Shift gear: Unilever sheds Pureit to AO Smith to focus on core categories

The strategic move

• The Global Water Technology Company AO Smith bought over Pureit from HUL which is a part of a larger part of deal that saw A.O. Smith purchase the Pureit business in south Asia from HUL parent Unilever for approximately USD 120 million.
• The stock exchange filing mentioned theta the sale would be undertaken on a slump sale basis through a business transfer agreement between the company and A. O. Smith India Water Products Pvt Ltd.
• The acquisition of Pureit is expected to complete by the end of 2024. The transaction is subject to customary closing conditions, and HUL will continue to manage the business until the completion of the transaction.
• Management mentioned that this sale is a part of their roadmap ahead wherein they intend to stick to their core categories such as beauty and personal care, food and refreshment and home care products. 
• As per HUL filing FY 24, the water purification business reported a turnover of INR 293 crore, less than 1% of HUL’s turnover in the same period. The water purification business of the company is part of the overall homecare business and its net worth is not separately tracked by the company.

AO Smith’s organic take over

• Pureit was first launched in Chennai in 2004 with the introduction of Pureit Classic. It entered the electric water purification segment in 2011.
• A.O. Smith acquired Pureit to expand its presence in India through distribution capabilities, strengthen its product portfolio, and boost its position in the water treatment industry.
• The Pureit brand complements A. O. Smith’s geographic and channel presence.
• With this merger, AO Smith can completely redesign the product from a new perspective especially when it is hard to meet the expectations of Indian customers.
• The product should be designed in such a way that it will last for years and the maintenance cost should also be minimum.

Market demographics

• India Water Purifier Market size was valued at USD 1.43 Bn in 2023 and is expected to reach USD 4.37 Bn by 2030, at a CAGR of 17.3 %.
• According to a report by the World Health Organization (WHO), around 21% of communicable diseases in India are waterborne. This alarming statistic has propelled the demand for water purifiers as households and businesses recognize the importance of ensuring access to clean and safe drinking water.
• Government initiatives and policies promoting clean water access have become crucial drivers in the Indian water purifier market. Programs such as the Swachh Bharat Abhiyan (Clean India Mission) have heightened awareness about the importance of clean water and sanitation.

Editor’s Note