HUL gets ₹962 Crore GST notice; stock slips ~2%

27 Aug 2024 , 02:37 PM

Hindustan Unilever received a tax demand of ₹962.75 Crore from the Income Tax Department, including ₹329.33 Crore in interest, the FMCG company said on Monday. 

The notice is a result of the failure to deduct Tax Deducted at Source (TDS) on a ₹3,045 Crore remittance made for the acquisition of India Health Food Drink (HFD) intellectual property rights (IPR) from the GlaxoSmithKline (GSK) group. 

Notably, the notification concerns the acquisition of the Horlicks brand for India from GSK for ₹3,045 Crore. This transaction also brought other GSKCH products into HUL’s portfolio, including Boost, Maltova, and Viva.

Irrespective of the high tax demand, the business said that it does not anticipate any substantial financial ramifications at this time. 

In response to the demand, the FMCG major stated that it intends to appeal the order and take all required legal resorts under Indian law.

HUL also stated that it had an indemnity right, which permits it to recover tax demands raised by the Income Tax Department from relevant parties.

HUL concluded its merger with GlaxoSmithKline Consumer Healthcare Limited (GSKCH) in 2020, after receiving all relevant permits.

The consumer goods company reported a 3% year-on-year (YoY) increase in net profit at ₹2,538 Crore for the first quarter of FY25, in line with the Street forecast of ₹2,541 Crore.

At around 2.18 PM, Hindustan Unilever was trading 1.45% lower at ₹2,780.20 per piece, against the previous close of ₹2,821.15 on NSE. The counter touched an intraday high and low of ₹2,824.10, and ₹2,772.40, respectively.

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