GITAM INSTITUTE OF MANAGEMENT

REPORT ON BRITANNIA

STRATEGIC MANAGEMENT SUBMITTED BY: Bernali (1225111206) Chaitanya Deep (1225111208) Mamata (1225111229) Priyanka V (1225111233) Sudarshana P (1225111254) Vamsee Krishna A (1225111261) 3/25/2012

Introduction: Britannia Industries (Britannia or the company) is engaged in the manufacture and distribution of bakery and dairy products like biscuits, bread, cakes and rusks; and milk, butter and cheese, among others The company primarily operates in India. It is headquartered in Bangalore, India and employs about 2010 people. Britannia Industries is a wholly owned subsidiary of The Bombay Burmah Trading & is a leading player in the Indian biscuits industry. The company operates in the Indian and overseas market through its subsidiaries, joint ventures and associates. The company's operations in India is managed by International Bakery Products, TC Balam, TamilNadu; J B Mangharam Foods, Gwalior, Madhya Pradesh; Manna Foods, Kolkata, West Bengal; Ganges Vally Foods, Kolkata, West Bengal; and Sunrise Biscuit, Guwahati, Assam. The company markets its biscuit products in India under the brand names of Tiger, Good Day, 50-50, Marie Gold, Treat, Milk Bikis, Nutri Choice, Time Pass, Pure Magic, Little Hearts, Nice Time, Bourbon and Greetings. Bread products are sold under the Premium Bakes, the companys white sandwich bread brand. Cake products are sold under the Premium Bakes, Cakes and Rusks brands. The company also offers 'Cup Cakes' in its cakes category. Britannia New Zealand Foods, the joint venture of Britannia with Fonterra Co-operative Group of New Zealand, markets and sells dairy products comprising cheese, dairy whitener, curd, butter and clarified butter. These products are sold under the Britannia Milkman brand. Britannia also operates in the premium bakery products business through its wholly-owned subsidiary, Daily Bread Gourmet Foods (Daily Bread).The subsidiary manufactures and retails a range of breads including French bread, Italian breads, Italian white breads, Italian sandwiches, rolls, multi-grains, pastries, bagels and a range of ultra premium health breads. In addition to this, Daily Bread also offers doughnuts, cheesecakes, mousse cakes, fruit cakes, fruit tarts, pastries, brownies, cookies and Belgian pralines and truffles. These products are marketed under Daily Bread brand name in India. In addition to this, Deluca, a division of Daily Bread, offers a wide range of gelato, sorbet, gelato cakes, sundaes, and desserts. Besides, the subsidiary operates Daily Brew espresso bars serving a variety of coffee, tea and light snacks. The companys international operations are also managed by several subsidiaries. Strategic Food International (70% stake of Britannia) operates in the Middle East. The subsidiary offers a wide range of biscuits and wafers under the brand name Nutro. Another subsidiary, Al Sallan Food Industries (64.5% stake of Britannia), also operates in the Middle East. It offers a range of cookies, rolls and chocolates under the brand name Baker's Pride. In addition to this, Britannia is also a key player in the Sri Lankan biscuits market offering biscuit brands like Milk Bikis, Milk Cream Smileys, and Vita Marie Gold.

Besides, the company exports its products to the US, Ghana, Seychelles, Singapore, Oman, Saudi Arabia, UAE, Qatar, Bahrain and Kuwait. History: Britannia Industries (Britannia or the company) was established in Kolkata, India in 1892.The operations of the company were mechanized with the advent of electricity in 1910. The company started using gas ovens in 1921 when imported machineries were introduced in the country. The company took over the biscuit distribution from Parry's in 1975. In 1978 the company became a publicly listed company. In the following year, it was renamed as Britannia Industries Limited. The company's executive office was relocated to Bangalore in 1989. In 1993, Wadia group acquired stake in Associated Biscuits International Holdings, UK and became an equal partner with Groupe Danone in Britannia. Britannia introduced its new corporate identity 'Eat Healthy, Think Better'; and launched Tiger Cashew Badam and Cheeker brands of biscuits in 1997. During the same period, the company entered in the dairy market. In 1999, the company introduced Cheeselets product range. The company introduced biscuit brands GD Choco, Time Pass and Vita Marie Gold in 2000; and Rourbon Pocket Packs, Maska Chaska and Vita Marie Gold in 2001. In 2002, Britannia introduced Time Pass Classic Salted, Jim Jam Pocket Packs, Chai Biskoot, Tiger Cream, GD Ginger Nut and Pure Magic. The company established Britannia New Zealand Foods in a joint venture with Fonterra in the same year. The company launched, Treat Duet, a biscuit brand in 2003. In the following year, Britannia's Good Day biscuit added Choconut, a new variety to its range of biscuits. The re-launch of Tiger biscuit was seen in 2005, with the tag line 'Swasth Khao, Tiger Ban Jao'. In the same year Britannia launched Greetings range of premium assorted gift packs; and Britannia 50-50 Pepper Chakkar. Also in the year, the company started its new plant in Uttaranchal. In 2006, Britannia acquired Cafe Coffee Day's 50% stake in Daily Bread, a Bangalore-based highend food retailer. Britannia formed a joint venture with the Khimji Ramdas Group in 2007 and acquired a 70% stake in the Dubai-based Strategic Foods International and 65.4% in the Oman-based Al Sallan Food Industries. In the same year, Britannia NutriChoice SugarOut range introduced no added sugar variants. In 2008, Britannia launched NutriChoice 5 Grain, Tiger Banana, and Good Day Classic Cookies. It renovated its MarieGold brand in the same year.

Groupe Danone and Wadia Group concluded their existing joint venture relationship in 2009. As per the agreement, Danone sold 50% of its interest in ABI Holdings (held through Britannia Brands Limited) to Wadia Group. In 2009, Britannia launched two new milk variants including Britannia Milk (Toned) and Britannia Slimz Milk. Also, in the year, Britannia announced its plans to enter flavored milk market through milk brand Actimind and also launched vegetarian cakes under the brand name Britannia Veg. In 2009, Kolkata Port Trust (KoPT) sent a notice to Britannia to vacate the Taratala premises, which the confectioner has been occupying for the past 60-years, following a rent dispute. Britannia announced its plans to launch new products in the salted biscuit space in April 2010. The company added the Milk Bikis Almond Cookies line to its existing Milk Bikis category in June 2010. In November 2010, the company announced its plan to set up manufacturing facilities for its bakery products in Bihar and Orissa. In the same month, Britannia expanded its health biscuit brand, Nutrichoice, to the diabetic friendly essentials range. In January 2011, Britannia announced voluntary delisting of equity shares from Calcutta Stock Exchange. In the same month, the company entered into the branded breakfast food sector with the launch of Britannia Healthy Start, a new range of ready-to-cook breakfast mixes of Upmas, Pohas, Porridges and Oats. In the same month, Kraft Foods sued Britannia for trademark and copyright violations of its popular Oreo cookies. Key People: Mr. Nusli Neville Wadia, Chairman Ms. Vinita Bali, Managing Director Neeraj Chandra, Vice President & Chief Operating Officer Raju Thomas, Chief Financial Officer Sreekanth K Arimanithaya, Vice President & Chief of Human Resources Vinay Singh Kushwaha, Vice President (Supply Chain).

SWOT ANALYSIS:

Britannia Industries (Britannia or the company) is engaged in the manufacture and distribution of bakery and dairy products like biscuits, bread, cakes and rusks; and milk, butter and cheese, among others. An extensive portfolio of global brands facilitates customer recall and enhances Britannia's market penetration capabilities. However, intense competition would lead to pricing pressures, thereby decreasing the profitability of the company.

STRENGTHS: Britannia has a strong portfolio of top selling food brands. The company's premium brands include50-50, Good Day, Little Hearts, Milk Bikis, MarieGold, NutriChoice, Pure Magic, Treat, and Tiger. The company is one of the trusted brands in India. For instance, during 2010, Brand Britannia was rated Most Trusted Food brand among the Top 10 Most Trusted Brands across all categories for 10th successive year in an independent survey conducted by AC Nielsen and The Economic Times. With a wide portfolio of brands and choice of product category, the company is able to differentiate itself in the market, nurture customer loyalty, and reduce its business risk. A strong brand portfolio not only facilitates customer recall but also enhances Britannia's market penetration opportunities. Focus on innovation: The company has a strong orientation towards product innovation. Through its ability to innovate and extend its brands and products, the company plans to strengthen and sharpen its brands. The company launched egg-less fruit cake under brand name Britannia Veg cake; Treat Chocoz, a new cream range; and new flavors and addition in its fruit cake range, in 2009. Further, in June 2010, the company added the Milk Bikis Almond Cookies line to its existing Milk Bikis category. The introduction of new brands and innovative product ranges has been one of the

strengths of the company and has helped it in retaining its leadership position in the Indian biscuits market. Product innovation adds to strength of the company's power brands and enables it to stay ahead in the competitive market. Strong emphasis on manufacturing operations: The company has a strong emphasis on its manufacturing operations to reduce the cost and improve the productivity. It has taken a number of initiatives to improve the productivity through effective application of technology and improved manufacturing processes by switching to lower cost energy alternatives. The emphasis on recycling energy helped the company in reducing the baking fuel consumption by approximately 3.6% over the previous year. In addition, the company addressed the cost challenge by removing over INR700 million ($14.8 million), by consolidating operations, optimizing manufacturing units, reducing complexity and eliminating wastages in the value chain. The strong emphasis on its manufacturing operations helps the company in reducing the unnecessary cost and thereby improves the productivity and efficiency of its value chain activities. Dominance in the higher margin non-glucose biscuit segment: Indian organized biscuit industry has been largely dominated by Britannia and Parle; Britannia being the largest player commanding approximately 38% of the market shares. The operational strategies of both the companies have however been different. Britannia till now has been a major player in the non-glucose segment while Parle primarily caters to the glucose segment. Britannia offers several premium products such as Good Day, Bourbon, and Treat in the higher margin non-glucose segment. Parle, except for its Hide and Seek brand of biscuits, majorly operates in the lower margin glucose and Marie segment. Furthermore, the company can leverage the profitability and cash flow generated from the premium segment to fuel the growth and offset the price-war in other segments. Besides, the changing demographics and improving disposable income coupled with the improving economic condition, increases the potential of growth in premium segment. Additionally, the premium biscuit segment's volume growth prospects have improved as a result of heightened focus on smaller packs and innovative products. Britannia with favorable sales mix and brand equity can utilize the opportunity to further its market share. WEAKNESS: High dependence on Indian market In spite of making forays into other international markets, Britannia is still dependent on the Indian market for majority of its revenues. As compared to this, Kraft Foods, the US foods major, is contemplating entry in the Indian biscuits market. Kraft Foods manufacture and markets packaged foods in over 160 countries. Furthermore, the company generates $40,386 million turnover as of FY2009; with approximately 47.6% of its revenues being generated from international operations. Britannia on the other hand derives almost all its revenues from Indian market. In a competitive environment, high dependence on Indian markets not only exposes Britannia to the vulnerability to the local market conditions but also limits the growth opportunities. Besides, the company is also

deprived of the economy of scale and benefits which its competitors enjoy because of their global operations OPPORTUNITIES: . Emerging dairy products market in India As per the Datamonitor estimates, Indian dairy market was valued at $4,388 million in 2009 and is expected to rise to $6,577.3 million by 2014, an increase of 49.9% since 2009. Milk sales proved the most lucrative for the Indian dairy market in 2009, generating total revenues of $4 billion, equivalentto 90.5% of the market's overall value. Besides, the company is also focusing on the flavored drinks market. With recent launch of TigerZor Choco Milk, a milk-based chocolate drink, the company further enhanced its ActiMind flavored drink portfolio. The new launches and strong brand equity of Britannia would enable it to target and penetrate the 40-42% generated in the midpriced segment. Britannia having its sales mix of 70% from non-glucose segment and 30% from glucose segment is well positioned to tap the higher margin segment. Furthermore, the company can leverage the profitability and cash flow generated from the premium segment to fuel the growth and offset the price-war in other segments. Additionally, the premium biscuit segment's volume growth prospects have improved as a result of heightened focus on smaller packs and innovative products. Britannia with favorable sales mix and brand equity can utilize the opportunity to further its market share. Launch of vegetarian line of products The company launched egg-less fruit cake under brand name Britannia Veg. The company is planning to increase its vegetarian product portfolio by 15-20% considering the fact that onethird the population in India is vegetarian and hence the potential demand associated with it. In addition, the company established a separate factory in Delhi to manufacture the egg-less cake products with special emphasis on states like Punjab, Rajasthan, Uttar Pradesh and Gujarat that have higher proportion of vegetarian populations. The launch of similar products by the company, hence, will help in attracting consumers in the vegetarian market segment and in turn could enhance revenues of the company. Positive outlook for the global biscuit market The biscuit market is witnessing phenomenal growth globally. According to Datamonitor reports, the global biscuits market grew by 3.6% in FY2009 to reach a value of $38.6 billion. In 2014, the market is forecast to have a value of $46 billion, an increase of 19.2% since 2009. The company offers various biscuit brands including Tiger, Good Day, 50-50, Marie Gold, Treat, Milk Bikis, Nutri Choice, Time Pass, Pure Magic, Little Hearts, Nice Time, Vita Marie Gold and Greetings. The company's quality and brand value, besides the experience of doing business in the competitive Indian biscuit industry, could be leveraged to expand in other emerging economies. The international expansion would not only add to the revenue growth, but also will provide the much needed economy of scale to fight the cash strengths of competitors like ITC and Kraft Foods. .

Corporate Social Responsibility Activities: Britannia Nutrition Foundation To secure Every Childs Right to Growth and Development through Right 2 Nutrition

Objective of the Britannia Nutrition Foundation (BNF) Setting up the Britannia Nutrition Foundation was a small step that they took to address the issue regarding child malnutrition. Britannia Nutrition Foundation is an independent, autonomous, nonprofit entity that leverages the strength through Britannias wide stakeholder network to address the issue of Child Nutrition. BNF works proactively to secure every childs right to growth and development through catalyzing thought and action that drives a meaningful nutrition agenda. Global Alliance for Improved Nutrition - GAIN Partnerships Innovative public private partnerships are a key instrument in the fight against global malnutrition. For GAIN, partnerships are formal relationships which take many forms, build trust and common understanding and lead to joint action. GAIN partners with business, governments, non-governmental organizations, international organizations, academia and other key players in the nutrition sector to deliver programs to vulnerable populations as efficiently and effectively as possible. Strategic partnerships leverage the best capabilities of each partner and are essential to achieve harmonization and help deliver performance targets, such as reaching 1 billion individuals with fortified foods. National Fortification Alliances (NFAs) are an example of the type of multi-sector partnerships GAIN supports at the country level. GAIN is also part of international multi-sector initiatives that support countries in implementing policies for better nutrition such as the Flour Fortification Initiative and the Iodine Network. GAIN is also committed to developing business partnerships in order to increase private sector investments in nutrition. In 2005, GAIN established the GAIN Business Alliance (BA) to mobilize business to play a greater role in combating malnutrition and facilitate business partnerships. The annual BA Global Forum, as well as smaller regional events, bring together a range of business actors, from global and local companies and from business associations. BA events offer a wide platform for business leaders to meet with key stakeholders from the public sector including governments, NGOs, civil society, academia and the media. The Amsterdam Initiative on Malnutrition (AIM) is an example of new partnerships emerging from within the BA. By becoming a member of the BA, Britannia had the opportunity to add value to its products through fortification for the BOP market Britannia has reach to about 40% Indian households at

affordable price points. Fortification of mainstay products is just one of the few things that Britannia has done after establishing business alliance with GAIN. GAIN believes that business has a critical role to play in the fight against malnutrition. GAIN strategically partners with business to increase private sector investment in combating malnutrition and has collaborated with hundreds of businesses to deliver core nutrition programs, such as the National Food Fortification programs. The GAIN Business Alliance (BA), currently chaired by Unilever, is an alliance of member companies committed to the fight against malnutrition and is an example of one kind of partnership arrangement between business and GAIN. A key role business can play in nutrition remains the delivery of quality, affordable and accessible food to those most at risk of malnutrition. GAIN remains committed to developing innovative business models to ensure that Base of the Pyramid (BOP) consumers are benefiting from nutritious products at an affordable price. Britannia Business Alliance Partnership with GAIN is based on this concept of reaching fortified products at affordable cost to the Base of Pyramid (BOP) population. In the last 2 years, Britannia has made a significant commitment, evident in its actions, to add more nutrition to the products marketed. Britannia has fortified over 55% of product lines with micronutrients & also proactively removed close to 8500 tons of transfats from its products to make them healthier. Some of the pillar brands that have been fortified include Tiger, Milk Bikis, Mariegold and the Britannia Breads portfolio Clinton Global Initiative: Building on President Clintons lifetime in public service, the Clinton Global Initiative (CGI) reflects his belief that governments need collaboration from the private sector, non-governmental organizations, and other global leaders to effectively confront the worlds most pressing problems. After attending thousands of meetings during his career in which urgent needs were discussed but no action was taken to solve them, President Clinton saw a need to establish a new kind of meeting with an emphasis on results. In 2005, President Clinton established CGI to turn ideas into action and to help our world move beyond the current state of globalization to a more integrated global community of shared benefits, responsibilities, and values. By gathering world leaders from a variety of backgrounds, CGI creates a unique opportunity to channel the capacities of individuals and organizations to realize change. To fulfill the action-oriented mission of CGI, all members devise practical solutions to global issues through the development of specific and measurable Commitments to Action. CGI Annual Meetings have brought together more than 100 current and former heads of state, 14 Nobel Peace Prize winners, hundreds of leading global CEOs, major philanthropists and foundation heads, directors of the most effective non-governmental organizations, and prominent members of the media. These CGI members have made more than 1,400 commitments valued at

$46 billion, which have already improved more than 200 million lives in 150 countries. Commitments made at the 2008 Annual Meeting are expected to impact almost 160 million people. The CGI community also includes CGI University (CGI U), a forum to engage college students in global citizenship; CGI Asia; and, MyCommitment.org, an online portal where anybody can make their own Commitment to Action. Apart from these, BNF also partners the World Bank Institute (WBI) (Develops case studies) UN World Food Programme Britannia partners with the UNWFP (United Nations World Food Program) in supplying customized biscuits to at risk populations in countries as distant as Afghanistan, Iran etc. This includes events like World Food Day & Walk The World: Hundreds Walk Together For The Hungry Poor Of The World Organized by TNT, the Walk the World on June 6 saw the participation of around 500 people. The Britannia Nutrition Foundation co sponsored the event which was held across the world to raise awareness on hunger and malnutrition Naandi FoundationSchool Feeding Program with GAIN and Naandi Foundation 49% of children below the age of 5 in India are moderately or severely underweight. This figure compares with 29% in Sub Saharan Africa and 17% in East Asia and the Pacific. 38% of the worlds malnourished children live in India. These numbers are a stark reality of malnutrition in the country. In March 2007, Britannia developed a a specially designed 5 mg Iron Fortified Tiger Biscuit, which in association with Naandi Foundation, Hyderabad and Global Alliance for Improved Nutrition (GAIN) Geneva, was used to supplement the Andhra Pradesh Governments midday meal program for 1.5 Lac school children in Hyderabad. The Britannia - Naandi - Gain Partnership has been profiled as part of the GAIN-WBI sponsored Case Study series titled Business Innovation to Combat Malnutrition. Under the aegis of the Britannia school contact program, as many as 5 million children are educated on nutrition using the popular story-telling medium of the country. Awards & Accolades: Ranked #6 in Top 100 Most Trusted Brands 2011 (28th September 2011)

Ranked #1 among food products Ranked #1 by Business World in Indias Most Respected Companies in FMCG (14th January 2011) Forbes Global: 1 among top 200 small companies in the world (2002) Economic Times: Indias 2nd most trusted brand (2002) 2004: Britannia Superbrand Master Brand 2010 award by CMO council (November 2010) CSR award from Rotary Club, Chennai for work in nutrition (November 2010) Britannia received the Most Respected Company Award 2011 from Businessworld. 2011: Bourbon received the Most Popular Confectionery Product Preferred By Youth (Biscuit) Award. 2011: IMCRBNQA (Indian Merchant Chambers Ramakrishna Bajaj National Quality Award) conferred the Manufacturing Performance Excellence Trophy a National Quality Award for the 2010 cycle, for Britannia Corporate Office (Bangalore), Britannia Industries Ltd. (Rudrapur) and Sunandram Foods Pvt Ltd (Mangaldoi, Guwahati).