This will be Nestle SA's first-ever direct venture in the business of producing biscuits outside the United States. Till now, South America is the largest biscuit market for the Nestle group where it owns several brands including Sao Luiz, Mckay and La Rosa.

Confirming the development, company vice-president Khing Fong Lim said: "Nestle SA will hold the majority stake in Excelsia through a restructuring of the current equity pattern. We will pump in about $6 million into the venture. Nestle India, in which Nestle SA holds 51 per cent stake, will have nothing to do with this outfit."

Analysts interpreted Nestle SA's move to make a direct entry and wresting the majority stake in the joint venture as highly significant against the backdrop of Britannia'stie-up with Dannon.

According to Lim, the Indian government has in principle cleared the proposal. "We were told by Dabur India officials that there is no regulatory barrier. The deal can be struck before the end of the current fiscal," Lim said.

Dabur Foods director Amit Burman had recently said his company would dilute its stake to at least 49 per cent in Excelsia Foods. "Worldwide, Nestle operates in every joint venture by holding a majority stake. It wants to do the same in Excelsia Foods," Burman said.

Lim made it clear that Nestle SA would pick up 60 per cent and not 51 per cent stake in Excelsia food as has been hinted at by Burman. He, however, refused to divulge the exact nature of the restructuring of stake and the amount Nestle SA will pay to hike its stake in Excelsia.

A formal announcement on the restructuring of Excelsia's equity base is expected in the third week of November during Swiss president Flavio Cotti's visit to India. Koti will be accompanied by a delegation of trade and Swissbusiness community during his visit. Senior Nestle executive WMO Garret--who looks after the global food major's businesss in Asia, Ocenia and Africa-- will accompany the Swiss president.

Exclesia Foods, a 60:40 joint venture between Dabur and Osem--the largest packaged food company in Israel--manufactures biscuits and extruded foods. Nestle took over Osem's worldwide operations late last year and has been vying for majority stake in Excelsia Foods ever since.

Excelcia Foods has recently launched a range of centre-filled cookies under the brandname Fillin's. This is the second range of products from the joint venture after the cream filled crisp wafers--Creamwich. The range consists of centre-filled cookies with four variants - chocolate, mixed fruit, pineapple and strawberry. The company has positioned Fillin's as an anytime appetising cookie with the fruit fillin's being a new soft type cookies.

On Nestle SA's plans for its India outfit Nestle India, Lim said: "India, despite some limitations, is avery important market for us. We have a three-pronged strategy in India -- increasing market share, strengthening product portfolio and raising share capitalisation."

He admitted that the company is `discussing' with `certain Indian partners' for possible tie-ups even though the objective of Nestle India is `growth from within'. "Worldwide we have been growing primarily through acquisitions and internal growth accounts for only one-third of the overall growth. Now the trend will be reversed," Lim said hinting that the company will stay away from new acquisitions for the time being.

In India, Nestle is targeting a 4 per cent `real internal growth' in the current fiscal. In 1997-98, Nestle India's sales turnover stood at Rs 1,435 crore.

India, which accounts for less than half a per cent of Nestle SA's worldwide business, houses six manufacturing centres. "Our new focus is on food and culinary products. We are emphasising on developing local Indian food concepts," Lim said.