GOBBLING UP INDIAN COMPANIES-WHAT ARE THE REPERCUSSIONS?

To day Indian processed food and beverage market is more or less dominated by multi-national companies which are supposed to bring new technologies and products to the country and upgrade the infrastructure for distribution. However what is happening is a series of take overs of Indian companies by some of these big fishes obliterating the domestic entities totally. As early as 1977 Coca Cola was forced to leave India by the then government for not being transparent in their activities but in came Pepsi during early nineteen nineties piggy riding on  a domestic public sector company in Punjab. Consequent to opening up of the Indian economy Coca Cola also returned to restart its operations in the highly lucrative beverage market. It is history as to how this MNC gobbled up the most successful national brand Thumsup and competition from local players was effectively extinguished. Same happened with potato chips market when Pepsi swallowed the domestic player Uncle Chips. It was not long ago that the Bangalore based MTR brand was acquired by a Norway company at an astronomical price. No one seems to be clear regarding what this trend bodes for the country. Here is the latest acquisition of a purely domestic brand in Pune by no less than the world's largest food processor and here are some sketchy information released by this MNC giant in its web site.

"Parampara's products join General Mills' growing portfolio of consumer food brands in India, including Pillsbury range of atta (flour) and cake mixes, Betty Crocker dessert mixes, Green Giant frozen vegetables, Nature Valley granola bars and Häagen-Dazs ice-cream. General Mills is one of the major food companies in the US, and operates in over 100 countries. Headquartered in Minneapolis, Minnesota, US, General Mills had net sales of $14.9 billion in fiscal 2011. Parampara, which started as a pickles, pappad and spices outfit 60 years ago, currently has the capacity to manufacture five million spice mix packs a year". 

Views may differ regarding the implications of these transactions with many impartial observers questioning the purpose behind these acquisitions at exorbitantly high prices, a temptation hard to resist for many domestic players. India may have a policy of inviting foreign investors with open arms but in a sensitive sector like food or pharmaceuticals, some policy orchestration is necessary to protect country's population from unhealthy foods turned out by these foreign companies. A common man may ask regarding the need for foreign investment in an area like beverages or for that matter the relevance of junk food peddling in this country and wonder whether India is going the US way in converting a healthy population into obese people! Having learned no lesson from history, Indian government seems to be bending backwards to welcome foreign direct investment in the highly profitable retail sector though this was thwarted by the vigilant citizens for the time being. It is time a broad consensus is reached among the political class and economic pundits for evolving an acquisition policy that will preserve the domestic food players without succumbing to the foreign money power.  

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com