Britannia plans capex of Rs 700 cr; bullish on rural demand due to Covid-19

FMCG major Britannia Industries has planned a capital expenditure of around Rs 700 crore over the next two-and-half years for its new facilities and is bullish on the rural demand during the Covid-19 crisis, a company official said on Monday.

The rural demand remained stable during the coronavirus outbreak and the company will focus more on its core products, its managing director Varun Berry said.

"The company is looking at some capex (capital expenditure) of more than Rs 700 crore over the next two-and- half years," he said at a virtual press conference.

Britannia plans to set up new manufacturing facilities in UP, Tamil Nadu, Bihar and Odisha, he said.

In the first quarter of the current fiscal, the company's net profit increased by 118 per cent to Rs 542 crore and the turnover was Rs 3,420 crore, up by 26.6 per cent over the corresponding period last year.

Since the future is uncertain for the next six to nine months, the company will give priority to core products, and less focus will be on innovation, Berry said.

According to him, the rural demand was not affected by the coronavirus pandemic and it will continue to grow at a higher pace than urban.

Berry said the Covid-19 crisis will cause permanent changes in consumer behaviour, and home consumption will increase.

"During the first quarter, the company has been able to unlock efficiencies and prioritised on high gross margin and premium products," he said.

The fast-moving consumer goods company had focused on cutting costs by way of reducing working capital as the inventory levels were low, he added.

Regarding commodity prices, Berry said there was deflation in flour and milk products, while sugar saw a three per cent price rise.