Berry's rise, Vinita Bali's exit seem certain at Britannia

Bali recently sold 75,000 shares in Britannia and company also announced it has completed a settlement of 1 lakh shares in stock options to its MD

The rise of Varun Berry, Britannia’s executive director, during the last year would inevitably lead to talks of Managing Director (MD) Vinita Bali, 58, planning her way out of the company after eight long years. Almost a year after Berry took the helm of the company’s Indian operations, Bali and Britannia are still tightlipped about her future at India’s top biscuits maker.

As speculation continues to build on Bali’s exit, her recent actions at the helm of the company indicate her tenure might be drawing to a close. Bali recently sold 75,000 shares in Britannia and the company recently announced it had completed a settlement of 100,000 shares in stock options to its managing director. Bali now has 400,000 shares in Britannia, worth about Rs 36 crore.

Bali joined the company in January 2005, when there was no designated MD or chief executive officer (CEO), two years after Sunil Alagh left as MD and CEO after a dispute with the Wadias, Britannia’s promoters. The annual revenue was about Rs 1,700 crore and net profit around Rs 150 crore when Bali was handed the reins. By the end of financial year 2013, revenue had grown almost four times to Rs 6,000 crore and net profit was Rs 260 crore.

In about a year after Bali took the reins at Britannia, the company’s share price broke out of the Rs 100-200 range it had been trading in since 2000. However, the acceleration in share price gained momentum only after Berry took charge. With him at the top of domestic operations, shares of Britannia almost doubled to Rs 901.50 at close on the BSE exchange on Tuesday, since his entry in the company on January 7 last year.

“Since May, the company is grooming Berry to take the lead at Britannia by giving him the responsibility for its Indian operations, the largest part of its revenue,” says an analyst who has a buy rating on the company. “It is just a matter of time before he is made MD,” the analyst said.

After joining Britannia, Berry was designated vice-president and chief operating officer effective February 1. Appointing Berry as an additional director of the company in November marked his third promotion in 11 months in the company after a May 28 decision to let him head Indian operations that account for about 95 per cent  of the company’s sales. Bali was left with Britannia’s much smaller international operations.

“Whether Bali’s opinion has been taken on the matter is not known,” says the analyst.

Another analyst tracking the company claimed the decision was “an aggressive one”,  with Berry having proved his mettle earlier at at PepsiCo.  Given his high jump in the company, few would today think he might not be able to recreate that success at Britannia.

IN AND OUT

• Since Bali joined the company in January 2005, Britannia's annual revenue has grown to Rs 6,000 crore in FY13 from about Rs 1,700 crore in FY05 and net profit to Rs 260 crore from around Rs 150 crore
• Since Berry’s entry in the company in January 2013, he has got three promotions to become the head of Indian operations, which accounts for 95% of Britannia’s operations