Hatsun Agro Product Ltd

Hatsun Agro Product Ltd is one of the largest private dairy located in the south of India. We have
been awarded with ISO and HACCP certification for the quality standards incorporated in the
production line. We Manufacture Skimmed Milk Powder, Full Cream Milk Powder or Whole Milk
Powder, Butter Oil, Ghee, Dairy Whitener & Butter which is at par with international standards in
Quality and we also assure you consistency in supply and an excellent service from our side.
Please get in touch with us for your needs.

Business Description
Hatsun Agro Products Limited. The Company's principal activities are to manufacture
and sell Milk and Milk Products and Ice Creams. The Company operates in two
segments, namely, Milk and Milk products and Ice cream and Others. The company
mainly operates in Tamil Nadu, Karnataka and West Bengal states. The plants are located
at Salem and Chennai in the state of Tamil Nadu and at Belgaum and Davangere in the
state of Karnataka.
Hatsun Agro Products Limited - Price Analysis Snapshot
This Report features up to a ten-year record of the equity Price history for Hatsun Agro
Products Limited. Tabular results include the High, Low and Closing price for the
quarter. There is also a calculation of percentage change in price for both Quarterly and
Annual periods. Price values are adjusted for stock splits and dividends.
Hatsun Agro Products Limited. The Company's principal activities are to manufacture
and sell Milk and Milk Products and Ice Creams. The Company operates in two
segments, namely, Milk and Milk products and Ice cream and Others. The company
mainly operates in Tamil Nadu, Karnataka and West Bengal states. The plants are located
at Salem and Chennai in the state of Tamil Nadu and at Belgaum and Davangere in the
state of Karnataka.

Hatsun Agro Products Limited - Earning & Dividend Analysis Snapshot

This detailed Report provides an Earnings and Dividends history for Hatsun Agro
Products Limited. Tabular results include up to a ten-year history of "as reported"
Earnings per Share and Dividends per Share plus a calculation of the amount of earnings
paid out over the year in dividends (i.e. Payout Ratio). Earnings and Dividends are
presented on both a Quarterly and Annual basis. An annual Percent Change factor is
calculated for both Earnings and Dividends.

Hatsun Agro Products Limited. The Company's principal activities are to manufacture
and sell Milk and Milk Products and Ice Creams. The Company operates in two
segments, namely, Milk and Milk products and Ice cream and Others. The company
mainly operates in Tamil Nadu, Karnataka and West Bengal states. The plants are located
at Salem and Chennai in the state of Tamil Nadu and at Belgaum and Davangere in the
state of Karnataka.

Hatsun Agro sets new trend for pvt dairies Introduces fortnightly,
monthly milk cards
R. Balaji
CHENNAI, May 16
HATSUN Agro Product Ltd, the Rs 300-crore private dairy, is looking to monthly milk
card sales to widen its market share. This is a new initiative for a private milk brand, and
it is expected to help Hatsun achieve significant growth in turnover for the current year,
according to Hatsun's Managing Director, Mr R.G. Chandramogan.
Hatsun has commenced promotional efforts to push milk sales through a monthly card
system for its Arokya brand in Chennai. As a part of a trial offer for its consumers, it is
selling 15-day coupons at a discount of about 20 per cent. Each coupon entitles the holder
to half a litre of Arokya milk per day for 15 days, door delivered. As a part of the initial
offer, this will be followed up with a monthly card at a discount.
This is expected to pave the way for the regular monthly card. Arokya milk will be
available Re 1 per litre cheaper to the cardholders. It sells at Rs 16 per litre in the retail
now. Consumers will get half litre at Rs 7.50, and the discount will be absorbed between
the manufacturers and the dealers, he said.
According to Mr Chandramogan, a monthly card sale is the trend that private dairies will
have to move to. Milk sales have over the last few years clearly shifted away from
commodity-based business to branded product sales. Establishing a brand, which Hatsun
has effectively done, and cornering a major share of the market, which it is doing now,
are the two imperatives, he said.
Card sales help the seller and the buyer. To the consumer, it offers the convenience of
door delivery and getting over with the monthly milk expense at the start of the month-a
welcome convenience for the middle class, which works on a tight monthly budget. To
the company, it offers an opportunity to rope in a bulk market, he said.
Through this initiative, Hatsun hopes to emerge the clear market leader among the private
dairy brands in Tamil Nadu. It is targeting about 2.5 lakh monthly card sales (half litre per
card per day) over the next four months, most of it being new buyers. This will mean an

additional 1.25-lakh litre milk sales under the Arokya brand. Concerted marketing effort
backed by an ad spend of Rs 12 crore for Arokya, with Rs 8 crore marked for Tamil Nadu
alone, and the brand's reputation for quality will help sustain this effort. Hatsun's annual
budget for ads is about Rs 20 crore. This is expected to contribute to achieving Hatsun's
target of Rs 450-crore turnover during the current year, he said.
Hatsun procures and markets over 6.25 lakh litres milk per day out of which over 1.55
lakh litres is sold in Chennai. It expects to be selling 2.5 lakh to 3 lakh litres by March
2004, he said.
Hatsun Agro has three main product lines, which include Arokya and Komatha brands of
liquid milk, and Arun, the super premium ice creams, which contributes about 11 per cent
of its turnover. With dairy units located at Kanchipuram, Salem and Madurai, the
company has a spread sufficient to cover the State. It also has a dairy in Belgaum,
Karnataka, which has helped it to cover north Karnataka and Goa, where it procures and
markets about 1.40-lakh litres milk. The company is looking at setting up a unit in
Tirunelveli, which will give it an improved access to markets in the South and Kerala, he
said.
Milk powder unit in offing
HATSUN Agro Product Ltd is setting up a Rs 6 crore milk powder unit in Kanchipuram,
about 75 km west of Chennai on the Bangalore route, according to Mr R.G.
Chandramogan, Chairman and Managing Director, Hatsun Agro Product Ltd.
The milk powder unit is expected to commence operations in about two months, and will
have the capacity to process about one-lakh litres of milk per day to produce about 10
tonnes of powder. This represents a significant advantage to the company and the dairy
farmers supplying milk to Hatsun, he said.
The company procures and markets about 6.25 lakh litres milk per day. But during the
flush season, there is an additional 15 per cent coming in, which the company has to push
hard to sell. But with a powder plant, the pressure can be handled and farmers have an
assured market, he said.
Milk powder is an input that dairies use to process liquid milk to marketable standards of
quality in terms of fat content. Hatsun will now have a captive source of milk powder that
will help it to absorb milk during the flush season and make up to liquid milk during the
lean season, he said.

Hatsun Agro Products

Company History
Mr. R.G CHANDRAMOGAN, one of the Promoters of the Company
established a Partnership firm in the year 1970 under the
name M/s.CHANDRAMOHAN & CO., for the manufacture and sale
of Ice Creams and Milk and Dairy based Products . The
facilities were set up at Madras. The business grew rapidly
and the Firm's turnover increased from Rs.1.00 lakh in 1970
to Rs.29.52 lakhs in the year 1986.
M/s. Hatsun Foods Private Limited was incorporated on 4th
March 1986. On 01.04.86 the Company was admitted as a
Partner in M/s. CHANDRAMOHAN & CO. In terms of Deed of
Dissolution dt.30.04.1986 M/s. CHANDRAMOHAN & CO. was
dissolved and all the assets and liabilities of the Firm
(except the Brand Name ARUN vested with the Company. The
Brand Name ARUN vested with Mr. R.G. CHANDRAMOGAN.
In 1987, Mr. R.G. CHANDRAMOGAN allowed the Company to
register the Brand Name ARUN, in the name of the Company
subject to a payment of 1% Royalty on the Company's Gross
Ice Cream Sales Turnover. The Company has not paid any
other consideration for the brand.
Till April '95 (04.04.95) the Company was carrying on its
manufacturing activities. The Company scrapped its
manufacturing facilities at its Tolgate Unit, since the
facilities became old and outlived its utilities The
Company is now concentrating only on marketing of Ice Cream
and Milk and Dairy based products under the brand name
ARUN
The Company has changed its Name to HATSUN MILK FOOD
PRIVATE LIMITED and Certificate to this effect was obtained from the
Registrar of Companies, Tamil Nadu, Madras on 07.08.95 and
subsequently converted into Public Limited Company by passing
Special
Resolution in Extra Oridinary General Meeting held on 09.08.95 and
Certificate to that effect has been issued on 11th August 1995 by
Registrar of Companies, Tamil Nadu. Since it is a Private Limited
Company, Converted into Public Limited Company it does not require
a Certificate of commencement of Business.
BUSINESS OF THE COMPANY:
Since incorporation in the year 1986 the Company has been
engaged in the manufacturing and marketing of Ice Cream and

Milk and Dairy based products under the brand name 'ARUN'.
Mr. R.G. CHANDRAMOGAN, the owner of the brand name
permitted the use of the brand name subject to a payment
of royalty @ 1% of the Gross Ice Cream Turnover achieved by
the company. In 1987 the company was also allowed to register
the brand name in the name of the Company subject to the
same terms. Except the royalty payable by the Company, no
other consideration was paid in 1987.
The Company decided to reorganise its operations by closing
down its / manufacturing operation and hiving of leather
division and retaining only marketing operations. As part
of the strategy, the Company closed down its manufacturing
activity on 4th April 1995, since the facility at its
Tolgate Unit has out lived its utility. The Company has
also put up Wind Mill of 250 KVA for generation of power to
meet part of the power requirements.
The Company also operated a Leather Division for the export
of leather garments. The division has since been sold.
The Company proposes to focus its efforts only on marketing
of Ice Cream and Milk and Dairy based Products. For
Sourcing Ice cream and other Ice Cream based products, the
company has entered into a contractual arrangement with its
Group/Associate concerns.
PRESENT PLAN AND PROPOSAL OF THE COMPANY:
The Company proposes to focus its activities purely on
marketing Ice cream and Milk and Dairy based products
Marketing is critical to the industry and bigger Companies
have already entered the field in a large way. Therefore
the company felt that it should have a focussed approach
and an undiluted attention towards marketing. The Company
has therefore decided to concentrate only on marketing,
leaving the production to their associates/group Companies
from where it can source the Ice Cream and Milk and Dairy
based products.
Further it also proposes to take advantage of the Brand
Name ARUN which has been an established Brand for more
than a Decade. The Company has agreed to discharge the
annual obligation attached to the Brand name ARUN by
making lumpsum payment of Rs. 363 lakhs.
The Company also felt it necessary that its market should
be protected from any competition from the promoters. In
order to ensure this the company has entered into strategic
arrangement with the promoters. This arrangement prohibits
any competition from them for a period of 20 years from the
date of this agreement. For this the company proposes to
pay a lumpsum consideration of Rs. 400 lacs.
Further to this, the Company has made an arrangement for

the supply of the entire production of Atlantic Foods and

Hatsun Foods Company, concerns belonging to the group The
Sales Turnover achieved by Atlantic Foods and Net Profit
Figures are given below to indicate the potential benefit
of the tie-up:

Sale of Ice Cream

Other Income
Total Expenditure
Net Profit

31.03.95
552.60
6.38
520.63
38.35

(Rs. in lacs)
31.03.94 31.03.93
369.58
248.05
4.71
20.36
329.78
257.18
44.51
11.23

To sum up, the Company as part of its strategy to focus

only on marketing of Ice Cream and other Milk and Dairy
based products, has entered into 3 major agreements viz:
(i) Agreement for payment of lumpsum consideration in lieu
of royalty payable for usage of Brand Name.
(ii)

Agreement for Non-Competition from Promoters and

(iii) Agreement for sourcing Ice Cream and other Milk and
Dairy based products.
The major Terms of these agreements are
A. Brand Name:
a. It is agreed between the company and Shri R.G.
Chandramogan that in consideration of lumpsum payment of
Rs.363 Lacs to Shri.R G Chandramogan, his right to receive
the amount of 1% per annum on the gross turnover is fully
discharged and that he will not make any further claim in
respect of this.
b. With a view to making the present agreement effective,
Mr. R. G. Chandramogan undertakes not to use the name
Arun or any variation thereof in any of his business.
c. It is agreed that the Company as registered owner have
all rights over the brand name without any encumberance.
d. It is agreed that there is no other agreement or
arrangement regarding the ownership and use of brand name
ARUN and that the Company is the sole and absolute owner
thereof as before with the only modification that there
would be no longer any obligation to make any further
payment to Mr.R.G. Chandramogan.
f. It is agreed that in the event of breach of any of the
terms by either party, the other party would be entitled to
compensation based upon the extent of loss as liquidated
damages and such other cost and expenses as may be found to
be incidental.

B. Non-Competition Agreement
a. Shri R. G. Chandramogan and Shri Raja K.S.P. Ganesan
agreed that during the currency of the agreement, the
Promoters shall not directly or indirectly without the
prior consent in writing of the Company, manufacture or
market or deal in Ice Creams any where in the world, either
by himself, or in association with others nor shall he
involve himself in such manufacture and marketing of Ice
Creams either as an employee, agent, representative or
through the medium of a company, partnership, or
association of persons or in any other form.
b. This agreement shall be in force for a period of 20
years from the date hereof and shall extend throughout the
union of India and rest of the world.
c. It is specifically agreed that the restriction herein
contained shah cease to be of effect and operation on the
expiry of the aforesaid period of 20 years.
d. In consideration of the restrictive covenant herein
contained, and of the undertaking by the Promoters the
Company shall pay to Shri R.G. Chandramogan Rs.300 Lacs and
to Shri Raja K.S.P. Ganesan Rs.100 Lacs totalling a sum of
Rs.400 lacs.
PAYMENT TERMS: (RS. IN LAKHS)
On or Before

R.G. CHANDRAMOGAN

30.08.95
31.12.95
After 01.01.96 but before
31.03.96

1.00
149.00
150.00
300.00

RAJA K.S.P. GANESAN

1.00
49.00
50.00
100.00

e. It is agreed that in the event of breach of any of the

terms by either party, the other party would be entitled to
compensation based upon the extent of loss as liquidated
damages and such other cost and expenses as may be found to
be incidental,
As said in the above clause, the compensation, in case of
breach, will be based upon the loss incurred by either
party. The methodology will be based on the actual losses
incurred at a future date depending on substantiation.
f. In the event of any default by the Company in making the
payment of the consideration it shall be open to Promoters
to treat the agreement as cancelled or alternatively at
their option to extend the time for payment on such terms
and conditions as may be agreed to between parties.
C. Sourcing of Ice cream:

The Company has entered into arrangement for supply of Ice

Creams with M/s. ATLANTIC FOODS, Salem a Proprietorship
concern of Mr. R.G. CHANDRAMOGAN and M/s. HATSUN FOODS
COMPANY a Partnership Firm in which Mr. R. G. Chandramogan,
MR. Raja K.S.P. Ganesan, Mr, C. Satyan & Ms. C.Deviga are
partners. These two concerns have contracted to supply
their entire production only to the company. The production
facilities available with these concerns and the relevant
background of these concerns are given below:
Name Of the Unit
Atlantic foods
Hatsun Foods Co.

Location
Ramalingapuram
Salem

Installed Capacity
In lakh liters

Nallur Village
Ponneri Taluk,
Near Madras

24

30

The principal terms of arrangement are as below:

a. The Suppliers shall manufacture Ice Cream strictly in
accordance with the Quality, specifications of the Company.
b. The Supplier shall procure under supervision of the
Company required raw materials, packing materials etc. for
the manufacture of Ice cream.
c. The supply will be effected to the Company at rates
mutually agreed from time to time, but will be computed on
the basis of Total Cost + Profit Margin not exceeding 10%
overall cost. The Profit margin agreed for this year is 7%.
of the overall cost.
d. The Company has agreed to take-up a minimum of 12 lacs litres
from M/s. ATLANTIC FOODS annualy. In the event of any shortfall
the company will have to pay Rs.1.50/- per litre as compensation
for such shortfall.
The Company has agreed to take-up a minimum of 15 lacs
litres from M/s. HATSUN FOODS COMPANY annually. In the
event of any shortfall the company will have to pay
Rs.1.50/- per litre as compensation for such shortfall.
In all the above arrangements the promoters are interested.
These arrangements have been included under Material
Contracts.
2000 - The company is set to acquire an 81-per cent stake in the Rs.
40-crore
Ajith Dairy Industries Ltd.
- The Chennai-based Hatsun Agro Product, which has
successfully
launched Arun ice creams and Arokya milk in south

India, has now

launched a branded popcorn, Hatsun `Noosa'.

2001 - The Company has allotted 2,50,000 preference shares of Rs

100/- each to
Mr. R.G. Chandramogan, Managing Director pursuant to the
approval of share
holders at the meeting of 2000.
2003 - Delisting of shares from Madras and Coimbatore Stock
Exchanges.

BSE: 531531

NSE: N.A

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