FMCG major Hindustan Unilever Ltd (HUL) has sold off its subsidiary Pond’s Exports Ltd, a leather shoes exporter, to Goa-based Hindustan Foods Ltd (HFL) for an undisclosed amount, it said in a stock market disclosure.
HUL said Pond's Exports has formed an agreement with HFL, the vendor that makes PepsiCo Inc’s Kurkure snack brand, for sale of certain immovable assets and inventory.
The acquisition of Pond's Exports by HFL comes on the heels of HFL raising a round of funding from Sixth Sense Ventures, a consumer sector-centric venture firm.
“This marks the entry of Hindustan Foods in the leather shoes exports space with a global clientele,” the company said in a BSE filing.
The sale by HUL, which holds a 90% stake in the leather manufacturer, was triggered by the fact that Pond’s Exports faced a tough year (2015-16), due to challenging economic conditions in its main market, Europe and was pushed down by a weaker Euro.
Chennai-based Pond’s Exports, which was launched in 1979, has a sole manufacturing facility in the city. It exports its products mainly to Europe. A person familiar with the development said the company is expected to achieve net sales of nearly Rs 50 crore during financial year 2016-17. “HFL is poised to take this business to Rs 100 crore by financial year 2018-19,” the person said.
HFL was earlier owned by Dempo Group, which sold a significant stake in the company to Vanity Case Group in 2013. Vanity Case is a contract manufacturer for consumer products and operates 13 facilities in India.
HFL makes Kurkure for PepsiCo and baby food products Farex, Easum and First Food for Danone. Besides PepsiCo and Danone, Vanity Case also works with Reckitt Benckiser, Hindustan Unilever and GlaxoSmithKline to make personal and home care products and processed foods.
HUL has been involved in several primary and secondary deals in the recent past to sell some of its business verticals. Early this year, the consumer goods major had sold its rice export business to LT Foods Ltd, a processor and exporter of packaged rice under the flagship brand Daawat.
Last year, it sold its bakery business to private equity firm Everstone Capital. Though the bakery unit recorded good performance both in terms of top-line and bottom-line, the sale was imminent as the business was stuck in a low-growth industry due to challenges posed by other breakfast options and the low entry rate in the segment.
It also sold one of its real estate properties in 2015. It disposed of the property in Bangalore, which was proposed to be developed as a special economic zone (SEZ), to Brigade Properties Pvt. Ltd, a joint venture between Bangalore-based developer Brigade Group and Singapore's sovereign wealth fund GIC.
Like this report? Sign up for our daily newsletter to get our top reports.