The Hindu Business Line : Marine products biz showed decline: HLL

Advertisement

Chennai March 6 Unimpressive financial results from marine product exports and a desire to focus on its core FMCG business have prompted Hindustan Lever (HLL)'s recent decision to exit its marine product exports business, explains the company's notice to shareholders seeking their approval for the move. The marine products business, which manufactures and distributes products such as Surimi and crab sticks catering to the export markets, has notched up losses of Rs 15 crore, Rs 14.4 crore and Rs 9.1 crore respectively over the three years to 2006. Revenues from the business have showed a declining trend, edging down from Rs 259.3 crore to Rs 189.6 crore over the same period. Factors such as un-remunerative Surimi prices in the Japanese market and anti-dumping duties, non-tariff barriers on import of marine products in key markets such as the US and Europe, apart from the after-effects of the tsunami, are cited as the key factors responsible for the unimpressive financial showing from this business in recent years. The move also appears to be in line with Unilever's decision to exit the marine business in most European markets.

Though HLL has not provided any guidance on the sum it hopes to realise from the transfer of this business, it places the net book value of the fixed assets deployed in this business at Rs 37.09 crore (as on December 31, 2006), which includes manufacturing facilities at Gujarat and Kerala. Apart from the manufacturing facilities, the divestiture will include assets at third party units, working capital and licensing rights for brands owned by HLL in this business. The deal is proposed to be structured as a slump sale, through a competitive bidding process. HLL is seeking shareholder approval for this move through the postal ballot route, for which results will be announced on March 31, 2007.

The decision to exit the marine products business ties in with HLL's efforts since 2000 to focus on core FMCGs, both in the domestic as well as export markets.

More Stories on : Restructuring | Aquaculture | Hindustan Lever Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page