HUL Ice Cream Demerger: Cost Apportionment Guidance Issued to Shareholders
Hindustan Unilever has successfully completed the demerger of its ice cream business to Kwality Wall's (India) Limited, with 234.96 crore shares allotted to eligible shareholders. The company has provided detailed guidance on cost apportionment, allocating 98.09% to HUL shares and 1.91% to KWIL shares based on net worth calculations as of November 30.
*this image is generated using AI for illustrative purposes only.
Hindustan Unilever Limited (HUL), a leading FMCG company in India, has successfully completed the demerger of its ice cream business to Kwality Wall's (India) Limited (KWIL). Following the completion, the company has issued detailed guidance to shareholders regarding the apportionment of acquisition costs for their shareholdings.
Demerger Completion Details
Kwality Wall's (India) Limited has officially completed the share allotment process following the approved demerger scheme. The Board of KWIL, at its meeting held on December 12, approved the allotment of shares to eligible HUL shareholders.
| Parameter: | Details |
|---|---|
| Total Shares Allotted: | 234.96 crore equity shares |
| Face Value: | ₹1.00 per share |
| Allotment Date: | December 12 |
| Record Date: | December 5 |
| Share Entitlement Ratio: | 1:1 (One KWIL share for every HUL share) |
| Share Form: | Dematerialized form only |
| Effective Date: | December 1 |
| Appointed Date: | December 1 |
Cost Apportionment Guidelines
HUL has provided shareholders with specific guidance on apportioning their total cost of acquisition between HUL and KWIL shares post-demerger. The apportionment ratio has been determined based on the net worth of HUL and the net assets of the Ice Cream Business Undertaking as of November 30.
| Entity: | Cost Apportionment Percentage |
|---|---|
| Hindustan Unilever Limited: | 98.09% |
| Kwality Wall's (India) Limited: | 1.91% |
Practical Example
For shareholders who purchased 1,000 HUL shares at ₹400.00 per share (total cost ₹4,00,000.00), the cost apportionment would be:
| Component: | Amount |
|---|---|
| Original Total Cost: | ₹4,00,000.00 |
| KWIL Shares Cost (1.91%): | ₹7,640.00 |
| Remaining HUL Shares Cost: | ₹3,92,360.00 |
| KWIL Shares Received: | 1,000 shares |
Regulatory Compliance and Tax Implications
The demerger has been structured in accordance with Section 2(19AA) of the Income Tax Act, 1961. Under Section 47(vid) of the Act, the allotment of KWIL equity shares will not be regarded as a transfer. Additionally, as per explanation 1(i)(g) to Section 2(42A) of the Act, the date of acquisition of HUL equity shares will be deemed to be the date of acquisition for KWIL equity shares.
Corporate Structure Changes
As part of the demerger process, KWIL's Board has approved the cancellation and reduction of its entire pre-scheme paid-up share capital comprising 5.00 crore fully paid-up equity shares of ₹1.00 each, which was entirely held by HUL. Consequently, KWIL has ceased to be a wholly-owned subsidiary of Hindustan Unilever with effect from December 12.
Listing and Governance Structure
KWIL will take necessary steps to obtain listing and trading permission for the allotted equity shares from BSE Limited and National Stock Exchange of India Limited. The newly allotted equity shares will remain frozen until listing and trading permission is granted by the stock exchanges. The company has established statutory committees required for a listed company and appointed senior managerial personnel to support its operations as an independent entity.
Historical Stock Returns for Hindustan Unilever
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -2.72% | -2.79% | -8.86% | -17.50% | -4.01% | -8.66% |
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