MUMBAI: Quietly, and hidden from the public glare after the recent CXO level changes inBritannia IndustriesBSE 0.97 %, low-profile chairman Nusli Wadia is taking a hands-on role in directing the operations of the biscuit company. Sources within the company say Wadia spent a day meeting with over 200 top managers at Matthan, a luxury hotel near the Britannia office in Bangalore, on May 22, a week before he announced that Managing Director Vinita Bali would take care of international operations and COO Varun Berry would lead Indian operations. Later, in a note to managers, he called this meeting "a comprehensive exercise at understanding the company's performance."
This is Wadia's first intense engagement with managers since Bali took over as MD in 2005. Company sources say this conference was held at Wadia's request. He also crafted out the agenda for the day and requested that specific presentations be made. His son Ness Wadia, who is on board of the company, was also present at the conference. Close on the heels of this meeting, Wadia sent out a note to managers outlining at least three key changes which suggest he and his son will take on greater operational involvement in the company. The mail also outlined the new roles for Bali and Berry.
First, the executive committee, the apex management body of the company, which was headed by 58-year old Bali till recently, will now be run by Wadia. Second, new CFO Vinod Menon, who was reporting to Bali, will now report to Wadia and Bali. Third, Ness Wadia, along with Ajai Puri, a non-executive director and nutrition expert, and Shombit Sengupta, a management and design consultant, have been inducted into a task force to set company strategy, drive innovation and create new products. The task force is expected to come up with a growth plan backed by an innovation funnel to help improve profit margins in the business, company officials said.
Sengupta, who had earlier worked with Britannia during former MD & CEO Sunil Alagh's term and is perceived to be close to Wadia, will play the role of a 'challenger' questioning and sharpening ideas for new products conceptualised by Britannia's managers. This is the first time Ness Wadia will play such a hands-on role in Britannia. Lastly, though he did not spell it out in his note, Nusli Wadia is expected to visit Britannia's HQ in Bangalore every month for regular updates, officials with knowledge about Wadia's plans say.
Earlier, Wadia would hardly ever visit Bangalore, with Bali travelling to his office in Mumbai for occasional reports. He did not have any direct connect with Britanniamanagers. He has never been actively involved in Britannia's operations except when the company was headless after Sunil Alagh's sudden exit in 2003. All that is set to change as Wadia is now keen to personally ensure Britannia improves its profitability and regains market shares in a fiercely competitive market. Responding to a detailed questionnaire sent by ET, an executive from his office said Wadia was travelling and would not be able to reply to the queries.
Company officials present at Wadia's meeting with the top 200 managers last month say he took an uncharacteristically detailed look at Britannia's performance. Through the day, the spotlight remained on two things - Britannia's declining profit margins and market shares and the lack of too many big bang product launches ever since Alagh left in 2003.
Presentations made in the presence of a visibly upset Wadia showed that overheads had gone up significantly in the last eight years impacting the bottom line. EBIDTA margins fell from 11 per cent to 6 per cent in the period and market shares are down to 30-31 per cent from a high of 40 per cent plus in earlier years.
Britannia is perceived to be vulnerable to established rival Parle and an aggressive ITC in its core business, and is also being challenged by new entrants like Cadbury Kraft's Oreo, and United Biscuits' McVities. ITC, which entered the foods space just over ten years ago, has already become India's fourth-largest food company after Amul, Nestle, and Britannia. And both ITC, which overtook Britannia in the cream-biscuit segment, and Danone have aggressive plans for dairy business where Britannia has been present since the last two years.