HUL to set up production arm
NEW DELHI: India’s top packaged consumer goods company, Hindustan Unilever Ltd (HUL), on Monday announced the setting up of a local arm, which will be engaged in manufacturing to leverage India’s growth opportunities.
The new manufacturing subsidiary will help HUL avail benefits of the lowered tax burden on manufacturers, announced recently by the Centre.
According to a stock exchange filing, the board of directors of HUL on Monday approved the proposal to form a new 100% subsidiary, which will be incorporated with an authorised share capital of ₹2,000 crore.
Last September, finance minister Nirmala Sitharaman had slashed the basic corporate tax rate from 30% to 22%, besides lowering tax rates from 25% to 15% for manufacturing companies incorporated on or after October 1, 2019, and starts production before March 2023.
In the first phase, the company, which sells popular brands such as Dove shampoo, Lux soap and Kissan jams, will invest ₹500800 crore, said Srinivas Phatak, the company’s executive director, finance and IT, and chief financial officer.
“In the whole Make in India initiative the government is encouraging stepping up of investment levels, and to facilitate this they had amended the (corporate) tax law sometime ago and given a provision where if
HUL’S BOARD APPROVED THE PROPOSAL TO FORM A NEW 100% UNIT WITH AN AUTHORISED SHARE CAPITAL OF ₹2,000 CR
you set up a new company you will get corporate tax at the rate of 15% versus the higher tax rate that is there for existing companies,” said Phatak.
“The new subsidiary has been formed to leverage the growth opportunities in a fast-changing business environment and will help HUL in becoming more agile and customer-focussed,” the company said in the filing.
Phatak did not divulge details on the categories where HUL will step up investments in manufacturing here. “The company is being set up with an authorized capital of ₹2,000 crore. Obviously, we will go step-by-step. In phase one we aim to invest between ₹500 crore and ₹800 crore in our existing categories, but at this stage, we are not calling out the categories or where we are investing.” He said India’s consumer goods market continues to be an attractive opportunity for HUL, which is committed to investing in it.