hatsun agro product ltd share price Management discussions


Hatsun Agro Product Limited ("HAP" or "the Company") is the largest Private Sector Dairy in India manufacturing and marketing Ice Creams, Milk and Milk products such as Curd, Ghee, SMP etc., Ready to Eat products and also Cattle Feed.

HAP Management accepts responsibility for the integrity and objectivity of the Financial Statements and various estimates and judgments used therein. The estimates and judgments relating to Financial Statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner, the form and substance of transactions, and reasonably presents our state of affairs, profit and cash flows for the year.


The Covid-19 outbreak which started early in the year 2020 continuing till date has wrecked almost every industry worldwide. Indias dairy industry is no exception to that. Dairy Industries business operations were hit hard as the industry had to look for ways to mitigate the negative effects of pandemic on logistics, an abrupt change in demand which consequently impacted the supply. Due to the nationwide lockdown implemented periodically, consumption from non-essential commercial establishments such as restaurants, hotels, bakery, sweet shops, theatres and malls, suddenly dipped to the low.

Besides the above, for milkmen and vendors who collected loose milk from dairy farmers and then supply it to urban consumers, the ban on travel disturbed this arrangement. Milk procurement from small farmers, who were outside the umbrella of organised cooperative and corporate sector dairy networks, was equally impacted. That was a jolting setback for the dairy industry as well as farmers.

Unfortunately, the industry faced a few more exceptional challenges. It wasnt possible to entirely cut down the milk production considering the plunge in demand and issues in supply. Irrespective of the market mayhem, a cow had to be milked daily for its health. On one hand, it increased the cost of a dairy farmer and on the other, the situation left them with surplus milk with no trade taking place.

Moreover, the pandemic didnt eliminate the need for dairy products. But raised a different concern. Products such as curd and paneer are perishable and have a short shelf life. Hence, these were not stocked by families as their back up plan during the lockdown. As these cant be stored for selling at a later date, and the dairy supply chain operations were severely disrupted, surplus availabilities of dairy products had to be discarded. Another factor that added salt to the wound was the drastic declination in the consumption of cold products like ice cream, flavored milk and yogurt. In order to

keep one safe, the public at large avoided the food known to enhance cough and cold.

In no time, India, the largest and thriving dairy producer in the world with 187.7 million tons of milk production, as per the data from NDDB, and a high turnover rate, received a hard blow.

But every dark cloud has a silver lining. If this pandemic has brought unprecedented challenges and uncertainties, it has also given an opportunity to the dairy industry to look beyond and unleash its potential. Precisely, this is how several players in the industry responded to the pandemic. Identifying the need of the hour, they forayed into new product categories. Products for immunity boosting such as haldi doodh (turmeric milk), camel milk and goat milk started gaining attention. Consumer choices are shifting to consuming products made from organic materials. Further, considering health and hygiene are two key factors in the era of new normal, the demand for fresh and organic products will rise in the years to come. This has set manufacturers in the dairy industry to expand their offerings.

Indian dairies managed the Covid-19 crisis quite well through processing considerably more milk than usual and adapting their product portfolio.

India had to face a five-week lockdown in spring 2020, followed by partial restrictions in a few States in early September 2020. The crisis had almost no impact on the volume of milk collected: no milk was thrown away. But at the same time, demand faced a major downturn, with the informal channel being completely stopped for three months. This informal channel is immense as it includes all the confectionary shops and small businesses like tea stalls. In India, this informal channel procures 20% of total milk production.

Initially, the supply chain had to adapt to process more volumes, with dairies procuring a large part of the milk, which was in addition to their usual procurements (instead of being sold through the informal channel). Part of the milk not sold through the informal channel was also consumed on-farm, with families returning to villages for lockdown.

With the lockdown, and unlike mature markets where we saw an increase in drinking milk consumption, industrial production of drinking milk dropped because more consumers remained in rural areas. With 12-15% more milk and less demand for drinking milk, dairies had to switch to commodities and therefore produced more fat (ghee) and SMP.

Ghee in India is used extensively either for cooking, as a topping on bread or during religious ceremonies. Unlike butter, it is kept at an ambient temperature. Demand for ghee produced by dairies is increasing because consumption patterns are changing and the young generation tends to purchase its own ghee rather than produce it, even if production at home is still widespread. Consequently, demand for ghee, and for butter to a lower extent, increased.

Indian Dairy Industries could not hope much for SMP exports, as Indian SMP was not competitive on the global market and the foreseeable issue was either to export with the help of government subsidies, or to release volumes on the domestic market, again with government money (to school milk programs or fragile populations due to the Covid-19 crisis). The second solution seemed more realistic, considering political concerns (better acceptance of subsidies for domestic consumption rather than for exporters) and logistic issues due to Covid-19. But market conditions changed in Q4 2020, with global SMP prices increasing more than expected by the industry and India becoming able to export its SMP to neighboring countries at a competitive price without subsidising.

No doubt, due to the rapidly changing industry environment as well as consumer behavior, the dairy businesses experienced ebbs and flows of demand and supply. But on a brighter note, weighing the current developments, we are foreseeing a U-shaped growth curve for the dairy sector, wherein the industry is expected to regain its stable growth in the months to come.

The dairy sector has shown its resilience to a crisis it had never seen before, and that the Indian cooperatives and private dairies, which collect approximately 50 % each of the milk going to the formal channel, have successfully adapted themselves in the hard times overcoming the challenges posed due to Covid-19.

On 6 April, IMF projected an impressive 12.5 percent growth rate for India in 2021, stronger than that of China, the only major economy to have a positive growth rate last year during the Covid-19 pandemic. The Washington-based global financial institution, in its annual World Economic Outlook ahead of the annual Spring meeting with the World Bank, said the Indian economy is expected to grow by 6.9 per cent in 2022. Notably in 2020, Indias economy contracted by a record eight per cent, the International Monetary Fund (IMF) said as it projected an impressive 12.5 per cent growth rate for the country in 2021.

Whereas, further to its April projection, in a setback for India, IMF in May, 2021 said that it will revisit its forecast for Indias growth pegged at 12.5% later, due to the rising Covid-19 cases.

While the difficulties created by Covid induced lockdowns adversely affected the performance of the non-agricultural sectors, the agriculture sector came up with a robust growth rate of 3.4 per cent at constant prices during 2020-21 (first advance estimates). The sector has got renewed thrust due

to various measures on credit, market reforms and food processing under the Atma Nirbhar Bharat announcements. Various interventions of the Government for the development of allied sectors including animal husbandry, dairying and fisheries exhibit its resolve towards tapping the potential of allied sectors to further enhance farm welfare.

In addition to various measures aimed at increasing productivity and improving marketing of agricultural produce, the Government also carries out a large food management programme with a significant financial implication in terms of food subsidy. Under the Pradhan Mantri Garib Kalyan Anna Yojana, 80.96 Crores beneficiaries were provided additional foodgrains, i.e. above the NFSA mandated requirements, of 5 kg per person per month free of cost till November, 2020. Over 200 LMT of foodgrains were provided amounting to a fiscal outgo of over ?75000 Crores. Also, under Atma Nirbhar Bharat Package, 5 kg per person per month was distributed for four months (May to August) to benefit approximately 8 Crores migrants who are not covered under NFSA or state ration card entailing subsidy of ^3109 crores approximately. Now, our Prime Minister Shri Narendra Modi has announced Free Ration to 80 Crore Indians upto 2021 Diwali Festival taking in to consideration, the prevailing Covid-19 Pandemic.

The dairy companies and the government have made their own isolated efforts to work on the productivity problem. Dairy companies have largely worked on providing feed inputs to the farmers in their procurement network and some amount of veterinary support. But, this still has not solved the problem at scale. Governments - both central and state have done their bit by working on improving access to credit through the subsidy and loan schemes. In addition, governments have supported cross breeding programs which has resulted in yield improvement in a few states. While states like Punjab, Haryana have scaled the 10 litres per day per milking cattle mark on an annualised basis, most other large milk producing states continue to languish at 5-6 litres per cattle per day. Contrast to this, with the major dairy production countries like US, New Zealand, Australia, Continental Europe - where the milking cattle average is over 25 litres per day.

For India - the challenges remain in developing a holistic approach to solve this productivity conundrum and delivering the solutions to the farmers in a cost effective and efficient way. Brazil is often looked upon by some dairy experts as a standard to aspire to - given their work with cross breeding our own indigenous breed Gir with the much venerated Holstein Friesian(HF) - to get the best characteristics of temperature and disease resistance from the indigenous side and high milk yielding capacity from the HF side.

There has been a gradual shift of milk production from a marginal dairy farmer to a more focussed commercial dairy farmer - who depends on the dairy economy as his main livelihood source. But this architecture works till the time the farmer and his family are fully engaged in farming without meaningful engagement of outside labour.

Large commercial dairy farms with more than 100 animals in India have a mortality rate of 10-15% per annum mainly because the cost structures and relying on co-operatives or private dairies to buy milk isnt viable for most farms depending on their labour costs and feed costs. The most viable means for survival for such farms is to engage in breeding and selling as an additional source of income besides milk sale income.

Some potential solution themes for solving Indias conundrum for productivity problem are :

1. Create a standard for good quality milk which prices the milk besides the traditional measures of Fat and SNF (Solid not Fat) content but also on the quality parameters like microbial count and somatic cell count in the milk;

2. Enable commercial dairy farmers to improve genetics rapidly by subsidising the cost of modern technology like sex sorted semen and embryo transfer.

3. Allow entrepreneurs to develop platforms to facilitate diffusion of these genetics to local marginal farmer through cattle sale from these commercial farms;

4. Make these commercial dairy farms also the key information and knowledge dissemination centers to the local dairy farming community. Aid them to online content and knowledge repositories - access to best experts in India and across the world;

5. Encourage development of low cost frugal innovations to automate labour intensive processes and also address issues like long inter-calving periods;

6. Bring information and dairy technology to the Gaushalas to create a better self sustenance architecture so that the farmer can avoid the expenses involved in bringing an unproductive animal to a gaushala;

7. Use technology stack to create exhaustive data sets on animals and farmers to improve credit access and insurance penetration so that farmers are better equipped to handle the risks involved in livestock rearing and boom bust cycles of milk prices;

The pace of change in improving productivity has perhaps also been hampered by the marked bias of the successive governments towards the dairy co-operatives. There was a historical reason behind this tacit support but to usher in a new wave of productivity growth perhaps government needs to consider a more pro-active support for new enterprises and start-ups to use technology and deliver more rapid productivity improvements.

Platforms are needed to facilitate engagement between different stakeholders in the space to solve this productivity conundrum - it is not just the question of improving livelihoods - it is ultimately the question of creating a space for our dairy industry on the world stage.

The last budget saw aggressive target milestone setting for the remaining part of the term for the current government. These included amongst other milestones : Increasing coverage of Artificial Insemination in Cattle from 30 to 70 percent, Elimination of animal diseases such as Foot and Mouth Diseases and Brucellosis and using MNREGS programme to develop fodder farms to reduce cost of input for Dairy farmers. In addition government also announced allocation of ?15,000 Crores towards bolstering animal husbandry and livestock sector as part of the "Pashudhan" program as a continuing measure to support livestock farmers in the aftermath of Covid pandemic. The forthcoming budget should continue to see more active implementation of these schemes and drive micro-initiatives along with the states to ensure the subsidies and the interest subventions get maximum penetration. In addition, there should be additional support given to startups and SMEs working in this space to accelerate the adoption of modern livestock farming practices through use of technology.

During these difficult times, the dairy farmers, their cows and buffaloes were taken care of well due to the continuous supply of milk mulched every day albeit with discounted pricing for Milk. The procurement of Milk and the money given to dairy farmers ensured taking care of mulching animals well.

Although the dairy industry showed some reverse trend in its growth trajectory in the first quarter of the financial year 2020 - 21 i.e., for the quarter ended 30.06.2020, it regained its normal performance from the second quarter of the financial year 2020 - 21 i.e., from the quarter ended 30.09.2020 due to the demand for Milk and Milk products from the consumers particularly taking in to account the pandemic situation and the immunity consciousness.

As stressed often, Dairy Industry, for its sustenance and success in operations, is required to ensure efficient systems in Milk procurement, storing, testing, maintaining quality, uninterrupted supply of Milk etc.

The Milk procurement which is the core function of your Company starts at Village level. There are about 10000 plus Hatsun Milk Banks (HMBs) from which your Company procures the Milk. About 4,00,000 farmers from 13,000 Villages are pouring Milk both in the Morning and Evening in your Companys HMBs. Your Company has very good logistics management in transportation of Milk procured from HMBs to its various Chilling Centres and Manufacturing Plants. Your Company operates in about 1200 Milk procurement routes both in the Morning and Evening.

Best practices viz., the introduction of State-of-the-Art technologies in the processes involved in preserving, processing and making Milk and Milk Products for consumption by the masses, zero tolerance on deficiencies, no compromise on quality at all times, implementation of latest available technologies, practicing cordial relationship with farmers at all times and ensuring prompt and immediate payment to them for the supplies made by them, provision of complete package of forages and concentrate to the farmers and thus ensuring best practices in animal husbandry, concentrating on animal health care, artificial insemination, manufacture and sale of balanced Cattle Feed etc.,, have already been implemented in your Company.

These better practices coupled with strong brand and varied product portfolio ensure better performance and profitability year on year basis and enable the Company meet adverse conditions confidently and overcome them so as to ensure best returns to its Stakeholders.



Your Company handles about 4,00,000 farmers on a daily basis, spread over about 13,000 Villages. Your Company procures Milk in most of the Southern States viz., Tamilnadu, Andhra Pradesh, Telangana, Karnataka and also in the State of Maharashtra.

Active Bulk Cooler (ABC), an advanced system of procuring and chilling the milk at the village level is present in over 1100 locations. These chilling facilities improve the quality of Milk and retain its freshness until they reach the Dairy Plants for further process. Farmers become more flexible in milking their cows. These facilitates instant chilling within 2 hours, increased quantity of Milk, prevention of spillage or spoilage and improve shelf life.

The two parameters tested for determining quality are Fat and SNF which allows the determination Price to be paid to the farmers. Farmers are paid on time every 10 days and the payment is made directly to their Bank Accounts using the State-of the-Art database of farmers. HAP operates more than 1,200 rural milk procurement routes with an assigned route plan. The route plan determines the pick-up timing and schedule which ensures the Milk procurement vehicles reach the Hatsun Milk Chilling Centres (CCs) right on time.

During the FY 2020-21, your Company procured Milk on an average of 29.02 LLPD as against 27.26 LLPD procured during the FY 2019-20. The State-of the-Art Plants for processing and packaging the Milk and Milk products are situated in the States of Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and Maharashtra in strategic locations.


Your Company distributes its various products viz., Ice Creams, Milk and Milk Products through its "HAP Daily" Stores numbering about 3000, situated in various strategic locations across Tamilnadu, Andhra Pradesh, Telengana, Karnataka, Kerala and Maharashtra. Besides the above, your Company operates its own outlets under the brand and style of "IBACO" to sell Ice Creams and Chocolates and "OYALO" to sell its Ready to Eat Products.

HAP markets its Milk and Curd through its popular brand names of "Arokya" and "Hatsun". While the Milk is marketed in four different variants viz., standard, full cream, toned and double toned, the Curd is marketed in the form of pouches ranging from 180 grams to 1 kg and cups ranging from 50 Gms to 400 gms. Both Milk and Curd are being sold across Tamilnadu, Andhra Pradesh, Telangana, Karnataka and Maharashtra through its own distribution network and outlets viz., "HAP Daily".

Besides offering the entire range of Arun Icecreams, Your Company plans to selectively retail other products such as Arokya Milk, Hatsun - Curd, Paneer, Milk Beverage, Yoghurt Shakes, Ghee, Butter, Skimmed Milk Powder and Dairy Whitener in various markets in HAP Daily Outlets in the future.

Further, apart from direct sales to consumers, HAP Daily outlets will also supply its products to retail outlets within the vicinity thereby increasing ease of availability of its products and expanding the brand reach to the Consumers. The retail outlets offer tremendous growth opportunities for the franchisees.

Retail outlet expansion is in line with the Companys growth strategy and its vision of taking high quality dairy products closer to the masses. Retail expansion in Maharashtra and other regions will augur well for HAP which is augmenting its production capacities with the expected commissioning of a new plant in Solapur, Maharashtra at the earliest possible time.

Going forward, HAP plans to open more HAP Daily outlets in newer markets such as Maharashtra, Kerala, Orissa and Chhattisgarh and deepen its presence in its traditionally strong markets of Tamilnadu, Karnataka, Andhra Pradesh, Telangana, Puducherry and Goa. HAP aims to be a pioneer and transform the retail fabric of the Indian dairy industry.


HAP strongly holds two popular brands "Arun" and "IBACO". The Arun Icecream brand enjoys dominant position across South India. The brands promise has always been to give customers more choices, which is why Arun Icecreams has come out with a range of new products and flavours.

HAP produces various innovative Ice Cream varieties in Bars and Cones. The Company has installed state-of-art extrusion machine to increase overall productivity and manufacture different varieties of Ice Creams.

HAP is leveraging mega cold storages situated in the State of Tamilnadu at Salem, Kanchipuram, Karur, Palacode, Tirunelveli, Redhills, in the State of Andhra Pradesh at Kasyapuram and in the State of Telengana at Shadnagar to meet its peak Ice Cream demand during the summer months of April and May.

Due to the pandemic, the Company lost sales close to ^ 215 Crores in Ice cream and Curd which are normaly fast moving products in summer.

Despite this setback, your Company clocked 21 % growth due to the creation of brand awareness.

IBACO has gone onto become one of the most beloved brands of ice cream. Overwhelmingly positive customer feedback has led to the launch of many parlours, new product offerings, and fresh, exciting flavours. Rest assured, the brand will keep innovating well into the future.



Under the Hatsun brand, the company continues to come out with products to satisfy every consumer need. The range includes Curd, Ghee, Cooking Butter, Table Butter, Lassi, Buttermilk, Paneer, Yoghurt Shakes, Yoghurt Tops, Shrikand and Cheese Spread to name a few. These products are ideal for a variety of cooking and consumption requirements - be it preparing a delicious dish or if consumers are looking for ways to cool down during the intense summer heat.

The newly launched Hatsun Cow Milk is a unique product. The milk being pasteurised and packed under hygienic conditions with nothing added or removed. The milk will leave a thick layer of cream while boiling.


A team of agronomists help cultivate cattle feed in the most economic way possible. It also meets the nutritional requirements of the animals. Under the brand Santosa, HAP also manufactures and sells cattle feed to farmers based on their need.

HAP has plant with state-of-the-art facility in Tamilnadu to manufacture Cattle Feed with an installed capacity of 24,000 tonnes per month. These cattle feeds are supplied to farmers who are regularly supplying milk to HAP and the recoveries for such feed are made against the supply of milk by the farmers.


Oyalo offers customers a range of delicious 100% vegetarian pizzas.

Expert chefs handpick each ingredient, and also make the pizza spread. They also make the cheese in-house, giving each pizza a unique flavour like none other. With variants like Tandoori Paneer, Creamy Macaroni, Smoky BBQ Paneer and Piri Piri Corn to name a few, customers can look forward to a plethora of options.

The brand has added new variants like Giardino Feast and Spicy Paneer Twist - adding an element of surprise. Oyalo also offers delicious pasta and indulgent lava cakes.


The Animal Husbandry team is key to increasing profitability of dairy farms by increasing milk production efficiency and reducing costs. Working closely with the feed (Sourcing) team, professionals working in Animal Husbandry provide farmers with a complete package of forages and concentrates. Besides this, qualified animal health professionals hired by the Company ensure the health of animals to enable the farmers supply the quality Milk to the Company uninterruptedly. They also educate the farmers on the practice of best ways to prevent ailments to the Cattle.

A trained team of inseminators visit the villages to provide AI services from quality bulls. The goal of this process is to ensure that milch cows produce a calf every year with better genetic qualities. All the Cattle are managed efficiently with first of its kind Cattle Management System. They are tagged and their data recorded. The Company works closely with large farms to source appropriate technology that will help reduce labour and uses powerful tools to help monitor bulls and improve their productivity which contribute to reduction in cost and improving profitability.


The financial performance is covered in the Directors Report and an be referred to in the said Report.


(i) Debtors Turnover Ratio (in Days) - This stands at 0.59 compared to the previous years 1.00. There is a significant change to the extent of 41.00 percent. The main reason for this change is due to reduction in B2B customers outstanding.

(ii) Inventory Turnover Ratio - This stands at 8.06 compared to previous years 9.68. There is a change to the extent of 16.74 percent. The reduction is due to increase in Production and Sales volume.

(iii) Interest Coverage Ratio - This stands at 4.30 compared to previous years figure of 2.48. The change is 73.39 percent. The increase in coverage ratio is mainly due to better operating margin resulting from increase in selling prices, reduction in, procurement prices and marketing and advertisement overheads.

(iv) Current Ratio - This stands at 0.54 compared to previous years figure of 0.52. The change is 3.85 percent. There is no significant change.

(v) Total Debt to Equity Ratio - This stands at 1.39 compared to previous years figure of 1.32. The change is 5.30 percent which is not significant.

(vi) Operating Profit Margin (%) - This stands at 6.54 compared to previous years figure of 2.95. The change is 121.69 percent. The increase in percentage is mainly due to the increase in selling prices of Milk and Milk products, reduction in milk procurement prices and also reduction in marketing and advertisement overheads, besides increase in Sales.

(vii) Net Profit Margin (%) - This stands at 4.42 compared to previous years figure of 2.12. The change is 108.63 percent which is mainly due to an increase in selling prices of Milk and Milk Products, reduction in milk procurement prices and also a reduction in marketing and advertisement overheads besides increase in Sales.


During the financial year under review, the Company has received ?1,18,104 on 1064 partly paid up Rights Equity Shares through the Call made (on the partly paid up Rights Equity Shares allotted in the year 2018). Besides this, 5,38,90,831 Shares were allotted as Bonus Shares during the year in the ratio of 1 fully paid up Equity Share for every 3 Equity Shares held on the Record Date of 10.12.2020. Considering the above, the total paid up Equity Share Capital stood at 21,55,63,323. The increase in the paid up Equity Share Capital from 16,16,71,428 from the previous year to 21,55,63,323 had an impact on Networth value.


With Indias population ever increasing, there is always a scope for rise in food demand including Milk consumption in India. A post-Covid-19 situation offers the unique opportunity to repurpose the existing food and agriculture policies for a healthier population by way of introducing suitable model with a stronger nutrition where diets are more diverse.

Dairying has become an important secondary source of income for millions of rural families and has assumed the most important role in providing employment and income generating opportunities, particularly the marginal and women farmers. With the ever increasing demand, as seen in the previous 5 years which shows the average increase in production of Milk around 6.4%, the trend shows the opportunities for adding infrastructure and produce more milk and sell the same to the Society which is well informed about the health benefits of consuming Milk and Milk Products.

Monsoons are favourable in our Country in the past two years and the current year sees the advancement of Southwest Monsoon in the month of May, 2021 which is expected to be normal and give us the required water for farming, livestock and other food industries. This is indeed a good news in the Covid-19 scenario, assuming that the agriculture can do better largely unscathed .

Good news is that Government of India has now increased its focus on nutrition (besides food)- security and raising farmers income (rather than enhancing farm productivity). Changing the consumer behavior with suitable programs and incentives is already in the agenda. In this regard, we can cite the Central Governments implementation of amendment to Farm Laws which has started benefiting the Farmers albeit the protest in some sections.

Covid-19 has made people more aware of the need to adopt a healthy diet.

The focus of the Department of Animal Husbandry & Dairying has been towards increasing milk productivity through genetic improvement and reduction of input cost. Various measures have been launched recently for improvement of milk quality by providing the required testing facilities at village and dairy plant level for safe human consumption.

It is proposed to further intensify the Quality Milk Programme for both cooperative and private sectors on a fund-sharing basis. With a thrust on better productivity, reduced input cost and better quality milk and milk products, the competitiveness and profitability in the dairy sector gets enhanced, leading to increased demand of dairy products in domestic and international markets. This would also bring private investment in the sector so as to boost growth in rural incomes and also the employment.

Through convergence of various schemes of the Department of Animal Husbandry & Dairying, Ministry of Food Processing Industries, Department of Agriculture, Cooperation & Farmers Welfare, Department of Rural Development and State Governments, public investment to further incentivise private investments is being facilitated for increasing processing facilities.

Despite the intense competition, there is a phenomenal scope for expansion in other States of India where the consumer behaviour is changing replicating the urban consumption pattern and scope for innovations in new and varied product development, packaging and presentation. Considering the changing consumption pattern and choices of food product among the public, with the available technology and availability of balancing equipment, the flexibility of product mix is tremendous and the Company can keep on adding new products to its product line. Installation of state-of-the-art machineries fully/semi automated add to the productivity and reduction in cost.

Although 70 to 75% of the Covid affected cases were reported in South India and Maharashtra alone where most of the Companys short shelf products like Milk and Curd are sold, your Company was able to sell its products since the same are Essential Commodities which enabled the increase in footfall of Customers. Also, the performance of your Company was not much affected since your Company is not in HoReCa Segment.

In the Covid-19 affected financial year 2020 - 21, Your Company adopted the strategies for sustaining the operations and profitability which paid off well and in fact, your Company escaped unscathed to a large extent from the negative effect of the pandemic. Of course, there were some challenges posed to the Company and the negative effects were mitigated through constant monitoring of demand and supply, ensuring the normal/regular activities at all times without compromising on quality, timelines, work culture etc.,

This was made possible by the excellent team work of the employees of your Company from the top to the bottom.

Thanks to the status enjoyed by the Company that it is in to providing essential services to the Public, the Company overcame the challenges posed by Covid-19.

Your Company took the required steps to reduce the Cost involved in its overall operations where it was possible and constantly endeavours to utilise the opportunities thrown in this pandemic situation to help the Society at large and its Stakeholders in particular.

Your Company strongly believes that still there is enormous scope seen ahead before the dairy industry for Milk and value-added products including custards, desserts, puddings, sauces, mousse, stirred yogurt and nectars and there will be an increase in demand for processed and packaged dairy produce post Covid-19 scenario in urban centres due to the change in food habits and health awreness created by the pandemic. Your Company has entered new markets and has established its presence in the State of Maharashtra.

The main advantage of your Companys strength lies in its efficient and effective supply of manufactured products and cold chain management which facilitates wide reach and targeted coverage in its markets. Your Company has a professionally-trained, technical human resource pool, built over years to meet the challenges in the dairy industry and they do work as a team for the attainment of organisational objectives.


After the initial outbreak of Pandemic Corona in the early part of the year 2020 which saw the governments swinging in to action declaring lock downs which extended up to the middle of the year and relaxations made, the second wave which is striking the nation at an unprecedented level, after the first quarter of the calendar year 2021, claiming more lives and compelling hospitalisation of many affecting the normal life and work of people, seriously pose problems for the industry, workmen and the country as a whole. The only silverline in the catastrophe is the invention of indigenous Vaccines and production of the same which every one hopes will save the lives of people and the medicines viz., 2 DG (2 Deoxy - D - Glucose ) invented recently is proving to be contributing to effective treatment for Covid-19 which helps in faster recovery of hospitalised patients and reduce supplemental Oxygen dependence.

Protecting lives of people suffering from Covid-19 in the second wave, which is fast spreading and requiring hospitalisation of more and resulting in death of patients with comorbidities, as well as frontline health responders have been and are the priority of nations.

Considering the restrictions on movement of people and vehicular traffic, frequent lock downs announced by various States in India to contain the spread of second wave of Covid-19, concerns are raised on the negative implications of Covid-19 pandemic on the farm economy. Any severe disruption to the supply of perishables like dairy products, may create irreparable damage to all actors in the supply chain.

Making the Milk and Milk Products and other essential items available to consumers, both in rural and urban areas, is the most critical challenge for Government machinery during the lockdown period. Smooth functioning of the supply chain, with adequate safety measures for the people involved, is of paramount importance. Transportation of public distribution system (PDS) items to last mile delivery agents, by both rail and road, has to be ensured by respective Government agencies. Distribution of the commodities to vulnerable population, while maintaining prescribed guidelines and protocol, particularly of social distancing, must be effectively monitored.

The Union Home Ministrys circular waiving restrictions on the inter and intra-State movements of essential commodities, farmers/laborers, as well as harvesting and related farm machines, is indeed a step in right direction.

The sale of dairy products; fish; poultry, etc. has also been hit during the lockdown period as the uptake by the organised industry players has been affected due to shortage of workforce and transport issues.

Covid-19 situation compelling restrictions on movement, visit to Shopping Malls, Cinema Theatres, Programmes, Hotels, Restaurants etc., where the gatherings would normally happen and parties celebrated will surely affect the normal business of sale of Milk based products, Ice Creams, baked items, milk based drinks etc.,

Besides, there are restrictions imposed on gatherings even for events like Marriages, Meetings, functions, Parties etc., and the visit to Restaurants for eating by all the sections of the Society are impacted due to the fear of spread of second wave of Covid-19 at an unprecedented levels.

Now, the WHO (World Health Organisation) has spelt it out that Corona Virus cannot be eradicated/removed and the people have to learn to live with that. In this scenario, the volumes of sales as happened in the previous years may not be continued and there is a threat looming large that the production of those items would be hit.

First wave, second wave and the impending third wave are posing to be the real threats to the dairy industry. Milk production could go down by 3 million tonnes over the next two years as the average temperatures rise, creating problems of water scarcity and reduced availability of green and dry fodder for the cattle.

Dairy companies manufacturing operations are largely dependent on the supply of milk, which is the primary raw material for all the dairy products. Given the seasonal nature of the dairy industry, cattle farming patterns, availability of raw milk keeps on fluctuating which thereby could adversely impact the running of its operations.

Dairy may be a national industry, but it is also very much a regional one, with a highly fragmented supply - its industry environment is anything but basic. The fundamental challenge in dairy is maintaining quality and quantity with in a diversified supply base. As a perishable, dairy requires more complex supply chain operations and logistics to ensure freshness and safety.

Indian markets with the greatest growth potential are also among the least developed in infrastructure and consumer awareness. Supply chain has become increasingly complex in cities with multiple retail outlets. In metro cities, new value-added segments and alternative products have taken off with surprising speed, intensifying competitive pressures and the need to innovate constantly.

For dairy processors, creating value comes with many challenges. Different product segments yield very different levels of margins. The key to success in dairy therefore lies in finding the sweet spot of growth and margins. It takes an understanding of the markets unique characteristics and supply-and-demand dynamics to innovate constantly in Indian market. Investment and return potential vary significantly with choice of product-mix and type of processing segment focused on.

As already observed in the previous years, sooner or later, the competition will increase steadily as more and more companies are targeting dairy sector and few MNCs are eyeing for increasing their market share. Large established players are launching new products as a strategy under Covid-19 conditions.

Your Company is continuously monitoring the developments taking place in the Industry and adopts and implements the latest technology innovated/discovered in Milk and Milk products processing. This helps in improving the quality of milk processed and extend its shelf life. Lack of proper infrastructure facilities like good roads, continuous power supply and adequate transport support in Rural areas is another major deterrent faced by the Dairy Industry.

Your Company has been leveraging on the improvement given its economies of scale and with its inherent ability to adopt new technologies, which involves large investment in the production and distribution infrastructure affordable only by bigger companies like us.

Your Company is focusing on the consistent availability and procurement of quality milk throughout the year by improving the per capital yield of animals by applying scientific methods, genetic improvement, scientific feeding, properly managed animal husbandry practices etc., Your Company constantly educates the farmers on how to maintain quality and improve milk yield by arranging supply of good quality feeds to farmers.


The CEO and CFO certification provided in the CEO and CFO certification section of the Annual Report discusses the adequacy of our internal control systems and procedures.


Your Company has successfully implemented SAP ERP, an effective online MIS system, which helps in centralised control of operations at all the units of the Company. Your Company constantly upgrades and reconfigures this application to effectively monitor the increasing scale of operations of the Company. The hardware and network infrastructure is being constantly reviewed to increase the bandwidth and reduce operational costs. This is an ongoing process and your Company is committed to leverage the benefits of IT to enhance and optimise benefits to itself and its customers. Constant training and guidance have been provided to all the end users.


Your Company values its human resource as the most significant asset and the key focus is to attract, retain and develop talent as a resource. Your Company provides a congenial working atmosphere which will foster creative thinking. As part of manpower development and to enhance operational efficiency, training programmes have been organised for employees at all levels, wherever necessary.

The HR programmes of the Company focus on building capabilities and engaging employees through various initiatives to help the organisation consolidate and achieve sustainable future growth for the business.

Industrial Relations remained cordial at all the manufacturing locations during the year.

Effective employee communication through various channels ensured that all the employees are kept abreast of the current business situation. This has helped your Company build mutual trust and confidence with the employees. The total strength of the Company as on 31st March, 2021 was 5189.



Statements in this report describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations that involve risks and uncertainties. Such statements represent the intention of the Management and the efforts being put into place by them to achieve certain goals. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances. Therefore, the investors are requested to make their own independent assessments and judgments by considering all relevant factors before making any investment decision.