MUMBAI (Thomson Financial) – Food producer Groupe Danone has defended its investment in an Indian food ingredient intermediaries manufacturer by denying it has joint venture status with another Indian company in a similar market, something that would make the investment illegal under Indian regulations, the Economic Times reported.
Danone told the Indian government that it is not a joint venture partner with Britannia Industries and its 25 pct shareholding in the Indian snack food maker is through a joint venture with the Wadia Group in the UK, and not in India.
The clarification was in response to a set of government queries, prompted by a complaint from Wadia’s chairman Nusli Wadia, who told the ministry of commerce and industry that Group Danone’s investment in Bangalore-based Avesthagen was in violation of the government’s Press Note 1, 2005.
In a letter dated May 10, the French food giant clarified that it does not have a formal technology transfer or trademark agreement with the Indian company, supporting its argument that it does not need any permission either from Britannia or the Wadias for making investments in India.
The note requires a foreign company to obtain the consent of its Indian joint venture partner before pursuing an independent business in a similar area, and also applies to a joint venture based purely on technical collaboration.
Danone said its 25 pct holding in Britannia is only indirect in nature and does not apply to Press Note 1, and informed the government that it was going ahead with its independent plans for India.
Copyright AFX News Limited 2007. All rights reserved.
The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.