Britannia rural business contribution may rise to 50 per cent in 3 years

The company was also targeting to makeup the unprecedented annualised cost inflation of Rs 1,300 crore by March 2022 in a combination of price increase and reduction in pack size

Britannia has said that the rural market-share gain is 2.5 times in the Q2 period ending September. Source: Reuters

The country's largest biscuit-maker Britannia Industries rural focus remains intact and the company's rural revenue may touch 50 per cent in the next three years amid a gradual rebound in urban demand.

The company was also targeting to makeup the unprecedented annualised cost inflation of Rs 1,300 crore by March 2022 in a combination of price increase and reduction in pack size.

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The cost of inflation in 2021-22 for Britannia is more than the cumulative six previous years, company officials said.

"Rural revenue will reach 50 per cent in the next three years for Britannia as the company continues to focus on the rural market," sources told PTI.

The company's revenue from rural segment contribution is already around 35 per cent, analysts estimated.

Britannia has said that the rural market-share gain is 2.5 times in the Q2 period ending September. In the last few quarters the rural market has been strong and the company continues to stay upbeat at expanding rural distribution.

The company has increased 2,000 rural direct dealers in the last months to 25,000. It has said the focus states were also showing some positive numbers than national growth.

Meanwhile, the annualised total estimated inflationary pressure which is about Rs 1,300 crore will be recovered by the end of year.

"Till September quarter, five per cent hike had been taken and another 17.5 per cent will be taken in the next two quarters," company sources told PTI.

While a third of this price increase comes into effect at the consumer-end hiking direct price and the remaining two-thirds in reducing pack sizes.

An unprecedented inflation in the price of palm oil of 54 per cent, industrial fuel of 35 per cent and packaging material of 30 per cent led to an overall inflation of 14 per cent during the quarter.

Commodity price inflation has resulted in a lower profit for Britannia in the second quarter of 2021-22. The company posted a consolidated net profit of Rs 381.84 crore for the second quarter.

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