Soon after having bought out Groupe Danone SA's its 25.48-per cent stake two weeks back, Britannia Industries Ltd yesterday announced that it was buying out its partner Fonterra Brands (Mauritius Holding) Ltd's 49-per cent shareholding in Britannia New Zealand Foods Pvt Ltd (BNFZ), the Brittania-Fonterra dairy joint venture.
With this, the Wadia group now fully controls all its food businesses.
The acquisition makes BNZF a fully-owned subsidiary of Britannia Industries. The companies did not disclose the value of the deal, but Fonterra said it is transferring the stake at a "nominal value''.
Bloomberg quoted a Fonterra executive as saying that the holding, acquired in 2002 for $19.8 million, had been written down in the past two years. "We've taken the decision to exit at a nominal value and be released from any loan guarantees or any further liabilities,'' he said.
Britannia had started its dairy business in 1997, and Fonterra - one of the world's largest exporters of dairy products and a cooperative owned by 13,000 New Zealand farmers - entered as a partner in 2002. BNZF makes and markets products like cheese, butter, ghee, curd and paneer.
Vinita Bali, managing director and chief executive of Britannia, told CNBC-TV 18 that bakery and dairy operations would be key growth drivers. "We may enter into new segments apart from bakery and dairy in the next few months. The company is confident of seeing aggressive growth rate in business and are still looking at double-digit growth," she said, but added that the economic slowdown may effect growth by a couple of percentage points.
The company has seen an annual growth rate of 22 per cent for the past four years. Bali said Britannia is working on making the biscuit brand Tiger its own. ''Britannia owns the Tiger brand and will continue to use it wherever it is present,'' she said, adding that Danone has already exited the biscuits business globally and woulod not be using the brand name anymore.
Britannia has also lined up several new products for its dairy business, especially cheese, a product segment it leads with a 50-per cent market share.
These products will be launched over the next few months. Bali also said that even though the company is constantly looking out for newer business opportunities, it will focus on its core business of dairy and bakery products in the short term.
Britannia New Zealand Foods reported a top line of Rs143 crore and a net loss Rs5 crore in FY08. Its net liabilities are estimated to be around Rs70 crore with net assets of Rs90 crore.
New Zealand-based Fonterra is the world's largest exporter of dairy products. It is responsible for more than a third of international dairy trade. Its strength is seen to be basic milk ingredients, which it supplies to larger companies like Nestle and Kraft to build into brands.
Bali said BNZF's business has been growing at 15-18 per cent a year. It has had substantial success in cheese, where it is estimated to have a market share of 50 per cent. It tried its hand at milk retailing some years ago, but had to pull out of it.
Fonterra (Asia) managing director Mark Wilson said that while it saw a lot of growth in India, "given the fragmented local milk supply that requires significant development, investing in India's consumer dairy market is not a core priority for Fonterra at this time''.
In the last few years, there have been rumours that Fonterra was looking to exit from the JV as it hasn't been able to make much headway in the Indian dairy market.