Pantaloon Retail has confirmed that it is in negotiations with Kellogg in a bid to increase its margins, but remained coy over reports that it is preparing to boycott Kellogg's cereal products.

According to Indian reports, Pantaloon will launch a boycott of Kellogg's cereals at its Big Bazaar and Food Bazaar outlets if the US cereal giant refuses to give way to its demand for higher margins. Local reports suggested the retailer was demanding a 15-16% margin from Kellogg's, up from around 12% now.

"We have always believed in a collaborative approach to all our vendor partners and FMCG companies," a spokesperson for Pantaloon insisted.

However, the spokesperson admitted that negotiations "on the margins" are "going on at this point in time".

"It would be premature to comment on this. What will happen tomorrow is a matter of speculation," the spokesperson added.

Pantaloon, India's largest retailer, is a division of conglomerate Future Group. Last year, the company launched a boycott of Cadbury chocolates after a disagreement over margins.

While Kellogg comands over 70% of the Indian breakfast cereal market, Pantaloon has been looking at promoting its own label range of Tasty Treat cereals.