Analysis of Britania Industries Limited
Company Overview
Britannia biscuit company was started in 1892 in kolkotta .In 1920 with the help of electricity it mechanised its operations. In 1921 it became first company to import electric ovens. During world war two they were the contractors to supply biscuits to armed forces.
In 1975 they took over distribution system of parry’s. Iin 1975 they become as Indian listed company with more than 60% held by Indian public and it became Britannia industries limited. In 1983 it crossed 100 crores revenue turn over mark. In 1997 the company repositioned itself as “Eat Healthy, Think Better”. By becoming the core sponsors for 1999 world cup they enhanced their brand identity and brand image. The Lagaan Match was voted India’s most successful promotional activity of the year 2001 while the delicious Britannia 50-50 Maska-Chaska became India’s most successful product launch. In 2002, Britannia’s New Business Division formed a joint venture with Fonterra, the world’s second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. Was born. In recognition of its vision and accelerating graph, Forbes Global rated Britannia ‘One amongst the Top 200 Small Companies of the World’, and The Economic Times pegged Britannia India’s 2nd Most Trusted Brand.
Innovation is the KEY MANTRA
In this highly competitive market Britannia survives because of its continuous product and marketing innovation.
Its reposition into Eat Healthy and Think Better touched the emotional part of all Indians and enhanced its brand image and market cap.
Its continuous innovation and its low-cost variety to reach the market depth like “TIGER BISCUITS” are notable innovative strategies by the company.
Even if you take Milk Bikis it changed its wrapper, form and size continuously to break monotony in the minds of the consumer.
Latest Innovations
- Tiger Banana
- NutriChoice Sugar Out
- NutriChoice Digestive Biscuit
- Treat Fruit Rollz
- Britannia 50-50 Pepper Chakkar
- New Britannia Milk Bikis
Financials
Britannia Industries Ltd. (BIL), one of India’s leading food Companies, reported sales of Rs. 25,848 MM for the year ended 31st March 2008. This reflects a 17.5% growth over the previous year. Net Profit for the year at Rs. 191 crores grew by 77.6%. Operating margin improved by more than 300 basis points.
For the last quarter of the year, the Company reported Net Sales of Rs. 6,92 crores & Net Profit of Rs. 61 crores, up 15.6% & 53.6% respectively, over the corresponding quarter last year. The Board of Directors has recommended a dividend of Rs. 18 per share of Rs. 10 each. Total payout including Dividend Distribution Tax amounts to Rs. 50 crores for the year.
In the food processing industry it ranks 2nd among the top 3 in net sales in India
| Rank | Company | Net Sales(03/07) |
| 1 | Nestle | 3500 crores |
| 2 | Britannia | 2200 crores |
| 3 | Glaxo smith | 1300 crores |
Ratios
| Ratio | Mar 2007 | Mar 2006 | Mar 2005 | Mar 2004 | Mar 2003 |
| Operating margin (%) | 5.85 | 11.72 | 11.58 | 11.21 | 11.35 |
| Gross profit margin (%) | 4.70 | 10.46 | 10.39 | 9.65 | 9.34 |
| Net profit margin (%) | 4.86 | 8.48 | 9.25 | 8.16 | 7.59 |
| Current ratio | 1.02 | 1.35 | 1.18 | 1.10 | 0.86 |
Operating Profit Margin
Operating profit ratio=operating profit (EBIT)/sales
The decrease in operating profit margin in 2007 can be because of increase in the cost of raw materials and commodities like wheat and sugar. The material cost has gone up significantly from the year 2006 to 2007.
Gross Profit Margin
Gross Profit Ratio=Gross Profit/Sales
The decrease in Gross profit margin in 2007 can be because of increase in the cost of raw materials and commodities like wheat and sugar. The material cost has gone up significantly from the year 2006 to 2007.
Net Profit Margin
It is calculated as
Net Profit Ratio=EAT/Net Sales
The decrease in net profit margin in 2007 can be because of increase in the cost of raw materials and commodities like wheat and sugar. The material cost has gone up significantly from the year 2006 to 2007.
Current Ratio
It is defined as current assets divided by current liabilities. It is a measure of short term financial liquidity of the firm.
Current Ratio= Current Assets/Current Liabilities
Analysis
A current ratio of 2:1 is always considered as optimum means that there is a 50 % safety margin in terms of assets to cover its current liabilities. However this doesn’t mean higher current ratio is good. It may signify higher unused cash, inventory which again may result in inventory carrying cost. A current ratio of around 1 seem to be numerically not attractive based on logics however for a company like brittnia with huge brand equity and market cap this doesn’t have significant negative impact from investors point of view or financial strength point of view.
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