Hindustan Unilever gets NCLT approval to demerge ice cream business into Kwality Wall's India

Hindustan Unilever Limited (HUL) has secured approval from the National Company Law Tribunal (NCLT) in Mumbai to demerge its ice cream business into a new independent company, Kwality Wall's India (KWIL). This significant corporate restructuring is part of Unilever's broader global plan to spin off its entire ice cream division. The demerger will formally separate HUL's ice cream operations, which contribute approximately Rs 1,800 crore annually, from its main fast-moving consumer goods (FMCG) portfolio.

Under the approved Scheme of Arrangement, HUL shareholders will receive one share of KWIL for every share they hold in HUL. Magnum HoldCo, an affiliate of Unilever's global ice cream business, will acquire about 61.9% of KWIL, with HUL shareholders holding the remainder. Magnum HoldCo will also conduct an open offer to public shareholders as per SEBI regulations.

The new company, KWIL, will inherit all assets and liabilities of HUL's ice cream division, including five manufacturing facilities and around 1,200 employees. It will be debt-free at inception and poised for future expansion with dedicated funding.

Impact: This separation is expected to provide greater strategic flexibility and a sharper focus for both HUL's core FMCG business and the specialized ice cream segment. Analysts believe it will unlock value and allow for optimized capital allocation, enabling the ice cream business to grow more agilely, especially given India's rising disposable incomes and low per capita consumption. The process is on track for completion by the end of Fiscal Year 2026.

Difficult terms: * Demerge: To separate a company or business unit from its parent company. * National Company Law Tribunal (NCLT): A quasi-judicial body in India that adjudicates on corporate matters. * Scheme of Arrangement: A court-approved plan detailing how a company's affairs will be reorganized, often involving mergers, demergers, or reconstructions. * Fast-Moving Consumer Goods (FMCG): Products that are sold quickly and at a relatively low cost, such as packaged foods, beverages, toiletries. * Subsidiary: A company controlled by a holding company. * Magnum HoldCo: A specific entity associated with Unilever's global ice cream business that will acquire a stake in KWIL. * Open Offer: An offer made by an acquirer to buy shares from existing shareholders of a company, required under SEBI regulations for substantial stake acquisitions. * SEBI: Securities and Exchange Board of India, the regulator of the securities market in India. * FY26: Fiscal Year 2026 (ending March 31, 2026). * Per capita consumption: The average consumption of a product per person in a given year. * Capital allocation: The process of distributing a company's financial resources.