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INDIAN BISCUIT
INDUSTRY

INDIAN BISCUIT INDUSTRY

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Summary
The biscuits industry in India, valued at INR 145bn (~USD 2.41bn) in FY 2014, has been growing at a CAGR of
~10% over
the last three years

Estimates that the industry will be worth nearly INR 279bn (~USD 4.65mn) by FY 2019, growing at a CAGR of
~14%.

The share of glucose biscuits is expected to decline as they have reached a point of saturation. With rising
incomes, consumers
are being lured towards cream biscuits and cookies instead of glucose biscuits.

Increase in disposable income, changing lifestyles, growth in organized retail and increasing consumption of
processed and
packaged food are the main drivers of the industry

Concerns like health, rising incidence of health conditions, increasing concerns over physical appearance,
changing lifestyles,
and soaring costs of healthcare have led the biscuits and cookies market to move towards a healthier path

At present, three large players dominate 70% of the total market

Attractiveness of this Investment

According to FBMI, a steady growth of 15 percent per annum in the next 10 years will be achieved by the biscuit
industry of India.

Export of biscuits will also surpass the target and hit the global market successfully.

Biscuit is one of the fastest moving packaged food categories from retail channels. It is the most common snack
along with tea and coffee in India.

Such as Britannia and Parle G. biscuits are at a mature stage in the products lifecycle, and is well accepted amongst
consumers,
easily available, affordable by everyone and a good snack. Hence, it maintained its leading position as the highest
sales generator
amongst biscuits.
INDIAN BISCUIT INDUSTRY
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Overview
FBMI (Federation of biscuit manufacturer of India) established in Indian Biscuit Market
1950. 30000
India is third largest producer of biscuits after USA and China.
25000
The two major organized players are Britania & Parle in Biscuit
20000
Industry.
Sales
15000
Apart from Big 3 (Parle, Britania & ITC) there are around 150 medium 27900
to
10000
small biscuit factory in India.
13191.7
12214.54
11206 14500
14247.04
Britania & Parle account for 70 percent of the Industrys volume. 5000 9830
Unorganised & Organized sector accounts for about 30% & 70% of 0
the 2009 2010 2011 2012 2013 2014 2019-E
total market share respectively

Market has seen growth of ~10% in the past 8 years

Expected to grow at a CAGR of 14% in the next 5 years.

Market Share Distribution

Biscuit industry contribute Rs 8,000 crore to the FMCG industry , as
Market Share of Big 3 Brands
per
capita consumption of biscuits is less than 2.1 kg in our country.
Parle
30% Organized 11% Britania
34%
Unorganized
27% ITC
70% Others
28%

INDIAN BISCUIT INDUSTRY

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With globalization and cultural integration, eating habits of the
discerning urban and rural consumers are fast changing.
Changing consumerism is witnessing product innovations and
retail formats are going to be great platforms for product push in
the near future.

Bakery joints are slowly becoming popular hangout places. A

typical trend is for a variety of bakery snacks, top quality products
and value-for-money.

India has the largest middle-income consumers, who demand

varieties in food, clothing, transport and improved living
standards, also wish to eat out.

Consumers are increasingly concerned about their health and are

well aware of the relationship between nutritious food and optimal
health.

In addition to healthier products, consumers also are purchasing

products that satisfy their taste buds. The taste enjoyment factor
is vital in the marketplace, as the large range in bakery products
available provides a wide range in consumer choice.

Indulgence/luxury products are becoming more

INDIAN BISCUIT pronounced as a
INDUSTRY
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Brand building capabilities.

Low and mid price range of products.
Strength Provide a wide range of biscuits.
Depth of distribution networks even in rural and remote areas
Innovative Advertisements.

Lack of technology upgradation.

Weakness Low penetration in rural areas.
Not an extensive Overseas Market.
Dependence on retailers and grocery for shelf space.

Increasing demand for Diet, Sugarfree Biscuit.

Opportunities Per Capita consumptions of biscuits in India is only 2.1kg.
Constant rise in disposable income
IBMA estimates annual growth of around 20% in next couple of
years.

Margin war among the major brands.

New Entrants: Oreo, Dark fantasy(Sunfeast).
Threats Emerging local bakery products.
Fluctuation in the price of raw materials, transportation cost and
distribution.
Entry of ITC, having very good distribution channels in to biscuit
industry.

INDIAN BISCUIT INDUSTRY

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Company Overview Key Valuation Matrics (All values in
Cr.)
ITC LimitedorITCis anIndian conglomerateheadquartered in KolkataWest
BengalIts diversified business includes five segments:Fast Moving Market Cap. 2,60,865 Enterprise Value
Consumer Goods(FMCG), Hotels, Paperboards & Packaging, Information 9.3 B
Technology. 52week High 409.70 P/E
31.95
Established in 1910 as the Imperial Tobacco Company of India Limited, the 52 week low 294.50 Market Price
company was renamed as the Indian Tobacco Company Limited in 1970 and 313
further to I.T.C. Limited in 1974, and in 2001 renamed as ITC Ltd. Capital Employed 32420 EPS 12
One of Indias most Admired and Valuable company - Market Capitalization:
over US$ 40 Billion

Extensive FMCG distribution network Direct servicing of 1,00,000 markets & 2

million retail outlets
Key Financial (All values in Cr.)
Stock
120 Price Performance NET REVENUE 36083 PBDIT 15017
EBIT 14055
100 PBT 13998 CAGR 11.8%
PAT 9608
80
EPS
60 EBITDA 13562

40

20

0
Future Plans and Key development

Financing of its operations activities needs

INDIAN BISCUIT INDUSTRY
more careful attention.
Intervention will be concentrated for
steadily growth.
Promoting and mainstreaming inclusive
growth in long run.
Strengthening trade cycle for better cash
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Company Overview Key Valuation Matrics (All values in INR)

123 years ago, in 1892 in a small house in central Kolkata Market Price 2792.45 (8july2015) Market cap.
Britannia was born. 334,734
52 Week high 2828.00 Enterprise value
Britannia is a leading food company in India with over Rs.6912.7 253.74
Crores in revenues, delivering products in over 5 categories 52 week low 966.00 P/E
through 3.5 million retail outlets to more than half the Indian 48.63
population.

Britannia, one of the Indias biggest brands of the country, has a

market share of 33%.

Management

Nusli N Wadia, Chairman Key Financial

Varun Berry, Director
Ness N Wadia, Promoter & NON-Executive Director Revenue 6912.7
EBITDA 15.92x (2014)
EBIT 611.44 (2014)
Stock Price Performance
EPS 30.83 (2014)
140
120
100 Future Plans and key development
80 It is going to introduce in new product
60 underTreatbrand catering to children segment.
40 The company is also planning to expand its health &
20 nutrition space under the brandNutrichoiceby
introducing in new products.
0

Recent developments

Britannia has introducedShubh Kaamnayein,a

range of biscuits, premium cookies andcakes for the
INDIAN BISCUIT INDUSTRY
festive season.
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1 2 3 4 5 6 7
2010 2011 2012 2013 2014 2015 2016
EBIT 50.00 63.25 85.37 98.08 130.85 161.20 168.81
Less: Tax 15 18.975 25.61177 29.42378 39.25388 48.36047 50.64416
Operating profit 35.00 44.28 59.76 68.66 91.59 112.84 118.17
Add: Depreciation 10 12.00 11.83 14.11 16.74 19.61 21.80
Less: Capex 0 -47 -8.44804 -58.8941 -68.1595 -75.8165 -64.7289
Less: Change in wc -40 -8 -59.7754 -20.801 -23.8636 -26.0113 -19.7609

Adj. cash
flow
Free Cash flow to firm 5.00 1.28 3.36 3.07 16.31 30.62 55.48 98.41

WACC 9%

Discounted value 94.71 4.60 1.08 2.62 2.20 10.75 18.57 54.90


Terminal value 2,752.47 2752.473

Long term growth 7.50%

Total value of firm 2,847.19
Less: Debt 100

DCF value of common

equity 2,747.19

INDIAN BISCUIT INDUSTRY

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Revenue statement

industry
2010 2011 2012 2013 2014 2015 2016median
Revenue
Net sales 1000 1250 1500 1790 2123 2487 2765
25% 20% 19% 19% 17% 11% 19%
Cost
Less : COGS -825.00 -1,025.00 -1,223.00 -1,462.00 -1,738.00 -2,045.00 -2,287.00
SGA -115.00 -150.00 -180.00 -216.00 -237.60 -261.36 -287.50

EBITDA 60 75.25 97.20 112.19 147.59 180.81 190.62
Less: D&A 10 12 11.83 14.11 16.74 19.61 21.80

EBIT 50.00 63.25 85.37 98.08 130.85 161.20 168.81

Less:
Interest 11.90 14.14 14.16 12.75 10.83

EBT 50.00 73.47 83.94 116.69 148.45 157.98
Less Tax 15.00 22.04 25.18 35.01 44.53 47.39

PAT 35.00 51.43 58.76 81.68 103.91 110.59

INDIAN BISCUIT INDUSTRY

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Balance sheet
31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16

Assets

Net Fixed Asset 235 231.62 276.40 327.82 384.03 426.95

Non Cash WC 48 107.78 128.58 152.44 178.45 198.21

Cash -33 - - - - 31.21

Total assets 250 339.396 404.97698 480.260336 562.47819 656.37141

Liabilities
Equity 150.00 150.00 150.00 150.00 150.00 150.00
Debt 100.00 137.96 144.79 138.39 116.69 100.00

Profit & Loss - 51.43206 110.19131 191.872626 295.78592 406.37141

Total 250 339.396 404.97698 480.260336 562.47819 656.37141

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Statement
Cash flow statement

2012 2013 2014 2015 2016

Cash Flow from Operating Activities

Net Profit 51.43 58.76 81.68 103.91 110.59

Add: Interest 11.90 14.14 14.16 12.75 10.83
Add: Depreciation 11.83 14.11 16.74 19.61 21.80

Add/Less :Change in WC
Net change WC -59.78 -20.80 -23.86 -26.01 -19.76

Total cash flow from operations 15.38 66.21 88.72 110.27 123.46

Cash flow from investing activities

Capex -8.45 -58.89 -68.16 -75.82 -64.73

Total cash flow from investing activities -8.45 -58.89

INDIAN -68.16
BISCUIT INDUSTRY -75.82 -64.73