In a bid to resolve its dispute with the Wadias of Bombay Dyeing, Groupe Danone of France may offer to exit Britannia Industries and stay out of the biscuit business in India.
That may be preceded by Danone and the Wadias dissolving their other joint venture, Wadia-BSN, as they look to untie knots.
When asked if the French dairy foods giant had discussed exiting Britannia, Danone's Secretary-General Philippe Loic Jacob said, "We might remain a shareholder, or friends."
He added that if Danone exited Britannia, it might sign a non-compete agreement with its Indian partner and stay out of the biscuit business in the country. This is the first time that a senior Danone executive has spoken on record about the company's plans in India.
The Wadias and Danone hold 50 per cent equity each in Associated Biscuits International, which holds a controlling stake in Britannia, the leader in India's biscuit market. The partners are discussing their relationship under a confidentiality agreement.
Disputes have arisen over intellectual property rights for the successful Tiger brand of biscuits launched by Britannia some years ago and over Danone tying up for a dairy-related venture with a Bangalore-based company, which the Wadias claim violates government guidelines on competing businesses involving joint venture partners.
With Danone working towards setting up an India operation on its own, an amicable settlement between the two is likely to be reached by the end of July.
Sources say the agreement for ABIL, signed in 1992, gives the first right of refusal to buy to each partner in the event of the other wishing to sell its holding.
The French company's exit from Britannia may, however, be a slow process and take place in phases. If it continues to hold on to its shares, it may become a silent stakeholder.
Danone has already stopped consolidating Britannia's accounts in its balance sheet. Accruals from Britannia are reflected as income from investment.
When contacted, a Britannia spokesperson said it was a shareholders' issue and has nothing to do with the businesses of Britannia. A Wadia group spokesperson was not available for comment.
