Hindustan Unilever Ltd. (HUL), the largest consumer staples company in India, has received preliminary approval from its board to separate its ice cream business into a standalone entity.

HUL aims to maximize shareholder value through this decision, which was announced on November 25. The demerger will require further approval from the board and shareholders in early 2022. Once finalized, existing HUL shareholders will receive shares in the new ice cream entity proportionate to their current holdings.

HUL believes that this separation will unlock fair value for shareholders and provide an opportunity to invest in the growth potential of the ice cream segment. Despite experiencing a slight decline of approximately 1.4 percent over the past year, HUL shares have remained relatively stable.