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Type Public

(BSE:500825)

(NSE:BRITANNIA)

Industry Food

Founded 1892

Headquarters Kolkata, India

Number of locations 300 stores (2000)

Area served India

Key people Nusli Wadia,Chairman

Ms. Vinita Bali,Managing Director

Products BiscuitsTiger, Britannia,

milk

Revenue Rs3,401.4 crores

[$ 746.8 million] (2009-10)

Net income Rs116.5 crores

[$ 25.58 million] (2009-10)

Owner(s) Danone, Kalabakan Investments

Parent Wadia Group,

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Associated Biscuits Intl. Holdings

Website www.britannia.co.in

History

The company was established in 1892, with an investment of Rs. 295.[2]Initially, biscuits were

manufactured in a small house in central Kolkata. Later, the enterprise was acquired by the

Gupta brothers and operated under the name of "V.S. Brothers." In 1918, C.H. Holmes, an

English businessman 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 andPeek FreansUK,

acquired a controlling interest in BBCo. Biscuits were in big demand during World War II, which

gave a boost to the companys sales. The company name finally was changed to the current

"Britannia Industries Limited" in 1979. In 1982 Nabisco Brands Inc., USA became a major

foreign shareholder.

Kerala businessmanK. Rajan Pillaisecured control of the group in the late 1980s, becoming

known in India as the 'Biscuit King'. In 1993, theWadia Groupacquired a stake inABILUK, and

became an equal partner withGroupe Danonein Britannia Industries Limited.

In whatThe Economic Timesreferred to as one of [India's] most dramatic corporate

sagas,[3]Pillai ceded control to Wadia and Danone after a bitter boardroom struggle,[4]then fled

his Singapore base to India in 1995 after accusations of defrauding Britannia, and died the

same year inTihar Jail.[5]With all these inspiring history, Britannia has reached every

households of India reaching the top 100 Most Trusted brands listed inThe Brand Trust

Reportby Trust Research Advisory.

Growth and profitability

The company is growing at a steady rate, and is currentlyprofitable. Between 1998 and 2001, the company's sales grew ata compound annual rate of 16% against the market, andoperating profits reached 18%. More recently, the company has

been growing at 27% a year, compared to the industry's growthrate of 20%.

At present, 90% of Britannias annual revenueofRs2,200crorecomes from biscuits.

[edit]Business

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[edit]Dairy products

Dairy products contribute close to 10 per cent to Britannia'srevenue.[6]Britannia trades and markets dairy products, and itsdairy portfolio grew to 47% in 2000-01 and by 30% in 2001-02.

Britannia holds an equity stake in Dynamix Dairyand outsourcesthe bulk of its dairy products from its associate. Its maincompetitors areNestlIndia, theNational Dairy DevelopmentBoard(NDDB),andAmulGCMMF)[7]

[edit]Joint venture with New Zealand Dairy

On 27 October 2001, Britannia announced a joint venturewithFonterra Co-operative Groupof New Zealand, an integrateddairy company from procurement of milk to making value-addedproducts such as cheese and buttermilk.[7]Britannia planned tosource most of the products from New Zealand, which they wouldmarket in India.[6]The joint venture will allow technology transferto Britannia.[7]Britannia and New Zealand Dairy each holding 49%of the JV, and the remaining 2 per cent held by a strategicinvestor. Britannia has also tentatively announced that its dairybusiness would be transferred and run by the joint venture.[7]

The authorities' approval to the joint venture obliged the companyto start manufacturing facilities of its own. It would not be allowedto trade, except at the wholesale level, thus pitching it incompetition with Danone, which had recently established its owndairy business.[7]

[edit]Biscuits

The company's factories have an annual capacity of 433,000tonnes.[1]The brand names of biscuits

includeVitaMarieGold,Tiger, Nutrichoice Junior,Good day, 5050, Treat, Pure Magic, Milk Bikis,Good Morning, Bourbon, ThinArrowroot, Nice, Little Heartsand many more.

Tiger, the mass market brand, realised $150.75 million in salesincluding exports to countries including the U.S. and Australia, or20% of Britannia revenues in 2006.

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agreed there would be the right of first refusal to buy out theremaining partner in the event of the other wishing to sell itsholding.[15]

In May 2007, Nusli Wadia told the Ministry of Commerce andIndustry that Danone invested in a Bangalore-based bio nutritioncompany,Avesthagen, in October 2006 in violation of thegovernment's Press Note 1, 2005, which requires a foreigncompany to obtain the consent of its Indian joint venture partnerbefore pursuing an independent business in a similar area,including joint ventures based purely on technical collaboration.Danone argued that Press Note 1 did not apply to it as it did nothave a formal technology transfer or trademark agreement with

Avesthagen, and that its 25 pct holding in Britannia wasindirect.[16]Wadia also filed a case in the Bombay High Court for abreach of a non-compete clause in that connection. The courtordered Danone not to alienate, encumber or sell shares of

Avestagen.[17]

In September 2007, the Foreign Investment Promotion Board ofIndia rejected Danone's claims that it does not need a non-compete waiver from the Wadias to enter into business in India

alone.[18]

In June 2006, Wadia claimed Danone had used the Tiger brand tolaunch biscuits in Bangalore.[15]

After a prolonged legal battle, Danone agreed to sell its stake inBritannia and get out of this line of business. Danone will sell its25.48% stake to Leila Lands, which is a Wadia group entity basedin Mauritius. The deal is valued to be at $175200 m. With thisbuy-out, Wadia's will hold a majority stake of 50.96%.[19][edit]

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