Fast moving consumer goods major Nestle India is on the lookout for acquisitions of bottling plants for its Pure Life bottled water. The move is part of its expansion plans.
The company is currently in the advanced stage of talks with the Mumbai-based Atco Healthcare, manufacturers of Brilliant mineral water, for a possible tie-up.
Vikram Doshi, chairman and managing director of Atcom Technologies (the holding company of Atco Healthcare) said: "Nestle officials visited our manufacturing facilities at Mumbai and Daman. They plan to enter into a manufacturing agreement with us. Three rounds of meetings have already been concluded and a final decision is yet to be taken."
There were reports that Ramesh Chauhan's Bisleri is in talks with Nestle and Danone for picking up a stake in the company.
However, analysts tracking the sector say that in case Nestle picks up a stake in Bisleri, it would become meaningless for it to retain the interest it has evinced in Atco Healthcare.
When contacted, Nestle India's spokesperson denied any discussions with Atco. The company launched its Pure Life brand of bottled water in February this year. Compared with other players in the segment, the company has kept a low profile.
Apparently, three more plants of Atco Healthcare are under implementation at Jaipur, Chandigarh and Delhi and are likely to be operational by the year-end, while Nestle currently has only one manufacturing facility for its water business in the northern region.
However, it is learnt that the proposed contract faces two issues: the first being the cost of the deal and the second is that Nestle does not want Atco to manufacture any rival brand apart from its own brand, Brilliant.
But the company has kept its options open. Atco Healthcare's top official said: "If Nestle doesn't use a certain required capacity of the plant, we are ready to offer the spare capacity to other players in the market. These issues are yet to be resolved."
It is understood that Coca-Cola has also approached Atco for manufacturing its Kinley brand of water.
Though Nestle India launched its Pure Life brand in Mumbai and Delhi simultaneously, the brand's presence in Mumbai is negligible, clearly for the lack of manufacturing facilities.
According to company sources, the company hasn't started marketing and selling the brand aggressively in Mumbai yet. The launch in Mumbai was purely for awareness purpose, they said.
