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Hatsun Agro Products
BSE: 531531|ISIN: INE473B01035|SECTOR: Food Processing
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Company History - Hatsun Agro Products
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:
 
                                           (Rs. in lacs)
                         31.03.95   31.03.94  31.03.93
 Sale of Ice Cream        552.60     369.58    248.05
 Other Income               6.38       4.71     20.36
 Total Expenditure        520.63     329.78    257.18
 Net Profit                38.35      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   RAJA K.S.P. GANESAN
 
 30.08.95                       1.00                    1.00
 31.12.95                     149.00                   49.00
 After 01.01.96 but before
 31.03.96                      150.00                  50.00
                               300.00                 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             Location     Installed Capacity
                                               In lakh liters
 Atlantic foods             Ramalingapuram
                            Salem                     24
 
 Hatsun Foods Co.           Nallur Village
                            Ponneri Taluk,
                            Near Madras               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.
 
 2008
 
 - The Company has splits its face value from Rs10/- to Rs2/-.
 
 2009
 
 - Hatsun Agro Product set up a state-of-the-art plant with a capacity
 to process 9 lakh litres of milk a day for producing mainly milk
 powder and is located near Palacode in Dharmapuri District. 
 
 2010
 
 - Hatsun Agro Product - Board declares Interim dividend @30% 
 
 2011
 
 -  Hatsun Agro Product Appointed Mr. S. Chandrasekar as a Company
 Secretary & Compliance Officer of the Company
 
 - Hatsun Agro Product - Board declares Interim Dividend@ 25%
 
 -Company has splits its Face value of Shares from Rs 2 to Re 1
 
 2012
 
 - Hatsun Agro Product - Board approves Bonus Issue & declares
 Dividends (Interim Dividend & Special Interim Dividend)
 
 - Hatsun Agro Product- Selling of new range of Ice Creams under the
 Brand name IBACO
 
 -  Hatsun Agro Product- Board recommends Final Dividend @20 %
 
 -Registered Office of the Company has been shifted from No.5A,
 Vijayaraghava Road, T. Nagar, Chennai - 600 017 to DOMAINE, Rajiv
 Gandhi Salai (OMR), Karapakkam, Chennai - 600 097
 
 -Hatsun Agro Products has given the Bonus in the Ratio of 1:2
Source : Dion Global Solutions Limited
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