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Britannia delays capex plans to grow capacity

The company has reduced the distance its biscuits travel between the factory and consumer from 630km to 350km. The company says every 10km reduction results in Rs 5-crore saving annually. The maker of Marie and Good Day biscuits reported 24% growth in Q3 profit to Rs 373 crore on a revenue of Rs 2,936 crore.

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Last Updated: Feb 14, 2020, 10.34 AM IST
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(This story originally appeared in on Feb 14, 2020)
BENGALURU: Britannia is slowing down capital expenditure, as volume growth in its biscuits and bakery business remains low due to weak consumer spending.

“We have reduced wastage in the system and tightened our fixed costs. We have looked at every possible method of capacity extraction, so that we can postpone capital investments in capacity. We are trying to get more from what we have,” MD Varun Berry said in a post-earnings call with analysts earlier this week.

The company has reduced the distance its biscuits travel between the factory and consumer from 630km to 350km. The company says every 10km reduction results in Rs 5-crore saving annually.

The maker of Marie and Good Day biscuits reported 24% growth in Q3 profit to Rs 373 crore on a revenue of Rs 2,936 crore. Berry said in the current challenging situation, it did not make much sense to push full throttle for volumes as there is a limit to the system’s elasticity.

“We focused our energies-...we are driving top line as much as we can, but we are not dumping at all, and we focused energies on making sure that we set up right systems and processes for the future.”

As a result, Britannia is also delaying the national rollout of a few products that were being test marketed. The company had launched croissants last year by partnering with Greek company Chipita and had in November said the plan was to reach across the country in three months.
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