The Directors present their Annual Report together with the Statement of Accounts for
the year ended 31 March 2011. 


1. FINANCIAL RESULTS


  

    

    

    
Rs MM
  
  

    
Particulars
    
Year ended 31 March 11
    
Year ended 31 March 10
  
  

    
Gross sales
    
42,460
    
34,266
  
  

    
Other income
    
588
    
508
  
  

    
Profit from operations
    
1,794
    
1,248
  
  

    
(PBT before other income, finance costs and exceptional items)
    

    

  
  

    
Profit before tax
    
1,981
    
1,208
  
  

    
Less: Tax
    
528
    
43
  
  

    
Net profit
    
1,453
    
1,165
  
  

    
Add: Profit brought forward
    
1,448
    
1,096
  
  

    
Profit available for appropriation
    
2,901
    
2,261
  
  

    
Less: Proposed dividend
    
776
    
597
  
  

    
Less: Tax on dividend
    
126
    
99
  
  

    
Less: Transfer to general reserve
    
146
    
117
  
  

    
Balance carried forward to Balance sheet
    
1,853
    
1,448
  
  

    
Net cash flow from operating activities
    
2,431
    
2,039
  



2. OVERVIEW OF COMPANY PERFORMANCE

In an environment that is becoming increasingly competitive and in a business whose
profit and profitability are greatly impacted by commodity inflation, profit from
operations increased from Rs 1,248 MM to Rs 1,794 MM. Your Company added Rs 8,194 MM to
the gross sales, which grew 23.9%. Earning per Share was Rs 12.16. The tables below show
trends in performance across key parameters:

In 2010-11 the unprecedented inflationary pressures on the consumer food basket
continued, as did commodity inflation for the food industry.

Against this adverse economic scenario and continued competitiveness that eroded the
overall industry profit pool, your Company continued to focus on its growth strategy, led
by its Power Brands and at the same time restructured operations to reduce cost. Britannia
bakery brands including cake, rusk and bread grew 23.9% with biscuit brands outpacing
market growth.

Your Company addressed the cost challenge by significantly reducing cost through
consolidating operations, re-structuring manufacturing units, reducing complexity and
eliminating wastages in the value chain. Your Company will continue and intensify the
thrust on cost effectiveness in the coming year as well.

Your Company's focus on building new capabilities and a robust pipeline of innovation
resulted in several new launches. Coupled with leading edge go-to-market approaches these
innovations tap new sources of growth and profitable revenue, while building brand
differentiation and relevance. Launches in the Indulgence portfolio continued with
Treat-O' and 'GoodDay Choconut' and 'GoodDay Chocochip' cookies. Your Company further
strengthened its entry in the mass cookies segment through the launch of 'Tiger Krunch'
cookies in Fruit n Nut and Chocochip variants. Your Company also entered the functional
health segment with the launch of specially formulated Diabetic-friendly biscuits under
the Nutrichoice brand. "On-the-go consumption" at the Rs 5 price point has been
a thrust area.

2010-11 saw your Company entering new consumption segments, with the pilot launch of
Breakfast Cereals - 'Britannia Healthy Start' in Mumbai. This is a delicious and healthy
ready-to-cook range of breakfast options like porridge, oats, upma and poha mixes.

The Company's Dairy operations represent a big pillar for growth. Despite an unexpected
inflation in milk prices, growth has been accelerated in the Dairy vertical and synergies
are being secured with the Britannia bakery business. Operations have also been
streamlined for superior profitability and there have been sustained activities in the
highly competitive cheese portfolio. Investment in new innovations - Actimind, Dahi, UHT
Milk, Tiger Zor choco-milk was also strengthened.

Growth momentum continued and escalated in the emerging categories - Breads, Cakes and
Rusks. Your Company is investing behind these categories and building consumer relevance
and brand differentiation through new products, new consumption moments as well as through
new communication.

Export out of India continues to grow rapidly at over 30%. Your Company has added dairy
products to its exports range. During the current year the Company is expanding the range
of products and opening new channels of distribution in key markets.

While the business environment continued to be challenging and competitive, consumers
continued to buy and consume more of the Company's brands, more often. Your Company was
ranked as the 'Most Respected FMCG Company' by Business World. Consumers once again voted
brand "Britannia" as # 1 'Most Trusted Food Brand' and # 5 'Most Trusted Brand'
across all product categories in an independent survey conducted by A C Nielsen and The
Economic Times. Brand "Britannia" also entered the Hall of Fame as it has been
voted among the Top 10 Most Trusted Brands for a continuous period of 10 years.

Britannia won the prestigious IMC Ramkrishna Bajaj National Quality performance
excellence trophy 2010 for two of its units - the Rudrapur factory and the cake factory in
Mangaldoi.

The Britannia Nutrition Foundation (BNF) was founded in this year and on the eve of
National Nutrition Week (1 September 2010), BNF organized a symposium "India's
Malnutrition: Combating the Hard Core" in New Delhi. The symposium saw huge
participation and engagement with 19 international and national speakers of repute and
expertise, and a 200 strong audience comprising the government sector, the development
sector, the medical and scientific fraternity.


3. CONSOLIDATED FINANCIAL RESULTS

Your Company has prepared Consolidated Financial Statements in accordance with
Accounting Standard 21(AS21) issued by the Institute of Chartered Accountants of India.
The Consolidated Statements reflect the results of the Company and those of its
Subsidiaries and Associates. As required by Clause 32 of the Listing Agreement with the
Stock Exchanges, the Audited Consolidated Financial Statements together with the Auditors'
Report thereon are annexed and form part of this Annual Report.

The Consolidated turnover of the Company for the year ended 31 March 2011 was Rs 46,378
MM.

The Consolidated Net Profit of the Company for the year ended 31 March 2011 was Rs
1,343 MM compared with Rs 1,032 MM in the previous year.


  

    

    

    
Rs MM
  
  

    
Particulars
    
Year ended 31 March 11
    
Year ended 31 March 10
  
  

    
Gross sales
    
46,378
    
37,963
  
  

    
Other income
    
649
    
582
  
  

    
Profit from operations
    
1,700
    
1,046
  
  

    
(PBT before other income, finance costs and exceptional items)
    

    

  
  

    
Profit before tax
    
1,871
    
1,087
  
  

    
Net profit
    
1,343
    
1,032
  


Performance of Subsidiaries and Associates is presented below:


SUBSIDIARIES AND ASSOCIATES

Your Directors present herewith a broad overview of the operations and financials of
Subsidiaries and Associates of your Company.


Britannia Dairy Private Limited (BDPL)

During the current year, the Company operated in a highly inflationary environment and
faced huge cost pressures owing to the surging price of milk which increased by around 17%
compared to the previous year. In spite of this the business grew profitably by focusing
on its value added portfolio like cheese and registered a turnover of Rs 2,185 MM compared
to Rs 1,888 MM in the previous year - a growth of 16%. The business recorded a net profit
of Rs 42 MM (after considering an amortization charge of Rs 130 MM) compared to a net loss
of Rs 344 MM (including an amortization charge of Rs 498 MM) in the previous year. Your
Company managed this by aggressively controlling costs and improving realization for its
products in a very competitive market.

With more value-added products in the pipeline, your Company's dairy vision continues
to be anchored in building differentiation by giving delightful consumer experiences. The
plan is to accelerate profitable growth by augmenting and leveraging sales and
distribution and accessing new geographies.


Daily Bread Gourmet Foods (India) Private Limited (Daily Bread)

Daily Bread is a manufacturer and retailer of premium, gourmet bakery products,
including specialty breads, cakes and cookies which it sells to institutional, modern
trade and retail segments. In 2010-11 Daily Bread expanded its retail and franchisee
operations in Bangalore and Hyderabad.

Daily Bread has achieved a turnover of Rs 192 MM during the year as against Rs 147 MM
in the previous year registering a growth of over 31%. Daily Bread has made significant
improvement in its operations to achieve cash break-even for the year, compared to cash
loss of Rs 37 MM in previous year.


Strategic Food International Company LLC, Dubai (SFIC)

Despite the challenging global economic scenario and a real population decline in
Dubai, UAE where the Company has a sizeable presence, the Company increased sales by 12%
to AED 110.8 MM 1,343 MM) for the year ended 31 March 2011 as against the previous year's
levels AED 99.3 MM 1,280 MM). For the year ended 31 March 2011, SFIC posted a net loss of
AED 10.8 MM 131 MM), compared to a net loss of AED 14.4 MM 185 MM) for the previous year.
A new CEO was recruited in September 2010 to lead the business to the next level.

During the year, the Company increased its market share in the GCC region and made
significant brand investments. These initiatives have strengthened the Company's
competitive position, with share gains in all markets in the GCC where the Company
operates. The recent upheaval in North Africa has affected business in markets such as
Libya but the Company is confident that this will be made up in other markets.


Al Sallan Food Industries Company SAOC (ASFI)

Sales for the year ended 31 March 2011 were recorded at Omani Rials (OMR) 7.52 MM 869
MM) as against OMR 7.56 MM 924 MM) for the year ended 31 March 2010. Unrest in Sohar led
to loss of production in February and March 2011. The Company for the first time since its
inception recorded a net profit of OMR 0.15 MM 18 MM) for the year ended 31 March 2011
compared to a net loss of OMR 0.68 MM 83 MM) in previous year, after considering an
interest waiver from the National Bank of Oman of OMR 0.63 MM 74 MM) following the early
settlement of the outstanding loan. Profitability was adversely affected owing to increase
in commodity prices and lower sales due to the challenging global economic scenario.


Investment Companies

M/s. Boribunder Finance and Investments Private Limited (Boribunder), M/s. Flora
Investments Company Private Limited (Flora) and M/s. Gilt Edge Finance and Investments
Private Limited (Gilt Edge) form the Investment Associates of your Company. Boribunder is
a wholly owned subsidiary of your Company.

The combined revenue and profit of the investment companies for the year ended 31 March
2011 was Rs 30.49 MM and Rs 23.80 MM respectively.

Further, pursuant to Section 4 of the Companies Act 1956, the following companies
engaged in manufacture of biscuits at various locations are also deemed to be subsidiaries
of your Company. The Gross Income and Net Profit of the said subsidiaries during 2010-11
are as under:


  

    

    

    
Rs MM
  
  

    
Name of Subsidiary
    
Gross income
    
Net profit /(loss)
  
  

    
International Bakery Products Limited, TC Balam
    
139
    
0.7
  
  

    
J B Mangharam Foods Private Limited, Gwalior
    
183
    
7.1
  
  

    
Manna Foods Private Limited, Kolkata
    
2
    
0.07
  
  

    
Ganges Vally Foods Private Limited, Kolkata
    
136
    
(0.98)
  
  

    
Sunrise Biscuit Company Private Limited, Guwahati
    
821
    
(23.0)
  



Britannia and Associates (Mauritius) Private Limited (BAMPL)

BAMPL, a Company formed in Mauritius and a wholly owned subsidiary of the Company, is
the holding company of Britannia and Associates (Dubai) Private Co. Limited, a Jebel Ali
Free Zone Company, which in turn holds investments in Strategic Food International Co.
LLC, Dubai and Al Sallan Food Industries Company SAOC, Oman.

The combined revenue and loss of holding companies for the period ended 31 March 2011
were USD 0.35 MM 16.02 MM) and USD 0.45 MM 20.23 MM) respectively.


Welfare Companies

Britannia Employees General Welfare Association Private Limited, Britannia Employees
Educational Welfare Association Private Limited and Britannia Employees Medical Welfare
Association Private Limited are the three other Associates of your Company. These are
companies limited by guarantee, have no share capital and have been set up for general,
educational and medical welfare of the employees of your Company. They are not engaged in
any commercial activity.


4. DIVIDEND

The Board of Directors is pleased to recommend a dividend of 325% on the paid up equity
share capital of the Company, which works out to Rs 6.50 per share, for consideration and
approval by the shareholders at the Annual General Meeting. The total payout amounts to Rs
902 MM including dividend distribution tax of Rs 126 MM.


5. Brands

Brands provide the momentum for business growth and during the year, investment in
Research and Development, Advertisement and Sales Promotion increased by 12.7% and coupled
with the renovation and innovation efforts, resulted in 23.9% growth.

Several new and renovated offerings were successfully introduced across the entire
portfolio that include Milk Almond Cookies, Fruit Dhamaka Cookies, Tiger Krunch - Fruit n
Nut/Chocochips,

Diabetic friendly biscuits under Nutrichoice, Time Pass Toasted snack variants, Maska
Chaska variants, Treat-O and GoodDay - Chocochips and Choconut. Significant introductions
in Bread and Cake include Sweet Bread, Milk Bread, Healthy Slice Bread, Premium Sandwich
variants and Fruit chunk cakes, and provided significant impetus to the Bread and Cake
business.

Your Company continues to invest significantly in its capability-building and
structured innovation process, which is reflected in the launch of varied and
differentiated offerings to strengthen the business. Your Company has also initiated the
process for breakthrough innovations through interactions with reputed institutions, which
is expected to help build a strong platform for sustained and significant business
leadership and growth.

Significant innovation in packaging has led to the introduction of attractive and
cost-effective new packs catering to increasing purchase and consumption both in-home and
out of home.


6. supply chain

The singular focus of supply chain has been to improve availability of stocks and
reduce overall cost. A continuous focus on availability through specific projects in the
customer service area improved the availability of SKUs at depots and with customers. New
tools have been introduced for price discovery and this has brought in vendors with new
capability. Further, a focused effort was made to improve volumetric utilization of
trucks, which led to good savings. In addition, an IT tool was used to generate the
optimum network and this was rigorously followed to deliver the least cost in
manufacturing and distribution.


7. quality standards

Each year your Company re-visits its quality standards and makes them more stringent.

Your Company's Rudrapur Unit (Biscuits) and one of its Contract Packers, Sunandram
Foods Private Limited at Guwahati (Cakes) have been awarded the Performance Excellence
Trophy in Manufacturing by The Indian Merchant Chambers and Ramkrishna Bajaj National
Quality Awards Committee which includes a Crystal Trophy, a certificate and a Citation.
The requirements for this award are based on the Malcolm Baldridge model of the US.

It is your Company's endeavor to deliver excellence in quality and there are specific
programs in place to pervasively drive this quality culture.

To strengthen the Company's capability for exports to EU, its Contract Packer, M/s.
Uttam Foods at Khopoli (Maharashtra) has been certified for BRC (British Retail
Consortium) Standards.


8. manufacturing operations

Your Company has revised its manufacturing footprint to support profitable growth. In
that context, capacities were created at relevant locations to meet demand. Additionally,
there was the continual focus on de-bottlenecking existing capacities and improving the
productivity levels at current units.

The creation of these capacities and capabilities has helped the Company deliver the
volume growth at improved customer service levels and lower costs.


9. information technology

Your Company continues to invest in Information Technology to improve operational
efficiencies and enhance productivity. During the year a business intelligence system was
implemented to enable effective analysis of secondary sales information to drive top line
growth by identifying new opportunities. A project has also been initiated to connect the
contract manufacturing units and depots to the Company's data centre in Bangalore through
a more efficient network to ensure faster response to IT systems.

During the year, your Company also consolidated its core ERP infrastructure using new
generation servers leading to significant reductions in energy/ power consumption and
enhanced efficiencies.


10. environment And safety

Several initiatives were continued by the Company as part of energy saving measures
including a new generation oven piloted in one of its own units. The drive for energy
conservation is always a key priority and your Company continually strives to achieve this
through process improvements and through enhancing equipment capability. Environment
friendly fuels like propane, LPG, PNG and biodiesel were used for baking purposes wherever
such fuels were available, to reduce pollution.

As part of its overall safety initiatives, your Company has implemented several safety
measures at its Corporate Office at Bangalore mainly in terms of:

• Implementation of Fire Safety Measures in compliance with National Building Code
and Fire Norms

• Creation of Emergency Control Room

• Emergency Preparedness and Evacuation


11. corporate social responsibility (csr)

Your Company continues to pursue its Corporate Responsibility by driving the Health and
Nutrition agenda in India. Your Company is moving along the path of "Better for
You" products and "Good for You" products. "Better for You"
includes initiatives of removal of unhealthy content like transfat which the Company
undertook three years ago and continues to be the leading Company doing the same. Your
Company now has a portfolio of "Good for You" products which are vitamin and
mineral enriched - these products constitute 55% of your Company's product portfolio. In
the last year, your Company pioneered energy-snacks specially created for people with
diabetes - Nutrichoice Diabetic Friendly Essentials. As you would be well aware, India is
the Diabetes capital of the world.

Another well documented statistic is that India suffers from wide spread micronutrient
deficiency - the most notable being Iron Deficiency or Anaemia which affects 70% of the
Indian population. Your Company continues to support several NGOs by supplying specially
formulated Iron Fortified Biscuits.

Your Company pursues relevant partnerships with key organizations in Nutrition like
GAIN (Global Alliance for Improved Nutrition), UNWFP (United Nations World Food Program),
WBI (World Bank Institute), CGI (Clinton Global Initiative), etc. Your Company has been
recognized for its CSR efforts in the last year by the eminent Rotary Club of India and
the Navjyoti Foundation.

Your Company also set up the Britannia Nutrition Foundation which seeks to "Secure
every child's right to growth and development through good food everyday". The
objective of the Britannia Nutrition Foundation is to work in three core areas -
Scientific Knowledge Building and Dissemination, Education and Awareness building at grass
root levels, Creating a Platform for Action. Your Company organised an international
symposium on 1 September 2010 in New Delhi coinciding with the National Nutrition Week.
The symposium was titled "India's Malnutrition -Combating the Hard Core". It had
19 international and national speakers of eminence from the scientific and medical
fraternities, the bureaucracy as well as the development sector. The symposium brought to
light the success stories from around the world in combating malnutrition along with the
scientific advancements in the area. The final session of the symposium saw a healthy
panel discussion on creating a platform for action in India.

Your Company also sponsors and participates in health and nutrition seminars to further
the cause of awareness building. Some of them are:

• International Symposium on Transfats, Delhi, April 2010

• Sponsorship of Diabetes Blue Fortnight, World Diabetes Day, 14 November 2010

• 55th Annual National Conference of IPHA (Indian Public Health Association),
Belgaum, January 2011

• 1st National Conference on Nutritional Anaemia, LTMG Hospital, Mumbai, January
2011


12. SUB-DIVISION OF EQUITY SHARES

In terms of the approval accorded by the shareholders at the Annual General Meeting
held on 9 August 2010, each equity share of the face value of Rs 10 each fully paid up was
sub-divided into 5 equity shares of the face value of Rs 2 each fully paid up on and from
9 September 2010 (the Record Date fixed by the Board for the purpose).


13. VOLUNTARY DELISTING OF EQUITY SHARES

The Company's equity shares were voluntarily delisted from the Calcutta Stock Exchange
Limited (CSE) with effect from 12 January 2011 in terms of the SEBI (Delisting of Equity
Shares) Regulations, 2009. However, the Company's equity shares continue to be listed on
the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited
(NSE) having nation wide terminals.


14. PENSION

In respect of the notice received from the Commissioner of Income Tax (CIT), Kolkata in
April 2007, to the Company's Covenanted Staff Pension Fund asking it to show cause why
recognition granted to the Fund should not be withdrawn for refunding in the year 2004,
the excess contribution of Rs 121.20 MM received by it in earlier years, the Hon'ble
Supreme Court of India has directed the Single Judge of the Hon'ble Calcutta High Court to
hear the same.

Pursuant to the directions of the Hon'ble Madras High Court, the CIT, Kolkata passed
orders rejecting the deeds of variation submitted in May 2005 by the Company's Pension
Funds on technical grounds. The Company preferred appeals before the Central Board of
Direct Taxes (CBDT), New Delhi challenging the orders of the CIT. CBDT passed orders in
the said appeals in March, 2011 directing the Company inter alia to submit deeds of
variation incorporating the modifications in line with the directions made in the orders
effective 1 November 2004. The modified deeds of variation in line with the directions
contained in the CBDT orders have already been filed with the CIT, Kolkata, for his
approval. In writ petitions filed by some of the pensioners, the Hon'ble Madras High Court
has passed an interim order restraining the CIT, Kolkata, from approving the deeds of
variation pending disposal of the writ petitions.

A suit was filed by the Britannia Industries Limited Pensioners Welfare Association
('the Association') in the Hon'ble Court of City Civil and Sessions Judge, Bangalore,
where the Hon'ble Court passed interim orders on 1 January 2009 and 10 February 2009
directing the Funds to pay pension to the members in accordance with the computation made
and submitted by the Pension Funds to the Court. This computation was on a defined
contribution basis, and is consistent with the pension offered by the Pension Funds to
eligible employees at the time of their retirement/exit. The Funds have been complying
with the said order. In April 2010, the Hon'ble judge passed another interim order
requiring the Funds to pay pension as per Rule 11(a) of the Pension Fund Rules, i.e. on
"Defined Benefit Basis", and gave the Funds 2 months' time for complying with
the order.

In an appeal filed against this order in the Hon'ble Karnataka High Court, the Hon'ble
High Court in April 2010 modified the Trial Court's order so as to extend the time limit
from 2 months to 3 months and in July 2010, further modified the Trial Court's order
directing inter alia that the pension shall be paid as per Rule 11(a) from the date of
filing of the suit by the Association in the Hon'ble Bangalore City Civil Court, i.e. with
effect from 17 June 2008.

The Company filed Special Leave Petitions (SLPs) in the Hon'ble Supreme Court against
the above order of the Hon'ble Karnataka High Court. The Hon'ble Supreme Court passed an
order in January 2011 disposing of the SLPs and directing inter alia that the interim
order passed by it in September 2010 directing that the Pension Funds should continue to
pay pension as per the interim order passed by the Hon'ble Bangalore City Civil Court on 1
January 2009 would continue till disposal of the suit by the Trial Court.

The proceedings in the main suit are currently in progress in the Hon'ble Bangalore
City Civil Court.

The above matters have been dealt with in Note No. 27 of schedule S to the Accounts,
which are self-explanatory.


15. energy, technology and foreign exchange

Details of energy conservation, technology absorption, foreign exchange earnings and
outgoings in accordance with the provisions of clause (e) of sub-section (1) of Section
217 of the Companies Act, 1956, read with the Companies (Disclosure of the Particulars in
the Report of Board of Directors) Rules, 1988, are given as Annexure 'A' to this Report.


16. CORPORATE GOVERNANCE

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate report on corporate governance along with the Auditors' Certificate on its
compliance is attached to this Report.


17. DIRECTORS

Mr. Pratap C. Khanna, Director, passed away on 12 February 2011. He was 85. He had a
long association with the Company since 1948 in various capacities including as General
Manager of its Delhi Branch and as a Director from 1973 to 1981 and from 1993 till his
death in February 2011 and as a Member of the Audit Committee from 2008 to 2011. The Board
records its sorrow and deep sense of loss on the passing away of Mr. Khanna.

Your Board had appointed Dr. Ajai Puri as a Director with effect from 30 April 2009 in
the casual vacancy caused by the resignation of Mr. Philippe Loic Jacob. He holds office
up to the date of the forthcoming Annual General Meeting under Section 262 of the
Companies Act, 1956 read with Article 112 of the Articles of Association of the Company,
and is eligible for appointment as a Director of the Company.

In accordance with the provisions of the Companies Act, 1956 and the Articles of
Association of the Company, Mr. Nusli N Wadia, Mr. A K Hirjee and Mr. Jeh N Wadia,
Directors, retire by rotation at the forthcoming Annual General Meeting and are eligible
for re-appointment.


18. PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956, ('the Act') read with
the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However,
as per the provisions of Section 219(1) (b) (iv) of the Act, the report and accounts are
being sent, excluding the statement containing the particulars to be provided under
Section 217(2A) of the Act. Any member interested in obtaining such particulars may
inspect the same at the Registered Office of the Company or write to the Company Secretary
for a copy thereof.


19. EMPLOYEE STOCK OPTION SCHEME (ESOS)

Requisite disclosure in respect of the Employee Stock Option Scheme in terms of
Guideline 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines 1999, has been provided in Annexure 'B' to
this Report.


20. AUDITORS

M/s. B S R& Co. retire in accordance with the provisions of the Companies Act,
1956. They have indicated their willingness to continue in office and are recommended for
re-appointment as the Company's Auditors for the ensuing year.


21. DIRECTORS' RESPONSIBILITY

Pursuant to sub-section (2AA) of Section 217 of the Companies Act, 1956, your
Directors, based on representations from the Operating Management, confirm that:

(a) In the preparation of annual accounts, the applicable accounting standards have
been followed and there are no material departures;

(b) They have, in selection of the accounting policies, consulted the statutory
auditors and applied these policies consistently, making judgments and estimates that are
reasonable and prudent, so as to give a true and fair view of the state of affairs of the
Company as on 31 March 2011 and of the profit of the Company for the year ended 31 March
2011;

(c) They have taken proper and sufficient care, to the best of their knowledge and
ability, for the maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

(d) They have prepared the annual accounts on a going concern basis.


22. ACKNOWLEDGEMENTS

The Directors would like to thank all stakeholders, namely, customers, shareholders,
dealers, suppliers, bankers, employees and all other business associates for the
continuous support given by them to the Company and its management.


  

    

    
On behalf of the Board
  
  

    
Mumbai
    
Nusli N Wadia
  
  

    
27 May 2011
    
Chairman
  



ANNEXURE 'A' TO THE DIRECTORS' REPORT

Information under Section 217 (1) (e) of the Companies Act, 1956 read with Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 and forming
part of Directors' Report for the year ended 31 March 2011.


A. CONSERVATION OF ENERGY

(a) Following energy conservation measures were undertaken during 2010-11:

(i) Enhancement of cream shell production by 40% at Uttarakhand through optimum
extension of baking oven length resulting in better utilisation of line equipments thereby
enabling reduction in energy consumption per tonne.

(ii) Energy efficient continuous mixing system installation in Uttarakhand replacing
conventional mixing system, which delivered substantial energy conservation.

(iii) Installation of roof top air extractors (operating without electricity) in place
of electrical exhaust fans in Uttarakhand factory.

(iv) Installation of waste heat hot water generator at Delhi, enabling reduction of
energy consumption and also ensuring reduction on impact on environment. The hot water
generated is being used in the pre-mixing section.

(v) Installation of heater in the pre-oven section at Delhi, enabling core heating of
the product thereby achieving baking time reduction, productivity enhancement and
reduction in energy consumption per tonne.

(vi) Pre-heating of air in the Baking Oven at Kolkata factory has helped in improving
combustion efficiency, thereby ensuring energy conservation.

(vii) All sodium vapor lamps were replaced with metal halide lamps in Uttarakhand
factory.

(viii) Installation of CFL lights replacing conventional tube lights at possible
locations.

(b) Additional investments and proposals, if any, being implemented for reduction of
consumption of energy:

Investment of Rs 40 MM planned in 2011-12 for investing in various projects relating to
reduction in energy consumption

(c) Impact of measures at (a) and (b) above: Electricity consumption reduced to 116.71
units/mt of Biscuit production from 123.71 units/mt, resulting in reduction of almost 6%
over the previous year.

Form 'A'

Form of disclosure of particulars with respect to conservation of energy


  

    
For the year ended
    
31 March 2011
    
31 March 2010
  
  

    
1 ELECTRICITY
    

    

  
  

    
(a) Purchased (gwh)
    
11.67
    
12.00
  
  

    
Total amount MM) Rate/Unit ( Rs /kwh) (1gwh = 1,000,000 kwh)
    
57.79 4.95
    
55.14 4.59
  
  

    
(b) Own generation
    

    

  
  

    
(i) Through diesel generator (gwh)
    
2.27
    
1.13
  
  

    
Unit per litre of diesel oil (kwh/litre)
    
3.10
    
3.10
  
  

    
Cost/Unit ( Rs /kwh) (1gwh = 1,000,000 kwh)
    
10.73
    
9.60
  
  

    
(ii) Through steam turbine/ generator
    

    

  
  

    
Units (KL)
    
Nil
    
Nil
  
  

    
Unit per litre of fuel oil/gas
    
Nil
    
Nil
  
  

    
Cost/Unit ( Rs /KL)
    
Nil
    
Nil
  
  

    
(iii) Others/Internal
    

    

  
  

    
generation (Baking fuel consumption)
    

    

  
  

    
Quantity (Billion btu)
    
225.55
    
195.75
  
  

    
Total cost MM)
    
204.21
    
152.99
  
  

    
Rate/Unit ( Rs /therm)
    
90.54
    
78.15
  
  

    
Consumption per unit of production
    

    

  
  

    
Bakery products
    

    

  
  

    
Biscuits (Mt)
    
119,452
    
106,150
  
  

    
Electricity (kwh/mt)
    
116.71
    
123.71
  
  

    
Baking fuel (Therms/mt)
    
18.88
    
18.44
  


The increase in cost per unit of own generation as well as the rate per unit of baking
fuel is due to the increase in cost of HSD and other fuels used in baking.

Due to increase in cost of Propane, usage of this fuel for baking was only for 6 months
at Uttarakhand. This had also contributed to higher rate per unit of baking fuel.

Consequent upon the energy saving measures initiated, the electricity consumption for
biscuits per tonne has reduced by 6% as compared to previous year.

Owing to change in product and SKU mix, as a few products like Jim Jam consume higher
energy due to process complexity, there was marginal increase in baking fuel consumption
per unit of biscuit production.

Technology absorption, adaptation and innovation

(a) Efforts in brief made towards absorption, adaptation and innovation:

Various actions were initiated for upgradation of technology and automation in specific
areas.

• New pre-heating technology in the baking process is being tested. This has a
potential to increase the plant output by around 10%, depending on variety and SKU.

• Continuous mixing of ingredients has been implemented at Uttarakhand.

• Packing machine speed enhancement has been effected through Automation and Servo
controlled motion.

(b) Benefits derived as a result of the above:

The above initiatives resulted in improved productivity, reduction of wastages, better
energy utilization, process improvements and enhanced product quality.

(c) Details of imported technology:

(i) Technology imported: Nil

(ii) Year of import: Not applicable

(iii) Has the technology been fully absorbed Rs : Not applicable

(iv) If not fully absorbed, areas where this has not taken place, reasons therefor and
future plans of action: Not applicable.


B. TECHNOLOGY ABSORPTION

Research and Development (R & D)

Details of efforts made in technology absorption are

1. Core areas of research by the Company:

(i) Introduction of 'Ready to Cook' range of products.

(ii) The investment behind upgradation of basic research led to the successful launch
of 'Diabetic friendly' cookies with validated claims.

(iii) Continuous research in the area of nutrition, analytical techniques, ingredients,
packaging materials, process technology and food safety.

(iv) Partnership with leading NGOs / Institutes initiated for delivering specially
formulated and fortified products.

2. Benefits delivered as a result of above R&D initiatives:

(i) New products launched:

• Fruit Dhamaka Cookies

• Diabetic-friendly Cookies

• Healthy Start Range

• Almond Cookies

• Chocolate Biscuits

(ii) Manufacturing and exporting range of products:

• Digestive for SFIC

• Nutro cream renovation

(iii) Improved products with technology upgradation and cost efficiencies:

• Mariegold, Vitamariegold

• Thin Arrowroot

• Nicetime

• Treat-O

(iv) Packaging upgradation for differentiation and serving different consumption
occasions and target groups:

• Chocochip & Choconut re-launch with differentiated packaging formats.

• Britannia "Shubh Kamnayaen" offerings.

• Promotional offerings.

• New launches with differentiated packaging materials in Diabetic-friendly
Cookies and Time pass variants.

(v) Rewards and recognition:

• INDIASTAR Award for Cuptainer and BSK Packaging.

3. Future plan of action:

Your Company will continue to focus on technology led innovations and effectively apply
the same in cost-efficient initiatives across portfolio:

(i) New areas of research to facilitate product introduction in new benefit categories
and upgrading the existing offerings to provide value for spend.

(ii) Differentiated and consumer-appealing product/ pack propositions catering to
cross-sections of consumers.

(iii) Continuous improvement and strengthening of the process of 'Concept to
Commercialisation' to ensure 'FIRST-TIME RIGHT' delivery.

(iv) Research in wheat characteristics, baking technology, sensory sciences, functional
foods, specific nutrition needs and food safety.

(v) New partnerships to explore alternative cereals/ flours and fat
reduction/replacements to drive the health and nutrition agenda further.


  

    
4. Expenditure on R&D
    
Rs MM
  
  

    

    
31 March 11
  
  

    
Capital
    
47.48
  
  

    
Recurring
    
45.34
  
  

    
Total
    
92.82
  
  

    
Total R & D expenditure as a % of gross turnover
    
0.219%
  



C. FOREIGN EXCHANGE EARN INGS AND OUTGO

Activities relating to exports:

(i) The Company actively pursued and secured new export markets for its core products.

(ii) Total foreign exchange used and earned:


  

    

    
Rs MM
  
  

    

    
31 March 11
  
  

    
Foreign exchange used*
    
1,377.45
  
  

    
Foreign exchange earned
    
515.41
  


* Foreign exchange used for dividend, import of raw materials and capital goods.


  

    

    
On behalf of the Board
  
  

    
Mumbai
    
Nusli N Wadia
  
  

    
27 May 2011
    
Chairman
  



ANNEXURE 'B' TO THE DIRECTORS' REPORT

Disclosure pursuant to the provisions of SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999


  

    
Particulars 
    
No. of Options
    

  
  

    
(a) Options granted 
    
Financial Year: 2008-09 
    

    
15,000 Options 
  
  

    

    
Financial Year: 2009-10 
    

    
15,000 Options 
  
  

    

    
Financial Year: 2010-11 
    

    
20,000 Options 
  
  

    

    

    

    
50,000 Options 
  
  

    

    
The numbers of options have been appropriately adjusted as under consequent upon the
    sub-division of the equity shares. 
    

    

  
  

    

    
Date of Grant
    
No. of Options outstanding as on 9.9.2010
    
Adjusted No. of options
  
  

    

    
29.10.2008
    
15,000
    
75,000
  
  

    

    
27.05.2009
    
15,000
    
75,000
  
  

    

    
27.05.2010
    
20,000
    
100,000
  
  

    

    
Total
    
50,000
    
250,000
  
  

    
(b) The pricing formula
    
The exercise price was determined in accordance with the pricing formula approved by
    the shareholders i.e. at the latest available closing market price on the stock exchange
    having highest trading volume, prior to the date of the meeting of the Board of Directors
    or Remuneration/ Compensation Committee in which options were granted.
    

    

  
  

    

    
Accordingly the options were granted at an exercise price of Rs 1,125.30, Rs 1,698.15
    and Rs 1,668.55 being the closing market price on the previous date of grant, i.e. 28
    October
2008, 26 May 2009 and 26 May 2010 respectively for the grants made on 29 October
    2008, 27 May 2009 and 27 May 2010.
    

    

  
  

    

    
The prices relating to the options granted on 29 October 2008 and 27 May 2009 have
    been adjusted downwards by Rs 170, being the face value of bonus debenture, issued as per
    Scheme of Arrangement approved by Hon'ble High Court of Calcutta by its order dated 11
    February 2010.
    

    

  
  

    

    
Consequent upon the sub-division of equity shares on and from 9 September 2010, the
    exercise prices have been further adjusted as under:
    

    

  
  

    

    
Date of Grant
    
Adjusted Exercise Price ( Rs /Share)
    

  
  

    

    
29.10.2008
    
191.06
    

  
  

    

    
27.05.2009
    
305.63
    

  
  

    

    
27.05.2010
    
333.71
    

  
  

    
(c) Options vested (as at 31 March 2011)
    
150,000 Options.
    

    

  
  

    

    
Options vest 1 year after date of grant of options. First lot of 75,000 options which
    were granted on 29 October 2008 vested on 29 October 2009 while the second lot of 75,000
    options which were granted on 27 May 2009 vested on 27 May 2010 and the third lot of
    100,000 options which were granted on 27 May 2010 are due for vesting in the next
    financial year (i.e. on 27 May 2011).
    

    

  
  

    
(d) Options exercised (as at 31 March 2011)
    
Nil
    

    

  
  

    
(e) The total number of shares arising as a result of exercise of option
    
Nil
    

    

  
  

    
(f) Options lapsed
    
NA
    

    

  
  

    
(g) Variation of terms of options
    
NA
    

    

  
  

    
(h) Money realized by exercise of options
    
NA
    

    

  
  

    
(i) Total number of options in force
    
250,000 options
    

    

  
  

    
(j) Employee wise details of options granted to: (i) Senior managerial personnel.
    
250,000 options granted to the Managing Director,
    

    

  
  

    
(ii) Any other employee who receives a grant in any one year of option amounting to 5%
    or more of option granted during that year.
    
Ms. Vinita Bali. NA
    

    

  
  

    
(iii) Identified employees who were granted option, during any one year, equal to or
    exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the
    Company at the time of grant.
    
NA
    

    

  
  

    
(k) Diluted Earnings Per Share pursuant to issue of shares on exercise of option
    calculated in accordance with Accounting Standard (AS) 20 'Earnings Per Share' (EPS).
    
Rs 12.16
    

    

  
  

    
(l) Employee compensation cost:
    
The Company has calculated the employee compensation cost using the intrinsic value
    method of accounting for the Options granted under the Scheme.
    

    

  
  

    
(i) Method of calculating employee Compensation cost.
    

    

    

  
  

    
(ii) Difference between the employee compensation cost so computed at (i) above and
    the employee compensation cost that shall have been recognised if it had used the fair
    value of the Options.
    
Rs 7.79 MM
    

    

  
  

    
(iii) The impact of this difference on the profits and on EPS of the Company.
    
Had the Company considered 'fair value' method then the additional employee
    compensation cost would be Rs 7.79 MM. The profit before tax and EPS would be lower by Rs
    7.79 MM and Rs 0.07 respectively.
    

    

  
  

    
(m) Weighted-average exercise price and weighted-average fair values of options shall
    be disclosed
    
Weighted average Exercise Price for the options granted during the year :
    

    

  
  

    
separately for options whose exercise price either
    
Rs 282.49 per option
    

    

  
  

    
equals or exceeds or is less than the market price of the stock. Also refer point (b).
    
Weighted average Fair Value of Option: Rs 81.24 per option
    

    

  
  

    
(n) Description of method and significant assumptions used during the year to estimate
    the fair values of options:
    
Black and Scholes Model
    

    

  
  

    
(i) risk - free interest rate
    
6.56%
    

    

  
  

    
(ii) expected life of options
    
3 years
    

    

  
  

    
(iii) expected volatility
    
26.95%
    

    

  
  

    
(iv) expected dividends
    
300% of face value of share
    

    

  
  

    
(v) Market price (latest available closing price prior to the date of the meeting of
    the Board for grant)
    
Rs 1,125.30, Rs 1,698.15 and Rs 1,668.55 as on 28 October 2008, 26 May 2009 and 26 May
    2010 respectively.