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Informist, Friday, Aug 2, 2024

 

--Britannia Apr-Jun consol revenue 42.50 bln rupees vs 40.11 bln

--Britannia Apr-Jun consol net profit 5.06 bln rupees vs 4.58 bln

--Britannia Apr-Jun consol revenue 42.50 bln rupees

--Analysts saw Britannia Apr-Jun consol net profit 5.31 bln rupees

--Britannia Apr-Jun consol net profit 5.06 bln rupees

 

By Avishek Rakshit

 

KOLKATA – A high single digit volume growth and increasing focus on rural markets helped Britannia Industries Ltd report a 10.5% on-year growth in its consolidated net profit for the June quarter at 5.1 bln rupees. Higher volumes also led to the consolidated revenue from operations increasing nearly 6% to 42.5 bln rupees.

 

The consolidated net profit, however, fell short of the Street's expectations of 5.3 bln rupees, although the revenue was slightly higher than the consensus estimate of 42 bln rupees.

 

In a statement, Britannia said that it continued to make positive strides in rural India as it expanded its distribution footprint, and enhanced the product portfolio to align with regional preferences. This resulted in the company gaining more market share in rural belts than in urban centres of the country. The company also expects to reap the benefits from consumption growth in the rural areas in the coming months.

 

Larger consumer goods companies like Hindustan Unilever Ltd, ITC Ltd, and others have previously said that green shoots in rural consumption have started to appear in Apr-Jun. Other consumer product manufacturers like Colgate-Palmolive (India) Ltd, Dabur India Ltd, and others have also been quite bullish on their registered growth in rural locations, and said that their financial growth for the quarter ended June largely got a boost from an uptick in rural consumption. Britannia seems to be in line with the likes of companies focussed on reaping growth from rural India.

 

For the past several quarters, Britannia has been focussed on regaining market share which it previously lost to regional companies and driving topline growth, even at the cost of sacrificing some margins in the short term. Although Britannia continues to be the market leader in bakery products in the country, competition from local brands has led to the company losing some market share.

 

"Our market share progressed well as an outcome of sustained investments in brands, product excellence, and innovation," Varun Berry, vice chairman and managing director at Britannia Industries said in the company statement. "We are actively leveraging the rapidly growing modern trade and e-commerce channels, both growing handsomely compared to previous year."

 

Increasing sales volume, however, led to an upswing in its manufacturing costs. Its expenditure on raw materials, namely wheat, milk, and palm oil, increased 6.4% to 22.2 bln rupees. However, the cost of purchase of stock-in-trade, which refers to the procurement of finished goods to eventually make the final product, fell drastically by 22.5% to 1.9 bln rupees. Finance costs, as well as inventory cost overheads declined, but other costs like employee benefit expenses, depreciation, and other costs went up. Eventually, total costs shot up by 4.5% to nearly 36 bln rupees.

 

Britannia's net profit could have been more than what it reported had its share in joint venture companies and associates not run into losses. Britannia's associate companies - Nalanda Biscuit Co Ltd, and Sunandaram Foods Pvt Ltd; and the joint venture company - Britannia Bel Foods Pvt Ltd, dragged down Britannia's profits by 6.5 mln rupees.

 

Britannia also incurred a one-time expense of 246.4 mln rupees towards a voluntary retirement scheme for its workers at its second-oldest manufacturing plant in Kolkata. The factory, which was established in 1947, shut down operations in June.

 

The company's board today also approved an investment of 43 mln rupees towards setting up a special purpose vehicle which will source renewable energy for captive use in its Ranjangaon factory in Maharashtra. As mandated by law, Britannia will hold a 26% stake in this special purpose vehicle.

 

Today, shares of Britannia closed nearly flat at 5,720.4 rupees on the National Stock Exchange. End

 

 

Edited by Tanima Banerjee

 

 

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