Hindustan Foods Limited (HFL), a leading contract manufacturer in the FMCG sector, has made a strategic move into the waste management and recycling industry. The company has acquired a 25.07% stake in Asar Green Kabadi Private Limited for ₹5 crore, marking its entry into a new business segment.

Acquisition Details

According to a regulatory filing, Hindustan Foods has executed a Share Subscription Agreement (SSA) to acquire 24,643 Series B Compulsorily Convertible Preference Shares (CCPS) of Asar Green Kabadi. This acquisition represents 25.07% of the total share capital on a fully diluted basis.

Financial Terms

The total consideration for the stake is ₹5 crore, structured as follows:

• ₹4.00 crore paid as cash consideration
• ₹1.00 crore adjusted against an outstanding loan provided by Hindustan Foods to Asar Green Kabadi

About Asar Green Kabadi

Asar Green Kabadi Private Limited, incorporated on November 24, 2014, specializes in waste management, scrap collection, recycling solutions, and circular economy services. The company has shown consistent growth in recent years:

Strategic Implications

This acquisition aligns with Hindustan Foods' strategy to diversify its business portfolio. By entering the waste management and recycling sector, HFL is positioning itself to capitalize on the growing emphasis on sustainable practices and circular economy initiatives.

Regulatory Compliance

The transaction is subject to the completion of conditions precedent as outlined in the Share Subscription Agreement. Hindustan Foods expects to complete the acquisition by Q2 FY 2025-26, subject to fulfillment of the terms and conditions set out in the SSA.

Market Impact

As a contract manufacturer for various FMCG products, including foods, personal care, and home care items, Hindustan Foods' entry into waste management could potentially create synergies with its existing operations. This move may enhance the company's sustainability profile and open up new revenue streams in the environmental services sector.

The waste management industry in India is experiencing rapid growth, driven by increasing urbanization and government initiatives promoting cleaner environments. Hindustan Foods' investment in Asar Green Kabadi positions the company to benefit from this expanding market.

Investors and industry observers will be watching closely to see how Hindustan Foods leverages this new venture to complement its core business and drive future growth in the evolving landscape of sustainable manufacturing and waste management.

Hindustan Foods Limited, a leading contract manufacturer for FMCG products, has reported a strong financial performance for the first quarter, marking its highest ever quarterly profit despite challenging weather conditions affecting seasonal categories.

Financial Highlights

Operational Performance

The company achieved record production across several segments:

• Beverage, OTC Pharma, and Home Care units hit peak production levels
• Lucknow Ice Cream facility reached full capacity utilization
• New Nashik Ice Cream plant commenced production in May
• Footwear business posted its highest ever monthly sales in June

Strategic Developments

• Investing ₹200.00 crores in North Ice Cream facility expansion
• Allocating ₹50.00 crores for Shoe business expansion
• Targeting ₹2,000.00 crore gross block

Management Commentary

Sameer Kothari, Managing Director of Hindustan Foods Limited, stated, "HFL achieved its highest ever quarterly profit this quarter, a milestone made even more remarkable by the challenges posed by the unseasonal rains that impacted demand in key seasonal categories like Ice Creams and Beverages."

Kothari added, "We remain optimistic of achieving the targets that we have set for ourselves."

Segment-wise Performance

Ice Cream Business

The company's ice cream segment showed strong growth despite weather-related challenges. The Lucknow facility reached peak capacity, while the new Nashik plant, with a capacity of nearly 15,000 KL, started production in May. Hindustan Foods aims to become the largest contract manufacturer of ice creams in India within the next two years.

Footwear Segment

The footwear business demonstrated significant improvement, posting its highest ever monthly sales in June. The South facility continues to ramp up in line with expectations.

FMCG Segment

The company reported that consumption in the FMCG sector is beginning to show traction, with hopes for further improvement during the festive season.

Future Outlook

While the company remains confident about achieving its targets, it acknowledges potential challenges from global trade tensions affecting the Footwear segment and seasonal variations impacting Ice Cream and Beverage demand.

Hindustan Foods continues to focus on strategic value-accretive acquisitions and operational efficiency to navigate the challenging macroeconomic environment. The company's diversified product mix and differentiated business model are expected to provide resilience against external headwinds.

As Hindustan Foods Limited moves forward with its expansion plans and strategic initiatives, it remains well-positioned to capitalize on growth opportunities in the contract manufacturing space across various FMCG categories.