MUMBAI, July 28: Hindustan Lever Ltd (HLL) is reportedly in talks with the management of Kwality Frozen Foods for a possible takeover of the latter's ice-cream production rights. It is not clear what form the final deal will take, but insiders say the company's prime property at Worli in midtown Mumbai will be excluded from it.

Officially, both HLL and Kwality have denied any move for a deal, but the trade union leaders of Kwality Frozen Foods, an unlisted, closely-held company owned by Ravi Ghai and his family members, believe otherwise.

According to Dada Samant, president of the Maharashtra General Kamgar Union and brother of slain union leader Datta Samant, "the owners are quite likely to hand over the facilities to HLL, since all the production programmes are currently decided by HLL. But we have not yet received any intimation on whether the company has changed hands.''

Ravi Ghai himself says that closing down the Worli factory and starting something like a fast food restaurant in its place cannot be ruled out. According to him, since Worli has become the heart of the city, it is impossible to have a factory here as there is an acute shortage of power and water.Some workers at Kwality Frozen Foods have, meanwhile, put out a signed letter saying that the area personnel manager of HLL had told them as early as in January 1997 that the Worli factory was under HLL and the salaries of all employees, including the Vice president, were being paid by Hindustan Lever.

NK Seth, managing director of Kwality Frozen Foods, denied that "there is any discussion whatsoever of any nature of a final buyout by Hindustan Lever of Kwality Frozen Foods."

An official spokesman for HLL said that "rumours about a buyout are totally unfounded." Asked whether the company was planning to buy the unit and/or the production rights at a later date, he said this "cannot be ascertained now. Right now there is no deal at all.''

The union alleges that the Kwality management is gradually trying to reduce the workforce as well as production at the Worli factory. According to it, the company bid goodbye to 30 workers in May 1997. Ravi Ghai says around 70 employees took the voluntary retirement scheme.

Kwality Walls, the new hybrid brandname under which Levers markets ice-creams and frozen desserts, has reportedly pulled out about 30 products from the original Kwality stable and many of these, with slight changes in nomenclature, are now being made by the HLL Nashik factory.

Seth agrees that certain Kwality products have been pulled out of the market. He says: "We have stopped the Kwality Cassatta because these were handmade and now we are planning to have it machine made." Kwality Frozen Foods has factories in Goa, Ahmedabad, Pune and Worli (Mumbai).

The ice-cream business of Hindustan Lever Ltd has been built up by acquiring brands and forging marketing alliances. In early 1995, the group (through Brooke Bond) bought Milkfood, a powerful brand in the North, from the Jagatjit group. In the same year, the multinational also struck an alliance with market leader Kwality which sources its ice-cream from a web of 15 small-scale vendors across the country.

HLL has a Rs 56 crore frozen desserts factory based on vegetable fat at Malegaon in Nashik, Maharashtra. HLL's ice-cream and frozen desserts business reportedly has a 50 per cent share in a Rs 250 crore domestic market.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.