CONTENTS

CHAPTER 1 EXECUTIVE SUMMERY CHAPTER 2 BACKGROUNDS CHAPTER 3 FINANCIAL ANALYSES CHAPTER 4 CO-CURRICULAR ACTIVITIES CHAPTER 5 COMPANY PROFILE

CHAPTER - 1 Executive Summary

Britannia is the market leader in the organized biscuit and bakery product market in India. Biscuits contribute to more than 80% of Britannia's total turnover. Other products include bread and cakes. Britannia diversified into dairy products in 2000 with processed cheese and dairy whitener. The portfolio was expanded with the launch of butter, pure, flavored milk in tetra packs and UHT milk. 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 2000, 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. Competitive Position: The entry of new MNC's have not posed a direct thereat 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 Kwality Biscuits, gaining a strong foothold in the southern market.
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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 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. Britannis'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. 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. 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. Britannia and Fonterra will each hold 49% of the Rs2.25bn equity, while the balance 2% will be held by business associates.

CHAPTER - 2 Background
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, thus acquiring controlling stake in Britannia. Later, Grop Danone and Nusli Wadia took over Pillai's holdings. 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.

Parent Group
Britannia's controlling stake is jointly with Groupe Danone and Nusli Wadia. 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..Nusli Wadia group is one of the leading

industrial houses in the country, with interests mainly in textiles and petrochemicals.

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 are 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.

Balance Sheet (Rs. mn)

Period Ended No. of Months Equity capital Profit & Loss/ General reserve Other reserves Reserves and surplus Net worth Secured loans Unsecured loans Total debt Capital employed Gross block Accumulated 03/01 03/02 12 12 SOURCES OF FUNDS 185.7 185.7 990.4 35.2 1,025.6 1,211.3 647.0 337.7 984.7 2,196.0 APPLICATION 1,728.7 470.1 18.6 1,277.2 911.9 585.8 489.7 56.8 591.0 1,509.0
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03/03 12 278.5 1,586.1 1,586.1 1,864.6 1,098.2 1,098.2 2,962.9 2,048.5 766.8 24.4 1,306.1 1,469.9 704.6 377.9 493.7 731.0 1,955.9

03/04 12 278.5 2,075.2 47.5 2,122.7 2,401.2 1,762.6 1,762.6 4,163.8 2,515.7 944.9 16.9 1,587.7 2,156.1 830.8 326.2 345.8 809.5 1,696.6

1,307.9 1,307.9 1,493.6 1,170.3 1,170.3 2,663.9 OF FUNDS 1,928.7 613.4 37.9 1,353.3 1,293.1 663.6 299.8 285.8 677.9 1,687.3

depreciation Capital work in progress Total fixed assets Investments Inventories Sundry debtors Cash & bank balance Total loans & advances Sundry creditors/

Acceptances Other liabilities Provisions Net current assets Miscellaneous expenses Capital deployed Turnover ratios (x) Net sales to total assets Net sales to fixed assets Net sales to working capital Net sales to inventory Gross sales to debtors Liquidity ratios (x) Current ratio Debt equity ratio Interest cover Return on (%) Networth (post tax) Capital employed (pre tax) Per share (Rs) Net earnings (EPS) Cash earnings (CPS) Dividend payout Book value (NAV) Asset composition (%) Net fixed assets Working capital

30.0 14.0 177.5 208.3 6.9 17.5 2,196.0 2,663.9 RATIOS 3.8 6.5 1,197.5 14.1 17.3 1.0 0.8 12.0 23.9 21.5 15.6 21.9 5.5 65.2 58.2 0.3 3.8 7.4 573.4 15.1 34.4 1.0 0.8 117.4 26.5 21.8 21.3 29.9 6.1 80.4 50.8 0.7

15.6 270.7 65.1 121.8 2,962.9

32.2 326.6 257.0 163.0 4,163.8

3.8 8.7 175.0 16.2 31.0 1.0 0.6 14.1 27.4 29.1 18.3 24.5 5.0 67.0 46.0 2.3

3.1 8.1 50.0 15.5 41.0 1.1 0.7 13.0 29.4 27.0 25.3 32.1 6.1 86.2 39.7 6.4

CHAPTER - 3 Financial Analysis

Net Sales recorded a CAGR of 15.5% during last 5 years. In FY01, sales grew by 12.8%yoy to Rs12.8bn. The main sales driver have been the biscuit and dairy businesses. Biscuit sales, accounting for 83% of turnover registered a 13% yoy growth to Rs11bn. Dairy sales grew by 47% yoy to Rs1.3bn. Dairy products now contribute to 10% of Britannia's turnover. Cake sales (Rs270mn) registered a 12% yoy growth, while bread sales (Rs620mn) declined by 6.8% yoy. Average realization growth in Biscuits and Bread was in line with inflation at 2-3%. Cake realizations were higher by 9%, while dairy product realizations remained stagnant. Operating profit margin excluding other income increased by 1.3% points from 7.7% in FY00 to 9% in FY01. The gain in margin has come despite higher selling costs at 11.4% of sales (10.9% of sales in FY00). This has been possible due to lower material cost which declined from 46.1% of sales to 43.7% of sales. Ad spend in FY01 was Rs853mn, but marginally lower than last year at 6.6% of sales. Employee cost has also been brought down during the last two years through VRS. Employee cost in FY01 stood at 7.4% of sales. The company has paid VRS compensation of Rs81.7mn during the year, which is being charged off over 5 years. Interest cost increased from Rs73mn in FY00 to Rs101mn in FY01, as debt equity ratio rose to 0.7x. Net profit grew by 38% yoy to Rs.705m This was after providing for VRS expenditure of Rs40.5mn and writeback of Rs157.5mn of previous year's liabilities.

The company generated cash profits of Rs853mn. Working capital generated Rs261mn and net cash generated from operations was Rs592mn In FY01 the company incurred a capex of Rs471mn. Investments increased by Rs686mn. The company paid a dividend of 55% in FY01 as against 45% during FY00. Dividend payments absorbed Rs169mn. Debt stood at Rs1.7bn at the end of FY01. RONW improved from 27.4% in FY00 to 29.4% in FY01. However ROCE registered a decline from 29% in FY00 to 27% in FY01. The company has bought back 3.6% of its equity during FY02.

Capacity Breakup
Period ended No. of months Capacity volume(unit) Biscuits (Ton) Bread (Ton) Cake & rusk (Ton) 03/01 12 03/02 12 111,000.0 12,000.0 5,500.0 Breakup 03/02 12 53,092.0 2,858.0 03/03 12 111,000.0 12,000.0 5,500.0 03/03 12 62,034.0 2,905.0 03/04 12 111,000.0 12,000.0 5,500.0 03/04 12 59,657.0 2,139.0

111,000.0 5,500.0 Production Period ended 03/01 No. of months 12 Production volume (unit) Biscuits (Ton) 49,447.0 Bread (Ton) 5,602.0 Cake & rusk (Ton) 2,282.0

Business
Britannia core businesses constitute of Bakery and Dairy products. Bakery products account for 90% of the revenues and include Biscuits, Bread and Cake & Rusk. Dairy products contribute to 10% of Britannia's annual turnover of Rs13.38bn.

Biscuits (82.7% of turnover)

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Revenues from biscuit were Rs11.07bn in FY01. The company sold 214,214 tons of biscuits registering a volume growth of 11% yoy. Biscuit sales in value terms registered a 13.2% yoy growth. Britannia has a 40% volume share and 48% value market share in the organized biscuit market. The company presently has an installed capacity of 111,000 tons for biscuits. Production in FY01 was 59657 tons against 62034 tons in FY00. Over 70% of biscuits sold are outsourced by the company. Over the years, Britannia has introduced and developed a full line of brands in all segments of the biscuit market. The company's Tiger range of glucose biscuits has been a runaway success, enabling the company to expand its presence in the largest gluco category of the biscuit market. In salty-sweet segment Parle's Krackjack and Britannia's Fifty-Fifty compete very closely. Britannia's other major brands include Marie, Thin Arrowroot, Bourbon, Milk-bikis, Nice, Snax, Coconut Crunchies, Pure Magic, Good Day, Jim-Jam and Chekkers. It has also launched biscuits like Vita MarieGold, NutriChoice etc, under the health positioning.

Bread (4.6% of turnover)

Britannia's bread business has been gradually degrowing year after year. Bread sales at Rs420mn accounted for just 4.6% of turnover in FY01, against 5.7% of turnover in FY00. The company sold 42450 tons of bread in FY01, a volume degrowth of 9.4% yoy. The company has an installed capacity of 12000 tons.

Dairy Products (9.8% if turnover)

The company's diversification into dairy business has been fairly successful. Dairy product sales were Rs1.3bn in FY01. The company has relaunched all its dairy products under the MilkMan brand name. New flavors like Milkman Cold Coffee and Milkman Lassi have been launched in flavored drinks besides MilkMan Chocolate Milk and Milkman Strawberry Milk. Cheese, dairy whitener, butter and ghee are the other products sold under the MilkMan brand. Britannia outsources its dairy products from Dynamix Dairy in Maharashtra, Modern Dairy in Haryana and Thacker Dairy Products in West Bengal. During FY01 the company sold 13039 tons of dairy products, a 50% yoy growth over 8820 tons sold in FY00. Britannia has invested Rs58.3mn in the equity of Dynamix Dairy in FY01. The Dairy business is proposed to be divested into a Joint Venture with the New Zealand Dairy Board's Fonterra Cooperative. Britannia hopes to gain from the R&D support as well as access to the international product portfolio of the JV partner.

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Cake & Rusk (2% of turnover)

Cake and Rusk sales were Rs271mn (2% of sales) in FY01. Volume growth was 2.6% yoy with sales of 3082 tons. In value terms, sales grew by 12% yoy.

Exports
Britannia has discontinued commodity export of Soya bean. Export of marine products has also declined significantly. The company now mainly exports biscuits and cheese to neighboring countries like Sri Lanka and Africa

Earnings Sensitivity Factors

Success if Dairy Joint Venture
Success of new product launches: New launches entail significant

ad-spends and impact margins in the short run. Competition activity in core biscuit business and ability to protect market share.
Post acquisition of Modern Foods, HLL is expected to give

formidable competition in bakery products.

Input prices: Raw material such as wheat, fats and sugar prices

influences margins.

Profit & Loss Account (Rs mn)

Period ended No. of months Gross Sales Excise Duty Net sales Other income 03/01 12 8,478.4 235.7 8,242.7 113.4
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03/02 12 10,301.4 277.7 10,023.8 130.6

03/03 12 11,698.4 302.9 11,395.5 159.1

03/04 12 13,384.2 525.1 12,859.0 161.2

Total income Raw materials Stock adjustment (Inc)/Dec Purchase of finished goods Cost of material Employee cost Power & fuel Advertising/ promotion/ public Freight & forwarding Other expenses Cost of sales PBIDT Interest & finance charges PBDT Depreciation PBT Provision for taxation Extraordinary items/ Prior year adj Adjusted PAT Dividend payout Forex inflow Forex outflow Book value of quoted investments Market value of quoted investments Contingent liabilities As % of net sales Gross sales Excise duty Net sales Other income Total income Cost of material Employee costs

8,356.1 2,863.4 52.3 949.6 3,760.7 725.7 107.7 525.2 318.5 2,326.9 7,764.6 591.4 49.2 542.2 118.2 424.0 134.7 289.3 102.1 64.4 128.2 150.4 165.3

10,154.4 3,653.2 33.7 1,224.7 4,844.1 829.1 123.2 584.0 401.0 2,632.1 9,413.6 740.8 6.3 734.5 158.9 575.6 180.0 395.6 113.4 39.6 148.9 577.0 630.6

11,554.6 4,042.1 45.2 1,257.3 5,254.2 904.5 161.2 770.1 471.5 2,957.8 10,519.2 1,035.5 73.2 962.3 171.8 790.5 260.7 19.6 510.2 139.1 29.4 159.1 283.1 320.0 207.9

13,020.2 3,880.7 114.9 1,850.1 5,615.9 953.0 152.9 852.9 613.8 3,519.6 11,708.1 1,312.2 100.9 1,211.3 188.9 1,022.4 434.1 117.1 705.4 168.8 23.5 129.4 69.0 88.9 592.0

167.3 405.5 RATIOS 102.9 2.9 100.0 1.4 101.4 45.6 8.8
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102.8 2.8 100.0 1.3 101.3 48.3 8.3

102.7 2.7 100.0 1.4 101.4 46.1 7.9

104.1 4.1 100.0 1.3 101.3 43.7 7.4

Selling expense Other expenses Cost of sales Profitability ratios (%) PBIDT excl. other

10.2 28.2 94.2

9.8 26.3 93.9 6.1 7.4 7.3 5.7 3.9 21.6 25.3 35.8 36.8 31.3 28.7 03/02 12 445.0 158.9 130.6 180.0 554.5 77.8 190.0 178.3 14.8 305.3 859.9 235.0 381.2 86.9
13

10.9 26.0 92.3 7.7 9.1 8.4 6.9 4.5 13.7 39.8 37.3 29.0 33.0 27.3 03/03 12 631.4 171.8 121.8 139.5 260.7 560.2 41.0 78.1 268.6 63.9 213.4 773.6 124.7 176.8 53.1

11.4 27.4 91.0 9.0 10.2 9.4 8.0 5.5 12.8 26.7 29.3 38.3 42.5 23.9 03/04 12 861.2 188.9 41.2 278.2 434.1 853.1 126.2 51.7 259.2 72.5 261.2 591.8 470.5 686.2 78.5

5.8 income PBIDT 7.2 PBDT 6.6 Profit before tax 5.1 Profit after tax 3.5 Growth ratios (% yoy) Net sales 13.5 PBIDT 61.0 PBT 43.8 PAT 61.8 Payout ratios (%) Tax (% of PBT) 31.8 Dividend (% of PAT) 35.3 Cash flow statement (Rs mn) Period ended 03/01 No. of months 12 Pre tax income from 310.6 operation Depreciation 118.2 Expenses (deferred)/ written off Other income/prior 113.4 period adj Tax 134.7 Cash profits 407.5 (Inc)/Dec in trade working capital Inventories 78.9 Sundry debtors 131.9 Sundry creditors 143.3 Others 54.8 Net adjustment 12.6 Operating activities 394.8 (Inc)/Dec in fixed assets 542.2 (Inc)/Dec in investments 181.0 (Inc)/Dec in loans & 110.6 advances

Investing activities Inc/(Dec) in debt Inc/(Dec) in equity/ premium Direct add/(red) to reserves spl item Dividends Financing activities Cash generated/ (utilised) Cash at start of the year Cash at end of the year Sales breakup Period ended No. of months Sales value(Rs mn) Biscuits Bread Cake & rusk Gardens & dairy products Marine products Others Sales volume(unit) Biscuits (Ton) Bread (Ton) Cake & rusk (Ton) Gardens & dairy products (Ton) Marine products (Ton) Unit realisation (Rs/unit) Biscuits (Ton) Bread (Ton) Cake & rusk (Ton) Gardens & dairy

612.7 347.1 0.0 102.1 244.9 27.1 29.7 56.8 03/01 12 7,248.0 555.4 169.8 378.0 49.9 77.3 144,213.0 43,558.0 2,249.0 3,024.0 659.0 50,259 12,751 75,495

703.1 185.6 0.0 113.4 72.2 229.0 56.8 285.8 03/02 12 8,621.6 623.5 237.4 696.2 122.8 167,467.0 46,647.0 2,809.0 6,111.0 51,482 13,365 84,504 113,933 03/02 12
14

354.6 72.0 92.8 92.8 139.1 211.2 207.9 285.8 493.7 03/03 12 9,783.7 664.9 242.3 891.1 116.4 192,646.0 46,880.0 3,003.0 8,820.0 50,786 14,182 80,698 101,030 03/03 12

1,235.3 664.3 0.0 168.8 495.5 147.9 493.7 345.8 03/04 12 11,073.0 619.6 271.4 1,313.1 107.1 214,214.0 42,450.0 3,082.0 13,039.0 51,691 14,597 88,050 100,704 03/04 12

124,993 products (Ton) Marine products (Ton) 75,728 Raw materials cost breakup Period ended 03/01 No. of months 12 Raw materials cost(Rs mn)

Flour Hydrogenated vegetable

944.4

1,192.0 980.4 558.3 922.5 143,353.0 22,406.0 38,588.0 8,315 43,758 14,469

1,393.4 908.0 678.0 1,062.7 163,732.0 26,185.0 44,559.0 8,510 34,677 15,215

1,435.1 637.2 719.4 1,089.1 169,667.0 23,700.0 49,516.0 8,458 26,887 14,528

803.2 oil Sugar 490.0 Others 683.9 Raw materials volume(unit) Flour (Ton) 122,729.0 Hydrogenated vegetable 20,935.0 oil (Ton) Sugar (Ton) 33,542.0 Unit realisation (Rs/unit) Flour (Ton) 7,695 Hydrogenated vegetable 38,367 oil (Ton) Sugar (Ton) 14,608

DIRECTORS' REPORT (1st June, 2004)

1. Sales and Earnings: In-spite of significant slowdown in the economy, corporate sales grew by 14.4% with both core bakery operations and the new dairy business contributing to the growth. Operating profit at Rs962mn increased by 37%. Profit before taxation and exceptional items at Rs1022mn increased by 29% and crossed the Rs1bn (Rs.1000mn) mark. Growth in earnings has been achieved through higher sales, cost reduction and improvement in productivity. We have charged off proportionate VAS cost of Rs41mn and written back previous years liabilities no longer required to the tune of Rs158mn. Net profit at Rs705mn (after considering these exceptional items) have gone up by 38%. Earnings per share have increased by 38% from Rs18.31 to Rs25.33.
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2. Finance and Acquisitions:

a) Your Company has acquired the trade mark "KWALITY", the Chef

Device and several other trademarks owned by Kwality Biscuits Pvt. Ltd. of Bangalore along with copyrights and designs in labels and packaging materials for a consideration of Rs300mn. This will help us to become a stronger player in South India, where the "Kwality" brand has a significant presence. We have also agreed in principle to acquire 49% equity of Kwality Biscuits Pvt. Ltd. This transaction is expected to be completed during 2001/02. b) We have issued 5,000,000 Secured Redeemable Non convertible privately placed debentures of Rs100/ each amounting to Rs 500mn at interest of 10.9% per annum for funding new projects and acquisitions.

3. Dividend: Board recommends a dividend of Rs5.50 per share, representing 55% of the equity share capital of the company for approval by the members. The total payout on dividend and tax would be Rs169mn which works out to an increase of 22% vs. previous year's payout of Rs139mn. 4. Information Technology: We continue to upgrade our information technology systems to support the growth in operations and growing needs of the changing market place. We are putting in place comprehensive Enterprise Resource Planning system to

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cover all facets of our operations. The first phase of this exercise is expected to be completed by next years.

Welcome to Britannia Health Products Limited

As the specialist consumer company for the Forum group, Britannia Health Products distribute products to Health Stores, Pharmacy and Grocery/Supermarket retail outlets. Many of Britannia Health's products are also available via direct mail, and through other specialist trade sectors, as well as online via this site. Visit our Products page for more information. Britannia Health Products have a wealth of experience in the Healthcare Market and in particular in the dietary supplements market. Britannia was the company who pioneered the development of Efamol Evening Primrose Oil supplements in the UK. Britannia is also familiar with the promotion of cosmetic lines and food lines which provide a health benefit and are currently developing into the emerging functional foods market. Britannia Health Products' key products are Prostabrit, a dietary supplement for helping to maintain a healthy prostate, Colief Infant Drops lactase enzyme drops used to treat babies' milk and Astaxin, capsules containing algae astaxanthin, a powerful antioxidant. We have recently added an exciting new vitamin and mineral range which is NOW available for purchase by mail order and via this site. Britannia Health have several new ideas and products in the offing which we hope to be able to offer in the coming months. Visit us again soon!

Home
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Originally established in 1989, and trading as Britania Services since 1995, we pride ourselves on our excellent customer service record. The management team has over 35 years combined experience in the building services industry, with a broad expertise and practical experience in every aspect of building services. We offer our customers the very best in design, installation and service for Heating and Air Conditioning. Our company policy is Enthusiasm, Forward thinking and Dedication to providing you the customer, with the very best in Quality, Service and the Latest Technology to achieve Efficiency, Reliability and Economy. Our after sales service is second to none with a customer service free phone for help and advice whenever needed as well as a prompt response to site calls. We have comprehensive public liability insurance and health & safety policy and the Company operates a No Smoking policy at all times. Fixed price quotations provided free of charge with no obligation.

COOKING OIL AND DESI GHEE

Sr. No. 1 2 3 4 5 6 7 Name of the Product Dalda Lipton India L.T.D. Soya Refined Oil Britania Company L.T.D. Sundrop I.T.C.Li Crystal I.T.C.Li Whiltal Britannia Company L.T.D. Anik Ghee Lipton India L.T.D. Everyday Ghee Nestle India L.T.D Multi National Company Indian Substitute Amrut, Gagan, Ruchi, Dhara. Amulya, Posteman, Nefed. Swekar, Path, Panghat, Ruby. Raja, NO-1, Atal, Shankh. Sona, Surya, Suvarna, Neelgiri. Himgiri, Kanavdia, Indradhanush Parag, Amul.

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The good news is that Britannia, the homely and friendly restaurant on Sprott Road, next to New Custom House, Ballard Estate, now serves dhanshak every afternoon of the week. And, if you want more good news - it also serves its famous berry pulao every day, Monday to Saturday. The daily service is in keeping with the policy of proprietor Boman Kohinoor (Irani) - if an item is popular, serve it every day, not on special days. Thank you, Mr. Kohinoor. The dhanshak is among the best in town. If I were to rate it, I would put it among the four best: Ripon Club (Wednesdays), Yacht Club (Fridays), Melhi Mistry's house (Sundays, though it is many Sundays since he has invited us), and Mr. Kohinoor's Britannia (Monday to Saturday). You get all three, mutton, chicken and vegetables. Rs.55 for the meat ones, Rs.45 for the vegetarian. Of course, there is nothing like a vegetarian dhanshak, just as there is nothing like a non-alcoholic beer or an eggless omelette. Still, there you are. And, while I am at it, I would like to add, the only bona fide dhanshak is with mutton, not chicken. The mutton at Britannia is boneless. In fact, all the meats at Britannia, whether mutton or chicken, are boneless, and this applies to all the dishes. A footnote in the menu declares: "Chicken and mutton served boneless." Only the fish has a bone in it, and since it is pomfret, it is only the central bone. It was Mr. Kohinoor's late wife, Bachan, who taught the Britannia cooks how to make the perfect dhanshak. The lady, sadly passed away earlier this year, but her art continues. Two dals are used, mung and tur, in proportions that only the cooks know. And the meat is cooked with the dal to
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give it its meaty texture and aroma. Pumpkin is used to thicken the dal. Muslims use dudhi in their dal gosh, which is a similar preparation and yet with a world of difference. In the dal gosh, the dudhi is left more or less untouched, diners pick out large pieces of it and eat it. In the dhanshak dal, the pumpkin is thoroughly mashed. It is up to you what you prefer. I am for the dhanshak, so is Gerson da Cunha, whom I found last week, tucking away. Goans are the only people, besides Parsis, who eat dhanshak on a regular basis. And, in early days, when being a Parsi meant being Sir Cowasji Jehangir or Sir Jamshetjee Tata, gentlemen who could afford to maintain a fleet of servants, it was Goan cooks who cooked the dhanshak. But let us return Britannia. And a word about the dhanshak rice, before we pass on. The rice is brown, the colour and taste achieved by carmelising it in a little ghee. Crisp fried onions are added on the top, and not only for decoration. Naturally, the rice tastes a little sweet, though the pepper and the tej patta sees to it that it is not too sweet, and the fried onions provide a taste of smokey bitterness. With the rice, the restaurant serves you small round kababs, meat kababs, a little spicy, at least three, though often four. The dal comes in a separate bowl. And the meat is in the dal, not the rice. If it is put in the rice, it becomes pulao dal, which is far, far from the same thing. Equally popular is the restaurant's berry pulao, Rs.60 for mutton and chicken, Rs.45 for veg. They are the Barberry Berries; at least, I think so. They grow wild in the Middle East, on spindly shrubs, a red berry. In Iran, they are used with rice, in restaurants and in homes, and Britannia's berry pulao comes from Iran. The late Mrs. Kohinoor, though a Parsi, meaning not an Iranian, spent seven years

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in Teheran as legal assistant to Iran Airways, and brought back with her the berry pulao. In Iran, the berries are known as zereshk, and the pulao as zereshk pulao. The berries are dry, like raisins, but sour and with a sweet aftertaste. Mr. Kohinoor compares them to dry pomegranate. I would not know, I have not seen a dry pomegranate. In any case, the berries are cooked with the best quality of basmati rice, then the marinated and masalaed meat placed between layers of the rice. And there is a garnish of cashewnuts and fried onions. Plus, a few kababs. Note: This is the only place in India that you get berry pulao. Try it, it is like an aromatic biryani. A third item I recommend at the place is a fish patra (Rs.45), it is the standard Parsi wedding patra-ni-machi, but with some differences. First, it is not a filet of pomfret, it is a full pomfret, one pomfret per person. It may not be a big pomfret, but it is reasonably large, medium sized. Second, the green chutney, it is wet and smooth and most generously applied all over the pomfret. It has less chillis, more of kothmir and dhania and jeera and coconut and lime juice. There is another interesting difference, the price varies. Sometimes the fish patra costs Rs.45, sometimes Rs.50, depending on the size of the fish and its availability. Mr. Kohinoor says: "Our customers understand, they don't mind. We tell them it will cost five rupees more than the marked price." The fish is, of course, steamed, wrapped in the plantain leaf. A drop of oil and vinegar is added to the water before steaming. A few rules of the restaurant will be helpful. The place is open for lunch only, from 10.00 a.m. to 3.30 p.m. A few breakfast snacks are available
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before 12.30 p.m., but no tea, only Nescafe. Soft drinks are available, but no beer. For dessert, there is Parsi Dairy's yoghurt and the restaurant's own caramel custard, excellent quality, burnt the right degree. But there is no icecream. And no beef. And the restaurant's philosophy, as written on the menu, is: "There's no greater love than the love of eating." Such a restaurant has to have some history. It has. The present proprietor's father, Rashid Meherwan Kohinoor, opened it in 1923. The present proprietor joined it in 1933, coming there direct from Iran. Britannia was run on a grand scale then. Only officers were allowed, the assistant collector of customs, Port Trust manager, the collector of Bombay. Food was mainly Western, with some Indian dishes. During the war, the British auctioned the place, to run a war office. It was returned to the proprietors at the end of the war, but by that time its glory days had ended. Mr. Kohinoor is actually the third generation. His grandfather came to Bombay in 1885 and opened Kohinoor Restaurant opposite the GPO. It still exists, in the same name, though not under the same proprietors. Never mind, there's still Britannia. If you have not already done so, visit it, the earlier the better. Order a patra fish, a mutton dhanshak, and caramel custard. And say hello to Mr. Gerson da Cunha.

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CHAPTER - 4 CO-CURRICULAR ACTIVITIES Information Event Our Performance

Britania Heritage Quiz Era Public School. Winner in the zonal round being adjudged as the second best Times of India Debate held at New Runners up with the school team team in north India. Debate organised by the Discovery Winner in the North zone. channel. Slogan writing competition organised in connection with the Hepatitis awareness Day. Anchor festival held at Naval public Won prizes in 6 events like Rangoli, school. Group Dance, Fancy Dress, Street Play, Bhakti Sangeet and One act play. Art competition at Vidya Devi Jindal Hissar Bagged the first runners up, School. Quest competition organised by Indian Express. SPORTS JKPS has become a force second prize in glass painting ,third prize in cartooning. 3 of our students were among the 5 students selected to receive the coveted award of Rs.5000. Our students have won Laurels in kho-kho and judo. Won the first prize.

to reckon with in the realm of sports. table tennis, basket ball, badminton,

Information
EVENT
23

OUR PERFORMANCE

Zonal Basketball.

We lifted the winners trophy in Senior girls & junior category and runners up trophy in the sub junior girls. Our senior boys lifted the winning

Rosary school tournament.

trophy. North Delhi Public school (NDPS) Our senior boys were runners up. basketball tournament. NDPS badminton tournament. NDPS Football tournament. NDPS Kho-Kho. NDPS Table Tennis tournament. Junior boys were the winners & senior boys were runners up. Our senior boys were winners. Junior girls emerged as the winners. We lifted the winners trophy in junior boys, sub-junior boys, senior girls and junior girls category & Runners up in sub-junior girls at the zonal level. Junior open Table Tennis tournament held at Calicut. Kunal Puri and Sunal Jain were placed at forth position. Joshita Bhushan is Delhi No 4 in Junior cadet girls category.

Brand Churn in 01 Sees Leaders Lifebuoy & Nirma Lose Market

Fast moving consumer goods (FMCG) sales may be stagnating or worse, falling, but there have been substantial changes in market shares during calendar year '01. Data collated by market research agency ORGMARG and by FMCG companies reveals a bitter fight for share in a market experiencing a sharp slowdown. Many market leaders have struggled to hold on to their top positions.

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Consider, for example, the largest FMCG segment, toilet soaps. Data for '01 reveals that Lifebuoy, for many years HLL's mainstay, has lost volume market share to 18 per cent in '01 from 20 per cent in '00. When contacted, the company said that this excluded its variant Lifebuoy Active, which accounted for a further 3.4 per cent market share in '01. Lifebuoy's market share in terms of value was down to 10.7 per cent (excluding the 1.8 per cent for Active) in '01 from 12.8 per cent in '00. In a bid to regain lost market share, HLL is in the process of re-launching Lifebuoy as reported by ET in its edition dated February 9. ORG officials were not available for comment. HLL's other mainstay in the premium part of the soap segment, Lux, had more or less the same volume share of 13 per cent in '00 and '01. The effect of promotions and down-trading is, however, visible across the premium segment. Breeze, another HLL brand which is cheaper than Lux, now holds a volume market share of 12 per cent in '01, up from 10 per cent in '00. Analysts believe that users have down-traded to Breeze from brands like Lux, as FMCG companies increased TFM content in lower-priced soaps due to the low prices of oils in early '01. Nirma had a mixed '01. Its sales have been continuously rising, crossing Rs.1,400 crore last year, but volume market share of washing powders and liquid detergents dropped from 29 per cent in '00 to 24 per cent in '01, according to the ORG data. The company has more or less maintained its shares in other brands. According to the company, however, its volume market share was around 39 per cent for washing powders and detergents in fiscal year '00-01. Any subsequent change may be marginal, the company said, adding that the industry growth for the segment was flat. IN early '01, Godrej Consumer products' Fairglow grabbed a lion share of the fairness cream and soaps segment. However, ORG data reveals that in '01, HLL's Fair and Lovely skin
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cream garnered a volume market share of 24 per cent in '01 from 18 per cent in '00, gaining six per cent in one year, thus maintaining its market leadership. According to HLL, however, its volume market share has improved from 30 to 36 per cent, while value share up at 38 per cent in '01 from 31.5 per cent in '00. In the fiercely aggressive toothpaste segment, Colgate-Palmolive's Colgate Dental Cream's volume share dropped by almost three per cent in '01 from 39 to 36 per cent, according to ORG data. But this has been compensated by increase in market shares by Cibaca Top, Herbal and Gel. According to the company, it managed to hold onto its total volume share at 50.5 per cent in '01, up 0.7 per cent from the previous year. On the other hand, HLL's Close-up lost two per cent volume share, from 13 to 11 per cent, while its Pepsodent brand gained marginally. In the beverages segment, SmithKline Beecham's Horlicks maintained its volume share at around 50 per cent of total market in '01 as compared with 51 per cent in the previous year. Meanwhile, Cadbury's Bourn vita gained one per cent share to touch 13 per cent in '01, after Cadbury undertook a brand relaunch in South India. In a shrinking market for tea last year, all companies lost share in both volume and value terms for packaged tea. Stiff competition from low-cost regional players hit Tata Tea's regional brands like Agni and Kannan Dewan, both losing between one percent shares. With production cuts in the North and Southern tea gardens and increased focus on quality, these two majors anticipate that their shares will grow in the future. However, premium tea brands of HLL (Red Label and Taj) and Tata Tea have shown increases in their respective market shares in '01.

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Britannia continued its good run. Its Tiger brand of biscuits gained two per cent volume share to touch nearly 15 per cent in '01. It's Marie Gold and Good day brands of biscuits maintained shares, while last year's successful launch of '50-50' got it a share of four per cent in '01. The increase in market shares reflects strategies followed by FMCG majors. Every other company focused on promotions, bundling and relaunches of its core brands to drive volumes. Price reductions and freebies distorted the value-volume estimates, underlining the turbulent FMCG market at the retail level. In '02, the industry is expected to do marginally better than '01, as any growth would be on a stagnant, or some cases, a lower base. Most companies expect FMCG sales to improve from now on. The decline in sales was marginally lower in December '01, but there's a long way to go for most brands. Source : Economic Times, February 11, 2002 Britannia English East India Company Ship Lost 1809 Tonnage EIC Classification : Voyage No. Event Date Location : 1200

Regular : : : 2 25 Jan 1809 Off South Foreland

27

Britannia Industries

Pare exposures

Aarati Krishnan
A fast growing dairy business and a foray into the mass market have kept Britannia's growth rates in the top league over the past couple of years. But recent developments are a cause for concern. The proposed transfer of the dairy business to a joint venture and Dan ones recent move to set up its own subsidiary in India, are two key uncertainties for the stock valuation, says Aarati Krishnan. The year 2001 may have been a staid one for other fast moving consumer goods (FMCG) stocks, but not for Britannia Industries. The stock has been through a virtual roller-coaster the past six months, thanks to a slew of company-specific events, all having an important bearing on its prospects. The just-concluded buyback has not materially altered the valuation for the stock. But the possible hive-off of the dairy business and Group Dan one's decision to set up a wholly-owned subsidiary may be different stories. Over the past three years, while other FMCG companies struggled with a sluggish topline, Britannia's sales grew at a healthy compounded annual rate of 16 per cent, and operating profits at 18 per cent. 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 plateau. With low penetration of dairy products and snack foods, they offer significant potential for growth. Therefore, unlike FMCG companies operating in markets for mature products such as soaps or detergents, there appear to be considerable room for growth for Britannia.

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The New Alliance

On October 27, 2001, Britannia Industries announced a joint venture with Fonterra Co-operative Group of New Zealand Dairy. The alliance with New Zealand Dairy is undoubtedly a coup for Britannia Industries. With revenues of $3.5 billion in 2000, New Zealand Dairy is among the ten biggest dairy companies in the world. Unlike Britannia's present copromoter Dan one, which is essentially a dairy product company, New Zealand Dairy is an integrated dairy company. Thus, while Dan one markets dairy products (mainly fresh dairy products such as desserts, fresh cheese and yoghurt), New Zealand Dairy is present in practically every part of the chain, from procurement of milk to value-added products such as cheese and buttermilk. Operated on the co-operative model much like the NDDB, New Zealand Dairy, thus, has access to technology in every stage of milk production. This could prove valuable for Britannia in competing with the formidable Amul. Given Britannia's recent forays into ghee and liquid milk, this could be invaluable.

Fate of the Dairy Business

But the bad news for Britannia shareholders could lie in the manner in which the deal is structured. At the time of the announcement, Britannia stated that it would enter into a new joint venture with New Zealand Dairy to operate the dairy business. Given that only an in-principle agreement is in place, the final shape of the deal will probably emerge later. But the details available now are not very reassuring.
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According to the proposal cleared by the FIPB, the proposed joint venture is to have a capital base of Rs 225 crore, with Britannia and New Zealand Dairy holding 49 per cent each. The crucial 2 per cent is proposed to be given to a strategic investor, to be decided at a later date. Britannia has also tentatively announced that the current dairy business, with the marketing and distribution of products, will be transferred and run by the joint venture. There is no indication yet whether Britannia shareholders will be paid any compensation for the transfer of the dairy business into the joint venture. The transfer will certainly impact Britannia's revenue and profit profile in the near term. In the first nine months of 2001-02, the dairy business contributed around 12 per cent of Britannia's revenues. Though the division made a loss of around Rs 2 crore for the nine-month period, it is expected to break even the next fiscal. Britannia will have to shell out around Rs 110 crore (roughly half its current capital employed) for its equity stake in the joint venture. Its shareholders would stand to reap a return from this joint venture, only if and when it declares any dividends. The near-term impact apart, the long-term implications of this move are also significant. Over the past couple of years, Britannia's dairy portfolio has far outpaced its traditional biscuits and breads range, growing at 47 per cent in 2000-01 and by 30 per cent in 2001-02. A transfer of the dairy business into a separate company could deprive Britannia of the growth momentum that the dairy business brings to its table.

From Outsourcing to Manufacturing

There could also be other operational issues that need to be sorted out. For one, the joint venture with Fonterra could also mark Britannia's transition
30

from a dairy product marketing company to one which is invested in the dairy business at the grassroots levels. Until now, Britannia has outsourced the bulk of its dairy products from Dynamix Dairy, in which it holds an equity stake. This has given Britannia considerable flexibility in changing its product mix, with very little exposure to the inherent risks of an agriculture-oriented business such as dairying. But the joint venture with Fonterra could change this. The FIPB approval to the joint venture is based on the condition that the company would set up manufacturing facilities of its own and not indulge in `trading' of any product, save at the wholesale level. This could force a gradual shift in Britannia's profile from a company merely marketing dairy products to one that operates its own manufacturing facilities. While this could bring cost savings and create a larger product portfolio, it could also entail substantial capital investments in the near term, apart from adding a measure of risk to Britannia's operational profile.

Groupe Danone: Striking out on its own

Which ever way, if the joint venture with Fonterra pans out, the recent move by Groupe Danone to set up its own wholly-owned subsidiary in India is a definite damper for Britannia. Last week, Groupe Danone received the FIPB clearance to make and sell dairy products. Since Britannia has never depended heavily on Danone for its product portfolio, it may not directly lose out because of this move. However, the setting up of the wholly-owned subsidiary could result in the emergence of an entirely new, strong, multinational competitor to Britannia in the dairy business. With MNCs such as Nestle India and Dabon already in the market, along with the well-

31

entrenched NDDB, Britannia can certainly do without yet another competitor fighting for a foothold in the market. After the recent slump, the Britannia Industries stock now trades at a price- earnings multiple of 23 times its latest earnings. This is definitely low compared to Britannia's FMCG peers. It is early days yet to jump to conclusions about the prospects for Britannia's earnings, based on the above events. However, the uncertainty arising out of developments could act as a damper to the valuations of the Britannia Industries stock for now. Investors uncomfortable with the enhanced risk profile can contemplate trimming exposures to the stock.

MILK BIKIS
05/04/03 PCHL/74/7-3 Purc BRITANNIA IND LTD 9000.00 4.40 39,600.00 25/05/03 PCHL/74/7-4 Purc BRITANNIA IND LTD 300.00 4.40 1,320.00 28/08/03 PCHL/74/7-15 Purc BRITANNIA IND LTD 250.00 4.40 1,100.00 21/09/03 PCHL/74/7-17 Purc BRITANNIA IND LTD 200.00 4.40 880.00 23/12/03 INV/039 Sale CASH 120.00 4.95 -594.00 05/10/04 PCHL/74/7-23 Purc BRITANNIA IND LTD 200.00 4.40 880.00 Britannia Industries the Company's principal activity is the

manufacture and sale of biscuits, bread, rusk, cakes and dairy products like cheese, butter and milk. The brand names of biscuits include Vita Marie Gold, Tiger Variants, Nutrichoice Junior and Good Morning. Biscuits & high protein food accounted for 81% of fiscal 2004 gross revenues; Dairy products, 12%; Bread, 4%, Cake & Rusk, 2% & other, 1%
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Stock Price (12/12/04): 522.30

Recent stock performance 1 Week 4 Weeks 13 Weeks 52 Weeks 0.5% 0.4% 1.1% 10.9%

Chairman Managing Director & Chief Executive Chief Operating Officer Secretary Key Valuation Drivers

Nusli N. Wadia Sunil K. Alagh Nikhil Sen Ravi Mannath

Commitment of Group Danone which is currently playing an active

role in the operations of the company.

Revenue growth and new brand introductions in the bread business. Ability to successfully brand premium label in butter and

commonplace label in ghee under the Milkman brand. (Dairy business is a high margin business).
Ability to increase productivity after VKS and modernization

exercise.
Ability to hedge raw material price fluctuations (wheat, fat, sugar

and milk).
Ability to successfully compete against new competition in the

biscuit sector both domestic and imports (Nestle, Kellogs, United Biscuits, and HLL) (opening up of the food market under WTO will lead to influx of foreign brands).

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 Ability to maintain brand equity in the premium end of product-

mix.
Ability to drive growth in ethnic snack segments.

34

CHAPTER - 5 Company Profile

Britannia Industries Ltd is India's leading biscuit and bakery product manufacturer. It is an associate company of Group Danane. Associated Biscuits of Nusli Wadia and Danane holds 22% equity stake each in Britannia Industries Ltd. Its market share in biscuits is more than 45% of the organized sector. Britannia Industries and Fonterra Co-operative Group of New Zealand, the world's ninth largest dairy company, shall put in Rs 110.4 crone each in their proposed dairy products joint venture, which shall give them a 49 per cent holding each in the new company. The company has received the go-ahead from the government to hive off its existing dairy business and concentrate on bakery and confectionery products. On 26th March, Britannia Industries Ltd has entered into a joint venture with New Zealands Fonterra Cooperative Group, a leading diary co-operative group in the world, wherein it will be transferring its existing diary business. The joint venture, to be called Britannia New Zealand Foods Pvt. Ltd. and effective March 27, 2002, will be engaged in areas relating to sourcing/manufacturing and distribution of milk and milk products in India. On 04 September, Britannia Industries has announced a buyback of its fully paid-up equity shares of face value of Rs 10 each from the open market. The maximum buyback price fixed by the company is not more than Rs 650 per equity share.

u u u

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