergies with rest of HUL.
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The portfolio restructuring, HUL said, will enable the company to sharpen focus on the core business and further strengthen its play in trending demand spaces such as Beauty, Foods, Health and Wellbeing.
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Further, it will also enable the Ice Cream business to operate with greater flexibility and focus. “With the aim of maximising value for all shareholders, the Board, based on the recommendations of the Independent Committee, will determine the mode of separation by the end of this year,” HUL said in a statement.
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