Financial Daily from THE HINDU group of publications
Friday, Mar 15, 2002
Financial Daily from THE HINDU group of publications Friday, Mar 15, 2002 |
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Corporate
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Restructuring Britannia gets nod for hiving off dairy business Ambarish Mukherjee
NEW DELHI, March 14 BRITANNIA Industries Ltd (BIL) has received the go- ahead from the Government to hive off its existing dairy business and concentrate on bakery and confectionery products. The existing dairy business of BIL will be transferred as an ongoing business to Britannia Newzealand Food Private Ltd (BNFPL), the newly-formed joint venture between BIL and Fonterra Co-operative Group Ltd of New Zealand. The Foreign Investment Promotion Board (FIPB) recently approved the necessary amendment in the existing foreign collaboration agreement of Britannia Industries to effect such a transfer. The move follows a condition imposed by the Foreign Investment Promotion Board (FIPB) on the company when the board gave approval for floating the proposed joint venture — BNFPL — in December last year. The conditions imposed by FIPB on the Britannia-Fonterra joint venture included that the joint venture company should give a firm commitment as to when they would set up their own manufacturing activities and what the likely investments would be and the expected amount of exports. Instead of providing a firm commitment, the company has approached the board seeking a waiver of this condition. The company has informed FIPB that the joint venture with Fonterra will take over the dairy business activities which are currently carried out by BIL. BIL manufactures dairy products at dairy factories under its own supervision and quality control mechanism which will be carried out by the joint venture company and as such the condition for giving firm commitment for starting the manufacturing activities does not arise, BIL has informed the FIPB. BNFPL is a joint venture company between BIL and Fonterra Co-operative with an authorised capital of Rs 225.6 crore. The foreign partners, Fonterra Co-operative, will bring in Rs 110.40 crore and subscribe to 49 per cent equity stake in the joint venture company. The joint venture company will be engaged in activities relating to dairy products and sale of milk and milk products, including distribution of the products in India and abroad under the trademark and technical knowhow from the foreign partners. According to the terms of agreement of Britannia Industries and Fonterra Co-operative, the New Zealand-based company or its subsidiaries/group companies will subscribe on a repatriable basis in equity shares of the joint venture company. While Britannia Industries and Fonterra Co-operative will hold 49 per cent each, the remaining two per cent will be taken up by a strategic investor who is yet to be decided. The foreign partners will acquire another 49 per cent stake in a phased manner through equity as well as preferential allotments. Fonterra's 49 per cent stake in the company will have 39 per cent equity capital (Rs 104.88 crore) and 10 per cent preferential capital (Rs 5.52 crore).
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