March 23, 2016

Under its plans to streamline operations and divest non-core businesses, Hindustan Unilever Limited (HUL), the Indian unit of Unilever, has agreed to sell its rice export business to LT Foods for Rs 25 crore (US$3.08 million). The deal includes all inventory and the brands “Gold Seal Indus Valley” and “Rozana”, which saw combined sales of Rs51 cr (US$7.66 million) for the 2014/15 fiscal year.

HUL has an 80 year history of doing business in India, and today, is the largest Fast Moving Consumer Goods Company in the country. The company began exporting Basmati rice to markets across Europe and the Middle East in 1985 under the Gold Seal Indus brand.

“Given the context of our portfolio priorities, we believe that it is in the best interest of the business to sell these brands to a strategic player such as LT Foods, who is capable and well positioned to unlock their full potential,” said Sanjiv Mehta, CEO & Managing Director of HUL in a company statement.

The low-margins realized in the business have made high costs and workforce especially challenging for HUL, driving the company to restructure – exiting tea plantations, oil, fats, and its biscuit business over the past ten years, reports the Economic Times. Most recently, in September 2015 the group sold its Modern Foods bakery business, which it acquired in 2000 from the government to Nimman Foods. As the company exits these ventures, it plans to move forward focusing on its core $300 million packaged food business, including the brands Kissan, Knorr, Kwality Walls and Magnum, reports the Times of India.

For LT Foods, the deal represents the opportunity to expand its presence in the markets of Qatar, Oman, and Bahrain, according to VC Circle.

“The Middle East accounts for almost 80 per cent of the total basmati consumption in the world,” VK Arora, MD at LT Foods told VC Circle. This region is a critical market and our limited presence with only 15 per cent of our revenue coming from the geography is now getting addressed by this acquisition.”