HUL to buy Adityaa Milk to bolster regional market

MUMBAI: Hindustan Unilever (HUL) is set to acquire Adityaa Milk ice cream and frozen desserts business from Vijaykant Dairy and Food Products (VDFPL), which largely caters to the southern markets for an undisclosed amount. Industry experts view the move as a regional expansion strategy by HUL to take on national leader Amul.
Adityaa Milk is a fast-growing brand and brings in distribution and portfolio synergies to Kwality Wall’s across Maharashtra, Goa, Karnataka and Kerala.The proposed acquisition is in line with HUL’s strategic intent to strengthen its position in the ice cream and frozen dessert market in India.
HUL said in a statement that the parties will work together to complete this over the next few months. VDFPL will manage the business until the transaction is completed, and will also continue to manufacture for HUL for an agreed period of time.
“Categorically, we are not taking over their manufacturing setup as part of the transaction,” said an HUL spokesperson, while adding, “Adityaa Milk business will continue to be run independently by Vijaykant Dairy & Foods Products.”
Edelweiss Securities senior VP (institutional equities) Abneesh Roy said, HUL is a strong No. 2 player in ice cream and this acquisition will help in closing the gap with Amul, the current No.1.
Adityaa Milk is a flagship business of the roughly Rs 270-crore VDFPL, which was incorporated in September 2004. The Belgaum-based company was set up by Shivkant Sidnal, who is the son-in-law of Vijay Sankeshwar of VRL Logistics. Industry sources estimate Adityaa Milk’s annual turnover at about Rs 45-50 crore. It has presence in dairy and dairy-based products, and over the last five years has successfully expanded into ice creams and frozen desserts. With its roots in Karnataka, Adityaa Milk has gradually expanded into Maharashtra, Goa and Kerala.
HUL declined to comment on the turnover or deal size numbers. With both HUL and Adityaa Milk operating a multiple brands strategy, the company believes the two portfolios will complement each other.
HUL CMD Sanjiv Mehta said, “Ice creams and frozen desserts is an exciting category and we see great potential for growth. We believe the acquisition will complement our existing portfolio of Kwality Wall’s.”
Expanding footprint by acquiring regional brands is not new to HUL. The maker of Lux soap and Sunsilk shampoo had acquired Indulekha, a premium hair oil brand, two years back to strengthen its naturals portfolio.