Britannia Sees 4-5% Cost Inflation, May Hike Prices

Kolkata, Aug 5 (PTI) Leading biscuits maker Britannia Industries Ltd on Monday said it anticipates a cost inflation of 4-5 per cent going forward, and the company will take a call on price hike accordingly.

It expects an increase in the cost of some raw materials, including cocoa, flour and sugar, Vice Chairman and Managing Director Varun Berry said.

“We need to see which brands and categories can bear a price hike if necessary. The hikes would not be like previous times when we saw inflation in excess of 20 per cent,” Berry told analysts during a post-earnings concall.

He, however, emphasised that the company will remain vigilant to ensure stable growth and profitability.

“There has been a trend of prices (of raw materials) going up marginally, but we have managed. The price rollbacks, whatever was required, have been done and we are in a phase of consolidation now. Our volume growth is now close to double digits,” Berry said.

He also noted that price hikes might negatively impact the recovering demand, especially in rural markets where consumers have been preferring the cheapest options within the same product category.

Britannia Industries has seen significant market share gains in rural India compared to urban centers during the April-June period. It is focusing on increasing rural sales by expanding its distribution network.

As of June, the company has a direct presence in 2.8 million outlets, and has increased the number of its rural distributors by 7 per cent year-on-year.

There was, however, no word on one of its oldest biscuits facility at Taratala in Kolkata, where both permanent and contractual employees were recently offered VRS, and the plant production was halted.

Meanwhile, the Kolkata-based FMCG major reported a 10.85-per cent rise in consolidated net profit to Rs 504.88 crore for the June quarter, aided by volume growth and improved operating margins.

The company had posted a bottomline of Rs 455.45 crore for the April-June period a year ago, according to a regulatory filing.

Revenue from sale of products was up 4 per cent to Rs 4,129.92 crore in the reporting period.