Cautious on capital investments, see revival in 6 months: Britannia's Varun Berry
moneycontrol , Aug 29, 2019
With slowdown blues wrecking the sentiments of corporate India, Britannia is going slow on capital investments, according to Varun Berry, Managing Director, Britannia.
"We have not stopped our projects but we have to factor in the volume growth and see to it that we don't go beyond the capital invested," Berry said.
He was speaking on the panel of FICCI Foodworld India 2019.
He pointed out that Britannia was the first company to talk about slowdown after Diwali last year.
"We did our internal annual calculations and said that the fixed cost should not extend more than 75 percent of the top line growth," Berry said.
He further opined that they have not cut down on any of the market building or market facing activities and have continued to spend money on ad and sales promotions.
"We have not stopped capital expenditure on projects but on other costs we have tightened our belt," Berry said.
However, he does not expect the slowdown to last for long.
"I don't see the slowdown lasting for long. In about six months or so I see normalisation as far as growth numbers are concerned. Base effect will help get volume growth back on track," Berry said
Berry accepted that there is a slowdown in most industries because of rural economy.
"There are two channels which are showing signs of slowdown. First is the rural channel and the second is the wholesale channel," Berry said.
Like other FMCG players, Berry also mentioned that the value segment has been hit the most, while premium segment is faring well.
"North is more rural while south and west are more premium markets. So, North has been hit the most," Berry said.
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