Report on

Analysis of
Britannia Industries LTD.
INTRODUCTION
Britannia Industries Limited is one of India's leading food companies, specializing in the production and distribution
of a wide range of bakery and dairy products. Founded in 1892, Britannia has a rich heritage and has played a
significant role in shaping the country's food industry over the decades.
Corporate Overview:
 Founding Year: Britannia was established in 1892 in Kolkata, India, by a group of British businessmen.
 Headquarters: The company's headquarters are currently located in Bangalore, Karnataka, India.
 Industry Presence: Britannia is a prominent player in the fast-moving consumer goods (FMCG) sector,
specifically in the food and beverage industry.
 Product Portfolio: The company is renowned for its diverse product portfolio, which includes biscuits, bread,
cakes, dairy products, and more. Some of its popular brands include Good Day, Tiger, Marie Gold, and Milk
Bikis.
Key Achievements:
 Market Leadership: Britannia has been a market leader in the Indian biscuit industry for several years,
maintaining a strong presence in both urban and rural markets.
 Innovation: The company has consistently focused on innovation to meet changing consumer preferences.
Britannia has introduced a variety of new products and flavors to cater to diverse tastes.
 Quality and Standards: Britannia is known for maintaining high-quality standards in its manufacturing
processes, ensuring that its products meet stringent quality and safety norms.
Global Presence:
 While Britannia's roots are deeply embedded in India, the company has expanded its reach internationally.
Its products are exported to various countries, contributing to its global footprint.
Sustainability Initiatives:
 Britannia has taken strides in adopting sustainable and environmentally friendly practices. The company has
implemented initiatives to reduce its carbon footprint, conserve water, and promote responsible sourcing.
Corporate Social Responsibility (CSR):
 Britannia is actively involved in CSR activities, contributing to community development, education, and
healthcare. The company demonstrates a commitment to social responsibility through various initiatives
aimed at making a positive impact on society.
Financial Performance:
 Britannia's financial performance is indicative of its robust business model and strategic management. The
company has consistently demonstrated growth and profitability in its financial reports.
In conclusion, Britannia Industries Limited stands as a stalwart in the Indian food industry, with a legacy that spans
over a century. Its commitment to quality, innovation, and social responsibility has helped it maintain a strong
position in the market, both domestically and internationally.
 Capital Structure of Britannia Industries ltd.
Year Debt (Total) Debt (Long term debt) Equity Debt to Equity* Debt to Equity Ratio**
Mar-14 986.7 28.27 853.46 0.0331 1.1561
Mar-15 1222.8 20.35 1235.62 0.0165 0.9896
Mar-16 1364.24 21.54 1700.16 0.0127 0.8024
Mar-17 1114.16 24.74 2581.98 0.0096 0.4315
Mar-18 1392.02 25.99 3235.28 0.0080 0.4303
Mar-19 1613.52 31.16 4039.45 0.0077 0.3994
Mar-20 2978.69 763.63 4274.65 0.1786 0.6968
Mar-21 4096.48 768.72 3319.53 0.2316 1.2341
Mar-22 4600.41 750.94 2402.54 0.3126 1.9148
Mar-23 5457.319 1611.93 3181.15 0.5067 1.7155
* represents long term debt
** represents total debt

Let's analyze the capital structure of Britannia Industries Ltd. based on the provided data:
1. Total Debt, Long-Term Debt, and Equity:
 The total debt of Britannia Industries has been increasing consistently over the years, from 986.7 in
March 2014 to 5457.319 in March 2023. This suggests that the company has been relying more on
debt to finance its operations and growth.
 Long-term debt has also increased over the years, indicating that a significant portion of the debt is
of a long-term nature. Long-term debt is often used for capital expenditures, acquisitions, or other
long-term investments.
 Equity has also shown an increasing trend, although at a slower pace compared to total debt. This
implies that the company has been financing its growth through a combination of debt and equity.
2. Debt to Equity Ratio:
 The Debt to Equity ratio is a key metric that indicates the proportion of debt and equity in a
company's capital structure.
 The Debt to Equity ratio has fluctuated over the years, with a notable increase in the ratio from
March 2020 to March 2023. This indicates a higher reliance on debt relative to equity in the later
years.
3. Observations:
 The company had a relatively conservative capital structure in the earlier years (March 2014 to
March 2016) with lower Debt to Equity ratios.
 There was a significant increase in debt in March 2020, which coincided with a spike in the Debt to
Equity ratio. This could be attributed to the company's response to market conditions, expansion
plans, or other strategic decisions.
 The Debt to Equity ratio continued to rise in the subsequent years (March 2021 to March 2023),
indicating a higher level of financial leverage. High leverage can amplify both returns and risks.
 Long-term debt represents a substantial portion of the total debt, suggesting that the company has
been using long-term financing for its investment needs.
4. Implications:
 A higher Debt to Equity ratio indicates a higher level of financial risk. While it can amplify returns
during good times, it can also lead to higher financial costs and risks during challenging economic
conditions.
 Investors and creditors typically assess the Debt to Equity ratio to gauge a company's ability to meet
its financial obligations and the potential impact on shareholder returns.
  Management's decision to increase debt should be evaluated in the context of the company's growth
plans, industry conditions, and the overall economic environment.
In conclusion, Britannia Industries has seen an increase in its debt levels, particularly in the later years, leading to a
higher Debt to Equity ratio. Investors should carefully assess the implications of this capital structure on the
company's financial health and make informed investment decisions based on their risk tolerance and investment
objectives.

Dividend Decision
Year Earning Per Share(RS) Retention Rate Dividend Paid EBIT(RS)
2014 30.87 61.08 12 47.36
2015 51.9 69.17 16 61.84
2016 62.44 67.96 20 95.26
2017 70.31 71.55 22 104.38
2018 78.96 72.13 25 120.5
2019 46.71 73.25 15 71.48
2020 61.75 71.55 35 81.27
2021 73.12 -61.34 157.5 102.83
2022 66.56 -11.93 56.5 94.59
2023 88.82 36.38 72 114.87

Let's analyze the dividend decisions of Britannia Industries Ltd. based on the provided data, considering the earnings
per share (EPS), retention rate, dividend paid, and earnings before interest and tax (EBIT):
1. Earnings Per Share (EPS):
 The EPS represents the portion of a company's profit allocated to each outstanding share of common
stock.
 Britannia's EPS has varied over the years, reaching its peak in 2018. There was a decline in 2019,
followed by an increase in 2020 and subsequent years.
2. Retention Rate:
 The retention rate indicates the percentage of earnings retained by the company rather than
distributed as dividends.
 The retention rate has fluctuated, with a notable decrease in 2021 and a subsequent increase in
2022 and 2023.
3. Dividend Paid:
 Dividend paid is the amount distributed to shareholders as dividends.
 Britannia's dividend payments have shown a general increasing trend, with a significant spike in
2021.
4. Earnings Before Interest and Tax (EBIT):
 EBIT is an indicator of a company's profitability from its core operations, excluding interest and taxes.
 Britannia's EBIT has generally increased over the years, reflecting growth and profitability in its core
operations.
5. Observations:
 The company has increased its dividend payments over the years, with a substantial increase in 2021.
This significant increase in dividends in 2021 does not align with the trend in earnings or the
retention rate.
 The retention rate turned negative in 2021, indicating that the company paid out more in dividends
than it earned in that year. Negative retention rates can be a concern, as they imply that the
company is financing dividends through other means, such as debt.
 Despite the negative retention rate in 2021, the company continued to pay substantial dividends.
This suggests that the company might have used reserves or other financing sources to fund the
dividend payments.
  In 2022, there was a decrease in both the dividend paid and the retention rate, which could be a
response to the substantial increase in dividends in the previous year.
 In 2023, the dividend paid increased again, but the retention rate also turned positive. This indicates
a more balanced approach between distributing dividends and retaining earnings.
6. Implications:
 The negative retention rate in 2021 raises questions about the sustainability of the high dividend
payout. Investors should closely examine the company's financial statements and management
commentary to understand the reasons behind this decision.
 The increase in dividend payments in 2021 could have been driven by various factors, such as a one-
time event, strategic decisions, or expectations of future earnings growth.
 Investors should assess whether the company's dividend policy aligns with its growth prospects,
financial health, and overall strategic objectives.
 Management decisions regarding dividend payouts should be evaluated in the context of the
company's overall financial strategy and the need for reinvestment in the business.
In conclusion, Britannia Industries has experienced fluctuations in earnings, retention rates, and dividend payments
over the years. Investors should closely examine the reasons behind these changes and assess the company's ability
to maintain a sustainable and balanced dividend policy.

FInancing Decision
Year Earning Per Share(RS) EBIT(RS)
2014 30.87 47.36
2015 51.9 61.84
2016 62.44 95.26
2017 70.31 104.38
2018 78.96 120.5
2019 46.71 71.48
2020 61.75 81.27
2021 73.12 102.83
2022 66.56 94.59
2023 88.82 114.87

The financing decision involves how a company chooses to fund its operations and investments, considering factors
like debt and equity. Let's analyze the financing decision for Britannia Industries Ltd. based on the provided data on
Earnings Per Share (EPS) and Earnings Before Interest and Tax (EBIT):
1. Earnings Per Share (EPS):
 EPS is a measure of a company's profitability on a per-share basis, calculated as net profit divided by
the number of outstanding shares.
 Britannia's EPS has shown a generally increasing trend over the years, indicating improved
profitability. The peak in 2018 is followed by a decline in 2019, and then a recovery in 2020 and
subsequent years.
 The increasing trend in EPS suggests that the company has been generating higher profits on a per-
share basis.
2. Earnings Before Interest and Tax (EBIT):
 EBIT represents a company's operating profit before deducting interest and taxes. It provides insights
into the company's core operating profitability.
 Britannia's EBIT has also shown a consistent upward trend over the years, indicating that the
company's operating performance has been improving.
 The growth in EBIT suggests that the company's core operations are becoming more profitable.
 3. Analysis:
 The positive trends in both EPS and EBIT generally indicate that Britannia Industries has been able to
generate higher profits and improve its core operating profitability over the analyzed period.
 The declining trend in EPS in 2019 might be attributed to specific factors affecting profitability during
that period. Further analysis is needed to understand whether it was a one-time event or part of a
broader trend.
 The recovery in EPS in 2020 and subsequent years suggests that the company has taken corrective
measures or experienced improved business conditions.
 The growth in EBIT implies that the company's operating decisions and efficiency have contributed
positively to its profitability. Higher EBIT can provide the company with more resources for financing
its operations and investments.
4. Implications:
 The positive trends in EPS and EBIT are generally favorable for financing decisions, as they indicate a
healthy and growing business.
 The company may have more options for financing, given its improving profitability. It could consider
raising funds through equity or debt, depending on its strategic goals and the prevailing market
conditions.
 Investors and financial analysts may view the positive trends as a sign of financial health, but they
should also consider other financial metrics and the overall economic environment.
 Management decisions regarding financing (debt or equity issuance) should align with the company's
growth plans, risk tolerance, and cost of capital considerations.
In conclusion, Britannia Industries has shown positive trends in both EPS and EBIT, suggesting an improvement in
profitability and operating performance. The company's financing decisions should be evaluated based on these
positive trends and the overall financial strategy.

Ratio analysis of Britannia industries ltd.

Current Quick
Year Net profit Margin Inventory Turnover Ratio
ratio Ratio
Mar-14 0.9 0.51 5.86 17.19
Mar-15 1.19 0.9 8.67 20.76
Mar-16 1.06 0.77 9.42 20.7
Mar-17 1.84 1.29 10.02 13.96
Mar-18 2.03 1.59 10.18 15.65
Mar-19 1.94 1.49 10.7 14.58
Mar-20 1.45 1.16 13.5 17.34
Mar-21 1.21 0.91 14.21 12.49
Mar-22 0.93 0.61 11.98 5.68
Mar-23 1.15 0.87 13.69 6.09

Let's analyze the ratio trends for Britannia Industries Ltd. based on the provided data:
1. Current Ratio:
 The current ratio measures the company's ability to cover its short-term liabilities with its short-term
assets.
 Britannia's current ratio has shown fluctuations over the years. It was relatively low in March 2014
but increased significantly in March 2017 and remained relatively stable until March 2019.
  However, there has been a declining trend since March 2019, reaching its lowest point in March
2022. A declining current ratio may indicate potential liquidity challenges.
2. Quick Ratio:
 The quick ratio (acid-test ratio) is a more stringent measure of short-term liquidity as it excludes
inventory from current assets.
 Similar to the current ratio, the quick ratio shows a decline over the years, indicating a potential
decrease in the company's ability to meet its short-term obligations using its most liquid assets.
3. Net Profit Margin:
 Net profit margin is a profitability ratio that measures the percentage of revenue that remains as
profit after all expenses are deducted.
 Britannia's net profit margin has generally shown an increasing trend, reaching its peak in March
2022. This suggests improving profitability over the years.
4. Inventory Turnover Ratio:
 The inventory turnover ratio measures how many times a company's inventory is sold and replaced
over a period.
 Britannia's inventory turnover ratio has fluctuated but generally remained within a certain range. A
higher ratio indicates efficient inventory management.
 The ratio decreased in March 2022 and March 2023, suggesting a potential slowdown in inventory
turnover.
5. Observations:
 The declining trend in both the current and quick ratios from March 2019 to March 2022 raises
concerns about the company's short-term liquidity. Investors and creditors may be more cautious
during this period.
 The net profit margin's upward trend indicates improving profitability, which is a positive sign for
shareholders.
 The decrease in the inventory turnover ratio in the last two years may suggest challenges in selling
inventory efficiently. It's important to understand the reasons behind this trend, such as changes in
demand or production issues.
6. Implications:
 A declining current and quick ratio may indicate potential difficulties in meeting short-term
obligations. It's crucial to investigate the reasons behind this trend and assess the company's liquidity
management.
 The improving net profit margin is positive for shareholders, reflecting the company's ability to
generate profits from its operations.
 The decrease in the inventory turnover ratio may warrant further investigation into inventory
management practices and potential impacts on working capital.
In conclusion, while Britannia Industries Ltd. has shown improvements in profitability, there are concerns about
short-term liquidity and inventory turnover. Investors should conduct a thorough analysis and consider both positive
and negative aspects when making investment decisions.
 CASH FLOW OF BRITANNIA INDUSTRIES LTD. (in Rs. Cr.)
Years Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit/Loss
Before
542.62 882.61 1131.56 1251.16 1445.2 1716.11 1908.26 2379.44 2145.12 2840.1
Extraordinary
Items And Tax
Net CashFlow
From Operating 614.51 515.33 877.69 401.94 1182.58 1113.65 1659.68 1778.27 1206.09 2442.1
Activities
Net Cash Used
- -
In Investing -227.34 -384.29 -659.37 -115.49 -882.78 -831.1 500.64 930.63
1568.34 1386.4
Activities
Net Cash Used
-
From Financing -325.46 -168.11 228.29 -283.8 -304.27 -326.26 -94.25 -2222.84 -2211.71
1047.8
Activities
Net Inc/Dec In
Cash And Cash 61.71 -37.07 -9.97 2.65 55.53 -43.71 -2.91 56.07 -74.99 7.79
Equivalents
Cash And Cash
Equivalents -7.02 54.69 17.62 8.66 11.31 66.84 23.13 20.22 76.29 1.3
Begin of Year
Cash And Cash
Equivalents End 54.69 17.62 7.65 11.31 66.84 23.13 20.22 76.29 1.3 9.09
Of Year

Let's analyze the cash flow statement of Britannia Industries Ltd. based on the provided data:

1. Net Cash Flow from Operating Activities:

 Net cash flow from operating activities represents the cash generated or used by the company's core
operating activities.

 Britannia's net cash flow from operating activities has been positive in all years, indicating that the
company is generating cash from its core business operations.

 The trend shows a general increase over the years, reflecting improved operational cash generation.

2. Net Cash Used in Investing Activities:

 Net cash used in investing activities represents the cash used for investing in assets such as property,
plant, equipment, or other investments.

 There is variability in the net cash used in investing activities. Negative values indicate cash generated
from investing activities in certain years, possibly from the sale of investments or assets.

3. Net Cash Used from Financing Activities:

 Net cash used from financing activities reflects cash flows related to the company's financing, such as
issuing or repurchasing stock, issuing or repaying debt, and paying dividends.

 The pattern in net cash used from financing activities shows variability. Negative values indicate cash
generated from financing activities, possibly from debt repayment or other financing sources.

4. Net Increase/Decrease in Cash and Cash Equivalents:

  The net increase/decrease in cash and cash equivalents represents the overall change in the
company's cash position during the period.

 There is variability in the net increase/decrease in cash and cash equivalents. A positive value
indicates an increase in cash, while a negative value indicates a decrease.

 In the last year (Mar-23), there is a positive net increase in cash and cash equivalents.

5. Cash and Cash Equivalents Begin and End of Year:

 Cash and cash equivalents at the beginning of the year represent the cash position at the start of the
fiscal year.

 Cash and cash equivalents at the end of the year represent the cash position at the end of the fiscal
year.

 The ending cash and cash equivalents in Mar-23 are positive at 9.09 Rs. Cr, indicating that the
company has cash on hand.

6. Observations:

 The positive net cash flow from operating activities suggests that Britannia has been successful in
generating cash from its core business operations.

 The variability in net cash used in investing activities and net cash used from financing activities
indicates that the company has been engaged in various investing and financing activities over the
years.

 The positive net increase in cash and cash equivalents in the most recent year (Mar-23) is a positive
sign, indicating an improvement in the company's overall cash position.

7. Implications:

 Positive cash flow from operating activities is generally considered a positive sign, as it indicates the
company's ability to generate cash from its core operations.

 Variability in cash flows from investing and financing activities is normal, and the specific nature of
these activities should be analyzed to understand their impact on the company's financial health.

 Ending the fiscal year with positive cash and cash equivalents suggests that the company has
sufficient liquidity.

 Investors and analysts should examine the reasons behind significant changes in cash flow
components and assess the company's ability to maintain positive cash flows in the future.

In conclusion, Britannia Industries Ltd. has generally shown positive cash flows from operating activities, engaged in
various investing and financing activities, and maintained positive cash and cash equivalents at the end of the fiscal
year. These factors indicate a reasonable level of financial health, but further analysis is recommended to understand
the specific drivers behind the cash flow patterns.
 COST OF CAPITAL OF BRITANNIA INDUSTRIES LTD.
Years 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
WACC (Wt Avg
0.074 0.087 0.076 0.087 0.101 0.09 0.103 0.09 0.082 0.084
cost of capital)
Cost Of Equity
0.101 0.104 0.099 0.104 0.103 0.094 0.106 0.094 0.083 0.096
(CAPM)
Cost of Debt 0.0433 0.061 0.0387 0.0384 0.0431 0.0282 0.0319 0.0266 0.058 0.0314
Weight of Debt 0.458 0.403 0.373 0.256 0.0314 0.0497 0.0411 0.056 0.0372 0.188
Weight of
0.542 0.597 0.627 0.744 0.969 0.95 0.959 0.944 0.963 0.812
Equity

Let's analyze the cost of capital components for Britannia Industries Ltd. based on the provided data:

1. Weighted Average Cost of Capital (WACC):

 WACC is the weighted average of the cost of equity and the after-tax cost of debt, with weights
representing the proportion of each component in the company's capital structure.

 Britannia's WACC has varied over the years, ranging from 7.4% in 2023 to 10.3% in 2017.

 The decreasing trend in WACC from 2019 to 2023 is generally positive, as it indicates a potential
reduction in the overall cost of financing for the company.

2. Cost of Equity (CAPM):

 The cost of equity is the return required by equity investors to compensate for the risk associated
with holding equity in the company. It is often calculated using the Capital Asset Pricing Model
(CAPM).

 Britannia's cost of equity has fluctuated over the years, ranging from 8.3% in 2015 to 10.4% in 2022.

 The cost of equity is influenced by factors such as market conditions, perceived risk, and the
company's financial performance.

3. Cost of Debt:

 The cost of debt is the interest rate the company pays on its debt. It represents the cost of borrowing
for the company.

 Britannia's cost of debt has shown variability, ranging from 2.66% in 2016 to 6.1% in 2022.

 The cost of debt is generally lower than the cost of equity, reflecting the lower risk associated with
debt financing compared to equity.

4. Weight of Debt and Weight of Equity:

 The weights of debt and equity represent the proportion of the company's capital structure
attributed to debt and equity, respectively.

 Britannia's capital structure has evolved over the years, with varying weights of debt and equity.

 The company has generally had a higher weight of equity compared to debt, indicating a reliance on
equity financing.

5. Analysis:
  The decreasing trend in WACC is a positive sign, suggesting that Britannia has been successful in
reducing its overall cost of capital. This could be due to factors such as improved financial
performance or favorable market conditions.

 The fluctuation in the cost of equity is normal and reflects changes in market conditions and
investors' perceptions of risk. The company should be mindful of maintaining a balance between risk
and return.

 The variability in the cost of debt suggests that the company has faced different interest rate
environments and financing conditions over the years.

 The higher weight of equity in the capital structure indicates a preference for equity financing, which
may be considered a conservative approach. However, the cost of equity is typically higher than the
cost of debt.

6. Implications:

 A lower WACC is generally favorable, as it indicates a lower overall cost of capital for the company.
This can enhance the company's financial flexibility and attractiveness to investors.

 The cost of equity is a critical factor in WACC and is influenced by various market dynamics. It's
essential for the company to monitor and manage factors affecting the cost of equity.

 The company's preference for equity financing aligns with a conservative approach, but it's
important to evaluate the optimal capital structure that balances cost and risk.

 The company should consider the cost of capital when making investment decisions, as projects with
returns above the WACC are generally considered value-enhancing.

In conclusion, Britannia Industries has shown fluctuations in the cost of capital components over the years. The
decreasing trend in WACC is positive, indicating effective management of the overall cost of capital. The company's
financing decisions and cost of capital are influenced by various market and internal factors that should be carefully
considered in financial analysis and decision-making.

Conclusion
In conclusion, the analysis of Britannia Industries Ltd. provides insights into various aspects of the company's
financial performance, capital structure, dividend decisions, financing choices, ratio trends, and cash flow. Here are
the key takeaways:

1. Financial Performance:

 Britannia has demonstrated growth and profitability in its financial reports, with a positive trend in
earnings per share (EPS) and earnings before interest and tax (EBIT).

 The company's commitment to innovation, quality, and sustainability has contributed to its market
leadership and global presence.

2. Capital Structure:

 The capital structure analysis reveals an increasing trend in total debt over the years, with a notable
rise in the Debt to Equity ratio in recent years.

 Long-term debt represents a substantial portion of the total debt, indicating the use of long-term
financing for investment needs.
  The higher Debt to Equity ratio in the later years raises considerations about the company's financial
risk and management decisions.

3. Dividend Decisions:

 Britannia's dividend decisions show variability in dividend payouts, retention rates, and earnings per
share.

 The negative retention rate in 2021 raises questions about the sustainability of the high dividend
payout, and investors should investigate the reasons behind this decision.

4. Financing Decision:

 Positive trends in EPS and EBIT suggest an improvement in profitability and operating performance,
providing the company with more options for financing.

 Management decisions regarding financing should align with the company's growth plans, risk
tolerance, and cost of capital considerations.

5. Ratio Analysis:

 While the net profit margin has shown an increasing trend, concerns arise from declining current and
quick ratios, indicating potential challenges in short-term liquidity.

 The decrease in the inventory turnover ratio warrants further investigation into inventory
management practices.

6. Cash Flow:

 Positive net cash flow from operating activities reflects the company's ability to generate cash from
core operations.

 Variability in cash flows from investing and financing activities is normal, and positive ending cash
and cash equivalents indicate sufficient liquidity.

7. Cost of Capital:

 The decreasing trend in Weighted Average Cost of Capital (WACC) is positive, indicating a potential
reduction in the overall cost of financing.

 Fluctuations in the cost of equity and cost of debt are influenced by market conditions, and the
company should carefully manage these components.

In summary, Britannia Industries has exhibited strengths in financial performance and global presence, but challenges
such as increasing debt levels, dividend decisions, and liquidity concerns should be carefully monitored. Investors and
stakeholders should conduct a comprehensive analysis, considering both positive and negative indicators, to make
informed decisions based on the company's financial health and strategic direction.