Details of the agreement

• Parties to the agreement: BRIT, Bel, and Britannia Dairy Pvt. (BDPL, a whollyowned subsidiary).

• BRIT will transfer 49% stake in BDPL to Bel and will receive INR2,620m (~USD32m, assuming a USD:INR rate of 82) against it.

• After the transfer of stake, BDPL will transform into a JV.

• The purpose of the JV: To undertake development, manufacturing, marketing, distribution, trading, and selling, etc. of Cheese products in India and certain other countries.

• Date of agreement: 29th Nov’22.

• Expected date for completion of the sale: 2nd Dec’22.

• Board composition of BDPL: The board will consist of five directors, of which three will be nominated by BRIT and two by Bel.

Details on Bel

• Background on the Bel Group: It is one of the world leaders in the Branded Cheese sector and a major player in the Healthy Snacking segment. It has 5,100 suppliers and 1,400 dairy producers. Its products are produced at 29 sites and distributed in ~120 countries.

• Bel has six core brands, and 20 local Cheese brands. These six core brands are (brand website): The Laughing Cow, Kiri, Babybel, Boursin, Nurishh, and Gogo Squeez.

Our view g While the Dairy business constituted a small part of overall sales (INR3.4b, 2.4% of total sales in FY22), the JV provides additional funding to BRIT’s erstwhile 100% owned Dairy business and a host of global brands and domain knowledge from Bel’s portfolio. This can enable the business to scale up faster than that in the past.

BRIT’s history with MNCs

• Dairy still constitutes a small portion of the business for BRIT, both on an absolute basis and as a proportion of sales (INR3.4b sales in FY22, 2.4% of total sales). This, despite the fact that the listed entity was jointly owned by the Wadia Group and Danone earlier, with the latter being among the largest food players worldwide with a significant milk-based portfolio.

• In addition to being partly owned at the listed entity level by Danone, BRIT had a joint venture with New Zealand-based ‘Fonterra’ for its Dairy business (then called Britannia New Zealand Foods Pvt.), which was dissolved in CY13 with BRIT acquiring Fonterra’s 49% stake in the business. Sales of the Dairy business at the time of completion of the buyout stood ~INR2b.

• Fonterra had acquired 49% stake for USD19.8m. Interestingly, the cash consideration paid by Bel for the 49% stake amounted to ~USD32m.