Britannia Industries Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENT

The food industry was impacted by weak demand sentiment throughout the year, especially in rural areas. Further, pricing pressures and changing consumer preferences also contributed to the overall decline in demand. Softening of commodity prices led to increased competition from local players and effects of geopolitical tensions continued to be felt extensively.

Despite the volatile business environment prevailing during the year, your Company emerged with more resilience. The significant investments made in brands, judicious price increases, sharp focus on managing input costs and greater competitiveness enabled the Company to successfully navigate challenges.

Your Company was able to ensure availability of products and overcome volatility in prices of essential commodities through prudent procurement decisions. Moreover, the Company expanded its distribution footprint in rural areas of the country which enabled good growth in focus states despite the generally subdued rural demand.

The industry responded dynamically to evolving consumer preferences, especially the rising demand for healthier food options which is not just an urban trend now, but is also slowly emerging in Tier 2-3 cities. Concurrently, the digital transformation of the sector, marked by increased investments in E-commerce platforms and digital marketing, facilitated enhanced customer engagement and optimized distribution channels, contributing to sales growth and market expansion.

India continued to be one of the fastest growing economies of the world last year. The governments spending on creation of physical and digital infrastructure over the years, rising incomes of people and a strong domestic market augurs well for the economy.

Your Company is optimistic about its growth prospects and continues to make sizable investments through a mix of greenfield plants and additional lines in existing plants which helps the Company to build the capabilities to meet the needs of present as well as the future.

Your Company will continue to innovate and invest in its power brands with a strong focus on managing cost efficiencies to drive demand in key categories and geographies.

(A) BAKERY BUSINESS Biscuit

The Biscuit category witnessed macroeconomic headwinds on account of geopolitical tension, climate change and increasing category competition. Your Company took strategic action on the pricing front while ensuring continued investment in the growth and development of its brands leading to yet another successful year.

Cake

The Cake category continues to grow through both Sliced as well as Non-Sliced formats, especially at Rs5 and Rs10 price points. The category remains fragmented with strong regional players and specific offerings, making it important for the Company to be present in all the key formats. Large packs and products at higher price points have shown substantial growth, driven by Premium Channels like Modern Trade and E-commerce.

The increasing penetration provides an opportunity for driving newer experiences in this category.

Rusk

The increased competition from local players affected growth in the Rusk category in the initial part of the year. However, Britannia Toastea experienced a rebound in the second half of the year, thereby regaining its growth momentum. Further, your Company also introduced innovations like Cake Rusk and Multigrain Rusk during the year, strengthening its product portfolio and market position.

Bread

Bread is the staple food for many people and your Company is focused to drive this category. It is witnessing growth in both Sliced as well as Non-Sliced varieties of Bread. Category landscape is evolving as people are increasingly valuing convenience, seeking healthier options and trying out new recipes.

(B) DAIRY BUSINESS

India continues to lead the world in milk production accounting for ~23% of the global production.

In the Indian Dairy Industry, the organized segment, representing around 35%-36% of the market by value, has experienced rapid growth compared to the unorganized segment. Over the next few years, the organized dairy industry is likely to witness good revenue growth, supported by demand for value-added products, steady liquid milk sales and rise in the retail prices. While packaged liquid milk remains a key growth driver of the industry, healthy demand and growth is also expected in cheese, yogurt and other value added dairy products.

(C) ADJACENT BUSINESS Cream Wafer

Wafer is a highly unorganized & fragmented category with a market size of ~Rs1,000 Crores and healthy annual growth. As one of the pioneering brands to enter this category, your Company is well placed to achieve growth and become a leader in this category, leveraging its strong brands, innovative approach and nationwide presence.

Centre-Filled Croissant

There has been an increased adoption of Western snacking in the recent years and Croissant has emerged as one of the key snacks in this space. It has seen significant consumer acceptance in the last couple of years. This presents an opportunity for your Company to expand its reach and achieve growth in the urban markets where it is most salient. Salted Snacks In India, snacking especially savory snacking remains crucial to food consumption. Packaged savory snacking is of significance to your Company and is growing at a double digit rate. The category is impulsive and highly competitive, with established national as well as regional players. Further, constant innovation in formats, flavors, textures and price points drives the growth in this category. Shift in category penetration, increased consumption frequency and emergence of healthy snacking are some of the key trends being leveraged by your Company to build this category.

(D) INTERNATIONAL BUSINESS

International Business for your Company is largely centered around Middle East, Americas, Africa and Asia Pacific. The business environment in these geographies is highly competitive with the presence of large local and international players. International business is also increasingly fraught with other challenges such as geopolitical conflicts, localisation of workforce, changes in tariff barriers, exchange rate fluctuations, commodity price fluctuations, modern trade dominance etc., which have been mitigated to some extent through premium pricing strategies benchmarked against competition. Preference for locally manufactured products and E-commerce channels is also growing in emerging economies especially in GCC (‘Gulf Coperation Council) Countries and Americas.

II. BUSINESS STRATEGY (A) BAKERY BUSINESS

Biscuit Scale up distribution for key brands:

In a difficult year marked by adversity, your Company ensured continued patronage of its consumers and leadership in the category. The flagship brand Britannia Good Day extended its last campaign and brought smiles to everyones faces once again. The campaign targeted regional nuances to connect with mass audience and steadily reinforced its brand affinity in doing so. Milk Bikis and Marie Gold also leveraged their position in key markets with progressive campaigns promoting modern parenting values and new entrepreneurial avenues for women. The outcome of such perfectly executed campaign strategy resulted in growth in rural distribution despite the reported rural slowdown for the biscuit category and food industry at large.

Introduction of the next wave of pioneering experiences:

In keeping with its position as a category leader, your Company launched a slew of products to refresh its portfolio and keep its existing and new consumer base emphatically engaged. The sweet, salty and spicy notes of the new 50 50 Golmaal made it the first product innovation to reach Rs100 Crores in revenue in its first year of launch. Treat Cookies and Wafers also saw new launches in exciting new flavours and formats to reinvigorate their categories. Jimjam Pops has also upended the traditional norms of a cream biscuit and found favour with consumers leading to a great run in the first year.

Digitisation and Marketing Transformation:

Your Company remains a winner in modern consumer engagement with a host of campaigns spanning the gamut of marketing capability in todays age. Good Day launched the ‘Bank of Small Wins in partnership with another leading Gen-Z brand, Myntra and scored high relevance and affinity in doing so. Marie Gold introduced the ‘HerStore marketplace to give women entrepreneurs an innovative new forum to interact with consumers. ‘The 4^th Umpire campaign of 50 50 in partnership with Google Pay served as a landmark in gamification and engagement.

NutriChoice also extended its WhatsApp Chatbot with new features on the occasion of ‘World Diabetes Day while the ‘NutriPlus app democratized access to advanced digital health solutions.

Cake

Your Company has strategically diversified its overall portfolio to ensure presence across all the significant segments and price points. During the year, your Company introduced Veg Layer Cake at Rs5 and also Plum Cakes at affordable price point. Further, your Company entered the growing large pack segment in Slice Cakes with English Tea and Choco Chip Orange cakes. Your Company continues to strengthen its core portfolio through Premium Innovations and New-to-India formats.

Rusk

To maintain its commitment to deliver quality products at competitive prices, your Company expanded its manufacturing capacity. This strategic move aims to increase the consumer base and market share in the category, ensuring continued growth and success. Your Company remains focused on expanding its portfolio with unique products to sustain its competitive edge.

Bread

Your Company is committed to develop a comprehensive and consumer centric product portfolio. Towards this objective and in response to market trends, your Company introduced Cr?me-fill Rolls in the mass segment and Millet Bread in the health segment.

Your Company plans to invest in enhancing manufacturing and distribution capabilities, while also prioritizing value creation through the expansion of channels such as E-commerce and modern trade.

(B) DAIRY BUSINESS

Product and Innovation:

Your Companys strategy is to continue its focus on the core brands as well as build a portfolio to cater to various palates, taste and preferences. During the year, your Company launched ‘Britannia The Laughing Cow Cheese pursuant to the Joint Venture Arrangement with Bel SA, renowned French cheese maker. As part of this Joint Venture, your Company also launched first-in-category innovations, Cheese Triangles and Creamy Cheese Sachets in India.

As part of your Companys strategy to inroduce disruptive innovations, your Company launched ‘Britannia Winkin Cow Bourbon Milkshake, a 1^st in category initiative which extended the equity of your favourite brand Bourbon to the milkshakes category.

Dairy Backend Capabilities:

Your Company has scaled up operations in its state-of-the-art Dairy manufacturing facility at Ranjangaon, which is fully compliant with global standards. This facility is well equipped to function as a multi category dairy plant with capabilities of manufacturing yogurt, ghee, cheddar/processed cheese, skimmed milk powder etc. Milk collection has also been scaled-up to ~84,000 litres per day from ~3,000 farmers.

Growth through Channel Mix:

The key to achieve business objectives is increasing availability of products and your Company has improved the distribution of its Winkin Cow and Cheese products across conventional channels while establishing E-commerce as a crucial component of its distribution strategy. Your Company has also leveraged Premium Milkshakes and Cheese portfolio to further build salience in modern trade, E-commerce and premium channels.

(C) ADJACENT BUSINESS

Cream Wafer

The Cream Wafer category is growing rapidly and represents a significant opportunity for substantial growth for your Company in the near future. The consumer acceptance of Treat Creme Wafers accompanied by the restage of value portfolio (Rs5 & 10) has encouraged your Company to invest and expand its product range in the sticks/rolls segment as well.

While prioritizing the front-end excellence, your Company is also enhancing its manufacturing capabilities to meet the demands of this category.

Centre-Filled Croissant

Treat Croissant has successfully penetrated key geographies and channels during the last two years since its nationwide launch. The strategy going forward will be on increasing awareness of the category among Indian consumers through targeted engagement efforts. Your Company will continue its investment in new innovations like Strawberry Croissant launched in FY 2023-24, with more such innovations planned in the near future.

Salted Snacks

Your Company has been piloting its savory snacking category under the brand ‘Timepass in selected southern and western markets. A variety of differentiated products such as Cheesy Tubes and Tic-Tac-Toe, offering competitive value propositions and vibrant visual identities were launched during the year. Your Company has entered the healthy snacking market with the introduction of Makhana (Fox Nuts) under the brand ‘The Better Snack Co. which also has a strong online presence.

(D) INTERNATIONAL BUSINESS

Your Company continues to remain focused on strengthening brand equity & affirmity among Indian diaspora, product innovation & diversification, expanding local operations, customised distribution strategies and deepening penetration in established export markets.

Your Company has prioritised establishing strong portfolio pillars in the rapidly growing categories of chocolate-based products, crackers and healthy offerings.

Further, digital communication strategy has been transformed to include locally relevant narratives. This encompasses initiatives such as organizing the Summer Snacktivity Camp in the UAEs sweltering summers, empowering children to take charge of Britannias social media platforms during the back-to-school period and showcasing the delicious creations of Arab chefs in celebration of Ramadan festivities. The International Business continued to witness good double-digit value growth across regions for second year in a row. The primary growth drivers were distribution expansion, improved in-market execution in GCC, upsurge in revenues in Egypt and Kenya through local operations, deflation in commodity prices, stable double digit growth in developed markets driven by better penetration and portfolio expansion.

The working capital challenges in these markets are also being addressed by arranging necessary funds, improving inventory and receivables efficiency. Implementation of cost efficiency measures, controlling overheads and optimizing sales promotion expenditure improved the Companys performance during the year.

III. SEGMENT INFORMATION

The operating segment of the Company is identified to be ‘Foods.

IV. OUTLOOK

The foreseeable future of Indian industry looks promising with strong growth forecasts and an expectation of leading the next phase of global growth. Your Companys growth will largely depend on the strategic management of pricing, basis inflation and various global factors. The outlook on rural growth and the Companys continued success would be dependent on a variety of climatic factors such as the impact of the El Nino phenomenon on weather patterns, heat waves across the country and quantum of monsoon rainfall. However, the arrival of a favourable monsoon as projected, should result in good harvests and help stabilize demand and prices.

Rural consumer expenditure is also likely to recover gradually and help alleviate some of the industrys concerns. Further, the continued support from the government by way of capital expenditure on developing infrastructure and business-friendly economic schemes should help foster strong growth. Amidst rising competition, fluctuating commodity prices and climatic changes, your Company is expected to grow continuously on the strength of its renowned brands, product innovation, cost efficiencies and an ever-expanding distribution network. These attributes will play a significant role in your Companys success in the years to come.

International business continues to face challenges on account of the Russia-Ukraine war which is significantly affecting wheat flour prices. Further, the ongoing geopolitical tensions in the Middle East will also have an impact on business operations.

Your Company is committed to achieve strong growth in the GCCs key markets while strategically enhancing its market share in the UAE (‘United Arab Emirates) and KSA (‘Kingdom of Saudi Arabia). Additionally, your Company aims to develop its mainstream presence across the Americas and Asia Pacific with a focus on developing alternative distribution channels in the US (‘United States) to serve diverse communities such as Hispanics and Arabs. Also, regulatory challenges in UK (‘United Kingdom) and Europe are being resolved through your Companys plant in Mundra and changes in its distribution strategies.

The International Business outlook appears promising in emerging markets like Egypt and Kenya, where the Company has well established local manufacturing operations. Your Company is also seeking business opportunities in major biscuit markets such as South Africa through local manufacturing and other strategies.

V. OPPORTUNITIES AND THREATS (A) BAKERY BUSINESS Biscuit

The potential for growth within the biscuit category remains significant and diverse. Although the per capita consumption of biscuits in India continues to lag behind the levels seen in developed countries, the consumers perception of this category remains favorable. These factors therefore motivates your Company to leverage innovation in creating superior products, enhancing its brand reputation and continuing its path towards another successful year.

The immediate threats in this category are increasing competition and high commodity prices due to climatic changes and other macroeconomic factors.

Cake

There is a significant opportunity to grow in this category through innovative products/formats at attractive price points.

However, presence of strong regional players, fluctuating commodity prices and low margins continue to impact the profitability of this category.

Rusk

The Rusk category presents significant potential for growth, especially for companies with a national presence, given its fragmented and unorganized nature. Expanding the consumer base is achievable by providing differentiated products of superior quality at competitive prices.

However, potential threats include decreased consumption due to increasing health expectations and growing preference for local players.

Bread

There are substantial growth prospects in this category through introduction of healthy and value-added products and expansion into new markets. Major threats in this category includes fluctuating commodity prices, consolidation and investments made by larger industry players.

(B) DAIRY BUSINESS

There is immense potential in this category to leverage technology, expand operations and increase market presence to achieve rapid growth. It is also witnessing expansion through the integration of value-added products to address changing consumer needs and preferences. Moreover, the dairy business plays a significant role in your Companys longterm commitment to develop sustainable businesses. Increasing milk prices continue to be a major challenge to achieve growth in this category, accompanied by rising trend in input costs like labor and raw materials.

(C) ADJACENT BUSINESS

Cream Wafer

This category presents significant growth opportunities owing to its fragmented nature, low penetration and limited competition from major players. However, competition is intense, marked by the emergence of numerous new entrants from national and international markets offering differentiated and premium products at competitive prices. These developments could potentially affect your Companys expansion plans for this category.

Centre-Filled Croissant

The opportunity within this category is to achieve a dominant position in the Indian market for the long term. However, achieving this goal poses a considerable challenge, as the product format is entirely new for Indian consumers, acting as a barrier to growth within this category.

Salted Snacks

Competition in this category is intense, both at national and regional levels, with market leaders investing continuously in awareness campaigns, trade discounts and consumer promotions to maintain their market share. Further, online premium snacking is driven by innovation and awareness building which is largely dominated by new-age brands and start-ups. Your Company remains committed to drive growth by leveraging distribution in mass segments and innovating within emerging premium segments.

(D) INTERNATIONAL BUSINESS

Increasing Oil prices in Middle East, geopolitical tensions, mass departure of expatriates, localization of workforce, changes in trade barriers and currency exchange rate fluctuations continue to affect the International Business. Furthermore, emerging economies are placing more emphasis on locally manufactured goods.

VI. RISKS AND CONCERNS

The Indian economy has shown resilience and maintained its strength despite challenging circumstances. It may, however experience stress in the upcoming months due to geopolitical tensions, muted global financial forecasts and irregular crop patterns. The short term prospects for your Company could be impacted by changes in the prices of input commodities like wheat, sugar, milk, chocolate and edible oil. Sustaining your Companys strong performance will be dependent on effective management of input prices and economic downturns to achieve positive outcomes in terms of both value and volume. Further, the potential for growth may get affected by increasing consumer sensitivity to pricing amidst intense competition and decline in purchasing power.

VII. FINANCIAL AND OPERATIONAL PERFORMANCE

The key highlights of the financial performance (on standalone basis) are:

Particulars	2023-24	2022-23
Revenue from Operations	16,186.08	15,618.42
Operating Profit	2,799.63	2,546.69
Profit After Tax	2,082.05	2,139.30

VIII. KEY FINANCIAL RATIOS

The key financial ratios (on standalone basis) along with the details of significant changes in these ratios are given below:

Particulars	Unit of Measurement	2023-24	2022-23
Net Profit Margin	%	12.7	13.5
Operating Profit Margin	%	17.3	16.3
Debtors Turnover Ratio	Times	50.3	56.8
Inventory	Times	38.0	40.4
Turnover Ratio
Debt Equity Ratio*	%	57.8	83.7
Current Ratio	Times	1.2	1.1
Interest Service	Times	19.9	17.9
Coverage Ratio
Return on Net Worth#	%	62.1	76.6

* Debt Equity Ratio has changed by 31%, primarily on account of change in debt balance.

^# Return on Net Worth has changed by 19%, primarily on account of increase in net worth.

IX. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Companys Internal Control Systems are commensurate with the nature, size and complexity of its business.

The Directors have laid down Internal Financial Controls to be followed by your Company and such policies and procedures have been adopted for ensuring orderly and efficient conduct of business, adherence to Companys policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information. An independent firm carries out the Internal Audit of your Company and reports its findings to the Audit Committee on a regular basis. Internal Audit provides assurance on functioning and quality of internal controls along with the adequacy and effectiveness through periodic reporting. Internal Risk and Control function also evaluates organisational risks along with the controls required for mitigating those risks.

Your Company has a Code of Business Conduct for all employees and a clearly articulated and internalized delegation of financial authority. These authority levels are periodically reviewed by the Management and modifications, if any, are submitted to the Audit Committee and the Board for approval. Your Company also takes prompt action on any violations of the Code of Business Conduct by its employees.

To further strengthen the Internal Control Process, your Company has a Compliance Management System in place to monitor and enforce timely compliance with the applicable statutory rules and regulations. During the year under review, the Internal Financial Control Audit was carried out by the Statutory Auditors and their Report on the same is forming part of the Annual Report.

X. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Anchored on the Employee Value Proposition of INVITi)NG, IGNITi)NG, CREATi)NG and RESPECTi)NG, your Company has created an inclusive work environment that encourages an ownership mindset, empowerment, innovation, thereby enabling creation of value for the community and environment.

Kincentric Best Employer 2023

Your Company has been recognised as one of the top 15 best employers in the nation, having won the ‘Best Employer 2023 title for the 5^th consecutive year in a row, according to the Kincentric Best Employer Study, India (2023). The study was a combination of the engagement sentiment of colleagues in the organisation as well as an audit of policies and best practices. The recognition of your company in this prestigious award for the 5^th time underscores the organisations continuous pursuit of creating a positive and engaging workplace culture that supports employees and drives Companys growth.

Great Manager Awards, 2023

Your Company is dedicated to create a professional environment where the best managerial practices are nurtured and recognised. As a testament to this commitment, three managers from your Company were honored as Great Managers, ranking among the top 100 managers nationwide at the Great Managers Awards 2023 (organized in collaboration with ET and People Business). Your Company was also recognised among the Top 50 Companies with Great Managers. Out of 175 participating Companies, featuring among the Top 50 is a proud moment and prestigious recognition for Britannia.

Holistic Well-Being

Your Companys holistic wellness initiatives viz., Mindful Mondays, Wellness Wednesdays and Fitness Fridays are implemented to enhance employees physical, emotional, financial, and social well-being, aligning seamlessly with its core employee value propositions. On Mindful Mondays, Company invites experts to conduct sessions on mindfulness and finance, creating an empowering environment that supports personal and financial health, reflecting its INVITi)NG ethos of a workplace that feels like home.

During Wellness Wednesdays, senior psychologists lead discussions on emotional wellness, fostering a culture of respect and understanding, which resonates deeply with your Companys RESPECTi)NG value. Further, Fitness Fridays energize the team with activities focused on physical health, igniting a passion for well-being and performance beyond the usual scope of work, in line with your Companys IGNITi)NG principle.

These programs are integral to your Companys commitment in CREATi)NG enriching careers at Britannia, where learning, growth, and personal development are paramount. Employee safety and well-being has always been a priority for your Company. Over the last few years your Companys focus has been to enhance the well-being experience for the employees and their families through the Companys domain of Britannia Cares.

Respect for the community and environment are strongly entrenched in the ethos of your Company. In line with its sustainability agenda ‘DO THE RIGHT TiNG and EVP pillar ‘RESPECTi)NG, your Company has re-introduced its PAN India Employee Volunteering Intervention. There were 4,479 permanent employees on the rolls of Company as on 31 March 2024.

XI. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, competitive actions, disruptions due to pandemic and natural calamities, changes in government regulations, tax regimes, economic developments in India and in countries in which the Company operates and other incidental factors.