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Groupe Danone to take fully-owned arm route

Ambarish Mukherjee

NEW DELHI, Jan. 25

FRENCH food multinational Groupe Danone has finalised its strategy for entering the Indian market on its own.

According to the plan, the company will be investing Rs 150 crore in India over the next five years for manufacture and marketing of yogurt, yogurt drinks, yogurt snacks, dairy desserts and cheese.

Groupe Danone's new strategy also involves conversion of its 80 per cent subsidiary into a wholly-owned subsidiary.

Groupe Danone's Indian subsidiary was recently incorporated. The issued capital of the newly-incorporated company is 20 equity shares of Rs 10 each subscribed by two resident Indians, namely Mr S.P. Bharucha and Mr Cyrill S. Shroffe, at the time of subscription to the company's Memorandum and Article of Association.

These 20 shares of Rs 10 each will be taken over by Group Danone for an undisclosed amount. Thereafter, the French company will pump in fresh funds in the form of paid-up capital, subject to necessary approvals from the concerned regulatory authorities.

According to sources in the know, out of the proposed Rs 150-crore investment, around Rs 14.5 crore will be invested during the first year.

However, the new plan is a significantly truncated version of the company's earlier announcement proposing investment of Rs 245 crore for setting up its Indian operations.

According to these sources, following a delay in crystalisation of Group Danone's business plans for India, the company has not been able to go by its earlier proposal of investing Rs 245 crore.

Owing to the delay in plan finalisation, the company could not commence manufacturing and marketing of milk products for which it had received Government approval earlier.

According to the earlier approval, the company was allowed to manufacture and market milk-based products, except ice-cream and other items reserved for the small-scale sector, but was not permitted to pay any royalty to the parent company.

Now that the company's business plans for India are almost finalised, the company has sought approval from the Foreign Investment Promotion Board (FIPB) for approval for its revised business plans.

Group Danone already has a presence in India through its holding in Britannia India Ltd as well as in the carbonated water segment with two high-end brands, namely Evian and Farrarelle.

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