Presented By

Ankit Kohli

Ashish Bhiwaniwala

1. ECONOMY AND INDUSTRY VIEW OF THE SECTOR

2. COMPANY ANALYSIS

2.1 DABUR

2.2 BRITANNIA

1. Political

• Stable government

• Subsidies

• Trading policies

2. Economic

• Interest rates

• Exchange rate

• Per capita income

3. Social-Cultural

• Distribution of income

• Lifestyle

4. Technological

• Automation

• Innovation

5. Environmental

• Environmental regulation

• Ecological

6. Legal

• Labour law

• Consumer protection

• High import duties on raw material

• Competition for unorganised sector

• Counterfeits and fall offs

• Large domestic market

• Easy credit availability

• Rapid urbanization

• Low export levels

• Poor government spending on infrastructure

• Low purchasing power of consumers

• Presence of well established distribution network

• Policy support

• Increase in organised sector vis-à-vis unorganised sector

Strengths Weakness

Threats Opportunities

Competitive

Rivalry

(High)

Threat of

New

Entrants

(Medium)

Substitute

Products

(High)

Bargaining

Power of

Suppliers

(Low)

Bargaining

Power of

Customers

(High)

1. Competitive Rivalry

• Continuous innovation

• Competition from unorganised

sector

2. Threat of New Entrants

• High capital intensive

• Spending on advertisement is

aggressive

3. Threat of Substitutes

• Presence of multiple brands

• Narrow product differentiation

4. Bargaining power of Suppliers

• Big companies dictate price

• Numerous Suppliers

5. Bargaining power of Customers

• Low switching cost

• Influence of marketing strategies

• Availability of information due to

technological advancement.

REVENUE RURAL FMCG MARKET (2009-2013)

• Increase in tax exemption limit by Rs 50000 is positive for the FMCG sector, as it

will leave more discretionary income in the hands of consumers.

• The exemption in custom duty on crude glycerine, fatty acids, crude palm stearin,

RBD and other palm stearin and specified industrial grade crude oils will definitely

help the gross margin of two major companies HUL and Godrej Consumer

Products, the two major players in soap manufacturers.

• Excise duty on cigarettes is being increased by 72% for cigarettes of length not

exceeding 65 mm and by 11% to 21% for cigarettes of other lengths is a bad news

for cigarette manufacturer. Cigarettes have seen increased in excise duty by 18%

and 21% in last 2 budgets, which has impacted it volume.

• Reduction in excise duty from 12% to 6% on footwear of retail price exceeding ₹500

per pair but not exceeding Rs 1000 per pair is positive sign for Bata India.

• 1884-Birth of Dabur

• 1896-First manufacturing plant was set up

• 1936-Dabur became a full fledged company

• 1986-Became public limited company

• 1994-Launched IPO with a face value of Rs.10

• 2006-Approves FCCB/GDR/ADR up to $200 million

• 2010-First overseas acquisition

• 2012-Crossed billion dollar turnover mark

68%

21%

5% 5%

1%

Promoters

ForeignInstitutions

GeneralPublic

FinancialInstitutions

Other holdings

Dr. Anand Burman Chairman

Mr. Amit Burman Vice-Chairman

Mr. Mohit Burman Director

Mr. Saket Burman Director

Mr. P. D. Narang Director

Mr. Sunil Duggal Director

Mr. R. C. Bhargava Director

Mr. P. N. Vijay Director

Dr. S. Narayan Director

Mr. Albert Paterson Director

Dr. Ajay Dua Director

Mr. Sanjay Kumar Director

Strengths

Strong market position

Presence in the niche natural/herbal segment

Innovations

Weakness

Increase finance cost

Increase tax charges

Opportunities

Penetration into rural market

Positive outlook for personal care market

Threats

Competition from international players

Changing trends

Health care

Personal care

Supplements OTC-healthcare Digestives

Hair care Oral care

Foods

Home care

LTP ₹ 235

Market Cap ₹ 41,278.03 Cr.

P/E 58.75

52 week high ₹ 249

52 week low ₹ 159

Dividend Yield 0.74%

Face Value ₹ 1

Book Value ₹ 10.91

Effective Date Dividend (%)

27-06-2014 100

21-06-2013 85

27-06-2012 75

29-06-2011 65

03-08-2010 125

29-06-2009 100

19-06-2008 75

21-06-2006 100

29-06-2005 150

15-06-2004 140

14-07-2003 90

14-08-2001 50

Liabilities Assets

Balance Sheet

Income statement

Ratio Mar 10 Mar 11 Mar 12 Mar 13 Mar 14

Current ratios 1.48 1.61 1.52 1.36 1.33

Quick ratio 1.02 1.02 0.98 0.93 0.91

Debt Equity ratio 1.19 1.81 1.44 1.23 0.99

Interest

coverage ratio(in

times)

31 27 17 17 21

Inventory

turnover 8.0 5.8 6.4 7.3 7.3

EPS 2.8 3.3 3.7 4.4 5.2

EBITDA(in Rs.

Cr) 623.24 800.05 890.17 987.46 1156.26

0.00

0.50

1.00

1.50

2.00

Mar10

Mar11

Mar12

Mar13

Mar14

Current ratios

Currentratios

0

10

20

30

40

Mar10

Mar11

Mar12

Mar13

Mar14

Interest coverage ratio (in times)

Interestcoverageratio(intimes)

0.85

0.90

0.95

1.00

1.05

Mar10

Mar11

Mar12

Mar13

Mar14

Quick ratio

Quick ratio

0.0

2.0

4.0

6.0

Mar10

Mar11

Mar12

Mar13

Mar14

EPS

EPS

0.000.501.001.502.00

Debt Equity ratio

DebtEquity ratio

0

500

1000

1500

Mar10

Mar11

Mar12

Mar13

Mar14

EBITDA

EBITDA(inRs.Cr)

Name Market Cap. Sales Net Profit

Total Assets P/E

(Rs. cr.) Turnover

Dabur India 40,013.34 4,870.08 672.1 1,946.63

Godrej Consumer 31,416.15 4,079.84 564.84 3,025.24 53.06

Colgate 24,269.28 3,578.81 539.87 599.86 47.08

Marico 21,187.30 3,682.49 577.2 2,381.47 35.24

Intrinsic value as per P/E = Rs.246/-

Beta for Dabur w.r.t. S&P BSE FMCG = 0.77

Correlation = 0.96

Beta for Dabur w.r.t. CNX FMCG = 0.5

Correlation = 0.94

• Incorporated in 1892 with an initial investment of ₹ 295 in Kolkata as “BRITANNIA

BISCUIT CO. LTD.”

• On 21st March, 1918 it was incorporated as a public limited company under the

Indian Companies Act, VII of 1913

• In 1978 company came out with its IPO.

• Face Value: ₹ 10

• Sold at a premium of ₹ 5 i.e. sold at ₹15

• Total equity share sold: 18,00,000

• In 1979 the company changed its name to “BRITANNIA INDUSTRIES LTD.”

Resident Indian 23%

Company employess

2% UTI 5% LIC

3% GIC 3%

Public 64%

Shares issued during IPO Resident Indian 4,06,286

Company employees 43,714

UTI 1,00,000

LIC 50,000

GIC 50,000

Public 11,50,000

Total 18,00,000

Source: www.britannia.co.in

Promoter & Promoter Group 51%

Mutual Funds 4%

Banks & Financial Institutions

5%

FII 20%

Bodies Corporates &

Trusts 3%

Director and Relatives

0%

Foreign Nationals and NRIs 0%

Indian Public 17%

Share Holder Pattern as On 31st March 2014

Category %

Promoter & Promoter Group 50.75

Mutual Funds 3.75

Banks & Financial Institutions 4.65

FII 20.11

Bodies Corporates & Trusts 3.27

Director and Relatives 0.33

Foreign Nationals and NRIs 0.47

Indian Public 16.67

Total: 100 Source: Britannia Annual Report 2014

CHAIRMAN:

Nuslt N Wadta

MANAGING DIRECTOR:

Varun Berry (from 1st April 2014)

DIRECTORS:

A K Hirjee

S S Kelkar

Nasser Munjee

Nimesh N Kampani

Avijit Deb

Jeh N Wadta

Keki Dadiseth

Ajai Puri

Ness N Wadia

Vijay L Kelkar

Strength

The company is of Indian origin and having good

knowledge of markets.

Products of company are more preferred by the customers.

Widely accepted in all generations

Weakness

Export of the company is limited due to its production capacity.

Level of technology is not very high.

High cost is involved in research and development activities

Opportunities

Greater opportunity for expansion.

Export can be increased.

Cost competitive advantage to the company due to local conditions favourable

Threats

Imports from low cost producing countries like China

giving tough competition.

Poor transportation and infrastructure in rural markets.

SWOT

Britannia Industries Limited operates in two business segments which include

1. Bakery products such as biscuits, bread, cakes

2. Ruskand dairy products such as milk, butter, cheese, ghee and dahi.

Britannia manufactures dairy products from its plants located in Kolkata, Delhi,

Chennai, Mumbai, Uttaranchal and Orissa.

Key brands include Tiger, Good Day, Milk Bikis, Treat, 50-50, Bourbon, Little hearts,

and Marie.

Britannia exports its products to countries in the Middle East, USA, Ghana, and

Singapore.

Britannia 33%

Parle 33%

Horlicks 1%

Priya Gold 3%

Krati Oreo 3%

ITC 11%

Others 16%

OVERALL MARKET SHARE (IN BISCUITES)

Source: www.britannia.co.in

85%

10% 4%

1%

REVENUE SEGREGATON ACC. TO PRODUCTS FOR BRATANNIA

Biscuits Bread

Cakes And rusk Others

Source: www.britannia.co.in

Britannia has 19 subsidiaries in total (direct and indirect) of which 13 are Indian

subsidiaries and 6 are overseas subsidiaries.

• BRITANNIA DAIRY PRIVATE LIMITED (BDPL)

JV since 2002. Acquired 49% of the stack since 2009. The dairy products enjoy a

price premium of 8-15% across product segments.

• STRATEGIC FOOD INTERNATIONAL CO. LLC, DUBAI (SFIC)

Britannia hold a 70% stake in SFIC, one of the largest biscuit and wafer

manufacturing companies in middle east since 2007.

• AL SALLAN FOOD INDUSTIRES CO. SAOC (ASFI)

ASFI is a leading manufacturer of cookies, rolls and chocolates which is

sold under Baker’s Pride brand. It also manufacture selected Britannia’s

products at Oman for sale in Middle East. Britannia owns 65.4% stack since

2007.

• DAILY BREAD GOURMET FOOD (INDIA) PVT. LTD. (DAILY BREAD)

In 2006 Britannia forged a strategic alliance with CCD Daily Bread Pvt Ltd, a

Bangalore based company engaged in manufacturing and retailing of

premium breads, cakes and high end ready to eat foods and snacks.

LTP (as on 2nd Jan 2015) ₹ 1879.50

Market Cap ₹ 22570.04 Cr.

Market Cap free float ₹ 11285.02 Cr.

52 week high ₹ 1887

52 week low ₹ 812

Dividend % 600%

Dividend Yield 0.64%

Face Value ₹ 2

Book Value ₹ 71.17

Source: www.bseindia.com

Year Dividend Percentage

1998 50.00

1999 55.00

2000 45.00

2001 55.00

2002 75.00

2003 100.00

2004 110.00

2005 140.00

2006 150.00

2007 150.00

2008 180.00

2009 400.00

2010 250.00

2011 325.00

2012 425.00

2013 425.00

2014 600.00

PARTICULARS FY14 FY13 FY12 FY11 FY10

EQUITY AND LIABILITIES

Shareholders’ funds

(a) Share capital 23.99 23.91 23.89 23.89 23.89

(b) Reserves and surplus 769.84 526.85 385.28 302.15 258.9

Non-current liabilities 60.26 64.3 210.48 624.5 656.96

Current liabilities 60.26 64.30 210.48 624.5 656.96

TOTAL 2106.87 1883.47 1842.05 1618.81 1513.29

ASSETS

Non-current assets 847.67 784.88 641.23 432.08 509.5

Current assets

(a) Current investments 162.85 72.91 212.55 246.14 -

(b) Inventories 420.27 374.67 431.76 346.95 304.21

(c) Trade receivables 108.7 122.81 113.01 80.96 73.26

(d) Cash and cash equivalents 109.07 102.93 61.33 76.88 42.75

(e) Short-term loans and advances 245.21 188.77 161.24 72.75 197.69

(f) Other current assets 13.36

Total CA 1046.1 862.09 979.89 823.68 631.27

TOTAL 2106.97 1883.47 1842.05 1618.81 1513.3

BALANCE SHEET

PARTICULARS FY14 FY13 FY12 FY11 FY10

Revenue from operations (gross) 6945.52 6221.82 5519.96 4623.25 3796.32

Less: Excise duty -116.2 -85.91 -59.21 -33.52 -23.41

other operating revenues 83.39 49.5 24.62 19.65

Revenue from operations (net) 6912.71 6185.41 5485.37 4609.38 3772.91

Expenses

(a) Cost of materials consumed 3657.4 3350.51 3109.12 2714.38 2411.49

(b) Purchases of stock-in-trade 525.13 518.51 437.68 328.91 -

(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade -11.51 -7.67 -14.03 -15.68

(d) Employee benefits expense 262.66 226.75 211.15 177.49 164.51

(e) Other expenses 1851.83 1676.67 1430.58 1167.6 1034.05

Total Expenses 6285.51 5764.77 5174.5 4372.7 3610.05

EBIDTA 627.2 420.64 310.87 236.68 162.86

Interest -8.29 -41.3 -41.6 -43.63 -23.45

Depreciation and amortisation expense -83.18 -73.15 -61.83 -64.91 -58.23

Other income 33.59 52.24 59.14 59.01 58.25

PBT 569.32 358.43 266.58 187.15 108.7

Tax expense 173.58 98.55 66.85 52.94 5.61

PAT 395.35 259.5 199.55 134.35 103.18

INCOME STATEMENT

Year 2010 2011 2012 2013 2014

Current Ratio 1.104797 1.236404 0.802833 0.68521 0.839486

Quick Ratio 0.572394 0.715607 0.449088 0.387413 0.502223

D|E Ratio 4.34 3.96 3.497373 2.401118 1.645667

Interest Coverage Ratio 6.944989 5.424708 7.472837 10.18499 75.65742

Inventory Turnover Ratio 12.40232 13.28543 12.70467 16.51 16.45

EPS 8.64 11.25 16.71 21.72 33

EDITDA Margin 4.316562 5.134747 5.667257 6.800519 9.073142

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2010 2011 2012 2013 2014

Ra

tio

Year

CURRENT RATIO

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2010 2011 2012 2013 2014

Ra

tio

Year

QUICK RATIO

Source: Britannia Annual Report

0

10

20

30

40

50

60

70

80

2010 2011 2012 2013 2014

No

of

tim

es

Year

INTREST COVERAGE RATIO

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013 2014

RA

TIO

Year

INVENTORY TURNOVER RATIO

Source: Britannia Annual Report

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

2010 2011 2012 2013 2014

Ra

tio

Year

D|E RATIO

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014

EP

S

Year

EPS

Source: Britannia Annual Report

0

1

2

3

4

5

6

7

8

9

10

2010 2011 2012 2013 2014

PE

RC

EN

TA

GE

Year

EDITDA MARGIN

Source: Britannia Annual Report

Name

Market

Cap. Sales EPS P|E P|BV P|C

(Rs. cr.) Turnover

Britannia 22,570.74 6,307.39 45.75 41.08 26.41 36.82

GlaxoSmith Con 24,797.42 4,868.58 128.85 45.76 13.68 41.03

Nestle 61,051.40 9,101.05 118.23 53.56 25.77 41.53

• Industry P|E = 46.14

• Price of Share after Calculation

• Acc to P|E - ₹ 2271.90

• Acc to P|BV - ₹ 902.42

• Acc to P|C - ₹ 1888.60

Beta for Britannia w.r.t. S&P BSE FMCG = 0.2372

Correlation = 0.924377

Source: Graph from moneycontrol.com

Data from capitalline.com

Beta for Britannia w.r.t. CNX FMCG = 0.2763

Correlation = 0.913938

Source: Graph from moneycontrol.com

Data from nseindia.com

Source: in.finance.yahoo.com

Source: in.finance.yahoo.com