HUL to set up manufacturing subsidiary

FMCG major HUL on Monday announced its plans to set up a new subsidiary, which would be primarily engaged in manufacturing activities.

The company's board has given a go-ahead to a proposal to set up a step down unit, Hindustan Unilever Ltd (HUL) said in a statement.

According to sources, HUL is incorporating the subsidiary to get the benefit of the new corporate tax rate, which has been reduced to 15 per cent from the previous 25 per cent for new manufacturing companies.

"The company would initially invest around Rs 500 to Rs 600 crore in the new subsidiary," a source said adding the investment would be increased substantially in the coming times.

The new manufacturing unit would be making products mostly for the FMCG segment, they said.

In September last year, the government slashed the corporate tax rate to 22 per cent without any exemptions or incentives and to 15 per cent from 25 per cent for new manufacturing companies.

"This new subsidiary has been formed to leverage the growth opportunities in a fast-changing business environment and will help HUL in becoming more agile and customer-focused," said HUL in the statement.

It further added:"This company will be incorporated with an Authorised Share Capital of Rs 2,000 crore."