Search the Internet          Tips  Sites: Finance, Investment

Parle Bisleri in talks with Danone, Nestle

India's largest bottled water firm Parle Bisleri is in talks with Switzerland's Nestle and France's Danone on the sale of a large stake but the negotiations will take time, its founder said on Thursday.

Ramesh Chauhan, chairman of unlisted Bisleri, who analysts estimate controls about half of India's burgeoning bottled drinking water market, told Reuters in an interview he expected a deal in "a year or two".

The 61-year-old mechanical engineer from the Massachusetts Institute of Technology said he was willing to sell 49 per cent of the company to ensure the firm had strong leadership after him.

"We have the technical knowhow, the distribution, the brand name and the money," Chauhan said. "I'm looking at this for the future...they will run the company -- that's the basic idea."

Bottled drinking water in India, a country of one billion people, is a fast growing market that is now worth some Rs 10 billion ($200 million) a year.

Analysts expect India to become a key market for Danone and Nestle, and the buyer of a stake in Bisleri, India's best-known water brand, would have a huge advantage over other players.

Danone, producer of Evian mineral water, said in March it is focusing on India, China and Indonesia for its bottled water business.

Nestle, which produces Perrier water, rolled out its Pure Life bottled water, geared towards developing countries with unreliable municipal water supplies, in 1999.

Coca-Cola has a high-profile presence in India with its Kinley bottled water and PepsiCo Inc sells its Aquafina brand, but both trail Bisleri.

Unilever's Indian subsidiary Hindustan Lever Ltd has also announced plans to enter the bottled water market, and there have been rumours it is interested in buying into Bisleri, but Chauhan said he would not talk to HLL.

"HLL has nothing to offer. They (Unilever) are not in the water business anywhere in the world," he said.

SUCCESS

Bisleri's bottled water has been a success in a country where clean drinking water is a major health issue and water-borne infections are common.

Chauhan said his biggest breakthrough had been the launch of the half-litre bottle, priced at Rs 5 in 1998, and he expected another big success with a 10-litre bulk pack.

"The new pack will bring the cost of bottled drinking water down to between Rs 2-3 a litre from Rs 10-12 now," he said.

Bisleri has capacity to make 700 million litres of drinking water per year, which will rise to one billion litres by March 2003, the end of this financial year. Its turnover is estimated at Rs 3 billion in the year to March 2002.

Chauhan said the company, which has been investing heavily for some years, could report a net profit this year.

"It's a losing proposition still as we're in a very big growth phase...but I think this year we should be able to make money, profit at the net level," he said.

"We're growing at a healthy 35 per cent in volume terms, may be a little more and expanding capacities," he said.

Chauhan has a history of building and selling successful brands. He launched Thums Up, a cola, in 1978, and it soon became the country's leading pop brand.

He sold the brand, along with a clutch of other soft drink brands, to Coca-Cola in 1993, giving the US giant a strong entry into India. "I've always enjoyed building brands rather than routine work," Chauhan said.

ALSO READ:
The Rediff Budget Special
Money

Tell us what you think of this report