Rising input costs, squeezing margins and profits have forced India?s leading confectionary major Britannia Industries to restructure its sales team and middle management, a move aimed at bringing in greater synergies and profitability.
The company has appointed global consultancy firm Bain and Company for undertaking the management restructuring exercise. It is learnt that after the restructuring of various management positions, less employees would be responsible for more operations, thus curbing the wage bill of the company. The company is mulling hiring one individual to take up work of four individuals when it does the replacement hiring to fill vacancies.
Recently, Britannia Industries merged the sales team of its dairy portfolio with that of the more established biscuits business in a bid to cut costs when margins are under pressure. The confectionery major is facing increasing distribution cost due to high petrol prices and also soaring raw materials cost as prices of ingredients like palm oil, sugar, milk and nuts are spiralling.
?The merger of the sales teams of the biscuit and dairy businesses would enable the introduction of superior systems across the portfolio ensuring better customer service, and, our enhanced growth trajectory would provide better opportunities for our channel partners. The change is also enabling each of our people to handle a richer portfolio with superior development of skills and opportunities,? said the company spokesperson.
However, the company avoided giving out details about the specific restructuring exercise in the company. Britannia makes dairy products such as UHT milk, curd, fortified milk brands Actimind, Tiger Zor and most recently gourmet cheese, for which it has tied up with a factory in the Swiss Alps.
The dairy division, which accounts for close to 5% of its total sales, has doubled sales in four years. The integration of dairy with biscuit distribution would expand the reach of Britannia’s dairy products manifold without the company actually making substantial investments.
With a 31.7% value share, Britannia posted a net profit margin of 2.9% in the quarter ended September due to high cost of raw materials such as milk and cashew nuts. Britannia has hiked prices of its products across various categories by about 6% over the last nine months. While the hike has been steeper to the tune of 8-10 % on premium category biscuits, it has been 4-5 % in the staple line. Britannia holds about 33 % share in the total biscuits market in the country pegged at R15,000 crore. The company’s health and wellness segment accounts for almost 50% of its total turnover, which stood at R4,600 crore as on March 31, 2011.
