World’s largest dairy products-maker Le Groupe Lactalis of France will purchase Tirumala Milk Products by buying out the stakes of three owners and PE investor Carlyle’s growth capital fund for $275 million (. 1,750 crore), two people with direct knowledge of the development said.
The deal gives the French company an entry into the world’s largest dairy market, which produces 123 million tonnes of milk now and slated to grow to 190 MT by 2015. Family-owned Lactalis, with annual sales of €15.7 billion (. 1.33 lakh crore), signed an agreement last week and will make it public soon.
“We always wanted to build the largest dairy product company. I am sure Lactalis Group which is the largest company in the world will make the Tirumala the largest in India also,” said Danda Brahmanandam, Tirumala’s founder and managing director who along with three partners own 74% stake. Carlyle owns the rest 26%.
Lactalis, with its first acquisition, will seek to look at more such opportunities for growth across India to capture a larger share of the dairy market which is expected to grow at a compounded annual growth rate of anywhere between 13% and 15% until FY20 from $10 billion (. 60,000 crore) now. The Indian dairy market commands 20% of the global milk production. “For Lactalis, this acquisition is the first step. We believe India is a land of great opportunities. We will expand in other parts of the country,” Lactalis spokesperson Michel Nalet told ET.
Four farmers from Andhra Pradesh, who were partners in an automobile finance company, later built Tirumala with an initial capital of . 2.5 lakh to an annual sales of . 1,427 crore in fiscal ended March 2013 and a net profit of . 70 crore.
“We could in our generation, as friends, promote, nurture and develop the company as one of the leading players in the Indian dairy industry as we could gel well together,” said Bolla Bramha Naidu, one of the founder partners in an earlier interaction with ET. “Now, the next generation of promoters’ families are not gelling that well together like us and they are not keen to continue in the dairy business.” “Four of us used to fill the milk in sachets and sell at four locations in Chennai those days,” Naidu said on building the company.
Rothschild advised Le Groupe Lactalis while Tirumala’s banker was Barclays.
The PE fund, which invested $22 million in May 2010 valuing the company at $85 million, made a net profit of $50 million, a 225% return on investment.
“Carlyle has always believed in supporting good companies and in helping them improve systems and processes to take it to the next level. This is something in which we are very good,” said Shankar Narayanan, managing director, Carlyle India. Carlyle has invested and committed approximately $1.1 billion in India until September 30, 2013.
cr.sukumar@timesgroup.com
The deal gives the French company an entry into the world’s largest dairy market, which produces 123 million tonnes of milk now and slated to grow to 190 MT by 2015. Family-owned Lactalis, with annual sales of €15.7 billion (. 1.33 lakh crore), signed an agreement last week and will make it public soon.
“We always wanted to build the largest dairy product company. I am sure Lactalis Group which is the largest company in the world will make the Tirumala the largest in India also,” said Danda Brahmanandam, Tirumala’s founder and managing director who along with three partners own 74% stake. Carlyle owns the rest 26%.
Lactalis, with its first acquisition, will seek to look at more such opportunities for growth across India to capture a larger share of the dairy market which is expected to grow at a compounded annual growth rate of anywhere between 13% and 15% until FY20 from $10 billion (. 60,000 crore) now. The Indian dairy market commands 20% of the global milk production. “For Lactalis, this acquisition is the first step. We believe India is a land of great opportunities. We will expand in other parts of the country,” Lactalis spokesperson Michel Nalet told ET.
Four farmers from Andhra Pradesh, who were partners in an automobile finance company, later built Tirumala with an initial capital of . 2.5 lakh to an annual sales of . 1,427 crore in fiscal ended March 2013 and a net profit of . 70 crore.
“We could in our generation, as friends, promote, nurture and develop the company as one of the leading players in the Indian dairy industry as we could gel well together,” said Bolla Bramha Naidu, one of the founder partners in an earlier interaction with ET. “Now, the next generation of promoters’ families are not gelling that well together like us and they are not keen to continue in the dairy business.” “Four of us used to fill the milk in sachets and sell at four locations in Chennai those days,” Naidu said on building the company.
Rothschild advised Le Groupe Lactalis while Tirumala’s banker was Barclays.
The PE fund, which invested $22 million in May 2010 valuing the company at $85 million, made a net profit of $50 million, a 225% return on investment.
“Carlyle has always believed in supporting good companies and in helping them improve systems and processes to take it to the next level. This is something in which we are very good,” said Shankar Narayanan, managing director, Carlyle India. Carlyle has invested and committed approximately $1.1 billion in India until September 30, 2013.
cr.sukumar@timesgroup.com
Source: The Economics Times
By: CR SUKUMAR & ARUN KUMAR
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