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company analysis report of BRITANNIA

company analysis report of BRITANNIA

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Published by: E.GOPINADH on Dec 13, 2009
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07/27/2013

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BRITANNIA
Company Overview
The story of one of India's favorite brands reads almost like a fairy tale. Once upon atime, in 1892 to be precise, a biscuit company was started in a nondescript house inCalcutta (now Kolkata) with an initial investment of Rs. 295. The company we allknow as Britannia today.1.The beginnings might have been humble-the dreams were anything but. By1910, with the advent of electricity, Britannia mechanised its operations, andin 1921, it became the first company east of the Suez Canal to use importedgas ovens. Britannia's business was flourishing. But, more importantly,Britannia was acquiring a reputation for quality and value. As a result, duringthe tragic World War II, the Government reposed its trust in Britannia bycontracting it to supply large quantities of "service biscuits" to the armedforces.As time moved on, the biscuit market continued to grow… and Britannia grewalong with it. In 1975, the Britannia Biscuit Company took over thedistribution of biscuits from Parry's who till now distributed Britannia biscuitsin India. In the subsequent public issue of 1978, Indian shareholding crossed60%, firmly establishing the Indianness of the firm. The following year,Britannia Biscuit Company was re-christened Britannia Industries Limited(BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark.On the operations front, the company was making equally dynamic strides. In1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its newcorporate identity - "Eat Healthy, Think Better" - and made its first foray intothe dairy products market. In 1999, the "Britannia Khao, World Cup Jao" promotion further fortified the affinity consumers had with 'Brand Britannia'.Britannia strode into the 21st Century as one of India's biggest brands and the pre-eminent food brand of the country. It was equally recognised for its innovativeapproach to products and marketing: the Lagaan Match was voted India's mostsuccessful promotional activity of the year 2001 while the delicious Britannia 50-50Maska-Chaska became India's most successful product launch. In 2002, Britannia's1
 
 New Business Division formed a joint venture with Fonterra, the world's secondlargest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. was born. Inrecognition of its vision and accelerating graph, Forbes Global rated Britannia 'Oneamongst the Top 200 Small Companies of the World', and The Economic Times pegged Britannia India's 2nd Most Trusted Brand.Today, more than a century after those tentative first steps, Britannia's fairy tale is notonly going strong but blazing new standards, and that miniscule initial investment hasgrown by leaps and bounds to crores of rupees in wealth for Britannia's shareholders.The company's offerings are spread across the spectrum with products ranging fromthe healthy and economical Tiger biscuits to the more lifestyle-oriented MilkmanCheese. Having succeeded in garnering the trust of almost one-third of India's one billion population and a strong management at the helm means Britannia will continueto dream big on its path of innovation and quality. And millions of consumers willsavour the results, happily ever after.For the year ended 31st March 2008, the Company achieved a sales growth of 17.5%on an expanded base arising from 27.5% growth in the previous year. Net Profit of theCompany increased 77.5 % to Rs 1,910 Mn compared with Rs 1,076 Mn in 2006-07.Operating Margin increased by 307 basis points to 7.5%.The Company witnessed all round growth in key categories with Biscuits recordingsales of Rs. 23,299 Mn. Bread, Cake and Rusk business crossed the Rs. 2,700 Mnmark during 2007-08. This business has doubled in two years.In an intensely competitive biscuit environment, all ³Power Brands² of the Companyrecorded double digit growth, with Tiger and Good Day growing in excess of 20%.The Company¹s innovation forays have successfully addressed new benefit clustersand NutriChoice Digestive has claimed its position in the health and vitality space.The Company continues to maintain its leadership edge in 6 out of 7 key productsegments, the only exception being Glucose.The Company introduced several new and renovated offerings in Tiger, Good Day,Treat and MarieGold. The health and nutrition platform was buttressed by Tiger Banana with ³iron-zor², fortified Milk Bikis, renovated MarieGold and NutrichoiceDigestive. To tap the more indulgent consumers, your Company launched Good DayClassic Cookies, while continuing to roll out individual consumption packs at thehighly affordable Rs. 5 price point.2
 
The Bread, Cake and Rusk portfolio was strengthened with the successful relaunch of Breads, fortified with vitamins and minerals, positioning them firmly as the healthystart to your day. This innovation combined with relevant consumer activation in keymarkets has seen a 30%+ growth in the Bread, Cake and Rusk business.As a Corporate, Britannia worked for the benefit of all stakeholders - shareholders,consumers, dealers , suppliers, bankers and employees. It has established an excellenttrack record in terms of its financial performance and dividends distributed to itsshareholders. This has been adequately demonstrated with the Company's toplinegrowing from Rs 10,301 Mn in 1999 to Rs 26,176 Mn in 2008, a growth of 154%over the last 10 years. The net profit grew even more significantly at 382% from Rs396 Mn in 1998-99 to Rs 1,910 Mn in 2007-08, giving a CAGR of 19.1%. As at 31stMarch 2008, the issued and paid up capital of Britannia amounts to 23, 890,163equity shares having a nominal value of Rs 10 each. The shareholder base is about25,300 in number 3

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