Bengaluru: India’s largest biscuit maker Britannia Industries Ltd’s new financial chief N. Venkataraman has his work cut out for him when he takes over from outgoing chief financial officer (CFO) Amlan Datta Majumdar next month.

For starters, the company’s managing director Varun Berry wants him to find new ways to cut costs. That won’t be easy as Britannia has already trimmed its fat in a big way since Berry took charge three years ago.

“When you start on a cost-efficiency programme, initially it will always be the low-hanging fruits that you aim for," said Amnish Aggarwal, senior vice-president, research, Prabhudas Lilladher. “As you go on, it becomes more and more difficult to cut costs.

But Berry is confident the cost accountant, who has been with Britannia since 2007 and is currently in charge of the finances of its bakery business, can do it.

“Over the last three years, he has led the critical cost efficiency and productivity enhancement programmes in the company which has resulted in significant and consistent improvement in business margins," Berry said in an email.

Berry’s desire to introduce more cost savings is understandable: He wants to plough more money into new products or categories without disrupting margins amid high raw material costs. The inflation rate for all key ingredients—flour, sugar and palm oil—were in the double-digits in the second quarter, the company said. 

So what should Venkataraman do?

Some analysts advised him to focus on cutting freight costs, while others urged him to take a hard look at the inefficiencies in the supply chain.

“I think there are two three areas. One very clearly will be, with the GST coming in, one has to think very creatively on how to maximize that," said Harminder Sahni, a retail consultant and managing director of Wazir Advisors.

“The second thing is relationships with vendors and suppliers are not looked at as critically because at (legacy companies like Britannia) those old relationships are always there. But with the company growing now, they need to look at that very hard."

On Wednesday, Berry reiterated on a post-earnings conference call that the cost efficiency programme is critical.

“We have accelerated it over the last four years and we would like to make sure that we get this to an even higher level," said Berry, who is looking at almost 170 crore of cost savings this year.

So is this aggressive cost control stance that makes it harder for Britannia’s financial chiefs to stay in the job? That is not easy to determine, but clearly some are taking note, so much so that an analyst asked Berry why the firm has seen three CFO resignations in the past 4-5 years.

“The danger of a company like ours which is a completely Indian company with operations only in India is that sometimes there are aspirations which are beyond being CFO of an Indian company. Those aspirations will always remain in people’s minds," Berry explained.

However, Majumdar told Mint that he was leaving for personal reasons, adding it was time he used his experience to do something new and different.

Close