As Hindustan Unilever (HUL) gears up to demerge its ice cream business into a separate entity, the company is laying the groundwork for banking relationships to ensure the new unit can access funding when required, chief financial officer Ritesh Tiwari told Moneycontrol in an exclusive interview. He said that Kwality Walls India Ltd (KWIL) may need capital support in the future to scale up operations — whether it’s expanding freezer cabinets in outlets or setting up a new manufacturing facility.
While the business will start off debt-free, with assets worth over Rs 900 crore being transferred, management said that given the high-growth, low-margin nature of the category, access to external funding will be crucial for future expansion. A shareholder vote will be held on August 12 to hive off the ice cream unit into a separately listed company with the name of Kwality Walls India Ltd (KWIL).
"The company will be able to operate with all the assets we give to them in addition to the working capital. But this is a business which is high growth and requires high investment. This business has an annual turnover of approximately Rs 1,800 crore with a margin in low single digits. We are stitching banking relationships so KWIL will be able to tap in on them to access funds as it needs, going forward," Tiwari told Moneycontrol.
If at all they have to increase the cabinets in outlets or put up a new factory, they will use loans and funding as required, he added.
The newly listed entity will continue with the same management and will have nearly 1,200 factory and office employees transferred from HUL. The business contributes 3 percent to the company's overall revenue.
Asked about leadership appointments, he said, "Once the shareholders approve the demerger, we'll start appointing the leadership. We have already identified the management representation on the board. But, more importantly, we will start appointing independent directors on the board. We will do all of that prior to listing and then we will share the information memorandum in the public domain."
The new company will have access to Unilever's brands, research and development (R&D) and tech, on the same terms as it was with HUL.
Post the demerger, each shareholder will get one Kwality Walls share for each HUL share they own.
"We have about 12 lakh shareholders in HUL, of this about 1.23 lakh shareholders hold only 1 share of HUL – so the share entitlement ratio of 1:1 ensures that it’s a fair process with no fractional entitlements and all the shareholders who hold only 1 share also get the flexibility to stay invested and participate in the Ice Cream business. The entire capital table of HUL will become the cap table of Kwality Walls India Limited and and then the company will be listed. We expect the shares to start trading by Q4FY26," Tiwari added.
Unilever will continue to be the majority shareholder in the newly listed company, with roughly 61.9 percent shareholding.
"Unilever will have 61.9 percent shareholding in Kwality Wall’s India, same as their shareholding in HUL. They (Unilever and TMICC) have executed a share purchase agreement, under which The Magnum Ice Cream Company will acquire 61.9 percent shares in Kwality Wall’s India from Unilever," Tiwari said.
The company’s board had initially approved the demerger in November 2024, following a recommendation by an independent committee set up in September 2024. The panel noted that the ice cream business, which includes popular brands such as Kwality Wall's, Cornetto, and Magnum, has a unique operating model. It requires specialised cold chain infrastructure and distinct distribution channels, which differ from the rest of HUL's operations.
While ice cream remains an underpenetrated category in India, characterised by low per-capita consumption and on shelf availability, HUL expects the new company to unlock substantial growth through increase in refrigerator penetration, continuous improvement of cold chain infrastructure and the expansion of e-commerce platforms.
The business currently possess over 250,000 cabinets in market, 19 warehouses and 5 co-manufacturing sites, according to HUL's recent annual report.
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