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Britannia on to Cost Cutting to Grow Capacity

Britannia is found to be slowing down its capital expenditure as there is a reduction in volume growth in Britannia’s biscuits and bakery business as there is a decrease in the consumer spending and it is getting weaker with time.

There have been cost cuttings in the company says Britannia’s MD Varun Berry in a post-earnings call with analysts earlier this week that they have reduced wastage of resources or products and tightened their fixed costs. They have been looking at every possible method of capacity extraction, for postponing the capital investments in capacity. He also says that they are trying to get the best from what they already have.

The cost cutting have been taking place in the company by various means as the factory and consumer distance is been reduced from 650km to 350km. The company says that reduction of every 10 km results in saving an amount of about Rs. 5 crore on yearly basis.

There was a growth in Q3 profit by 24% as stated by the makers of Marie and Good Day biscuits of Rs 373 crore on a revenue of 2,936 crore. Varun Berry states that it is a challenging situation and it would make no sense to push full throttle for volumes as there is a certain capacity of the system to be elastic.

He also says that the company has focused its energies and are driving the top line as much as they can. They are not dumping it all and the energies have been focused on making sure that the systems and processes that are been set by the company are working out with high efficiency and consuming the least time for the future.

All these circumstances are resulting in the delay of the national rollout of a few products that were on the process being test marketed. Britannia had also launched croissants last year in partnership with a Greek Company ‘Chipita’ and had said in the month of November about their plan of reaching across the country in next three months.