MUMBAI: Hindustan UnileverBSE -0.38 % has agreed to sell its rice exports business to LT FoodsBSE 6.04 % for Rs 25 crore as part of its strategy to exit non-core businesses.
The deal transfers inventory along with two rice brands - Gold Seal Indus Valley and Rozana - to LT Foods' Middle East arm. Both these brands had combined sales of Rs 51 crore last fiscal.
"Given the context of our portfolio priorities, we believe that it is in the best interest of the business to sell these brands to a strategic player such as LT Foods, who is capable and well positioned to unlock their full potential," said Sanjiv Mehta, Managing Director of HUL.
The Indian unit of Anglo-Dutch Unilever began exporting premium basmati rice in three decades ago to several countries in the Middle East and Europe, which was subsequently extended to other brands and geographies.
HULBSE -0.38 % will continue to manage the business until the completion of the transaction which is expected to close over the next few months.
HUL had been struggling with high costs and an unmanageable workforce in the low-margin business. The maker of Knorr soup and Lipton tea has been focusing on core packaged food and beverage brands with higher margins and exited tea plantations, oil, fats and biscuit businesses over the past decade. Just two quarters ago, it sold its bread and bakery business under the Modern brand to the Everstone Group.
HUL's food business accounts for less than a fifth of sales compared with parent Unilever, which gets about 45 per cent of its global sales from foods and refreshments.
Source :economictimes.indiatimes.com
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