Britannia Industries, the confectionary and biscuits major jointly owned by French dairy major Groupe Danone and Indian conglomerate Wadia Group, is likely to review its investments
KOLKATA: Britannia Industries, the confectionary and biscuits major jointly owned by French dairy major Groupe Danone and Indian conglomerate Wadia Group, is likely to review its investments into a joint venture with Daily Bread, a Bangalore-based manufacturer and retailer of bakery products.
On the sidelines of its annual general meeting on Monday, Britannia Industries chairman Nusli Wadia said the joint venture—Daily Bread Gourmet Food (India) Pvt Ltd, formed last year—is making losses and so investments into it would have to be reviewed. Without giving details, he said some restructuring is possible in the future.
Britannia had acquired Café Coffee Day’s 50% stake in the bakery chain to get a foothold in the out-of-home consumption space.
On the company’s expansion plans, Wadia said that it was looking at new geographical locations such as Dubai and Oman for organic and inorganic growth and at joint ventures for marketing and distribution.
Its market share stands at 34% by value and 31% by volume. The entry of new players such as ITC, however, has led to a ‘secular decline’ in its market share, with unorganised players taking 1-2% of it, said Wadia.
Meanwhile, the Wadias and Groupe Danone are negotiating an out-of-court settlement for their legal tussle over the Tiger brand, with the French major considering sale of its 25.5% indirect stake in Britannia to the Indian partner.
The two partners locked horns when the Groupe Danone registered Britannia’s Tiger brand in over 70 countries without informing the Wadia Group. The Wadias filed a case against Danone in a Singapore court, and the matter is subjudice.
Nusli Wadia said, “We are hopeful that this case will be resolved soon in our favour.” Tiger is Britannia’s highest selling brand, accounting for 30% of the company’s sales in 2007-08.
Francois Xavier Roger, Danone’s director on Britannia board, declined comment on the case and also on whether the French company would enter India alone.
For fiscal 2007-08, Britannia posted a net profit of Rs 1,910 crore, a year-on-year increase of 77.5% over Rs 1,076 crore in FY07. Gross turnover, at Rs 26,679 crore, grew 13.6% and operating margins increased by 7.5% in the last fiscal.
For this fiscal, the company has planned a capital expenditure of Rs 75 crore, a decrease from the previous years due to Britannia’s increased focus on outsourcing. According to sources, it is planning to set up two greenfield ventures through its contract packers.
m_madhumita@dnaindia.net
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