Hindustan Unilever Limited, the country’s largest pureplay fast moving consumer goods (FMCG) company, has decided to form a wholly-owned subsidiary.
“The Board of Directors of Hindustan Unilever Limited (HUL) today approved a proposal to form a new 100% subsidiary of Hindustan Unilever Limited,” a stock exchange statement said on Monday.
“This company will be incorporated with an authorised share capital of ₹2,000 crore. This 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,” it added.
While the company did not elaborate any further on the development, it is widely believed that the decision has been taken to benefit from the new corporate tax regime that puts lower tax liability on new companies.
In September last year, finance minister Nirmala Sitharaman reduced the corporate tax rate from 25% to 15% for any new domestic company incorporated after October 1, 2019 and making fresh investments in manufacturing sector.
Incidentally, market participants are of the view that the announcement could put some short term pressure on the stock due to lack of clarity on the way ahead for the new venture and the manner in which transactions will be dealt with HUL.
On Monday, shares of HUL lost 1.42% or ₹31.85 to close at ₹2,216.00.
