Britannia, Danone may settle dispute out of court

July 28th, 2008 - 8:04 pm ICT by IANS  

Kolkata, July 28 (IANS) Biscuit and dairy product major Britannia Industries Ltd, embroiled in a bitter intellectual property right (IPR) violation litigation with French partner Groupe Danone, is interested in an out-of-court settlement, a senior company official indicated here Monday. “We are also simultaneously talking to Danone for settlement of dispute,” Britannia’s chief financial officer Durgesh Mehta said at the annual general meeting, indicating his company was open to an out of court settlement.

The relationship between Danone and the Nusli Wadia-led Britannia soured after the Indian company charged the French partner with using its Tiger trademark, a key intellectual property, in the overseas market without prior consent.

The two companies moved court for arbitration last year in Singapore and Malaysia.

Britannia chairman Wadia said the IPR issue was still pending, adding: “We hope it will come near to a resolution sooner rather than later.”

Tiger is the most popular Britannia brand, accounting for about 20 percent of its total sales, followed by its Good Day dairy product brand.

As for Britannia’s other plans, Wadia said the West Asian operations of its subsidiaries - Strategic Foods International in Dubai and Al Sallan Food Industries in Oman - would be consolidated and based in Oman.

“Instead of having businesses in two locations, we are putting them in one location,” he said.

Referring to Britannia’s acquiring a strategic stake last year in Daily Bread, a loss-making Bangalore-based manufacturer and retailer of high-end bakery products, Wadia said: “We are re-looking at our investment.”

At the same time, the company is looking at inorganic overseas expansion. “We are interested in any country which will provide us with better margins,” chief financial officer Mehta said.

Britannia also plans to invest between Rs.750 million to Rs.1 billion for buying equipment, capacity expansion and development this year, he added.

It had invested Rs.2 billion in the past 18 months.

Mehta said in view of inflationary trends and rising input costs, the company needed to reduce operational cost by two percent, in addition to raising product price.

“It will be a big challenge to protect our margins,” he conceded.

Last year, Britannia’s margin was about nine percent.

The total market for biscuits in India is valued at Rs.80 billion, with Britannia accounting for a lion’s share of 31 percent.

“In the last three years, there has been around two percentage points decline in market share due to the entry of new players,” Mehta said.

Last year, Britannia launched 20 products including variants.

The bread, cake and rusk business crossed the Rs.2.70 billion-mark last fiscal, doubling its revenue in two years.

At present, Britannia depends heavily on contract manufacturers, who account for as much as 85 percent of its total production.

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