November 14, 2013

Lactalis Group to acquire majority stake in India's Tirumala Milk Products

Lactalis Group, the world's largest food product company with sales of €15 billion (US$20.20 billion), is close to signing an agreement with shareholders of Hyderabad-based Tirumala Milk Products to buy a majority stake in the dairy company, according to sources.

The French company could pay up to US$300 million for south India's second-largest maker of dairy products. The deal with Lactalis, if closed, would thus represent a four-fold jump in valuation.

Tirumala Milk is currently owned by four farmers-turned-businessmen from Andhra Pradesh's Guntur district who own 80% of the company.

Bolla Bramha Naidu, one of the four founders, said private equity firm Carlyle, which owns a 20% stake, would sell its holding while the four promoters would divest another 50%, resulting in Lactalis owning 70%. Carlyle bought a 20% stake for INR100 crore (US$15.85 million) in June 2011. 

Tirumala Milk, a fast-growing private milk products company, reported sales of INR1,500 crore  (US$237.76 million) and net profit of INR126 crore (US$19.97 million) for the fiscal ended March 2013. Naidu said the company has recorded sales of IDR1,800 crore (US$285.31 million) so far this year and expects sales to exceed IDR2,000 crore  (US$317.0 million) in the current fiscal.

According to an Assocham report, the Indian dairy industry is now the world's largest, accounting for a 20% share in world milk production. "The domestic market with 123 million tonnes of milk production in 2011 is projected to reach 190 million tonnes by 2015," the report says.