Sources close to the developments say Wadia Group Chairman Nusli Wadia will be meeting top Danone officials in Paris on February 20 to "discuss all pending issues" but did not give details.

A Wadia group spokesperson declined comment. Stressing that India and China are going to be the main investment drivers for Danone, sources in the French company said it would honour all agreements.

"The talks next week will take care of all the issues raised by the Wadias," they added.

Despite public posturing, both sides are keen to end the dispute, which is threatening to spoil relations between the two companies.

In December 2005, the Wadia group had moved the Mumbai High Court against Danone's investment in Avesthagen, which makes speciality dairy products, on the ground that an agreement between the two companies required Danone to seek the Wadia Group's approval first. The high court stayed the transfer of shares and another hearing is pending.

In January 2007, the Wadias had told the commerce ministry that the Avesthagen investment violated Press Note 1, 2005, which specifies that new proposals for foreign investments require the government's prior approval if the foreign investor has an existing joint venture agreement with an Indian company in the same field.

The commerce ministry is expected to take up Wadia's letter with Danone but nothing has moved till now.

The Wadias fear that the Avesthagen investment is a prelude to Danone's full-fledged entry into the dairy business in India, which would compete with Britannia's food portfolio.

India produced 97 million tonnes of dairy products in the year to March 2006 and Danone seeks an increased market share, especially in the speciality product portfolio.

Ahead of next week's meeting, Danone also hardened its stand, saying it would not disinvest in Avesthagen or make any changes in the original share agreement Danone and the Wadias signed when they took control of Britannia in 1992 through a 50-50 joint venture called Associated Biscuits International Holdings.

"We have joint ventures across the world... and Danone would not like to jeopardise the India operations which are doing quite well," sources said.

The Wadias and Danone have three joint ventures. Of this, biscuit major Britannia itself made a profit of Rs 164 million on gross sales of Rs 5967 million for the quarter ended December 2006.