Britannia: «Daily Bread» posts net loss in FY 2008/2009

Mumbai / IN. (bi / bs / wib) In May Britannia Industries Limited, member of the Indian Wadia Group and top biscuit maker on the subcontinent, had acquired all of Bangalore-based bakery foods retailer Daily Bread Gourmet Foods – raising its stake from 50 percent earlier. Now Daily Bread has posted a net loss of 24,8 crore INR on sales of 16,3 crore INR in FY 2008/2009. The company is engaged in the business of premium bakery products.

Britannia in a statement to its shareholders detailing its subsidiaries has noted that while Daily Bread topline grew 38 percent to 16,3 crore INR, the net loss was mainly due to the relatively high infrastructure investment in Hyderabad and Delhi operations – at a time when the retail sector began to slow down. Consequently in December 2008, Daily Bread discontinued its operations in Hyderabad and Delhi, to focus on growing its business in Bangalore where the brand has been available for six years and is well-established.

«Daily Bread has added new institutional customers in Bangalore, has developed a franchisee model to expand its footprint and focussed on cost-effectiveness across the entire value chain. With these initiatives, the Daily Bread business in Bangalore is expected to break even at the EBIDTA level this year», Britannia said in its statement. The franchise model Daily Bread developed with the largest integrated franchise and retail solution provider Franchise India Holdings Limited (FIHL) across the subcontinent (see «Daily Bread: ties up with Franchise India»).

Britannia´s two other subsidiaries in West Asia were saddled with losses. Strategic Foods International Co LLC (SFIC), in which Britannia holds a 70 percent stake, posted a net loss of almost 27 crore INR on a topline of 157,8 crore INR. During the year, the business faced severe cost challenges due to exorbitant inflation in the cost of all key commodities like flour, sugar and oil, which resulted in a lower operating profit over the previous year.

Al Sallan Food Industries, in which Britannia holds a 65,46 percent stake, also posted a loss of close to seven crore INR on sales of 73 crore INR. «In order to obtain synergies in the West Asian operations, we have consolidated the front-end of the business and appointed common distributors for the products of Al Sallan. SFIC and Britannia exports from India. This has given us the advantage of improving customer services, resulting in an overall share increase in the key markets of UAE, from six percent to 9,1 percent and Oman from 7,8 percent to 11,6 percent» – Britannia detailed adding that in order to gain operational efficiencies in the supply chain, most of the manufacturing operations in Sohar have been consolidated (sources: bi / bs / wib).