The country’s largest fast moving consumer goods company, Hindustan Lever Ltd (HLL), is in preliminary talks with the Ahmedabad-based Lalbhai group firm, Anil Products, to sell its starch business.
Hindustan Lever has put the business on the block as a part of its strategy to exit non-core areas and focus on 30-odd power brands.
Anil Products is the largest starch manufacturer in India and lists HLL among its customers.
“The two sides are in preliminary discussions and it may take a while to seal the deal,” sources familiar with the development said. Anil Products has appointed a merchant banker to work on the deal.
If the deal goes through, it will give Anil Products a fillip in its efforts to ramp up marketshare in the Rs 700 crore Indian starch and starch derivatives market. The per capita starch consumption in the world is 6.5 kg, but India’s average is 700 gm.
A Hindustan Lever spokes- man declined to comment on the issue. “It’s the company’s policy not to comment on mergers and acquisitions,” the spokesman said. HLL’s starch facility is located at Pondicherry.
The starch business forms a sub-unit of HLL’s speciality chemicals business division and contributes just about Rs 15 crore to HLL’s turnover.
HLL has been splitting its speciality chemicals business division and looking for separate partners for each business.
It hived off its flavours, fragrances and food ingredients business into a separate joint venture with ICI India and has kept the option of exiting the joint venture open. It sold its nickel catalyst adhesives business to ICI India.
HLL has chalked out a strategy of focusing on power brands and exiting non-core areas over the last few years in the face of shrinking margins and poor topline growth owing to the increased competition that it is facing in all the business segments that it operates in.
It exited the seeds and animal feeds businesses, the mushrooms business and the edible oil business by selling one of its oldest brands, Dalda.
The Lalbhai group has a presence in textiles (Arvind Mills), apparels (Arvind Brands), FMCG products (Ayur herbal care), financial services (Anagram stock broking) and real estate.