Yakult, Danone set up Indian JV

A joint venture between French dairy giant Danone and Japanese company Yakult to manufacture dairy products in India from this year has deepened the rift between Danone and its Indian partner, the Wadias of Bombay Dyeing.

Yakult Danone India (P) products will compete directly with Britannia "" the 50:50 joint venture between Danone and the Wadias "" with the Wadia insiders saying that the no-objection certificate (NOC) granted to its partner Danone India (P) expired long back.

"There is a complete conflict of interest between both of Danone's joint ventures," a Wadia insider said. "Both Britannia and this company would fight for the same business," the insider added.

The Wadias had granted a no-objection certificate to Danone India (P) in 1997 to launch dairy products in India. As per Indian laws, a foreign partner must have a NOC from its Indian partner if they enter the "same" business. Danone is now using this company to launch its dairy brands after its relations with the Indian partner reached a point of no return.

Incidentally, Britannia has a joint venture since March 2002 with Fonterra Cooperative of New Zealand called Britannia New Zealand Foods (P), which markets its products under the brand name of "Britannia MilkMan". India and China have emerged as two key markets for Danone for its dairy and water products.

When contacted, a Danone source said the joint venture will make "good bacteria yogurt" for the growing Indian middle-class who want safe and hygienic dairy products. They said the new JV products does not compete with Britannia milk products.

A Yakult Danone statement in November 2006 had said Yakult Danone India (P) will produce "fermented milk drinks" from its 8-acre manufacturing facility at Rai food park near Sonepat in Haryana. The plant will have an installed capacity of 1 million bottles per day, and it will target the lucrative New Delhi dairy market.

"They are getting away with the violations of intellectual property rights and Press note 1. Our NOC had expired long back as Danone had abandoned the project in 2002," a Wadia official claimed. "It is not fair to the 40,000 small shareholders of Britannia," the official said. "Now, it would be Danone versus Danone in the Indian dairy market," the Wadia official said.

Though both Danone and the Wadias are in the midst of sorting out the matters amicably, Danone has almost made up its mind to part ways. Danone, sources say, is miffed with the Wadias for taking them to the Bombay High Court in December last year for their euro 5 million direct investment in Avesthagen, a Bangalore-based bio-nutritional firm.