Britannia Industries

Infobox Company
name = Britannia Industries Limited

type = Private
genre =
foundation = 1892
founder =
location_city = Kolkata and Bangalore; R&D Chennai
location_country = India
location =
locations = 300 stores (2000)
area_served = India
key_people = Nusli Wadia, Chairman
Ms. Vinita Bali, (Managing Director)
industry = Food
products = Biscuits "Tiger", "Britannia",
milk
services =
revenue = increase Rs 2,200 crore
operating_income =
net_income =
owner = Danone, Kalabakan Investments
num_employees =
parent = Wadia BSN,
Associated Biscuits Intl. Holdings
divisions =
subsid =
slogan =
homepage = [http://www.britannia.co.in/ www.britannia.co.in]
footnotes =
intl =

Britannia Industries Limited is an Indian company based in Kolkata that is famous for its Britannia and Tiger brands of biscuit, which is highly recognised throughout the country. Britannia is India’s largest biscuit firm, with an estimated 38% market share.Ruchita Saxena, [http://www.business-standard.com/common/storypage.php?autono=300420&leftnm=1&subLeft=0&chkFlg= Battle-scarred Britannia on expansion spree] , Business Standard, October 06, 2007]

The Company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products like cheese, butter and milk.

The Britannia's fame is largely acknowledged through the colourful Britannia logos that Indian cricketers such as Virender Sehwag, and Rahul Dravid wear on their bats.

Growth and profitability

The company is a growing and profitable one. Between 1998 and 2001, the company's sales grew at a compound annual rate of 16 per cent against the market, and operating profits reached 18 per centMore recently, the company has been growing at 27 per cent a year, compared to the industry growth rate of 20 per cent, At present, 90 per cent of Britannia’s annual revenue of Rs2,200 crore comes from biscuits

Business

Dairy products

Dairy products contribute close to 10 per cent to Britannia's revenue.Abhrajit Gangopadhyay, [http://www.blonnet.com/bline/2002/01/08/stories/2002010800950500.htm Danone move may hit Britannia's dairy plans] , Hindu Business Line, January 7, 2002] Britannia trades and markets dairy products, and its dairy portfolio grew at 47% in 2000-01 and by 30% in 2001-02. Britannia holds an equity stake in Dynamix Dairy and had outsourced the bulk of its dairy products from its associate. Its main competitors are Nestle India, and the National Dairy Development Board (NDDB).Aarati Krishnan, [http://www.blonnet.com/iw/2002/02/03/stories/2002020300110800.htm Britannia Industries: Pare exposures] , Hindu Business Line, Feb 03, 2002]

Joint venture with New Zealand Dairy

On October 27, 2001, Britannia announced a joint venture with Fonterra Co-operative Group of New Zealand, an integrated dairy company from procurement of milk to making value-added products such as cheese and buttermilk. Britannia planned to source most of the products from New Zealand, which they would market in India. The joint venture will allow technology transfer to Britannia. Britannia and New Zealand Dairy each holding 49% of the JV, and the remaining 2 per cent held by a strategic investor. Britannia has also tentatively announced that its dairy business would be transferred and run by the joint venture.

Authorities' approval to the joint venture oblige the company to start manufacturing facilities of its own. It would not be allowed to trade, except at the wholesale level, thus pitching it in competition with Danone, which had recently established its own dairy business.

Biscuits

The company's factories have an annual capacity of 433,000 tonnes. The brand names of biscuits include "VitaMarieGold", "Tiger", "Nutrichoice Junior","Good Day", "50 50", "Treat", "Pure Magic", "Milk Bikis" and "Good Morning".

"Tiger", the mass market brand, realised $150.75 million in sales including exports to countries including the U.S. and Australia, or 20% of Britannia revenues in 2006.

The company alleged that Danone has violated its intellectual property rights in the Tiger brand by registering and using "Tiger" in several countries in 2006 without the consent of the Britannia Board. Managing Director Vinita Bali claims the company found out in 2004 Danone launched the Tiger brand in Indonesia in 1998, and later in Malaysia, Singapore, Pakistan and Egypt when it attempted to register the Tiger trademark in some of these countries.Ruth David, [http://www.forbes.com/markets/2007/09/20/brittania-danone-legal-markets-equity-cx_rd_0920markets41.html Indian Cookie Maker Taking Danone To Court] , Forbes, September 20, 2007] Whilst it was initially reported in December 2006 that agreement had been reached, [ [http://goliath.ecnext.com/coms2/gi_0198-369415/Danone-to-return-Tiger-to.html Danone to return 'Tiger' to Britannia] , Knight-Ridder Tribune Business News, December 4 2006] it was reported in September 2007 that a solution remained elusive. In the meantime since Danone's biscuit business has been taken over by Kraft, the Tiger brand of biscuits in Malaysia has been renamed Kraft TiGER Biscuits beginning September 2008.

Britannia initiated legal action against Danone in Singapore in September 2007. [ [http://www.deccanherald.com/Content/Sep212007/business2007092026383.asp Britannia sues Danone in S'pore] , Deccan Herald, September 21, 2007]

Ownership and relationship between major shareholders

The Wadias' Kalabakan Investments and Groupe Danone have two equal joint venture companies, Wadia BSN and UK registered Associated Biscuits International Holdings Ltd., which together hold 51 per cent stake in Britannia.Dev Chatterjee, [http://www.business-standard.com/compindustry/storypage.php?leftnm=lmnu1&subLeft=1&autono=289603&tab=r Danone takes arbitration route to end Wadia ties] , Business Standard, July 1, 2007] The ABIH tranche was acquired in 1992, while the controlling stake held by Wadia BSN was acquired in 1995. It was agreed that, in case of a deadlock between the partners, Danone is obliged to buy the Wadia BSN stake at a "fair market value". ABIH which has a separate agreement signed in 1992 and is subject to the British law. [Kala Vijayraghavan, [http://economictimes.indiatimes.com/articleshow/498004.cms ABIL joins Britannia-Groupe Danone battle] , The Economic Times, 21 Nov, 2006]

Wadia was to be Danone's partner in the food and dairy business, and product launches from Groupe Danone’s were expected but never materialised despite the JV being in existence for over 11 years in India. Under the 1995 joint venture agreement, Danone is prohibited from launching food brands within India without the consent of the Wadias. [Ruth David, [http://www.forbes.com/markets/2007/06/25/danone-brittania-wadia-markets-equity-cx_rd_0625markets1.html Danone's Indian Cookie JV Set To Snap] , Forbes, June 25, 2007] In addition, the partners agreed there would be the right of first refusal to buy out the remaining partner in the event of the other wishing to sell its holding. [http://www.myiris.com/newsCentre/newsPopup.php?fileR=20070621074733126&dir=2007/06/21&secID=livenews Danone may dissolve ties with Britannia] , IRIS NEWS DIGEST, 21 June 2007, Retrieved 2007-07-18]

In May 2007, Nusli Wadia told the Ministry of Commerce and Industry that Danone invested in a Bangalore-based bio nutrition company, Avesthagen, in October 2006 in violation of the government's Press Note 1, 2005, which requires a foreign company to obtain the consent of its Indian joint venture partner before pursuing an independent business in a similar area, including joint ventures based purely on technical collaboration. Danone argued that Press Note 1 did not apply to it as it did not have a formal technology transfer or trademark agreement with Avesthagen, and that its 25 pct holding in Britannia was indirect. [ [http://www.abcmoney.co.uk/news/25200777303.htm Danone denies JV with India's Britannia; to proceed with solo plans - report] , Thomson Financial, 25 May 2007] Wadia also filed a case in the Bombay High Court for a breach of a non-compete clause in that connection. The court ordered Danone not to alienate, encumber or sell shares of Avestagen. [ [http://news.moneycontrol.com/mccode/news/article/news_article.php?autono=254762 Wadias take Danone to court] , December 5, 2006]

In September 2007, the Foreign Investment Promotion Board of India rejected Danone's claims that it does not need a non-compete waiver from the Wadias to enter into business in India alone. [ [http://www.domainb.com/companies/companies_b/britannia/20070928_wadia.html Danone needs NOC from Wadias: FIPB] , 28 September 2007]

In June 2006, Wadia claimed Danone had used the Tiger brand to launch biscuits in Bangalore.

References

ee also

* Wahaha

External links

* [http://www.superbrandsindia.com/superbrands2003/britannia/index.htm Brands described at Superbrands India, 2003]
* [http://www.britannia.co.in/ Company website]