Britannia plans Rs 700 crore capex, bullish on rural demand

Britannia Industries, FMCG major, plans to invest around Rs 700 crore (US$ 99.30 million) over the next two-and-half years for its new facilities.

Although, the rural demand remained stable during the coronavirus outbreak and the company will focus more on its core products, its managing director Mr Varun Berry said.

Mr Berry added, "The company is looking at some capex (capital expenditure) of more than Rs 700 crore (US$ 99.30 million) over the next two-and- half years."

The company plans to set up new manufacturing facilities in UP, Tamil Nadu, Bihar, and Odisha, he said.

The company’s net profit increased by 118 per cent to Rs 542 crore (US$ 76.89 million) and the turnover was Rs 3,420 crore (US$ 485.18 million), up by 26.6 per cent in the first quarter of current fiscal year, over the corresponding period last year.

The company plans to prioritise its core products as the future is uncertain for the next six to nine months. The focus will be on less on innovation, Mr Berry said.

He added that the rural demand was not affected by the coronavirus pandemic and it will continue to grow at a higher pace than urban.

The COVID-19 crisis will leave a permanent impact on the consumer behaviour, and home consumption will increase.

"During the first quarter, the company has been able to unlock efficiencies and prioritised on high gross margin and premium products," he said.

The cost has been cut by reducing working capital as the inventory levels were low, he added.

Regarding commodity prices, Mr Berry said there was deflation in flour and milk products, while sugar saw a three per cent price rise.

 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.