Parmalat Takes Control Of Swojas Foods, To Inject Rs 11-Crore

Parmalat SpA of Italy, the $3.6 billion processed foods major, has decided to inject Rs 11 crore into Swojas Energy Foods in which it has picked up 51 per cent equity stake and taken complete management control.

The Italian company has 119 manufacturing facilities spread over 25 countries. It has interests in dairy products, fruits and vegetables processing and bakery products.

However, 49 per cent of Parmalat's income comes from dairy products and claims to be the third largest global player in this field.

The new capital pumped in by the Italian company will be used mainly to retire old debt and provide the much-needed working capital for the local unit. Parmalat has already brought in Rs 8.40 crore through preferential allotment of equity shares in Swojas, constituting 51 per cent of the company's equity. The composition of board of directors in Swojas Energy Foods will also change with 7 out of 12 members of the board being the representatives of Parmalat.

 

Giorgio Lacovara, chief of Asian operations of Parmalat, has taken over as the managing director of Swojas Energy Foods.

The shareholding pattern of Swojas Energy Foods will also change with the company's Indian promoters, the Shahs, and Sicom's holding dropping to around 27 per cent. The balance 22 per cent equity is being held by the public.

Swojas Energy Foods, promoted by the local Swojas Group, has been ailing since its inception. The company's chairman R K Shah blamed the banks for the poor performance of the company. He has alleged that the banks refused to give working capital to Swojas.

Even though Swojas has been making losses, Lacovara said Parmalat would use the local firm as an entry point into the fast-growing Indian dairy products market.

Lacovara said Parmalat now plans to introduce a range of products including the first branded paneer product in the country, besides butter, cheese, dairy whitener and milk powder. All these dairy products will be processed at its existing manufacturing facility in Dhule district of Maharashtra.

Parmalat will upgrade the existing manufacturing facility with the induction of Parmalat's technology in processed foods and dairy milk.

Swojas has the state government permission granted under the Milk and Milk Products Order to process 75,000 litres of milk per day, while the company has an installed capacity of 2 lakh litres per day. Swojas plans to seek permission for capacity expansion from the government.

To begin with, Parmalat will introduce buffalo milk under the Parmalat brand name. The company also intends to explore the exports market in west Asia for its milk powder.