Why Britannia Won't Hike Prices This Year

Britannia Industries will not undertake any price increases this year, managing director Varun Berry told NDTV.

"At this point in time it seems the food inflation is not happening at all, in fact all raw material prices have been below what they were last year.

"So I don't think at this stage anything justifies a price increase. So I don't think we are looking at any price increase in the next couple of quarters," the Britannia Industries managing director said.

Britannia Industries on Tuesday reported a 67 per cent jump in consolidated net profit at Rs 190 crore for the first quarter of the current fiscal year.

Britannia attributed the jump in margins to a mix of things- growth in volume and revenue, and commodity prices being lower than last year. Britannia's Ebidta (earnings before interest, depreciation, tax, amortisation) margin expanded to 14.3 per cent from 9.5 per cent, despite higher ad spends and taxes.

"Beyond that we have done a lot to expand our coverage across the country through distribution, in fact we have added something like 75,000-80,000 outlets. All that is giving us the topline growth," Mr Berry said.

"90 per cent of our revenue growth is coming out of volume and mix only 10 per cent is coming out of pricing so that really is the breakup. So it's a pretty robust volume growth," he added.

Britannia's net sales in the first quarter rose to Rs 2,002.51 crore, up 13 per cent from Rs 1,772.63 crore a year ago.

The premium range that includes the likes of Good Day biscuits are Britannia's fastest growing products, while value brands like Tiger have not seen any momentum, Mr Berry said.

"For a brand like Good Day we have been growing in hefty double digits, so that's where our growths are coming from."

Britannia, however hopes to see some traction from its value portfolio as well.

Britannia said it owes its positive first quarter earnings largely to better supply chain management.

"Our supply chain costs have become very well controlled, lots of efficiencies that we've built in our supply chain including scale plants, reducing distance travel by biscuits which obviously can be translated into money, energy costs.

"So all that is adding up and with the kind of scale that we have, every 1 percentage point of savings gives us Rs 60 crore on the bottomline," Mr Berry said.