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Lactalis to acquire Indian dairy Tirumala Milk Products

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By Mark Astley+

08-Jan-2014

Tirumala's processing plant in Gudar, India.
Tirumala's processing plant in Gudar, India.

French dairy giant Lactalis has agreed to acquire a 100% stake in Indian dairy, Tirumala Milk Products Company - marking its entry into the world's largest dairy market.

Lactalis confirmed earlier today that it will buy all shares in Tirumala, the second largest private dairy processor in South India, from the company's founders and private equity firm the Carlyle Group, who own 80% and 20% stakes respectively.

Speaking with DairyReporter.com, Lactalis spokesman, Michel Nalet, branded the deal “an important step” for the company.

“India is the world’s biggest producer of milk - over 140bn litres per year. But the percentage that is processed is not the same as in Europe,” said Nalet.

“It’s a country with huge opportunities for companies like Lactalis. This is our first step in India, and it’s an important step.”

Nalet refused to disclose the price of the deal, but Reuters, citing sources, has slapped a price tag of between $250m (€185m) and $300m (€220m) on the deal. According to Barclays India, which provided financial advice to Tirumala, the deal is “the largest dairy transaction in India.”

“Good platform” for Indian development

Tirumala, which was established in 1996, currently processes around 1.66m litres of cow and buffalo milk across its seven plants, where it manufactures a wide range of branded dairy products, including milk, milk powder, butter, ice cream, flavoured milk, ghee, paneer, and lassi.

In May 2010, private equity firm the Carlyle Group acquired a 20% stake in Tirumala for $22m (€16m).

According to Nalet, the Carlyle Group’s involvement in Tirumala over the last couple of years has left it well positioned for growth.

“The work that has recently been done at Tirumala, the industrial investment in particular, has created a good platform for us to develop in the Indian market,” said Nalet.

There is, however, still “a lot to do,” said Nalet.

“Before, we were only present in India through export products. Now we have to increase our understanding of the market. This will be a challenging period for the company.”

“Catalyst for growth”

Commenting on the takeover, Tirumala co-founder and managing director, D Brahmanandam, praised the Carlyle Group for its involvement in the company in recent years.

“Tirumala has emerged as a leader in the private sector dairy market in South India. This was possible due to the relentless efforts of the founders and the consistent focus on quality,” said Brahmanandam.

“We are extremely happy to have partnered with Carlyle, who provided numerous value creation activities and acted as a catalyst in the growth of the company over the past few years,” he added.

1 comment (Comments are now closed)

Brahmandam's Tirumala.

Mr.Brhmanandam is very humble on his comments on the French Connection.

Though hav'nt met him, spoke to him couple of times and have interacted, promoted idea & product to increase quality and quantity of raw milk procurement from their famers on non profit basis.

Tirumala banner's growth is astounding in the limited time span, that was possible with great understanding of associates,market and steadfast quality driven by strong promotions and continuously increasing procurement and processing.

As Nalet said,
the have to focus, increase understanding of market as India is poised to Double over all milk productivity in a decade, that might become a problem.

Value addition, Exportation of value added milk products from India are back logged on quality assurance parameters by buyers in comparison with EU, NZ. Now French total take over can enable to break that ice wall and enter into other frontier.

Also, French should understand the Brand Tirumala is the most Powerful and sentimentally attached one to Indians, suggest them to Capitalise on that.

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Posted by Vallal Ranganathan
08 January 2014 | 16h192014-01-08T16:19:03Z