Today, Britannia industries posted a 22.4% increase in the profit after tax (PAT) for the third quarter ending, PAT stands at Rs 452.6 crore. The company’s margins beat estimates coming in at 19.3% as compared to 16.8% in Q3 of the previous financial year.
In an investor call post the announcement of the Q3 results, the company’s Managing Director Varun Berry said, “We need to accelerate the pace of innovation which had taken a backseat during this period. We are also looking at some new launches. We will strengthen our distribution which had taken a hit from a quality standpoint because of lack of enough supervision owing to disruptions. We are going to focus on brand building and visibility as we were not advertising in the first six months of the year due to uncertainty.”
Due to COVID-19, like most FMCG companies, Britannia too continued to see higher growth in rural areas and also from traditional trades, while modern trade remained subdued in urban areas. “We are hoping that as things normalise things will fall into place with these channels as well. It is very clear which channels we are lagging in,” Berry said.
The company’s modern trade channel has also been impacted by the financial crisis faced by Future Retail and the subsequent delay in the execution of its impending deal with Reliance Retail. “Future Group used to be a very large part of our business, now it is completely muted. The other modern trade chains were also not growing much in large cities etc. Plus alternate channels like transit clusters, offices, hotels were all shut or operating at skeletal operations,” Berry explained.
In terms of their capex plans for the upcoming financial year, the company said it will review the capacity and demand outlook and decide the spend accordingly. For the whole of FY21, its capex will be at 60% of its usual spend at Rs 200 crore.
In commodity costs, a 25% increase in red palm oil prices continues to exert pressure for the company, and milk prices have started inching upwards too. Other commodity prices for raw materials like wheat and sugar are well under control, Berry added.