Analysis of britania industries limitedDocument Transcript
Analysis of Britania Industries LimitedADVERTISEMENTSCompany OverviewBritannia biscuit company was started in 1892 in kolkotta .In 1920 with the help of electricityit mechanised its operations. In 1921 it became first company to import electric ovens.During world war two they were the contractors to supply biscuits to armed forces.In 1975 they took over distribution system of parry‟s. Iin 1975 they become as Indian listedcompany with more than 60% held by Indian public and it became Britannia industrieslimited. In 1983 it crossed 100 crores revenue turn over mark. In 1997 the companyrepositioned itself as “Eat Healthy, Think Better”. By becoming the core sponsors for 1999world cup they enhanced their brand identity and brand image. The Lagaan Match was votedIndia‟s most successful promotional activity of the year 2001 while the delicious Britannia50-50 Maska-Chaska became India‟s most successful product launch. In 2002, Britannia‟sNew Business Division formed a joint venture with Fonterra, the world‟s second largestDairy Company, and Britannia New Zealand Foods Pvt. Ltd. Was born. In recognition of itsvision and accelerating graph, Forbes Global rated Britannia „One amongst the Top 200Small Companies of the World‟, and The Economic Times pegged Britannia India‟s 2ndMost Trusted Brand.Innovation is the KEY MANTRAIn this highly competitive market Britannia survives because of its continuous product andmarketing innovation.Its reposition into Eat Healthy and Think Better touched the emotional part of all Indiansand enhanced its brand image and market cap.Its continuous innovation and its low-cost variety to reach the market depth like “TIGERBISCUITS” are notable innovative strategies by the company.Even if you take Milk Bikis it changed its wrapper, form and size continuously to breakmonotony in the minds of the consumer.Latest Innovations Tiger Banana NutriChoice Sugar Out NutriChoice Digestive Biscuit Treat Fruit Rollz Britannia 50-50 Pepper Chakkar New Britannia Milk BikisFinancials
Britannia Industries Ltd. (BIL), one of India‟s leading food Companies, reported sales of Rs.25,848 MM for the year ended 31st March 2008. This reflects a 17.5% growth over theprevious year. Net Profit for the year at Rs. 191 crores grew by 77.6%. Operating marginimproved by more than 300 basis points.For the last quarter of the year, the Company reported Net Sales of Rs. 6,92 crores & NetProfit of Rs. 61 crores, up 15.6% & 53.6% respectively, over the corresponding quarter lastyear. The Board of Directors has recommended a dividend of Rs. 18 per share of Rs. 10 each.Total payout including Dividend Distribution Tax amounts to Rs. 50 crores for the year.In the food processing industry it ranks 2nd among the top 3 in net sales in IndiaRank Company Net Sales(03/07)1 Nestle 3500 crores2 Britannia 2200 crores3 Glaxo smith 1300 croresRatios Mar Mar Mar Mar MarRatio 2007 2006 2005 2004 2003Operating margin (%) 5.85 11.72 11.58 11.21 11.35Gross profit margin 4.70 10.46 10.39 9.65 9.34(%)Net profit margin (%) 4.86 8.48 9.25 8.16 7.59Current ratio 1.02 1.35 1.18 1.10 0.86Operating Profit MarginOperating profit ratio=operating profit (EBIT)/salesThe decrease in operating profit margin in 2007 can be because of increase in the cost of rawmaterials and commodities like wheat and sugar. The material cost has gone up significantlyfrom the year 2006 to 2007.Gross Profit MarginGross Profit Ratio=Gross Profit/Sales
The decrease in Gross profit margin in 2007 can be because of increase in the cost of rawmaterials and commodities like wheat and sugar. The material cost has gone up significantlyfrom the year 2006 to 2007.Net Profit MarginIt is calculated asNet Profit Ratio=EAT/Net SalesThe decrease in net profit margin in 2007 can be because of increase in the cost of rawmaterials and commodities like wheat and sugar. The material cost has gone up significantlyfrom the year 2006 to 2007.Current RatioIt is defined as current assets divided by current liabilities. It is a measure of short termfinancial liquidity of the firm.Current Ratio= Current Assets/Current LiabilitiesAnalysisA current ratio of 2:1 is always considered as optimum means that there is a 50 % safetymargin in terms of assets to cover its current liabilities. However this doesn‟t mean highercurrent ratio is good. It may signify higher unused cash, inventory which again may result ininventory carrying cost. A current ratio of around 1 seem to be numerically not attractivebased on logics however for a company like brittnia with huge brand equity and market capthis doesn‟t have significant negative impact from investors point of view or financialstrength point of view.Be Sociable, Share!
July 14th, 2008 in Analysis | tags: brittania industries, Technical AnalysisLeave a commentYour comment Name (required) Mail (will not be published) (required) Website Submit Comment 22Popular Posts How to Start Investing in Shares Introduction to Share Market Beginners Basics of Technical Analysis in Share Markets Welcome to Share Market Investment Tips Blog What are Mutual Funds? Reliance Petroleum ValuationCategories Analysis Demat Account Futures and Options Introduction Mutual Fund Strategies
Recent Posts Indian Stock Market – I Don’t See a Recession Britannia Industries Limited: Intrinsic Value Projection for March 2009 Brittania Industries Limited Price Range till August 2009 Analysis of Sree Renuka Sugars Ltd (SRSL) Analysis of Britania Industries Limited Financial Ratio Analysis of Jindal Steel with Tata Steel Online Trading 5Paisa Geojit Financial Services ICICI Web Trading Sharekhan Online Trading Stock Exchanges Bombay Stock Exchange National Stock Exchange Useful Websites Work From Home Jobs Tags 2009Analysisbritannia Strategy: Porters Five Forces Model: analysing industry structure partner-pu Defining an industry FORID:10 ISO-8859An industry is a group of firms that market products which are close substitutes for each other (e.g. the car industry, the travel industry).me industries are more profitable than others. Why? The answer lies in understanding the dynamics of competitive structure in an industry. Searchost influential analytical model for assessing the nature of competition in an industry is Michael Porters Five Forces Model, which is described below:
Related res Study materials abou forces model on the Stu Related Stud What is S Anso Bosto Bench Competitive Ad Competitor Core Comp GE Indust McKinsey Growth explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are O - The threat of entry of new competitors (new entrants) PEST - The threat of substitutes Five Forc - The bargaining power of buyers - The bargaining power of suppliers Strategy and M - The degree of rivalry between existing competitors Strategic R Threat of New Entrants Strate SWOTntrants to an industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on thers to entry. High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, Value Chain restaurants). Key barriers to entry include - Economies of scale - Capital / investment requirements - Customer switching costs - Access to industry distribution channels - The likelihood of retaliation from existing industry players. Threat of Substitutesesence of substitute products can lower industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on: - Buyers willingness to substitute - The relative price and performance of substitutes - The costs of switching to substitutes Bargaining Power of Suppliers Suppliers are the businesses that supply materials & other products into the industry.ost of items bought from suppliers (e.g. raw materials, components) can have a significant impact on a companys profitability. If suppliers have argaining power over a company, then in theory the companys industry is less attractive. The bargaining power of suppliers will be high when: - There are many buyers and few dominant suppliers - There are undifferentiated, highly valued products - Suppliers threaten to integrate forward into the industry (e.g. brand manufacturers threatening to set up their own retail outlets) - Buyers do not threaten to integrate backwards into supply - The industry is not a key customer group to the suppliers
Bargaining Power of Buyers Buyers are the people / organisations who create demand in an industry The bargaining power of buyers is greater when - There are few dominant buyers and many sellers in the industry - Products are standardised - Buyers threaten to integrate backward into the industry - Suppliers do not threaten to integrate forward into the buyers industry - The industry is not a key supplying group for buyers Intensity of Rivalry The intensity of rivalry between competitors in an industry will depend on: tructure of competition - for example, rivalry is more intense where there are many small or equally sized competitors; rivalry is less when an industry has a clear market leadere structure of industry costs - for example, industries with high fixed costs encourage competitors to fill unused capacity by price cutting gree of differentiation - industries where products are commodities (e.g. steel, coal) have greater rivalry; industries where competitors can differentiate their products have less rivalrytching costs - rivalry is reduced where buyers have high switching costs - i.e. there is a significant cost associated with the decision to buy a product from an alternative suppliergic objectives - when competitors are pursuing aggressive growth strategies, rivalry is more intense. Where competitors are "milking" profits in a mature industry, the degree of rivalry is lessbarriers - when barriers to leaving an industry are high (e.g. the cost of closing down factories) - then competitors tend to exhibit greater rivalry. Other Strategy Revision Notes: Ansoff Growth Matrix | BCG Matrix | Balanced Scorecard - Intro| Balanced Scorecard - Perspectives Business Planning - Intro | Business Planning - Process | Writing a Business Plan - Introduction Business Plan - Contents | Benchmarking | Corporate objectives | Functional objectives | Types of Change | Change Management - Intro | Change Management - Lewin Change Management- Barriers |Change Management - Implementation | Competitive Advantage Competitor Analysis | Core Competencies | CSR - Intro | CSR - Issues | CSR - BITC Ethics - Introduction | Ethics - Issues and Examples | Growth - methods of development | Acquisitions (Intro) | Acquisitions evaluation Industry competition and profitability | GE Matrix | McKinsey Growth Model | Globalisation Intro | Globalisation Drivers Mission Statements | Risk (Introduction) | Risk Management | Contingency planning Business Objectives | PEST Analysis | Porters Five Forces | Resources & Strategy |Seasonality Strategic Audit | Stakeholders - Intro | Stakeholders - Interest & Power | Strategy & Marketing
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Marketing Blog Marketing Theory Finance Blog Finance Theory History Blog Geography Blog Give It A Go! Blog Revision Games Blog Teaching & Learning BlogBritannia Chooses FlightVu Cockpit Door Monitoring SystemBritannia Airways, the UKs largest charter airline and part of TUI AG, has chosen FlightVu video security for cockpitdoor monitoring across its fleet of 19 B-757s and 13 B-767s.AD Aerospace of Manchester UK, and AEI of Orlando USA are providing the video security system and installationdesign respectively. The system enables the flight crew to monitor the area outside the flight deck door and adjacentgalleys without leaving their seats. The pilots can visually identify anyone requesting entry and to take appropriateaction should an incident arise."Britannia Airways selected the FlightVu cockpit door monitoring system to enhance the safety and security of ourpassengers and crew," said Captain Colin Sharples, Director of Flight Safety, Quality and Environment at BritanniaAirways. "Our passengers safety has always been the first priority for us and this adds a further layer to the processeswe already have in place."Security measures have been increased throughout the airline industry. This in response to the heightened awarenessof risks from terrorism and air rage over the last few years. The introduction of intrusion resistant cockpit doors hasmade the pilots, and the aircraft, safer but has isolated them, leaving them unaware of what is happening in the cabin.This is where Close Circuit Television (CCTV) comes into use.The FlightVu cockpit door monitoring system consists of three CCTV cameras linked to a LCD monitor or monitorsmounted in the cockpit pedestal in clear view of both pilot positions. The system also includes Infra Red illuminatorsthat allow the area to be viewed even with the cabin lights extinguished."FlightVu, and other cockpit door monitoring systems, which allow the flight crew to observe the area outside of theflight deck are a major step forward in passenger airliner safety," said Mike Horne, Managing Director, ADAerospace. "We believe that the existence of secure flight deck doors and efficient CCTV surveillance will acttogether to reduce the occurrence of major incidents."FlightVu cockpit door monitoring systems have been or are being installed on aircraft for Britannia, easyJet, GBAirways, MyTravel and bmi.AD Aerospace Ltd., designs and manufactures aerospace video camera equipment, including state-of-the-art videosecurity systems. The company, part of the AD Holdings Group, is a CAA/JAA approved designer and manufacturerof video camera systems for commercial aerospace, and an approved supplier to the Boeing Company. AD Aerospace
has facilities in Manchester UK and Atlanta USA.Aircraft Engineering & Installation Services Inc. (AEI) is an Orlando, Florida based avionics integrator serving theAir Transport, Regional Airline, and Heavy Corporate Jet markets. AEI engineers incorporate new avionics systemsinto existing aircraft architecture and facilitate system certification. They then design and manufacture the customAvionics System Integration Kits required to install and activate the new equipment. AEIs engineering,comprehensive system integration kits, and technical support provide its customers with the most trouble-free avionicsinstallations possible.Post to: Delicious Digg reddit Facebook StumbleUpon k0S1QOGFVxHx1O Make An EnquiryFirst NameLast NameEmail AddressEnquiry SubmitContact usAdvertise with usTerms and conditionsPrivacyLinks controlis an essential part of production and is needed at every stage of manufacture. Parts must be correctly made or theywill not fit properly. The finished product should be free from defect. Poor quality control leads to slow andexpensive production. It also loses customers and sometimes results in expensive recalls.In British and American factories quality control is the work of skilled inspectors who examine parts and finishedproducts. German and Japanese factories involve the workers themselves in quality control. Groups check their ownoutput and make suggestions to improve quality. The Japanese “quality circles” involve workers and managers. Thehigh standards achieved in this manner bring lower costs and more satisfied customers. Many American companiesare now instituting such circles Videos Articles & Guides
More Tools Press CenterBrowse by TopicInternal and External AnalysisInternal | External | SWOT Matrix | Competitive Analysis | Market AnalysisSWOT AnalysisSWOT is an acronym used to describe the particular Strengths, Weaknesses, Opportunities,and Threats that are strategic factors for a specific company. A SWOT analysis should notonly result in the identification of a corporation‟s core competencies, but also in theidentification of opportunities that the firm is not currently able to take advantage of due to alack of appropriate resources. (Wheelen, Hunger pg 107)The SWOT analysis framework has gained widespread acceptance because it is both simpleand powerful for strategy development. However, like any planning tool, SWOT is only asgood as the information it contains. Thorough market research and accurate informationsystems are essential for the SWOT analysis to identify key issues in the environment.(Marketing and Its Environment, pg 44)Assess your market: What is happening externally and internally that will affect our company? Who are our customers? What are the strengths and weaknesses of each competitor? (Think Competitive Advantage) What are the driving forces behind sales trends? What are important and potentially important markets? What is happening in the world that might affect our company? What does it take to be successful in this market? (List the strengths all companies need to compete successfully in this market.)Assess your company: What do we do best? What are our company resources – assets, intellectual property, and people? What are our company capabilities (functions)?Assess your competition: How are we different from the competition? What are the general market conditions of our business? What needs are there for our products and services?
What are the customer-market-technology opportunities? What are the customer’s problems and complains with the current products and services in the industry? What “If only….” Statements does a customer make?Opportunityan area of “need” in which a company can perform profitably.Threatchallenge posed by an unfavorable trend or development that would lead (in absence of adefensive marketing action) to deterioration in profits/sales.An evaluation needs to be completed drawing conclusions about how the opportunities andthreats may affect the firm.EXTERNAL: MACRO- demographic/economic, technological, social/cultural, political/legalMICRO- customers, competitors, channels, suppliers, publics INTERNAL RESOURCES:the firmCompetitor analysis is a critical aspect of this step. Identify the actual competitors as well as substitutes. Assess competitors’ objectives, strategies, strengths & weaknesses, and reaction patterns. Select which competitors to attack or avoid.The Internal Analysis of strengths and weaknesses focuses on internal factors that give anorganization certain advantages and disadvantages in meeting the needs of its target market.Strengths refer to core competencies that give the firm an advantage in meeting the needs ofits target markets. Any analysis of company strengths should be market oriented/customerfocused because strengths are only meaningful when they assist the firm in meeting customerneeds. Weaknesses refer to any limitations a company faces in developing or implementing astrategy (?). Weaknesses should also be examined from a customer perspective becausecustomers often perceive weaknesses that a company cannot see. Being market focused whenanalyzing strengths and weaknesses does not mean that non-market oriented strengths andweaknesses should be forgotten. Rather, it suggests that all firms should tie their strengthsand weaknesses to customer requirements. Only those strengths that relate to satisfying acustomer need should be considered true core competencies.(Marketing and Its Environment,pg 44)The following area analyses are used to look at all internal factors effecting a company: Resources: Profitability, sales, product quality brand associations, existing overall brand, relative cost of this new product, employee capability, product portfolio analysis Capabilities: Goal: To identify internal strategic strengths, weaknesses, problems, constraints and uncertaintiesThe External Analysis examines opportunities and threats that exist in the environment. Bothopportunities and threats exist independently of the firm. The way to differentiate between astrength or weakness from an opportunity or threat is to ask: Would this issue exist if thecompany did not exist? If the answer is yes, it should be considered external to the firm.
Opportunities refer to favorable conditions in the environment that could produce rewards forthe organization if acted upon properly. That is, opportunities are situations that exist butmust be acted on if the firm is to benefit from them. Threats refer to conditions or barriersthat may prevent the firms from reaching its objectives.(Marketing and Its Environment, pg44)The following area analyses are used to look at all external factors effecting a company: Customer analysis: Segments, motivations, unmet needs Competitive analysis: Identify completely, put in strategic groups, evaluate performance, image, their objectives, strategies, culture, cost structure, strengths, weakness Market analysis: Overall size, projected growth, profitability, entry barriers, cost structure, distribution system, trends, key success factors Environmental analysis: Technological, governmental, economic, cultural, demographic, scenarios, information-need areas Goal: To identify external opportunities, threats, trends, and strategic uncertaintiesThe SWOT Matrix helps visualize the analysis. Also, when executing this analysis it isimportant to understand how these element work together. When an organization matchedinternal strengths to external opportunities, it creates core competencies in meeting the needsof its customers. In addition, an organization should act to convert internal weaknesses intostrengths and external threats into opportunities.SWOTFocus on your strengths. Shore up your weaknesses. Capitalize on your opportunities.Recognize your threats.Identify Against whom do we compete? Who are our most intense competitors? Less intense? Makers of substitute products? Can these competitors be grouped into strategic groups on the basis of assets, competencies, or strategies? Who are potential competitive entrants? What are their barriers to entry?Evaluate What are their objectives and strategies? What is their cost structure? Do they have a cost advantage or disadvantage?
What is their image and positioning strategy? Which are the most successful/unsuccessful competitors over time? Why? What are the strengths and weaknesses of each competitor? Evaluate competitors with respect to their assets and competencies.Size and Growth What are important and potentially important markets? What are their sizeand growth characteristics? What markets are declining? What are the driving forces behindsales trends?Profitability For each major market consider the following: Is this a business are in whichthe average firm will make money? How intense is the competition among existing firms?Evaluate the threats from potential entrants and substitute products. What is the bargainingpower of suppliers and customers? How attractive/profitable are the market now and in thefuture?Cost Structure What are the major cost and value-added components for various types ofcompetitors?Distribution Systems What are the alternative channels of distribution? How are theychanging?Market Trends What are the trends in the market?Key Success Factors What are the key success factors, assets and competencies needed tocompete successfully? How will these change in the future?Environmental Analysis An environmental analysis is the four dimension of the ExternalAnalysis. The interest is in environmental trends and events that have the potential to affectstrategy. This analysis should identify such trends and events and the estimate their likelihoodand impact. When conducting this type of analysis, it is easy to get bogged down in anextensive, broad survey of trends. It is necessary to restrict the analysis to those areas relevantenough to have significant impact on strategy.This analysis is divided into five areas: economic, technological, political-legal, sociocultural,and future.Economic What economic trends might have an impact on business activity? (Interest rates,inflation, unemployment levels, energy availability, disposable income, etc)Technological To what extent are existing technologies maturing? What technologicaldevelopments or trends are affecting or could affect our industry?Government What changes in regulation are possible? What will their impact be on ourindustry? What tax or other incentives are being developed that might affect strategydevelopment? Are there political or government stability risks?Sociocultural What are the current or emerging trends in lifestyle, fashions, and othercomponents of culture? What are there implications? What demographic trends will affect themarket size of the industry? (growth rate, income, population shifts) Do these trendsrepresent an opportunity or a threat?
Future What are significant trends and future events? What are the key areas of uncertaintyas to trends or events that have the potential to impact strategy?Internal Analysis Understanding a business in depth is the goal of internal analysis. Thisanalysis is based resources and capabilities of the firm.Resources A good starting point to identify company resources is to look at tangible,intangible and human resources.Tangible resources are the easiest to identify and evaluate: financial resources and physicalassets are identifies and valued in the firm‟s financial statements.Intangible resources are largely invisible, but over time become more important to the firmthan tangible assets because they can be a main source for a competitive advantage. Suchintangible recourses include reputational assets (brands, image, etc.) and technological assets(proprietary technology and know-how).Human resources or human capital are the productive services human beings offer the firm interms of their skills, knowledge, reasoning, and decision-making abilities.strategic planning analysis
CapabilitiesResources are not productive on their own. The most productive tasks require that resourcescollaborate closely together within teams. The term organizational capabilities is used to referto a firm‟s capacity for undertaking a particular productive activity. Our interest is not incapabilities per se, but in capabilities relative to other firms. To identify the firm‟scapabilities we will use the functional classification approach. A functional classificationidentifies organizational capabilities in relation to each of the principal functional areas.strategic planning swot Email ShareYou may also be interested in: Dilbert Again – This Time on External Analysis Internal Analysis External AnalysisTopics in this post: Corporate Performance Management, SWOT Analysis | Start Your Plan