Bangalore-based Britannia Industries is planning to expand its dairy business arm with an investment of Rs 150 crore. The company is also mulling to buy out its New Zealand-based partner Fonterra Co-operative’s stake in the joint venture, which was set up in 2002.
Sources said that Britannia has outlined the expansion plan to its partner and is awaiting their reply. “We want to aggressively boost the dairy business and have informed Fonterra about the Rs 100-200 crore expansion plan. If required, we are willing to buy out Fonterra’s stake in the joint venture,” a senior official of the firm said.
The JV, Britannia New Zealand Foods, in which Bangalore-based Britannia controls 51 per cent stake, is a Rs 200 crore business. offers a range of dairy products including cheese, milk powder, butter and ghee. However, the sources said that there are some indications that the India expansion plan may not be an immediate priority for Fonterra.
“There are some reports that indicate this, but there was no communication from Fonterra substantiating it,” the sources said.
If Fonterra decides to sell out its stake in the joint venture, Britannia is expected to merge the JV arm with Britannia Industries itself. as the front-end for both these companies are already tightly integrated.
The joint venture had reported a top line of Rs 143 crore for the financial year 2008. It also reported a net profit loss of Rs 5 crore during the period.
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According to Britannia’s recent annual report, the JV 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 manufacturing and distributing a whole range of dairy products.