FY-16 Britannia Industries marketing spends up 13.2 percent

BENGALURU: Britannia Industries Limited (Britannia) spent 13.2 percent more towards advertisement and sales promotion (ASP, marketing spends) during the year ended 31 March 2016 (FY-16, current year) as compared to the previous year. The Indian FMCG major’s consolidated ASP spend in FY-16 was Rs 737.81 crore (8.5 percent of Total Income from Operations or TIO) as compared to Rs 651.70 crore (8.3 percent of TIO) in the previous year. This is Britannia’s highest ASP spends in absolute rupees in a fiscal.

During the quarter ended 31 March 2016 (Q4-16, current quarter) the company’s ASP spend was the highest ever in absolute rupees in a twelve quarter period starting Q1-14 until Q4-16. Britannia spent Rs 208.68 crore (9.4 percent of TIO) towards ASP, which was 2.9 percent more year-over-year (y-o-y) as compared to Rs 202.89 crore (9.4 percent of TIO) and 13.5 percent higher quarter-over-quarter (q-o-q) as compared to Rs 183.93 crore (8.2 percent of TIO) in Q3-16.

The company says that it accelerated its advertisement spends in Q4-16 through high impact association with Filmfare Awards and Asia Cup T20.

Note: The unit of currency in this report is the Indian rupee - Rs (also conventionally represented by INR). The Indian numbering system or the Vedic numbering system has been used to denote money values. The basic conversion to the international norm would be:

(a) 100,00,000 = 100 lakh = 10,000,000 = 10 million = 1 crore.

(b) 10,000 lakh = 100 crore = 1 arab = 1 billion.

Britannia managing director Vrun Berry said, “In an environment where FMCG growths are slow, our double digit volume and value growth is a vindication of our strategy to offer the best products under our world class umbrella brands and a clear focus on building a robust distribution throughout the country with a thrust on rural and other weak states. We also focused on driving off-take through re-stage of our brands and passing on the benefits of benign commodity prices to the consumer. Our focus on supply chain efficiencies, wastage reduction, accelerated cost efficiency program and soft commodity prices helped us expand our operating margin by 360 basis points during the year. We strengthened our backend by successful commissioning of two new factories in Tamil Nadu and Karnataka and reinforced our innovation capability and state of the art R&D centre in Bengaluru. While the category growths are expected to remain subdued, we are confident of keeping our momentum going.

Please refer to Figure A below. As mentioned above, ASP spend in Q4-16 is the highest spent by the company during any quarter in absolute rupee value. In terms of percentage of TIO, Britannia’s ASP spend was highest in Q4-15 at 9.8 percent (Rs 202.89 crore) during the twelve quarter period in this paper. The lowest ASP spend in absolute rupees during the period under consideration was Rs 138.43 crore (7.7 percent of TIO) in Q1-16, while the lowest ASP spend in percentage of TIO was in Q3-16 at 7.3 percent (Rs 143.48 crore).

Britannia’s TIO in FY-16 increased 10.4 percent to Rs 8,678.75 crore from Rs 7,858.42 crore in the previous year. The company’s TIO in the current quarter increased 7.2 percent y-o-y to Rs 2,211.38 from Rs 2,063.64 crore, but declined 1.3 percent q-o-q from Rs 2,240.22 crore.

Britannia’s PAT for FY-16 at Rs 806.11 crore (9.3 percent of TIO) grew 17.1 percent from Rs 668.64 crore (8.8 percent of TIO) in FY-15.

Please refer to Fuigure B below. PAT in Q4-16 increased 13.7 percent y-o-y to Rs 190.23 crore (8.6 percent of TIO) from Rs  167.25 crore (8.1 percent of TIO), but declined 8.4 percent q-o-q from Rs 207.59 crore (9.3 percent of TIO) in the immediate trailing quarter.

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