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Britannia Industries Ltd (BIL) may do away with redundant subsidiaries and plans are also afoot to put up fresh capacities and reduce share of outsourcing for topline growth.
“We have too many subsidiaries and we need to reduce them. We are taking a re-look at it,” Mr Nusli N. Wadia, Chairman of BIL said, replying to a shareholders' query at the company's 92{+n}{+d} AGM here on Saturday. BIL has 24 subsidiaries and associates in its books. Detailed roadmap of the proposed consolidation exercise was not available.
BIL Managing Director, Ms Vinita Bali, later said, “Some of our investment companies are historical, but non-functional, and without relevance now. These are likely to collapse over a period of time.”
She said, “We have already consolidated a lot of subsidiaries and most of our operating businesses are 100 per cent owned by us.” Apart from the Britannia Dairy Private Ltd, Daily Bread, Strategic Food International, Al Sallan Food and Britannia and Associates Private Ltd, the FMCG major also has investment subsidiaries such as Boribunder Finance, Flora Investments and Gilt Edge Finance. The combined revenue of the investment outfits for 2010-11 was little over Rs 3 crore and they registered a net profit of around Rs 2.4 crore. Of the subsidiaries, Strategic Food International, Ganges valley Foods and Sunrise Biscuit Company, posted a net loss during 2010-11.
A senior company official indicated that BIL might not dismantle its subsidiaries in one go.
“We may consider merger of non-operational companies.”
Greenfield expansion
Addressing the AGM, Mr Wadia said the company aimed to scale down outsourcing by increasing its own production to 60 per cent from 30 per cent.
“Close to 70 per cent of our production is outsourced at present. We want to control close to 60 per cent of the total production moving forward,” he said.
The company will go for greenfield capacity expansion in Bihar, Orissa, Karnataka and in the western part of the country.
“The factory in Bihar will come up in the next few weeks. Capacities in Orissa and Karnataka are in different stages of development and should come up in the next few months. We are yet to decide on a location for the manufacturing facility in the West,” Ms Bali said. The expansion would ensure double digit growth in the company's topline.
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