• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Harish Damodaran

In the event of Schreiber infusing addition equity of Rs 35 crore, its share in Dynamix would rise to above 51 per cent. This would make Schreiber the largest shareholder in the firm.

New Delhi , Oct. 6

IN what could be the largest capital restructuring exercise in the country's agri-business sector, Rabo India Finance Pvt Ltd (RIF) is set to ink a deal with Dynamix Dairy Industries Ltd (DDIL), involving replacement of around Rs 100 crore of high cost debt and infusion of fresh equity worth Rs 35-40 crore in the latter by Schreiber Foods, the $ 2 billion plus US-based cheese major.

According to sources privy to the deal, Rabo will infuse fresh debt of about Rs 100 crore in Dynamix, which would be used to swap its existing costly term loans contracted at 14-15 per cent from IDBI and a few other institutions.

Schreiber Foods, the world's largest privately-held cheese company, will bring in additional equity of Rs 35-40 crore, which would give it a 51 per cent controlling stake in DDIL.

Schreiber already holds a 19 per cent stake in the Rs 53 crore paid-up capital of Dynamix, which operates a 10-lakh litres per day (LLPD) dairy at Baramati in Maharashtra. This includes the 8 per cent it picked up initially in lieu of supplying the technology for cheese manufacture and the 11 per cent it acquired early last year from Britannia Industries Ltd. This followed Britannia's decision to enter into a separate joint venture with Fonterra Cooperative Group of New Zealand and divest its equity in DDIL.

Besides Schreiber, there is another US-based company, Erie Foods, which has a 2.36 per cent stake in Dynamix, taking the total foreign equity holding to 21.36 per cent. In the event of Schreiber infusing addition equity of Rs 35 crore, its share in DDIL would rise to above 51 per cent. This would make Schreiber the largest shareholder in Dynamix, ahead of the existing promoter, Mr K.M. Goenka.

DDIL's Rs 200-crore plant contract manufactures a range of products for leading multinational brands in the country. These include processed cheese, butter, UHT-Tetrapak flavoured milk, ghee and dairy whitener for Britannia (marketed under the latter's Milkman brand), slice-on-slice cheese for McDonald's and yoghurt (dahi), butter and UHT plain-cum-flavoured milk for Nestle. Dynamix also uses its UHT-cum-aseptic packaging facility for producing Pepsi's Tropicana brand pure fruit juices. Besides, the plant makes milk powder and other bulk commodities such as industrial and edible grade casein, lactose and whey protein concentrates, which are largely exported.

The sources said the move to offer controlling stake in Dynamix to Schreiber comes in the wake of the former's financial problems, aggravated by the acute drought conditions around the plant's milkshed area in Maharashtra.

DDIL sources the bulk of its milk from the Baramati Taluka union, with the district cooperatives unions in Pune, Ahmednagar and Sholapur supplying the rest.

The dairy is currently managing to procure hardly 1-2 LLPD of milk, as against its handling capacity of 10 LLPD.

"It will be a mutually beneficial deal for both Dynamix and Schreiber. For Dynamix, the capital restructuring will help boost its financials, given that its net worth is just about positive now. For Schreiber, the Baramati plant can emerge as a sourcing hub for the Asian region as a whole," the sources added.

The Wisconsin-headquartered company now has units, outside of the US, in Curitiba (Brazil), Leon (Mexico), Niort (France), Wangen (Germany) and Dhahran (Saudi Arabia).

Article E-Mail :: Comment :: Syndication

Stories in this Section
FCI extends tender date for rice sale

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line