Britannia Industries to hike bakery products capacity

Britannia Industries to hike bakery products capacity
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First Published: Fri, May 28 2010. 04 17 PM IST
Updated: Fri, May 28 2010. 04 17 PM IST
Mumbai: India’s top biscuit maker Britannia Industries Ltd is planning to expand manufacturing capacity in bakery products by setting up one or two new plants this fiscal, a top official said on Friday.
“We are enhancing capacity in our existing plants and it is quite likely in this year we may look at 1-2 greenfield will be in bakery products,” Vinita Bali, managing director, told Reuters in an interview. The firm, which sells top biscuit brands such as ‘Good Day’, ‘Tiger’, ‘Marie Gold’ and ‘Fifty Fifty’ among others, has earmarked a capital expenditure of 700-800 million rupees in FY11 for the expansion.
The bakery and dairy products maker, which has seen revenue growth in the just concluded fiscal slow down to 9% on a standalone basis, expects to clock double-digit growth in FY11 betting on softening input prices and a good monsoon.
“I continue to see a double-digit growth for our business this year… we are still at the beginning of the year and I certainly hope we will see a greater stability and less of uncertainity and volatility in prices,” Bali said.
Indian consumer firms are struggling to cope with rising food inflation which is hurting volume growth and India is hugely betting on forecast of a normal monsoon season, vital for farm output and rural incomes, to help calm inflation.
The firm, which has already taken price increases in April, will continue to assess the pricing situation in the coming months, Bali said.
“We have already implemented some price increases effective April this year...the price hikes we took takes care of some of our products while in some others it doesn’t, so we will continue to assess the situation,” she said.
The firm also, despite seeing crimping margins in the just concluded fiscal, plans to continue spending very heavily on advertising and promotion in FY11, Bali said.
Britannia saw a 27% rise in ad and promotion expenditure to Rs269 crore in FY10.
The firm’s standalone net profit during FY10 fell 35% to Rs117 crore, whereas net sales grew a modest 9 percent to Rs3400 crore.
“High input costs and hike in brand building investments led to margin erosion,” Bali said.
The firm was also hit by exceptional items of over Rs40 crore, largely on account of excise and restructuring of the firm’s Sri Lanka operations.
At 3.07 p.m., shares of the firm were up 0.61% at Rs1,695.9 in a firm Mumbai market.
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First Published: Fri, May 28 2010. 04 17 PM IST