100-year gift: Britannia to issue bonus debentures of Rs 7.2 billion

Firm to launch 50 products with a refreshed logo and split stock

On its centenary year, the board of Britannia Industries has approved issuance of secured redeemable non-convertible debentures as bonus debentures of Rs 60 in the ratio of one such debenture for every equity share. Also, it has proposed a share split that the board will decide in the next meeting on August 23.  

Speaking at the company’s annual general meeting on Monday, Britannia Chairman Nusli Wadia said the company would incur Rs 7.2 billion for issuance of bonus debentures and the total payout to shareholders, including bonus, would be more than Rs 10 billion. These debentures will be issued out of the Rs 25.15-billion balance in retained earnings, which was available as on March 31, 2018.

Later, in a filing with BSE, Britannia said it would be issuing 0.12 billion bonus debentures of Rs 7.2 billion. “The firm will utilise balance in retained earnings to the extent of Rs 8.69 billion, including deemed dividend tax,” the filing said. These debentures will be listed in the BSE and NSE after getting nod from the National Company Law Tribunal.

According to the company, there will be no change in the paid-up equity capital of Britannia Industries pre and post issue of bonus debentures.

This apart, it has recommended a dividend of 1,250 per cent, which amounts to Rs 25 per share having a face value of Rs 2 each, bringing the total dividend payout to Rs 3.62 billion.  

Varun Berry, Britannia’s managing director, said 50 products would be launched this year to celebrate 100 years of the company.  

In previous instances, company officials had stated the focus of the company would be on premiumisation. The company is in the process of launching croissants and has partnered with Greece based Chipita for this endeavour.   “It is likely to be launched towards the end of this year,” Wadia said.  

Its 2018 annual report states: “The intention will be to launch products which also target the same snacking occassions that we target today but with new and innovative products.” 

Answering a shareholder’s query, Berry claimed Britannia had overtaken Parle G to be the market leader in biscuits with a 33 per cent share in terms of value. However, in terms of volume of brands, Parle G still dominates the market and it will take two-three years for Britannia to pull ahead of Parle G brand with its Good Day products. The company has set a target to evolve into a complete foods company rather than limit itself to biscuits, cakes, rusks, cakes and dairy products. 

Nusli Wadia said the company was looking at acquisitions and expansion into new geographies. Despite demonetisation and Goods and Services Tax woes in the past fiscal year, the company “hit every single target”, said Wadia. Britannia had set a target to sell 50 million packs every day, churn a Rs 100 billion top line with a Rs 15 billion gross profit and Rs 10 billion net profit.

“We have now got a very strong foundation — not only in terms of financials but also of management. We are on a very strong footing and in a position to look at adjacencies,” said Wadia, pointing out that it would focus on “growing the company substantially and not only on the laurels of the past”. 

The company, after marking its presence in more than 79 countries, is in the process of opening a plant in Nepal, where it entered recently and already became the market leader. It is also eyeing expansion across West Asian and North African markets. Wadia launched the new logo to mark the centenary year and said the company was carrying forward its brand heritage by giving the logo a modern look.  Berry said the company’s profitability increased from Rs 2.32 billion in 2013 to Rs 12.90 billion in 2018, while its market cap rose from Rs 50 billion in 2012 to Rs 780 billion in 2017.  

One of the key drivers, according to Berry, has been increasing its direct reach to cover nearly 19 million outlets. Britannia will be focusing on increasing its direct retail presence in the days ahead. 

The Britannia scrip, on the BSE, closed at Rs 6,325.65 apiece, down by 1.09 per cent at the end of the day’s trade.

Shifting plan
 

• Britannia is considering shifting its proposed dairy plant to Andhra Pradesh as incentives from Maharashtra are still left undecided 
• This plant and upscaling of the fairy business will also entail an investment into setting up of cold chains 
• A total of Rs 3 billion will be invested to set up the plant and the cold chain network