Hatsun Agro Products

The Directors are delighted to present their Report along with the
 Audited Accounts of the Company for the year ended 31st March, 2007.
 
 FINANCIAL RESULTS
 
 The financial performance of your Company for the year ended 31st
 March, 2007 is summarised below:
 
                                                   (Rs. in Lakhs)
                            Current Year ended Previous Year ended
                             31st March, 2007   31st March, 2006
 
 Income
 Net Sales                          58,528.28         54,034.42
 Other Income                          694.72            763.70
                                    59,223.00         54,798.12
 Profit 
 a) Profit before Depreciation       2,724.59          2,378.67
 b) Less: Depreciation               1,578.56          1,548.72
 c) Profit after depreciation        1,146.03            829.95
 d) Less : Income-tax - Current Period 362.30            152.20
 Deferred Tax - Current Period          24.30            170.95
 Reversal of Prior Period tax         (111.81)             —
 Fringe Benefit Tax                     56.64             82.27
 e) Profit after Taxes                 814.60            424.53
 f) Add : Balance brought forward from 
 previous year                         204.80            414.59
 h) Balance available for 
 appropriation                       1,019.40            839.12
 Appropriation
 a) Dividend
 Dividend paid on Equity Shares        135.78            135.77
 Proposed Dividend on Preference 
 Shares                                 54.12             19.71
 b) Corporate Dividend Tax
 Equity                                 23.08             19.04
 Preference                              9.20              2.76
 c) Transfer to General Reserve from 
 current year profits                   61.10            457.04
 d) Balance carried to Balance Sheet   736.12            204.80
 1,019.40 839.12
 
 PERFORMANCE OF THE COMPANY OPERATING RESULTS
 
 During the year, your Company registered a turnover (Net Sales) of
 Rs.58,528.28 Lakhs representing an increase of 8.32% over that of the
 previous year. Your Company registered a gross profit of Rs. 1,146.03
 Lakhs, with an increase of 38% over the previous year. This has been
 achieved through rigorous cost control measures and enhanced
 realization combined with a strong supply chain management and optimum
 collection system.
 
 EXPORTS
 
 The value of exports during the year under review was Rs.5,411 Lakhs
 representing 9.25 % of Net Sales. Your Company is a Net Foreign
 Exchange Earner.
 
 SEGMENTWISE PERFORMANCE DAIRY SEGMENT
 
 Your Company is a leading private Company in the dairy sector in the
 Country. Milk continues to have the major share in your Companys
 revenue. The revenue in the milk and milk products segment increased by
 6.68% over that of the previous year. The profit in this segment grew
 by 26.30% over the previous year.
 
 ICE CREAM SEGMENT
 
 Though the revenue in this segment showed an increase of 16.65% over
 the previous year, the segmental profit was reduced by 8.2% due to
 heavy increase in basic raw material cost. The exemption of excise duty
 has been passed on to the ultimate consumers by revision of prices.
 Your Company is implementing stringent cost control techniques to
 improve the returns from this segment. This segment is poised for good
 growth in the coming years with the increasing disposable income of the
 population.
 
 FUTURE PLAN
 
 The major thrust areas in the current financial year would be Dairy
 Ingredients, Milk Products and Ice Cream. This will help your Company
 to diversify its product profile and enable it to maintain its
 leadership position.
 
 DIVIDEND EQUITY SHARES
 
 Your Company has declared and paid an Interim Dividend of Rs.2/- per
 Equity Share (20%) on 21st June 2007 on Equity Share Capital, for
 shareholders whose names appear on the Register of Members as at 6th
 July, 2007 (Record Date), absorbing Rs. 1,58,85,1557- (Dividend - Rs.
 1,35,77,636/-; Corporate Dividend Tax - Rs. 23,07,5197-) and your
 Directors recommend the same to be deemed as the final dividend for the
 year ended 31st March, 2007.
 
 PREFERENCE SHARES
 
 As per the terms of the issue of 8% Non-convertible Cumulative
 Redeemable Preference Shares of Rs.100/- each, your Directors recommend
 a Dividend on the Preference Share Capital absorbing Rs.63,31,7057-
 (Dividend - Rs. 54,11,9457-; Corporate Dividend Tax - Rs. 9,19,7607-).
 
 COMMUNITY DEVELOPMENT AND CHARITABLE WORK
 
 Your Company has co-ordinated various Community Development Activities
 during the year. Your Company has organized free eye camps at Attur,
 Palacode, Edappady, Rasipuram and Valapatty. Your Company has also
 distributed stationery to school students.
 
 DIRECTORS
 
 In accordance with the provisions of the Articles of Association of the
 Company, three of your Directors, Mr. Kirti P Shah, Mr. S.Thiagarajan
 and Mr. B S Mani, are liable to retire by rotation at the forthcoming
 Annual General Meeting and being eligible, offer themselves for
 re-appointment.
 
 The profile of Directors seeking re-appointment is furnished in the
 Notice of the ensuing Annual General Meeting.  DIRECTORS
 RESPONSIBILITY STATEMENT
 
 Your Directors confirm
 
 i) that in the preparation of the annual accounts for the financial
 year ended 31st March, 2007, the applicable accounting standards have
 been followed and that there are no material departures;
 
 ii) that your Directors have selected such accounting policies and
 applied them consistently and made judgements and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for the period;
 
 iii) that your Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance, with the
 provisions of the Act, for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 iv) that your Directors have prepared the annual accounts on a going
 concern basis.  
 
 FINANCE
 
 During the year under review the Company had to maintain its borrowings
 to run the operations. However, your company has taken care to ensure
 that such of the Company borrowings are obtained at very competitive
 rates.
 
 In terms ofthe provisions of Investor Education and Protection Fund
 Rules 2001, Rs.7,200/- of unclaimed dividend pertaining to the
 accounting year 1998-99 was transferred to Investor Education and
 Protection Fund during the year.
 
 ALLOTMENT OF PREFERENCE SHARES
 
 During the year, your Company issued 5,00,000, 8% Non-convertible
 Cumulative Redeemable Preference Shares of Rs.100/- each aggregating to
 Rs.500 Lakhs. The said preference shares were redeemed during August
 22, 2006. The preference share dividend includes dividend on the said
 preference shares for the part of such year.
 
 DEPOSITORY SYSTEM
 
 As the Shareholders are aware, your Companys Shares are tradable in
 electronic form and the Company has established connectivity with both
 the Depositories i.e. National Securities Depository Limited and
 Central Depository Services (India) Limited. In view ofthe advantages
 offered by the Depository System, the shareholders are requested to
 avail ofthe facility of dematerialization of the Companys shares.
 
 FIXED DEPOSITS
 
 The total amount of Fixed Deposits from the Public and Shareholders
 ofthe Company outstanding as at 31s March, 2007, was Rs.278.93 Lakhs
 out of which a sum of Rs.155.14 Lakhs represent 565 accounts of
 Fixed/Non Cumulative Deposits and Rs.123.79 Lakhs represent 413
 accounts of Cumulative Deposits. A sum of Rs.8.59 Lakhs under 31
 accounts was unclaimed as on that date. Out of the above, Rs.8.43 Lakhs
 representing 30 accounts were since claimed and paid.
 
 AUDITORS & AUDITORS REPORT
 
 The Auditors, M/s. BSR & Co., Chartered Accountants, who retire at the
 Completion ofthe ensuing Annual General Meeting have expressed their
 desire not to be re-appointed as the auditors ofthe Company. In view of
 this, your Directors recommend the appointment of M/s. S.R. Batliboi &
 Associates, Chartered Accountants, Chennai as the Statutory Auditors of
 the Company in the forthcoming Annual General Meeting.
 
 EXPLANATION TO AUDITORS REMARKS Point No. 3 of the Auditors Report
 
 As more fully described in Note 2 (b)(iii) of Schedule 20 to the
 financial statements, certain income tax matters (financial estimate by
 the management ofRs. 15 millions in respect ofthe financial year ended
 31st March, 1996 are being contested by the Company and the matter is
 pending with the High Court of Judicature, Chennai. Pending a final
 resolution of uncertainties in this connection, no provision towards
 tax and other consequential adjustment, if any, have been considered in
 the financial statements.
 
 Clarifications on the above point have been provided in the Notes on
 Accounts under Schedule 20(2)(b)(iii).  Point No. 17 of Annexure to the
 Auditors Report
 
 In our opinion and according to the information and explanations given
 to us, and on an overall examination ofthe Balance Sheet ofthe Company,
 we report that the funds raised on short-term basis estimated
 Rs.5,31,299 have been used for long- term investment.
 
 As informed in the earlier years Annual Reports, the Company has a
 centralised treasury function where all the term loans and other
 borrowings in addition to the cash generated from operations are pooled
 through common bank accounts to optimally use funds and reduce the
 interest cost to the Company. It is also to be mentioned here that the
 Company obtains loans from banks, which inherently permit it, to be
 used interchangeably for long term and short term purposes.
 
 INDUSTRIAL RELATIONS
 
 Industrial relations in all the units and branches of your Company
 remained cordial and peaceful throughout the year.  PARTICULARS OF
 EMPLOYEES UNDER SECTION 217(2A)
 
 None of the employees of your Company were in receipt of remuneration,
 which in the aggregate exceeded the limits, fixed under sub-section
 (2A) of Section 217 of the Companies Act, 1956.
 
 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
 
 The information required to be given under these heads in accordance
 with the provisions of Section 217(1)(e) of the Companies Act, 1956
 read with the Companies (Disclosure of Particulars in the Report of
 Board of Directors) Rules, 1988, has been set out in the Annexure to
 this Report.
 
 FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The Foreign Exchange Earnings from Exports during the year 2006-07
 amounted to Rs. 5,334.26 Lakhs.  Total outgo of Foreign Exchange during
 the year amounted to Rs.259.83 Lakhs.  CORPORATE GOVERNANCE
 
 Your Company has complied with all mandatory provisions of Corporate
 Governance as prescribed under the Listing Agreement of Bombay Stock
 Exchange Limited with which the Company is listed.
 
 The Management Discussion and Analysis Report and Corporate Governance
 Report form part of this Annual Report.  
 
 ACKNOWLEDGEMENT
 
 Your Directors thank the Companys Bankers and the Financial
 Institutions for their help and co-operation extended throughout the
 year. Your Directors place on record their appreciation for the support
 and co-operation that the Company received from its stakeholders and in
 specific its channel partners. Your Directors also record their
 appreciation for the excellent operational performance of the staff of
 the Company that contributed to the achievements of the Company. The
 Directors also acknowledge with much gratitude, the continued trust and
 confidence reposed by the shareholders of the Company.
 
                     For and on behalf of the Board of Directors
 
                                         Soy-
 Place : Chennai                    R.G CHANDRAMOGAN
 Date  :  30th July, 2007      Chairman & Managing Director