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Britannia Industries Ltd. - Fundamental Analysis

The document provides an analysis of the FMCG sector in India based on several reports and sources. It summarizes key points from reports on market opportunities and regulatory framework. It also analyzes macroeconomic outlook, industry growth projections, and key takeaways on product innovations. Additionally, it covers an analysis of Britannia including financial projections, company information, SWOT analysis, and news updates. Sector factors like political, economic, technological, social, and environmental aspects are also evaluated.

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By – SUBHADEEP DASGUPTA UID: 2019-0107-0001-0007 MBA Finance6/18/2020 1
6/18/2020 2 Contents Conclusion Business Finance Company Information Sectoral Analysis Economic Analysis Summary of Reports
6/18/2020 3 Summary of Reports Source: IBEF report on FMCG, March 2020 Opportunities Market penetration, Innovative products, Resources etc. Regulatory Framework Union Budget, GST, FSB, FDI, SETU etc.
6/18/2020 4 Summary of Reports Continue Source: Deloitte Report- “Unravelling the Indian Consumer”, 2019 Macro-Economic outlook of India: 5.6%
6/18/2020 5 Summary of Reports Continue Source: Deloitte Report- “Unravelling the Indian Consumer”, 2019 30 29 36 Key Takeaways • Adding new product lines in Nutrition based foods. • Expected growth is 2.5 times of 2019 in next year.
6/18/2020 6Source: https://tradingeconomics.com/india/food-inflation Sectoral Analysis F M C G Food Processing Important Macro Economic Factors Food grains distributed lower rate to maintain cost Expected Money Supply 50 billion+ in 2024 @CAGR 12.4% Exchange rate of food industry is INR 1 = US$ 0.015 Fiscal Deficit has gone down by 3.8% of GDP Cost of Food processing index Unemploym -ent rate will increase
6/18/2020 7 Sectoral Analysis Continue… Bargaining power of buyers (High) The switching cost of buyers is very low. And similar products are easily available in the market. Threats of new entrants (Moderate) Entry cost is very low. But marketing cost for promotions and distribution is high. Limited rules and regulations Threats of substitute (High) Product differentiation is very less among the rivals and substitutes are available. So threats of substitute are very high. Bargaining power of sellers (Low) Mass raw materials are consumed by the companies. Many suppliers are available in the market. Competitive Rivalry (High): There are too many competitions (e.g. Parle, Amul, ITC etc.)
6/18/2020 8 Sectoral Analysis Continue… POLITICAL • Political Stability of INDIA. • High taxation charges. • “Vocal for Local” initiative. • 20 lakh crore package for MSMEs. ECONOMICAL • Current GDP in India is slopping downwards • Decrease in the CRR • High unemployment rate. • Exchange rate changes will impact foreign trade. TECHNOLOGICAL • Digitalization • AI & Machine Learning • High tech application to SCM helps in reducing the cost of production. SOCIAL • Demographics in India creates new segment. • Health consciousness of society. ENVIORNMENTAL • Covid-19 pandemic impact. • Impact of super cyclone Umfan in Bengal and East- Cost areas. • Lockdown reduced pollution rate which is good for the industry. LEGAL • Govt norms. For example, laws to protect Intellectual Property • Laws to protect employees. • Some safety norms also provided for the employees.
6/18/2020 9 Sectoral Analysis Continue… Industry life cycle - Hill and Jones model Current trends 100% FDI is issued for FMCG sector by government Adaptation of Digitalization Trading using multiple channels like Amazon, Flipkart etc. D2C model is used to provide products directly from customers to sellers. New Consumer Protection bill is drafted. GST became very beneficial for the FMCG sector
6/18/2020 10Source: http://britannia.co.in/milestones/ Company Information Milestones of the company Still Continuing..
6/18/2020 Source: Company’s official website 11 Company Information Continue…
6/18/2020 12 Company Information Continue… Tiger, 50-50 and Little hearts Bourbon, Pure magic Good Day, Marie Gold and Treat Nutrichoice
6/18/2020 13 Company Information Continue… S W OT STRENGTH OPPORTUNITY WEAKNESS THREAT • EPS growth of company is very high. • Quality Product offered by the company. • Market share of 400 crore INR, No. 2 in dairy segment. • Strong brand recall value of Britannia. • Deep pockets of the company. • Strong market penetration. • Inefficient management of cash. • ROCE declined in last year. • Only 5% contribution from dairy segment. • Declining market share from 20% to 17% in dairy segment. • Input price hike contributing towards low profitability. • Upgradation in target price in last quarters. • More market to cover, only cheese market is of around 2000 crore. • Dairy market growth at 10-12% annually. • Showing huge potential of the segment. • Changing lifestyle and preferences of consumers. • PE ratio is very high, more than 40. • Competition from local as well as from other giants like Amul, Hutson etc. • Increasing input prices thus low profitability. • Brand switch due to reference group influence or recommendations.
6/18/2020 14 Company Information Continue… Company Life Cycle News (Last 6/12 month) incl. corporate announcement Source: https://www.moneycontrol.com/stocks/company_info/stock_notices.php?sc_did=BI&category=1
6/18/2020 15 Business Finance Rs. In Crores. FY17 Actual FY18 Actual FY19 Actual FY20 Forcasted FY21 Forcasted FY22 Forcasted FY23 Forcasted FY24 Forcasted FY25 Forcasted Sales of Goods 8,581.55 9,282.04 10,389.49 11,225.52 12,128.83 13,104.83 14,159.37 15,298.76 16,529.84 y-o-y growth % 8% 12% 8% 8% 8% 8% 8% 8% Case 1: 12% 12% 12% 12% 12% 12% Case 2: 10% 10% 10% 10% 10% 10% Case 3: 8% 8% 8% 8% 8% 8% Other operating revenues 102.84 98.13 92.96 86.52 80.53 74.96 69.77 64.94 60.44 y-o-y growth % -5% -5% -7% -7% -7% -7% -7% -7% Case 1: -3% -3% -3% -3% -3% -3% Case 2: -5% -5% -5% -5% -5% -5% Case 3: -7% -7% -7% -7% -7% -7% II. Other income 144.78 155.93 190.52 215.18 243.03 274.48 310.00 350.12 395.44 y-o-y growth % 8% 22% 13% 13% 13% 13% 13% 13% Case 1: 17% 17% 17% 17% 17% 17% Case 2: 15% 15% 15% 15% 15% 15% Case 3: 13% 13% 13% 13% 13% 13% Cost of materials consumed 4,342.78 4,405.17 4,944.77 5,745.97 6,208.35 6,707.93 7,247.71 7,830.93 8,461.07 % of revenue 51% 51% 58% 51% 51% 51% 51% 51% 51% Case 1: 55% 55% 55% 55% 55% 55% Case 2: 53% 53% 53% 53% 53% 53% Case 3: 51% 51% 51% 51% 51% 51% Total Operating Expenses 1,368.57 1,740.71 1,656.04 1,670.39 1,804.81 1,950.04 2,106.96 2,276.50 2,459.69 % of revenue 16% 19% 16% 15% 15% 15% 15% 15% 15% Case 1: 19% 19% 19% 19% 19% 19% Case 2: 17% 17% 17% 17% 17% 17% Case 3: 15% 15% 15% 15% 15% 15% D&A 96.43 119.76 135.00 (85.56) (92.45) (99.89) (107.93) (116.61) (126.00) % of revenue 1% 1% 1% -1% -1% -1% -1% -1% -1% Case 1: 3% 3% 3% 3% 3% 3% Case 2: 1% 1% 1% 1% 1% 1% Case 3: -1% -1% -1% -1% -1% -1% Total Tax Expenses 407.47 497.31 593.91 681.74 795.32 918.80 1,053.02 1,198.89 1,357.42 % of EBIT 33% 34% 35% 32% 32% 32% 32% 32% 32% Case 1: 36% 36% 36% 36% 36% 36% Case 2: 34% 34% 34% 34% 34% 34% Case 3: 32% 32% 32% 32% 32% 32%
6/18/2020 16 Business Finance Balance Sheet Assuptions Rs. In Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Notes Trade receivables 126 230 351 379 410 443 478 517 558 DSO will remain same as FY2019in forcasted periods Days Receivables 5.4 9.1 12.3 12.3 12.3 12.3 12.3 12.3 12.3 Inventories 603 595 719 835 903 975 1,054 1,138 1,230 DIO will remain same as FY2019in forcasted periods Days Inventory 50.6 49.3 53.1 53.1 53.1 53.1 53.1 53.1 53.1 Trade Payables 643 866 1,033 1,200 1,296 1,401 1,513 1,635 1,767 DPO will remain same as FY2019in forcasted periods Days payable 54.0 71.8 76.2 76.2 76.2 76.2 76.2 76.2 76.2 PP&E 857 1,224 1,385 1,366 1,476 1,595 1,723 1,862 2,011 as a % of Revenue 10.0% 13.2% 13.3% 12% 12% 12% 12% 12% 12% Other Assets 23 23 30 30 32 35 38 41 44 as a % of Revenue 0.3% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Other Current Liabilities 261 254 274 315 340 367 397 429 463 as a % of Revenue 3.0% 2.7% 2.6% 3% 3% 3% 3% 3% 3% Other Non Current Liabilities 1.44 0.72 3.87 2.31 2.50 2.70 2.92 3.15 3.40 as a % of Revenue 0.02% 0.01% 0.04% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
6/18/2020 17 Business Finance Source: Annual report of Britannia 2019 Rs. in Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Sales of Goods 8,581.55 9,282.04 10,389.49 11,225.52 12,128.83 13,104.83 14,159.37 15,298.76 16,529.84 Other operating revenues 102.84 98.13 92.96 86.52 80.53 74.96 69.77 64.94 60.44 I. Revenue from operations 8,684.39 9,380.17 10,482.45 11312.048 12,209.37 13,179.79 14,229.13 15363.697 16,590.28 II. Other income 144.78 155.93 190.52 215.18 243.03 274.48 310.00 350.12 395.44 III. Total Income (I+II) 8,829.17 9,536.10 10,672.97 11,527.23 12,452.39 13,454.27 14,539.14 15,713.82 16,985.72 IV. Expenses: Cost of materials consumed 4,342.78 4,405.17 4,944.77 5,745.97 6,208.35 6,707.93 7,247.71 7,830.93 8,461.07 Gross Profit 4,486.39 5,130.93 5,728.20 5,781.25 6,244.05 6,746.34 7,291.43 7,882.90 8,524.64 Excise duty - 270.02 76.11 - Purchases of stock-in-trade 904.78 1,372.46 1,381.88 Changes in inventories of finished goods,work-in-progress and stock- in- (49.25) (4.18) (49.02) Employee benefits expense 241.68 294.87 321.64 Finance costs 1.34 1.45 1.54 Total Operating Expenses 1,368.57 1,740.71 1,656.04 1,670.39 1,804.81 1,950.04 2,106.96 2,276.50 2,459.69 EBITDA 3,117.82 3,390.22 4,072.16 4,110.86 4,439.24 4,796.30 5,184.47 5,606.39 6,064.95 Depreciation and amortisation expense 96.43 119.76 135.00 (85.56) (92.45) (99.89) (107.93) (116.61) (126.00) Other expenses 1,770.23 1,825.26 2,221.05 2,221.05 2,221.05 2,221.05 2,221.05 2,221.05 2,221.05 EBIT 1,251.16 1,445.20 1,716.11 1,975.38 2,310.64 2,675.14 3,071.35 3,501.95 3,969.90 V. Profit before tax (III-IV) 1,251.16 1,445.20 1,716.11 1,975.38 2,310.64 2,675.14 3,071.35 3,501.95 3,969.90 (i) Current tax 390.20 499.56 581.36 669.19 782.77 906.25 1,040.47 1,186.34 1,344.87 31% 35% 34% 34% 34% 34% 34% 34% 34% (ii) Deferred tax 17.27 (2.25) 12.55 12.55 12.55 12.55 12.55 12.55 12.55 VI. Tax expense: 407.47 497.31 593.91 681.74 795.32 918.80 1,053.02 1,198.89 1,357.42 VII. Profit for the year (V-VI) 843.69 947.89 1,122.20 1,293.64 1,515.32 1,756.34 2,018.33 2,303.06 2,612.48 VIII. Other comprehensive income Remeasurements of the net defined benefit (liability)/asset (0.37) (0.58) (3.21) Income-tax relating to items not to be reclassified subsequently to statement of profit or loss 0.13 0.20 1.12 Other comprehensive income, net of tax (0.24) (0.38) (2.09) - - - - - - IX. Total comprehensive income for the year (VII+VIII) 843.45 947.51 1,120.11 1,293.64 1,515.32 1,756.34 2,018.33 2,303.06 2,612.48 No of outstanding shares 24.00 24.01 24.03 24.00 24.00 24.00 24.00 24.00 24.00 Earnings per share (face value of Rs 1 each) Basic EPS (Rs) 35.14 39.46 46.61 53.90 63.14 73.18 84.10 95.96 108.85 Profit &Loss Output
6/18/2020 18 Business Finance Source: Annual report of Britannia 2019 Profit &Loss Output Revenue and EBITDA Rs. in Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Revenue 8,829.17 9,536.10 10,672.97 11,527.23 12,452.39 13,454.27 14,539.14 15,713.82 16,985.72 EBITDA 3,117.82 3,390.22 4,072.16 4,110.86 4,439.24 4,796.30 5,184.47 5,606.39 6,064.95 EBITDA % 35% 36% 38% 36% 36% 36% 36% 36% 36% 35% 36% 38% 36% 36% 36% 36% 36% 36% 33% 34% 35% 36% 37% 38% 39% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast inCrore Revenue EBITDA % Historical Figures Forcasted Figures EBITDA Bridge EBITDA in FY19 4,072.16 Delta in Revenue 836.03 Delta in COGS (801.20) Delta in OPEX 14.35 EBITDA in FY20 4,110.86
6/18/2020 19 Business Finance Source: Annual report of Britannia 2019 Working Capital Rs. in Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Inventory 602.61 594.58 718.89 835.37 902.59 975.22 1,053.70 1,138.49 1,230.10 Trade Receivables 126.41 230.32 350.96 379.20 409.72 442.69 478.31 516.80 558.38 Trade Payables 642.82 866.36 1,032.54 1,199.84 1,296.39 1,400.71 1,513.43 1,635.21 1,766.80 Working Capital 86.20 (41.46) 37.31 14.73 15.92 17.20 18.58 20.08 21.69 DSO 5.38 9.06 12.33 12.33 12.33 12.33 12.33 12.33 12.33 DIO 50.65 49.27 53.07 53.07 53.07 53.07 53.07 53.07 53.07 DPO 54.03 71.78 76.22 76.22 76.22 76.22 76.22 76.22 76.22 5.38 9.06 12.33 12.33 12.33 12.33 12.33 12.33 12.33 50.65 49.27 53.07 53.07 53.07 53.07 53.07 53.07 53.0754.03 71.78 76.22 76.22 76.22 76.22 76.22 76.22 76.22 (50) (30) (10) 10 30 50 70 90 FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Working Capital DSO DIO DPO
6/18/2020 20 Business Finance Calculation and Interpretation of Ratios Source: Annual report of Britannia 2019 Years 2017 2018 2019 2020 2021 2022 2023 2024 2025 Current Ratio 1.84 2.03 1.94 2.49 3.04 3.61 4.21 4.83 5.46 Inventory turnover ratio 14.41 7.36 7.53 7.39 7.14 7.14 7.14 7.14 7.14 Total Asset turnover ratio 4.70 2.25 2.04 1.79 1.58 1.41 1.28 1.16 1.06 Liquidity Ratios Years 2017 2018 2019 2020 2021 2022 2023 2024 2025 Debt Ratio 0.30 0.30 0.29 0.26 0.23 0.20 0.18 0.16 0.15 Equity Ratio 0.70 0.70 0.71 0.76 0.81 0.85 0.88 0.90 0.92 Debt to Equity Ratio 0.43 0.43 0.40 0.34 0.28 0.24 0.21 0.18 0.16 SolvencyRatios Years 2017 2018 2019 2020 2021 2022 2023 2024 2025 Profit margin ratio 0.10 0.10 0.10 0.11 0.12 0.13 0.14 0.15 0.15 Gross margin ratio 0.51 0.54 0.54 0.50 0.50 0.50 0.50 0.50 0.50 Return on total assets 0.46 0.23 0.22 0.20 0.20 0.19 0.18 0.17 0.17 BVPS 155.07 155.01 154.88 155.07 155.07 155.07 155.07 155.07 155.07 Basic EPS 35.14 39.46 46.61 53.90 63.14 73.18 84.10 95.96 108.85 ProfitabilityRatios
6/18/2020 21 Business Finance Share Price Analysis Source: money control data Current Market Price (as of 26.05.2020): 3196.40 (BSE India) Volume: 8394 (BSE India) 52 week Low: 2100.55 52 week High: 3443.90 Beta: 0.81 (as Beta <1 we can say there is low risk.) Market Capital (Rs. Cr): 77334.60 BVPS (Rs) 167.98 Face Value (Rs) 1.00 Relative market share comparison. Britannia Vs Sensex
6/18/2020 22 Business Finance Note Goal seek is used to find WAAC for Enterprice value @ 4000 Perpetuity grow th lies betw een 2-6% Cash Flows WAAC 31% Perpetuity Growth (g) 3% PV of Cash Flow s 2,978.5 74.5% Continuing Value 5,213.1 4,000.0 30% 31% 32% 33% 34% PV of Continuing Value 1,021.5 25.5% 1% 4,090.3 3,943.8 3,807.1 3,679.3 3,559.6 Enterprice Value 4,000.0 2% 4,137.6 3,986.3 3,845.4 3,713.9 3,590.9 Less: Financial Liabilities (303.1) 3% 4,188.5 4,031.9 3,886.4 3,750.8 3,624.2 Add: Cash 24.7 4% 4,243.3 4,080.9 3,930.3 3,790.3 3,659.7 Equity Value 3,721.7 5% 4,302.5 4,133.6 3,977.4 3,832.5 3,697.7 Current Equity Value 3,196.4 Upside 16% DCF Valuation WACC g Scenario Analysis 1.0 2.0 3.0 4.0 5.0 6.0 Rs. In Crores. FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast UFCF 622.2 481.7 1,093.6 1,036.0 1,137.5 1,236.6 1,333.3 1,427.9 Discounting Factor 0.8 0.6 0.4 0.3 0.3 0.2 PV of UFCF 833.5 601.8 503.5 417.2 342.8 279.8 No of Years/ Periods
6/18/2020 23 Business Finance DCF Result Enterprice Value 5000 Enterprice Value 4000 Enterprice Value 7000 CFs in Forcasted Period 67.5% CFs in Forcasted Period 74.5% CFs in Forcasted Period 56.4% Continuing Value 32.5% Continuing Value 25.5% Continuing Value 43.6% Scenario 1 Scenario 2 Scenario 3 67.5% 32.5% Enterprice Value: Scenario 1 CFs in Forcasted Period Continuing Value 5000.0 74.5% 25.5% Enterprice Value: Scenario 2 CFs in Forcasted Period Continuing Value 4000.0 56.4% 43.6% Enterprice Value: Scenario 3 CFs in Forcasted Period Continuing Value 7000.0
6/18/2020 24 Business Finance Source: money control data Competition Analysis Company Name For Year End 2017 2018 2019 2017 2018 2019 2017 2018 2019 Particulars Total Income 8,829.17 9,536.10 10,672.97 10,186.52 11,551.19 12,759.97 42,074.68 42,757.38 44,995.65 Total Expenses 7,578.01 8,090.90 8,956.86 8,255.32 9,010.29 9,651.79 26,548.68 25,819.03 29,001.84 PBT 1,251.16 1,445.20 1,716.11 1,931.20 2,540.90 2,671.99 15,525.91 16,938.35 18,478.35 Net Profit 843.45 947.51 1,120.11 1,225.19 1,606.93 1,966.55 10,200.90 11,223.25 12,464.32 Britannia Nestle ITC - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 2017 2018 2019 2017 2018 2019 2017 2018 2019 Britannia Nestle ITC Total Income Total Expenses PBT Net Profit
6/18/2020 25 Business Finance Source: money control data Competition Analysis Company Name For Year End 2017 2018 2019 2017 2018 2019 2017 2018 2019 Equity and Liabilities Share Capital 24.00 24.01 24.03 96.42 96.42 96.42 1,214.74 1,220.43 1,225.86 Researve & Surplus 2,672.42 3,382.22 4,229.22 3,324.17 3,577.32 1,835.84 44,126.22 50,179.64 54,725.99 Current Liabilities 1,345.40 1,647.97 1,851.41 1,492.71 1,854.95 2,147.51 6,830.07 8,856.60 9,621.56 Other Liabilities 66.98 133.72 137.16 2,449.29 2,559.29 2,978.43 2,044.92 2,124.64 4,224.51 Total Liabilities 4,108.80 5,187.92 6,241.82 7,362.59 8,087.98 7,058.20 54,215.95 62,381.31 69,797.92 Assets Fixed Assets 1,062.22 1,420.22 1,659.17 2,710.34 2,505.82 2,370.01 18,417.26 20,591.57 21,887.76 Current Assets 2,339.24 3,151.28 3,526.34 3,937.39 4,736.95 3,817.17 24,537.39 24,503.00 29,568.96 Other Assets 707.34 616.42 1,056.31 714.86 845.31 871.02 11,261.30 17,286.74 18,341.20 Total Assets 4,108.80 5,187.92 6,241.82 7,362.59 8,088.08 7,058.20 54,215.95 62,381.31 69,797.92 Britannia Nestle ITC 24.00 24.01 24.03 96.42 96.42 96.42 1,214.74 1,220.43 1,225.86 2017 2018 2019 2017 2018 2019 2017 2018 2019 BRITANNIA NESTLE ITC SHARE CAPITAL
6/18/2020 26 Business Finance Source: money control data Competition Analysis – Liability pattern
6/18/2020 27 Business Finance Source: money control data Competition Analysis – Asset pattern
6/18/2020 28 Business Finance Source: Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Related to Industry Development Business Strategy Segment Outlook Opportunities Risk and Concerns • Bakery is expected that it will grow by 11.27% CAGR from 2018 to 2022. There will be a collaboration with Chipita. Britannia’s mission is to be the “Total Foods Company”. • Britannia is strengthening the position of Bakery by strong categories, competitive mixes and innovations. • Food Processing • External environment and economy has impacted badly in the business, but Britannia is expecting to overcome it soon. • Growing aspiration, positioning uniquely to consumers, past capability, brand recognition are the best opportunities for Britannia. • Changes in the economy is the primary risk for the company and volatility in price is also the risk that is to be concerned. Management Discussion
6/18/2020 29 Business Finance Source: Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Auditors Comments Revenue recognition • It is the key audit matter for the Company because external stakeholders take revenue as a KPI. Incentive for revenue could be created to be recognized before transferring the control. Related Party Transfer • During 2018-2019 company has done many transactions which could be a risk in completing financial statements. According to Companies Act 2013, SEBI regulations involved in related party transactions are undertaken at arm’s length. Tax Litigations – Provisions and Contingencies • Management should take judgements in related to litigations. Some tax laws are having a very significant impact in Financial statements which company should take care.
6/18/2020 30 Business Finance Source: Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Revenue Structure
6/18/2020 31 Business Finance Source: Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Cost Structure
6/18/2020 32 Business Finance Source: Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Cost Structure
6/18/2020 33Source: Annual report of Britannia 2019 CONCLUSION 01 02 Financial statements of the company for last three years shows that Britannia is stable in nature. From the P&L statement we can easily understand that since 2017 to 2019 total revenue has increased and the net profit is nearly same for the past three years. But Britannia is unable to control the cost. For which Net profit of the company is not increased. 03 Current market of Britannia is going very good it is bullish in nature.
6/18/2020 34 CONCLUSION 04 Beta factor is less than 1.00. Those who are safe players can invest in Britannia. 06 05 Due to Cocid-19 Food processing industry is also effected and it is expected that next two years the revenue from sales will be hampered. Work from home for the manufacturing companies is not possible in current scenario. So Britannia should take very hard safety measures in reopening to protect their employees and to protect their business.
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Britannia Industries Ltd. - Fundamental Analysis

  • 1.
    By – SUBHADEEP DASGUPTA UID:2019-0107-0001-0007 MBA Finance6/18/2020 1
  • 2.
  • 3.
    6/18/2020 3 Summary ofReports Source: IBEF report on FMCG, March 2020 Opportunities Market penetration, Innovative products, Resources etc. Regulatory Framework Union Budget, GST, FSB, FDI, SETU etc.
  • 4.
    6/18/2020 4 Summary ofReports Continue Source: Deloitte Report- “Unravelling the Indian Consumer”, 2019 Macro-Economic outlook of India: 5.6%
  • 5.
    6/18/2020 5 Summary ofReports Continue Source: Deloitte Report- “Unravelling the Indian Consumer”, 2019 30 29 36 Key Takeaways • Adding new product lines in Nutrition based foods. • Expected growth is 2.5 times of 2019 in next year.
  • 6.
    6/18/2020 6Source: https://tradingeconomics.com/india/food-inflation SectoralAnalysis F M C G Food Processing Important Macro Economic Factors Food grains distributed lower rate to maintain cost Expected Money Supply 50 billion+ in 2024 @CAGR 12.4% Exchange rate of food industry is INR 1 = US$ 0.015 Fiscal Deficit has gone down by 3.8% of GDP Cost of Food processing index Unemploym -ent rate will increase
  • 7.
    6/18/2020 7 Sectoral AnalysisContinue… Bargaining power of buyers (High) The switching cost of buyers is very low. And similar products are easily available in the market. Threats of new entrants (Moderate) Entry cost is very low. But marketing cost for promotions and distribution is high. Limited rules and regulations Threats of substitute (High) Product differentiation is very less among the rivals and substitutes are available. So threats of substitute are very high. Bargaining power of sellers (Low) Mass raw materials are consumed by the companies. Many suppliers are available in the market. Competitive Rivalry (High): There are too many competitions (e.g. Parle, Amul, ITC etc.)
  • 8.
    6/18/2020 8 Sectoral AnalysisContinue… POLITICAL • Political Stability of INDIA. • High taxation charges. • “Vocal for Local” initiative. • 20 lakh crore package for MSMEs. ECONOMICAL • Current GDP in India is slopping downwards • Decrease in the CRR • High unemployment rate. • Exchange rate changes will impact foreign trade. TECHNOLOGICAL • Digitalization • AI & Machine Learning • High tech application to SCM helps in reducing the cost of production. SOCIAL • Demographics in India creates new segment. • Health consciousness of society. ENVIORNMENTAL • Covid-19 pandemic impact. • Impact of super cyclone Umfan in Bengal and East- Cost areas. • Lockdown reduced pollution rate which is good for the industry. LEGAL • Govt norms. For example, laws to protect Intellectual Property • Laws to protect employees. • Some safety norms also provided for the employees.
  • 9.
    6/18/2020 9 Sectoral AnalysisContinue… Industry life cycle - Hill and Jones model Current trends 100% FDI is issued for FMCG sector by government Adaptation of Digitalization Trading using multiple channels like Amazon, Flipkart etc. D2C model is used to provide products directly from customers to sellers. New Consumer Protection bill is drafted. GST became very beneficial for the FMCG sector
  • 10.
    6/18/2020 10Source: http://britannia.co.in/milestones/ CompanyInformation Milestones of the company Still Continuing..
  • 11.
    6/18/2020 Source: Company’sofficial website 11 Company Information Continue…
  • 12.
    6/18/2020 12 Company InformationContinue… Tiger, 50-50 and Little hearts Bourbon, Pure magic Good Day, Marie Gold and Treat Nutrichoice
  • 13.
    6/18/2020 13 Company InformationContinue… S W OT STRENGTH OPPORTUNITY WEAKNESS THREAT • EPS growth of company is very high. • Quality Product offered by the company. • Market share of 400 crore INR, No. 2 in dairy segment. • Strong brand recall value of Britannia. • Deep pockets of the company. • Strong market penetration. • Inefficient management of cash. • ROCE declined in last year. • Only 5% contribution from dairy segment. • Declining market share from 20% to 17% in dairy segment. • Input price hike contributing towards low profitability. • Upgradation in target price in last quarters. • More market to cover, only cheese market is of around 2000 crore. • Dairy market growth at 10-12% annually. • Showing huge potential of the segment. • Changing lifestyle and preferences of consumers. • PE ratio is very high, more than 40. • Competition from local as well as from other giants like Amul, Hutson etc. • Increasing input prices thus low profitability. • Brand switch due to reference group influence or recommendations.
  • 14.
    6/18/2020 14 Company InformationContinue… Company Life Cycle News (Last 6/12 month) incl. corporate announcement Source: https://www.moneycontrol.com/stocks/company_info/stock_notices.php?sc_did=BI&category=1
  • 15.
    6/18/2020 15 Business FinanceRs. In Crores. FY17 Actual FY18 Actual FY19 Actual FY20 Forcasted FY21 Forcasted FY22 Forcasted FY23 Forcasted FY24 Forcasted FY25 Forcasted Sales of Goods 8,581.55 9,282.04 10,389.49 11,225.52 12,128.83 13,104.83 14,159.37 15,298.76 16,529.84 y-o-y growth % 8% 12% 8% 8% 8% 8% 8% 8% Case 1: 12% 12% 12% 12% 12% 12% Case 2: 10% 10% 10% 10% 10% 10% Case 3: 8% 8% 8% 8% 8% 8% Other operating revenues 102.84 98.13 92.96 86.52 80.53 74.96 69.77 64.94 60.44 y-o-y growth % -5% -5% -7% -7% -7% -7% -7% -7% Case 1: -3% -3% -3% -3% -3% -3% Case 2: -5% -5% -5% -5% -5% -5% Case 3: -7% -7% -7% -7% -7% -7% II. Other income 144.78 155.93 190.52 215.18 243.03 274.48 310.00 350.12 395.44 y-o-y growth % 8% 22% 13% 13% 13% 13% 13% 13% Case 1: 17% 17% 17% 17% 17% 17% Case 2: 15% 15% 15% 15% 15% 15% Case 3: 13% 13% 13% 13% 13% 13% Cost of materials consumed 4,342.78 4,405.17 4,944.77 5,745.97 6,208.35 6,707.93 7,247.71 7,830.93 8,461.07 % of revenue 51% 51% 58% 51% 51% 51% 51% 51% 51% Case 1: 55% 55% 55% 55% 55% 55% Case 2: 53% 53% 53% 53% 53% 53% Case 3: 51% 51% 51% 51% 51% 51% Total Operating Expenses 1,368.57 1,740.71 1,656.04 1,670.39 1,804.81 1,950.04 2,106.96 2,276.50 2,459.69 % of revenue 16% 19% 16% 15% 15% 15% 15% 15% 15% Case 1: 19% 19% 19% 19% 19% 19% Case 2: 17% 17% 17% 17% 17% 17% Case 3: 15% 15% 15% 15% 15% 15% D&A 96.43 119.76 135.00 (85.56) (92.45) (99.89) (107.93) (116.61) (126.00) % of revenue 1% 1% 1% -1% -1% -1% -1% -1% -1% Case 1: 3% 3% 3% 3% 3% 3% Case 2: 1% 1% 1% 1% 1% 1% Case 3: -1% -1% -1% -1% -1% -1% Total Tax Expenses 407.47 497.31 593.91 681.74 795.32 918.80 1,053.02 1,198.89 1,357.42 % of EBIT 33% 34% 35% 32% 32% 32% 32% 32% 32% Case 1: 36% 36% 36% 36% 36% 36% Case 2: 34% 34% 34% 34% 34% 34% Case 3: 32% 32% 32% 32% 32% 32%
  • 16.
    6/18/2020 16 Business FinanceBalance Sheet Assuptions Rs. In Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Notes Trade receivables 126 230 351 379 410 443 478 517 558 DSO will remain same as FY2019in forcasted periods Days Receivables 5.4 9.1 12.3 12.3 12.3 12.3 12.3 12.3 12.3 Inventories 603 595 719 835 903 975 1,054 1,138 1,230 DIO will remain same as FY2019in forcasted periods Days Inventory 50.6 49.3 53.1 53.1 53.1 53.1 53.1 53.1 53.1 Trade Payables 643 866 1,033 1,200 1,296 1,401 1,513 1,635 1,767 DPO will remain same as FY2019in forcasted periods Days payable 54.0 71.8 76.2 76.2 76.2 76.2 76.2 76.2 76.2 PP&E 857 1,224 1,385 1,366 1,476 1,595 1,723 1,862 2,011 as a % of Revenue 10.0% 13.2% 13.3% 12% 12% 12% 12% 12% 12% Other Assets 23 23 30 30 32 35 38 41 44 as a % of Revenue 0.3% 0.2% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Other Current Liabilities 261 254 274 315 340 367 397 429 463 as a % of Revenue 3.0% 2.7% 2.6% 3% 3% 3% 3% 3% 3% Other Non Current Liabilities 1.44 0.72 3.87 2.31 2.50 2.70 2.92 3.15 3.40 as a % of Revenue 0.02% 0.01% 0.04% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
  • 17.
    6/18/2020 17 Business Finance Source:Annual report of Britannia 2019 Rs. in Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Sales of Goods 8,581.55 9,282.04 10,389.49 11,225.52 12,128.83 13,104.83 14,159.37 15,298.76 16,529.84 Other operating revenues 102.84 98.13 92.96 86.52 80.53 74.96 69.77 64.94 60.44 I. Revenue from operations 8,684.39 9,380.17 10,482.45 11312.048 12,209.37 13,179.79 14,229.13 15363.697 16,590.28 II. Other income 144.78 155.93 190.52 215.18 243.03 274.48 310.00 350.12 395.44 III. Total Income (I+II) 8,829.17 9,536.10 10,672.97 11,527.23 12,452.39 13,454.27 14,539.14 15,713.82 16,985.72 IV. Expenses: Cost of materials consumed 4,342.78 4,405.17 4,944.77 5,745.97 6,208.35 6,707.93 7,247.71 7,830.93 8,461.07 Gross Profit 4,486.39 5,130.93 5,728.20 5,781.25 6,244.05 6,746.34 7,291.43 7,882.90 8,524.64 Excise duty - 270.02 76.11 - Purchases of stock-in-trade 904.78 1,372.46 1,381.88 Changes in inventories of finished goods,work-in-progress and stock- in- (49.25) (4.18) (49.02) Employee benefits expense 241.68 294.87 321.64 Finance costs 1.34 1.45 1.54 Total Operating Expenses 1,368.57 1,740.71 1,656.04 1,670.39 1,804.81 1,950.04 2,106.96 2,276.50 2,459.69 EBITDA 3,117.82 3,390.22 4,072.16 4,110.86 4,439.24 4,796.30 5,184.47 5,606.39 6,064.95 Depreciation and amortisation expense 96.43 119.76 135.00 (85.56) (92.45) (99.89) (107.93) (116.61) (126.00) Other expenses 1,770.23 1,825.26 2,221.05 2,221.05 2,221.05 2,221.05 2,221.05 2,221.05 2,221.05 EBIT 1,251.16 1,445.20 1,716.11 1,975.38 2,310.64 2,675.14 3,071.35 3,501.95 3,969.90 V. Profit before tax (III-IV) 1,251.16 1,445.20 1,716.11 1,975.38 2,310.64 2,675.14 3,071.35 3,501.95 3,969.90 (i) Current tax 390.20 499.56 581.36 669.19 782.77 906.25 1,040.47 1,186.34 1,344.87 31% 35% 34% 34% 34% 34% 34% 34% 34% (ii) Deferred tax 17.27 (2.25) 12.55 12.55 12.55 12.55 12.55 12.55 12.55 VI. Tax expense: 407.47 497.31 593.91 681.74 795.32 918.80 1,053.02 1,198.89 1,357.42 VII. Profit for the year (V-VI) 843.69 947.89 1,122.20 1,293.64 1,515.32 1,756.34 2,018.33 2,303.06 2,612.48 VIII. Other comprehensive income Remeasurements of the net defined benefit (liability)/asset (0.37) (0.58) (3.21) Income-tax relating to items not to be reclassified subsequently to statement of profit or loss 0.13 0.20 1.12 Other comprehensive income, net of tax (0.24) (0.38) (2.09) - - - - - - IX. Total comprehensive income for the year (VII+VIII) 843.45 947.51 1,120.11 1,293.64 1,515.32 1,756.34 2,018.33 2,303.06 2,612.48 No of outstanding shares 24.00 24.01 24.03 24.00 24.00 24.00 24.00 24.00 24.00 Earnings per share (face value of Rs 1 each) Basic EPS (Rs) 35.14 39.46 46.61 53.90 63.14 73.18 84.10 95.96 108.85 Profit &Loss Output
  • 18.
    6/18/2020 18 Business Finance Source:Annual report of Britannia 2019 Profit &Loss Output Revenue and EBITDA Rs. in Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Revenue 8,829.17 9,536.10 10,672.97 11,527.23 12,452.39 13,454.27 14,539.14 15,713.82 16,985.72 EBITDA 3,117.82 3,390.22 4,072.16 4,110.86 4,439.24 4,796.30 5,184.47 5,606.39 6,064.95 EBITDA % 35% 36% 38% 36% 36% 36% 36% 36% 36% 35% 36% 38% 36% 36% 36% 36% 36% 36% 33% 34% 35% 36% 37% 38% 39% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast inCrore Revenue EBITDA % Historical Figures Forcasted Figures EBITDA Bridge EBITDA in FY19 4,072.16 Delta in Revenue 836.03 Delta in COGS (801.20) Delta in OPEX 14.35 EBITDA in FY20 4,110.86
  • 19.
    6/18/2020 19 Business Finance Source:Annual report of Britannia 2019 Working Capital Rs. in Crore FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Inventory 602.61 594.58 718.89 835.37 902.59 975.22 1,053.70 1,138.49 1,230.10 Trade Receivables 126.41 230.32 350.96 379.20 409.72 442.69 478.31 516.80 558.38 Trade Payables 642.82 866.36 1,032.54 1,199.84 1,296.39 1,400.71 1,513.43 1,635.21 1,766.80 Working Capital 86.20 (41.46) 37.31 14.73 15.92 17.20 18.58 20.08 21.69 DSO 5.38 9.06 12.33 12.33 12.33 12.33 12.33 12.33 12.33 DIO 50.65 49.27 53.07 53.07 53.07 53.07 53.07 53.07 53.07 DPO 54.03 71.78 76.22 76.22 76.22 76.22 76.22 76.22 76.22 5.38 9.06 12.33 12.33 12.33 12.33 12.33 12.33 12.33 50.65 49.27 53.07 53.07 53.07 53.07 53.07 53.07 53.0754.03 71.78 76.22 76.22 76.22 76.22 76.22 76.22 76.22 (50) (30) (10) 10 30 50 70 90 FY17 Actual FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast Working Capital DSO DIO DPO
  • 20.
    6/18/2020 20 Business FinanceCalculation and Interpretation of Ratios Source: Annual report of Britannia 2019 Years 2017 2018 2019 2020 2021 2022 2023 2024 2025 Current Ratio 1.84 2.03 1.94 2.49 3.04 3.61 4.21 4.83 5.46 Inventory turnover ratio 14.41 7.36 7.53 7.39 7.14 7.14 7.14 7.14 7.14 Total Asset turnover ratio 4.70 2.25 2.04 1.79 1.58 1.41 1.28 1.16 1.06 Liquidity Ratios Years 2017 2018 2019 2020 2021 2022 2023 2024 2025 Debt Ratio 0.30 0.30 0.29 0.26 0.23 0.20 0.18 0.16 0.15 Equity Ratio 0.70 0.70 0.71 0.76 0.81 0.85 0.88 0.90 0.92 Debt to Equity Ratio 0.43 0.43 0.40 0.34 0.28 0.24 0.21 0.18 0.16 SolvencyRatios Years 2017 2018 2019 2020 2021 2022 2023 2024 2025 Profit margin ratio 0.10 0.10 0.10 0.11 0.12 0.13 0.14 0.15 0.15 Gross margin ratio 0.51 0.54 0.54 0.50 0.50 0.50 0.50 0.50 0.50 Return on total assets 0.46 0.23 0.22 0.20 0.20 0.19 0.18 0.17 0.17 BVPS 155.07 155.01 154.88 155.07 155.07 155.07 155.07 155.07 155.07 Basic EPS 35.14 39.46 46.61 53.90 63.14 73.18 84.10 95.96 108.85 ProfitabilityRatios
  • 21.
    6/18/2020 21 Business FinanceShare Price Analysis Source: money control data Current Market Price (as of 26.05.2020): 3196.40 (BSE India) Volume: 8394 (BSE India) 52 week Low: 2100.55 52 week High: 3443.90 Beta: 0.81 (as Beta <1 we can say there is low risk.) Market Capital (Rs. Cr): 77334.60 BVPS (Rs) 167.98 Face Value (Rs) 1.00 Relative market share comparison. Britannia Vs Sensex
  • 22.
    6/18/2020 22 Business Finance Note Goalseek is used to find WAAC for Enterprice value @ 4000 Perpetuity grow th lies betw een 2-6% Cash Flows WAAC 31% Perpetuity Growth (g) 3% PV of Cash Flow s 2,978.5 74.5% Continuing Value 5,213.1 4,000.0 30% 31% 32% 33% 34% PV of Continuing Value 1,021.5 25.5% 1% 4,090.3 3,943.8 3,807.1 3,679.3 3,559.6 Enterprice Value 4,000.0 2% 4,137.6 3,986.3 3,845.4 3,713.9 3,590.9 Less: Financial Liabilities (303.1) 3% 4,188.5 4,031.9 3,886.4 3,750.8 3,624.2 Add: Cash 24.7 4% 4,243.3 4,080.9 3,930.3 3,790.3 3,659.7 Equity Value 3,721.7 5% 4,302.5 4,133.6 3,977.4 3,832.5 3,697.7 Current Equity Value 3,196.4 Upside 16% DCF Valuation WACC g Scenario Analysis 1.0 2.0 3.0 4.0 5.0 6.0 Rs. In Crores. FY18 Actual FY19 Actual FY20 Forecast FY21 Forecast FY22 Forecast FY23 Forecast FY24 Forecast FY25 Forecast UFCF 622.2 481.7 1,093.6 1,036.0 1,137.5 1,236.6 1,333.3 1,427.9 Discounting Factor 0.8 0.6 0.4 0.3 0.3 0.2 PV of UFCF 833.5 601.8 503.5 417.2 342.8 279.8 No of Years/ Periods
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    6/18/2020 23 Business Finance DCFResult Enterprice Value 5000 Enterprice Value 4000 Enterprice Value 7000 CFs in Forcasted Period 67.5% CFs in Forcasted Period 74.5% CFs in Forcasted Period 56.4% Continuing Value 32.5% Continuing Value 25.5% Continuing Value 43.6% Scenario 1 Scenario 2 Scenario 3 67.5% 32.5% Enterprice Value: Scenario 1 CFs in Forcasted Period Continuing Value 5000.0 74.5% 25.5% Enterprice Value: Scenario 2 CFs in Forcasted Period Continuing Value 4000.0 56.4% 43.6% Enterprice Value: Scenario 3 CFs in Forcasted Period Continuing Value 7000.0
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    6/18/2020 24 Business Finance Source:money control data Competition Analysis Company Name For Year End 2017 2018 2019 2017 2018 2019 2017 2018 2019 Particulars Total Income 8,829.17 9,536.10 10,672.97 10,186.52 11,551.19 12,759.97 42,074.68 42,757.38 44,995.65 Total Expenses 7,578.01 8,090.90 8,956.86 8,255.32 9,010.29 9,651.79 26,548.68 25,819.03 29,001.84 PBT 1,251.16 1,445.20 1,716.11 1,931.20 2,540.90 2,671.99 15,525.91 16,938.35 18,478.35 Net Profit 843.45 947.51 1,120.11 1,225.19 1,606.93 1,966.55 10,200.90 11,223.25 12,464.32 Britannia Nestle ITC - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 2017 2018 2019 2017 2018 2019 2017 2018 2019 Britannia Nestle ITC Total Income Total Expenses PBT Net Profit
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    6/18/2020 25 Business Finance Source:money control data Competition Analysis Company Name For Year End 2017 2018 2019 2017 2018 2019 2017 2018 2019 Equity and Liabilities Share Capital 24.00 24.01 24.03 96.42 96.42 96.42 1,214.74 1,220.43 1,225.86 Researve & Surplus 2,672.42 3,382.22 4,229.22 3,324.17 3,577.32 1,835.84 44,126.22 50,179.64 54,725.99 Current Liabilities 1,345.40 1,647.97 1,851.41 1,492.71 1,854.95 2,147.51 6,830.07 8,856.60 9,621.56 Other Liabilities 66.98 133.72 137.16 2,449.29 2,559.29 2,978.43 2,044.92 2,124.64 4,224.51 Total Liabilities 4,108.80 5,187.92 6,241.82 7,362.59 8,087.98 7,058.20 54,215.95 62,381.31 69,797.92 Assets Fixed Assets 1,062.22 1,420.22 1,659.17 2,710.34 2,505.82 2,370.01 18,417.26 20,591.57 21,887.76 Current Assets 2,339.24 3,151.28 3,526.34 3,937.39 4,736.95 3,817.17 24,537.39 24,503.00 29,568.96 Other Assets 707.34 616.42 1,056.31 714.86 845.31 871.02 11,261.30 17,286.74 18,341.20 Total Assets 4,108.80 5,187.92 6,241.82 7,362.59 8,088.08 7,058.20 54,215.95 62,381.31 69,797.92 Britannia Nestle ITC 24.00 24.01 24.03 96.42 96.42 96.42 1,214.74 1,220.43 1,225.86 2017 2018 2019 2017 2018 2019 2017 2018 2019 BRITANNIA NESTLE ITC SHARE CAPITAL
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    6/18/2020 26 Business Finance Source:money control data Competition Analysis – Liability pattern
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    6/18/2020 27 Business Finance Source:money control data Competition Analysis – Asset pattern
  • 28.
    6/18/2020 28 Business Finance Source:Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Related to Industry Development Business Strategy Segment Outlook Opportunities Risk and Concerns • Bakery is expected that it will grow by 11.27% CAGR from 2018 to 2022. There will be a collaboration with Chipita. Britannia’s mission is to be the “Total Foods Company”. • Britannia is strengthening the position of Bakery by strong categories, competitive mixes and innovations. • Food Processing • External environment and economy has impacted badly in the business, but Britannia is expecting to overcome it soon. • Growing aspiration, positioning uniquely to consumers, past capability, brand recognition are the best opportunities for Britannia. • Changes in the economy is the primary risk for the company and volatility in price is also the risk that is to be concerned. Management Discussion
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    6/18/2020 29 Business Finance Source:Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Auditors Comments Revenue recognition • It is the key audit matter for the Company because external stakeholders take revenue as a KPI. Incentive for revenue could be created to be recognized before transferring the control. Related Party Transfer • During 2018-2019 company has done many transactions which could be a risk in completing financial statements. According to Companies Act 2013, SEBI regulations involved in related party transactions are undertaken at arm’s length. Tax Litigations – Provisions and Contingencies • Management should take judgements in related to litigations. Some tax laws are having a very significant impact in Financial statements which company should take care.
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    6/18/2020 30 Business Finance Source:Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Revenue Structure
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    6/18/2020 31 Business Finance Source:Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Cost Structure
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    6/18/2020 32 Business Finance Source:Annual report of Britannia 2019 Qualitative Analysis of Annual Reports Cost Structure
  • 33.
    6/18/2020 33Source: Annualreport of Britannia 2019 CONCLUSION 01 02 Financial statements of the company for last three years shows that Britannia is stable in nature. From the P&L statement we can easily understand that since 2017 to 2019 total revenue has increased and the net profit is nearly same for the past three years. But Britannia is unable to control the cost. For which Net profit of the company is not increased. 03 Current market of Britannia is going very good it is bullish in nature.
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    6/18/2020 34 CONCLUSION 04 Beta factoris less than 1.00. Those who are safe players can invest in Britannia. 06 05 Due to Cocid-19 Food processing industry is also effected and it is expected that next two years the revenue from sales will be hampered. Work from home for the manufacturing companies is not possible in current scenario. So Britannia should take very hard safety measures in reopening to protect their employees and to protect their business.
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    Help the Fighters, Stayat Home, Stay Safe….