Britannia is great story of what good management can do to a relatively mediocre company. Till 2012-13, this company and its stock was considered average. Promoters (Nusli Wadia from Bomaby Dyeing) were more busy in fighting their JV partner Danone and company was lacking focus in the market. It was “also ran” company in the area dominated by ITC, Nestle, Parle etc. Varun Berry’s (ex Pesico, Unilever) arrival on the scene changed things a lot. He started de-cluttering the product portfolio and brought in concept of “Power Brands” which increased focus on key brands. They strengthened supply chain, appointed more dealers, added more points of sale and used operating leverage of the company. Their operating leverage (read – better asset utilization) is the reason they are able to generate higher profit growth.
Going forward, it would be interesting to see how much more market share they can gain as competition is getting fierce and operating leverage gains would have limited upside. Further growth would come from capex which could put bit of pressure on bottom line in the short run.
Disc : invested so my views could be biased.
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