Britannia Industries, India's largest processed food company, has announced that it has entered into an agreement with Fonterra Brands (Mauritius Holding) Ltd, Mauritius, for acquiring the latter's 49 per cent Equity and Preference shareholding in Britannia New Zealand Foods Pvt Ltd (BNZF), their Joint Venture Company engaged in Dairy business. This acquisition is subject to Reserve Bank of India approval.
With this acquisition, Britannia along with its wholly owned subsidiary will hold the entire Equity and Preference capital of BNZF.
This joint venture was formed during early 2002 when Britannia transferred its diary business to the joint venture. This move by Britannia to acquire Fonterra's stake in the joint venture comes close after the Wadia Group consolidated its holding to around 51 per cent in Britannia after it bought out French-firm Danone's stake in a holding company.
Britannia Industries, the Bangalore-headquartered firm, has been in discussions with Fonterra Brands for acquiring its stake over the past 8 months as Britannia wanted to aggresively grow this dairy business with an investment of around Rs 150 crore. The joint venture company is a Rs 200 crore business and offers a range of dairy products including cheese, milk power, butter and ghee.
With this buyout, Britannia is expected to merge this arm into the flagship Britannia Industries as the front-end for both these companies are already tightly integrated.
Sources in the company had earlier indicated to Business Standard that Britannia had officially outlined its expansion plans to its partner and was awaiting reply on whether Fonterra will be contributing its share for this expansion. “We want to aggressively grow this business and have stated an Rs 100-200 crore expansion plans to Fonterra. If required, we are willing to buy out Fonterra’s stake in the joint venture,” a senior official of the firm detailed to Business Standard during October 2008.
The joint venture for fiscal FY08 reported a topline of Rs 143 crore and reported a net loss of Rs 5 crore. According to Britannia’s recent annual report, this firm has total liabilities of Rs 70 crore and assets of Rs 90 crore.
The Fonterra Group, has revenues of more than $4 billion and is present in every part of the chain - from procurement of milk to the manufacture and distribution of a whole range of dairy products.