The good news about biscuit maker Britannia’s December 2008 quarter numbers is that volumes are higher by about 13 per cent despite the company having upped prices of most of its products a few months back.
That has driven up sales by a strong 25 per cent and with this, the increase in the top line for the nine months this year is a good 24 per cent. This suggests that the Bangalore-based firm is doing well despite the keen competition from newer players such as ITC and incumbents such as Parle.
For some time now, it has been able to hang on to its market share of around 33-34 per cent probably because Britannia’s strategy of selling products across price points is paying off. Both premium brands such as Bourbon and Good Day have done well as have lower- end brands such as Tiger. The products such as Nutrichoice and its variants positioned in the health segment too are gaining share.
By trimming costs on advertising, people and other items, the Rs 2,585 crore company was able to offset, to a great extent, the sharp increase in raw material prices in the December quarter and as a result, margins were lower by about 70 basis points at 8 per cent. With prices of agri-inputs such as wheat, vegetable oil and milk expected to ease, that should change.
Also, in the December quarter the growth in the bottom line (before exceptionals) grew at just 8 per cent y-oy because the company paid out more on account of interest and taxes. Britannia reported a profit of Rs 191 crore in 2007-08; in the current year analysts expect net profits to be in the region of Rs 220 crore on revenues close to Rs 3,250 crore.