Britannia plans expansion despite Q4 profit drop

Bakery and dairy products maker Britannia Industries Ltd is planning to expand manufacturing capacity in bakery products by setting up one or two new plants, the company said on Friday.

"We are enhancing capacity in our existing plants and it is quite likely in this year we may look at one or two greenfield projects ... it will be in bakery products," Vinita Bali, managing director, said. The firm has earmarked a capital expenditure of Rs70-80 crore in FY11 for the expansion, Bali added.

Rising commodity prices and higher promotional expenses dragged net profit of the company 35.42 per cent to Rs116.5 crore during fourth quarter ending March 2010.

''An extraordinary increase in commodity prices has far exceeded our revenue growth. This is coupled by our decision to step up brand investments in an intensely competitive market,'' Bali said. ''Our profit margins have been diluted by 2 per cent, almost equally due to commodity prices and advertising expenses for some key brands,'' she added.

Britannia was also hit by exceptional items of over Rs40 crore, largely on account of excise and restructuring of the firm's Sri Lanka operations.

Britannia, which sells products across the bakery and dairy categories, saw its net sales grow 9.3 per cent from Rs3,112.21 crore to Rs3401.40 crore in the January to March 2010 quarter.

Meanwhile, Britannia said in a BSE filing that Bali was granted 20,000 stock options. Each stock option would entitle her to receive one share of Britannia Industries of Rs10 each. Britannia's board of directors recommended a dividend of Rs25 per share of Rs10 each for the year ended 31 March 2010.