Top Indian Companies: Britannia Industries Limited

Britannia Industries Limited is an Indian company specialised in food industry, part of the Wadia Group headed by Nusli Wadia.

Founded in 1892 and headquartered in Kolkata, it is one of India's oldest existing companies and best known for its biscuit products.

The company sells its Britannia and Tiger brands of biscuits, breads and dairy products throughout India and abroad.

The company was established in 1892 by a group of British businessmen with an investment of ₹295.

Initially, biscuits were manufactured in a small house in central Kolkata. Later, the enterprise was acquired by the Gupta brothers, mainly Nalin Chandra Gupta, an attorney, and operated under the name "V.S. Brothers." In 1918, C.H. Holmes, an English businessman based in Kolkata, was taken on as a partner and The Britannia Biscuit Company Limited (BBCo) was launched. Britannia is Nifty50 company with a weightage of 0.57% on the index.

Businesses

The company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products.

Biscuits

The company's factories have an annual capacity of 433,000 tonnes. The brand names of Britannia's biscuits include VitaMarieGold, Tiger, Nutrichoice, Good day, 50 50, Treat, Pure Magic, Milk Bikis, Bourbon, Nice Time and Little Hearts among others.

In 2006, Tiger, the mass market brand, realised $150.75 million in sales, including exports to the U.S. and Australia. This amounts to 20% of Britannia revenues for that year.

Dairy products

Dairy products contribute close to 10% to Britannia's revenue. The company not only markets dairy products to the public but also trades dairy commodities business-to-business.

Britannia holds an equity stake in Dynamix Dairy and outsources the bulk of its dairy products from its associate.

On 27 October 2001, Britannia announced a joint venture with Fonterra Co-operative Group of New Zealand, an integrated dairy company which handles all aspects of the value chain from procurement of milk to making value-added products such as cheese and buttermilk.

Shareholding Pattern

The Shareholding Pattern page of Britannia Industries Ltd. presents the Promoter's holding, FII's holding, DII's Holding, and Share holding by general public etc.

Holder's Name No of Shares % Share Holding

No of Shares 240868296 100%

Promoters 16202 0.01%

Foreign Institutions 42370569 17.59%

Banks/ MutualFunds 12606574 5.23%

Others 13776350 5.72%

General Public 35206089 14.62%

Financial Institutions 15155822 6.29%

Foreign Promoter 121736690 50.54%

FY2023 Q4 and Full Year Result

Britannia Industries Ltd on Friday reported a 47.53 per cent rise in consolidated net profit to Rs 557.60 crore for the fourth quarter ended March 2023, helped by gains from distribution expansion, cost management and softening commodity prices.

The company had posted a net profit of Rs 377.95 crore in the January-March quarter a year ago, Britannia Industries said in a BSE filing.

Its revenue from operations rose 10.93 per cent to Rs 3,892.02 crore during the quarter under review against Rs 3,508.35 crore in the year-ago period.

"On the cost & profitability front, input prices softened on the back of correction in palm oil and packaging materials, while flour continued to trend higher. Our intensified cost efficiency programme coupled with moderation in commodity inflation led to a healthy operating margin in this quarter," said Britannia's earning statement quoted its Vice Chairman and Managing Director Varun Berry as saying.

The double-digit revenue growth was on the back of "significant" distribution gains, he added.

"We continued to accelerate our rural journey with a focus on enhancing reach, partnering with 28,000 rural distributors, and sustaining our diligent market practices. Our brand and distribution strength also reflects in the consistent market share gains over the last 10 years," said Berry.

The total income of Britannia Industries in the March quarter increased 13.18 per cent to Rs 4,079.55 crore.

"We supported our brands and innovations with the requisite investments in the digital and mass media space. We further expanded portfolio of few of our adjacent categories, including milkshakes (in aseptic PET bottles) and Croissant," he added.

Britannia Industries' total expenses rose 7.68 per cent to Rs 3,322.48 crore in the fourth quarter of FY23 from Rs 3,085.45 crore in the year-ago period.

During the quarter, Britannia commercialised two biscuit greenfield units in Uttar Pradesh and Tamil Nadu, and a brownfield expansion in Orissa.

"We also commercialised 3 new lines of rusk this quarter. This is in line with our strategy to make in-house, our exclusive range of products, and further enhance productivity," Berry noted.

Over the commodity inflation, Berry said input prices have softened. There is a correction in palm oil and packaging materials.

"We are being vigilant of the competitive actions in the marketplace and closely monitoring the commodity situation in the country, especially around wheat and sugar. We shall deploy appropriate pricing actions to remain competitive and drive market share growth," he said.

For the financial year ended March 2023, Britannia's net profit increased 52.8 per cent to Rs 2,316.32 crore. It was Rs 1,515.98 crore in FY22.

Its consolidated revenue from operations in FY23 increased 14.63 per cent to Rs 15,984.90 crore from Rs 13,944.67 crore a year ago.

"Net Profit for the year includes an exceptional gain (net of tax) of Rs 359 crore, pursuant to a joint venture agreement with Bel SA for the Cheese business and consequent sale of 49 per cent equity stake in its subsidiary and fair valuation of the residual stake of 51 per cent," the company said.

Brokerage Outlook

Brokerage, Prabhudas Lilladher, upgrade BRIT to BUY (accumulate earlier) even as we cut FY22/23/24 EPS estimates by 1.6%/4.2%/2.6%. This follows as 10% price increase (by 4Q end) might not be sufficient to fully pass on +20% input cost inflation.

Prabhudhar Lilladher, Brokerage roll over to 46xDec23 EPS thereby arriving at a target price of Rs4,139 (Rs4093 based on 46xSept23 earlier) as ROE/ROCE and Dividend payout of 58%, 53% and +80% provide support. Upgrade to Buy.

ESG

Sustainability Principles Our sustainability framework comprises 4 pillars – Growth, Governance, Resources and People that collectively guide our approach to sustainability.

We are committed to embedding the principles of ESG (Environment, Social and Governance) into our operations and value chain by continuously engaging with our stakeholders.

Environmental, Social and Governance (ESG) POLICY Resources: Environmental Management - We ensure compliance with existing laws and regulations of the environmental protection. We encourage the adoption of ecofriendly practices to maintain the functioning of a sustainable supply chain.

Responsible water management and sanitation practices is emphasized strongly at Britannia.

Farmer engagement programs aimed at sustainable agricultural practices are also encouraged. We are committed to conserve biodiversity in and around our operations and abide by the biodiversity related laws of the nation and the state in which we operate. committed to engaging with and supporting our communities in holistically addressing malnutrition through the Britannia Nutrition Foundation.