MIRA
INFORM REPORT
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Report Date : |
19.09.2007 |
IDENTIFICATION DETAILS
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Name : |
HATSUN AGRO PRODUCT LIMITED |
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Registered Office : |
5 – A, |
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Country : |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
04.03.1986 |
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Com. Reg. No.: |
012747 |
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CIN No.: [Company
Identification No.] |
L15499TN1986PLC012747 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CHEH00039E |
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PAN No.: [Permanent
Account No.] |
AAACH0945G |
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Legal Form : |
A Public Limited
Liability Company. The Company’s Shares are listed on the Stock Exchanges |
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Line of Business : |
Manufacturer of Dairy Products |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
USD 1440000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well – established and reputed company having track.
Directors are reported as experienced and respectable businessmen. Trade
relations are reported as fair. Business is active. Payments are usually
correct and as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions. |
LOCATIONS
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Registered Office: |
5 – A, |
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Tel. No.: |
91-44-28150014(14 Lines) |
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Fax No.: |
91-44-28152508 |
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E-Mail : |
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Website : |
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Factory: |
v
v
v
No. 114. v
No. 277/2, |
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Branches: |
Ananthapur, Avinashi, |
DIRECTORS
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Name : |
Mr. R G Chandramogan |
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Designation : |
Chairman and Managing Director |
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Name : |
Mr. K S Thanarajan |
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Designation : |
Joint Managing Director |
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Name : |
Mr. P Vaidyanathan |
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Designation : |
Director |
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Name : |
Mr. Kriti P Shah |
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Designation : |
Director |
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Name : |
Mr. S Thiagarajan |
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Designation : |
Director |
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Name : |
Mr. B S Mani |
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Designation : |
Director |
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Name : |
Mr. N Chandrasekaran |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. B V Nath |
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Designation : |
Company Secretary |
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Name : |
Mr. C Sathyan |
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Designation : |
Executive Director – Operations |
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Non – Executive Director |
Mr. P Vaidyanathan Mr. Kirti P Shah Mr. S Thiagarajan Mr. B S Mani Mr. N Chandrasekaran |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
|
Names of Shareholders (30.06.2007) |
No. of Shares |
Percentage of
Holding |
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Promoters and
Promoters Group |
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Indian |
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Individuals # Hindu Undivided Family |
4668626 |
68.769 |
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Foreign |
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Individuals (Non – Resident Individuals/ Foreign Individuals) |
- |
- |
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Non Institutions
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Bodies Corporate |
250715 |
3.693 |
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Individuals |
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Individual shareholders holding nominal share capital upto Rs. 0.100
Millions |
789579 |
11.631 |
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Individual shareholders holding nominal share capital in excess of Rs.
0.100 Millions |
739419 |
10.892 |
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Any other |
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OCB |
339300 |
4.998 |
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Clearing Member |
1179 |
0.017 |
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Total |
6788818 |
100.00 |
BUSINESS DETAILS
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Line of Business : |
Manufacturer of Dairy Products
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Products : |
v
Arun Ice Cream v
Fresh Milk |
GENERAL INFORMATION
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No. of Employees : |
Around 1300 |
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Bankers : |
ICICI Bank Limited State Bank of Axis Bank Standard Chartered Bank Bank of |
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Facilities : |
-- |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
S R Batliboi and Associates Chartered Accountant |
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Associates/Subsidiaries : |
Nil |
CAPITAL STRUCTURE
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
30000000 |
Equity Shares |
Rs. 10/- Each |
Rs. 300.000
Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
11870000 |
Equity Shares |
Rs. 10/- Each |
Rs. 118.700
Millions |
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
118.700 |
118.700 |
67.900 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
242.000 |
186.900 |
162.200 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
360.700 |
305.600 |
230.100 |
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LOAN FUNDS |
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1] Secured Loans |
523.600 |
702.500 |
692.500 |
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2] Unsecured Loans |
364.200 |
228.200 |
225.400 |
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TOTAL BORROWING |
887.800 |
930.700 |
917.900 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
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TOTAL |
1248.500 |
1236.300 |
1148.000 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
1394.400 |
1192.500 |
1172.400 |
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Capital work-in-progress |
41.600 |
145.000 |
86.900 |
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INVESTMENT |
0.000 |
0.000 |
0.000 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
169.700
|
104.600 |
88.500 |
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Sundry Debtors |
52.500
|
64.000 |
40.100 |
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Cash & Bank Balances |
34.600
|
36.600 |
73.700 |
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Other Current Assets |
0.000
|
0.000 |
0.000 |
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Loans & Advances |
131.600
|
115.600 |
71.700 |
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Total
Current Assets |
388.400
|
320.800 |
274.000 |
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Less : CURRENT LIABILITIES & PROVISIONS |
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Current Liabilities |
515.500
|
389.800 |
380.800 |
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Provisions |
60.400
|
32.200 |
4.500 |
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Total
Current Liabilities |
575.900
|
422.000 |
385.300 |
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Net Current Assets |
(187.500)
|
(101.200) |
(111.300) |
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MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
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TOTAL |
1248.500 |
1236.300 |
1148.000 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Sales Turnover |
5852.800 |
5448.200 |
4538.300 |
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Other Income |
123.000 |
64.100 |
62.900 |
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Total Income |
5975.800 |
5512.300 |
4601.200 |
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Profit/(Loss) Before Tax |
114.500 |
83.000 |
16.100 |
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Provision for Taxation |
33.100 |
40.500 |
8.700 |
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Profit/(Loss) After Tax |
81.400 |
42.500 |
7.400 |
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Export Value
|
NA |
774.501 |
NA |
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Expenditures : |
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Cost of Goods Sold |
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Manufacturing Expenses |
88.000 |
73.100 |
60.800 |
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Administrative Expenses |
590.100 |
539.300 |
447.600 |
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Raw Material Consumed |
4490.100 |
4090.400 |
3484.300 |
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Salaries, Wages, Bonus, etc. |
165.400 |
145.300 |
119.700 |
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Interest |
100.800 |
93.700 |
56.900 |
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Power & Fuel |
214.900 |
230.400 |
159.100 |
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Depreciation & Amortization |
157.900 |
154.900 |
137.700 |
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Other Expenditure |
54.100 |
57.500 |
72.600 |
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Total Expenditure |
5861.300 |
5384.600 |
4538.700 |
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QUARTERLY RESULTS
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PARTICULARS |
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30.06.2007 (1st
Quarter) |
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Sales Turnover |
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|
1910.200 |
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Other Income |
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|
6.000 |
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Total Income |
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|
1916.200 |
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Total Expenditure |
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|
1801.300 |
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Operating Profit |
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|
114.900 |
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Interest |
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|
29.800 |
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Gross Profit |
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|
85.100 |
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Depreciation |
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|
43.800 |
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Tax |
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|
15.600 |
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Reported PAT |
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|
25.700 |
KEY RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
2.73 |
3.45 |
3.55 |
|
Long Term Debt-Equity Ratio |
2.31 |
3.05 |
3.02 |
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Current Ratio |
0.56 |
0.58 |
0.60 |
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TURNOVER RATIOS |
|
|
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Fixed Assets |
3.05 |
3.27 |
3.32 |
|
Inventory |
42.67 |
56.43 |
69.66 |
|
Debtors |
100.48 |
104.67 |
142.49 |
|
Interest Cover Ratio |
2.14 |
1.89 |
1.24 |
|
Operating Profit Margin(%) |
6.38 |
6.09 |
4.58 |
|
Profit Before Interest And Tax Margin(%) |
3.68 |
3.24 |
1.55 |
|
Cash Profit Margin(%) |
4.09 |
3.62 |
3.16 |
|
Adjusted Net Profit Margin(%) |
1.39 |
0.78 |
0.13 |
|
Return On Capital Employed(%) |
17.33 |
14.82 |
6.82 |
|
Return On Net Worth(%) |
26.92 |
16.70 |
2.52 |
STOCK PRICES
|
Face Value |
Rs.10/- |
|
High |
Rs.205.00 |
|
Low |
Rs.161.00 |
LOCAL AGENCY FURTHER INFORMATION
PERFORMANCE OF THE COMPANY
OPERATING RESULTS
The year under review witnessed strong growth in sales revenue and profit.
During the year, the Company
registered a turnover (Net Sales) of Rs.5403.442 Millions representing an
increase of 20.29% over that of the previous year. The Company delivered a
strong performance in cash generation during the year driven by the business
performance, enhanced capability of the supply chain and efficient collection
system.
The Company continues with its cost control measures. The company intends to
expand its market penetration to increase the sale of packed milk and is also
giving a major thrust to export of milk products.
EXPORTS
The value of exports during the year under review was Rs.774.501 Millions
representing 14.33% of Net Sales and an increase of 11.58 times over that of
the previous year. The Company is a Net Foreign Exchange Earner.
SEGMENTWISE PERFORMANCE
DAIRY SEGMENT
The Company continues to be the leading private sector company in the dairy
industry in the Country. Milk continues to have the major share in the
company's revenue. The revenue in the milk and milk products segment increased
by 21.36% over that of the previous year. The profit in this segment grew
substantially by 77.18% over the previous year.
During the year under review the Company closed its milk business
activities - processing and marketing of milk - under the brand name 'Delight'
at Kolkatta in the State of
ICE CREAM SEGMENT
The sales grew by 5.79% and the segmental profit by 7.93%. The market continued
to witness intense competitive activity. The business also faced severe
challenges on the cost front due to higher prices of milk and other ingredient.
Extensive cost control programmes in manufacturing has been implemented to
improve the cost structure of this business. A good growth potential is
foreseen in this business in the coming years.
FUTURE PLAN
The major focus areas in the current financial year is export of Milk Products
and Ice Cream. This will help the Company to diversify its product profile and
enable it to maintain its leadership position.
FINANCE
During the year under review the company had to go in for additional
borrowings to meet the long term resources of the Company. However, the company
has taken care to ensure that such additional borrowings are obtained at a very
competitive rates.
In terms of the provisions of Investor Education and Protection Fund Rules,
2001, Rs.5,437/- of unclaimed dividend pertaining to the accounting year
1997-98 was transferred to Investor Education and Protection Fund during the
year.
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENTS
The Company is one of the pioneers in the Indian Dairy private sector started
dairy operations in 1993 itself.
Until few years ago,
OPPORTUNITIES
In
With the Indian economy growing at a rapid pace, the disposable income of
consumers has also increased. This has resulted in growth of various value
added Dairy Products. People also use their higher disposable income to get
healthy food such as good quality liquid milk for their children to enhance
their capability. In a regular family after rice, milk occupies the highest
percentage of the total spend for food products.
Indian Dairy products have now been accepted in the international market.
Companies such as thes have
established in the international market that the quality of Dairy Ingredients
is on par with other dairy ingredients manufacturer in the world. Few
advantages that are helping to establish the company's dairy ingredients in the
international market are:
1. low cost of raw material (milk) as compared to other developed
countries
2. less manpower cost
3. up gradation of machine on par with the international standards
4.
THREATS
Apart from normal threats being faced by dairy industry as a whole, like
distortion in rainfall pattern, non-availability of green fodder and water
resources, increase in procurement cost, the two main threats that have to be
addressed by the processors in the Indian Dairy Industry are:
1. Lack of cold chain infrastructure in procurement.
The company already has an extensive cold chain and are further expanding the
same by increasing Chilling Centres. Hatsun is also increasing chilled milk
storage capacity at its factories.
2. Lack of education in increasing yield per animal through better feed
management.
The company is already sourcing the feed to be supplied to the farmers and is
further trying to improve the quality of the same for increasing the yield per
annum. Hatsun is working with experts in the field to increase
productivity.
PRODUCT/ MARKET WISE PERFORMANCE
During the year 2005-06, the Company's processed milk output was 268.400
Millions liters valued at Rs.3718.500 Millions. The Ice Cream segment contributed
a sales of Rs.355.000 Millions during the year. Tamil Nadu accounted for the
maximum sales of Arokya and Komatha milk followed by Karnataka and Kerala.
The company was able to maintain
its market share of 22% in Tamil Nadu and 12% in Karnataka. The market share
for ice cream in
OUTLOOK
The Company is expanding the procurement network to match ambitious
growth plan for the future, and is stepping up procurement network by
increasing the collection centre, chilling centre etc., to achieve higher
procurement capabilities and ensure good quality of raw material.
Hatsun is establishing new avenues for increasing the market share of Ice
Creams in
Hatsun shall increase its base in the world dairy ingredients market by
adding new countries and customers to the existing list. Active plans are
underway to approach new international customers by offering a wide range of
high quality dairy ingredients at competitive pricing backed by excellent
service. Hatsun will be the pioneer in establishing
RISKS AND CONCERNS
The risks have already been highlighted under 'Threats'. However, there
are two main concerns that have to be addressed by the Dairy Companies in
1. To maintain high quality of Dairy Products and to increase the
capabilities for processing the growth in liquid milk, continuous new
infrastructure up-gradation investment in Plant and Machinery.
One of the main reasons for success of the company has been the fact that
Hatsun has been addressing this risk on a continuous basis and the Company
shall do it in future also.
2. Lack of knowledge to adopt new scientific developments in the health
care of cows.
The company has been the pioneer in establishing a systematic health care
infrastructure for the cows through its team of veterinary doctors. With the
exposure of senior people in the company to the happening in the international
dairy field the veterinary team has the opportunity to become knowledgeable regarding
the same on continuous basis.
FINANCIAL PERFORMANCE
The financial year under review continued to be a good year when the
company witnessed a strong growth in sales revenue and profits.
Turnover (Net Sales) for the year increased by 20.29% from Rs.4491.875 Millions
to Rs.5403.442 Millions. This increase in net sales is on account of additional
realization derived from sale of milk ingredients.
Other income increased from Rs.15.914 Millions to Rs.76.370 Millions. The
increase represents export incentives receivable from DGFT and APEDA.
Profit before interest, depreciation and tax increased by 57.36% from Rs.210.685
Millions to Rs.331.538 Millions This
increase was mainly on account of higher sales volume.
Profit before tax has increased substantially by 418.37% from Rs.16.011 Millions
to Rs.82.996 Millions.
Provision for taxation increased from Rs.8.660 Millions to Rs.40.542 Millions.
This includes fringe benefit tax
of Rs.8.227 Millions.
Profit after tax increased by 477.51% from Rs.7.351 Millions to Rs.42.453
Millions.
Export turnover increased substantially from Rs.61.586 Millions to Rs.774.501
Millions representing an increase of 11.58 times over that of the previous
year
As per website details
Hatsun Foods was incorporated as a
private limited company in Mar.'86, by R G Chandramohan. In April 1986, the
company was admitted as a partner in Chandramohan and Co, a partnership firm,
promoted by the same promoter. During the same month, Chandrmohan and Co was
dissolved and all the assets and liabilities of the firm vested with the
company, except the Arun brand name which was vested with R G Chandramohan. In
1987, the company acquired the Arun brand name, subject to a payment of 1%
royalty on the company's gross ice cream sales turnover. The company became a
public limited company in August, 1995.
Till April 1995, the company was carrying on its manufacturing activities. It
scrapped its manufacturing facilities at Tolgate unit, since the facilities
became old and outlived its utilities. The company is concentrating only on
marketing of ice cream and milk- and dairy-based products under the Arun brand
name. For sourcing ice cream and other ice cream based products, the company
has entered into contractual arrangements with Atlantic Foods, a group concern.
The company has put up a 250-kVA windmill for power generation. Hatsun came out
with a public issue in January 1996.
The name of the Company has been changed with the approval of the Central
Government from Hatsun Milk Food Limited to Hatsun Agro Product Limited
effective from 7.4.1998.
The Company has diversified its activities and entered into production and sale
of Toor Dhall and Urad Dhall under the brand name "Apurva".
Hatsun Milk Products Limited was merged with the Company with retrospective
effect from 1.4.98 vide order of high court dated 18.2.99. and the process of
amalgamation was completed on 26.2.99. Ajith Dairy Industries too merged with
the compnay. The company has also amalgamated Hatsun Foods Company Ltd.
During 2000-2001 the company's second dairy plant was commissioned at
Belgaum.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.39.87 |
|
|
1 |
Rs.80.11 |
|
Euro |
1 |
Rs.56.19 |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
6 |
|
PAID-UP CAPITAL |
1~10 |
6 |
|
OPERATING SCALE |
1~10 |
6 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
5 |
|
--LIQUIDITY |
1~10 |
6 |
|
--LEVERAGE |
1~10 |
6 |
|
--RESERVES |
1~10 |
6 |
|
--CREDIT LINES |
1~10 |
6 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
54 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial condition
(40%) Ownership background
(20%) Payment record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
|