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Hatsun Agro expanding markets, product range

CHENNAI, JAN. 20:

Backed by a strong growth in milk processing capacity, Hatsun Agro Product Ltd will expand into new

markets for branded liquid milk and ice creams and launch new products, according to R.G.

Chandramogan, Chairman and Managing Director, Hatsun Agro.

The BSE-listed company has a capacity to handle over 17 lakh litres of milk daily including two lakh litres

in Andhra Pradesh following the recent acquisition of Jyothi Dairy.

An additional two-lakh-litre plant will soon commence operations in south Tamil Nadu.

The company now handles about 14 lakh litres of milk. It also has over one lakh litres a day of ice cream

production capacity comprising the flagship brand Arun Ice Creams and the premium brand of Ibaco; 2.2

lakh litres of curd and 12 lakh litres of milk powder processing capacity.

Arokya market growth

By the month-end, it plans to launch Arokya brand of liquid milk in Hyderabad, he said.

By March-end the company will also launch a new range of milk products which will sail on the milk and

curd distribution infrastructure, he said but declined to specify the products.

Premium Ice Cream

Hatsun Agro is also expanding the chain of outlets offering the exclusive range of Ibaco brand of ice

creams to more cities.

There are over 100 outlets in about 50 towns and cities and this will increase to 150 by March-end. It

will soon be present in Pune.

It will also strongly focus on Karnataka and Andhra Pradesh, he said. From February, Ibaco will also be

available in take-home packs from premium department stores and on sale in five-star hotels pastry

shops.

Arun Ice Creams

The flagship brand is entering into Karnataka and Andhra Pradesh in towns such as Chitradurga, Nelloreand Guntur.

The company is using the Hatsun Distribution Centre modeldistribution centres that act as wholesale

and retail outletsit had used for milk marketing to expand the ice cream sales.

Last year, ice cream contributed to about Rs 108 crore of its total business of Rs 2,152 crore. The

marketing initiatives will contribute to a 20 per cent growth, he said.

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Dairy sector upbeat on revenue growth in FY14

Expects margins to improve by 10-12%

Sohini Das & Kalpesh Damor | AhmedabadFebruary 28, 2014Last Updated at 00:03 IST

The Gujarat CooperativeMilkMarketing Federation (GCMMF)is eyeing a 30 per cent rise in revenues in the

current financial year, at Rs 18,000 crore, in FY14. Down south,HatsunAgro Product Ltd, a major private dairy

in Chennai, expects revenues to grow 17-18 per cent in FY14 from Rs 2,500 crore last year, while

Maharashtra-basedParag MilkFoods estimates its revenues would grow 25 per cent from last years Rs 1,100

crore. In the north, Punjab-basedVerkaDairy, too, feels that with competitive rates, profitability is likely to

improve by 10-12 per cent.

R S Sodhi, managing director of GCMMF, which sells milk and milk products under theAmulbrand, said: For

the last five years, the compounded annual growth (in revenues) rate has been in the range of 20 per cent.

The incremental growth this year will come from the price increase. He added that for GCMMF, the profits are

passed on to the producers or farmers, and on an average, farmers get 10-12 per cent more procurement

price this year. GCMMF is paying an average procurement price Rs 500 a kg fat of milk to the farmers, which is

up by about Rs 40 a kg fat compared to last year.

According todairy industryinsiders, while milk production has been up by around five per cent during the

financial year (around 340 million litres a day), the demand has also risen commensurately, thereby avoiding

building up of any surplus in the market. Add to this the export of skimmed milk powder (SMP)and India is

expected to export in excess of 100,000 tonnes of SMP this year.

Players such as Parag Milk Foods

expect to more than double their

turnover from exports to Rs 300 crore

this financial year (from Rs 120 crore in

FY13) mainly on the back of SMP and

cheese exports. Sodhi, too, informed

that GCMMF is exporting close to

8,000-10,000 tonnes of SMP in a

month. Nandkishor Attal, chairman and

managing director of Maharashtra-

based Vaishno Devi Dairy Products

claimed SMP prices have firmed up in

the international markets. Prices at

present are Rs 4,200-4,300 a tonnecompared to Rs 3,000-3,100 a tonne

around a year ago.

Also, the demand for value-added

products is on the rise, and margins

are much higher in this segment. For example, while margins in liquid milk are around four per cent, in items

such as curd, margins are way higher, around 20 per cent.

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Dairiessuch as Parag Milk Foods and Verka are expecting margins to improve by 10-12 per cent. While R G

Chandramogan, chairman and managing director of Hatsun Agro, did not wish to comment on the exact

margins, he, nonetheless confirmed that margins are definitely going to increase this year. With volumes

increasing, together with optimisation of capacity utilisation, profitability will improve, he said. Buoyed by the

increased demand, Parag has raised production by 30 per cent. We are now handling 1.4 -1.6 million litres a

day, which is around 30 per cent more than last year, said Devendra Shah, chairman and managing director

of Parag Milk Foods.

However, Chandramogan is of the view that production growth would moderate to 3.5 per cent in the next

financial year.

Jan 24, 2014

Confident of maintaining margins at 9%: Hatsun Agro The companys net profit in Q3FY14 doubled to Rs 31 crore versus Rs 15

crore, on a year-on-year basis.

In FY14-FY15 we are expecting growth of 25-30 percent on the topline. RG CHANDRAMOGAN CMD Hatsun Agro Hatsun Agro Products is

confident of maintaining its margins at around 9 percent levels going ahead. Speaking to CNBC-TV18 about the financial performance of the

company, CMD RG Chandramogan said that its branded business is overtaking commodity business leading to margin improvement. The

companys net profit in Q3FY14 doubled to Rs 31 crore versus Rs 15 crore, on a year-on-year basis. Total income in Q3FY14 rose 16.5

percent to Rs 633 crore versus Rs 543 crore. Its Q3 margins stood at 9 percent versus 7 percent (Y-o-Y). Also Read: Emami Q3 profit rises

31% to Rs 150.68 crore Below is the edited transcript of RG Chandramogans interview with Reema Tendulkar and Sumaira Abidi of CNBC-

TV18. Q: This was a good quarter for you, what could we expect that the company will close FY14 with and what are the early signs that you

are getting how FY15 will shape up for revenue growth for the company? A: In FY14-FY15 we are expecting growth of 25-30 percent on the

topline and the bottomline probably depends on our product portfolio. Q: Even your margins have improved. Last quarter you had it at 9

percent, this quarter too it has come in at 9 percent, so from the last year where you had it around that 7 percent region, you all have moved

up. Is 9 percent now the new reality, is that where we can hope margins to sustain? A: There are two things that have happened. Last year,

our commodity business that is a branded business the ratio was comparatively higher. Today, commodity has become less and branded

businesses have become more. Also, last year we were on the verge of building brands in ice cream, curd and today probably we are only

servicing brands from where critical volumes have come. This is one of the reasons why margins have improved and it will continue. Q: So

you will maintain margins at 9 percent? A: We can maintain it easily or probably we can improve on it. Q: You also have quite a bit by way of

expansion plans; could you tell us how much the company has outlined for its capex for the next fiscal year? A: In the next fiscal year,expansion maybe in the region of about Rs 220 crore. Q: We understand that there was some plant in Tamil Nadu also that were supposed

to come on track next month, is that on track to commence operations? A: Yes, not next month. It will be commissioned in the month of

March. Q: What will be the capacity there? A: Capacity will be about 2 lakhs litre. Q: This Rs 200 crore capex that you are looking at to invest

next year, how will you be funding it? A: There are accruals and we can take loans. The net worth of the company will be more than Rs 200

crore this year. Q: What is the cash that you currently have on your books? A: I have to check. The deposition itself will be about Rs 60-65

crore. PAT will be excess and cash flow for the next year will be equivalent to the project without any difficulty. Q: Would some of this

expansion also includes perhaps into international geographies? A: Not much, it mostly domestic.

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