Godrej Tyson Food Limited

Vivek Kumar
Yogesh Kumar Image Source- Google Images
B.F.Tech- VI
Tyson Foods, Inc.
● One of the world's largest processors and marketers of chicken,
beef and pork established in 1935.
● The second-largest food production company in the Fortune 500
and the market leader in its retail and foodservice markets.
● The $26-billion Tyson Foods is one of largest US marketers of
value-added meat products to retail grocers, distributors and
national fastfood and full-service restaurant chains.
Godrej Agrovet Ltd.
● A part of the Godrej Group.
● The Rs 1,200-crore Godrej Agrovet is one of the largest producers and
marketers of animal feeds and agri-inputs in India.
● Godrej Agrovet Limited is a diversified, Research & Development focused
agri-business company, dedicated to improving the productivity of Indian
farmers by innovating products and services that sustainably increase crop
yields.
● Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed
Foods.
Godrej Tyson Food Limited
● Godrej Tyson Foods Ltd is a joint venture between Godrej Agrovet Ltd. a part of
the Godrej Group and Tyson Foods Inc.
● The company is India’s premier poultry products manufacturer and marketer
with strong value-added chicken brands such as Real Good and Yummiez
● Tyson Foods’ expertise in processing and product development to create great-
tasting, safe, and healthy poultry products.
● The company also offers India’s expanding foodservice industry and universe of
modern retailers, innovative poultry solutions and world class products
customized to local tastes.
About Joint Venture (51:49)

● Joint Venture is signed on 4 March 2009 between Tyson foods &

Godrej Agrovet.
● U.S. based Company tyson $16 million in indian joint venture Godrej
tyson foods ltd. & Tyson takes 51% stake of GTFL.
● Godrej Agrovet, a unit of diversified Godrej Industries Ltd holds the
remaining 49 percent stake in the venture which sells processed
chicken brand ‘Real Good’ and ‘ready-to eat’ foods like chicken
sausages under the ‘Yummiez’ brand.
Why was Joint Venture made ?

● Both companies already have working relationship, Godrej agrovet is

the sole franchisee of Cobb-Avian.
● Godrej Agrovet, India's leading agri company.
● Tyson, the world leader in protein & wants to expand.
● Godrej has a good supply chain & distribution strength of godrej.
● Tyson is looking for better supply chain & expand their business.
● India’s potential market.
● Both companies are making Profit.
Why company prefer JV?
● Shared Resources and Responsibilities
● Flexibility for Participating Companies
● Shared Business Risk and cost
● It is only temporary
● There ways to exit a joint venture
● Potential will virtually be limitless
Why Target agreed?
● Godrej Agrovet is one of the largest producers
and marketers of animal feeds and agri-inputs
in India. The deal will help it gain access to the
global food processing and product
development technology of Tyson Foods.
● Godrej Group, the move will help accelerate
growth rates and also help tap the burgeoning
market in modern retail and processed food
industries.
Potential value creation

● The processed poultry business recorded sales

of Rd.44,852 Lakh during Financial Year 2016-
17 over sales of Rs.45,147 Lakh during the
Financial Year 2015-16. The focus of business
will continue to remain investing and building
the Real good Chicken and Yummiez brands for
future growth.
Recommendation & Suggestion
Godrej Tyson food has 2 brands - real good chicken fresh poultry and meat products,
among retail and institutional customers. Vertically integrated poultry process offers
fresh and frozen poultry in a variety of cuts, for ready use & Real good yummiez
which offers a range of vegetarian and non-vegetarian ready-to-cook products.

If they Launch their own food chain like subway we think they will get a good
customer database and definitely it will help to expand their customer base
as well as market share.
Reference
1. https://www.tysonfoods.com/who-we-are/our-story/what-we-do
2. Case study
3. //economictimes.indiatimes.com/articleshow/3071681.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign
=cppst
4. https://in.reuters.com/article/godrej-tyson-idINBOM38824820081008
5. https://www.thehindubusinessline.com/economy/agri-business/providing-affordable-proteins-is-
our-goal-says-godrej-tyson-chief/article7591333.ece
6. http://www.godrejagrovet.com/godrej-tyson-foods.aspx
7. https://www.thehindubusinessline.com/companies/godrej-tyson-foods-lineup-for-breakfast-
snacking-segments/article9091282.ece
Failur
e
TVS
● A multinational motorcycle company headquartered at Chennai, India.
● Third largest motorcycle company in India with a revenue of over 13,000 Cr
($2 billion) in 2016-17.
● 3 million units annual sales.
● 4 million unit annual capacity.
● Second largest exporter to over 60 countries.
● Is the largest company of the group in terms of size and turnover.
Suzuki
● Is a Japanese multinational corporation headquartered in Minami-ku,
Hamamatsu.
● Manufactures automobiles, four-wheel drive vehicles, motorcycles, all-terrain
vehicles (ATVs), outboard marine engines, wheelchairs and a variety of other
small internal combustion engines.
● The ninth biggest automaker by production worldwide.
● production facilities in 23 countries, and 133 distributors in 192 countries.
● $ 19.43 billion revenue.2016-2017.
About JV
● TVS-Suzuki plans to set up an auto ancillary estate through joint venture with
some of its existing components suppliers.

● 59,40,000 shares issued at par in 1984. 7,00,000 shares allotted to Sundaram

Clayton, Ltd. Chennai, 70,000 shares allotted to Anusha Investments (P) Ltd.
Chennai, 20,00,000 shares allotted to Suzuki Motor Co., Ltd., Japan; 2,20,000
shares allotted to employees and business associates and 29,70,000 shares
offered to the public.

● 154,00,000 Rights Equity shares issued at par in prop. 2:1

● Indo Suzuki Motorcycles Ltd. was the new name given to the entity which later
changed to TVS Suzuki Ltd with effect from 18th August 1986.

● Suzuki was to provide technology and TVS was supposed to provide

marketing networks and supply chains.
Why was JV formed

● TVS approached Suzuki for more funds and technology for new models.
● TVS wanted to expand with a capacity of 400000.
● Suzuki wanted to penetrate to potential India market.
● Suzuki wanted to know trade secrets, know business culture and generate
profit.
Their relationship

● 1982: Suzuki entered India through TVS-SUZUKI joint venture

● 1982: The JV was incorporated as Indian Motorcycles Pvt Ltd.
● 1984: Announced the name TVS Suzuki and a public issue.
● Indian Suzuki motorcycles was received well by the market but resulted in
loss due to high import content of the vehicle.
● 1987: TVS-Champ, the moped for urban customers was launced.
● 1989 – 1991: company posted losses
● 1990 – 1991: Company declared lockout due to labour problems
● 1991-92: With strengthened R&D the Company decided to become Product
Focused through a Turnaround Strategy
Problems with JV

● Mid 1990s: Suzuki having 26% stake in the company’s equity, wanted to
increase its share.
● Suzuki wanted to play a pivotal role and gain management control in TVS
Suzuki. Therefore Suzuki proposed
1. Adoption of Veto Rights for all management decisions.
2. Restriction on the use of local components. Import of Dyes and Capital
Equipment
3. Constraints on Indigenisation of components for future models
4. Royalty Payment to Suzuki for an indefinite period.
Collapse of the JV

● August 2001: Suzuki entered into an agreement with Japanese automobile

major Kawasaki for collaborating on Product development, Design
engineering and Manufacturing. TVS saw this as a direct conflict of interest,
since Kawasaki already had a successful joint venture with Bajaj in India.
● September 2001: Suzuki’s representatives were not present at the company’s
annual general meeting. This was a definite proof of the fact that “all was not
well” between the JV Partners.
● November 2001: Dissolution of Joint Venture was announced.
● TVS Group promoter company bought Suzuki Motor Corporation’s stake for
Rs 15 per share, while the share price of TVS-Suzuki closed at Rs 87 per
share on the Bombay Stock Exchange on the day of terminating the JV.
● Suzuki sold its 25.97 % to TVS for 90 million Rs.
Suggestion

● TVS should monitor the strategies of Suzuki.

● Top level managements should be able to coordinate properly with each other
to maintain joint venture.
● TVS should formed policies to maintain the interest of Suzuki.
References
http://www.globalsuzuki.com/ir/library/annualreport/index.html

https://economictimes.indiatimes.com/tvs-motor-company-ltd/infocompanyhistory/companyid-
12940.cms

http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy1/The%20TVS-
Suzuki%20Break-Up.htm

https://www.goodreturns.in/company/tvs-motor/history.html

https://www.thehindubusinessline.com/iw/2001/09/30/stories/0230b051.htm

http://www.globalsuzuki.com/ir/library/annualreport/index.html

https://www.sharekhan.com/stockpricequote/TVS-Motor-Company-
Ltd/010540010.00005004001/overview