In this quarter, dairy as well as vegetable oil prices have dented ’s performance. Can they pass it on all to consumers and given that some still believe that inflation is transitionary in nature, is this phenomenon going to ebb off in the next quarter?
If we look at the performance, clearly there is a miss on the EBITDA numbers and also the revenue numbers were not particularly great. We were expecting at least a 1% higher revenue number than the company reported.
Coming to the aspect of the passing on the input cost inflation is concerned, the category in which Britannia operates, is quite competitive in nature. There are quite a few players. There are regional players so on and so passing on the price hikes is not very easy. It takes a little bit of time.
As far as inflation is concerned, I would say that typically food inflation is a second half phenomena in India, especially the period from now till January, February. My sense is that this is seasonal inflation which tends to move up a little bit and it is going to be a challenge for Britannia even for a couple of quarters, because it is not going to ebb so easily the inflationary pressures and price hikes tend to be delayed. We are witnessing margin pressure and that is likely to stay for the next three to five months at least and thereafter we might start seeing this pressure ebbing a little.
