Danone has declined to comment on reports coming out of India that the government has requested further information from its joint venture partner Wadia regarding the troubled business relationship between the two groups.
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Danone holds a 50.95% stake in Indian food group Britannia Industries, while Wadia controls the remaining 49.05% of the company’s capital through a UK-based investment company.
The relationship between Danone and Wadia turned sour after Wadia threatened legal action against Danone over the company’s use of the Tiger brand in international markets. Danone sells the Tiger brand, which was established in 1995 by Britannia, in Indonesia, Malaysia, Singapore, Pakistan and Egypt. It has reportedly registered it in 70 other countries.
Wadia has also accused Danone of breaking Indian laws governing the operation of foreign companies in Indian-based joint ventures. According to Wadia, Danone violated laws prohibiting the company from making independent business decisions when it picked up a 5% stake in the Bangalore-based bio-nutritional company, Avesthagen, late last year.
Danone has repeatedly denied this accusation, contending that its JV with Wadia is based in the UK and not India and claiming that it does not have a formal technology transfer or trademark agreement with the Indian company. A spokesperson for the French food giant told just-food today (4 June): “Danone contends that it has not violated any joint venture agreements or Indian regulations.”
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By GlobalDataResponding to Wadia’s complaint, the Indian government has reportedly asked the Wadia group to disclose all the JV and technical collaboration agreements it has with Danone in India and abroad. In doing so, the government has placed the onus of proving the existence of JV agreements, and consequently the violation of JV laws, on Wadia.
Danone told just-food that it is still seeking an amicable settlement with Wadia. “Negotiations towards a settlement that is acceptable to all parties are ongoing,” the spokesperson said.
