Britannia saddled with losses at its 3 subsidiaries

Daily Bread Gourmet Foods, a subsidiary of biscuits major Britannia Industries, has posted a net loss of Rs 24.8 crore on sales of Rs 16.3 crore. The company, which is engaged in the business of premium bakery products, was acquired by Britannia Industries more than a year ago.

Britannia, in a statement to its shareholders detailing its subsidiaries has noted that while Daily Bread topline grew 38 per cent, to Rs 16.3 crore, the net loss was mainly due to the relatively high infrastructure investment in Hyderabad and Delhi operations, at a time when the retail sector began to slow down. Consequently, in December 2008, Daily Bread discontinued its operations in Hyderabad and Delhi to focus on growing its business in Bangalore where the brand has been available for six years and is well-established.

“Daily Bread has added new institutional customers in Bangalore, has developed a franchisee model to expand its footprint and focussed on cost-effectiveness across the entire value chain. With these initiatives, the Daily Bread business in Bangalore is expected to break even at the EBIDTA level this year,” Britannia said in the statement.

Britannia’s two other subsidiaries, in West Asia, were saddled with losses. Strategic Foods International Co LLC (SFIC), in which Britannia holds a 70 per cent stake, posted a net loss of almost Rs 27 crore on a topline of Rs 157.8 crore. “During the year, the business faced severe cost challenges due to exorbitant inflation in the cost of all key commodities like flour, sugar and oil, which resulted in a lower operating profit over the previous year.

Al Sallan Food Industries, in which Britannia holds a 65.46 per cent stake, also posted a loss of close to Rs 7 crore on sales of Rs 73 crore. “In order to obtain synergies in the West Asian operations, we have consolidated the front-end of the business and appointed common distributors for the products of Al Sallan. SFIC and Britannia exports from India. This has given us the advantage of improving customer services, resulting in an overall share increase in the key markets of UAE, from 6 per cent to 9.1 per cent, and Oman, from 7.8 per cent to 11.6 per cent,” Britannia detailed adding that in order to gain operational efficiencies in the supply chain, most of the manufacturing operations in Sohar have been consolidated.