Le Groupe Lactalis of France to purchase Tirumala Milk Products for $275 mn

MUMBAI/NEW DELHI: Le Groupe Lactalis, the world's largest dairy group, has bought out Hyderabad-based Tirumala Milk Products for $275 million (Rs 1,750 crore), two people with knowledge of the development said.

The French dairy group has bought the 74% stake held by Tirumala Milk's founders and the rest 26% from private equity investor Carlyle Growth Capital Fund.

"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 his three partners holds controlling stake.

Tirumala Milk, which clocked Rs 1,427 crore in sales last fiscal, is the second largest milk supplier in south India. Its processing units across Andhra Pradesh, Karnataka and Tamil Nadu have a cumulative capacity of 1.2 million litres a day.

"For Lactalis, this acquisition is the first step. We believe India is a great opportunity. We will expand in other parts of the country," Lactalis spokesperson Michel NALET told ET.

The companies did not divulge the financial details of the deal.

The deal gives the French company an entry into the world's largest diary market, which produces 123 million tonnes of milk every year. The industry is expected to grow to 190 MT by 2015.

Family-owned Lactalis, with annual sales of €15.7b (Rs 1.33 lakh crore), signed the deal on Tuesday which it will soon make public, a Tirumala executive said.

The Indian diary market, which accounts for about 20% of the global milk production, is pegged at Rs 60,000 crore. It is expected to grow at a compounded annual growth rate of 13% to 15% until fiscal 2019-20.

Carlyle, which had invested $22 million in Tirumala in May 2010, valuing the company at $85 million, made a three-fold return with a net profit of $50 million.

"Carlyle has always believed in supporting good companies and in helping them in improving systems and processes and governance to take it to the next level," said Shankar Narayanan, MD, Carlyle India.

Carlyle has invested and committed approximately $1.1 billion in India until September 30, 2013.

Rothschild was the advisor in the deal for Lectalis while Tirumala's investment banker was Barclays.