HLL offloads 2% in Tata Chemicals

Hindustan Lever Ltd (HLL) has taken the first step towards exiting from Tata Chemicals by selling 2 per cent of its 8 per cent stake in the company.

The consumer goods major reaped a profit of Rs 40.54 profit on the sale. It currently holds 6.2 per cent in the agri-chemical company.

M K Sharma, vice-chairman of Hindustan Lever said, "We have divested about 2 per cent of our holding in Tata Chemicals in the last quarter of 2004."

A Tata Chemical executive said, "Post this deal, the Tata group's holding in the company has increased to 27.06 per cent. The Tatas hold stake through Tata sons, Tata Investment Corporation and Tata Tea.

In 2003, Hind Lever Chemicals, the subsidiary of HLL, announced that it would be merged with Tata Chemicals. As per the arrangement, HLL got 8 per cent stake in Tata Chemicals.

Last year, The High Court of Punjab and Haryana had sanctioned the scheme of amalgamation of Hind Lever Chemicals with Tata Chemicals.

This has been the third transaction between HLL and India's second largest industrial house. Previously, the two had come together in the HLL-Tata oil mills deal in 1993 and Lakme-Lever deal in 1998.

Over the years, HLL has been selling its interests in non-core areas such as fragrances and flavours, mushrooms, animal feeds, seeds and speciality chemicals, among others.

It was also looking at exiting the leather business and companies such as Mirza Tanners and Liberty Shoes have been in talks with HLL over this. However no deal has been sealed thus far.

M S Banga, chairman of HLL, said, "We have moved out of businesses that did not have the potential to build long-term brands and businesses. Today, the company is more befitted in the market and has a stronger brand portfolio. The way forward is to drive volume, followed by value and then profit."