The Telegraph
Wednesday , August 13 , 2014
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Two-pronged Britannia strategy for product push

Nusli Wadia (right) with Varun Berry in Calcutta on Tuesday. Picture by Kishor Roy Chowdhury

Calcutta, Aug. 12: Britannia Industries will focus on capacity expansion and innovations in its products as it plans to bridge the gap with rival Parle in a 2.5-million-tonne biscuit market.

At the company’s annual general meeting, chairman Nusli Wadia today said Britannia had been able to grow at a faster pace than the market and improve its market share to narrow the gap with Parle. It has lined up a capital expenditure of Rs 150-200 crore over the next few years for product innovation and capacity addition.

Britannia did not give its market share but industry sources said last year its share was 38 per cent, while Parle’s was at 40 per cent.

Managing director Varun Berry said that the company had set a strategy to strengthen its business foundation by improving quality and focusing on efficiency and cost management. “Strategies are placed in a way so that we can grow faster than the market,” Berry said.

He said the company would invest in adding capacity every year besides focusing on innovation primarily in costlier products. At present, Britannia’s total production capacity stands at about 74,000 tonnes per month. The company said it would expand the capacity by about 10 per cent every year.

“We are setting up an innovation centre in Bangalore at an investment of Rs 20-30 crore,” he said, adding that the company will increase both its direct reach through distributors and presence in rural areas this year.

The company is also keen on expanding its business in the overseas market. “Certainly we would revisit our strategy for Saarc countries. Bangladesh is a fairly large market. But we are not doing anything right now,” Berry said.

The company said it might exit its subsidiary, Daily Bread, as the unit was suffering losses. “It is not fitting into our scheme,” said Berry. Daily Bread sells bakery products through its stores in Bangalore.

Profit rises

The company has reported a 27 per cent increase in net profit at Rs 113.66 crore for the first quarter ended June. The company had posted a net profit of Rs 89.49 crore in the same period of the previous fiscal.

Net sales stood at Rs 1,772.63 crore, up 15.13 per cent over the year-ago period.

Berry said the dairy division, which constitutes close 5 per cent to the business, was under pressure owing to a rise in the price of milk. However, this had little impact on the biscuit business. Berry expressed hope that the company would maintain its growth momentum in spite of an inflation in raw material prices.

“Our results are a reflection of our focus on driving consumer offtake and leveraging fundamental levers of operations to generate sustainable and profitable growth,” he said.