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Bengaluru-based Steer Engineering moves Delhi HC against GSK Consumer

GlaxoSmithKlineA cloud of litigation hangs over the GlaxoSmithKline-Unilever deal for the sale of the former’s nutrition business which includes its marquee product, Horlicks.Bengaluru-based Steer Engineering has moved the Delhi High Court seeking protection of technology and know-how it provided to GSK Consumer Healthcare in India. The said technology is used for the manufacturing of food and malt-based drinks such as Horlicks and Milo.In its petition before the court, Steer Engineering has said that it had signed a contract with GSK Consumer which involved scaling up of the two “Twin Extrusion” process being employed by the latter. The company had set up a pilot manufacturing facility on the premises of one of the manufacturing agents of GSK Consumer.ALSO READ: GSK’s health food drink Boost may get a brand refresh under new owner HULHowever, following the GSK Consumer-Unilever deal, Steer Engineering is apprehensive that the technology it developed, along with the advancements made in optimal measurements for temperature of the product, the feed rate of solids, and enzymes among other parameters could be transferred by GSK Consumer to Hindustan Unilever, which it claims is against the terms of the contract.

ALSO READ: HUL presents good opportunity to GSK shareholders; to add value in long runAccording to the contract, Steer Engineering would not only provide the hardware but also the technology and know-how involved in the process. The company, would, however, be entitled to protect its technology and intellectual property (IP) if GSK Consumer were to transfer it to a third party, the company said in its petition.“There are some bits of the technology which would be transferred to GSK once the contract is over. But the bulk of it would remain with Steer Engineering,” managing partner at Obhan and Associates, and the advocate for Steer Engineering, Essenese Obhan said.ALSO READ: From Jefferies to Edelweiss, here’s how brokerages interpret HUL-GSK dealThe two “Twin Extrusion” process enables the continuous production of homogeneous, finely-structured products, using bio-sourced or synthetic raw inputs. The technology is used to produce a wide range of food and malt-based products such as Horlicks.Hearing Steer Engineering’s petition, the court on Friday asked GSK Consumer to file an affidavit detailing whether the said technology, related hardware and related know-how is actually being transferred to HUL, as claimed by the petitioner.“It is made clear that if there is any such move, status quo will be maintained till further orders of the court,” a single judge bench of Justice Rajiv Shakdher said. The court will next hear the matter on January 23.ALSO READ: With GSK buy, HUL also wins access to key pharmacy channels in IndiaOn December 3, Unilever had agreed to buy GlaxoSmithKline’s nutrition business and merge it into its Indian unit, HUL. The deal is worth $3.8 billion.
Source: Business Standard