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Danone taste for dairy pact with Jalan

Calcutta, Nov. 28: After a year of speculation, French FMCG giant Groupe Danone is ready to take the plunge into India’s lucrative dairy market.

Danone, which is locked in a bitter battle with the Wadias at biscuit maker Britannia, is planning to team up with Calcutta-based Keventer Group to set up a large milk processing unit in Rajasthan.

The French company — one of the largest milk processing giants in the world — is working on a three-way alliance with Keventer and the Rajasthan government.

Sources said Danone and Keventer would hold 44.5 per cent each in the venture while the Rajasthan government would have 11 per cent.

An agreement among the three partners is likely to be signed on November 30 in Jaipur in the presence of chief minister Vasundhara Raje at the ‘Resurgent Rajasthan’ meet.

Mahendra K. Jalan, chairman of Keventer Group, refused to confirm or deny the deal with Danone.

“There are many in the race. We are yet to finalise our partner in the project,” Jalan said while confirming that an agreement would be signed as early as day after tomorrow.

A questionnaire sent to Danone headquarters remained unanswered.

Investment in the project is likely to range between Rs 650 crore and Rs 700 crore. The equity component will be around Rs 250 crore.

Without divulging details about the project, Jalan said the aim was to make this India’s largest milk processing firm with a capacity of 30 lakh litres a day.

Rajasthan is a milk surplus state. The partners expect there will be enough milk to be processed.

Jalan said it would mainly be an export oriented unit and produce a number of milk-based products, including milk powder.

The project will use the land and assets of a firm that is owned by the Rajasthan government. The state government will not be making any monetary contribution.

The Danone move is coming at a time when Britannia is also planning to strengthen its dairy business.

Its dairy business, which is a joint venture with New Zealand’s Fonterra, reported a turnover of Rs 130 crore last year.

Danone may have to seek permission from the Foreign Investment Promotion Board for the venture.

Under the terms of the guidelines outlined in Press Note 1 of 2005, Britannia’s views on this venture would be taken as well. However, Danone will not require a no-objection certificate from Britannia.

Danone, which reported 14 billion euros sales in 2006, is the largest producer of fresh dairy products in the world and second largest in bottled water with brands like Evian.

It has 90,000 employees across five continents and makes dairy products, bottled water and beverages, and baby food.

Danone, Actimel Activia, Danonino and Vitalinéa are some of Danone’s dairy brands.

Keventer is a Rs 400-crore group with a strong presence in eastern India. It operates a successful dairy business in Bengal under the Metro Dairy brand.

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