Britannia signs joint venture agreement with France's Bel SA for sale of Cheese

Britannia Industries will sell 49 percent stake in its wholly-owned subsidiary Britannia Dairy Pvt. Ltd. as part of its joint venture agreement that it signed with French company Bel SA on Tuesday.

The joint venture will undertake the development, manufacturing, marketing, distribution, trading, and selling of cheese products in India and other territories.

Britannia will receive Rs 262 crore as part of this sale, which is likely to be completed by Friday, December 2. Suresnes, France-based Bel will have the legal and beneficial ownership of 49 percent stake in Britannia Dairy.

Post this transaction, Britannia Daily (BDPL) will become a joint venture company instead of a wholly-owned subsidiary of Britannia.

The board of BDPL will now consist of five directors - three of which will be nominated by Britannia and two by Bel. Although the joint venture agreement (JVA) does not have a defined term, there is a lock-in period of 20 years for both parties from its effective date.

As part of the agreement, both Britannia and Bel will subscribe to fresh issue of equity shares of BDPL, in proportion to their respective shareholding. Based on this, Britannia will invest Rs 215 crore while Bel will invest Rs 206.5 crore in BDPL within 30 days of the execution of the Share Subscription Agreement.

As of Financial Year 2022, BDPL's overall sales stood at Rs 207 crore, out of which Rs 207 crore were from the sale of Cheese. The total turnover amounted to 2.4 percent of Britannia's consolidated sales.

BDPL is currently engaged in the marketing, trading, and selling of cheese products.

During the September quarter, Britannia's Vice Chairman & Managing Director Varun Berry said that Britannia's market share is at the highest level in 15 years. He also spoke of volume growth during the quarter, which stood at 4 percent.

After Berry's elevation as Executive Vice Chairman & MD, Ranjeet Kohli has been appointed as the company's new Chief Executive Officer and will take over the day-to-day operations of the company. Berry added that Kohli will focus on building the company's digital push.

“The total cheese market is estimated at about Rs 5,000 crore. Half of it is consumer and half of it is QSRs and institutions. We already have about 11-12 percent share in that market and we would like to make this business five times what it is in the next five years,” Berry said.

Shares of Britannia Industries are trading 1.3 percent higher at Rs 4,268. Shares hit a 52-week high of Rs 4,302 in intraday trade.