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Parakh Foods and Cargill India JV comes to an end
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Saturday, 24 September, 2005, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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It is going to be a case of an exceptionally short joint venture. Parakh Foods and Cargill India joint venture partners for two years, who got together to sell branded cooking oil, will be parting ways.
This was the first joint venture between an MNC and a domestic major in India's Rs 5,000 crore branded cooking oil industry.
Pune-based Parakh Foods will be selling its 49 per cent stake t Cargill India, which will now have complete ownership of two leading retail brands Nature Fresh and Gemini, and four edible oil refineries. That makes it the single-largest company in the domestic edible oil industry, with the capacity to make 5m pouches daily.
According to sources close to the deal, the Indian partner decided to exit because of irreconcilable differences between the two in their management objectives, market strategy and operational styles. "Indian companies are typically cost-conscious and being close to the ground, have a short-term view of the market. Foreign companies don't always share that perception. If there is no syncronisation between the mind and body, it is time to take remedial action," said a source.
Cargill and Parakh Foods had come together because the MNC had sizeable financial and trading advantages in the import of edible oils, while Parakh had built a formidable marketing and distribution network for its brand Gemini, especially in the southern India.
Cargill's own brand Nature Fresh was unable to make sufficient inroads across India to sell the quantity of oil being produced daily in its port-based refineries.
The JV had brought together four edible refineries based in Paradeep, Kandla and Pune, owned by the two partners. Cargill Mauritius, the parent company of Cargill India had brought 1,05,060 equity shares of Rs 100 each of Parakh Foods and 25,500 equity shares of Rs 10 of Global Fats and Oils, which were held largely by the Parakh family.
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