Britannia embarks on global sourcing to cut costs with profits 25% higher

INDIA – The Indian biscuit maker and food products corporation has reported a 25% increase in net profit in the fourth quarter ended March 31, boosted by high demand met through a wide distribution reach across its market.

Following a reformed tax environment that recognizes a uniform producer levy, Britannia said it was consolidating its synergies as it embarks on global sourcing in a bid to cut on costs.

The company was setting up a US$22.83 million manufacturing facility in Gujarat responsible for making cookies, biscuits and rusk and which the company said was its first move towards setting up exports-only operations.

While net profit rose to US$38.94 million from US$30.94million in the same period the previous year, revenue from operations grew 9.5% to US$373.7 million and margin rose to 15.3%.

The quarter got support from a strong distribution system, having increased their number of direct retail outlets from 550,000 to 1.7 million including new ones in the rural areas.

“We have witnessed positive momentum in the market growth over the last few months.

Our Double digit growth for the quarter is backed by a double digit volume growth on the back of investment in brands and widening our distribution network through focus on direct reach, rural market and weak states,” managing director Varun Berry said.

Despite moderate inflation in key raw materials market, international business managed to grow in double digits offset by a slow-down in many places like Middle East and Africa.

The company said the growth in dairy business remained subdued and profitability improved considerably.

Britannia, the maker of Bourbon and Good Day biscuits said it had stepped up its focus in the rural markets over the last few years to drive growth and sustain market share.

It revamped its chocolate portfolio in Goodday with the launch of Choco Almond and Chocoships besides other launches.

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