Merger with GSK will take food and refreshment business to over Rs 10,000 crore, says HUL

In one of the biggest deals across the consumer goods space, Hindustan Unilever (HUL) has bought GSK's India business for around $3.8 billion. The deal increases the consumer goods giant's footprint in one of the world's fastest-growing economies.

Speaking yo CNBC-TV18, HUL's CFO Srinivas Phatak elaborated on the company's strategy for Horlicks brand going forward.

“We are actually quite excited because it is a transformative proposed merger. We get an opportunity to play in the largest health food drinks market in the world. Therefore, when you look at the possibilities and the opportunities of what you can do in the category and the brand, we are extremely excited. The second thing it also does for us is that it also gives us the scale in our foods business. When the proposed merger goes through, our foods and refreshment business will be over Rs 10,000 crore which will also put us as one of the top players in the foods and refreshment segment. So we are absolutely delighted with both aspects and for that, I think it is a transformative one from an HUL’s point of view,” he said.

“The opportunities are across the value chain. First and foremost we have to look at about synergies is it all comes from the strength of an existing HUL business. We are a Rs 35,000 crore business and we are adding 10 percent. In the whole space of supply chain, logistics, distribution, warehousing, you will ride on the strength of HUL’s distribution that is going to be a big plus. The way you go to market in terms of distribution and the cost, we spend on media-non-media is about 7x of what GSK does. Therefore, buying scale, the sophistication, the technology that we have, is going to help us unlock cost,” he added.

“The focus first and foremost is the proposed merger, get the approvals. The second focus is going to get the integration done then we need to get the growth momentum and then the savings will come. I am not going to give you a timeframe but we are very confident of the size of the price and all our efforts will be trying to see how much can we realise it earlier on in the business case than later,” Phatak further mentioned.