Indian biscuit maker Britannia Industries saw its net profit slump in its fiscal first quarter, hit by a steep increases in the prices of its ingredients.

Net profit slid 30.7% in the quarter to INR320m for the quarter ended 20 June. The decline was attributed to inflation in key commodities like flour and sugar.

Britannia posted gross sales of INR9.19bn for the quarter, a 24.8% increase against the same period of 2009. Volumes were up 20%.

Managing director Vinita Bali said: "We have delivered a 25% [sales] growth, well ahead of the market, across our portfolio, backed by a strong 20% growth in volume. The real challenge for the industry is the continuing and high inflation in key commodities like flour and sugar that adversely impacts margin. In an intensely competitive market we are focused on stripping down cost even as we continue to drive innovation".

Local press reports, meanwhile, said Britannia plans to increase capacity by 20% by expanding exisiting operations and going to new sites.

According to the Asia Pulse news agency, Bali said: "We want to augment capacity by 20% in line with volume growth."

The details will be finalised in a few weeks, she added.