Mumbai News: NCLT Approves Demerger Of HUL And Kwality Wall’s, Paving Way For Independent Ice Cream Company

Mumbai: The National Company Law Tribunal (NCLT), Mumbai Bench, on Thursday, has approved the demerger scheme of Hindustan Unilever Limited (HUL) and Kwality Wall’s (India) Limited, paving the way for the creation of an independent, listed ice cream company in India.

Tribunal’s Observation

The two-member bench comprising Prabhat Kumar (Technical Member) and Sushil Mahadeorao Kochey (Judicial Member) sanctioned the scheme under Sections 230 to 232 of the Companies Act, 2013, observing that it was “fair, reasonable, and not contrary to public policy.”

Board’s Approval and Global Alignment

The petition for demerger stated that the process would facilitate a smoother transition for the Ice Cream Business Undertaking (as defined in the scheme) and its employees.

Background of the Decision

The order follows Unilever PLC’s global announcement to separate its ice cream business. HUL’s board had subsequently approved the demerger of its Ice Cream Business Undertaking into Kwality Wall’s (India) Limited, a wholly owned subsidiary, during meetings held on January 22, 2025.

Scheme Details

“Following the announcement by the Demerged Company’s parent entity, Unilever PLC, of its intention to separate its ice cream business globally, the Board of the Demerged Company undertook a comprehensive review and decided to separate the Ice Cream Business Undertaking in view of its different operating model, including differentiated infrastructure for supply and distribution, capital allocation needs, distinct channel landscape, and go-to-market strategy. After due consideration, the Board of the Demerged Company proposed to undertake the separation of the Ice Cream Business Undertaking by way of the Scheme, which contemplates the demerger of the Ice Cream Business Undertaking to the Resulting Company to create an independent, listed ice cream company,” the scheme as mentioned in the petition.

Tribunal’s Findings

The tribunal, after hearing the petition, noted that the demerger would allow both companies to sharpen their business focus and unlock value for shareholders. The new entity will manage iconic brands such as Kwality Wall’s, Cornetto, and Magnum, while benefiting from Unilever’s global expertise in the ice cream segment.

Future Prospects

HUL, on the other hand, will be able to “accelerate its play in high-growth demand spaces,” strengthening its portfolio of fast-moving consumer goods.

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Regulatory Directions

The NCLT directed both companies to comply with all regulatory and statutory requirements, including those of the Income Tax Department, SEBI, BSE, NSE, and the Registrar of Companies. It also mandated the filing of a certified copy of the sanctioned scheme within 30 days of receiving the order.

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