Shares of Hindustan Unilever were slipping in early trade on Thursday despite being in talks to ink a palm oil deal with the Andhra Pradesh government.

What Happened: The Andhra Pradesh government and Hindustan Unilever Limited (HUL) are discussing a potential partnership to boost palm oil production. This collaboration is expected to generate over 1,000 jobs, both directly and indirectly, by establishing palm plantations and an oil mill.

Palm oil is widely used across various industries, from food to personal care, making India the world’s largest importer of this commodity. The government sees this collaboration as a way to attract investments, benefit farmers and reduce reliance on palm oil imports.

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Why It Matters: HUL plans to engage with around 15,000 farmers in Andhra Pradesh to cultivate over 30,000 hectares of oil palm plantations. The proposed project includes establishing nurseries, collection centres, and a modern oil mill, with investments exceeding ₹300 crore.

During a meeting with Andhra Pradesh officials, HUL reiterated its commitment to supporting agriculture in the state. The company aims to provide agricultural training and outreach programs to enhance farming practices, contributing to sustainable palm oil production in India.

FMCG stocks like HUL have struggled to perform in the market as rural demand stays subdued for a prolonged period, creating margin pressure for these firms.

Price Action: HUL’s share price was down 0.46% at ₹2,376.95 near the start of trade on Thursday.

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