HUL sells Modern to Everstone Capital

Hindustan Unilever Ltd (HUL) has exited the bread and bakery business by selling the Modern brand to Nimman Foods Private Ltd, owned by private equity fund Everstone Capital. While the companies did not disclose the consideration, analysts estimate that HUL’s bread and bakery business is worth ₹250 crore.

The deal includes sale and transfer of the brand, six manufacturing units and a network of franchisees across the country. The business consists of a full range of white and sweet breads, as well as bakery products such as cakes, buns and pavs.

In a statement, HUL said that the decision to divest the 42-year-old brand is in line with the company’s strategy to exit non-core businesses, while continuing to drive growth in the core packaged foods business.

The FMCG behemoth had been trying to sell the Modern brand for several years due to the high cost of running the former public sector undertaking.

Modern Foods was the first PSU to be sold under the government’s disinvestment programme. In January 2000, Hindustan Lever (HUL’s earlier avatar) paid ₹105.45 crore for a 74 per cent stake in the PSU with a commitment to invest an additional ₹20 crore to revive the company. In the same statement, Sanjiv Mehta, CEO & Managing Director of HUL, said: “…we believe that the sale to Everstone will unlock the full potential of the Modern brand”. On Tuesday, the HUL scrip dropped 2.15 per cent to close at ₹802.45 on the BSE.