Danone has remained silent on rumours that it has begun preparations for its first solo business enterprise in India as animosity between the French food group and its joint venture partners in the country intensifies.

According to a report in the Economic Times, Danone has commenced a recruitment process to build the management team and appoint functional heads for Danone India, the group’s wholly-owned subsidiary. It has been suggested that Danone India would make and market dairy products for the Indian market.

Danone declined to either confirm or deny these rumours when contacted by just-food. “This is not something I am able to comment on,” a spokesperson for the company said.

Danone has been active in the Indian food sector since 1990 through its joint venture Britannia Industries . Danone holds a 50.95% stake in the Indian food processing firm, while India’s Wadia group controls the remaining 49.05% of Britannia, whose product ranges includes biscuits, breads and cakes. 

Relations have become increasingly strained between Danone and Wadia, with the latter recently instigating legal proceedings following the acquisition by Danone on 1 December 2005 of a 4.6 % stake in Indian biotech company Avesthagen . Wadia claimed that the investment was in breach of the terms of its JV agreement with Danone, an allegation that the French company vigorously denied. “No breach of the agreement has taken place,” a spokesperson for Danone told just-food, adding that the claim has been countered in court. A ruling on the dispute has yet to be made.

Britannia’s earnings figures have also been conspicuously missing from Danone’s financial results, raising questions in the Indian press that all is not well between the food groups. Reports have suggested that Britannia refused to share earnings information due to corporate governance issues, while Danone said the omission was a result of stock market regulations.