The Hindu Business Line : Britannia promoters transfer stake to joint venture co

THE shareholding pattern in Britannia Industries Ltd (BIL) has undergone a major change with the incumbent joint promoters of the company — the Nusli Wadia group and Groupe Danone of France — deciding to transfer their total 45.34 equity stake into a joint venture company, which was recently incorporated under the name and style of "AIBH".

In the new joint venture company, the Nusli Wadia group and Groupe Danone control equal percentage of shares. Without elaborating the reasons for such transfer of shares to virtually a "shell'' company, Mr Nusli N. Wadia, non-Executive Chairman of BIL, said here on Tuesday that AIBH had no immediate plans to buy back BIL shares, although 10 lakh equity shares of the company of Rs10 each had already been bought back under the approved buyback scheme at an arranged price of Rs 533.15 per share during the year under review.

In reply to questions by shareholders at the company's annual general meeting, Mr Wadia said the group had no intention of selling its equity stake in BIL. He, however, said that the BIL management had taken a strategic decision to improve the company's sales through new product launches, renovation and improving distribution. According to him, the slowdown in the economy was restricting topline growth of most FMCG majors and it would be difficult to maintain historical growth rates in the depressed scenario. In the given market scenario, any price corrections to offset cost increases could affect volumes. Hence, the decision not to revise biscuit prices. Moreover, it decided to focus on all-round cost savings and improvement in productivity to ensure satisfactory growth in profits.

He informed shareholders that the BIL management, during the year under review, had transferred its dairy business to Britannia New Zealand Foods Pvt Ltd, a joint venture with Fonterra Co-operative Group, New Zealand's biggest dairy company and one of the 10 largest dairy companies in the world. The joint venture would be uniquely positioned to become one of the leading players in the dairy segment.

While BIL would offer its market base, the Fonterra group would provide advanced technical know-how. The joint venture would continue to strengthen the "MILKMAN" brand with creative initiatives and consumer promos, and the new company would endeavour to increase sales and profits by having a strong presence in the mass market, introducing value-added products and offering benefits of health, nutrition and taste.

He said that India's milk production at 81 million tonnes was encouraging, with a surplus in milk producing States such as Karnataka and Maharashtra. The surplus milk needed to be harnessed into value-added products. The demand for packaged dairy products was expected to show a robust growth with new product offerings, improved quality and creating awareness among consumers, he commented.

Claiming that BIL had already captured about 35 per cent share of the country's cheese market within four years, Mr Wadia said that biscuit and bread volumes had increased by 7 per cent. However, cake volumes were lower than last year mainly due to the fact that the previous years' volumes included "Half Half" cakes, which has since been withdrawn.

He said that the company had moved its cake operation from its own factories to outsourcing, which had impacted supply during the last quarter. But he expected cake volumes to improve in the coming months.

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