HUL divests atta, salt business; stock up 1%

Shares of Hindustan Unilever Ltd (HUL), the country's leading fast-moving consumer goods (FMCG) player, rose nearly 1% in opening trade on Monday after the company announced divestment of 'Annapurna' and 'Captain Cook' food brands of the company. The Mumbai-headquartered consumer goods company has signed a deal to sell its atta and salt brands - Annapurna & Captain Cook - to Singapore-based Uma Global Foods and Uma Consumer Products for ₹60.4 crore.

Following the announcement, HUL share price opened marginally higher at ₹2,515.50 against Friday’s closing price of ₹2,515.05 on the BSE. In the first half an hour of the trade so far, the FMCG heavyweight rose 0.94% to ₹2,538.70. In comparison, the BSE benchmark Sensex was trading 144 points higher at 61,146 levels. HUL shares touched a 52-week high of ₹2,741 on December 9, 2022, while it hit a 52-week low of ₹1,901.80 on March 8, 2022.  

“Hindustan Unilever has entered into definitive documents for sale and divestment of “Annapurna” and “Captain Cook” brands in the “Atta & Salt” categories of the foods business of the company including the trademarks, copyrights and other intellectual properties and any exclusive assets and contracts associated with the brands to Uma Global Foods Pte Ltd and Uma Consumer Products Private Limited, affiliates/nominees of CSAW Aqbator Pte Ltd., (Singapore),” the FMCG major said in a BSE filing on Friday.

Uma Global Foods and Uma Consumer Products are subsidiaries of Reactivate Brands International, a Singapore-headquartered company and an affiliate of CSAW Aqbator Pte Ltd. (Singapore). CSAW is focused on acquiring and scaling up food brands to promote affordable wellness.

The disinvestment is in line with the company’s stated intent of exiting non-core categories while continuing to drive its growth agenda in the packaged foods business of dressings, scratch cooking and soups, HUL said in the exchange filing.

The company said that the transaction also involves distribution support by the company to provide transitionary support for a period of 24 months. The deal is subject to fulfilment of certain terms and conditions as specified in the transaction documents, it added.

Sanjiv Mehta, CEO & Managing Director of HUL, said: “Launched more than two decades ago, Annapurna and Captain Cook enjoy strong equity. Given our strategic priorities and portfolio choices, we believe it is in the business' best interest to sell these brands to Reactivate Brands International, which is well-positioned to unlock their full potential.”

“We are delighted to bring Annapurna and Captain Cook into our portfolio. Both these brands have a long history of providing high quality food products to Indian consumers. We are confident of scaling them up and expanding globally, leveraging founders’ experience. These brands fit well with our mission to promote affordable wellness,” said Ashok Vasudevan, Co-Founder of Uma Global Foods.

Annapurna and Captain Cook brands generated revenue of ₹127 crore in the financial year 2022-22, which was less than 1% of HUL’s total turnover for the said period.

In the recently concluded December quarter of 2022 (Q3 FY23), HUL reported a net profit of ₹2,505 crore for the third quarter, up 12% year-on-year from ₹2,243 crore in the year-ago period. The revenue rose 16% YoY to ₹14,986 crore in Q3 FY23, driven by strong growth in the home care segment, which witnessed 32% growth. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter stood at ₹3,537 crore, up 8% year-over-year. EBITDA margin declined 180 basis points to 23.6%.