Ladies and gentlemen, good day, and welcome to Hindustan Unilever Limited Conference Call. As a reminder, all participants will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Srinivas Patak, Chief Financial Officer at Hindustan Unidivore Limited.
Thank you, and over to you, sir.
Thank you, Amal. Good afternoon, everyone, and welcome to a short call that we've organized on what is actually a very special day for all of us. Fifteen months ago, we had announced a plan to merge GSK Consumer Healthcare Limited with HUL, and we are delighted to share that today that has actually been confirmed, having received all the approvals. And and very equally delighted to welcome the 3,500 strong family of members who joined us today. Before I get into some details, I would like to bring your attention to the safe harbor statement for good order.
This update is predominantly in the nature of a transaction update. This is not a full fledged update in terms of the business case and the synergy. And this presentation is already loaded on the website, and therefore, you will get a picture a clear picture of what we are talking about. So what I want to start with is actually giving you a very quick recap of this deal when we announced it in December 2018. Clearly, a strategy perspective, it was right bang on in terms of what we wanted to do.
The HFD portfolio, the company and the branch, this is actually the number one HFD portfolio in the largest HFD market, and we're actually giving an opportunity for Unilever to enter into a new segment to serve the needs of many of our consumers. Clearly, from a strategic rationale perspective, market development was a key opportunity. Market development is a key opportunity arising from low levels of penetration. And if you recollect, we had talked about the total penetration of the category is less than 24%, 25%, much lower in the rural areas. And therefore, that really gives a big opportunity to actually build and grow the market therefore grow the business.
Equally, there was a very attractive opportunity to drive premiumization through the high sciences portfolio, and that is actually something we will look to unlock. There's also a big advantage of leveraging the HUL distribution system and the distribution muscle, all of which would actually be big growth enablers for us. At that point in time, we had called out structural opportunity to be double digit growth into the medium term and the margin expansion in the range of about 800 to 1,000 basis points. This was all using the financials which were available at that point in time, which was typically March 2018. All in all, this is actually this whole merger was based or this acquisition was based on leveraging the megatrend of health and wellness.
Some key highlights of the transaction. This is an all equity merger with for every one share in GSK, the shareholders receiving 4.39 shares of HUL. Consequent to the merger, GSK plc would own about 5.7% of the combined entity. And as a consequence of this, Unilever shareholding will actually come down to 61.9% in a post merger scenario. There is an aspect to the Horlicks brand, and I will come back and address it in the end.
So just wait for that. And there was also a very interesting piece, which was all about distributing the GSK's over the counter and oral care products under a consignment selling arrangement for a period of five years. These are typically brands such as Sensodyne, Eno, Croson, and so on and so forth. So all in all, when we when we went to the market and when we spoke to all of you, we had spoken to you about the attractiveness of the HFD portfolio and the complementarity which was coming through from the OTCOH business. This has been a bit of a journey for us.
And over the period of time, we have secured various approvals starting from December 18, went through Stock Exchange Competition Commission. Subsequently, we received the shareholders' approvals. And because we are two listed entities with different registered offices, we had to get NCLT clearances, which we did receive both from Mumbai bench as well as the Chandigarh bench. And today with the board approvals coming through and us completing some of the formalities, the merger actually becomes effective. So so effective first April twenty twenty, HUL, really, this GSK merges into HUL, and we will be running the operations.
Obviously, this is a special day for us because this is one of the biggest deals in the FMCG space. It also brings to the fold a large business in a completely new segment, and therefore, we are delighted to welcome the nutrition team into the HUL family. Here, I'm also drawing your attention to the statement which Sanjeev put out. Basically, if you really look at it, we're delighted to have on board iconic brands such as Horlicks and Boost. So that's a big tick in terms of brands.
The second is it's a unique opportunity to live our purpose and serve India, therefore address the nutrition related challenges. I think, therefore, we are excited from that angle. And third is clearly, we're delighted to welcome the 3,500 people. So when you really look at the ethos of HUL, it's it's all about brands. It's all about purpose, and it's all about people.
And therefore, this merger is a win win for us, and we're we're absolutely delighted and excited, with where we are today. If I now talk to you about what is likely to happen in the course of of the next four weeks, we've already shared, when we file our return or filed a an app or filed a statement with the stock exchange that April 17 will be the date for record date for for shares to be, you know, issued fresh shares to be issued and therefore allotted. Thereafter, we will complete a series of filings. And between April and early May, we hope to have all shares really being HUL shares and and all shareholders really being HUL shareholders. I am sure that a lot of you will have a lot of questions in terms of the business case, the long term growth opportunities, the synergy, and and all are valid questions.
I think where we really would would really request you to have patience is when we will come back in early May, and we will give you a comprehensive update on all those aspects. Today is really about completing the merger and and and taking forward the next steps. There are also some challenges and opportunities just given what's happening off late in the environment. Plus, because they were listed companies, it is only now that we get fully into the business, into some of the granularities. And therefore, we will use the next few weeks to sharpen some of the the messaging and some of the financials, and we will be in in a good position to talk to you in early May in a more comprehensive manner.
Not to say that we can't talk about many of those aspects today, but it only makes sense for us to do our our total work and then share some of these details with you. If I really just give you a little bit of a a flavor in terms of how we will be organized and how we will run this business, obviously, the the focus for now is to really facilitate a smooth trans transformation and get get the business to drive growth. And the way, therefore, we have organized it is that we will call this a nutrition business, and this nutrition business will be a separate CCBT or a category country business team as we call it within the f and r division. So there will be the dedicated CCBT which operates like a mini company, and that's the that's the structure that we have across many of our many of our businesses. We almost have fourteen, fifteen CCBTs.
And, therefore, these guys will be responsible for leading the business strategy and execution and unlocking the market development opportunity. Krishnan Sundaram, who is also an integration lead over the last twelve months, will actually now take over as a nutrition business head, and he will report into Sudhir Sittatathi, who handles our total f and r business. Equally critical is that we will continue to hold on and maintain a a strong and an experienced integration team because we still see there are massive amounts of work to be done to unlock this opportunity. To give you an example, we will now start to commence. While we have done a lot of planning at our end, it's now that we need to really implement some of those plans, and and IT is a good example.
We will now start implementation of an SAP system, migrate GSKs from JDE, and that work will commence now. Given that we will be wiring up the entirety of the operations, we expect that to take about nine to twelve months. Once we are able
to get the
backbone of an IT system running, we'll have to then map out some of the other business processes and ancillary systems. And, therefore, there's a fair amount of work which will come through from that stream. Equally, while we'll have certain people who are really looking at a leading market development, we still want to capture the synergy benefits, and therefore, the integration team will continue to work closely to lead and drive that. We expect that some of this will will continue for the next twelve to eighteen months. With with within which we also hope to finish IT integration by mid of next year.
Yeah. That gives you a bit of a flavor in terms of our thinking and how we're progressing. Now if I come to the last aspect of my presentation, which is really about the Horlicks brand acquisition. If I take you back to what we had said in December 2018, at that point in time, if you really remember, there was a certain law which was likely to come into force where where we were Sebi was looking to cap royalty payments at about 2%. Yeah?
In that context, when we had evaluated the whole business case, then we really looked at a situation and said that, look, from an HUL perspective, we were fine whether the brand was acquired from a Unilever point of view or from an HUL point of view. That was one of the criteria amongst some of the others that we had looked at. And in the course of the last fifteen months, as we're all aware, that that restriction is no longer there, which effectively means that, royalties rates are now still can be as as high as 5%. To be fair, even the 2% was subject. You could have gone ahead of 2% subject to shareholders' approvals.
So that is, again, a material change which has really happened. We've also looked at our our utilization of cash on balance sheet and what is the best way to deploy it for the purposes of shareholders of of HUL. Third is also as we have understood the business and some of the various regulatory aspects to it, whether it's from a direct tax and an indirect tax, having the both the economic ownership as well as the legal ownership within one entity for something which was clearly coming out in favor of doing it together. Then the last element also is that we we as we work through, I think having the ownership in HUL gives us more flexibility to do different things with the brands and therefore drive better salience from an Indian consumer point of view. So so considering all these aspects, we looked at the valuation because this has to really be at an arm's length, and it has to be defendable from a governance perspective as well as from tax and regulatory perspective.
We also had evaluation independently done by an expert team. We've also got fairness opinions from a separate independent agency to actually validate this. With all these elements, we actually went to the board of directors, and we have got their approvals for HUL to actually acquire the brand at a consideration of about 3,045 crores. Yeah? Obvious implication of this is because we will be the owner HUL will be the owner.
We will not be paying any brand royalty. Yeah? So, therefore, that is really a summary of where we are with respect to the transaction. As I've said, this is this is we are super, super excited because this is really something which is really on strategy for us, Gives us an opportunity to capture and serve the needs. Actually, it gives us an opportunity to serve the needs of consumers in a new segment, which is nutrition.
We get onboard iconic brands. It enables us to really live our purpose, and we actually are delighted to have onboard a strong GSK team which joins us, and therefore, today, becomes all HUL. Yeah? So I'll pause here, and I'll hand it over to Aman for any questions.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets for asking a question.
The first question is from the line of Rohit Daghania from IDFC Securities. Congratulations
on completion. Just two quick ones. On this cash payout for the brand, what all approvals would be required, you know, incrementally?
So, Rohit, these are standard approvals. So we have the assignment. Because if you if you look at the original deal structure, there was always an option. There's nothing new. If you go back to the original SPA, either Unilever could have bought it or it could have been bought by one of the group companies.
So the SPA was always clear. From a central bank perspective, we worked through with them. Most of the documentation is completely routine. And, actually, we have been able to make the payment today. So so it's not an intention.
It's actually something which we have executed a little while ago.
Sure. Okay. Great. The other part is, you know so, obviously, brand brand royalty will not be there as you pointed out. But I was just wondering, you know, will there be the technology related royalty and the shared services which actual pays to Unilever?
Will those things be applicable on these revenues?
Yeah. So so from a technology perspective, I think we'll have to break it up into two. A lot a lot of technology and the r and d, if you really see for the HFD parts of the business, is housed in India. Yeah? So we got a dedicated r and d team and a dedicated r and d setup, and they do a lot of work with respect to nutrition.
And therefore, we will continue to leverage them. It is quite possible because many of these sciences travel between various of our categories and divisions. And in that case, if you were to access any of technology from a Unilever, we will pay on a used basis. Obviously, it'll have to stand scrutiny of being at arm's length. It'll have to give benefits to HUL, and it'll be subject to its routine governance processes, include going to the audit committee.
And if there is anything, then it'll come on that, and there'll be benefits to it. But a starting point, a lot of the r and d Mhmm. Is actually something which is in house in in the organization.
Now the third part
is if there are some elements related to central services, now that will really depend on there is an a certain methodology which we follow today. Again, it comes back to the same principles. The principles really being arm's length benefit to the organization subject to audit committee. If it satisfies those conditions, we will pay. So so the clear answer is in two parts.
First is brand royalty, we will not pay. Sure. Technology in most parts is in house. Mhmm. And whatever we access technology or other services, subject to us or to the conditions that I described, if they meet that criteria, we will pay separately.
Sure. Right here, Shuni. Thanks a lot, and wish all the best.
Thank you. Thank you. The next question is from the line of Arnav Mitra from Credit Suisse. Please go ahead.
Yeah. Hi. Just to to carry on with the previous question. So at the actual level, currently, we pay about 2.8% to the parent. How much would this be?
I mean, I've got your breakup, but is there a percentage you could share what you would be likely to pay for the GSK part of the business?
So look. I don't have any percentages and numbers because as I for the reasons that I explained to you just now, I think, as I was answering the previous question, what's very clear is that I will not pay a band royalty. Yeah? And and without getting into future expectations and future guidance and numbers, if you were to take a look at the last year's annual report, you would know what is the brand royalty payout. Yeah?
And I think I think that was approximately a 138 crores, but that's really a view of past. Now r and d, as I said, a lot of it is in house. So it really comes down to saying what are we accessing from Unilever. So that is something which, at this stage, I will not have any visibility. And central service is also something which I will need to work through.
Yeah? So at this stage, it will be very difficult for us to give a number. Maybe when we come back in May, we'll try and see if it's possible. But at this stage, I will not be able to give you a number.
Sure. And the second question was now that you own the brand, is there any clarity on whether you will have amortization on intangible assets? Does it give you some kind of a tax shield on the amortization in the tax books?
So look, again, we'll a detailed discussion in May. So two aspects. First is we're owning the brand for India territory. I think that I just wanna make sure that's clear because as far as the rest of the territories are concerned, really, where we'll own the brand. Obviously, there are two aspects to it.
In this case, there is a cash payout, and therefore, there will be a tax amortization. And there is a broader question of of when we have merged the two entities and what happens to the intangibles. That is something that we will address back in May when we come for a detailed update. But on this one, the position is very clear. There's a straightforward one in terms of this INR 3,045 crores.
There should be a direct benefit of tax amortization.
The next question is from the line of Pejas Shah from Spark Capital. So
since the Holix brand acquisition by any of the group company was of the original deal as well in 02/2018, so how much value was assigned to the brand then?
So if you go back and look at I think I think Yuleeva put out a a number there. I think it was €425,000,000, if I recollect, for brand in all markets. Yeah? That was the total number given by Unilever.
Okay. And so the balance number is still being acquired by Unilever Global, the other 19 geographies or 20 geographies. Is that correct?
Yeah. So the total business is in more than 119, 20 geographies are key, and Unilever is acquiring the brand rights in all those markets. Not for me to comment on what value are they paying or or what are they working on. I'm sure if there are some releases from Unilever, you'll get a picture of that. Yeah?
Sure. Sure. Thanks. Sir, second, when the deal was announced, we had visibility of 802 percentage points synergy benefits accruing in GSK operating margins. Now since then, GSK margins have improved by five percentage points.
So what is the latest assessment of the synergy benefits for HCL?
So what did I say? So therefore, I said let's let's have a detailed discussion on this in in May when we come back. Yeah? That's not something which we are addressing in today's call. Some of it looked they would have learned from us, and and some of it benefits would have been captured in what has come through.
While there are independent companies within what was available from a framework, we have been sharing some best practices. So some parts would be captured. But, again, I do believe that there is a fair amount of benefit which we will realize, and May would be a good time to sorry. Would be a good time to have a a detailed conversation on this. But the good aspect of this is that if you just look back and say that, look.
If we did this merger and we got into a swap ratio in December '18, and if some of these benefits have flown through from an economic and a cash flows perspective, some of the benefits are already in. Yeah? So I think that's an important lens to apply. But but having said that, we will have a detailed discussion in May.
Okay. And lastly, any thoughts on other brands like Vivo or Maltura, which has been dormant in the earlier setup? Are you planning to revive those, or, it's too early to comment on that as well?
Look. There there's a bigger opportunity to actually take Horlicks and Boost. Yeah? We're talking about certain penetration levels of less than 25%, and these are seriously iconic brands. To be honest, there is a lot more joy if you're able to lead with Horlicks and Boost.
If you're able to actually stretch the portfolio right from sachets to premium in terms of price and benefits sorry, price and formats. And second is that if you're able to actually use benefit segments with high sciences and protein and growth plus, there is, again, massive opportunity. So so I would really say that our first focus would really be on Horlicks and Boost, and, and then we'll think about Viva and Malto. They're too small at this stage. I I think a bigger joy is to really start taking bigger business and and go for it.
So are we open to divesting some of these flanking brands, if at all, in future?
So look. Too early. Yeah. Too early. First, I think let's focus on Horlicks and Boost.
And in due course, we will really see. And and if they're not strategic, look, everything is on the table. It's just not about it's just not about what's coming through through this month. We do look at from time to time opportunities for acquisition. And if some parts of our portfolio are not strategic, we are open to divestments.
But that's too early at this stage with respect to the brands that you've asked me.
Great. Thanks, and, call it on. Thanks for calling our time in such difficult times. Thanks. Thanks a lot.
Yeah. Thank you. Thank you. The next question is from the line of Shereesh Pardesi from Centrum. Please go ahead.
Yeah. Hi, Shereesh. Congratulations, and thanks for an opportunity. Just two questions. You have spoken on the Horlicks brand.
You give some details on the fee income on OTC brands?
So so if you go back and I think what we had said, even if you look at December 18, I think there was a detailed question on this and we clarified. Broadly, if you see, the same equation holds. Yeah? I thought we had we had explained about a net margin being in the same levels that you see in the balance sheet. There is no change to that.
There have been some changes to the responsibilities. If you see, originally, they were doing both the aspects of market building, market development, and distribution. In the revised scheme of things, for GSK consumer doing that on behalf of the others, In the revised scheme of things, where we are saying is that some of the development and brand development and brand ownership will be with with the the GSK entities. As far as HUL is concerned, we will really focus on on distribution. But if you were to then start to model it from you, I think in the overall net margins that that was coming through into the financials, I don't see that will be a material difference.
And in when in May when we talk to you, we will actually spell out some of those numbers. But for now, if you really want to get a very quick response, the net margins will continue to remain.
That's very helpful. The second question is on the penetration. What you have said is 24% in urban and 14% in rural. I think that was for a while ago. Is I'm sure in between last fifteen months, GSK would have done some penetration as they've gone on your synergy part.
So would you have any number last quarter and December ending? What would be the penetration and the category?
I I I don't have a number straight away. To be honest, in in give or take, yes, there was definitely that GSK did work to take a brand to the rural markets. They definitely put in efforts to drive Sashay portfolio. And definitely, in a near, there would always be some pickup of penetration. I don't have a number offhand, but typically, in a near you penetration doesn't move by more than two or 300 basis points.
While I don't have a number, but I don't think materially that is going to alter the attractiveness of what we're buying into. Yeah? Because when you do market development over the medium term, there is a sizable benefit that you can really drive. Yeah? Two, three hundred basis points here or there is not going to make a big difference in its totality.
Okay. Just last question on see, right now, I look at Horlicks and Boost portfolio, it's largely driven by the mass segment, and you have pushed in the presentation saying that the premiumization is the larger opportunity.
So No. I did not say that, Suresh. Let me clarify. I said that is an opportunity. To be honest
I said
when you're talking about penetration of about 25%, There is massive opportunity even being where you are today. But, yeah, but please continue.
Yeah. So if I look at and quickly break up about 22% of the premiumization portfolio which Alex owns today, do you think that there will be a significant opportunity in, like, say, two to three years?
So, look, I I still continue to believe that and and look, we are in in slightly difficult environment, and and and you're all well, you know, aware of that. I think first, we need to get through that. If I if I keep that aside for a bit, I think there is very good growth opportunity for this business to grow in double digits, and that's really gonna come from leading market development. Yeah? And, and therefore, I think that's how we really need to take it from there.
And premium will be one aspect to it. Premium will be important. Premium will grow. But but let's take it step by step.
Wonderful. Thanks a lot, and all the best to you.
Thank you. Thank you. The next question is from the line of Ankit Kavra from Kotak. Please go ahead. Ankit, your line is unmuted for question.
Please go ahead. Since there's no response on the line, we will move to the next question. That is from the line of Pinoy Jariwara from Suneedi Securities. Please go ahead.
Yes. Hi. Thank you for the opportunity. My question was when you gave the guidance of EBITDA margin expansion by 800 to 1,000 basis points at the time of acquiring GSK Consumer India. That at that time, the base year was meant to be FY eighteen.
Right? That's right. Okay. And second part of the question was on the the goodwill, the intangible the tax benefit that would accrue from writing off the intangibles. So you've given a clarification that the cash payout of about 3,050 odd crores will definitely be eligible.
Just wanted to understand where is the lack of clarity from the from the shared swap? So there are so I said let's let's keep it simple. I said that's something which we should pick up for a broader discussion in May. Yeah? So there are there are enough in tax laws which you can argue on both ways.
So I I would really suggest that we park it for May, and we have a broader discussion on that. Yeah? Because there are case laws in favor, and there is, it's also and it's a tax neutral merger when two companies merge. So there are both pros and cons, and I think we'll come back to you with a point of view in May in terms of how we're looking at it. Yeah?
Understood. Thank you. Yeah. Thank you so much. Perfect.
What I wanted to just make sure that this one pick up a couple of questions which are there on the web. That was the first question, I think, which came from Aditi Somans from, Goldman Sachs saying how will we pay? How will you pay Unilever for the Holix brand? No. We don't pay Unilever for the Holix brand.
We pay GSK because the deal was originally structured. It's not that Unilever bought over and we are buying from Unilever. The SPF provided for Unilever or the group buying the brand. In this case, HUL has bought the brand for the India territory, and we are paying to to GSK. Unilever will in turn pay its own share for whatever it is for its international markets to them.
Yeah? In terms of the second question has come from Chanchal Khandelwal in terms of channel synergies. How will this play out? The pharma is an important one. It's absolutely an important one.
Direct distribution is an important one. Rural is an important one. Pharma is an important one. And I think from a pharma point of view, I think we've also answered in the past, Horlicks is an important addition. We have skincare and other products which go into the channel.
That's again an interesting piece. As we now distribute the OTC, Oh products, that again is something which is going to be which is going to add to us. So all in all, I think today we have a very good portfolio, which we can and and, actually, equally, if you see what we announced about a week week ago in terms of a small brand, an an important one, which is really Bewash. Again and again, something which helps us from a from a channel perspective. So I think we got a good portfolio to really take to take to the pharma channel, and I think all of that will help us actually.
And then then we are very good at distribution, and that's what really Unilever is very good at, and I think that'll all come in for us as we do it. Yeah? There's one question from, again, Aditi Suman about the 800 to thousand basis points improvement, and you suggested the post royalty or before royalty. Look, Alita, we will address all of this next month. When we had originally talked about the 800 to thousand basis points, clearly, the brand was being owned by Unilever.
That was the plan at that stage, and we were paying royalty. Now we will rework all of these numbers and what they would mean. As we also said, there's also about fifteen months down the line. There's also been some improvement which has come through. Some because of some of the learnings which we have been able to share, some because the business itself did well.
Let's let's put all of that together, and we'll answer it in May, and then we'll give you a clear view of how we see both growth and margin expansion. We'll also get some more clarity in the next few weeks in terms of the current situation that we are in. Notwithstanding, I think it's important to talk a medium term. Yeah? Maybe I'll just flip back saying any other any other calls on anything
on
the on the lines? I just wanted to one more question maybe from the audio or maybe max two questions on the audio. And I think they got a couple of questions here on on the web.
Sure, sir. Please take the next question that is from the line of Barag Shah from ASK. Please go ahead.
Punav, this is bit confused. You originally mentioned that earlier the proposal was to acquire the brand by GV Research, and there was a likely proposal to keep the royalty payment to lower level. And since then, that matter probably seems to be buried. I I'm not able to then understand. Not that I'm I'm happy that liver is bought.
Henderson liver is bought the brand rather than Unilever buying them. It will making the royalty payment. I mean, that wouldn't have been the best arrangement. So I'm happy with these arrangements. But I'm just trying to understand how you said settling in because if the royalty payment keeps going away, then from legal first delivery first 50, they would have been on the branch and take the royalty.
I would have thought.
So so couple of things to just clarify. I think while while you may be happy with the current situation you are, I think the important lens for us to saying this, the stance that we took in December '18, did it make sense from a shareholder's perspective in HUL? There was a rationale in the background I explained, and it did. Today, I've also taken some pains to explain why we believe is the right things to do and how it actually is beneficial from an HUL shareholder point of view. As far as Unilever is concerned, obviously, that's something which Unilever should answer.
But but if you really look at it, there is a strong economic rationale when they worked out, and that is why they are happy. If you have any specific questions on this aspect, I would request you to get in touch with our investor relations team, and they'll be able to explain it in a bit more detail for you.
Just just a bit more on that. I don't know whether happy or not is a related term. I'm just saying that in 02/2018, if the proposal was being considered because of the worries about potential royalty clampdown. If that is no longer there, then why would Unilever not be interested today?
Think we can So let let's answer it this manner. I think I think it's absolutely a question you should ask Unilever because I shouldn't be answering on behalf of Unilever. The question is the current proposal, and there's an economic rationale for all of this, does it make sense from a shareholder's perspective subject to independent valuation, fairness opinion, board approvals? Yes. That'll also make sense for Unilever because there are and from what I understand, Unilever is also going through major changes and transformation at a global level.
They have their own tax perspectives of what positions and take, what views they take. When we had discussions with them, they were happy to to go with it. Made economic sense for them. It's not for me privy to what that decision is because in these cases, I'll really represent what comes through from an HUL perspective.
Yep. Thank you. The next question.
Aman, is there any other last question, please?
Yeah. We'll take the last question, sir. That is from Shereesh Pardesai from Centrum.
I thought he did that already. Shireesh has already asked a question.
No. No. I I I got that answer in between. Thank you.
Okay. Okay.
Thank you, sir.
Alright. So maybe just I'll just take the last question or two on on what's on the web. When can we expect to see a combined balance sheet? Are the assets from revalued? Yes.
The let me answer the second. There's a question which has come from Nitin Gupta from SBI Cap. Two questions. When can we expect to see a combined balance sheet and the assets from GSK consumer revalued by valuer? Let me take the second part first.
Yes. The assets are being revalued by a valuer. We will be hoping to complete that soon. And I think we would expect to see a combined balance sheet when we report the June results. I think that's the first time that we will see a combined combined balance sheet.
Yeah? There's one more question from Gautam Shwedee from Nepyan Capital. The question really is that now that we have paid 3,045 crores, what's the price sales for FY nineteen twenty twenty one? I am not going there. I'm not getting into a forward projection of it.
I would I would say you have all the information, and and you should be able to use it. There's a question from Richard Liu from GM Financial. How was Sebi hiking the 2% to 5% now influences brand ownership? Shouldn't a higher royalty allowable make it easily easy for Unilever to own the brand and HUL to pay the royalty? GSK's cash of 5,000 crores also will become HUL balance sheet.
So let me take the second question first, Richard. Yes. GSK's cash will also come onto our books. And that's why when I explained the logic and the rationale for HUL considering all of this, it was three or four elements. I talked about the royalty change.
That was I talked about the cash and utilization as a second reason. I talked about when I look at some of the aspects of direct taxes and the indirect taxes, and when I look at the strengthening of the claim both from an economic ownership as well as from a from a a legal ownership, that also comes into play. And I also talked about a fourth aspect of the freedom and the flexibility to do with a lot more with the brand, which is local. And you have you know that we have many other examples of local, which is really in terms of our Indule caste to our brews to our lacme. It's a combination of four or five things which actually help us make the decision.
Now second aspect you said is that, yeah, you should Unilever should be happy to take a higher royalty. Sure. Unilever can be happy to take a higher royalty. It's also found in the water that Unilever corporate structure, how they were looking at in terms of what tax benefits they would get and which entity would they put in. From the limited understanding that I have, and that's what I was trying to tell the other gentleman, there is also a lot of change which is happening at the Unilever corporate structure in terms of organization and entities, and you would have all read about it in the last six, nine, twelve months.
So there are many of those moving parts and and which has got a ramification in terms of how Unilever were to look at it from a tax angle. So so not for me to get more detail of what Unilever would see and why Unilever would make a certain decision. What's very clear for me, and and I think that's the more important question for me to answer, is if we are making this payment and if HUL is owning the brand for the Indian territory, is there a financial case for it? And which is what I've taken pains to explain that there is done through an independent valuation, fairness opinion, board and audit committee looking at it and giving us the go ahead. And that's the reason we're delighted that HUL will be owning this brand, and and we will we will go ahead with this merger.
Any further questions on this aspect on the Unilever side? I think only fair that you guys raise it with Unilever, and and that that, I think, is the most appropriate one. Yeah? So I'm I'm conscious of time, and I'm also conscious of everything which is going on in everyone's lives. So a few things.
First is thank you for being available and giving us an opportunity to just explain this very quickly, conscious that everyone is working differently, and it's important to therefore put out a point of view. We will, in due course, have a broader discussion, and we hope to do that in May in terms of the aspects relating to the business case, the synergies, the tax positions, and various ins and outs. So we will hopefully talk to you in May on all those aspects. And until such time, I I think it's important that we all remain safe. We take care of yourselves.
You take care of your families. And and collectively, work towards fighting is what what's really is actually a human tragedy. So so I hope we'll all do our best and and come out emerge out stronger, and then all work together for a brighter future. Please do take care. We are delighted today, and I think I do want to acknowledge all the people, many of the people who have worked on the integration team, many of the people who worked for making all of this happen.
And in the last weeks, it's been incredibly tough and interesting. Actually, on on the lighter side, we also had our first completely agile board meeting and audit committee to make it happen. So as we're all doing, I think many firsts, while I think we are keeping a good amount of social distance, think we've never been better connected. So so thank you for for everyone from team HUL, which is one team from today. And and on that note, I will actually hand it back to Aman to bring the call to a close.
Thank you very much, sir. Ladies and gentlemen, on behalf of Hindustan Unilever Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.