New Delhi: In a surprise move, Nestle India Ltd has acquired 26 per cent stake in a little known dairy company Indocon Agro and Allied Activities Pvt Ltd.
In a note to the BSE on Monday, Nestle said that it had entered into an agreement to pick up a minority stake in Indocon, which is engaged in milk collection business in western India.
Nestle India currently has its own manufacturing facilities at Moga in Punjab and Samalkha in Haryana, which largely service the northern market.
Apart from that, it has contract supply arrangements for the West and South markets with Baramati-based Schreiber Dynamix Dairies Ltd and the Hyderabad-based Heritage Foods for its curd and UHT (ultra high temperature) milk. Besides, it sources milk powder from domestic players such as Sterling Agro and VRS Foods.
“When there are so many suppliers, one doesn’t understand the rationale for picking up stakes, that too in a company about which not much is known,” an industry source said.
One possibility could be that this company could be linked to Schreiber Dynamix itself. There has been talk, of late, about Nestle tying up with Schreiber Dynamix to set up a milk powder plant at Baramati.
Schreiber Dynamix, formerly Dynamix Dairy Industries Ltd, was originally promoted by K.M. Goenka, before the US-based cheese major Schreiber International Inc acquired a majority stake in it in 2003.
Following that, Goenka floated a separate company, Sahyadri Agro Produce and Dairy Ltd, which is engaged in the business of milk handling for captive consumption of Schreiber Dynamix.
A Nestle India spokesperson said the Swiss major’s deal with Indocon was of ‘strategic and long-term’ nature, but could not give further details, including where the latter was based or how much milk it collects per day. Details of the financials of the transaction were also not disclosed.
Nestle India shares ended higher by 0.63 per cent to end at Rs 4,749 on the BSE on Monday.
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