Unilever planning parting with Dalda

KARACHI (December 18 2003): Unilever Pakistan Ltd, the country's largest consumer goods maker, announced on Wednesday it plans to sell its edible oil business, commonly known as “Dalda”, as part of its global strategy to focus on core brands.

In a release of the company sent to the Karachi Stock Exchange (KSE), Unilever said that it is assessing the future of its edible oils business, including its disposal.

It is learnt from reliable sources that Unilever has hired Hong Kong Shanghai Banking Corporation as its financial advisor, to help sell the edible oil business.

A company spokesperson, however, categorically stated that disposal of edible oil business does not mean closing down of operations. What the Unilever is seeking is either outright sale or a joint venture.

Either of the two is possible since the edible oils and margarine production line is a stand-alone facility located in SITE, Karachi.

The review of the edible business is driven by the need for Unilever Pakistan to focus on developing its core businesses that are vital for its long-term future.

Internationally, Unilever has divested itself of edible oils business, as this is not central to its future global strategy. In June this year, Hindustan Lever Limited (HLL) transferred ownership of its edible oil and fats businesses in India and Nepal to Bunge Ltd – a US-based, integrated global agribusiness and food company – for 900 million Indian rupees.

Besides the edible oil business of Unilever, including the manufacture, marketing, distribution and sale of edible oils under the 'Dalda' brand name, which is licensed to Unilever Pakistan, the company has four other divisions, namely, soaps and detergents, personal products, ice creams and tea.

The interests of Unilever Pakistan's partners, shareholders and employees of the edible oil business are an important factor in the current review. Unilever Pakistan remains committed, the announcement said, to continue to operate in Pakistan and to the growth of its core business.

The sell-off will be beneficial to the shareholders as the edible oil unit was not in profit due to stiff competition from local companies and influx of unbranded oil packing in the local market.

The focus of the company has over the years shifted to home and personal care category, which has the potential to show strong growth.

According to sources close to edible oil industry, Lakson Group and Habib Oil are serious contenders and may try to purchase the edible oil unit of Unilever.

Based on simple analysis, from the sale of this segment of Unilever, shareholders would gain between Rs 70 and 84 per share, an analyst said.

Unilever share price on the stock market on Wednesday declined by 38.90 rupees, or 2.66 percent, to 1421 rupees.

Pakistan imports 1.3 million metric tons of vegetable oil products annually, mostly palm oil from Malaysia, to help meet its domestic demand of nearly 1.9 million tons per annum.

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