MSL 302

Indian Institute of Technology, Delhi

Submitted by :
Rhythm Gupta 2020MT10836
Khushee A Namdeo 2020CH10095
Goonjan Saha 2020CS10494
Kartik Sharma 2020CS10351
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TABLE OF CONTENTS:

1) Abstract
2) Objectives of the term paper
3) Company Overview
4) Accounting Principles
5) Balance Sheet Analysis
6) Income Statement Analysis
7) Segment Reporting
8) Trend Analysis of Balance Sheet
9) Trend Analysis of Income Statement
10) Financial Ratios Calculations
11) Descriptive Analysis of Financial Ratios
12) Competitor analysis
13) Interpretations and inferential analysis
14) Suggestions
15) Conclusions
Objectives of study
1. To examine the solvency position of the company.
2. To know the liquidity position of the company.
3. To know the profitability position of the company.
4. To know the turnover of the company.

Abstract
Financial Statement Analysis explains the historical and present financial performance of an
organization. Both owners and creditors seek this information in order to forecast expected
profits and analyze the associated risks. It can be used to assess a firm's strengths and
weaknesses, predict future challenges and accomplishments, and ultimately assist in determining
whether or not the company presents a favorable investment opportunity. The goal of this term
paper is to analyze the annual report of Britannia Industries Ltd of the past 5 years, with an
emphasis on the financial statements, utilizing trend analysis, common size statements, and
financial ratios, and then to present the findings and inferences via charts and graphs. In the
conclusion, compare the result to the industry average and provide a conclusion.
Company Overview
Britannia Industries is one of India’s leading food companies with a 100 year legacy and annual
revenues in excess of Rs. 9000 Cr. Britannia is among the most trusted food brands, and
manufactures India’s favorite brands like Good Day, Tiger, NutriChoice, Milk Bikis and Marie
Gold which are household names in India. Britannia’s product portfolio includes Biscuits, Bread,

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Cakes, Rusk, and Dairy products including Cheese, Beverages, Milk and Yogurt. Britannia is a
brand which many generations of Indians have grown up with and our brands are cherished and
loved in India and the world over. Britannia products are available across the country in close to
5 million retail outlets and reach over 50% of Indian homes.
Britannia Bread is the largest brand in the organized bread market with an annual turnover of
over 1 lac tons in volume and Rs.450 crores in value. The business operates with 13 factories and
4 franchisees selling close to 1 mn loaves daily across more than 100 cities and towns of India.
Britannia takes pride in having stayed true to its credo, ‘Eat Healthy, Think Better’. Having
removed over 8500 tonnes of Trans Fats from products, Britannia became India’s first Zero
Trans Fat Company. Over 50% of the Company’s portfolio is enriched with essential micro-
nutrients which nourish the body.
The company set up the Britannia Nutrition Foundation in 2009, and began working on public
private partnership to address malnutrition amongst under-privileged children and women.

Headquarters Year Founded No. of Employees

India 1892 4,467

Net Income (2022)

Origin Industry Rs. 1603.19 Cr
Kolkata, West Bengal Consumer Packaged Goods ↓9.78%
(2022 vs 2021)
Website Ticker Symbol & Exchange Market Cap
britannia.co.in BRITANNIA (NSE) Rs 909.76B
Revenue (2022) Net Profit Margin (2022)
Company Type Rs. 13731.05 Cr 12.17%
Public ↑7.71% ↓14.05%
(2022 vs 2021) (2022 vs 2021)

Accounting Principles
The Financial Statements of Britannia Industries Ltd. has been prepared according to the Indian
Accounting Standards as mandated by the Companies Act, 2013. These accounting standards,
which were issued under the supervision of the Accounting Standards Board, try to
accommodate the IFRS rules into the Indian Accounting System.

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Excel sheet link for balance sheet, income statement and common size analysis for all 5 years:
https://csciitd-my.sharepoint.com/:x:/g/personal/cs1200494_iitd_ac_in/EZ7iRKfCiodJjZm3t23xUu4BbiSBsflF0eXtQJNziKvfBA?e=
kNdC0I

Segment Reporting Analysis:

1) Geographical Analysis:

31st MARCH 2022 31st MARCH 2021

Revenue by Geographical markets (including other operating revenue)

INDIA 13,422.80 12,386.94

OUTSIDE INDIA 713.46 749.20

14,136.26 13,136.14

Segment non-current assets (excluding financial instruments and deferred tax assets)

INDIA 2,218.30 1,871.49

OUTSIDE INDIA 216.77 222.59

2,435.07 2,094.08

The contribution from outside India towards the total revenue is 5-6% whereas rest comes
from the domestic market of India. Thus, the company has an established market position in
Indian industry and is also currently focusing on developing its international business by
capitalizing on its manufacturing footprint in Oman, Dubai and Nepal. BIL has a healthy
market share in Nepal and is currently in talks to establish facilities in Uganda and Egypt to
cater to the needs of neighboring countries and in turn enhance its international business
prospects. Rural markets account for a sizable share of the demand for biscuits in the country
and the company increased its access to about 23,000 rural preferred dealers (RPDs) as in
2021 from 7,000 RPDs as on March 31, 2015. This has also helped the company make more
money and given more money from rural areas, which make up a big part of the market.
2) Subsidiaries Analysis
As of 2022, BIL has 25 subsidiaries, and 15 of them work in India.
- Britannia Dairy Private Limited has consistently shown the highest profits, strongly
outperforming the second highest profit generating subsidiary, in all of the last 5 years.
However, no strong trend in the profit values of this subsidiary is noticeable.

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- On the other hand, Manna Foods Private Limited has usually generated the second
highest profits among subsidiaries operational in India in the last 5 years. Though their
numbers have been substantially lower than those of Britannia Dairy Private Limited, it
has shown a consistent growth trend in the past 4 years.
- Strategic Food International Co. LLC., operational in Dubai, has displayed a severely
turbulent performance; in 2018-19 it showed the highest loss among all the subsidiaries
whereas in 2020-21 it gave very significant profits.
- In the last 4 years, Britchip Foods Limited has recorded the maximum loss among all the
subsidiaries of Britannia Industries Ltd.
Balance Sheet Analysis

■ The company's current liabilities during FY20 stood at Rs 26 billion as compared to

Rs 19 billion in FY19, thereby witnessing an increase of 39%.
■ The company's current liabilities during FY21 stood at Rs 36 billion as compared to
Rs 26 billion in FY20, thereby witnessing an increase of 40.17%.
■ These two year’s balance sheets show maximum total current liabilities.
■ From our observation we see that borrowings have increased which is the major
reason for the significant increase in the total current liabilities.
■ Long-term debt stood at Rs 8 billion as compared to Rs 619 million during FY19, a
growth of 1137.2%.
■ In FY20, current assets increased by 4% to reach Rs 37 billion, while fixed assets
increased by 54% to reach Rs 41 billion.Overall, the assets and liabilities for FY20
were Rs 78 billion as opposed to Rs 62 million in FY19, representing a 26% increase.
Income Statement Analysis

● Operating income during the year rose 8.2% on a year-on-year (YoY) basis in the year
2021-2022, 12.57% on a year-on-year(YoY) bases in the year 2020-2021, 4.28% on a
year-on-year(YoY) bases in the year 2019-2020, 10.78% on a year-on-year(YoY)
bases in the year 2018-2019, 7.29% on a year-on-year(YoY) bases in the year
2017-2018. We see that the operating income rose the highest in the year 2021.
● Higher Than Industry Net Income:
o Over the last 5 years, net income has grown at a yearly rate of 11.51%, vs industry
average of 6.72%
o Net income is net earnings less net expenses. This is an important measure to show
how profitable a company is.
● Lower than Industry Revenue Growth:
o Over the last 5 years, revenue has grown at a yearly rate of 9.3%, vs industry average
of 12.81%
o A higher than industry revenue growth represents increased potential for the company
to increase the market share.

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● Increasing Market Share:

o Over the last 5 years, market share increased from 13.02% to 15.27%
o Market share is the percentage of an industry’s total sales going to a particular
company. It gives a general idea of the size of a company vs its competitors.
● Dividend Returns:
o Stock offers good dividend returns.
o A dividend is the distribution of reward from a portion of a company's earnings and
paid to its shareholders. Good dividend returns indicate good health and outlook of the
company.

Financial Ratios

Ratios Formula 2022 2021 2020 2019 2018

Short-Term Liquidity ratios

Accounts Receivables 𝑁𝑒𝑡 𝐶𝑟𝑒𝑑𝑖𝑡 𝑆𝑎𝑙𝑒𝑠 57.6 54.5 36.0 38.9 49.9
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠
Turnover

Inventory Turnover 𝑆𝑎𝑙𝑒 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 43.69 49.94 43.1 40.4 38.9

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠 𝑜𝑓 𝑓𝑖𝑛𝑖𝑠ℎ𝑒𝑑 𝑔𝑜𝑜𝑑𝑠

Current Ratio 𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 0.9 1.2 1.4 1.9 2.0
𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
(times)

Quick Ratio 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 − 𝑃𝑟𝑒𝑝𝑎𝑖𝑑 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 0.61 0.91 1.16 1.49 1.59
𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Long-Term Solvency Ratios

Net Debt-Equity ratio % 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 * 100 90.7 54.2 28.2 0 0.3
𝑇𝑜𝑡𝑎𝑙 𝑆𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟'𝑠 𝑒𝑞𝑢𝑖𝑡𝑦

Net Debt-Asset Ratio % 𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡 * 100 65.7 55.3 41.07 28.5 30.1
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Interest Coverage Ratio 𝐼𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥 17.1 25.3 30 1,115.4 1,115.4
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
(times)

Profitability Ratios

Profit Margin % 𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑇𝑎𝑥 * 100 11.7 13.9 13.1 10.5 9.9
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒

Operating Profit Margin % 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 * 100 14.4 17.6 14.7 14.6 13.8
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒

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Return on Equity % 𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑇𝑎𝑥 * 100 56.04 46.35 34.7 27.8 29.3
𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟'𝑠 𝐸𝑞𝑢𝑖𝑡𝑦

Return on Assets % 𝐼𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥 * 100 22.89 23.73 20.46 19.85 20.48
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

Basic Earnings per Share 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑝𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 66.56 73.12 61.75 46.71 78.96
𝑤𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝑎𝑣𝑔 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
(Rs)

Dil. Earnings per Share (Rs) 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 − 𝑝𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 66.56 73.09 61.73 46.68 78.92
𝑤𝑡𝑑 𝑎𝑣𝑔 # 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒𝑠 + 𝑐𝑜𝑛𝑣. 𝑜𝑓 𝑑𝑖𝑙 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠

Market Price and Dividend Ratios

Price-Earnings Ratio 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 51.2 46.6 48.8 65.9 62.7
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
(times)

Dividend Yield % 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑝𝑒𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 * 100 1.49 4.7 3.03 0.58 0.39
𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑜𝑓 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒

Dividend Payout % 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑝𝑒𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒 * 100 142 205 367 122 227
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒

COMPARISON OF THE FINANCIAL RATIOS WITH THE INDUSTRY AVERAGE:

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Descriptive analysis of financial ratios:

Short-Term Liquidity Ratios:
1. Account Receivables Turnover
The turnover increased with a compound annual growth rate of 3.65%, which signifies an
increase in the number of times that the company collects its average accounts
receivables. The change can be attributed to a steady increase in both the net and credit
sales over the past five years.
The industry average is 10.42 days. Though there has been a net increase in the credit
sales but the value is still less than the industry average. The majority of the company's
revenues are cash sales, and it is reluctant to issue credit to clients. The same pattern has
also been observed in previous years.
2. Inventory Turnover
The inventory turnover increased with a compound annual growth rate of 2.64% over the
past five years, which signifies an increase in the rate at which the inventory is getting
sold or replaced. The ratio has also witnessed a significant 12.5% decrease from the
previous year because an increase in the average inventory outperformed the increase in
net sales. The interest coverage ratio of a company states how easily a company can pay
its interest expense on outstanding debt. A higher ratio is preferable. But here, the interest
coverage ratio has only experienced a decline.
The industry average is 62. The company's inventory turnover is significantly lower than
the industry norm, indicating weak sales or possible overstocking. More production, less

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sales. The same pattern has been observed in previous years, and this is a serious problem
for the corporation.
3. Current Ratio
The steady decrease of the current ratio with a CAGR of 23.37% signifies uncertainty in
the company's ability to pay its short-term obligations. The company's current ratio fails
to attain the standard ratio and fluctuates year by year. The last reported value has fallen
below 1, which poses a severe insolvency risk to the company. The alarming decrease can
be explained by the heavy borrowings resulting in 15.86% increase in total current
liabilities and complemented by a 10.5% decrease in the total current assets from the
previous year.
The industry average is 1.77. The company's current ratio has been steadily declining,
falling from 2 in 2018 to 0.9 in 2022 and falling below the industry average for the first
time in 2020. This signifies that the company's total current obligations now exceed its
total current assets. A current ratio below 1 implies that the company lacks sufficient
liquid assets to satisfy its current liabilities. 2022 is the first year in which the value fell
by less than 1.
4. Quick Ratio
Similar to the Current Ratio, the quick ratio witnessed a significant decrease of 27.38%
compounded annually over the past years. The ratio of 0.69 signifies the company’s
inability to meet its short term obligations using its most liquid assets, and can be
alarming for the investors.
Similar to the current ratio, the company's quick ratio has been steadily declining, falling
from 1.59 in 2018 to 0.61 in 2022 and falling below the industry average for the first time
in 2022. 2021 was the first time value declined less than 1. The quick ratio indicates a
company's ability to fulfill its short-term obligations using only its most liquid assets.
Long Term Liquidity Ratios:
5. Debt-Equity Ratio
The 571.2% compounded annual growth rate of the Debt-Equity ratio suggests high
financial leverage and insolvency risk to the company. The company’s financial structure
changed significantly over the past 5 years as it became a highly leveraged company from
a 0 debt company.
The industry average is 93. The company's Net-Debt equity ratio improved significantly
from 0% in 2019 to 90% in 2022. In 2019, the company had no debt, but in 2020 it took
out loans and the debt-to-equity ratio continued to rise. This indicates that for every 1 rs
of equity, there is now 0.90 rs of debt.
6. Debt-Asset Ratio
There has been a steady increase (21.5% CAGR) in the Debt-Asset ratio, which signifies
increasing ownership of creditors in the company. Both the total assets and liabilities
have increased, but the change in liabilities outperformed the change in assets, thus
increasing the Debt-Asset ratio.

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The industry average is 51. The ratio of Net Debt to Assets has increased steadily from
28.5% in 2019 to 65.7% in 2022. In 2018-2019, the value of the same has exhibited a
little dip. The company's rising net-debt-to-asset ratio is a serious problem.
7. Interest Coverage Ratio
The Interest Coverage ratio decreased with a CAGR of 80.21% over the past 5 years,
which signifies that it is becoming increasingly difficult for the company to pay the
interest on its outstanding debt. This can be attributed to massive borrowings of the
company which led to increase in the interest expenses, but similar growth has not been
observed in the EBIT yet.
The industry average is 5.69. The company's Interest Coverage ratio has drastically
decreased from 1,115.4 in 2018 to 17.1 in 2022. This is the result of rising interest costs
resulting from an increase in debt.
Profitability Ratios:
8. Profit Margin %
Britannia witnessed 4.26% compounded annual growth in the profit margin, which
emphasizes on the company’s profitability and increasing money making capacity. But it
witnessed a 15.82% decrease as compared to previous years gross profit margin which
can be attributed to increase in the costs of raw material.
At all times, the company's profit margin has been above the industry average. This is a
positive indicator for the company. This indicates that the company earns more profit per
unit of revenue than other companies. There has been a net increase in the same since its
2018 value.
9. Return on Equity % (ROE):
The ROE measures the ability of a firm to generate profits from its shareholders' capital
in the company. It has been increasing steadily at a compound annual growth rate of 17%
which is a positive sign for the company. This is because both the total equity and net
profit decreased over the past year, but the decrease in the equity dominated the change.
The industry average is 7.4. The company's ROE% has improved over the previous few
years, and the company's value has consistently been significantly more than the industry
average. This indicates that the company is capable of transforming its equity into
earnings, indicating that it is performing well in business. This figure typically ranges
from 15 to 20, but for Britannia, it is 56.04, which is a very encouraging indicator.
10. Return on Assets % (ROA):
The ROA measures how efficiently the company uses its assets to generate earnings. The
ratio fluctuated over the past five years but there was a net increase of 2.82% CAGR. The
decrease compared to 2021 is primarily because of a decrease in both EBIT and the total
assets, where the change in EBIT outperformed the change in the total assets.The
industry average is 4.3. Return on assets is a profitability ratio that indicates a company's
capacity to create profit from its assets. This value has also remained relatively steady
over the previous decade and is significantly higher than the industry average.

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11. Basic and diluted Earnings Per Share (EPS):

The ratio decreased by 8.93% over the past years primarily because of a 9.78% decrease
in the net earnings and a 0.028% increase in the weighted average of the number of
common outstanding shares. EPS indicates how much money the company makes for its
each share and this recent decrease can be troubling from the investors point of view.
Market Price and Dividend Ratios:
12. Price-Earnings Ratio:
The PE Ratio took a major hit of 25.9% in the year 2020, because of the pandemic which
had caused global instability in the financial markets. In the past 3 years, the market price
has recovered from its bottoms and the ratio increased by 4.92% CAGR over the past 3
years. This can be attributed to the increase in the market price of the company.
The industry average is 17.89. The PE ratio indicates whether a stock's current market
price is pricey or inexpensive. A P/E ratio of 51.2 is high relative to the historical stock
market. A higher P/E ratio indicates that investors are willing to pay a higher share price
today in anticipation of future growth.
13. Dividend Yield and Payout Ratio
The company has a pleasing dividend payout history for the investors, which it
maintained even during the pandemic crisis. The ratios decreased from the previous years
primarily because of a decrease in the amount of dividend distributed.
The industry average is 0.47. The company's dividend payout has always been higher
than the industry average, and its market capitalization is bigger than 1, indicating that it
pays out more dividends than its earnings can support.
Segment Reporting Analysis:
1) Geographical Analysis:

31st MARCH 2022 31st MARCH 2021

Revenue by Geographical markets (including other operating revenue)

INDIA 13,422.80 12,386.94

OUTSIDE INDIA 713.46 749.20

14,136.26 13,136.14

Segment non-current assets (excluding financial instruments and deferred tax assets)

INDIA 2,218.30 1,871.49

OUTSIDE INDIA 216.77 222.59

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2,435.07 2,094.08

The contribution from outside India towards the total revenue is 5-6% whereas rest comes
from the domestic market of India. Thus, the company has an established market position in
Indian industry and is also currently focusing on developing its international business by
capitalizing on its manufacturing footprint in Oman, Dubai and Nepal. BIL has a healthy
market share in Nepal and is currently in talks to establish facilities in Uganda and Egypt to
cater to the needs of neighboring countries and in turn enhance its international business
prospects. Rural markets account for a sizable share of the demand for biscuits in the country
and the company increased its access to about 23,000 rural preferred dealers (RPDs) as in
2021 from 7,000 RPDs as on March 31, 2015. This has also helped the company make more
money and given more money from rural areas, which make up a big part of the market.
2) Subsidiaries Analysis
As of 2022, Britannia Industries Limited has 25 subsidiaries, and 15 of them work in India.
- Britannia Dairy Private Limited has consistently shown the highest profits, strongly
outperforming the second highest profit generating subsidiary, in all of the last 5 years.
However, no strong trend in the profit values of this subsidiary is noticeable.
- On the other hand, Manna Foods Private Limited has usually generated the second
highest profits among subsidiaries operational in India in the last 5 years. Though their
numbers have been substantially lower than those of Britannia Dairy Private Limited, it
has shown a consistent growth trend in the past 4 years.
- Strategic Food International Co. LLC., operational in Dubai, has displayed a severely
turbulent performance; in 2018-19 it showed the highest loss among all the subsidiaries
whereas in 2020-21 it gave very significant profits.
- In the last 4 years, Britchip Foods Limited has recorded the maximum loss among all the
subsidiaries of Britannia Industries Ltd.
Competitor Analysis of Britannia
Competitors of Britannia are: TATA consumer products, Parle, Amul, Nestle, Mother dairy

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

Brand portfolio:
Covers 30% market share
-Offers bakery products for all
income groups
Overdependence on biscuit Upcoming Dairy Increasing Price of the raw
business: products materials:
-75% of the revenue of -decline in the profit margin
Britannia comes from the
biscuit business

Penetration into the market
and distribution:
large market network coverage
-vast distribution system
Indistinguishable products:
produce similar products
bourbon biscuit is
manufactured by both Parle
and Brittania
Enter into foreign Buyer’s power increasing:
markets: Penetrating -increased brand switching
the foreign markets due to similar products of
recognize itself competitors
globally

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Serving Indian markets for Dairy business struggles: E-commerce: Increasing competition:
the last 128 years add only 5% to the total -Increase in purchases -Similar products of
revenue online competitors

Britannia is well-known and has a huge global presence. The results of Britannia's SWOT
analysis showed that the company has a strong reputation for reliability. However, the main
problem is that the R&D department needs to be improved because of the increased market
rivalry.
A company must constantly put its best marketing efforts in front of the client if it wants to
succeed in the market. Digital marketing has become one of the most important ideas for anyone
interested in the market today. With the help of digital marketing tools like SEO, SMM, and
others, the company may effectively reach a larger audience.

Interpretations/ Inferential Analysis

Established market position in domestic FMCG industry:
Britannia Industries Limited (BIL) stays at the top of the domestic FMCG market thanks to
strong brands like Good Day, Marie Gold, Tiger, Milk Bikis, and NutriChoice. BIL is a
significant player in the Indian biscuit market, with a market-leading presence in categories like
cookies, Marie, and milk biscuits. This has helped the business gain a bigger share of the market
over the past few years. Along with biscuits, BIL also holds a strong market share in the areas of
cake, rusk, bread, and cream wafers, which supports its business potential.
Improving focus on diversification/innovation:
Currently, biscuits account for about 75% of the company's sales, with the remaining 20%
coming from other product categories such bread, cake, rusk, dairy (about 5%), and newer ones
like cream wafers, croissants, milk shakes, and salty snacks, which supports the company's
diversification. BIL introduced Milk Bikis 100% Atta in Q1 FY2022, and it plans to increase its
footprint across all of India (vs. current concentration in South Indian states). With a focus on
expanding its target market segment from consumers of milk biscuits to the larger milk + glucose
segment, the brand was relaunched. For the Milk Bikis relaunch, BIL has planned one of the
most extensive visibility campaigns in company history. It is also putting more effort into
launching new products and coming up with new ideas for products to increase sales in its
high-end categories.
Strong financial profile characterized by healthy cash balances, robust debt protection metrics,
minimal working capital intensity and strong free cash flows:
As of March 31, 2021, BIL has cash on hand, liquid investments totaling Rs. 1,604.6 crore, and
long-term investments totaling Rs. 1,596.3 crore in non-group entities. Due to higher working
capital utilization, higher commercial paper (CP) issuance to support the expansion of
operations, and issuance of bonus debentures to its shareholders, its debt increased to Rs. 2,105.7
crore as of March 31, 2021 from Rs. 1,537.6 crore as of March 31, 2020. On June 3, 2021, the
firm additionally offered bonus debentures to its shareholders. The company saw a cash outflow
of over Rs. in Q1 FY 2022. 1,744 crore will be used to pay dividends.This shows BIL's credit

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profile will stay strong, even though dividends will use up a lot of cash and total debt will go up.
This is because BIL is expected to bring in a lot of cash.
Profit margins exposed to fluctuations in raw material prices:
Due to significant price increases in RPO (+49% YoY), milk (13% YoY), fats, and crude oil in
Q1 FY2022, the gross margin shrank. Additionally, the company has been implementing internal
cost-efficiency measures, which have strengthened its margins, to lessen the impact from rising
raw material costs. BIL has also started rolling out pricing increases as a way to partially
mitigate the effects of RM price inflation.
Liquidity Ratios:
As of March 31, 2022, BIL has significant liquidity, with cash balances, liquid investments
totaling Rs. 1,604.6 crore, and long-term investments totaling Rs. 1,596.3 crore in non-Group
entities. The company experienced a cash outflow of Rs. 2,823.8 crore in FY2021 and Q1
FY2022, and more than Rs. 1,744 crore went toward dividend payout. Material increase is the
basic reason for deterioration of company’s liquidity and credit profile.
Dupont Analysis:
𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑆𝑎𝑙𝑒𝑠
1. 𝑅𝑂𝐴 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
= 𝑆𝑎𝑙𝑒𝑠
* 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
𝐸𝐵𝐼𝑇 𝐸𝐵𝐼𝑇 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
2. 𝑅𝑂𝐸 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟'𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
= 𝑆𝑎𝑙𝑒𝑠 * 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 * 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟'𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
𝐸𝐵𝐼𝑇 𝑆𝑎𝑙𝑒𝑠
𝑆𝑎𝑙𝑒𝑠
= 0. 153 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠
= 1.789
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑆𝑡𝑜𝑐𝑘ℎ𝑜𝑙𝑑𝑒𝑟'𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
= 2.516 𝑆𝑎𝑙𝑒𝑠
= 0. 115

Conclusions
The study highlights that the financial performance of Britannia Industries Ltd is satisfactory.
This study helped us know the financial strength and weakness of the company. The financial
statements of the company were analyzed and interpreted with the help of the balance sheet and
profit & loss account of the last 5 years 2018-22. The company has a scope of improvement in
the future.

Suggestions
A company should try to get the most out of its working capital so it can make sales and increase
its activity ratio. This will help it keep a good amount of cash on hand over the years.
Company has to concentrate on debt capital to have a smooth running of the company.
The company must start using its assets efficiently as there has been a decrease in the total asset
turnover ratio year by year. It will be better if the company decreases its current liability to
improve the liquidity position.
The company can use effective cost control methods for future growth. The company should
keep an eye on its variable costs and look for ways to cut its production costs. This will increase
the profitability of the company.

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Bibliography and References

http://britannia.co.in/pdfs/annual_report/Annual%20Report%20for%20FY%202021-22%20of%
20Britannia%20Industries%20Limited.pdf
http://britannia.co.in/pdfs/annual_report/Annual-Report-2020-21.pdf
http://britannia.co.in/pdfs/annual_report/Annual-Report-2019-20.pdf
http://britannia.co.in/pdfs/annual_report/Annual-Report-2018-19.pdf
http://britannia.co.in/pdfs/annual_report/Annual-Report-Britannia-2018.pdf
https://www.moneycontrol.com/financials/britanniaindustries/results/yearly/BI

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