Shares of Hindustan Unilever (HUL) were trading in the red and almost 1% lower on Friday, 31 October, after the company announced that the Mumbai bench of the National Company Law Tribunal (NCLT) has approved the demerger of its ice cream business into Kwality Wall’s India (KWIL). 

The action marks the formal separation of HUL’s ice cream operations from its main fast-moving consumer goods (FMCG) portfolio.

The tribunal’s approval, granted under Sections 230 to 232 of the Companies Act of 2013, is also part of parent Unilever’s global ambition to spin off its €15 billion ice cream company into an independent firm.  India is Unilever’s second-largest market, following the United States, accounting for more than 12% of global revenues.

Under the authorized Scheme of Arrangement, HUL would transfer its entire ice cream business, including brands like Kwality Wall’s, Cornetto, Magnum, Feast, and Creamy Delight, to the new company. The segment generates approximately Rs 1,800 crore in annual revenue, accounting for roughly 3% of HUL’s overall income.

As part of the demerger, HUL stockholders will get one share of KWIL for every HUL share they hold.  Magnum HoldCo, a unit of Unilever’s global ice cream business, will purchase around 61.9% of KWIL, with HUL stockholders holding the remaining shares.  According to HUL, Magnum HoldCo will launch an open offer to public shareholders in accordance with SEBI regulations.

The newly established firm will assume the assets and liabilities of HUL’s ice cream business, which includes five manufacturing facilities, a workforce of approximately 1,200 employees, and positive working capital. KWIL will begin debt-free, but will have access to specific capital for future expansion, such as capacity building and freezer installations to improve its cold-chain footprint.

HUL’s management stated that the demerger would allow the company to operate with greater agility and targeted investment.  “The separation offers strategic flexibility and sharper focus on a high-growth category,” Ritesh Tiwari, HUL’s CFO, stated in recent earnings calls, adding that the company expects the ice cream segment to continue growing in double digits, driven by rising disposable incomes and low per capita consumption in India.

The demerger was approved by the board in November 2024, followed by scheme of arrangement permission in January 2025, and shareholder approval later that year. With the NCLT’s approval, the procedure is on target to be completed by the end of fiscal year 26.

The ice cream industry, which works in a capital-intensive and rapidly changing consumer market, is projected to gain from more autonomous governance and investment structures.

At 1:45 pm, the shares of Hindustan Unilever were trading 0.61% lower at Rs 2,454.50 on NSE. 

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