Britannia Q2 profit rises 11.52% to Rs261.03 crore
Bengaluru: Biscuit maker Britannia Industries Ltd reported an 11.52% jump in net profit for the July-September quarter as customer demand improved and trade channels normalized after initially being impacted by the implementation of the goods and service tax (GST).
Net profit for Q2 increased to Rs261.03 crore from Rs234.05 crore on a year-over-year basis, the firm said in a filing with the BSE on Saturday. Total revenue grew 3.95% to Rs2,596.11 crore from Rs2497.27 crore during the same period a year ago.
“It has been a good quarter in the face of GST transition. Mid-single-digit volume growths on the back of investment in brands and widening our distribution network through focus on direct reach, rural markets and weak states,” Britannia’s managing director Varun Berry said in a statement.
The company had reported a marginal decline in net profit in the April-June quarter due to a short-term impact from GST. Biscuits attract a higher 18% rate under the new tax regime and that had initially impacted traders and distributors who did not stock up on goods in the run up to the implementation of GST on 1 July.
While the GST Council on Friday slashed rates across the board for various items that were under the 28% slab, including of those consumed daily, the rates for those under other slabs including biscuits remains unchanged.
“Our premiumisation and innovation journey continues with the launch of Treat Chocolate and Vanilla and Good Day Wonderfulls. Our international business has grown in spite of pressure on account of deteriorating geopolitical situation and currency fluctuations in geographies like Middle East and Africa,” Berry added.
Prices of key raw materials have been stable in Q2, Britannia said in its BSE filing. The company’s cost efficiency program has also helped it improve profitability, it added.
The firm plans to set up a greenfield plant in Guwahati, Assam to service that region and also a facility at Mundra, Gujarat to service export markets, it said on Saturday. This is part of its strategy to expand manufacturing footprint over the next three years at an investment of Rs1,500 crore.
That investment will increase the number of facilities owned by Britannia, rather than third party or contract facilities. It is expected to boost manufacturing of its flagship products and will also go toward setting up an exports facility in Gujarat, the firm had said in a statement earlier this month.
The Rs1,500 crore includes Britannia’s previously announced intent of setting up its biggest manufacturing facility at Ranjangaon in Maharashtra.
In August, the firm said it was investing Rs1,000 crore to set up the Maharashtra plant, which will have six lines for production of biscuits, and one each for filled croissants, cakes, rusks, flour and dairy. That plant will employ 3,000 people, and will be the first to have an integrated dairy and flour mill, Britannia said.