Britannia to push volumes and prices, says MD

Bangalore-based Britannia Industries will pursue top line growth through a combination of volumes and pricing, Managing Director Vinita Bali said here today.

“It is no more about ‘Or’,” she said. “But about ‘And’. Commodity inflation has been steep.”

The company, she said, was keen to accelerate growth, but profitably. Her comments come after weak second-quarter results were posted, with net profit slipping 39 per cent to Rs 64.7 crore. This is a consecutive quarter-decline in bottom line. In the first quarter of this financial year, the decline was 30 per cent.

Net sales, however, increased 28 per cent, thanks to volume growth of 20 per cent. Price-led growth was about eight per cent during the quarter.

During the second quarter, Britannia took successive price rises cumulating to 10-15 per cent in response to input cost pressures, but even then saw its earnings before interest, tax depreciation and amortisation (Ebitda) decline by 30 per cent.

Analysts blame competitive intensity. Amnish Aggarwal, analyst at Motilal Oswal, says: “Competitive intensity in value-added segments has impacted margins. This competition will only grow with the entry of new players, such as Kraft.”

Bal says the company would continue to “seize opportunities” whenever these present themselves, indicating it will not abandon its strategy of identifying void niches in the food pyramid. For instance, it has just launched biscuits for diabetics under the Nutrichoice umbrella. This follows the company’s attempts to strengthen its portfolio with multi-grain and high-fibre biscuits, under the same banner, in recent quarters.

According to Anuradha Narasimhan, category director, health & wellness, Britannia, 55 per cent of the firm’s product portfolio is fortified with some micro-nutrient, while the balance is the staple variety.

“We will continue to see how we can innovate, differentiate and add value,” Narasimhan said. “We have been doing work in the area of child health by fortifying products there. The big opportunity lies in taking that to adult health care needs. The work we are doing with Nutrichoice is an indicator of that.”