Financial Daily from THE HINDU group of publications
Thursday, Aug 28, 2003
Financial Daily from THE HINDU group of publications Thursday, Aug 28, 2003 |
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Mergers & Acquisitions Corporate - Mergers & Acquisitions Dabur to divest entire stake in jt venture Dabon
Ratna Bhushan
New Delhi , Aug. 27 FMCG major, Dabur India, plans to divest its entire stake in Dabon International Pvt Ltd, its 50:50 joint venture with the French dairy major, Bongrain SA. While confirming this to Business Line, Mr P.D. Narang, Corporate Director, Dabur India, said, "We will formally divest our stake in Dabon International in due course, since it does not fit in our overall strategy and it is a non-core business. We will not invest any further in this joint venture." Dabur India has not invested in this venture since the last two years. In any case, the company has already ceded complete operational control in the JV to its foreign partner. Sale of its 50 per cent stake in the JV — which sells processed cheddar cheese, spreads, imported slices and pizza/pasta cheese under the LeBon brand name - would, in a sense, be a mere formality, analysts said. Mr Narang, on his part, stated that Dabur India would continue to be on the board of Dabon International for the time being. Active management of the JV remains with Bongrain. The domestic processed cheese market is estimated at about 8,000 tonne annually, valued at Rs 250 crore. The Gujarat Cooperative Milk Marketing Federation (GCMMF or Amul) is the market leader with a share of about 4,800 tonne, followed by Britannia (2,000 tonne). Dabon's LeBon sales are estimated at about 250 tonne. Apart from these, there are a couple of cooperative dairy players such as Verka and Vijaya, in addition to small local private brands including Nilgiris and Choudhry's. "The JV (operational since July 1998) has been bleeding badly and its manufacturing plant at Noida, near Delhi, has been operating at barely 15 per cent capacity due to poor distribution logistics and inadequate cold chain infrastructure," the analysts added. Dabur India, on the other hand, has made its strategy clear to concentrate on the personal care and ayurvedic healthcare segments. A couple of months back, the company kicked off a portfolio restructuring exercise, to concentrate on five flagship brands. These are Dabur (the core brand for natural healthcare products), premium personal care brand Vatika, Hajmola digestives, fruit juice brand Real, and mass hair-care brand Anmol.
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