Britannia

BRITANNIA INDUSTRIES LTD

PROJECT BY

RITESH WADHWANI

T.Y.B.M.S

PROJECT GUIDE
RAJESH SONKAR

SMT. MITHIBAI MOTIRAM KUNDANI

COLLEGE OF COMMERCE AND ECONOMICS,
BANDRA(W), MUMBAI-400050

SUMBITTED TO:
UNIVERSITY OF MUMBAI
2009-2010

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DECLARATION

I Ritesh Wadhwani, a student of TYBMS of Smt.MMK College of

Commerce and Economics,Bandra (W) hereby declare that I have
completed this project on “BRITANNIA INDUSTRIES LTD” in
the academic year 2009-2010.This information is true and original
to the best of my knowledge.

SIGNATURE OF STUDENT
RITESH WADHWANI

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CERTIFICATE

I Rajesh Sonkar hereby certify that Ritesh Wadhwani of

Smt.MMK College of Commerce and Economics, Bandra(west)
has completed project on ““BRITANNIA INDUSTRIES LTD”
in the academic year 2009-2010. The information isubmitted is
true and original to the best of my knowledge.

SIGNATURE OF GUIDE SIGNATURE OF PRINCIPAL

MR.A.C.VANJANI
(I/C PRINCIPAL)

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ACKNOWLEDGEMENT

My sincere thanks to my project guide MR. RAJESH SONKAR

without his help and support this would not be possible.

I would like to thank my class mates and also my friends which

have always supported in my opinion. Without their help this
project would have seemed incomplete.

I would also like to thank my college SMT. MMK COLLEGE OF

COMMERCE & ECONOMICS for supporting me everytime.

Last but not least, I would like to thank my parents for giving the
best education and also for supporting.

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TABLE OF CONTENTS

SR.NO TOPIC PAGE NO

.
1. INTRODUCTION TO BRITANNIA 7
2. BRITANNIA IN A NUTSHELL 11
3. THE STRUCTURE OF INDIAN BISCUIT MARKETS 20
4. BRITANNIA THE BISCUIT SEGMENT 24
5. BRITANNIA - THE LAUNCH OF VARIOUS PRODUCTS 25
6. BRITANNIA FINANCIAL STATEMENT 28
7. MANAGEMENT DISCUSSION AND ANALYSIS 34

-ANNUAL REPORT
8. BRITANNIA – MARKETING 39

- THE MAKEOVER- EAT HEALTHY, THINK BETTER

-BRITANNIA OUTLINES INITIATIVE TO TAP

INNOVATIONS

-BRITANNIA USES CRICKETERS FOR PROMOTIONS

9. SALES GROWTH – STRATEGIES 48

10. BRITANNIA – ADVERTISING 50

11. BRITANNIA – THE COMPETITION 52

12. GLUCOSE BISCUITS- COMPARISON OF THE 59

NUTRITIOUS VALUE OF VARIOUS BRANDS

13. A BITE FULL OF HEALTH? 60
14. WHO DECIDES BISCUIT QUALITY? 64
15. HOW THEY PUSH SALES 66
16. MARKETING ON LABELS 68
17. BRITANNIA HAS FACED GLOOMY DAYS 70
18. BRITANNIA GIVES MARCHING ORDERS TO ALAGH 71
19. BRITANNIA PRODUCTS 72
20. A BRIEF STUDY OF BRITANNIA’S CLOSEST 74

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COMPETITOR – PARLE
21. BRITANNIA - SWOT 80
22. RECOMMENDATIONS 85
23. BIBLIOGRAPHY 87

AN INTRODUCTION TO BRITANNIA

Britannia Industries Ltd

Britannia was incorporated in 1918 as Britannia Biscuits Co Ltd in

Calcutta. In 1924, Pea Frean UK acquired a controlling stake, which later passed
on to the Associated Biscuits International (ABI) a UK based company. During
the ’50s and’ 60s, Britannia expanded operations to Mumbai, Delhi and Chennai.
Exports of sea foods started in the ’70s. In 1987, Nabisco, a well known
European food company, acquired ABI. In 1989, J M Pillai, a Singapore based
NRI businessman along with the Groupe Danone acquired Asian operations of
Nabisco and thus acquired controlling stake in Britannia. Later, Groupe Danone
and Nusli Wadia took over Pillai’s holdings.

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In 1977, the Government reserved the industry for small scale sector,
which constrained Britannia's growth. Britannia adopted a strategy of engaging
contract packers (CP) in the small scale sector. This led to several inefficiencies
at the operating level. In April ’97, the Government dereserved the biscuit sector
from small scale. Britannia has expanded captive manufacturing facilities and
has modernized and upgraded its facilities in the last five years. It has also
forayed into the Dairy Business with the launch of Cheese, Butter, Ghee, Dairy
whitener and flavored milk products.

Britannia's controlling stake is jointly with Groupe Danone and Nusli

Wadia. The Company is controlled by the Wadias. Danone provides product
support and technical assistance to the venture. Groupe Danone is one of the
leading players in the world in bakery products business. It acquired interest in
Britannia Industries in 1989 and acquired controlling stake in 1993. The Wadia
Group, headed by Nusli Wadia, is one of the leading industrial houses in the
country, with interests mainly in textiles and petrochemicals.

Britannia is the market leader in the organized biscuit and bakery product
market in India. They are the only Indian biscuit company with a presence
across all segments, from Glucose, Salted, Arrowroot and Premium Cream
Biscuits. Biscuits contribute 84% of Britannia's total turnover. Other products
include bread (6 per cent) and cakes (2 per cent). Britannia diversified into dairy
products in 1997 with processed cheese and dairy whitener. The portfolio was
expanded with the launch of butter, pure, flavoured milk in tetrapacks and UHT
milk. Dairy products account for 8 per cent of the company’s total turnover. Over
the years, Britannia has trimmed down its wide product portfolio and focussed on
value-added instead of low-margin products. The company divested a range of
unrelated business interests in soyabean extraction, edible oils, export of
cashewnuts and shrimp, granites and software. The company rationalised its
products portfolio by reducing the products from 35 to around 25.

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Britannia has share of 20 per cent in the biscuit market. In the organised
biscuit market, the market share is higher at 40 per cent. The company claims a
share of 33 per cent of the organised cheese market and 15 per cent of the milk
powder.

Plant locations

Britannia's plants are located in the 4 major metro cities - Kolkatta,

Mumbai, Delhi and Chennai. A large part of products are also outsourced from
third party producers. Dairy products were out sourced from three producers -
Dynamix Dairy based in Baramati, Maharashtra, Modern Dairy at Karnal in
Haryana and Thacker Dairy Products at Howrah in West Bengal.

Competitive position : The entry of new MNC’s have not posed a direct
threat to Britannia, as these MNC’s have positioned their brands in the
premium/health segment. Britannia has maintained market leadership with a 40%
volume share and 48% value market share in the organized sector. FMCG major
HLL is expected to venture into the segment. Britannia has been aggressive in
new launches and marketing during the last 2 years anticipating the competition.
It has also recently acquired a stake 49% stake Kwality Biscuits, gaining a.
strong foothold in the southern market

Bread is one of the most widely consumed processed foods in the

country. The market is estimated at 1.5mn tpa. The industry is dominated by a
large number of players in the unorganized sector, which accounts for over 80%
of the market. Britannia Industries and Modern Foods (now owned by HLL) are

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the only two players with a national presence in packet slice bread segment.
There are several other regional players who have significant market shares in
their respective local areas. Britannias’s bread business has been slowly
degrowing and registered a 9.4% yoy volume degrowth in FY01.

Dairy : India has emerged as the largest milk producing country in the
world manufacturing 81mn tons of milk pa. The country has one of the largest
livestock populations of the world and this industry plays a crucial role in terms of
providing income to around 70 million farmers in 500,000 villages. The top 6
states viz. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and
Gujarat account for 58% of India’s milk production. The market size of milk in
India is worth Rs 45,000 cr and more than 90% of the market is unorganized.
Britannia has forayed into this huge market under a brand called ‘Milkman’.
Britannia’s dairy business has been growing at a fast pace on the low base.
Volume growth was 50% and value growth was 47% in FY01. In value terms the
Dairy business contributed to 10% of turnover in FY01. Prior to the entry of
Britannia, the organized market for dairy products like butter and cheese was
dominated by the regional milk cooperatives, such as Amul, Vijaya, etc. Imported
brands are also freely available in the country today. In the organized domestic
segment, Amul remains the dominant player and will continue to be a stiff
competitor, given its sourcing advantage and market savviness. Significant entry
barriers exist, but once the network is in place, it is a cash generating business.
The dairy market offers long-term opportunities for organized players such as
Britannia. Britannia outsources its milk requirement from Dynamix Diary in
Maharashtra and Karnal Dairy In Haryana.

Operating margins have been improving despite the fast pace of new
product launches in the last 2-3 years. Rationalization of manufacturing
operations, and greater contribution of higher margin dairy products have both
contributed to the margin gains. Britannia has decided to hive off its dairy
business into a joint venture with the New Zealand based Fonterra Cooperative.

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Britannia and Fonterra will each hold 49% of the Rs2.25bn equity, while the
balance 2% will be held by business associates.

Britannia- The Highlights

• Largest manufacturer of Biscuits in India
• Product range includes breads and cakes
• One of the best known brands, Britannia is the largest company in the Indian
food processing industry
• Four production facilites with over 4367 employees.
• Extensive all India distribution network of over 600,000 outlets, making it
among the most wide spread in the industry.
• Exporter of various types of Biscuits.

BRITANNIA IN A NUTSHELL

1918

- The Company was Incorporated on 21st March 1918, as a public limited

company under the Indian Companies Act, VII of 1913. The Company
Manufacture bakery and soyabean products, export of cashew Kernels marine
products, general merchandise items and computer software.

1921

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- The Company obtained a priority of Certificate and imported new machinery

thereby becoming the first biscuit company in India to install and run a gas oven
plant.

1924

- A new factory was established at Kasara Pier Road in Mumbai. In the same
year, the Company became a subsidiary of Peek, Frean & Co. Ltd., U.K., a
leading biscuit manufacturing company, and further strengthened its position by
expanding the factories at Calcutta and Mumbai.

1939-45

- A large part of the Company's production was diverted to war effort on account
of World War II and at times as much as 95% of the total capacity was booked
for the production of "Service Biscuit".

1951

- 19,779 Equity shares issued to acquire the Delhi Biscuit Co. Ltd. In August
1,53,234 Bonus equity shares issued in the proportion 1:1.

1952

- The Calcutta Factory was shifted from Dum Dum to spacious grounds at
Taratola Road in the suburbs of Calcutta. During the same year automatic plants
were installed there and later in Mumbai in 1954.

1954

- The development of high quality sliced and wrapped bread in India was
pioneered by the Company and was first manufactured at Delhi.

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- 1,53,234 Bonus equity shares issued in the proportion 1:2.

1961

- Manufacture of bread was started in Mumbai and a new bread bakery was set
up at Delhi in 1965.

- 2,29,851 Bonus equity shares issued in the proportion 1:2.

1966

- In May 1966, 3,06,468 Bonus equity shares issued in the proportion 4:9.

1968

- On 14th May, 6,64,014 Bonus equity shares issued in the proportion 2:3.

1970

- 9,96,021 Bonus equity shares issued in the proportion 3:5.

1976

- Britannia bread was introduced in Calcutta and Chennai.

- 18,59,239 Bonus equity shares issued in the proportion 7:10 in April.

1978

- After the issue of shares to the Indian public, the non-resident holding in the
Company was reduced to less than 40%.

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- 18,00,000 Equity shares issued at a premium of Rs 5 per share. 4,06,286

shares offered as rights to resident Indian shareholders in proportion 1:5. 43,714
shares offered to the Company's employees; 1,00,000 shares to UTI and 50,000
shares each to LIC and GIC were reserved for allotment and 11,50,000 shares
offered to the public during January/February.

1979

- With effect from 3rd October, the name of the Company was changed from the
Britannia Biscuit Co., Ltd., to Britannia Industries Ltd.

1980

- The Company signed a 10 year technical collaboration agreement with Nebico

Pvt. Ltd., Nepal, for the supply of know-how relating to manufacturing, packaging
and marketing of biscuits and selection of plant and machinery.

1982

- 25,26,118 Bonus equity shares issued in proportion 2:5.

1986

- The turnover increased by 19.4% over the the previous year to Rs 192.15
crores. Sales of biscuits, in terms of volume, registered a satisfacotry growth.
"Good Day", a new biscuit launched during the year met with good market
response.

- Production of bread at Delhi unit was adversely affected due to launched pure
refined cooking oil under the brand name of "Vital".

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- 35,36,565 Bonus shares issued in proportion 2:5 during July 1987.

1987

- In (16 months), the total sales turnover increased on an annualised basis by

38.7% over the previous year. Increase in sales of bakery and soya products
divisions and higher cashew exports helped to realise higher sales. With the
introduction of some more brands during the year, the total biscuit brands of the
bakery division reached 27. The soya products division introduced a range of
extruded products under the brand name "VITAL FEAST".

1989

- The Company launched new brand of biscuit, namely, `CIRCUT'. Another

brand "PURE MAGIC" was extended nationally and pista badam was added to
"GOOD DAY" range of biscuits. Bread production and affected for some time at
Delhi factory due to industrial unrest.

- 61,88,989 Bonus shares issued in proportion 1:2.

1990

- Two new brands of biscuits,"Elaichi Cream"and "Petit Beurre" were launched.

Also, a new cashew badam variant of the brand "Milk Bikis" and brand extension
of Pure magic biscuit Vanilla cream were launched. Fruit bread was launched in
Delhi and was well received.

1991

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- The Company launched two new speciality brands viz., Britannia milk bread
and Britannia brown bread in Delhi and extended nationally its main brands Petit
Beurre and elaichi cream.

- On 17th August, the Company handed over to SM Dychem Ltd, its soya unit at
Vidisha, MP.

- The Company proposed to invest in the equity capital of Britco Company Pvt.
Ltd., a joint venture with JMRPCO Ltd., Hongkong, for manufacture of beverage
bases and essence for Coca Cola, Fanta & Sprite and to export processed snack
foods.

1992

- The Company launched a new brand of biscuit, namely `Little Hearts' which
carved a niche in the market.

1993

- The Company launched new brand of biscuit, namely, `Fifty-Fifty'. Bread market
remained depressed. To revive the market, the Company launched a speciality
brand viz. `Premium Bake' in both Delhi and Mumbai. During the year, the
company has started exporting Basmati Rice under the name `Britannia Indian
Pearl'.

1994

- During the year, the bakery division launched `Bakers Choice' a sweet biscuit
and `Thinlite' a light semi-sweet biscuit aimed at fitness concious consumers.

1995

- Under the `Pure Magics' Umbrella, the company launched a new sandwich
cream biscuit with two-in-one flavour viz. double cream and this was well

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received in the market. In the cake market, under the premium segment, the
company launched with Groupe Danone's technological input a Swissroll Cake
"Mini Roule" which was also met with good response.

1996

- Mariegold biscuits registered quantum growth in volumes and Milk Bikis milk
cream launched during the year was well received. Despite general slow down
in the economy the company's profits improved.

1997

- The Biscuit industry has been dereserved which would not only remove
restriction on increasing capacity but would also provide opportunities of growth
through new products and efficient production systems. The Company undertook
to diversify into Cheese and Dairy Whitner.

- The Company launched `Tiger' range of biscuits for mass market category,
`Jim-Jam' and ` `Chekkers' in the premium segment. The Company also
launched Butter in Delhi during the year.

- Britannia Industries (BIL) is one of the largest bakery in the private sector and a
household name in food products.

- Britannia Industries Ltd (BIL) will shortly enter the cheese and milk products
market with an alliance proposed between itself and the Mumbai-based Dynamix
Dairy Ltd.

- Britannia Industries Ltd is all set to launch a new corporate identity and a total
revamp of its product portfolio, with strategic inputs from an international strategic
design and brand repositioning company - Shining Strategic Design. 1998

- Food major Britannia Industries Ltd (BIL) has signed a wage agreement with
the Maharashtra General Kamgar Union (MGKU), providing an average wage

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increase for 1,000 workers employed in the biscuit manufacturing unit at Reay
Road, Mumbai.

- The company has launched Half/Half, a soft cake filled with cream in two
variants, chocolate-vanilla and vanilla-orange. Half/Half comes in a twin-cake
pack (Rs.6) and a tray pack containing five cakes.

- Britannia Industries Ltd has launched a festival offer for Britannia Dairy
Whitener in Kerala.

- A Ind AAA rating has been signed to the Rs.100-crore secured non-convertible
debenture issue from Britannia Industries Limited (BIL).

1999

- Britannia Industries Ltd has rolled out its flavoured milk brand `Zip-Sip' in
tetrapaks. Zip-Sip has been launched in Mumbai and some markets in the South.
- Britannia Industries, launching the country's first branded flavoured milk is
another step towards its goal of becoming a dairy-products giant.

- In a move meant to sharply increase its India-profile, `knowledge major'

Encyclopaedia Britannica Inc plans to come out - for the first time - with India and
south Asia-specific volumes targeted at school children as well as institutions and
the general `knowledge-seeker'.

2000

- Britinnia Industries has launched consumer promotion scheme `Britannia Khao,

Cricketer Ban Jao' on May 1st.

- Britannia Industries, in its second coming in the Indian dairy market under the
`Milkman' brand, is introducing a range of products many in desi flavours to woo
the Indian consumer.

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- The Company has launched Vita Mariegold, a semi-sweet biscuit which

reportedly has 10 essential vitamins, milk protein and 58 cereals.

- Britannia's Milk Bikis Funland biscuits an innovative extension of the Milk Bikis
brand.

- The Industry is set to start bread-manufacturing factories in Kochi, Hyderabad

and Chennai to tap the region's market potential.

- The Company has become the first company to take its products to the Net in
the form of a video file.

- Britannia Industries has launched Britannia Milkman Butter, a product under the
Milkman brand.

- The Company has appointed Tata Energy Research Institute (Teri) for a power
audit.

- FITCH rating India Pvt. Ltd has reaffirmed the Ind AAA rating assigned to the
Rs 1000 million non convertible debenture program of Britannia Industries Ltd.

- The Company has lauched two new dairy products Milkman Cold Coffee and
Milkman Sweet lassi.

- Britannia Industries Ltd. has introduced a new range of traditional namkeens

called Britannia Snaz in Mumbai.

2001

- Britannia Industries has launched Britannia Milkman Milk in Delhi.

- Biscuits major Britannia Industries will fund its in-principle agreement to acquire
49 per cent of Kwality Biscuits through internal accruals.

2002

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-Britannia Industries Ltd announced on March 26, 2002 that it has entered into a
joint venture with the Fonterra Cooperative Group, New Zealand's biggest
company and one of the leading diary co-operative groups in the world.

-Britannia's new COO is Nikhil Sen.

2003

- Board of Directors of Britannia Industries Ltd has passed a resolution to

terminate the employment of Mr S K Alagh as Managing Director of the company
with immediate effect.

- The management of Britannia Industries has roped in John Miller, a Danone

representative, as additional director on its board.

2004

- Vinita Bali has been appointed as the new chief executive officer of Britannia
Industries Ltd.

- She will assume charge from January 3, 2005.

THE STRUCTURE OF INDIAN BISCUIT MARKETS

The Indian population is classified into destitute class, climbers, aspirants,

consuming class and the rich. The consuming class (which has an annual

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income between Rs.45000 to Rs.245,000) has around 32-35 million households

and destitute class and climbers have even a larger base of consumers. There is
a huge presence of unorganised markets in almost every category.

One of the biggest challenges for consumer-goods manufacturers in India

is to make people loyal to their brands. Becoming a household name in such a
populous marketplace translates into millions of rupees of potential sales.
Britannia has successfully managed to do that. It has with great ease become a
part of every household. INDIANS may be hogging less of the staple rice and
wheat. But, they surely are snacking big time on 'biscuits.' For the fast moving
consumer goods industry, the packaged biscuit basket has emerged as a winner
with all other product lines like soaps, detergents, hair oil, packaged tea biting the
dust.

The biscuit market in India is estimated to be 1.1mn tpa, valued at

Rs35bn. The unorganized sector accounts for over 50% of the market. The
market has been growing at a CAGR of 6-7% pa. Per capita consumption of
biscuits is estimated at a low 1.5kgs, reflecting the huge potential for growth.
Manufacturing was reserved for small scale upto 1997, which put large players at
a disadvantage. In the organized sector, Britannia and Parle are the only national
players with dominant market shares. Other organized players include domestic
players like Bakeman’s, Champion, Kwality, Priya and MNC’s like SmithKline
Consumer, Kelloggs, Sara Lee, Heinz, Excelsia (Nestle) and United Biscuits

Indian biscuit manufacturers have managed a crunchy bite of the business

in the last few years. From a sales turnover of Rs 1,489.90 crore in 1997, the
biscuit industry notched an impressive compounded annual growth rate (CAGR)
of 10.24 per cent to touch Rs 2,426.39 crore in 2001.

Even volumes have given biscuit manufacturers reasons to cheer as they

clocked a CAGR of 9.16 per cent in the same period.

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The reasons for this being: 1) The opening up of the sector (till 1997,
manufacturing was reserved for the small-scale sector), which had resulted in a
flurry of multinationals like SmithKline Consumer, Kellogg and Sara Lee entering
this sector.

Britannia Industries and Parle Products are still the predominant national
players. The other organised players include domestic players like Bakeman’s,
Champion, Priya , along with the multinationals continue but as relatively small
players.

The influence of promotions and new launches have helped the biscuit
market grow.

The biscuit industry is divided into two broad segments: core and
non-core. While Glucose, Arrowroot, Marie and Milk biscuits belong to the core
segment, the non-core segment has a massive portfolio of cookies, creams, non-
salt crackers, salt crackers, wafer creams (this segment also includes gift packs
and assorted biscuits).

In 2001, the core biscuit segment witnessed 37 new introductions and

30 existing brands did not seem to have any sales value (which is as good as
being non-existent). Similarly, the non-core segment registered 117 product
introductions, and 124 brands had no sales value.

In 2001, non-core biscuits contributed just 40 per cent — or Rs 970

crore — while the core segment contributed nearly Rs 1,456 crore to sales. And
it is not that the non-core segment is making up for the smaller share by growing
at a faster rate: while the entire biscuit category managed a CAGR of 10.24 per
cent, the non-core segment grew by 9.75 per cent in value, while the core
segment grew at 10.58 per cent.

Volumes had a similar tale to share. Volume growth for core biscuits like
Parle-G, Britannia Tiger, Kellogg’s Glucose, Bakeman’s English Marie and others

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managed a CAGR of 10.10 per cent in the five-year period between 1997 and
2001, the impressive spread of cream biscuits to cookies from non-core brands
crumbled and grew at barely 6.61 per cent.

In January-December 1997, the Glucose biscuit segment with players like

Parle-G, Britannia Tiger and smaller players like Kellogg’s Glucose, notched up
Rs 538.08 crore — or 61 per cent of the core biscuit segment valued at Rs
882.10 crore.

However, by the end of 2001, the Glucose category had nearly doubled in
terms of value contribution to touch Rs 977.14 crore. And today Glucose biscuits
contribute 67 per cent of the core biscuit segment valued at Rs 1,458.41 crore.

Milk biscuits in the core biscuit segment and cream biscuits in the non-
core biscuit segment have shown a decline in contribution. In 1997, milk biscuits
contributed 17 per cent or Rs 149.95 crore to the core biscuit segment. In 2001,
milk biscuits made up just 10 per cent or Rs 145.8 crore of a Rs 1,458-crore
segment.

For cream biscuits the slide has been similar. In 1997, cream biscuits
contributed 23 per cent or Rs 139.79 crore to the non-core segment valued at Rs
607.79 crore. However, in 2001, though the actual contribution from cream
biscuits increased to Rs 183.91 crore, it was just 19 per cent of the total non-core
segment valued at Rs 967.97 crore.

The decline in the cream and milk segments has been chiefly due to the
lack of push by players in these two segments. Another recent trend has been
that PoPs (point of purchase) displays and advertising in the biscuit market have
been directed more at cookie types of biscuits than any other types.

While both segments have witnessed a price increase, the extent to which
it has taken place in the non-core is higher than in the core. The difference

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between volume and value for non-core segment is higher than it is for the core
segment

Sweet cookies and non-salt crackers (Bakeman’s Butrkist, Britannia

Coconut Cookies, Britannia 50:50) account for 66 per cent and have garnered Rs
638.86 crore of the Rs 967.97-crore non-core segment. It will take some time for
the core and the non-core segments to be 50:50, but this helps manufacturers to
spread their risks into different baskets.

BRITANNIA- THE BISCUIT SEGMENT

Britannia Industries Ltd. caters to all segments of the biscuit market. Its
major brands include Marie, Arrowroot, Bourbon, Milk-bikis, Nice, Snax, Coconut

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Crunchies, Pure Magic, Snax, 50-50, Cream Treat Good Day, Jim-Jam, Little
Hearts and Chekkers and Tiger. The three new brands Digestive, Thinlite and
Cream Cracker have been launched under the umbrella brand Nutrichoice. The
company also launched a Cashew-Badam variant of Tiger. BIL has a small
presence in the cake market with Merricake, FruitCake and Half-Half brands.

In the biscuit`s segment the tiger brand has captured 21.6 per cent share
of glucose biscuit market. Tiger contributes 25% to volumes and 19% to the
sales of the company. Earlier, with its previous glucose biscuit brands - Glucose
D and Circus- Britannia had only 10 per cent of market share.

The company has decided to focus on seven core brands in the biscuits
and bakery category. The brands included Good Day, Tiger, 50-50, Snax, and
the Cream Treat brands, among others.

BRITANNIA- THE LAUNCH OF VARIOUS PRODUCTS

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Britannia constantly expands its product portfolio to achieve its vision of

converting every third Indian into its consumer. In order to appeal to the younger
generation, the company added two new products -- Sweet Lassi and Britannia
Milkman Cold Coffee to its existing dairy-based drinks portfolio which includes
the `ZipSip' brand of flavoured milk.

In the ethnic food segment, the company introduced a new range of

traditional `namkeens' in Mumbai called Britannia Snax. The new range includes
seven varieties of traditional namkeens like 'Bikaner ki Bhujia' and 'Rajasthani
Alu Bhujia' in a price range of between Rs 5 and Rs 20.

Tiger biscuits launch in July 1997 led Britannia’s foray into the glucose
category. Tiger now contributes about 40% to the biscuits turnover and has been
Britannia’s biggest success. The company has ‘Tiger’ brand in the low-price-low
income segment. In this segment, value growth is lower than volume growth.
‘Tiger’ brand operates in a competitive market where price is an important factor.

In Dec. 2000, Britannia dropped its plans to enter the mineral water
segment. The move comes close on the heels of Danone launching its own
mineral water brand, Evian, in India, through a separate wholly-owned
subsidiary, Danone India. Groupe Danone is globally the second-largest
producer of mineral water in the world with brands such as Evian, Volvic,
Ferrarelle Badoit, Font Vella and Aquaprima among
others. The mineral water segment in India is growing
at around 50% annually and is dominated by Bisleri and
Bailley.

In 2001, the launch of Maska Chaska, the

snack biscuit extension of Britannia's 50-50, is selling more than the mother
brand in certain markets like north Karnataka. And in doing so, Maska Chaska is

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 Britannia

contributing nearly 30% to the mother brand 50-50's total sales across the
country

In October 2001, Britannia had agreed in-principle to acquire a 49%

stake in Snacko Biscuits, a privately held company, along with the trademark
`Nutrine` and several other trademarks in addition to their copyrights and
designs.

In 2002, the company acquired Kwality biscuits. BIL acquired the trade
mark "KWALITY", the Chef Device and several other trademarks owned by
Kwality Biscuits of Bangalore for a consideration of Rs 30 crore. It also agreed in
principle to acquire 49% equity of Kwality Biscuits.

In March 2002 , Britannia entered into a joint venture with the

Fonterra Cooperative Group, New Zealand. BIL has transferred its dairy
business to the new joint venture. The joint venture was effective from 27th
March 2002 and is engaged in areas relating to sourcing/manufacturing and
distribution of milk and milk products in India.

In March 2002,Britannia Tiger Chai Biskoot’ a new variant of the Tiger

brand the new hit major Indian markets. With this new launch, the objective was
to target all income groups in India and strengthen the mother brand ‘Tiger’. The
product is priced at Rs 4 for 75 gm and Rs 15 for 300 gm.

In October 2002, ‘Tiger Mast Cream’ was launched across the nation.
This launch comes subsequent. This was with a view to fulfil another impulse
buying need of the consumer and to leverage the companys Brand portfolio , of
which Tiger was one of the core brands.

On April 02, 2003 Britannia Industries Ltd (BIL rolled out ‘Britannia
Timepass’ in metros and mini-metros. The selling proposition for the new

26
 Britannia

snacking range was ‘tasty yet healthy snacking option’. The products are
available in two pack sizes of 25g and 50g, priced at Rs 5 and Rs 10
respectively. The launch of Timepass in the snacking category was an effort by
the company to try and strengthen its presence in the snacking segment.

At the moment, Britannia is in the process of rolling out a new variant of

its popular biscuit brand ‘Tiger Mast Cream’ across the country. The company is
also extending its ‘Little Hearts’ range to penetrate the youth segment more
effectively. The consumer response for ‘GoodDay’ has been encouraging. The
price of GoodDay has been taken up only in the south Indian markets to bring in
parity. This brand has shown a healthy growth. The two new variants of Tiger
‘Chai Biskoot’ and ‘Mast Cream’ -- have also met with enthusiastic response.
Such initiatives will enable the company to maintain its growth momentum.

BRITANNIA FINANCIAL STATEMENT

27
 Britannia

Brief Financials (in Rs. Mn.) Detailed Quarterly

Period ending (months) 30-Sep-2004 (3) 31-Mar-2004 (12) 31-Mar-2003 (12)
Net sales 4271.00 14396.13 12958.28
Other Income 227.00 102.45 75.09
Total Income 4498.00 14498.58 13033.37
Cost of goods sold 3716.00 12694.07 11485.99
OPBDIT 782.00 1804.51 1547.38
PAT 485.00 1187.99 991.62
Gross Block - 2078.46 2386.32
Equity capital - 251.12 259.04
EPS (Rs.) - 47.31 38.28
DPS (Rs.) - 10.85 9.69
BV (Rs.) - 144.95 129.30
P/E range (x) - 0.0 - 0.0 0.0 - 0.0
Debt / Equity (x) - 0.11 0.46
Operating margin (% of OI) 17.4 12.4 11.9
Net margin (% of OI) 10.8 8.2

Income Statement
31-Mar- 31-Mar- 31-Mar-
As on( Months )
04(12) 03(12) 02(12)

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 Britannia

Profit / Loss A/C Rs mn %OI Rs mn %OI Rs mn %OI

Net Sales 14396.13 99.29 12958.28 99.42 13985.12 99.87
Operating Income (OI) 14498.58 100.00 13033.37 100.00 14003.63 100.00
OPBDIT 1804.51 12.45 1547.38 11.87 1377.69 9.84
OPBDT 1744.19 12.03 1436.34 11.02 1236.96 8.83
OPBT 1520.15 10.48 1175.79 9.02 996.84 7.12
Non-Operating Income 443.13 3.06 253.09 1.94 225.69 1.61
Extraordinary/Prior
-77.25 -0.53 59.51 0.46 1361.66 9.72
Period
Tax 698.04 4.81 496.77 3.81 552.53 3.95
Profit after tax(PAT) 1187.99 8.19 991.62 7.61 2031.67 14.51
Cash Profit 1412.03 9.74 1237.09 9.49 2278.64 16.27
Dividend-Equity 272.35 1.88 251.12 1.93 201.38 1.44

The net sales have increased from 13985 In 2002 to 12958.28 in 2003 to 14396
in2004.
But the percentage to operating income has reduced marginally.
The operating income has reduced from 14003.63 in 2002 to 13033.37 in 2003 and
further increased to 14498.58 in 2004.
But the profit after tax has shown a downward trend from 2031.67 in2002 to 991.62
in2003 to 1187.99 in 2004 as a marginal increase over 2003.

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 Britannia

Balance Sheet
As on 31-Mar-04 31-Mar-03 31-Mar-02
Assets Rs mn %BT Rs mn %BT Rs mn %BT
Gross Block 2078.46 32.53 2386.32 33.98 2316.76 33.48
Net Block 1067.10 16.70 1174.95 16.73 1228.75 17.76
Capital WIP 8.61 0.13 3.72 0.05 54.20 0.78
Investments 906.02 14.18 1048.72 14.93 703.72 10.17
Inventory 1222.46 19.14 824.25 11.74 714.93 10.33
Receivables 191.14 2.99 291.61 4.15 240.06 3.47
Other Current Assets 2993.15 46.85 3679.07 52.39 3978.44 57.49
Balance Sheet Total(BT) 6388.47 100.00 7022.32 100.00 6920.10 100.00
Liabilities Rs mn %BT Rs mn %BT Rs mn %BT
Equity Share Capital 251.12 3.93 259.04 3.69 268.50 3.88
Reserves 3388.80 53.05 3090.28 44.01 2863.67 41.38
Total Debt 391.87 6.13 1544.51 21.99 1846.70 26.69
Creditors and Acceptances 1548.43 24.24 1608.16 22.90 1485.77 21.47
Other current liab/prov. 808.25 12.65 520.33 7.41 455.45 6.58
Balance Sheet Total(BT) 6388.47 100.00 7022.32 100.00 6920.10 100.00

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 Britannia

Latest Quarterly/Halfyearly Detailed Quarterly

As On(Months) 30-Sep-2004(3) 30-Sep-2003(3) % Change
Sales of Products/Services 4271.00 3792.00 12.63
Other Income 227.00 115.00 97.39
Total Income 4498.00 3907.00 15.13
Total Expenses 3716.00 3334.00 11.46
Stock Adjustments 0.00 0.00 --
OPBDIT 782.00 573 36.47
Interest 6.00 16.00 -62.50
Depreciation 48.00 53.00 -9.43
Extraordinary Items -33.00 -11.00 200.00
Prior Period Adjustments 0.00 0.00 --
Provision for Tax 210.00 163.00 28.83
After Tax Profit 485.00 330.00 46.97

The following is the capacity break – up & raw materials cost break – up &
sales break – up from 1998 to 2001

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 Britannia

Capacity breakup
Period ended 03/98 03/99 03/00 03/01
No. of months 12 12 12 12

Capacity volume(unit)
Biscuits (Ton) 111,000.0 111,000.0 111,000.0 111,000.0
Bread (Ton) - 12,000.0 12,000.0 12,000.0
Cake & rusk (Ton) 5,500.0 5,500.0 5,500.0 5,500.0

Raw materials cost breakup

Period ended 03/98 03/99 03/00 03/01
No. of months 12 12 12 12
Raw materials cost(Rs mn)
Flour 944.4 1,192.0 1,393.4 1,435.1
Hydrogenated vegetable oil 803.2 980.4 908.0 637.2
Sugar 490.0 558.3 678.0 719.4
Others 683.9 922.5 1,062.7 1,089.1

Raw materials volume(unit)

Flour (Ton) 122,729.0 143,353.0 163,732.0 169,667.0
Hydrogenated vegetable oil
20,935.0 22,406.0 26,185.0 23,700.0
(Ton)
Sugar (Ton) 33,542.0 38,588.0 44,559.0 49,516.0

Unit realisation (Rs/unit)

Flour (Ton) 7,695 8,315 8,510 8,458
Hydrogenated vegetable oil
38,367 43,758 34,677 26,887
(Ton)
Sugar (Ton) 14,608 14,469 15,215 14,528

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 Britannia

Sales breakup
Period ended 03/98 03/99 03/00 03/01
No. of months 12 12 12 12
Sales value(Rs mn)
Biscuits 7,248.0 8,621.6 9,783.7 11,073.0
Bread 555.4 623.5 664.9 619.6
Cake & rusk 169.8 237.4 242.3 271.4
Gardens & dairy products 378.0 696.2 891.1 1,313.1
Marine products 49.9 - - -
Others 77.3 122.8 116.4 107.1

Sales volume(unit)
Biscuits (Ton) 144,213.0 167,467.0 192,646.0 214,214.0
Bread (Ton) 43,558.0 46,647.0 46,880.0 42,450.0
Cake & rusk (Ton) 2,249.0 2,809.0 3,003.0 3,082.0
Gardens & dairy products
3,024.0 6,111.0 8,820.0 13,039.0
(Ton)
Marine products (Ton) 659.0 - - -

Unit realisation (Rs/unit)

Biscuits (Ton) 50,259 51,482 50,786 51,691
Bread (Ton) 12,751 13,365 14,182 14,597
Cake & rusk (Ton) 75,495 84,504 80,698 88,050
Gardens & dairy products
124,993 113,933 101,030 100,704
(Ton)
Marine products (Ton) 75,728 - - -

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 Britannia

MANAGEMENT DISCUSSION AND ANALYSIS

BRITANNIA INDUSTRIES LIMITED-ANNUAL REPORT

A) Industry Structure and Development

i) BAKERY

Biscuit continues to be amongst the highest penetrated category in

packaged food with urban and rural penetration at around 70% and 50%
respectively. We continue to focus on increasing penetration in both segments
for volume growth.
Mass market segment, which contributes to more than 60% of the
total biscuit market, has been the key volume driver for the industry. We are
driving this segment through TIGER, which targets both, rural as well as urban
consumers. We have launched TIGER variant Chai Biskoot which will help in
upgrading consumers from the unorganised segment.
Rural potential is being further tapped through innovative distribution
and specially designed low unit price packs.
The premium end of the business has been growing at a rate lower than
the mass market. The Company is the market leader in the premium biscuit
segment and we continue in their attempt to become a stronger leader through
improving volumes of their existing products as well as through launch of new
products / pack extensions. Within this segment, they are launching small unit
packs, driving the out-of-home consumption as well as catering to consumers in
the medium and lower strata. Brand extensions and launch of variants helped
this segment show satisfactory growth.

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 Britannia

ii) DAIRY

India’s milk production at 81 million tonnes is encouraging with surplus

in key milk producing states like Karnataka and Maharashtra. This surplus milk
needs to be harnessed into value added products. The demand for packaged
dairy products is expected to show robust growth with new product
offerings, improved quality and creating awareness amongst consumers.
In the Union Budget, restriction on milk processing capacities have been
removed. This will encourage free flow of market forces and utilisation of excess
capacity in the dairy industry.

B) Business Strategy

i) BAKERY

The Company has always endeavoured to optimise Shareholder Value

through its vision of dominating the Food and Beverages market. Our business
strategy is based on
* increasing width of consumption through more penetrative distribution
strategy and introducing low price point packs.
* maintaining brand leadership through continuous and contemporary image
building.
* increasing depth of consumption through specific promos to cater to
regional preferences.
• ensure critical mass for our key varieties.

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 Britannia

ii) DAIRY

With a view to giving impetus and focus to our dairy business,

Britannia has transferred existing operations to Britannia New Zealand Foods
Pvt. Ltd., a joint venture with Fonterra Co-operative Group, New Zealand^s
biggest dairy company and one of the ten largest dairy companies in the world.
This joint venture will be uniquely positioned to become one of India’s leading
players in the dairy segment. While your Company offers a robust base in the
form of its existing dairy business, the Fonterra Group will provide advanced
technical know-how and learnings from the international market.
The joint venture will continue to strengthen the MILKMAN brand
with creative initiatives and consumer promos. The new company will endeavour
to increase sales and profits by :

* Having strong presence in the mass market.

* Introducing value added products.
* Offering benefits of health, nutrition and taste.

With these initiatives, we feel that the joint venture will be able to develop a
sustainable and profitable business in the coming years.

C) Segment-wise Performance

i) BAKERY

* Sales have improved by 6% in spite of difficult market scenario.

* Biscuit and bread volumes have increased by 7%.
The 50:50 variant Maska Chaska continues to do well. They have launched
Tiger variant Chai Biskoot with initial favourable response. They are also test
marketing premium cookies under the Pure Magic range.

36
 Britannia

Cake volumes are lower than last year mainly due to the fact that previous years’
volumes included Half Half cakes which has since been withdrawn. Further,
they have moved cake operations from their factory to outsourcing which has
impacted supply during the last quarter. They expect cake volumes to improve in
the coming months.

ii) DAIRY

Sales are up 39% due to significant growth in Butter, Ghee and Fresh milk
volumes.

They continue to maintain our leadership position in Cheese, with their

consumer pack volumes improving by 9%.

Fresh milk is doing well both in Delhi and Kolkata.

iii) EXPORTS

They are concentrating on exports of our core products. Their exports have been
mainly to the Gulf countries with some inroads into Western markets.

D) Risks and Concerns

i) BAKERY

The slowdown in the economy is restricting topline growth of most FMCG

majors and it will be difficult to maintain historical growth rates in this depressed
scenario. Britannia’s major raw materials are influenced by government policies /
controls as well as vagaries of the monsoons. Fluctuations in prices of raw
materials can have significant impact on costs and margins. Similarly, inordinate

37
 Britannia

hike in petroleum products also increases cost of production and distribution. In

view of current market scenario any price corrections to off-set cost increases
could affect volumes.

ii) DAIRY

With the removal of quantitative restriction, there is a possibility of increase in

competition from foreign layers which can impact volumes/profitability of the
business.

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 Britannia

BRITANNIA – MARKETING

Promotions have been the chief propeller for growth for Britannia.
Britannia has gained the edge by creating an ‘emotional surplus’ for the Britannia
brand through effective communication and providing products for different
moments of consumption. Another equally
important move is exciting the consumer with
new products
Among the biggest promotions in 2001
was Britannia's glucose biscuit brand Tiger's
tie-up with the Hindi film blockbuster Lagaan.
Biscuits market has become the third largest category in terms of promotions -
after toothpaste and toiletries - in the last one year.The launch was supported
with an advertising campaign extending to print, POS (Point-of-Sale) materials
and outdoor branding.

Tiger had been positioned it as a biscuit that has to be taken as part of

the chai biscuit break. Chai Biskoot is an interesting extension, which will
strengthen the Tiger mother brand as the product is targeted at people across all
income groups. Tiger has successfully addressed themselves to the lower end of
the market.

Britannia's strategy has also been to drive margins from variants rather
than the mother brands. Britannia's strategy is to keep the price of its mother
brand at the lowest and launch variants at the higher price points and this has
worked for the company till date. Eg. Britannia has leveraged the equity of
Glucose biscuit brands like Tiger to extend it to variants like coconut. Britannia is
clearly playing a volume game. It is driving volumes through the Tiger brand.

39
 Britannia

Another strategy has been to indulge in cross-promotions. In 2000,For

example, the company offered a Little Hearts biscuit packet (priced at Rs 3) free
with the purchase of a 300 gm pack of Tiger. This also helped in pushing trials for
the Little Hearts brand.

Britannia believes its all about how you define the market, or how you
redefine it for yourself. At Britannia they came up with a one-line vision for the
company 'Every third Indian must be a Britannia consumer by 2004.' Because
Britannia believes that packaged products can be bought by just about every
third Indian.

Strategically expanding the product line is what Britannia believes in. Just
selling biscuits was not good enough. Britannia listed all the products used in a
home, and the competitors in each space. They then asked themselves if they
could acquire the No. 1 or No. 2 position in that market. Dairy seemed to be a
good area for them to enter. There were mostly large cooperatives without too
many branded products in the space. Amul was the leading producer. So
Britannia chose cheese, and wanted to become No. 2. In three years, they
became No. 1 in processed cheese.

Britannia's success is largely due to the company's razor-sharp clarity of

purpose. No one competes with Britannia’s low-end brands in terms of price.
Britannia has created an emotional service with their brand, to give the
consumers more than they expect. Britannia says they don't make the best
biscuits in India. What they do provide, however, is consistency-the idea that
wherever you open a packet of Britannia products, you'll get the same thing.
Britannia believes in being realistic and benchmarks itself with what the
consumer expects of them. The consumer in India today needs international
products at national prices. Britannia initially gets into an existing category and
then forays into different categories.

40
 Britannia

A brand built on a "low price-no frill" is what Britannia. Tiger provides a

good example of using this approach. After having achieved success at the lower
end of the market competing largely in the unorganised sector, the brand has
launched cream variants at (relatively) low price points.

Britannia has time and again exhibited its understanding of the Indian
consumer. This has been in the form of new launches, innovative marketing and
promotional schemes. In FY 2001, the company spent Rs 85 cr in advertising i.e
6.7% of net sales. Britannia has tied up with the makers of ‘Lagaan’. Britannia
has been associating itself with cricket and has achieved good results.

Brands need to stay relevant by stretching along with the customer and
not expect the consumer to stay with you, brands need to move on, be a part of
the consumer’s life and create an activated presence by getting the product
involved. The product has done just that.

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 Britannia

BRITANNIA- THE MAKEOVER- EAT HEALTHY, THINK BETTER

Britannia initiated the new positioning in 1996 . They captured logic with
emotion. Their brand equity has been built and nurtured by each and every one
of the employees, who constitute the direct Britannia family, not to speak of the
extended family comprising distributors, suppliers and franchisees. For them,
success comes from becoming a part of their consumers’ lives. They drive thes
organisation with a passion to produce and market ‘tasty yet healthy’ products in
which the consumer perceives value for money.
They have built the consumer’s trust by providing consistent quality and
through emotional bonding.

`Britannia gains most from World Cup promos'

Biscuit major Britannia India's Britannia khao, World Cup jao promotion
has emerged as the most recalled sales promotion among all World Cup-related
cricket sales promotion.
Interestingly, biscuits captured the No 1 slot among all the categories
promoted during the world cup. The campaign was a continuation of the success
stories of `Britannia Khao, World Cup Jao' in 1999. The promotion offered 100
cricket enthusiasts an opportunity to visit South Africa and cheer the Indian team
in person in a match against Pakistan on March 1, 2003. The offer was valid on
select Britannia products from October 1 2002 onwards.
Wrappers of every such offer pack carried a certain number of runs which
could be exchanged for a specially designed `World Cup '03 scratch card' at any
of the 8,000 authorised Britannia Prize centres across the country. On scratching
the pad on the card, the prizes were revealed to the customer. The company's
previous world cup promotion campaign held in 1999 was considered one of the
largest consumer promotions ever, wherein redemptions alone were in excess of

42
 Britannia

Rs 1.6 crore. The 2003 year's `Britannia Khao, World Cup Jao' promotion
featured more than one crore prizes.

Britannia Industries in 2003 had an

interesting promotional event called Britannia
Milkman Cheese - not just Toppings. The
event was targeted at housewives and others who love to experiment with
cuisine.

A free booklet of recipes was offered and participants were also invited to
taste the dishes. A series of such events were held at ITC
Grand Maratha Hotel Mumbai, through February and will
carry on into March.

Besides creating excitment around the brand, the

event sought to increase consumption of Britannia Milkman cheese by
encouraging customers to use cheese in new and versatile ways and be creative
and innovative in their cooking

It reinforces Britannia's core values of "Eat healthy, Think better"

A 'Kids for Tigers' campaign carried out jointly by Sanctuary Cub

magazine and Britannia Industries Ltd. saw one million Indian children signing a
scroll to protect their national animal.

On this occasion an educational scholarship was handed over by Mr.Sunil

Alagh, CEO Britannia Industries Ltd. to Mr. B. Mazumdar Chief Wildlife Warden
Maharashtra, for the children of those forest guards who have done exemplary
work towards the saving the tiger.

Britannia's successful foray into the mass market for biscuits through
`Tiger' brand and into the dairy business gave volumes for Britannia when its
traditional businesses — biscuits and bread — showed signs of plateauing. With

43
 Britannia

low penetration of dairy products and snack foods, they offered significant
potential for growth. Therefore, unlike FMCG companies operating in markets for
mature products such as soaps or detergents, there appeared to be considerable
room for growth for Britannia.

In a bid to promote its popular biscuit brand ‘50-50 Maska Chaska’,

Britannia Industries Ltd (BIL) has joined hands with Contests2win.com (C2W), a
leading customised contesting Website.

Britannia Industries Ltd announced a three-pronged strategy to maintain

volumes and market share and to improve sales.

Britannia plans to improve their sales through new product launches,

renovation and improving distribution. They will also focus on all-round cost
savings and improvement in productivity to ensure satisfactory growth in profits

Addressing shareholders at the company’s annual general meeting, Mr

Wadia said the slowdown in the economy was expected to continue and as such
maintaining historical topline growth rates in the coming months would be
extremely challenging.

On the bakery business, he said the company’s strategy was based on

increasing width of consumption through more penetrative distribution strategy
and introducing low price point packs.

The strategy also aimed at maintaining brand leadership through

continuous and contemporary image building apart from increasing depth of
consumption through specific promos to cater to regional preferences.

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 Britannia

BRITANNIA OUTLINES INITIATIVE TO TAP INNOVATIONS

In an effort to better utilise employee innovations for tapping market

opportunities, Britannia Industries Ltd (BIL) had deployed a new initiative termed
‘opportunity managers’. The rationale behind the initiative, according to the
company, was to leverage out-of-the-box ideas of its professionals to drive the
business forward. It believes that the uniqueness of this practice lies in the fact
that these ideas which the professionals implement need to pro-actively impact
the business.

Any innovative concept that professionals want to implement was

something that needed to be implemented within a six- month timeframe. And the
deployment of the idea indicated a judicious use of the company’s resources.

Further, according to the company, the initiative is not just meant to

institutionalise a culture of innovation in the organisation, but to empower
professionals to use their innovative acumen to usher in value for the
businesses.

Accordingly, any professional who has a distinct business idea needs to

make a presentation to the top management that also comprises the managing
director. “Once the idea is considered feasible for implementation, then the
individual concerned is given complete control to deploy the idea and generate
the promised results for the organisation.

Further, the employee whose ideas have been approved is given total
autonomy to choose the appropriate mix of professionals across levels who need
to be a part of his or her team.

Having pioneered a new concept, the professional then becomes the team
leader for the specific project right from the day it starts getting executed.

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 Britannia

The audience for this initiative is mainly the talent that the company has
inducted from the management campuses. The younger breed of professionals
are not moulded into a defined mindset and hence Britannia believes that they
have the capability to explore a wider gamut of possibilities to come up with ideas
that can trigger growth for the businesses.

Once the said idea has been able to deliver profitable results for the
business, the employee is suitably rewarded with bonuses. This is an effort on
Britannia’s part to acknowledge the benefits that the individual has successfully
leveraged for the establishment.

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 Britannia

BRITANNIA USES CRICKETERS FOR PROMOTIONS

Britannia Industries Ltd (BIL) had signed up six national cricketers, who
play for the Indian team to fuel a mega brand promotion initiative. The move is
aligned to the larger strategy to leverage the three lead brands that the company
has identified across two major categories which include biscuits and snacking
arena. In 2002, Britannia had decided to focus on two segments namely the
biscuits market and the mass market in the snacking arena. And Tiger, 50-50
and Timepass the chosen lead brands in these two categories. The mass market
represents a huge opportunity with its vast consumer base buying both into
branded products and those from the commodity sector. Brands like Tiger, for
instance, owe their success to being able to both gain upgrades from the
unorganised market and increasingly become a preferred brand in the organised
market

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 Britannia

SALES GROWTH – STRATEGIES

At a time when growth rates for most FMCG products had wound down to
single digit, Britannia had managed to sustain a fairly healthy growth in its sales
revenues. This was on account of several factors.

One, the company has rationalised its product portfolio, pruning the
number of brands from 35 to 25, so that it could devote greater attention to key
businesses. Britannia has pruned the total number of brands being offered in the
market and those actually being supported through communication initiatives.
This has given the company a strong roster of solid brands

It also reduced contribution from the low-margin breads business to focus

on faster-growing segments such as biscuits and cakes. This appeared to have
resulted in better utilisation of the adspend. Despite sustaining a high-decibel
promotional campaign over the past years, Britannia's adspend-to-sales ratio
hovered at around 7 per cent, lowest in the FMCG universe.
Two, in 1998, the company moved into the mass market for biscuits
introducing low-priced varieties under the umbrella brand, Tiger. The success of
this brand has enabled Britannia expand its market share in the `Glucose' biscuit
market from 10 per cent to over 20 per cent.

While growth rates in the mid-priced and premium biscuits had flagged, it
was Tiger which had kept Britannia's biscuit business roaring. Meanwhile, the
company kept up the high-decibel promotional campaign to make known its other
major brands -- 50:50, Mariegold, Bourbon, Pure Magic, Nice, Snax and Milk
Bikis. Britannia Khao World Cup Jao and Britannia Khao Crorepati Ban Jao were
among the more successful of these campaigns.

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 Britannia

Three, to pep up overall growth rates, the company had also been
leveraging its brand image to establish a foothold outside of the highly
competitive biscuit market. Over the years, it has launched a slew of dairy
products (processed cheese, flavoured milk, butter, ghee and dairy whitener) and
ethnic snack foods such as Aloo Bhujiya and Chana Choor.

The foray into dairy products appears to be a success, with revenues

improving more than two-fold from Rs 38 crore in 1997-98 to Rs 89 crore in
2000-01.

Coffee Outlets and Petrol Pumps

The company is now in talks with speciality coffee outlets and petrol
pumps to place the products at strategic sites. BIL is taking up festival-specific
initiatives to trigger mobility for brands like ’Pure Magic’ and ’GoodDay Cakes’.
The company plans to launch a range of assortment packs. The initiative is to
improve institutional sales along with enhancing the display appeal for brands.

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 Britannia

BRITANNIA – ADVERTISING

Britannia made its mark in the general public with their first major TV
commercial for Glucose, which showed the then famous character Gabbar Singh
eating the biscuits with the byline- Gabbar ki asli pasand.
Britannia spent Rs. 29 crores in FY97 on advertising, up 39% from the
previous year, and 550% rise since FY91. None of their domestic competitors
like Parry or Bakemans can hope to match this, especially as they largely cater to
regional markets.
Britannia believes in high awareness through two components- one is
media awareness the other relates to point of consumption. The first one means
large advertising spends, and simple messages repeated umpteen times. ‘Eat
Healthy. . Think Better’ also translated as “ Swasth Khao Tan Man Jagao”
.Those are the key words. Britannia tries to get its message across in four-five
words.
Britannia kicked off its repositioning exercise in 1997 when it changed its
logo and corporate slogan as a first step in its makeover plans aimed at
transforming the company from essentially a 'bakery' business to a 'food'
business. Advertising played a crucial role in the repositioning. Key brands have
been re-packaged and re-launched, backed by very visible national advertising
campaigns.
To announce the new launch of a variant of Tiger- Chai Biskoot, the
company launched a high-voltage television campaign which included six ad
films from March 8 2002. For the first time, Britannia roped in six famous
Bollywood directors to produce these films. Earlier, the adfilms for a particular
product was produced by a single director. They used popular old Hindi film
songs as the back ground music for these commercials. With the tagline ‘Chalo
Chai Biskoot Ho Jain’, the commercials were produced by well-known directors
Mr Govind Nihalani, Mr Priyadarshan, Mr Aziz Mirza and Mr Mansur Khan.

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The launch was supported with an advertising campaign extending to

print, Point-of-Sale materials and outdoor branding.
The ad spend for the current promotion world Cup 2003 would be close to
Rs 10 to 12 crore

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BRITANNIA – THE COMPETITION

The biscuit market is hotting up with two huge players Hindustan Lever,
HLL, and ITC entering the fray but they still have to get their product mix in place.
They are trying the safe way to bite a share of the mainstream category - the
Maries and the Glucoses.

ITC hasn't had a very smooth maiden run in the biscuit market. Its first
product Bischips-‘I’ bicuits was an odd combination of a baked biscuit and a chip
and it didn't go down too well with the consumers. So after eight months of
making little or no impact, ITC pulled the brand off shop shelves. It's now
available only in Bangalore. ITC claims it's the positioning of Bischips that failed.

ITC is not the only company striving to make inroads into the marie-
glucose segment. HLL began with a fruit cream brand called Greedy Bistiks, but
is currently test marketing its brand of glucose biscuits.

Both companies expect over 10% of the biscuit market in the next few
years. But analysts feel that ITC has an edge over HLL with its pan-beedi shop
distribution and the first mover advantage over HLL.

ITC announced the launch of a range of biscuits and expects the biscuits
segment to contribute Rs 150-200 crore to its turnover in the next four years.

They hope to a have a market share of 10-11 per cent in biscuits in three
years. This would, however, still place ITC at number three behind market
leaders Britannia and Parle.

ITC would initially source its biscuits from two factories — one in Burdwan
in West Bengal and the other at Nagpur. The outsourcing activity could be
extended to a further two factories in the next three years to support the firm's
growth plans.

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Naware said ITC had planned an aggressive media campaign to drive the sales
of its biscuits.

As the two new players shape up their entry strategies and products, the
existing players are working harder to hold their ground.

It is a matter of concern that regional players such as Priyagold offer

products at retail prices that are almost half that of established players such as
Britannia. The product offerings from such regional players may not necessarily
be innovative on taste, but are priced very aggressively and do not compromise
on quality. Some of Britannia's products such as Marie, Good Day and Milk Bikis,
for example, have been the victims of this strategy, registering some decline in
market share in recent months. However Britannia is is launching five new
advertising campaigns. Two of these are for its MarieGold and Tiger brands.
Parle too is looking to launch new products as well as re-launch some of the
older brands. Also it's going to start advertising after a gap of almost a year.

Priyagold is not an isolated case. Several small and mid-sized players in

the FMCG sector have been able to shake up big competitors thanks to well-
focused, region-specific, price-sensitive strategies.

This trend is highlighted more in semi-urban and rural markets, known to

occupy a significant share of the overall Rs 3,000-crore domestic biscuit market.
In fact, close to 70 per cent of Priyagold's sales are accounted for by semi-urban
rural markets, and the skew is expected to continue in favour of these markets.

On the other hand, intensified competition from regional players has led
the established Britannia and Parle to squeeze their profit margins, offer products
at various price points, introduce small pack sizes, and offer aggressive
marketing promotions. And even as the battle royale continues between Britannia
and Parle on a national level, Surya Agro now claims market leadership in the
non-glucose biscuit segment, which, according to industry estimates, accounts
for 30 per cent of the overall biscuits market.

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It is very difficult for any company to enter the domestic biscuits market.
First, consider the competition. Britannia and Parle are very aggressive
nationally, in the East Priya Biscuits is tough competition for any new player,
while Duke is strong in the South. Then, of course, there is Priyagold. Yet
another player is Bakeman's. The second reason is that margins have to be
incurred at dealer, distributor and stockist levels. Then there are other factors
such as large investments involved in manufacturing and brand building. It
makes it easier for any company wanting to enter this segment, therefore, to buy
out an existing brand.

Recent times have thrown up examples of several established FMCG

players going slow on biscuits. Kellogg's recently stopped active production of
biscuits, Dabur has ruled out an entry and Nestle SA sold off the assets of
Excelsia Foods.

The pressure to grow for these companies is high also because of

competition from low priced players like Priya Gold.

The biscuit battle will be fought in the low priced categories of Glucose
and Marie and biscuits.

THE COOKIE WARS RAGE

The Delhi-based Surya Food & Agro, makers of PriyaGold biscuits,

doubled capacity from 25 tonnes a day to 50 tonnes and plans to be a national
brand soon. Britannia Industries is looking at gobbling up smaller players with
Modern Foods high up on its menu. The Rs 200-crore Parle Biscuits is setting up
a huge plant, spread over 200 acres in Neemrana in Rajasthan, and is said to
have bought land in Bangalore. Even as rivals claim the Delhi-based Bakeman is
not in the pink of health, it launched a new biscuit named Honey Lite in July
1999.

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United Biscuits of the UK also launched its McVities brand of premium

biscuits in July. In 1998, Sara Lee came in and chomped up the biscuits business
of confectionery major Nutrine. And among those waiting in the wings: Canadian
major George Weston and US and European players such as Nabisco and Arnott
& Lotte. The Chennai-based Parry's Confectionery is said to be negotiating with
one of them.

There's a lot going on in the biscuits industry --

takeovers, capacity expansion, launches. More
important, the excitement's mostly in the organised
sector. Today, it produces 5 lakh tonnes per annum
while the unorganised sector accounts for another 7 lakh tonnes. In the last six
years, Protech has conducted six studies on the industry. And, as per the
studies, in the last year and a half, the organised sector has bitten off more than
a 7% share from the unorganised players. Moreover, the organised sector is
growing at 14% annually while the unorganised sector's growth has slowed down
at 8%.

There's much driving all this. In 1997, the government knocked biscuits off
the list of products reserved for the small-scale sector and the results are
showing. It was a big blow to the unorganised sector. As the big players rapidly
expand capacities and advertise on a big scale, small firms are getting squeezed.

Till 1995, Meghraj was the number one brand in Uttar Pradesh. Today,
he's been forced to downsize operations to survive. That goes for others too.
Many small-scale players will have to shut shop as they can't compete on quality
and packaging.

The Hyderabad-based Emjak group's flagship brand is Ampro biscuits.

The Rs 10-crore Ampro closed shop in 1997 as a result of stiff competition from
Britannia. Several other biscuit brands produced out of Hyderabad, but with a

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strong presence in northern India, such as Amber and Shalimar are no longer
visible there.

Small players like the Delhi-based Asian and Apsara, too, are struggling to
survive. But with stacks of regional brand recall, they are good takeover targets.
For example, Bangalore's well-known Kwality biscuits became an easy prey for
any Britannia. It has five manufacturing units in Bangalore with a capacity of
24,000 tonnes per annum and has two strong brands in its kitty -- Kwality
Glucose and Pusti.

A few players like PriyaGold exist by

launching good quality, smartly packaged biscuits
priced 15%-20% lower than products from Parle or
Britannia.

It's understandable why the biggies are slavering for more. India is the
world's second-largest biscuit industry -- China is the global market leader -- and
makes 1.2 million tonnes of biscuits per annum. But what makes India a delicious
proposition is that, despite these huge volumes, the per capita consumption of
biscuits here is small. According to the Federation of Biscuits Manufacturers, the
per capita consumption in India is about 1.2 kg per annum compared to 15 kg per
annum in developed nations. The size of the industry in India attracts new
players and encourages existing players to launch products and expand
capacity. Market research shows that traditional Indian snacks like samosas are
being replaced by biscuits.

Enter alliances and acquisitions. According to Britannia's Sen, the entry of

global players will lead to consolidation among small players -- they may either
flock to players like Britannia or join hands themselves. "The proliferation of small
players will diminish," says Sen.

Britannia has picked up a controlling stake in Pondicherry-based Auro

Foods. (Britannia officials, however, say that it set up International Bakery

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Product as a joint venture with Auro Foods). It is also expanding capacity not
only by tying up with more franchisee manufacturers, but has also picked up
equity in some cases.

This will allow Britannia's franchisee manufacturers to make use of its

exclusive technology. For instance, in the next few years it will be making fresh
investments in proprietary technology for products like Little Hearts and
Chekkers. To extend its distribution reach, it has pushed up the number of its
retail outlets from 4 lakhs to 7.5 lakhs. The next target: 10 lakhs in two years. It
plans to launch new variants of Little Hearts and Chekkers. Also, an energy
biscuit under the Britannia Marie range for housewives and executives and
another one for children are in the offing.

Britannia has a market share of around 40% in the organized biscuit

market. Two MNCs, Sara Lee Bakery and Nestle (through Excelsia), have made
unsuccessful attempts to tap the Indian market. Smithkline Beecham Consumer
and Kellogg’s also market biscuits but these are mere brand extensions. There
are a few regional players across India. For e.g. Surya Food & Agro (Priya Gold)
is strong in Uttar Pradesh, Punjab and Haryana, and plans to take on Britannia’s
sale in semi-urban markets. Parle has also launched several products across
various price points which in addition to local players have intensified
competition, whereas Bharat Biscuits has a strong foot hold in West Bengal.
Regional players will continue to survive and play a significant role in local
markets - creating awareness and increasing the overall size of the biscuit
market.
As of today, it is not the multinationals, but the smaller local players, which
are posing bigger threats. The multinationals have launched their products at a
premium and hence have not eaten into Britannia’s shares.
The dairy business is another big opportunity for Britannia. Though Amul
would be a tough competitor the unorganized milk market is so huge that it can
accommodate many more Amul's.

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As of now, the trade for retailers and dealers is happy with their share of
margins from Britannia. While distributors are paid profit margins of around 5-7
per cent, dealers are paid around 11-12 per cent. A host of regional players have
moved into the market and are offering as many innovative products and higher
margins to the retailers. It faces stiff competition from Parle in the mass-market
segment, thus limiting its pricing power.

However, Tiger, Britannia`s strongest biscuit brand has been unable to

hike prices since its launch in 1997, and is facing the heat from HLL and the
unorganised sector. Britannia has a 20 per cent market share in the overall
biscuit market. Then there`s the fear of the stagnant growth rate faced by the
Tiger brand. Tiger drives growth for Britannia and accounts for 24 per cent of its
overall revenues. Britannia`s market share in the branded biscuits segment is
down from 40 per cent to 38 per cent (volume). The share has been gained by
the smaller price competitive brands, which generally do well in recessionary
trends. Currently, its operations are like a well-oiled machine and will continue to
be aggressive since strategies are in place. Britannia has been buying back
shares from the secondary market steadily over the past few years. As a result,
its equity capital has fallen to Rs 25.9 crore in March `03, compared to Rs 27.85
crore in March `01. The market is getting more challenging and growth now lies
on the new crop of leaders who will take over.

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GLUCOSE BISCUITS- COMPARISON OF THE NUTRITIOUS VALUE OF

VARIOUS BRANDS!!!

Glucose biscuits are high in nutrition, we

know this to be a home truth. Many brands cash in
on this notion. With around 413 million packets sold
every year, the biscuit industry is valued at Rs 2,426
crore.

But when 12 brands of ‘glucose’ biscuits were put to the test by the Delhi-
based Consumer Voice, they were found wanting: in protein, fibre, calcium and
iron.

Twelve popular brands of glucose biscuits, namely Anmol-G, Kellogg’s,

Horlicks, Apsaraji, Britannia Tiger, Asian Milk Biscuits, Radha, Britannia Marie
Gold, Bakeman’s Gluco Gold, Parle G, Priya Gold, Cremica, were tested
according to the ‘IS:1011-1992 Third Revision’.

Glucose biscuits are a popular and commercial name for what actually are
‘sweet biscuits’. With the exception of Horlicks and Priya Gold, all the other
brands had the word ‘glucose’ either directly incorporated in their names, or on
the labels. The quality of biscuits is statutorily covered by the provisions of PFA
pertaining to bakery products

Horlicks and Anmol stand first and second

respectively and are also the only two brands to
reach the ‘Very Good’ category in our tests.
Parle G stands third and Britannia Tiger comes
fourth. The multinational Kellogg’s brand rests at
the eleventh position

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A BITE FULL OF HEALTH?

Glucose biscuits are regarded as the healthier option as far as other kinds
of biscuits are concerned (sweet, semi-sweet, crackers, cookies). But biscuits
cannot be a substitute for a wholesome meal and should be treated as a snack
food only even when most ‘glucose biscuits brands’ do make impressive
nutritional claims as part of their advertising strategy.

There is also a view that since ‘glucose biscuits’ do not form part of
regular meals, their nutritional content (or the lack of it) like dietary fibre, proteins,
calcium and iron, can be ignored.

However, from a consumer’s point of view, it is important to know how

nutritionally beneficial glucose biscuits actually are. Ready availability of such
nutrition information and testing analysis can actually help consumers make
sound food purchase decisions.

Glucose content
There are no standards for the glucose content of
glucose biscuits, because there are no specific
standards for glucose biscuits. When one buys or
consumes glucose biscuits, one naturally assumes
that glucose would be an ingredient of the biscuit, but biscuit manufacturers are
under no obligation to either put glucose in glucose biscuits or state the quantity
of glucose in the biscuits they manufacture.

According to tests done by CERC on biscuits (an Ahmedabad-based

consumer organisation), the glucose content in biscuits was just 1.64 per cent
(for Bakeman’s Gluco Gold) and 3.77 per cent (for Britannia Tiger).

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Proteins

Out of 12 brands, only three declare their protein content on the label, and two of
them are found to have protein content less than the claims made.

Britannia Tiger has the most protein of the 12 brands, at 7.4 per cent.
Horlicks and Anmol follow close behind with 7.1 per cent proteins. Kellogg’s and
Radha have the least amount of proteins at 6.20 and 6.1 per
cent.

Only three brands — Britannia Tiger, Parle G and

Kellogg’s provide nutritional information regarding proteins on
their label. On testing, we found that:

* Parle G, which claimed to have 8 per cent proteins, actually have just 6.8 per
cent of it.

* Similarly Kellogg’s, which claimed to have 7.4 per

cent proteins, was found to have just 6.2 per cent.

* Only Britannia Tiger was true to its claim of 7.3 per cent proteins. Our tests
found that it actual protein content was 7.4 per cent.

Carbohydrates and calories

Glucose biscuits give you ready energy in the form of glucose. Horlicks
provided the maximum calorific value at 456 kcal/ 100 gm, whereas Radha did
not do so well with the lowest calorific value of all 12 brands at 420.3 kcal/ 100
gm.

However, one needs to keep in mind that most of these calories are
‘empty calories’ and hardly provide any nutrition.

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Carbohydrates also provide energy. The carbohydrates of all brands

ranged between 75 to 77.9 per cent, which means that carbohydrates form bulk
of the constituent of glucose biscuits.

Dietary fibre
Fibre is often missing from most processed foods,
which makes over-consumption of such foods
harmful for health. The higher the dietary fibre
content, the better.

Apsaraji had the most dietary fibre at 6.9 per cent, and Kellogg’s had the
least at 4.8 per cent. All brands except for Kellogg’s fell in the ‘good’ and ‘very
good’ category as far as dietary fibre is concerned. Kellogg’s only managed to
get a ‘fair’ rating.

Added sugar

All brands had added sugar between 22.7 per cent (Priya Gold) and 30.8
per cent (Anmol and Radha). Labels should mention the sugar content of biscuits
so that diabetic consumers can make a decision about which biscuit type they
should eat. Existing standards do not specify any minimum or maximum limit for
sugar content in biscuits.

Calcium and iron

Glucose biscuits often claim to have the goodness of milk and extra
calcium. Biscuits which have added milk exhibit higher calcium content. Of all the
brands tested, Horlicks had the most calcium content at 5295.9 mg/kg, while the
brand which had the second highest calcium content — Kellogg’s had a calcium
content of 2988.5 mg/kg.

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Asian had the least calcium content of all brands tested. Britannia Tiger,
Horlicks and Parle G were the only brands to declare their calcium content on
their labels. These were found to match their actual content.

Only Parle G declared its iron content, and against its claim of 80 mg/kg
iron, it did well by providing actual iron content of 234 mg/kg.

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WHO DECIDES BISCUIT QUALITY?

The standards are devised by the Bureau of Indian Standards (BIS) which
comes under the Department of Consumer Affairs, Government of India.

However, since biscuits are a food item, the regulatory body is the Prevention of
Food Adulteration (PFA) which comes under the Ministry of Health. So BIS sets
the standards in consultation with the Ministry of Health. PFA issues guidelines
for adulteration and packaging.

There are no nutritional standards for biscuits even though glucose

biscuits are touted as ‘healthy snack food’. BIS does not have any powers to
make the ISI Certification Mark mandatory for food products. It is only when the
PFA issues directions to this effect, that the ISI Mark can be made mandatory for
packaged food items.

No specifics for pesticides

Biscuits have wheat flour (maida) as one of their main ingredients. Wheat
production in India has been ridden with use of many kinds of pesticides and
chemicals, and it is only natural to assume that biscuits may carry some residual
pesticides. As yet, no standards for setting limits for pesticides in biscuits, have
been formulated by the BIS.

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Things to keep in mind

* High calorie snacks (like biscuits) are not always bad, as long as the total
calorie intake matches the bodies energy demands, and as long as we don’t
consume too many ‘empty calories’.

* Children tend to consume glucose biscuits a lot and they often forget basic
dental hygiene. Frequent presence of food in mouth and around the teeth
encourages bacteria build-up and formation of plaque. Eating biscuits can cause
poor dental health if proper cleaning precautions are not observed.

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HOW THEY PUSH SALES

Glucose biscuits are practically ‘sweet biscuits’ but the term ‘glucose’ has
been added to the name to give consumers the perception that these biscuits
have the goodness of ‘glucose’ in it.

Here are the label and advertising claims made by manufacturers:

* Anmol-G claims to be a ‘100 % Glucose Shakti Biscuit’ with glucose, calcium

and milk.

* Kellogg’s calls itself ‘Glucose Breakfast Biscuit’ and its label claims to have
five essential vitamins.

* Horlicks advertises itself as ‘the great nourishing biscuit’ which is ‘fortified with
calcium’.

* Apsaraji calls itself a ‘glucose milk biscuit’. Radha also calls itself the same,
with the addition of the punchline ‘the delicious food’.

* Britannia Tiger uses the punchline ‘health force biscuits’,

apart from its ‘eat healthy, think better’ slogan.

* The Asian Milk Biscuits brand clams to have ‘more

glucose, more energy’.

* Britannia Marie Gold claims on its label that 100 gm of Marie Gold Biscuits
give as much protein as one glass of milk. The biscuits also claim to be fortified
with 58 per cent cereals and 10 essential vitamins.

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MARKETING ON LABELS

The following particulars should be clearly and indelibly marked on the label of
each container:

* Name and trade name of biscuit

* Indication of the source of manufacture
* Batch or code number
* Net mass in grams or kilograms
* Type of biscuits
* List of ingredients
* Month and year of manufacture
* Best before date
* The statement — contains permitted colours and added flavour (if added)
* Other labelling requirements according to provisions of the Standard of Weights
and Measures Rules/ Prevention of Food Adulteration Rules.
* Biscuit packs which have a weight of over 150 gm should have information for
making complaints printed on the label.

Some labelling findings

* Of the 12, only Cremica, Priya Gold, and Britannia Tiger carried the ISI mark.
* All brands carried the green dot on the label, which signifies that the product is
vegetarian.
* Only Kellogg’s, Horlicks, Parle G and Britannia Tiger mention nutritional
information on the label.
* All brands mentioned the ‘best before date’ as within five or six months from the
‘date of packaging’.

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What consumers think

* About 20 per cent say that they ‘often’ supplement their breakfast or teatime
with glucose biscuits, while 80 per cent expressed that they ‘sometimes’
consume biscuits with breakfast or tea.

* Around 80 per cent thought that ‘glucose biscuits’ were healthier than the other
biscuit varieties and specifically bought glucose biscuits for children at home.

On the positive side

* Horlicks priced at Rs 7 for 100 gm, gets the highest score of 93.47, falling in the
‘very good’ category. It has the highest calcium content, and scores on count of
its high dietary fibre and calorific value. It has a ‘best before’ date of six months
from the date of manufacture. However, it is also the costliest of biscuits among
the 12 brands tested.

* Anmol gets a score of 91.14. Along with Horlicks, it is one of the only two
brands to be in the ‘very good’ category, and is priced at Rs 10 for 250 gm.
Anmol has highest protein content after Britannia Tiger, and also good dietary
fibre content as compared with other brands.

* Britannia Tiger, priced at Rs 3 for 75 gm, gets a score of 89.84. It has the
highest protein content, high carbohydrate content as well as calcium and dietary
fibre as compared with other brands. Britannia Tiger is one of the only three
brands to carry the ISI Mark.

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BRITANNIA HAS FACED GLOOMY DAYS

Despite a strong brand and national distribution, Britannia has not enjoyed
the same kind of valuations and investor perceptions asother FMCG (food)
companies like Cadbury, Nestle, or Hindustan Lever. This has to do with the
recent history of the company which saw three changes in ownership in the last
decade.Between 1989 and 1993, the company was controlled by NRI
businessman Rajan Pillai along with Nabisco. During this period, the company
got into non-core activities like exports of seafood and cashew which diluted the
focus on its core strength - the Indian consumer market. A number of
controversies also arose, when the MD, Mr. Alagh was removed - and later
accused Mr. Pillai of misappropriation of funds. This sorry saga ended in 1993,
with control passing into the hands of Groupe Danone and Nusli Wadia. Ever
since then the company has re-focused its activities by:-
♦ getting out of merchant export businesses
♦ revamping its brand and image
♦ upgrading its manufacturing facilities
♦ improving packaging
♦ improving product offerings with the help of Danone

Another reason why Britannia has not been popular is that it operates in
the bakery segment which has long been the preserve of the unorganised sector.
In biscuits, 65-70% of the market is controlled by the unorganised players.
Britannia controls 38-40% of the remaining, which gives it an overall share of
under 15%. In breads, Britannia has been slowly losing market share to
unorganized players (market share 75- 80%), as well as to the Government
owned Modern Foods, which is given wheat at subsidized rates. As a result, the
bread business is highly unprofitable for Britannia, which must compete on price
with small-scale players who don’t pay excise, and the subsidised Modern

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Foods. The contribution of bread has fallen to 7% of sales, and volumes are
down 25% in the last six years.

De-reservation of Biscuits

In April 1997, the government de-reserved biscuits. Effectively this

removed restrictions on larger players in terms of raising capacity. This allows
the company to not only add capacity in-house, but will enable it to consolidate
manufacturing activities to enjoy scale economies. Earlier they were forced to
purchase from a number of vendors, which affected quality, and ensured that
products remained low-tech and undifferentiated from others.Biscuits in India are
a basic food item - a mass use item, unlike chocolates and ice-creams. Since
fragmentation is rife, the long-term consolidation in the industry will benefit
organised sector players like Britannia and Parle. Britannia can now fully exploit
its brand strength and economies of scale - being the only national player. We
expect the benefits of deregulation to continue, as the company consolidates
operations and increases market share.

Rationalise and Re-focus

In FY93, non-bakery products like soya, cashew and marine products

accounted for over 13% of sales, which has been reduced to 3% in FY97. Since
1997, Britannia has launched its dairy products including whitener and cheeses.
These have been very successful, especially the cheeses which reportedly
achieved a market share of 35% in less than a year since launch. Though
currently small (around 2% of sales), cheese could contribute 10% three years
from now. In biscuits, re-launches of core products like MarieGold, Little Hearts,
and 50-50 have been very successful. All this is being accompanied by a cost-
control exercise which focuses on productivity linked labour agreements (which
have been signed), in-house capacity increases and modernisation.

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BRITANNIA GIVES MARCHING ORDERS TO ALAGH

The board of Britannia Industries on June 5, 2003 had terminated the

services of its managing director and chief executive, Sunil Alagh, nine months
before his contract was due to end in February 2004.
Alagh was unceremoniously sacked as the MD and CEO after an audit
committee report found large scale irregularities and alleged lavish expenses by
him and family. Mr Alagh was accused of incurring an expenditure of Rs 1.02
crore, which has been debited to a recoverable account pending reconciliation
and an independent examination by a firm of chartered accountants
The matter is being examined by an independent external firm CC
Chokshi & Co appointed by the board whose report is awaited.
However, it is expected that the amount involved will not have a material
impact on the financial statements including the profit and loss account of the
company considering the size and nature of the business of the company.
Alagh has been responsible for making Britannia the country's largest and
undisputed leader in biscuits.
In recent years, the company has shown a higher growth rate than the
industry average by focusing on the glucose biscuit category.
Alagh had also established Britannia as one of the high recall brands
through high-profile advertising campaigns over the past few years.
Nikhil Sen was appointed as the managing director of the company on
August 8, 2003. Mr Sen, was the chief operating officer (COO) before appointed
as MD.
Recently Vinita Bali has been appointed as the new chief executive officer
of Britannia Industries Ltd. She will assume charge from January 3, 2005.

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BRITANNIA PRODUCTS

TIGER, NICE, GOOD DAY, SNAX, 50 – 50, MARIE

All these products are at the lower end of the Product Line. Tiger is a
Glucose biscuit positioned on a health platform, in direct competition with Parle’s
Glucose, it is also intended to bring in customers from the unorganized sector.
Nice and MarieGold are products aimed at Children and older Adults. Marie and
Nice and to an extent Good Day, are also positioned as Tea Time Snacks.

 Cream Treat – Vanilla, Stawberry, Black Current, Toffee Caramel. Pure

Magic,
Orange Treat, Pure Magic, JimJam, Milk Bikis, Bourbon, Elaichi Cream
These are targeted at the children and adolescent market. They are also a little
more expensive than than the first set of products. They are positioned to get
Britannia a share of the market that is currently under brands like Cadbury’s.

 LITTLE HEARTS
Little Hearts is a niche Product, developed as a snack that combines the
feeling of a biscuit and a wafer.

 BREAD

Bread is a mass market product. It doesn’t cater to any single specific

segment, since it is largely a basic requirement. They also manufacture a
variant, Fruit Bread. Britannia were the pioneers of high quality sliced wrapped
bread. In India

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 MINI ROULE & Half/HALF

Mini Roule was launched in 1995 in the cake market, under the premium
segment, the company launched with Groupe Danone's technological input a
Swiss roll Cake "Mini Roule" which was also met with good response. Half/Half a
soft cake filled with cream in two variants, chocolate-vanilla and vanilla-orange.
Half/Half was also launched in a twin pack and a tray pack. These two products
have been launched as an extension of Britannia’s Product Line.

 MILK MAN - Butter, Cheese, Ghee, Flavoured Milk, Dairy Whitner, Malai
Chaska
These products have now been shifted under the Britannia Fonterra Joint
Venture. They are basically FMCGs.
Britannia were the first movers in the Flavoured Milk Segment.

 BRITANNIA INDIAN PEARL

Started in 1993, it is a rice exporting concern.

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A BRIEF STUDY OF BRITANNIA’S CLOSEST COMPETITOR

Introduction
Today, Parle enjoys a 40% share of the total biscuit market and a 15%
share of the total confectionary market, in India. View some of the entertaining
advertising campaigns that have been part of this success story.
A long time ago, when the British ruled India, a small factory was set up in
the suburbs of of Mumbai city, to manufacture sweets and toffees. The year was
1929 and the market was dominated by famous international brands that were
imported freely. Despite the odds and unequal competition, this company called
Parle Products, survived and succeeded, by adhering to high quality and
improvising from time to time.
A decade later, in 1939, Parle Products began manufacturing biscuits, in
addition to sweets and toffees. Having already established a reputation for
quality, the Parle brand name grew in strength with this diversification. Parle
Glucose and Parle Monaco were the first brands of biscuits to be introduced,
which later went on to become leading names for great taste and quality.

How Parle fought to make biscuits affordable to all.

Biscuits were very much a luxury food in India, when Parle began
production in 1939. Apart from Glucose and Monaco biscuits, Parle did offer a
wide variety of brands.
However, during the Second World War, all domestic biscuit production
was diverted to assist the Indian soldiers in India and the Far East. Apart from

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this, the shortage of wheat in those days, made Parle decide to concentrate on
the more popular brands, so that people could enjoy the price benefits.
Thankfully today, there's no dearth of ingredients and the demand for
more premium brands is on the rise. That's why, we now have a wide range of
biscuits and mouthwatering confectionaries to offer.

The strength of the Parle Brand

Over the years, Parle has grown to become a multi-million US Dollar

company. Many of the Parle products - biscuits or confectionaries, are market
leaders in their category and have won acclaim at the Monde Selection, since
1971.
Today, Parle enjoys a 40% share of the total biscuit market and a 15%
share of the total confectionary market, in India. The Parle Biscuit brands, such
as, Parle-G, Monaco and Krackjack and confectionery brands, such as, Melody,
Poppins, Mangobite and Kismi, enjoy a strong imagery and appeal amongst
consumers.
Be it a big city or a remote village of India, the Parle name symbolizes
quality, health and great taste! And yet, we know that this reputation has been
built, by constantly innovating and catering to new tastes. This can be seen by
the success of new brands, such as, Hide & Seek, or the single twist wrapping of
Mango bite.
In this way, by concentrating on consumer tastes and preferences and
emphasizing Research & Development, the Parle brand grows from strength to
strength

Import-Export

Parle bisuits and confectionaries are fast gaining acceptance in

international markets, such as, Abu Dhabi, Africa, Dubai, South America and Sri
Lanka.

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Even the more sophisticated markets like USA & Australia, now relish
Parle products.
As part of the efforts towards a larger share of the global market, Parle
has initiated the process of getting ISO 9000 certification. Many Parle Products
have also won Gold, silver and bronze medals at the Monde Selection.

Parle Products

The Biscuit Basket

PARLE G - THE EVOLUTION !!!

Parle-G has been a strong household name across India. The great taste,
high nutrition, and the international quality, makes Parle-G a winner. No wonder,
it's the undisputed leader in the biscuit category for decades. Parle-G is
consumed by people of all ages, from the rich to the poor, living in cities & in
villages. While some have it for breakfast, for others it is a complete wholesome
meal. For some it's the best accompaniment for chai, while for some it's a way of
getting charged whenever they are low on energy. Because of this, Parle-G is
the world's largest selling brand of biscuits.
Parle, Krackjack, Monaco, Marie Choice, hide and seek, fun centre,
cheeselings, jeffs, sixer.
Sweets n treats- Melody, poppins, MangoBite, Kissmi toffee bar, Rola-
Cola, toffees, orange candy, mints.

Krackjack
A little sweet - A little salty… That's what makes Krackjack very, very delicious!
This delightful biscuit is acclaimed in India and across the world for its
controversial sweet and salty taste. Krackjack has won 11 Gold, 3 Silver and 1
Bronze award at the 'Monde Selection'. You can enjoy Krackjack any time plain
or with a host of
beverages like tea, coffee or milkshakes.

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Monaco
This original 'O' shaped salted biscuit makes people exclaim 'Oh,
Monaco'. Whether plain or with toppings, Monaco is simply delicious. Light, crisp
and fresh, Monaco is now available in a variety of delicious flavours.

Marie Choice
"Solid Milk, Solid Taste" - this summarises the qualities of this delicious biscuit.
Bite into it to relish the real taste, energy and nourishing goodness of Milk.

Hide & Seek

Let your taste buds indulge in the sinful pleasure of a delightful game -
Seek out the chocolate chips that aren't really hidden. This cookie biscuit is made
up of a large quantity of chocolate chips.

Fun Centre
Parle's Fun Centre range, has the highest cream content amongst
biscuits in the category. Best of all, you get a choice of delicious, creamy
flavours, such as, orange, elaichi (cardamom) and chocolate cream.
.
Cheeslings
The scrumptious, cheese-filled taste makes it difficult to stop with just a
few. These little, cheese flavoured, fluffy biscuits, called Cheeslings make you
smack your lips for more

Jeffs
A rectangular shaped, salted biscuit, flavoured with cumin seed (Zeera)
for that delicious, crunchy taste.The high-count of cumin seed makes Jeffs a
more scrumptious savoury - an absolute must , for munching just about anytime.

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Sixer
This six-sided, salted delight is one hard-to-resist savoury. Whatever the
occasion, Sixer makes for a great salty snack Be it a picnic, a party, or just any
snack time, Sixer gives you that crunchy, munchy, delicious, salty taste that
leaves you wanting more!

Melody
A double symphony of chocolate on the inside and caramel on the
outside. That's Melody, India's first double-layered toffee. With a unique single-
twist wrapper, Melody hits the right note.

Poppins
Lickable, likable and loveable! That's a popular description for the multi-
fruit flavoured candy roll called Poppins. Now, with an even more fruitier taste,
the Poppins Roll shows how great taste can come in different flavours - apple,
orange, pineapple, watermelon grape or banana.

Mango Bite
Just take one bite and you'll be amazed - it tastes so much like a real,
sweet mango! And the green and yellow, single-twist wrapper adds to the illusion
of an actual mango fruit.

Kismi Bar
The 'Maha' Tasty Bar, that's the best description for the Kismi Bar. A
delicious elaichi (cardamom) toffee bar.The Kismi Bar is a favourite for it's great
taste and huge size.
.
Rol-a-Cola
A Cola you can eat! Yes, that's what Rol-a-Cola is all about. The great
cola-taste, contained in a little candy. So, you can enjoy it just about anytime.

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Toffees
Apart from Kismi, Parle offers a variety of toffees for you including
Mayfair, Lux and Dairy . All enriched with the goodness of dairy milk that makes
them the most popular toffees in India.
Orange Candy
Orange Candy is the first product to be launched from the House of
Parle. Since over 50 years, this oval shaped, juicy delight, has been extremely
popular in India. If you love Orange Candy, you
will also like Pick'n'Pack, Fruit Drops, and Tangy.

Mints
The first Indian mints that never fail to refresh you, Parle Mints are
available in a choice of two flavours - Peppermint and Rosemint. With its original,
Extra Strong Mint taste, Peppermints have a very refreshing effect. While the
unique combination of Rose and Mint flavours, cater to those who appreciate a
more mild, sweeter taste.

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BRITANNIA SWOT

STRENGTHS

1.) Strong Parentage

Group Danone has a 22% stake in Britannia Industries. Danone is number
1 worldwide in dairy products, number 2 in bottled water and biscuits

2.) Britannia Brand Name

Britannia is already a well established name in the minds of Indian
Consumers. They have delivered sustained quality in return, reaped the benefits
of consumer loyalty.

3.) The Biscuits Business

Biscuits contribute over 80% to the revenues of Britannia. The Indian
biscuit market is worth around Rs 4500 cr and the organized segment contributes
Rs 2500 cr to the total. The Biscuit market is growing as a whole, thus Britannia
stands to benefit just by maintaining itself.

4.) The Tiger Brand

Britannia’s Tiger brand is very successful in it’s segment. Launched as
direct competition to Parle’s Glucose Biscuits, it contributes 25% of the
Companies Volumes and 19% of it’s Sales

5.) The Premium Range

Britannia faces no competition at all in its premium range of biscuits. It’s
Cream Treat Range of Products are at present the only players in that segment.

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6.) Innovation
Britannia has been consistently adding new products to its existing lines,
and has been successful also because of its strong distribution network. It has
introduced a new range of namkeens in Mumbai called Britannia Snax. IT added
the Sweet Lassi and Cold Coffee to it’s flavoured milk line.

7.) Superior Marketing Skills

Britannia has Time and Again exhibited its understanding of the Indian
consumer. This has been in the form of new launches, innovative marketing and
promotional schemes. Britannia had tied up with the makers of ‘Lagaan’.
Britannia has been associating itself with cricket and has achieved good results.

8.) Investments for the future

Britannia has acquired the ‘Kwality’ trademark for Rs 30 cr and 49% in
Kwality Biscuits. Recently Britannia also acquired a 49% stake in Snacko Bisc
that owns the 'Nutrine' brand. It picked up a controlling stake in Pondicherry-
based Auro Foods. These acquisitions will help Britannia target various niche
markets.

9.) The Dairy Business – Joint Venture with Fonterra Group

India is the largest producer of milk in the world with an output of 78
million tonnes per annum. Britannia has transferred its dairy business to the
Joint Venture. The new company has full access to Fonterra's research and
development strengths to help further upgrade product quality and reduce
product costs.

10.) The Distribution Chain

Britannia has built an enviable distribution chain across the country in
2,200 towns with over 4,00,000 outlets. It is developing this network further with
a bias towards the Rural Areas.

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11.) Leveraging the Net

They were able to avail end-to-end procurement services and use e-
procurement and reverse auctions to tap over 82 suppliers leading to new
supplier/price discovery. They achieved 5 per cent cost savings and continues to
use e-procurement extensively to utilise more cost effective transport routes.

WEAKNESSES

1.) Danone India

Groupe Danone has set up a wholly owned subsidiary Danone India to
market it’s mineral water product Evian. Depending on how this brand develops,
it might become a competitor to Britannia.

2.) Loss of Flexibility

As long as Britannia were sourcing their milk products from Dynamix, they
enjoyed a certain amount of flexibility, this will not be possible in their new
venture, since it will run through the entire production process in – house.

3.)Fallout of the Sunil Alagh Incident

A lot of things that made Britannia what it is today happened under the
leadership of Mr. Sunil Alagh. The Sudden termination of his term 9 months
before the completion of his term, after serving as MD for 10 years is bound to
raise questions about the company.

4.) Over Dependence on Biscuits

Britannia is relying heavily on it’s income from the biscuits segment. This
will not harm the company as long there are no bad monsoons or other incidents
that may jeopardize their production. Britannia must develop it’s other product
lines so as to be more certain.

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OPPORTUNITIES

1.) The Dairy Market

Although Amul is a big player in the dairy products market, the
unorganized sector is so big, that several more ‘Amuls’ can be accommodated.

2.) Expansion
There still remains a good opportunity for expansion, since the biscuit field
has many players in the organised sector.

3.) Diversification
Britannia should add new products to it’s portfolio to compete with rival
brands. This will ensure its survival and give it a chance at market Dominance.

4.)Promotion of Parent Company’s Products

Britannia can promote the products of its Parent Company Groupe
Danone, which is one of the largest in the world. In this way it can avion
developing a competitor in Danone India.

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THREATS

1.) Market Competition

Although Britannia currently dominates the market to a good extent, it is
threatened by the forays made by several firms, especially the joint Ventures
between MNC, like Nestle and HLL and Priya Gold has doubled it’s Production
facilities. These MNCs can flood the market with products from their parent
companies.

2.) Increase in Excise Duty

The increase in excise duty on biscuits in the low cost bracket will have an
impact on Britannia, in particular it’s Tiger Brand.

3.) Environment
The FMCG market in general if showing recessionary tendancies.
Although, Britannia has come out unscathed so far, It will only get more difficult
to grow and develop.

4.) Regulations
The Government has agreed to form and implement a plan and committee
to control specifications for the production of foods. This will be an additional
cost on the company.

5.) Accusations of Unfulfilled Claims

There have been reports published of manufacturers who failed to live up
to the claims they make, eg. the quantity of minerals in their product. Although
Britannia has never been guilty of such activity, it destroys consumer confidence.

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RECOMMENDATIONS

- The Paanwala –
The Paanwala is being accepted as an important medium of marketing. The
concept developed by ITC is a huge success and if Britannia adopts this concept
the brand would become more visible and the consumer would recall it. They
would even strengthen its distribution network. With ITC coming in the biscuit
segment and using its cigarette distribution network. This will also take Britannia
further in tapping the existing market in the unorganized sector.

- Develop Rural Market –

The Market for biscuits is not considered saturated, since there exists the
large unorganized sector, particularly in rural areas. Britannia should tap this
market, since it already has a wide distribution network, and an efficient system
(e-procurement) for developing new them.

- Exports –
Britannia is mainly focusing on exporting its core products. They have made
inroads mainly in gulf and some European markets. They should try to increase
the exports as their partner is no 1 in biscuits it would help them it could use
them as their umbrella brand

- Relaunch bread-
Britannia was the pioneer in the sliced bread segment, yet the contribution of
bread in the total turnover is only 6% . Since the market for packaged sliced
bread exists, they should consider relaunching to capture a larger share of this
market.

- Fruit Juices -
Britannia is already into packaged beverages, now under their Joint Venture
with Fonterra. Since fruit juices are becoming a popular food item at breakfast

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tables in Indian homes, as well as hotels. They also offer an alternative to

aerated drinks and they can be promoted on a platform of Health with
refreshment since Areated Drinks are not healthy.

- Marketing Groupe Danone Products

Britannia can market some of the products of it’s parent company in India.
Thus it can expand it’s product line without having to invest much in Research
and Development.

- Promotion of Ethnic Products

Britannia should promote the ethnic products it produces, like Ghee, since these
are commonly consumed in Indian households, it will make Britannia an
indespensible brand to the consumers.

Britannia must focus on maintaining its current position first and not
innovate and experiment excessively at the cost of it’s existing Brand Equity. It is
the market leader, and thus can fortify itself to guarantee a comfortable
existence.

It must keep a watch on its competition.

Therefore as PHILIP KOTLER said that “in today’s world of competition

you have to run faster than before to be in the same place where you are” is
rightly applicable to BRITANNIA.

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BIBLIOGRAPHY

http://www.altindia.net/enron/pressClip/2001.10/www.hindustantimes.com.nonfra
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http://www.hindustantimes.com/news/printedition/070603/detECO01.shtml

http://www.indiainfoline.com/comp/brit/lr00.html

http://www.blonnet.com/iw/2002/02/03/stories/2002020300110800.htm

http://www.hinduonnet.com/thehindu/2002/03/27/stories/2002032701651600.htm

http://www.expressindia.com/fe/daily/19981027/30055514.html

http://www.ppfas.com/investindia/equityresearchreports/britania121201.htm

http://www.mouthshut.com/readreview/37047-1.html

http://www.hinduonnet.com/thehindu/2002/08/03/stories/2002080302571600.htm

http://www.tribuneindia.com/2001/20011226/nation.htm#3

http://www.rediff.com/money/2003/jun/04britannia.htm

http://www.expressindia.com/fe/daily/19980716/19755214.html

http://www.hdfcsec.com) (http://www.coolavenues.com

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