CONTENTS

CHAPTER – 1 EXECUTIVE S UMMERY

CHAPTER – 2 B ACKGROUNDS

CHAPTER – 3 FINANCIAL A NALYSES

CHAPTER – 4 CO -C URRICULAR A CTIVITIES

CHAPTER – 5 COMPANY P ROFILE

 CHAPTER - 1
Executive Summary

Britannia is the market leader in the organized biscuit and bakery

product market in India. Biscuits contribute to more than 80% of Britannia's
total turnover. Other products include bread and cakes. Britannia diversified
into dairy products in 2000 with processed cheese and dairy whitener. The
portfolio was expanded with the launch of butter, pure, flavored milk in
tetra packs and UHT milk.

The biscuit market in India is estimated to be 1.1mn tpa, valued at

Rs35bn. The unorganized sector accounts for over 50% of the market. The
market has been growing at a CAGR of 6-7% pa. Per capita consumption of
biscuits is estimated at a low 1.5kgs, reflecting the huge potential for
growth. Manufacturing was reserved for small scale upto 2000, which put
large players at a disadvantage. In the organized sector, Britannia and Parle
are the only national players with dominant market shares. Other organized
players include domestic players like Bakeman's, Champion, Kwality, Priya
and MNC's like SmithKline Consumer, Kelloggs, Sara Lee, Heinz, Excelsia
(Nestle) and United Biscuits.

Competitive Position: The entry of new MNC's have not posed a direct
thereat to Britannia, as these MNC's have positioned their brands in the
premium/health segment. Britannia has maintained market leadership with a
40% volume share and 48% value market share in the organized sector.
FMCG major HLL is expected to venture into the segment. Britannia has
been aggressive in new launches and marketing during the last 2 years
anticipating the competition. It has also recently acquired Kwality Biscuits,
gaining a strong foothold in the southern market.
2
 Bread is one of the most widely consumed processed foods in the
country. The market is estimated at 1.5mn tpa. The industry is dominated by
a large number of players in the unorganized sector, which accounts for over
80% of the market. Britannia Industries and Modern Foods (now owned by
HLL) are the only two players with a national presence in packet slice bread
segment. There are several other regional players who have significant
market shares in their respective local areas. Britannis's bread business has
been slowly degrowing and registered a 9.4% yoy volume degrowth in
FY01.

Dairy: India has emerged as the largest milk producing country in the world
manufacturing 81mn tons of milk pa. Britannia's dairy business has been
growing at a fast pace on the low base. Volume growth was 50% and value
growth was 47% in FY01. In value terms the Dairy business contributed to
10% of turnover in FY01. Prior to the entry of Britannia, the organized
market for dairy products like butter and cheese was dominated by the
regional milk cooperatives, such as Amul, Vijaya, etc. Imported brands are
also freely available in the country today. In the organized domestic
segment, Amul remains the dominant player and will continue to be a stiff
competitor, given its sourcing advantage and market savviness.

Operating margins have been improving despite the fast pace of new
product launches in the last 2-3 years. Rationalization of manufacturing
operations, and greater contribution of higher margin dairy products have
both contributed to the margin gains. Britannia has decided to hive off its
dairy business into a joint venture with the New Zealand based Fonterra
Cooperative. Britannia and Fonterra will each hold 49% of the Rs2.25bn
equity, while the balance 2% will be held by business associates.

3
 CHAPTER - 2
Background

Britannia was incorporated in 1918 as Britannia Biscuits Co. Ltd. in

Calcutta. In 1924, Pea Frean UK acquired a controlling stake, which later
passed on to the Associated Biscuits International (ABI) a UK based
company. During the '50s and' 60s, Britannia expanded operations to
Mumbai, Delhi and Chennai. Exports of sea foods started in the '70s. In
1987, Nabisco, a well known European food company, acquired ABI. In
1989, J M Pillai, a Singapore based NRI businessman along with the Groupe
Danone acquired Asian operations of Nabisco, thus acquiring controlling
stake in Britannia. Later, Grop Danone and Nusli Wadia took over Pillai's
holdings.

In 1977, the Government reserved the industry for small scale sector,
which constrained Britannia's growth. Britannia adopted a strategy of
engaging contract packers (CP) in the small scale sector. This led to several
inefficiencies at the operating level. In April '97, the Government
dereserved the biscuit sector from small scale. Britannia has expanded
captive manufacturing facilities and has modernized and upgraded its
facilities in the last five years. It has also forayed into the Dairy Business
with the launch of Cheese, Butter, Ghee, Dairy whitener and flavored milk
products.

Parent Group

Britannia's controlling stake is jointly with Groupe Danone and Nusli

Wadia. Groupe Danone is one of the leading players in the world in bakery
products business. It acquired interest in Britannia Industries in 1989 and

4
acquired controlling stake in 1993..Nusli Wadia group is one of the leading
industrial houses in the country, with interests mainly in textiles and
petrochemicals.

Plant Locations

Britannia's plants are located in the 4 major metro cities - Kolkatta,

Mumbai, Delhi and Chennai. A large part of products are also outsourced
from third party producers. Dairy products are out sourced from three
producers - Dynamix Dairy based in Baramati, Maharashtra, Modern Dairy
at Karnal in Haryana) and Thacker Dairy Products at Howrah in West
Bengal.

Balance Sheet (Rs. mn)

Period Ended 03/01 03/02 03/03 03/04
No. of Months 12 12 12 12
SOURCES OF FUNDS
Equity capital 185.7 185.7 278.5 278.5
Profit & Loss/ General
990.4 1,307.9 1,586.1 2,075.2
reserve
Other reserves 35.2 - - 47.5
Reserves and surplus 1,025.6 1,307.9 1,586.1 2,122.7
Net worth 1,211.3 1,493.6 1,864.6 2,401.2
Secured loans 647.0 1,170.3 1,098.2 1,762.6
Unsecured loans 337.7 - - -
Total debt 984.7 1,170.3 1,098.2 1,762.6
Capital employed 2,196.0 2,663.9 2,962.9 4,163.8
APPLICATION OF FUNDS
Gross block 1,728.7 1,928.7 2,048.5 2,515.7
Accumulated
470.1 613.4 766.8 944.9
depreciation
Capital work in progress 18.6 37.9 24.4 16.9
Total fixed assets 1,277.2 1,353.3 1,306.1 1,587.7
Investments 911.9 1,293.1 1,469.9 2,156.1
Inventories 585.8 663.6 704.6 830.8
Sundry debtors 489.7 299.8 377.9 326.2
Cash & bank balance 56.8 285.8 493.7 345.8
5
Total loans & advances 591.0 677.9 731.0 809.5
Sundry creditors/
1,509.0 1,687.3 1,955.9 1,696.6
Acceptances
Other liabilities 30.0 14.0 15.6 32.2
Provisions 177.5 208.3 270.7 326.6
Net current assets 6.9 17.5 65.1 257.0
Miscellaneous expenses - - 121.8 163.0
Capital deployed 2,196.0 2,663.9 2,962.9 4,163.8
RATIOS
Turnover ratios (x)
Net sales to total assets 3.8 3.8 3.8 3.1
Net sales to fixed assets 6.5 7.4 8.7 8.1
Net sales to working
1,197.5 573.4 175.0 50.0
capital
Net sales to inventory 14.1 15.1 16.2 15.5
Gross sales to debtors 17.3 34.4 31.0 41.0
Liquidity ratios (x)
Current ratio 1.0 1.0 1.0 1.1
Debt equity ratio 0.8 0.8 0.6 0.7
Interest cover 12.0 117.4 14.1 13.0
Return on (%)
Networth (post tax) 23.9 26.5 27.4 29.4
Capital employed (pre
21.5 21.8 29.1 27.0
tax)
Per share (Rs)
Net earnings (EPS) 15.6 21.3 18.3 25.3
Cash earnings (CPS) 21.9 29.9 24.5 32.1
Dividend payout 5.5 6.1 5.0 6.1
Book value (NAV) 65.2 80.4 67.0 86.2
Asset composition (%)
Net fixed assets 58.2 50.8 46.0 39.7
Working capital 0.3 0.7 2.3 6.4

6
 CHAPTER - 3
Financial Analysis

Net Sales recorded a CAGR of 15.5% during last 5 years. In FY01,

sales grew by 12.8%yoy to Rs12.8bn. The main sales driver have been the
biscuit and dairy businesses. Biscuit sales, accounting for 83% of turnover
registered a 13% yoy growth to Rs11bn. Dairy sales grew by 47% yoy to
Rs1.3bn. Dairy products now contribute to 10% of Britannia's turnover.
Cake sales (Rs270mn) registered a 12% yoy growth, while bread sales
(Rs620mn) declined by 6.8% yoy. Average realization growth in Biscuits
and Bread was in line with inflation at 2-3%. Cake realizations were higher
by 9%, while dairy product realizations remained stagnant.

Operating profit margin excluding other income increased by 1.3%

points from 7.7% in FY00 to 9% in FY01. The gain in margin has come
despite higher selling costs at 11.4% of sales (10.9% of sales in FY00). This
has been possible due to lower material cost which declined from 46.1% of
sales to 43.7% of sales. Ad spend in FY01 was Rs853mn, but marginally
lower than last year at 6.6% of sales. Employee cost has also been brought
down during the last two years through VRS. Employee cost in FY01 stood
at 7.4% of sales. The company has paid VRS compensation of Rs81.7mn
during the year, which is being charged off over 5 years.

Interest cost increased from Rs73mn in FY00 to Rs101mn in FY01, as

debt equity ratio rose to 0.7x. Net profit grew by 38% yoy to Rs.705m This
was after providing for VRS expenditure of Rs40.5mn and writeback of
Rs157.5mn of previous year's liabilities.

7
 The company generated cash profits of Rs853mn. Working capital
generated Rs261mn and net cash generated from operations was Rs592mn
In FY01 the company incurred a capex of Rs471mn. Investments increased
by Rs686mn. The company paid a dividend of 55% in FY01 as against 45%
during FY00. Dividend payments absorbed Rs169mn.

Debt stood at Rs1.7bn at the end of FY01. RONW improved from

27.4% in FY00 to 29.4% in FY01. However ROCE registered a decline from
29% in FY00 to 27% in FY01. The company has bought back 3.6% of its
equity during FY02.

Capacity Breakup
Period ended 03/01 03/02 03/03 03/04
No. of months 12 12 12 12
Capacity volume(unit)
Biscuits (Ton) 111,000.0 111,000.0 111,000.0 111,000.0
Bread (Ton) - 12,000.0 12,000.0 12,000.0
Cake & rusk (Ton) 5,500.0 5,500.0 5,500.0 5,500.0
Production Breakup
Period ended 03/01 03/02 03/03 03/04
No. of months 12 12 12 12
Production volume (unit)
Biscuits (Ton) 49,447.0 53,092.0 62,034.0 59,657.0
Bread (Ton) 5,602.0 - - -
Cake & rusk (Ton) 2,282.0 2,858.0 2,905.0 2,139.0

Business
Britannia core businesses constitute of Bakery and Dairy products.
Bakery products account for 90% of the revenues and include Biscuits,
Bread and Cake & Rusk. Dairy products contribute to 10% of Britannia's
annual turnover of Rs13.38bn.

Biscuits (82.7% of turnover)

8
 Revenues from biscuit were Rs11.07bn in FY01. The company sold
214,214 tons of biscuits registering a volume growth of 11% yoy. Biscuit
sales in value terms registered a 13.2% yoy growth. Britannia has a 40%
volume share and 48% value market share in the organized biscuit market.
The company presently has an installed capacity of 111,000 tons for
biscuits. Production in FY01 was 59657 tons against 62034 tons in FY00.
Over 70% of biscuits sold are outsourced by the company.

Over the years, Britannia has introduced and developed a full line of
brands in all segments of the biscuit market. The company's Tiger range of
glucose biscuits has been a runaway success, enabling the company to
expand its presence in the largest gluco category of the biscuit market. In
salty-sweet segment Parle's Krackjack and Britannia's Fifty-Fifty compete
very closely. Britannia's other major brands include Marie, Thin Arrowroot,
Bourbon, Milk-bikis, Nice, Snax, Coconut Crunchies, Pure Magic, Good
Day, Jim-Jam and Chekkers. It has also launched biscuits like Vita
MarieGold, Nutri-Choice etc, under the health positioning.

Bread (4.6% of turnover)

Britannia's bread business has been gradually degrowing year after

year. Bread sales at Rs420mn accounted for just 4.6% of turnover in FY01,
against 5.7% of turnover in FY00. The company sold 42450 tons of bread in
FY01, a volume degrowth of 9.4% yoy. The company has an installed
capacity of 12000 tons.

9
Dairy Products (9.8% if turnover)

The company's diversification into dairy business has been fairly

successful. Dairy product sales were Rs1.3bn in FY01. The company has
relaunched all its dairy products under the MilkMan brand name. New
flavors like Milkman Cold Coffee and Milkman Lassi have been launched in
flavored drinks besides MilkMan Chocolate Milk and Milkman Strawberry
Milk. Cheese, dairy whitener, butter and ghee are the other products sold
under the MilkMan brand. Britannia outsources its dairy products from
Dynamix Dairy in Maharashtra, Modern Dairy in Haryana and Thacker
Dairy Products in West Bengal. During FY01 the company sold 13039 tons
of dairy products, a 50% yoy growth over 8820 tons sold in FY00. Britannia
has invested Rs58.3mn in the equity of Dynamix Dairy in FY01.

The Dairy business is proposed to be divested into a Joint Venture

with the New Zealand Dairy Board's Fonterra Cooperative. Britannia hopes
to gain from the R&D support as well as access to the international product
portfolio of the JV partner.

10
Cake & Rusk (2% of turnover)

Cake and Rusk sales were Rs271mn (2% of sales) in FY01. Volume
growth was 2.6% yoy with sales of 3082 tons. In value terms, sales grew by
12% yoy.

Exports

Britannia has discontinued commodity export of Soya bean. Export of

marine products has also declined significantly. The company now mainly
exports biscuits and cheese to neighboring countries like Sri Lanka and
Africa

Earnings Sensitivity Factors

 Success if Dairy Joint Venture

 Success of new product launches: New launches entail significant

ad-spends and impact margins in the short run.

 Competition activity in core biscuit business and ability to protect
market share.
 Post acquisition of Modern Foods, HLL is expected to give

formidable competition in bakery products.

 Input prices: Raw material such as wheat, fats and sugar prices

influences margins.

Profit & Loss Account (Rs mn)

Period ended 03/01 03/02 03/03 03/04
No. of months 12 12 12 12
Gross Sales 8,478.4 10,301.4 11,698.4 13,384.2
Excise Duty 235.7 277.7 302.9 525.1
Net sales 8,242.7 10,023.8 11,395.5 12,859.0
Other income 113.4 130.6 159.1 161.2

11
Total income 8,356.1 10,154.4 11,554.6 13,020.2
Raw materials 2,863.4 3,653.2 4,042.1 3,880.7
Stock adjustment
52.3 33.7 45.2 114.9
(Inc)/Dec
Purchase of finished
949.6 1,224.7 1,257.3 1,850.1
goods
Cost of material 3,760.7 4,844.1 5,254.2 5,615.9
Employee cost 725.7 829.1 904.5 953.0
Power & fuel 107.7 123.2 161.2 152.9
Advertising/ promotion/
525.2 584.0 770.1 852.9
public
Freight & forwarding 318.5 401.0 471.5 613.8
Other expenses 2,326.9 2,632.1 2,957.8 3,519.6
Cost of sales 7,764.6 9,413.6 10,519.2 11,708.1
PBIDT 591.4 740.8 1,035.5 1,312.2
Interest & finance
49.2 6.3 73.2 100.9
charges
PBDT 542.2 734.5 962.3 1,211.3
Depreciation 118.2 158.9 171.8 188.9
PBT 424.0 575.6 790.5 1,022.4
Provision for taxation 134.7 180.0 260.7 434.1
Extraordinary items/
- - 19.6 117.1
Prior year adj
Adjusted PAT 289.3 395.6 510.2 705.4
Dividend payout 102.1 113.4 139.1 168.8
Forex inflow 64.4 39.6 29.4 23.5
Forex outflow 128.2 148.9 159.1 129.4
Book value of quoted
150.4 577.0 283.1 69.0
investments
Market value of quoted
165.3 630.6 320.0 88.9
investments
Contingent liabilities 167.3 405.5 207.9 592.0
RATIOS
As % of net sales
Gross sales 102.9 102.8 102.7 104.1
Excise duty 2.9 2.8 2.7 4.1
Net sales 100.0 100.0 100.0 100.0
Other income 1.4 1.3 1.4 1.3
Total income 101.4 101.3 101.4 101.3
Cost of material 45.6 48.3 46.1 43.7
Employee costs 8.8 8.3 7.9 7.4
12
Selling expense 10.2 9.8 10.9 11.4
Other expenses 28.2 26.3 26.0 27.4
Cost of sales 94.2 93.9 92.3 91.0
Profitability ratios (%)
PBIDT excl. other
5.8 6.1 7.7 9.0
income
PBIDT 7.2 7.4 9.1 10.2
PBDT 6.6 7.3 8.4 9.4
Profit before tax 5.1 5.7 6.9 8.0
Profit after tax 3.5 3.9 4.5 5.5
Growth ratios (% yoy)
Net sales 13.5 21.6 13.7 12.8
PBIDT 61.0 25.3 39.8 26.7
PBT 43.8 35.8 37.3 29.3
PAT 61.8 36.8 29.0 38.3
Payout ratios (%)
Tax (% of PBT) 31.8 31.3 33.0 42.5
Dividend (% of PAT) 35.3 28.7 27.3 23.9
Cash flow statement (Rs mn)
Period ended 03/01 03/02 03/03 03/04
No. of months 12 12 12 12
Pre tax income from
310.6 445.0 631.4 861.2
operation
Depreciation 118.2 158.9 171.8 188.9
Expenses (deferred)/
- - 121.8 41.2
written off
Other income/prior
113.4 130.6 139.5 278.2
period adj
Tax 134.7 180.0 260.7 434.1
Cash profits 407.5 554.5 560.2 853.1
(Inc)/Dec in trade working capital
Inventories 78.9 77.8 41.0 126.2
Sundry debtors 131.9 190.0 78.1 51.7
Sundry creditors 143.3 178.3 268.6 259.2
Others 54.8 14.8 63.9 72.5
Net adjustment 12.6 305.3 213.4 261.2
Operating activities 394.8 859.9 773.6 591.8
(Inc)/Dec in fixed assets 542.2 235.0 124.7 470.5
(Inc)/Dec in investments 181.0 381.2 176.8 686.2
(Inc)/Dec in loans &
110.6 86.9 53.1 78.5
advances

13
Investing activities 612.7 703.1 354.6 1,235.3
Inc/(Dec) in debt 347.1 185.6 72.0 664.3
Inc/(Dec) in equity/
- - 92.8 -
premium
Direct add/(red) to
0.0 0.0 92.8 0.0
reserves spl item
Dividends 102.1 113.4 139.1 168.8
Financing activities 244.9 72.2 211.2 495.5
Cash generated/
27.1 229.0 207.9 147.9
(utilised)
Cash at start of the year 29.7 56.8 285.8 493.7
Cash at end of the year 56.8 285.8 493.7 345.8
Sales breakup
Period ended 03/01 03/02 03/03 03/04
No. of months 12 12 12 12
Sales value(Rs mn)
Biscuits 7,248.0 8,621.6 9,783.7 11,073.0
Bread 555.4 623.5 664.9 619.6
Cake & rusk 169.8 237.4 242.3 271.4
Gardens & dairy
378.0 696.2 891.1 1,313.1
products
Marine products 49.9 - - -
Others 77.3 122.8 116.4 107.1
Sales volume(unit)
Biscuits (Ton) 144,213.0 167,467.0 192,646.0 214,214.0
Bread (Ton) 43,558.0 46,647.0 46,880.0 42,450.0
Cake & rusk (Ton) 2,249.0 2,809.0 3,003.0 3,082.0
Gardens & dairy
3,024.0 6,111.0 8,820.0 13,039.0
products (Ton)
Marine products (Ton) 659.0 - - -
Unit realisation (Rs/unit)
Biscuits (Ton) 50,259 51,482 50,786 51,691
Bread (Ton) 12,751 13,365 14,182 14,597
Cake & rusk (Ton) 75,495 84,504 80,698 88,050
Gardens & dairy
124,993 113,933 101,030 100,704
products (Ton)
Marine products (Ton) 75,728 - - -
Raw materials cost breakup
Period ended 03/01 03/02 03/03 03/04
No. of months 12 12 12 12
Raw materials cost(Rs mn)

14
Flour 944.4 1,192.0 1,393.4 1,435.1
Hydrogenated vegetable
803.2 980.4 908.0 637.2
oil
Sugar 490.0 558.3 678.0 719.4
Others 683.9 922.5 1,062.7 1,089.1
Raw materials volume(unit)
Flour (Ton) 122,729.0 143,353.0 163,732.0 169,667.0
Hydrogenated vegetable
20,935.0 22,406.0 26,185.0 23,700.0
oil (Ton)
Sugar (Ton) 33,542.0 38,588.0 44,559.0 49,516.0
Unit realisation (Rs/unit)
Flour (Ton) 7,695 8,315 8,510 8,458
Hydrogenated vegetable
38,367 43,758 34,677 26,887
oil (Ton)
Sugar (Ton) 14,608 14,469 15,215 14,528

DIRECTORS' REPORT (1st June, 2004)

1. Sales and Earnings:

In-spite of significant slowdown in the economy, corporate sales grew

by 14.4% with both core bakery operations and the new dairy business
contributing to the growth.

Operating profit at Rs962mn increased by 37%. Profit before taxation

and exceptional items at Rs1022mn increased by 29% and crossed the
Rs1bn (Rs.1000mn) mark. Growth in earnings has been achieved through
higher sales, cost reduction and improvement in productivity.

We have charged off proportionate VAS cost of Rs41mn and written

back previous years liabilities no longer required to the tune of Rs158mn.
Net profit at Rs705mn (after considering these exceptional items) have gone
up by 38%.

Earnings per share have increased by 38% from Rs18.31 to Rs25.33.

15
2. Finance and Acquisitions:

a) Your Company has acquired the trade mark "KWALITY", the Chef

Device and several other trademarks owned by Kwality Biscuits Pvt.

Ltd. of Bangalore along with copyrights and designs in labels and
packaging materials for a consideration of Rs300mn. This will help
us to become a stronger player in South India, where the "Kwality"
brand has a significant presence.

We have also agreed in principle to acquire 49% equity of Kwality

Biscuits Pvt. Ltd. This transaction is expected to be completed during
2001/02.

b) We have issued 5,000,000 Secured Redeemable Non convertible

privately placed debentures of Rs100/ each amounting to Rs 500mn at
interest of 10.9% per annum for funding new projects and
acquisitions.

3. Dividend:

Board recommends a dividend of Rs5.50 per share, representing 55%

of the equity share capital of the company for approval by the members. The
total payout on dividend and tax would be Rs169mn which works out to an
increase of 22% vs. previous year's payout of Rs139mn.

4. Information Technology:

We continue to upgrade our information technology systems to

support the growth in operations and growing needs of the changing market
place. We are putting in place comprehensive Enterprise Resource Planning

16
system to cover all facets of our operations. The first phase of this exercise
is expected to be completed by next years.

Welcome to Britannia Health Products

Limited

As the specialist consumer company for the Forum group, Britannia

Health Products distribute products to Health Stores, Pharmacy and
Grocery/Supermarket retail outlets. Many of Britannia Health's products are
also available via direct mail, and through other specialist trade sectors, as
well as online via this site. Visit our Products page for more information.

Britannia Health Products have a wealth of experience in the

Healthcare Market and in particular in the dietary supplements market.
Britannia was the company who pioneered the development of Efamol
Evening Primrose Oil supplements in the UK. Britannia is also familiar with
the promotion of cosmetic lines and food lines which provide a health
benefit and are currently developing into the emerging functional foods
market.

Britannia Health Products' key products are Prostabrit, a dietary

supplement for helping to maintain a healthy prostate, Colief Infant Drops -
lactase enzyme drops used to treat babies' milk and Astaxin, capsules
containing algae astaxanthin, a powerful antioxidant. We have recently
added an exciting new vitamin and mineral range which is NOW available
for purchase by mail order and via this site.

Britannia Health have several new ideas and products in the offing
which we hope to be able to offer in the coming months. Visit us again
soon!

17
Home

Originally established in 1989, and trading as Britania Services since

1995, we pride ourselves on our excellent customer service record.

The management team has over 35 years combined experience in the

building services industry, with a broad expertise and practical experience
in every aspect of building services. We offer our customers the very best in
design, installation and service for Heating and Air Conditioning.

Our company policy is Enthusiasm, Forward thinking and Dedication

to providing you the customer, with the very best in Quality, Service and the
Latest Technology to achieve Efficiency, Reliability and Economy. Our
after sales service is second to none with a customer service free phone for
help and advice whenever needed as well as a prompt response to site calls.
We have comprehensive public liability insurance and health & safety
policy and the Company operates a No Smoking policy at all times.

Fixed price quotations provided free of charge with no obligation.

COOKING OIL AND DESI GHEE

Multi National Company
Sr. No. Name of the Product
Indian Substitute
1 Dalda Lipton India L.T.D. Amrut, Gagan, Ruchi, Dhara.
Soya Refined Oil Britania
2 Amulya, Posteman, Nefed.
Company L.T.D.
3 Sundrop I.T.C.Li Swekar, Path, Panghat, Ruby.
4 Crystal I.T.C.Li Raja, NO-1, Atal, Shankh.
Whiltal Britannia Company
5 Sona, Surya, Suvarna, Neelgiri.
L.T.D.
Anik Ghee Lipton India Himgiri, Kanavdia,
6
L.T.D. Indradhanush
7 Everyday Ghee Nestle India Parag, Amul.

18
 L.T.D

The good news is that Britannia, the homely and friendly restaurant
on Sprott Road, next to New Custom House, Ballard Estate, now serves
dhanshak every afternoon of the week.

And, if you want more good news - it also serves its famous berry
pulao every day, Monday to Saturday.

The daily service is in keeping with the policy of proprietor Boman

Kohinoor (Irani) - if an item is popular, serve it every day, not on special
days. Thank you, Mr. Kohinoor.

The dhanshak is among the best in town. If I were to rate it, I would
put it among the four best: Ripon Club (Wednesdays), Yacht Club (Fridays),
Melhi Mistry's house (Sundays, though it is many Sundays since he has
invited us), and Mr. Kohinoor's Britannia (Monday to Saturday).

You get all three, mutton, chicken and vegetables. Rs.55 for the meat
ones, Rs.45 for the vegetarian. Of course, there is nothing like a vegetarian
dhanshak, just as there is nothing like a non-alcoholic beer or an eggless
omelette. Still, there you are. And, while I am at it, I would like to add, the
only bona fide dhanshak is with mutton, not chicken.

The mutton at Britannia is boneless. In fact, all the meats at Britannia,

whether mutton or chicken, are boneless, and this applies to all the dishes. A
footnote in the menu declares: "Chicken and mutton served boneless." Only
the fish has a bone in it, and since it is pomfret, it is only the central bone.

It was Mr. Kohinoor's late wife, Bachan, who taught the Britannia
cooks how to make the perfect dhanshak. The lady, sadly passed away
earlier this year, but her art continues. Two dals are used, mung and tur, in

19
proportions that only the cooks know. And the meat is cooked with the dal
to give it its meaty texture and aroma. Pumpkin is used to thicken the dal.
Muslims use dudhi in their dal gosh, which is a similar preparation and yet
with a world of difference.

In the dal gosh, the dudhi is left more or less untouched, diners pick
out large pieces of it and eat it. In the dhanshak dal, the pumpkin is
thoroughly mashed. It is up to you what you prefer. I am for the dhanshak,
so is Gerson da Cunha, whom I found last week, tucking away. Goans are
the only people, besides Parsis, who eat dhanshak on a regular basis. And,
in early days, when being a Parsi meant being Sir Cowasji Jehangir or Sir
Jamshetjee Tata, gentlemen who could afford to maintain a fleet of servants,
it was Goan cooks who cooked the dhanshak.

But let us return Britannia. And a word about the dhanshak rice,
before we pass on. The rice is brown, the colour and taste achieved by
carmelising it in a little ghee. Crisp fried onions are added on the top, and
not only for decoration. Naturally, the rice tastes a little sweet, though the
pepper and the tej patta sees to it that it is not too sweet, and the fried
onions provide a taste of smokey bitterness.

With the rice, the restaurant serves you small round kababs, meat
kababs, a little spicy, at least three, though often four. The dal comes in a
separate bowl. And the meat is in the dal, not the rice. If it is put in the rice,
it becomes pulao dal, which is far, far from the same thing. Equally popular
is the restaurant's berry pulao, Rs.60 for mutton and chicken, Rs.45 for veg.
They are the Barberry Berries; at least, I think so. They grow wild in the
Middle East, on spindly shrubs, a red berry. In Iran, they are used with rice,
in restaurants and in homes, and Britannia's berry pulao comes from Iran.
The late Mrs. Kohinoor, though a Parsi, meaning not an Iranian, spent seven

20
years in Teheran as legal assistant to Iran Airways, and brought back with
her the berry pulao.

In Iran, the berries are known as zereshk, and the pulao as zereshk
pulao. The berries are dry, like raisins, but sour and with a sweet aftertaste.
Mr. Kohinoor compares them to dry pomegranate. I would not know, I have
not seen a dry pomegranate.

In any case, the berries are cooked with the best quality of basmati
rice, then the marinated and masalaed meat placed between layers of the
rice. And there is a garnish of cashewnuts and fried onions. Plus, a few
kababs. Note: This is the only place in India that you get berry pulao. Try it,
it is like an aromatic biryani.

A third item I recommend at the place is a fish patra (Rs.45), it is the

standard Parsi wedding patra-ni-machi, but with some differences. First, it
is not a filet of pomfret, it is a full pomfret, one pomfret per person. It may
not be a big pomfret, but it is reasonably large, medium sized. Second, the
green chutney, it is wet and smooth and most generously applied all over the
pomfret. It has less chillis, more of kothmir and dhania and jeera and
coconut and lime juice.

There is another interesting difference, the price varies. Sometimes

the fish patra costs Rs.45, sometimes Rs.50, depending on the size of the
fish and its availability. Mr. Kohinoor says: "Our customers understand,
they don't mind. We tell them it will cost five rupees more than the marked
price." The fish is, of course, steamed, wrapped in the plantain leaf. A drop
of oil and vinegar is added to the water before steaming.

A few rules of the restaurant will be helpful. The place is open for
lunch only, from 10.00 a.m. to 3.30 p.m. A few breakfast snacks are
21
available before 12.30 p.m., but no tea, only Nescafe. Soft drinks are
available, but no beer.

For dessert, there is Parsi Dairy's yoghurt and the restaurant's own
caramel custard, excellent quality, burnt the right degree. But there is no
ice-cream. And no beef. And the restaurant's philosophy, as written on the
menu, is: "There's no greater love than the love of eating."

Such a restaurant has to have some history. It has. The present

proprietor's father, Rashid Meherwan Kohinoor, opened it in 1923. The
present proprietor joined it in 1933, coming there direct from Iran. Britannia
was run on a grand scale then. Only officers were allowed, the assistant
collector of customs, Port Trust manager, the collector of Bombay. Food
was mainly Western, with some Indian dishes.

During the war, the British auctioned the place, to run a war office. It
was returned to the proprietors at the end of the war, but by that time its
glory days had ended. Mr. Kohinoor is actually the third generation. His
grandfather came to Bombay in 1885 and opened Kohinoor Restaurant
opposite the GPO. It still exists, in the same name, though not under the
same proprietors.

Never mind, there's still Britannia. If you have not already done so,
visit it, the earlier the better. Order a patra fish, a mutton dhanshak, and
caramel custard. And say hello to Mr. Gerson da Cunha.

22
 CHAPTER - 4
CO-CURRICULAR ACTIVITIES
Information
Event Our Performance
Britania Heritage Quiz Winner in the zonal round
Times of India Debate held at New Runners up with the school team
Era Public School. being adjudged as the second best
team in north India.
Debate organised by the Discovery Winner in the North zone.
channel.
Slogan writing competition Won the first prize.
organised in connection with the
Hepatitis awareness Day.
Anchor festival held at Naval public Won prizes in 6 events like Rangoli,
school. Group Dance, Fancy Dress, Street
Play, Bhakti Sangeet and One act play.
Art competition at Vidya Devi Hissar Bagged the first runners up,
Jindal School. second prize in glass painting ,third
prize in cartooning.
Quest competition organised by 3 of our students were among the 5
Indian Express. students selected to receive the
coveted award of Rs.5000.
SPORTS JKPS has become a force Our students have won Laurels in
to reckon with in the realm of table tennis, basket ball, badminton,
sports. kho-kho and judo.

Information
EVENT OUR PERFORMANCE
23
 Zonal Basketball. We lifted the winners trophy in
Senior girls & junior category and
runners up trophy in the sub junior
girls.
Rosary school tournament. Our senior boys lifted the winning
trophy.
North Delhi Public school (NDPS) Our senior boys were runners up.
basketball tournament.
NDPS badminton tournament. Junior boys were the winners &
senior boys were runners up.
NDPS Football tournament. Our senior boys were winners.
NDPS Kho-Kho. Junior girls emerged as the winners.
NDPS Table Tennis tournament. We lifted the winners trophy in
junior boys, sub-junior boys, senior
girls and junior girls category &
Runners up in sub-junior girls at the
zonal level.

Junior open Table Tennis Kunal Puri and Sunal Jain were
tournament held at Calicut. placed at forth position. Joshita
Bhushan is Delhi No 4 in Junior
cadet girls category.

Brand Churn in 01 Sees Leaders Lifebuoy &

Nirma Lose Market

Fast moving consumer goods (FMCG) sales may be stagnating or

worse, falling, but there have been substantial changes in market shares
during calendar year '01. Data collated by market research agency ORG-
MARG and by FMCG companies reveals a bitter fight for share in a market
experiencing a sharp slowdown. Many market leaders have struggled to hold
on to their top positions.

24
 Consider, for example, the largest FMCG segment, toilet soaps. Data
for '01 reveals that Lifebuoy, for many years HLL's mainstay, has lost
volume market share to 18 per cent in '01 from 20 per cent in '00. When
contacted, the company said that this excluded its variant Lifebuoy Active,
which accounted for a further 3.4 per cent market share in '01. Lifebuoy's
market share in terms of value was down to 10.7 per cent (excluding the 1.8
per cent for Active) in '01 from 12.8 per cent in '00. In a bid to regain lost
market share, HLL is in the process of re-launching Lifebuoy as reported by
ET in its edition dated February 9. ORG officials were not available for
comment. HLL's other mainstay in the premium part of the soap segment,
Lux, had more or less the same volume share of 13 per cent in '00 and '01.
The effect of promotions and down-trading is, however, visible across the
premium segment. Breeze, another HLL brand which is cheaper than Lux,
now holds a volume market share of 12 per cent in '01, up from 10 per cent
in '00. Analysts believe that users have down-traded to Breeze from brands
like Lux, as FMCG companies increased TFM content in lower-priced soaps
due to the low prices of oils in early '01.

Nirma had a mixed '01. Its sales have been continuously rising,
crossing Rs.1,400 crore last year, but volume market share of washing
powders and liquid detergents dropped from 29 per cent in '00 to 24 per cent
in '01, according to the ORG data.

The company has more or less maintained its shares in other brands.
According to the company, however, its volume market share was around 39
per cent for washing powders and detergents in fiscal year '00-01. Any
subsequent change may be marginal, the company said, adding that the
industry growth for the segment was flat. IN early '01, Godrej Consumer
products' Fairglow grabbed a lion share of the fairness cream and soaps
segment. However, ORG data reveals that in '01, HLL's Fair and Lovely
25
skin cream garnered a volume market share of 24 per cent in '01 from 18 per
cent in '00, gaining six per cent in one year, thus maintaining its market
leadership. According to HLL, however, its volume market share has
improved from 30 to 36 per cent, while value share up at 38 per cent in '01
from 31.5 per cent in '00.

In the fiercely aggressive toothpaste segment, Colgate-Palmolive's

Colgate Dental Cream's volume share dropped by almost three per cent in
'01 from 39 to 36 per cent, according to ORG data. But this has been
compensated by increase in market shares by Cibaca Top, Herbal and Gel.
According to the company, it managed to hold onto its total volume share at
50.5 per cent in '01, up 0.7 per cent from the previous year. On the other
hand, HLL's Close-up lost two per cent volume share, from 13 to 11 per
cent, while its Pepsodent brand gained marginally.

In the beverages segment, SmithKline Beecham's Horlicks maintained

its volume share at around 50 per cent of total market in '01 as compared
with 51 per cent in the previous year. Meanwhile, Cadbury's Bourn vita
gained one per cent share to touch 13 per cent in '01, after Cadbury
undertook a brand relaunch in South India.

In a shrinking market for tea last year, all companies lost share in
both volume and value terms for packaged tea. Stiff competition from low-
cost regional players hit Tata Tea's regional brands like Agni and Kannan
Dewan, both losing between one percent shares. With production cuts in the
North and Southern tea gardens and increased focus on quality, these two
majors anticipate that their shares will grow in the future. However,
premium tea brands of HLL (Red Label and Taj) and Tata Tea have shown
increases in their respective market shares in '01.

26
 Britannia continued its good run. Its Tiger brand of biscuits gained
two per cent volume share to touch nearly 15 per cent in '01. It's Marie Gold
and Good day brands of biscuits maintained shares, while last year's
successful launch of '50-50' got it a share of four per cent in '01.

The increase in market shares reflects strategies followed by FMCG

majors. Every other company focused on promotions, bundling and
relaunches of its core brands to drive volumes. Price reductions and freebies
distorted the value-volume estimates, underlining the turbulent FMCG
market at the retail level. In '02, the industry is expected to do marginally
better than '01, as any growth would be on a stagnant, or some cases, a
lower base. Most companies expect FMCG sales to improve from now on.
The decline in sales was marginally lower in December '01, but there's a
long way to go for most brands.

Source : Economic Times, February 11, 2002

Britannia

English East India Company Ship

Lost 1809

Tonnage : 1200

EIC Classification : Regular

Voyage No. : 2

Event Date : 25 Jan 1809

Location : Off South Foreland

27
Britannia Industries : Pare exposures

Aarati Krishnan

A fast growing dairy business and a foray into the mass market have
kept Britannia's growth rates in the top league over the past couple of years.
But recent developments are a cause for concern. The proposed transfer of
the dairy business to a joint venture and Dan one’s recent move to set up its
own subsidiary in India, are two key uncertainties for the stock valuation,
says Aarati Krishnan.

The year 2001 may have been a staid one for other fast moving
consumer goods (FMCG) stocks, but not for Britannia Industries. The stock
has been through a virtual roller-coaster the past six months, thanks to a
slew of company-specific events, all having an important bearing on its
prospects. The just-concluded buyback has not materially altered the
valuation for the stock. But the possible hive-off of the dairy business and
Group Dan one's decision to set up a wholly-owned subsidiary may be
different stories.

Over the past three years, while other FMCG companies struggled
with a sluggish topline, Britannia's sales grew at a healthy compounded
annual rate of 16 per cent, and operating profits at 18 per cent.

Britannia's successful foray into the mass market for biscuits through `Tiger'
brand and into the dairy business gave volumes for Britannia when its
traditional businesses - biscuits and bread - showed signs of plateau. With
low penetration of dairy products and snack foods, they offer significant
potential for growth. Therefore, unlike FMCG companies operating in
markets for mature products such as soaps or detergents, there appear to be
considerable room for growth for Britannia.
28
The New Alliance

On October 27, 2001, Britannia Industries announced a joint venture

with Fonterra Co-operative Group of New Zealand Dairy. The alliance with
New Zealand Dairy is undoubtedly a coup for Britannia Industries.

With revenues of $3.5 billion in 2000, New Zealand Dairy is among

the ten biggest dairy companies in the world. Unlike Britannia's present co-
promoter Dan one, which is essentially a dairy product company, New
Zealand Dairy is an integrated dairy company. Thus, while Dan one markets
dairy products (mainly fresh dairy products such as desserts, fresh cheese
and yoghurt), New Zealand Dairy is present in practically every part of the
chain, from procurement of milk to value-added products such as cheese and
buttermilk.

Operated on the co-operative model much like the NDDB, New

Zealand Dairy, thus, has access to technology in every stage of milk
production. This could prove valuable for Britannia in competing with the
formidable Amul. Given Britannia's recent forays into ghee and liquid milk,
this could be invaluable.

Fate of the Dairy Business

But the bad news for Britannia shareholders could lie in the manner in
which the deal is structured. At the time of the announcement, Britannia
stated that it would enter into a new joint venture with New Zealand Dairy
to operate the dairy business.

Given that only an in-principle agreement is in place, the final shape

of the deal will probably emerge later. But the details available now are not
very reassuring.

29
 According to the proposal cleared by the FIPB, the proposed joint
venture is to have a capital base of Rs 225 crore, with Britannia and New
Zealand Dairy holding 49 per cent each. The crucial 2 per cent is proposed
to be given to a strategic investor, to be decided at a later date. Britannia
has also tentatively announced that the current dairy business, with the
marketing and distribution of products, will be transferred and run by the
joint venture.

There is no indication yet whether Britannia shareholders will be paid

any compensation for the transfer of the dairy business into the joint
venture. The transfer will certainly impact Britannia's revenue and profit
profile in the near term. In the first nine months of 2001-02, the dairy
business contributed around 12 per cent of Britannia's revenues. Though the
division made a loss of around Rs 2 crore for the nine-month period, it is
expected to break even the next fiscal.

Britannia will have to shell out around Rs 110 crore (roughly half its
current capital employed) for its equity stake in the joint venture. Its
shareholders would stand to reap a return from this joint venture, only if and
when it declares any dividends.

The near-term impact apart, the long-term implications of this move

are also significant. Over the past couple of years, Britannia's dairy
portfolio has far outpaced its traditional biscuits and breads range, growing
at 47 per cent in 2000-01 and by 30 per cent in 2001-02. A transfer of the
dairy business into a separate company could deprive Britannia of the
growth momentum that the dairy business brings to its table.

From Outsourcing to Manufacturing

30
 There could also be other operational issues that need to be sorted
out. For one, the joint venture with Fonterra could also mark Britannia's
transition from a dairy product marketing company to one which is invested
in the dairy business at the grassroots levels.

Until now, Britannia has outsourced the bulk of its dairy products
from Dynamix Dairy, in which it holds an equity stake. This has given
Britannia considerable flexibility in changing its product mix, with very
little exposure to the inherent risks of an agriculture-oriented business such
as dairying.

But the joint venture with Fonterra could change this. The FIPB
approval to the joint venture is based on the condition that the company
would set up manufacturing facilities of its own and not indulge in `trading'
of any product, save at the wholesale level. This could force a gradual shift
in Britannia's profile from a company merely marketing dairy products to
one that operates its own manufacturing facilities. While this could bring
cost savings and create a larger product portfolio, it could also entail
substantial capital investments in the near term, apart from adding a
measure of risk to Britannia's operational profile.

Groupe Danone: Striking out on its own

Which ever way, if the joint venture with Fonterra pans out, the recent move
by Groupe Danone to set up its own wholly-owned subsidiary in India is a
definite damper for Britannia. Last week, Groupe Danone received the FIPB
clearance to make and sell dairy products. Since Britannia has never
depended heavily on Danone for its product portfolio, it may not directly
lose out because of this move. However, the setting up of the wholly-owned
subsidiary could result in the emergence of an entirely new, strong,

31
multinational competitor to Britannia in the dairy business. With MNCs
such as Nestle India and Dabon already in the market, along with the well-
entrenched NDDB, Britannia can certainly do without yet another
competitor fighting for a foothold in the market.

After the recent slump, the Britannia Industries stock now trades at a
price- earnings multiple of 23 times its latest earnings.

This is definitely low compared to Britannia's FMCG peers. It is early

days yet to jump to conclusions about the prospects for Britannia's earnings,
based on the above events. However, the uncertainty arising out of
developments could act as a damper to the valuations of the Britannia
Industries stock for now. Investors uncomfortable with the enhanced risk
profile can contemplate trimming exposures to the stock.

MILK BIKIS

05/04/03 PCHL/74/7-3 Purc BRITANNIA IND LTD 9000.00 4.40 39,600.00

25/05/03 PCHL/74/7-4 Purc BRITANNIA IND LTD 300.00 4.40 1,320.00

28/08/03 PCHL/74/7-15 Purc BRITANNIA IND LTD 250.00 4.40 1,100.00

21/09/03 PCHL/74/7-17 Purc BRITANNIA IND LTD 200.00 4.40 880.00

23/12/03 INV/039 Sale CASH 120.00 4.95 -594.00

05/10/04 PCHL/74/7-23 Purc BRITANNIA IND LTD 200.00 4.40 880.00

Britannia Industries the Company's principal activity is the

manufacture and sale of biscuits, bread, rusk, cakes and dairy products like
cheese, butter and milk. The brand names of biscuits include Vita Marie
Gold, Tiger Variants, Nutrichoice Junior and Good Morning. Biscuits &

32
high protein food accounted for 81% of fiscal 2004 gross revenues; Dairy
products, 12%; Bread, 4%, Cake & Rusk, 2% & other, 1%

Stock Price (12/12/04): 522.30

Recent stock performance
1 Week 0.5%
4 Weeks 0.4%
13 Weeks 1.1%
52 Weeks 10.9%

Chairman Nusli N. Wadia

Managing Director & Chief Executive Sunil K. Alagh
Chief Operating Officer Nikhil Sen
Secretary Ravi Mannath

Key Valuation Drivers

 Commitment of Group Danone which is currently playing an

active role in the operations of the company.

 Revenue growth and new brand introductions in the bread

business.
 Ability to successfully brand premium label in butter and

commonplace label in ghee under the ‘Milkman’ brand. (Dairy

business is a high margin business).
 Ability to increase productivity after VKS and modernization

exercise.
 Ability to hedge raw material price fluctuations (wheat, fat, sugar

and milk).

33
 Ability to successfully compete against new competition in the

biscuit sector both domestic and imports (Nestle, Kellogs, United

Biscuits, and HLL) (opening up of the food market under WTO
will lead to influx of foreign brands).
 Ability to maintain brand equity in the premium end of product-

mix.
 Ability to drive growth in ethnic snack segments.

34
 CHAPTER - 5
Company Profile

Britannia Industries Ltd is India's leading biscuit and bakery product

manufacturer. It is an associate company of Group Danane. Associated
Biscuits of Nusli Wadia and Danane holds 22% equity stake each in
Britannia Industries Ltd. Its market share in biscuits is more than 45% of the
organized sector. Britannia Industries and Fonterra Co-operative Group of
New Zealand, the world's ninth largest dairy company, shall put in Rs 110.4
crone each in their proposed dairy products joint venture, which shall give
them a 49 per cent holding each in the new company. The company has
received the go-ahead from the government to hive off its existing dairy
business and concentrate on bakery and confectionery products. On 26th
March, Britannia Industries Ltd has entered into a joint venture with New
Zealand’s Fonterra Cooperative Group, a leading diary co-operative group
in the world, wherein it will be transferring its existing diary business. The
joint venture, to be called Britannia New Zealand Foods Pvt. Ltd. and
effective March 27, 2002, will be engaged in areas relating to
sourcing/manufacturing and distribution of milk and milk products in India.
On 04 September, Britannia Industries has announced a buyback of its fully
paid-up equity shares of face value of Rs 10 each from the open market. The
maximum buyback price fixed by the company is not more than Rs 650 per
equity share.

❑ ❑ ❑

35