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Britannia readies succession plan to boost growth, COO Varun Berry to head India ops

MUMBAI: Britannia IndustriesBSE -0.58 %, the country's leading biscuit maker, on Monday said Chief Operating Officer Varun Berry will lead its India operations, making him the clear favourite to succeed Vinita Bali, the company's long-serving managing director, who retires in two years.

The 58-year-old Bali, who has been Britannia's MD since mid-2006, will focus on international operations, business development and the company's nutrition foundation, said a company statement. 

A person with direct knowledge of the development said Berry's enlarged role was part of the Nusli Wadia-owned company's succession plan. The 50-year-old Berry, who joined 
BritanniaBSE -0.58 % earlier this year, will report to the company's executive committee that includes Bali. Prior to joining the company, Berry was the CEO of PepsiCo Foods and has worked for over 27 years in various companies, including Unilever.

The company said the organisational changes will enhance "Britannia's position to become an all-embracing foods company from a bakery/dairy company". 

"We are preparing Britannia for high growth in India operations by catering to the changing food habits of the evolving Indian consumer and pursuing opportunities for growth in the overall food domain, here and abroad," said Chairman Nusli Wadia in a statement. 

Britannia's shares rose 16.5% to a lifetime high of Rs 665.80 on Monday after the company announced robust fourth-quarter results late last week. 

During Bali's tenure, first as CEO and then as MD, the company's revenues have quadrupled from Rs 1,510 crore in 2005 to Rs 6,185 crore in 2013. But net profit in these eight years has increased from Rs 149 crore to Rs 259 crore, a much slower rate of growth. 

This is because the company has had to navigate high costs and ward off competition not just from older rivals such as Parle and ITC in its core biscuits business, but also from relatively new entrants like Cadbury Kraft's Oreo and United Biscuits' McVities. 

While biscuits still make up over three-fourths of its total sales, the company has made an aggressive push into other categories such as milk, cheese and ready-to-eat food to earn higher margins. In these segments, too, it is facing stiff competition from MTR, PepsiCo and its erstwhile partner Danone, among others. 

The international business currently accounts for less than 10% of Britannia's revenues, with the Middle East being its main overseas 
market. It operates in the region through Dubai-based Strategic Food International and Oman-based Al Sallan Food Industries. 

A Mauritius-based wholly owned subsidiary of Britannia is the holding company of Britannia and Associates (Dubai) Ltd, which in turn holds investments in the Middle Eastern subsidiaries. 

Analysts expect Britannia to grow its international operations inorganically. "Its international business is very small right now, and there could be some acquisitions to make it large," said Nitin Mathur, consumer research analyst at Espirito Santo Securities.