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Hatsun Agro Products Ltd. Company History and Annual Growth Details

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

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.


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.


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.



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

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.


- The Company has splits its face value from Rs10/- to Rs2/-.
Oct 21, 12:00 am
Oct 21, 4:14 pm
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