Companies September 27, 2020October 18, 2020 JST Investments Britannia Industries Annual Report 2020 Key Takeaways! Reading Time: 7 minutes Source link | Twitter Profile Britannia Industries Q1FY21 Report Card Britannia results: Strong 🍪 Revenues up 26% & profits by 117% YoY🍪 Slight jump in raw material prices, brought cost efficiencies to counter🍪 Employee costs up 13% QoQ (positive rarity in a pandemic)#Q1FY21withJST pic.twitter.com/z9K6pQYIF0 — JST Investments (@JstInvestments) July 17, 2020 Fun Facts Britannia Bread is the largest brand in the organized bread market with annual turnover of 1 lac tons+ in volume and Rs.4.5bn in value. They have 13 factories and 4 franchisees selling close to 1 mn loaves daily across more than 100 cities and towns of India.@BritanniaIndLtd — Aditya Kondawar (@adi2five) December 2, 2019 Recent Innovations at Britannia Industries – Manufacturing ramped up Nepal operations commenced Ranjangaon Mega Food Park scaled up ( 5 Biscuit lines, 2 Cake Lines, 1 Croissant line and 1 Snacks line) Availability of Products About Britannia Industries Britannia Industries Limited is an Indian food and beverage company. Founded in 1892 and headquartered in Kolkata, it is one of India’s oldest existing companies. It is now part of the Wadia Group headed by Nusli Wadia. The company was established in 1892 by a group of British businessmen with an investment of ₹295. Initially, biscuits were manufactured in a small house in central Kolkata. Later, the enterprise was acquired by the Gupta brothers, mainly Nalin Chandra Gupta, an attorney, and operated under the name “V.S. Brothers.” In 1918, C.H. Holmes, an English businessman based in Kolkata, was taken on as a partner and The Britannia Biscuit Company Limited (BBCo) was launched. The Mumbai factory was set up in 1924 and Peek Freans UK, acquired a controlling interest in BBCo. Biscuits were in high demand during World War II, which gave a boost to the company’s sales. The company name was changed to the current “Britannia Industries Limited” in 1979. In 1982, the American company Nabisco Brands, Inc. acquired the parent of Peek Freans and became a major foreign shareholder. About Wadia Group Britannia Industries is a part of the Wadia group – Supply Chain & Operations For improving competitiveness in its operations, the company has been carrying out various Cost Efficiency and Operational Excellence Programs across the value chain. During the year, the Company implemented Small Group Activity Programs across all its factories to strengthen the culture of the safety of workers in such programs. Successfully commissioned 3 Biscuit Lines and 1 Snack line at the Integrated Food Park, Ranjangaon, Maharashtra, and operationalized its greenfield unit in Nepal. Also Watch: Britannia Industries Success Story Britannia Industries: Q1FY21 Concall Takeaways (Posted as it is) So from a sales and marketing standpoint, rural reach, obviously, we understood that urban was getting more impacted than rural. So we started to get after rural and started to make sure that we were able to expand the reach and we were able to do that. Direct reach obviously took a tumble for the first 2 months, but we were back much better than where we were in February. We did a lot of direct telesales, SMS blasts, distributor point pickups. We did retailer surveys sitting in our homes. We focused on digital campaigns to make sure that we were reaching the consumers wherever they were. From a manufacturing standpoint, we were able to start factories much before anyone else in the industry. We were able to ramp up our volumes. We got production prioritization very clearly put in place. We slowly but steadily improved our productivity within our plants. People worked around the clock to make sure that everything was working very, very well. We added new capacities where required through contract packers. Even from a distribution standpoint, we made sure that there was no hockey stick towards the end of the month. So complete linearity in billing through the month. Calls every day. We were all connected. We all knew what was happening, what were the areas that we need to focus on. We serviced the entire requirement with very, very low inventory. And we started to do direct sales from our factories to make sure that the transit time, et cetera, was reduced and even the costs were reduced. From a procurement standpoint, it wasn’t easy as well. There were — obviously, we buy a lot of raw materials and getting all of them in the right measure to the right factory was critical, and it was very difficult as well during those times. But our procurement teams just did fantastically well to get the availability going. And obviously, the support functions did really well to make sure that everything was being monitored and supported through this period. From a cost reduction standpoint, our working capital had come down consecutively because of reduced inventories, reduction in debtors. We leveraged our overheads and our factory costs and our employee costs during this period because of the top-line growth and we avoided discretionary spends and we renegotiated contracts wherever we could. So that was what we did from a cost standpoint. On flour and on milk, we had deflation, while there was gentle inflation on sugar and steep inflation on RPO, but towards the end of the quarter, we saw that also softening a bit. Salty snacks, again, we are in a situation where we are test marketing it and fine-tuning it. And research, again, has taken a backseat. So it will take a little more time, but I think we’ll be, again, with the right marketing mix out in the next 3, 4, 6 months as well, as soon as things get a little better. Dairy drinks have been, again, a category that has been extremely good for us. We launched WINKIN’ COW and it has done very well for us. We first launched the Milk Shake. And recently, 2 months — 1.5 months back, we launched Lassis in 2 flavors. And both of those are doing well, albeit it’s the on-the-go product. So it’s not growing as we would have expected it to, but that’s true for all drinking products in the market. So that’s where we are at. I would say — I wouldn’t say that we’ve hit the ball out of the park. But I would certainly say that we are on the right track as far as adjacency businesses are concerned. So there will be obviously the dairy CapEx. But beyond that, we are looking at 5 more facilities. So there will be an augmentation of manufacturing capacity in Orissa plant. We are looking at putting up a new plant in Bihar, a new plant in Tamil Nadu, a new plant in U.P., which is — U.P., by the way, is emerging as the second-largest market for us now. So — and we don’t have any facility in U.P. We’ve only got a factory in Uttaranchal. So U.P., so it’s Orissa, then Bihar, Tamil Nadu, and U.P., and we will require a few more lines in our Ranjangaon facility, which is also a very large facility. So that’s what we are looking at, which could — in the next 2 years or so, which could mean an additional CapEx of approximately INR 700 crores just for our bakery products. And beyond that, CapEx is for dairy as well. So we will require CapEx to take this momentum forward. (Over 3 years) E-commerce has been on a very, very different trajectory, up 300%. So we used to have about 11 days of stock, which was approximate, let’s say, 40,000 tonnes in our system. Today, it’s not more than 2 or 3 days, 3 days stock is what we carry. So it’s a very, very tight inventory and a very tight replenishment system that we are running at this point in time. Balance Sheet of Britannia Industries Profit & Loss of Britannia Industries Cash Flows The company had a Cash flow from operations (CFO) of Rs 1155.78 Cr in 2019. In 2020 it was 1484.53 Cr. The company had a Free Cash flow (FCF) of Rs 754.57 Cr. In 2020 it was Rs 1240.36 Cr. Source link | Twitter Profile Also Read on FinMedium: Apple Stock Analysis - Yadnya Investment AcademyRead more Research Reports here. Cover Image: Business Standard Every Wednesday and Saturday, we send Info-Graphic and FinMedium Weekly Digest newsletters to our 25000+ Subscribers. Join Them Now! Email address: Leave this field empty if you're human: Please Share :) JST Investments JST Investments is a Mumbai-based investment firm that believes in long-term wealth creation. It's a brainchild of Aditya Kondawar, Aditya Shah, and Anish Moonka.