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Britannia churns aggressive capex plan

Plans to add production capacities in three states
Last Updated 22 July 2017, 17:45 IST

 Biscuit maker Britannia Industries will look to spend Rs 350 crore on capital expenditure in 2017-18, a growth of 35% over the previous year, to grow its business.

The company, which makes a wide range of biscuits and cookies among other products, is looking at creating more manufacturing capacities at Guwahati in Assam, Ranjangaon in Maharashtra and Mundra SEZ in Gujarat during 2017-18. Britannia's investment in R&D (including a new R&D centre commissioned in FY17), is paying off handsomely both in terms of new product launches and potential entry into adjacencies, quoting the company's annual report, Motilal Oswal Securities Ltd, an investment advisory firm said.

Distribution expansion has been massive, with its direct reach doubling over the past three years (overall reach of 4.7 million outlets at end-FY17, including 0.7 million outlets added over the past year). Britannia added eight new lines at five of its plants across south and west India in FY17.

The biscuit maker is banking on low per capita consumption of biscuits in India and premiumisation to grow its business.

“This is expected to be drvien by the company's efforts on R&D, distribution expansion, understanding of consumer behaviour and large-scale capacity expansion”, Motilal Oswal said.
The company is looking to eat into the share of unorganised players in the rusk segment, driven by its efforts on innovation, market leadership and manufacturing scale. Even in the cake segment, it is gearing up to eat into the share of unorganised players due to its innovation and achieving longer shelf life for its products.

According to the company's management, the biscuits category has witnessed robust growth over the past decade, led by increase in per capita consumption and premiumness of products. Britannia has eight power brands, with each contributing sales of over Rs 500 crore. These include Britannia, Good Day, Bourbon, Milk Bikis, Nutri Choice, 50:50, Tiger and Pure Magic. Across products and variants, the company has over 300 SKUs and it sells 935 million packs of its products.

“The R&D team is also developing disruptive and new-to-market products which will be launched in coming years,” Britannia Chairman Nusli N Wadia said in the company's annual report.

For the year ended March 2017, Britannia reported 10.5% rise in net profit at Rs 843 crore. Its sales grew 8.9% to Rs 8,582 crore during the year.

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(Published 22 July 2017, 17:45 IST)

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