GICS Industry : Food Products l Sub Industry : Packaged Foods & Meats l Website : www.britannia.co.

in

Britannia Industries Ltd

Key Stock Indicators
NSE Ticker : Bloomberg Ticker : Face value / Share: Div. Yield (%): BRITANNIA BRIT:IN 10.0 6.1 CMP (as on 04 Jan 2011Rs/share): 52-week range up to 04 Jan 2011 (Rs)(H/L): Market Cap as on 04 Jan 2011 (Rs mn): Enterprise Value as on 04 Jan 2011 (Rs mn): 409.6 2297.95/392.60 48,927 55,124 Shares outstanding (mn) : Free Float (%) : Average daily volumes (12 months) : Beta (2 year) : 119.5 49.5 42,422 0.6

Britannia Industries Limited (BIL) was incorporated in 1918 as Britannia Biscuit Company Ltd. BIL operates in two segments -- bakery products (biscuits, bread, cakes and rusk) and dairy products (milk, butter, cheese, ghee and curd). The companys facilities are located in Kolkata, Delhi and Uttarakhand. Dairy products sold under the Britannia Milkman brand are produced by Britannia Dairy Pvt Ltd.

Key Financial Indicators

R evenue (R s m n) E B ITD A m a rg ins (% ) P AT (R s m n) P AT m a rg ins (% ) G ea ring (x) E P S (R s /s ha re) P E (x) P /B V (x) R oC E (% ) R oE (% ) E V/E B ITD A (x) n.m. : Not meaningful Mar-08 27,830.8 8.3 1,765.5 6.3 0.6 73.9 17.9 4.9 28.2 31.0 14.6 Mar-09 34,314.5 6.5 1,434.5 4.2 0.5 60.0 23.3 5.1 22.7 22.2 16.0 Mar-10 37,871.9 4.0 1,033.2 2.7 3.9 43.2 9.5 5.3 14.1 24.7 10.5

KEY HIGHLIGHTS
Dominant player in the biscuit industry BIL is a leading player in the Rs 77 billion (as of March 2010) biscuit industry, with a market share of 36%. BILs biscuit portfolio comprises of glucose, marie, cookies, crackers, cream, milk and health biscuits. BIL mainly caters to the premium segment. However, with the launch of Tiger brand biscuits in 1997, it diversified into the low-end category as well. Its strong brand presence, extensive distribution channels and continuous product innovation have helped the company sustain its leading position in the industry. It has 600,000 outlets across India and has expanded its distribution network to rural areas as well. The company exports to the Middle East, Asia, the US and Australia. The company primarily caters to the domestic market; export sales are not significant. Outsourcing model saving operational cost BIL operates largely on the outsourcing model, sourcing nearly 65% of its total sales from contract manufacturers spread across the country. This leads to cost savings in the form of lower capital cost and reduced overheads (freight and labour costs), and extends the shelf-life of products as the company saves time in transport. Acquisitions increase footprint abroad In FY10, BIL acquired Strategic Food International Co LLC, a leading player in the Middle East in biscuits and wafers, and Strategic Brands Holding Co Ltd. In March 2010, it acquired Britannia and Associates (Mauritius) Private Ltd. In April 2009, the company entered into an agreement with M/s Fonterra Brands (Mauritius) Holdings Ltd, Mauritius, for acquiring 49% equity and preference shareholding in their JV Britannia New Zealand Foods Pvt Ltd. With this acquisition, BIL holds 100% stake in the dairy entity.

Shareholding (As on December 31, 2010)

DII 17% Others 22%

FII 10%

Promoter 51%

KEY RISKS

Intense competition from organised as well as unorganised Volatile raw material prices mainly sugar, wheat etc Climatic conditions, as major raw materials are sugar and wheat

Indexed price chart

(index ) 160 140 120 100 80 60 40 20 0 May-10 Nov-10 Mar-10 Aug-10 D ec -10 NIFTY F eb-10 J un-10 S ep-10 Apr-10 O c t-10 J an-10 J ul-10 ('000) 1400 1200 1000 800 600 400 200 0

Stock Performances vis--vis market

R eturns (%) YTD B R ITANN IA NIF TY
Note: 1) YTD returns are since April 1, 2010 to Jan 04, 2011. 2) 1-m, 3-m and 12-m returns are up to Jan 04, 2011.

1-m 1 3

3-m -5 0

12-m 23 17

28 16

V olumes (RHS )

B RITA NNIA

BACKGROUND
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Britannia Industries Ltd

BIL was incorporated in 1918 as Britannia Biscuit Co Ltd. The company mainly operates in two segments -- bakery products (biscuits, bread, cakes and rusk) and dairy products (milk, butter, cheese, ghee and curd). The companys facilities located in Kolkata, Delhi and Uttarakhand. Biscuits account for the largest portion of the companys revenues, at around 77%, followed by bread at 9%, and cake and rusk at 3%. The company operates in the dairy segment via its subsidiary Britannia Dairy Pvt Ltd, which accounts for 5% of BILs overall revenues. BIL has a presence in the Middle East markets through its subsidiaries Al Sallan Food Industries Co, Oman and Strategic Food International Co LLC, Dubai.

COMPETITIVE POSITION
Peer Comparison

R evenue (R s m n) E B IT D A m a rg ins (% ) P AT (R s m n) P AT m a rg ins (% ) G ea ring (x) E P S (R s /s ha re) P E (x) P /B V (x) R oC E (% ) R oE (% ) E V/E B ITD A (x)
n.m: Not meaningful

B ritannia Indus tries L td Mar-10 37,871.9 4.0 1,033.2 2.7 3.9 43.2 9.5 5.3 14.1 24.7 10.5

Glax oS m ithK line C ons umer Healthc are Dec -09 19,881.3 19.2 2,327.8 11.7 0.0 66.6 32.0 7.8 41.9 27.8 21.3

Nes tle India Dec -09 51,523.5 19.8 6,550.0 12.7 0.0 74.8 48.4 41.2 152.4 124.1 34.1

R EI Ag ro Mar-10 36,932.3 16.3 1,571.7 4.3 5.2 2.6 10.1 1.1 10.8 18.2 10.9

FINANCIAL PROFILE
Revenue growth moderated in FY10

K ey Financ ial Indic ators Units R evenue R s m illion P er cent R s m illion P er cent P er cent P er cent P er cent Tim es P er cent P er cent E B IT D A m a rg ins P AT P AT m a rg ins R evenue g rowth E B IT D A g rowth P AT g rowth G ea ring R oC E R oE

Ma r-08
27,830.8 8.3 1,765.5 6.3 22.4 81.8 67.9 0.6 28.2 31.0

Ma r-09
34,314.5 6.5 1,434.5 4.2 23.3 -4.0 -18.7 0.5 22.7 22.2

Ma r-10
37,871.9 4.0 1,033.2 2.7 10.4 -31.4 -28.0 3.9 14.1 24.7

Top-line in FY10 grew at a rate of 10% y-o-y vis--vis 23% in FY09. Revenue grew from Rs 3.4 bn in FY09 to Rs 3.7 bn in FY10; growth was mainly driven by a rise in volumes and realisations. Realisations in the biscuit segment grew by 7%, whereas realisations in bread grew 10%. Volumes in the biscuit segment grew a mere 0.2%, while the bread segment saw volumes grow by 11%. However exceptional commodity price rise -- particularly in sugar, wheat and milk products -- in the latter half of the year, coupled with intense competition, saw operating margin decrease by 150 bps to 4% in FY10, against 6.5% in FY09.

INDUSTRY PROFILE
Branded Foods The branded foods industry includes units manufacturing bakery products, dairy and milk products, confectioneries and ready-to-eat products. While India ranks among the largest food producers in the world, its share in the processed food industry is miniscule, reflecting the low penetration levels and inadequate supply chain infrastructure. India, however, has an abundant supply of the raw materials as it is one of the world`s largest producers of milk, food grains, fruits, vegetables, spices, sugar and oilseeds. Demand growth in the branded foods industry depends on the ability of manufacturers to offer a wide range of products that meet regional tastes at competitive prices. Increase in the level of penetration, especially in urban areas, will depend primarily on the growth in income levels and the number of working women. Government policies do not have a large bearing on the branded foods industry. Policy changes have, however, largely been supportive to the growth of the sector. The industry was accorded priority status for bank lending in 1999. Organised players in the branded foods industry face stiff competition from regional brands. Imported food products are costlier than local equivalents and are, therefore, not competitive in the domestic market.

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Britannia Industries Ltd

ANNUAL RESULTS
Inc om e S ta te m e nt (R s m illion ) Net S ales Ope ra ting Inc om e E B IT DA E B IT DA Ma rg in Deprec iation Interes t O ther Inc ome PBT P AT P AT Ma rg in No. of s hares (Mn No.) E arnings per s hare (E P S ) C a sh flow (R s m illion ) P re-tax profit Total tax paid Deprec iation C hange in working c apital C a sh flow from ope ra ting a c tivitie s C apital E x penditure Inves tments and others Ma r-08 27,738.6 27,830.8 2,317.7 8.3 393.6 187.6 232.0 2,181.8 1,765.5 6.3 23.9 73.9 Ma r-09 34,214.0 34,314.5 2,225.7 6.5 659.1 307.9 213.0 1,964.6 1,434.5 4.2 23.9 60.0 Ma r-10 37,707.5 37,871.9 1,527.4 4.0 582.3 263.6 403.9 1,088.9 1,033.2 2.7 23.9 43.2 B a la nc e she e t (R s m illion ) E quity s hare c apital R es erves and s urplus T a ng ible ne t worth Deferred tax liablity:| s et| as L ong-term debt S hort-term-debt T ota l de bt C urrent liabilities Total provis ions T ota l lia bilitie s G ros s bloc k Net fixed as s ets Inve stm e nts C urre nt a sse ts R ec eivables Inventories C as h T ota l a sse ts R a tio Ma r-08 1,968.4 -429.3 393.6 -1,501.5 431.2 -700.0 -490.8 Ma r-09 1,471.6 -405.3 659.1 846.0 2,571.4 -1,335.1 -375.0 Ma r-10 1,085.4 -216.1 582.3 432.0 1,883.6 -925.9 109.1 R evenue growth (% ) E B ITDA growth(% ) P A T growth(% ) E B ITDA margins (% ) Tax rate (% ) P A T margins (% ) Dividend payout (% ) Dividend per s hare (R s ) B V (R s ) R eturn on E quity (% ) R eturn on c apital employed (% ) G earing (x ) Interes t c overage (x ) Debt/E B ITDA (x ) A s s et turnover (x ) C urrent ratio (x ) G ros s c urrent as s ets (days ) Ma r-08 22.4 81.8 67.9 8.3 19.6 6.3 24.4 18.0 267.7 31.0 28.2 0.6 12.4 1.2 4.1 1.8 76 Ma r-09 23.3 -4.0 -18.7 6.5 20.5 4.2 66.6 40.0 272.5 22.2 22.7 0.5 7.2 1.3 4.3 1.8 64 Ma r-10 10.4 -31.4 -28.0 4.0 19.8 2.7 57.8 25.0 78.0 24.7 14.1 3.9 5.8 4.3 4.4 1.5 58 Ma r-08 238.9 6,157.0 6,395.9 -25.4 2,048.9 703.8 2,752.7 2,929.6 1,057.0 13,109.8 7,210.9 3,703.3 3,398.4 6,008.1 690.4 3,293.1 534.6 13,109.8 Ma r-09 238.9 6,270.5 6,509.4 99.4 2,494.0 296.9 2,790.8 3,260.5 1,506.8 14,166.9 8,661.3 4,296.8 3,773.4 6,096.7 740.0 2,886.9 688.4 14,166.9 Ma r-10 238.9 1,624.8 1,863.7 -61.0 6,411.3 212.4 6,623.8 3,881.8 1,545.2 13,853.5 8,602.6 4,125.9 3,664.4 6,063.2 730.2 3,042.1 427.3 13,853.5

C a sh flow from inve sting a c tivitie s E quity rais ed/(repaid) Debt rais ed/(repaid) Dividend (inc l. tax ) O thers (inc l ex traordinaries )

-1,190.8 0.0 1,081.7 -503.1 168.8

-1,710.1 0.0 38.1 -1,118.0 372.4

-816.8 0.0 3,833.0 -1,386.7 -3,774.1

C a sh flow from fina nc ing a c tivitie s C hange in c as h pos ition O pening c as h C los ing c as h
n.m : Not meaningful;

747.4 -12.2 546.8 534.6

-707.5 153.8 534.6 688.4

-1,327.8 -261.0 688.4 427.3

QUARTERLY RESULTS
P rofit and los s ac c ount (R s million) No of Months Revenue EBITDA Interes t D eprecia tion PBT P AT S ep-10 3 11,072.4 653.6 97.0 103.4 440.2 318.7 100.0 5.9 0.9 0.9 4.0 2.9 % of Rev S ep-09 3 8,711.5 863.9 8.8 93.5 691.8 590.7 100.0 9.9 0.1 1.1 7.9 6.8 % of Rev J un-10 3 9,357.4 635.8 94.0 99.6 442.2 328.3 100.0 6.8 1.0 1.1 4.7 3.5 % of Rev S ep-10 6 20,393.9 1,290.3 191.0 203.1 882.3 647.0 100.0 6.3 0.9 1.0 4.3 3.2 % of Rev S ep-09 6 16,176.6 1,616.0 17.0 184.7 1,274.7 1,064.4 100.0 10.0 0.1 1.1 7.9 6.6 % of Rev

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Britannia Industries Ltd

FOCUS CHARTS & TABLES
Rs mn 12,000 10,000 8,000 6,000 4,000 2,000 0 Mar-08 Mar-09 D ec -07 D ec -08 D ec -09 Mar-10 J un-08 J un-09 J un-10 S ep-08 S ep-09 S ep-10

Qua rte rly sa le s & y-o-y g rowth

Per c ent 35 30 25 20 15 10 5 0

Rs mn 700 600 500 400 300 200 100 0 -100 -200 -300 Mar-08 D ec -07

Qua rte rly P AT & y-o-y g row th

Per c ent 200 150 100 50 0 -50 -100 -150 -200 S ep-10 J un-10 S ep-10

Mar-09

D ec -08

D ec -09

Mar-10 D ec -09

J un-08

J un-09

S ep-08

Sales

Sales growth y-o-y (RHS)

Net Profit

Net profit growth y-o-y (RHS)

Rs /s hare 30 25 20 15 10 5 0 -5 -10 Mar-08

EP S

Per c ent 14 12 10 8 6 4 2 0 -2 -4 D ec -07 D ec -09 Mar-10 J un-09 S ep-09 J un-10 S ep-10

Movem ent in operating and net m arg ins

Mar-08

Mar-09

S ep-09

D ec -08

S ep-08

D ec -07

D ec -08

S ep-08

Mar-09

J un-08

OPM
B oard of Direc tors Direc tor Nam e N us li N eville Wa dia (Mr.) Vinita K unda n L a l B a li (Ms .) K eki B om i D a dis eth (Mr.) Avijit D eb (Mr.) Anil K um a r H irjee (Mr.) N im es h N a g inda s K a m pa ni (Mr.) S uka nt S a da s hiv K elka r (Mr.) Vija y L a xm a n K elka r (D r.) P ra ta p K ha nna (Mr.) N a s s er Mukhta r Munjee (Mr.) Aja i P uri (D r.) J eha ng ir N us li Wa dia (Mr.) N es s N us li Wa dia (Mr.)

S ep-09

S hareholding P attern (P er c ent) Mar 2010 J un P rom oter 51.0 F II 8.6 D II 18.9 Others 21.5

2010 51.0 8.6 18.9 21.6

S ep 2010 51.0 8.5 18.4 22.1

Dec 2010 51.0 9.9 17.1 22.0

Des ig nation N on-E xecutive C ha irm a n, P rom oterD irector Ma na g ing D irector N on-E xecutive D irector N on-E xecutive D irector P rom oter-D irector, N on-E xecutive D irector N on-E xecutive D irector P rom oter-D irector, N on-E xecutive D irector N on-E xecutive D irector N on-E xecutive D irector N on-E xecutive D irector N on-E xecutive D irector P rom oter-D irector, N on-E xecutive D irector N on-E xecutive D irector, P rom oter-D irector

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Mar-10

J un-08

J un-09

NPM

J un-10