Introduction of britannia


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Introduction of britannia

  1. 1. Britannia Industries Limited (BSE: 500825, NSE: BRITANNIA) is an Indian food-products corporation based in Kolkata[2], India. It is famous for its Britannia and Tiger brandsof biscuit, which are popular throughout India. Britannia has an estimated 38% marketshare.[3]The Companys principal activity is the manufacture and sale of biscuits, bread, rusk, cakesand dairy products.Contents 1 History o 1.1 The Biscuit King o 1.2 Wadia and Danone 2 Growth and profitability 3 Business o 3.1 Dairy products  3.1.1 Joint venture with New Zealand Dairy o 3.2 Biscuits 4 See also 5 References 6 External linksHistoryThe company was established in 1892, with an investment of Rs. 295.[4] Initially, biscuitswere manufactured in a small house in central Kolkata. Later, the enterprise was acquired bythe Gupta brothers mainly Nalin Chandra Gupta, a renowned attorney,and operated under thename of "V.S. Brothers." In 1918, C.H. Holmes, an English businessman in Kolkata, wastaken on as a partner and The Britannia Biscuit Company Limited (BBCo) was launched. TheMumbai factory was set up in 1924 and Peek Freans UK, acquired a controlling interest inBBCo. Biscuits were in big demand during World War II, which gave a boost to thecompany’s sales. The company name finally was changed to the current "Britannia IndustriesLimited" in 1979. In 1982 the American company Nabisco Brands, Inc. became a majorforeign shareholder.The Biscuit KingKerala businessman K. Rajan Pillai secured control of the group in the late 1980s, becomingknown in India as the Biscuit King.[5] In 1993, the Wadia Group acquired a stake inAssociated Biscuits International (ABIL), and became an equal partner with Groupe Danonein Britannia Industries Limited.In what The Economic Times referred to as one of [Indias] most dramatic corporate sagas,[6]Pillai ceded control to Wadia and Danone after a bitter boardroom struggle,[7] then fled hisSingapore base to India in 1995 after accusations of defrauding Britannia, and died the sameyear in Tihar Jail.[8]
  2. 2. Wadia and DanoneThe Wadias Kalabakan Investments and Groupe Danone had two equal joint venturecompanies, Wadia BSN and UK registered Associated Biscuits International Holdings Ltd.,which together held a 51 per cent stake in Britannia.[9] The ABIH tranche was acquired in1992, while the controlling stake held by Wadia BSN was acquired in 1995. It was agreedthat, in case of a deadlock between the partners, Danone was obliged to buy the Wadia BSNstake at a "fair market value". ABIH had a separate agreement signed in 1992 and was subjectto British law.[9][10]Wadia was to be Danones partner in the food and dairy business, and product launches fromGroupe Danone’s were expected but never materialised despite the JV being in existence forover 11 years in India.[9] Under the 1995 joint venture agreement, Danone is prohibited fromlaunching food brands within India without the consent of the Wadias.[11] In addition, thepartners agreed there would be the right of first refusal to buy out the remaining partner in theevent of the other wishing to sell its holding.[12]In May 2007, Nusli Wadia told the Ministry of Commerce and Industry that Danone investedin a Bangalore-based bio nutrition company, Avesthagen, in October 2006 in violation of thegovernments Press Note 1, 2005, which requires a foreign company to obtain the consent ofits Indian joint venture partner before pursuing an independent business in a similar area,including joint ventures based purely on technical collaboration. Danone argued that PressNote 1 did not apply to it as it did not have a formal technology transfer or trademarkagreement with Avesthagen, and that its 25% holding in Britannia was indirect.[13] Wadiaalso filed a case in the Bombay High Court for a breach of a non-competition clause in thatconnection. The court ordered Danone not to alienate, encumber or sell shares ofAvestagen.[14]In September 2007, the Foreign Investment Promotion Board of India rejected Danonesclaims that it did not need a non-compete waiver from the Wadias to enter into business inIndia alone.[15]In June 2006, Wadia claimed Danone had used the Tiger brand to launch biscuits inBangalore.[12]After a prolonged legal battle, Danone agreed to sell its 25.48% stake in Britannia to LeilaLands, which is a Wadia group entity based in Mauritius, and quit this line of business. Thedeal was valued at $175–200 m. With this buy-out, Wadia holds a majority stake of50.96%.[16]Growth and profitabilityThe company is growing at a steady rate, and is currently profitable. Between 1998 and 2001,the companys sales grew at a compound annual rate of 16% against the market, andoperating profits reached 18%. More recently, the company has been growing at 27% a year,compared to the industrys growth rate of 20%.At present, 90% of Britannia’s annual revenue of Rs2,200 crore comes from biscuits.
  3. 3. Britannia is one of Indias 100 Most Trusted brands listed in The Brand Trust Report.[17]BusinessDairy productsDairy products contribute close to 10 per cent to Britannias revenue.[18] Britannia trades andmarkets dairy products, and its dairy portfolio grew to 47% in 2000-01 and by 30% in 2001-02. Britannia holds an equity stake in Dynamix Dairy and outsources the bulk of its dairyproducts from its associate. Its main competitors are Nestlé India, the National DairyDevelopment Board (NDDB), and Amul (GCMMF).[19]Joint venture with New Zealand DairyOn 27 October 2001, Britannia announced a joint venture with Fonterra Co-operative Groupof New Zealand, an integrated dairy company from procurement of milk to making value-added products such as cheese and buttermilk.[19] Britannia planned to source most of theproducts from New Zealand, which they would market in India.[18] The joint venture willallow technology transfer to Britannia.[19] Britannia and New Zealand Dairy each holding49% of the JV, and the remaining 2 per cent held by a strategic investor. Britannia has alsotentatively announced that its dairy business would be transferred and run by the jointventure.[19]The authorities approval to the joint venture obliged the company to start manufacturingfacilities of its own. It would not be allowed to trade, except at the wholesale level, thuspitching it in competition with Danone, which had recently established its own dairybusiness.[19]BiscuitsBritannia Little HeartsThe companys factories have an annual capacity of 433,000 tonnes.[3] The brand names ofbiscuits include VitaMarieGold, Tiger, Nutrichoice Junior,Good day, 50 50, Treat, PureMagic, Milk Bikis, Good Morning, Bourbon, Thin Arrowroot, Nice, Little Hearts and manymore.Tiger, the mass market brand, realised $150.75 million in sales including exports to countriesincluding the U.S. and Australia, or 20% of Britannia revenues in 2006.
  4. 4. In a separate dispute from the shareholder matters, the company alleged in 2006 that Danonehad violated its intellectual property rights in the Tiger brand by registering and using Tigerin several countries without its consent. Britannia claimed the company found out thatDanone had launched the Tiger brand in Indonesia in 1998, and later in Malaysia, Singapore,Pakistan and Egypt, when it attempted to register the Tiger trademark in some of thesecountries in 2004.[20] Whilst it was initially reported in December 2006 that agreement hadbeen reached,[21] it was reported in September 2007 that a solution remained elusive.[20] In themeantime since Danones biscuit business has been taken over by Kraft, the Tiger brand ofbiscuits in Malaysia was renamed Kraft Tiger Biscuits in September 2008.Britannia initiated legal action against Danone in Singapore in September 2007.[22] Thedispute was resolved in 2009 with Britannia securing rights to the Tiger brand worldwide,and Danone paying Rs 220 million to utilise the brand