Vinita Bali, Managing Director, Britannia Industries, joined the company as Chief Executive Officer in January 2005. Since Vinita joined Britannia as CEO in 2005, the company almost doubled its turnover in just four years, growing at an annual rate of c23%, as compared to the previous three years’ 10-11% growth. She has led Britannia’s charge beyond its core biscuits business into categories such as dairy and bakery, and moved into international markets with Britannia’s range of products. She received her Bachelor's Degree in Economics from LSR at the University of Delhi and her MBA at the Jamnalal Bajaj Institute of Management Studies at Bombay University. She pursued postgraduate studies in Business and Economics at Michigan State University on a scholarship from The Rotary Foundation, and was selected to work as a Graduate Intern at the United Nations headquarters in New York. She started her career with Voltas Ltd.-a Tata Group company focusing on consumer products, where she launched Rasna soft-drink concentrate. In 1980, Vinita joined Cadbury India. The Coca-Cola Company chose her as its worldwide Marketing Director in 1994 where she was responsible for the worldwide strategy for Coke. In 1997 she took over as Vice President of Marketing for Latin America, and in 1999 relocated to Chile as President of the Andean Division with sales in excess of US$1bn. In 2001, she was made a corporate officer of The Coca-Cola Company and appointed Vice President of Corporate Strategy reporting to the Chairman. After a nine-year association with Coke, Vinita joined her mentor at Coke, Sergio Zyman at the Zyman Group in July 2003 as a Managing Principal and Head of the Business Strategy practice in the company's Atlanta office. As a member of the company's Board of Managers, Vinita shared responsibility for developing and managing Zyman Group's consulting business.
Britannia was started in 1892 in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs295. By 1910, with the advent of electricity, Britannia mechanised its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry's who till then distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs1bn revenue mark. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese.
Read earlier interview
In an exclusive interaction with Anil Mascarenhas of IIFL, Vinita Bali says, "In the second half, Britannia has done better and so the earlier decline is not a trend."
With prices of sugar witnessing a decline and wheat stabilizing, can we expect to see the benefits in the coming quarters?
Sugar prices have eased for now but again it is relative. The year before, in 2008-09, we had seen sugar prices between Rs17-19 per kg whereas in 2009-10 prices shot up and reached almost Rs38 per kg in January 2010 and are now in the range of Rs29-31 per kg. Sugar has been the most volatile commodity last year. As far as wheat is concerned, the season is currently on. Government has announced its estimates and unless some major unexpected event takes place, we do not expect wheat prices to spiral as they have done in the past.
In terms of brand building, is the spend more on advertising or promotional activities?
I would say it is a healthy mix of both. There are markets where traditional media does not reach effectively or give the desired impact. Our media investments are growing faster than any other promotional activities and that is just one part of our consumer activity.
Activities like the one we did at the beginning of the year with NutriChoice, which was ‘start your year with a healthy lifestyle,’ connects well with consumers, though it may not be just a pure media activity. It all depends on the brand. In the case of Tiger biscuits, we do not rely only on conventional media in rural areas. Around 70-80% of our brand investment is done to directly impact consumer behaviour.
You have done around 4-5 price hikes last year. Are more in the offing?
Pricing is a dynamic variable, which consists of largely two sub-components. One is the input cost, which we temper with any cost-efficiency programs we have internally; the second is the competitive environment. Our brands command a price premium of 10-15%, whether it is Marie or Milk Bikis. In differentiated products like BritanniaJim Jam biscuits, the premium commanded is even higher.
Your market share has witnessed a fall. Is it a matter of huge concern?
We saw a decline in share, in the first half of the year - especially in Glucose biscuits. In the second half, we have done better and arrested that decline - so the decline is not a trend. Secondly, there are a large number of areas where we sell our products and which are not captured in the audited off take. These include bus-terminals, railway stations etc. We lost market share in the first half and stabilized in the second half so, overall for the year, there has been some decline.
Briefly comment on your numbers. What led to such a decline in profit?
Commodity prices especially sugar and dairy products saw unabated inflation. Overall our commodity input costs have gone up by around Rs.2bn. This coupled with an increase in brand investment in an intensely competitive market, adversely impacted the bakery margin. During the year, we increased brand investment by 30%, which diluted margin by 1%. We also had some one-off exceptional items that eroded profitability like provision for losses from our Sri Lanka operations and certain tax-related matters; ie. excise duty levied on an input which was not the case earlier.
In a very competitive market, the first six months saw lethargic off take and growth picked up in the second half. Specifically in the last quarter, Britannia top line growth was around 22%.
We reported sales of Rs34,014mn for the year ended 31st March 2010, a growth of 9.3% over the previous year. Net Profit for the year stood at Rs1,165mn, a decline of 35.4% and was impacted by one-off cost in excess of Rs400mn mentioned earlier.
Consolidated sales of Rs37,708mn for the year ended 31st March 2010, registered a growth of 10.2% over the previous year. Net Consolidated Profit for the year stood at Rs1,031mn, a decline of 28%.
You have also decided to split the face value of your share.
Yes, the Board of Directors recommended a dividend of 250% and has also approved, subject to shareholders consent, sub-division of each equity share of the face value of Rs10 into 5 equity shares of Rs2 each.