1-4 September, 2006 Pragati Maidan, New Delhi, India
    Parakh Foods to exit JV with Cargill India


It’s been an exceptionally short marriage. Parakh Foods is exiting its joint venture with Cargill India less than a year after the two players got together to sell branded cooking oil to consumers. This was the first JV between an MNC and a domestic major in India’s Rs 5b branded cooking oil industry and, hence, had become something of a test case.

Pune-based Parakh Foods will be selling its 49% stake to Cargill India, which will now have complete ownership of two leading retail brands — Nature Fresh and Gemini — besides four edible oil refineries. That makes it the single-largest company in the domestic edible oils industry, with the capacity to make 5m pouches daily. Prakash H Parakh, who was managing director of the joint venture company, has already put in his papers.

The Indian partner decided to exit because of irreconciliable 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 synchronisation between the mind and body, it is time to take remedial action..

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 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 bought 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.

Date: 26-Sep-2005

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