Wadias may buy out Danone at discount

The Wadias of Bombay Dyeing are poised to buy the entire stake of partner Groupe Danone in biscuit maker Britannia at a discount.The contours of the deal are likely to be drawn up at a meeting on September 3. That is also the time when Danone Chairman Franck Riboud is expected to be in India.

Sources close to the deal said the French dairy foods giant’s exit would be in line with that of other multinational companies from joint ventures in India and the discount in this case could be as much as 20 per cent to the market price.Danone is keen on operating on its own in India and needs a no-objection from the Wadias to be able to do so.

The Wadias and Danone hold 50 per cent equity each in Associated Biscuits International (ABIL), which holds 51 per cent equity in Britannia, giving each partner control over 25.1 per cent equity of the joint venture.

Read more in The Business Standard article.

Danone may acquire Catch and Aava

French food company Groupe Danone has shortlisted acquisition targets in the Indian bottled water market, including DS Group’s Catch and Sheelpe Enterprises’ Aava.
Danone, which also imports its Evian water brand in India, has been reported to be keen on increasing its presence in the beverages and dairy business in India, which are growing quickly on the back of rising incomes and the expansion of modern trade.
Danone has a stake in India’s top biscuit maker Britannia Industries Ltd.

PepsiCo Inc.’s Aquafina, Mount Everest Mineral Water’s Himalayan and Coca-Cola’s Kinley also compete in the market for bottled water, which is estimated at Rs20 billion.

Amul in Catch-22 situation over foreign JVs

The top brass at Indian co-operative dairy heavyweight, Anand-based Gujarat Co-operative Milk Marketing Federation (GCMMF), better known by its iconic brand Amul, has been deliberating over a critical issue in recent times.

Pressure is mounting on the 13-member board to improve profits at the hands of farmers at a time when their input costs (for corn products, cattle-feed and de-oiled cakes) are up by 25-50% in the last one year. The board is mulling over the feasibility of entertaining joint ventures to tap global markets without hurting Amul’s brand equity or growth in India.

Though global food majors such as Mars, Kraft Foods, Danone and LandoLakes visited India recently, GCMMF is clearly unwilling to help the growth of competing brands at the cost of is own brand. Most of the global brands are courting GCMMF to leverage its distribution strength for their brands in the attractive Indian market and build India as a hub for low-cost milk supplies.

Amul's interest in a JV with a global partner is to gain a foot hold in new markets and ensure higher profit margins at the farm gate. But the interest in improving farm profits by tapping the massive growth opportunities in foreign shores comes with the worry about protecting brand Amul.

Read more in The Economic Times article.

New York Life Fund picks up minority stake in Avesthagen

New York Life Investment Management India Fund has picked up a minority stake in the Bangalore-based Avestha Gengraine Technologies (Avesthagen) for Rs 22.5 crore.Avesthagen will invest the money in expanding its business and to increase its global presence. Avesthagen is focussed on the convergence of food, pharmaceuticals and clinical genomics. The company provides solutions to agriculture and health disorders such as degenerative diseases, metabolic disorders and infections.

According to Srinivas Chidambaram, managing director, Jacob Ballas Capital India (JBC), the investment advisor to NYLIM India Fund, “With its unique business model, Avesthagen has the potential to develop a valuable IP portfolio which can be leveraged globally in the bio-pharma, bio-nutritional and bio-agriculture sectors.”

Avesthagen’s clients include global and Indian companies such as bioMerieux, Cipla, Godrej Industries, Nestle, Groupe Limagrain, and Danone. Avesthagen expects to commercially launch some of its products for the bio-pharma and bio- nutritional markets in 2008.

Danone offers Wadia $ 1.34 mn to use Tiger brand

French dairy major Groupe Danone has offered to pay the Wadia Group ¤1 million ($1.34 million) as compensation to use its Tiger brand in international markets.According to a report in the Financial Times, Danone has also asked for a five-year exclusive licensing agreement in countries like Singapore, Malaysia and Indonesia.

Meanwhile, a television channel reported that the commerce ministry had come around to the view that Groupe Danone had violated Press Note 1 regulations, which make it mandatory for a foreign company to take a no-objection certificate from its Indian partner if it is investing on its own in the same business.

Nusli Wadia and Danone have equal stakes in Britannia. Wadia had objected to Danone’s investment in nutraceutical firm Avesthagen. The Wadia group had moved the Bombay High Court and also lodged a complaint with the Union commerce ministry.

Read more in The Business Standard article.