Hatsun Agro: Arokya milk for your good health!

Can any Hatsun investor throw some light on why the valuations are so high? What am I missing here. This is for pure educational purpose.

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low working capital among the peers, focus on pouched milk rather than value added products leading to stable demand, great brand equity in a core market, very prudent and pragmatic management etc…

Go through this report for a complete understanding of the sector along with all the companies in it.

Hope it clarifies


Before two years i am regularly buying Hatsun ghee but now they cant deliver it in gujarat because of high demand in their home state.

Here is my comparison of Hatsun and Heritage on some specific aspects.

A. Depreciation

Hatsun FY16 FY17 FY18 FY19
Net fixed assets 647 991 1217 1408
Depreciation 107 143 174 201
% of Depreciation 16.5% 14.4% 14.3% 14.3%
Heritage FY16 FY17 FY18 FY19
Net fixed assets 312 296 433 476
Depreciation 35 25 38 47
% of Depreciation 11.2% 8.4% 8.8% 9.9%

Why Hatsun depreciation is 15% while Heritage is less than 10%. What kind of assets depreciate at 15%. Here is what I calculated from annual report of Hatsun.

land Building P&M Windmill Compu Furniture Office Vehicle lease hold Total
Gross at FY18 9165.33 25073.51 79616.77 17471.2 1557.75 1072.54 1718.04 449.53 6994.29 143119
Depreciation till FY18 0 1917.36 16522.46 878.38 566.54 300.86 530.83 62.39 1828 22606.82
Net at FY18 9165.33 23156.15 63094.31 16592.82 991.21 771.68 1187.21 387.14 5166.29 120512.1
Depreciaiton for FY19 0 1380.65 14459.49 792.75 480.98 186.63 422.09 83.45 2109.8 19915.84
Depreciation % 0.0% 6.0% 22.9% 4.8% 48.5% 24.2% 35.6% 21.6% 40.8% 16.5%

Some components of assets like Plant & Machinery, Computers, Furniture, Office equp, Vehicles and lead hold are depreciating anywhere between 23% to 48%. which is very high I think.

B. Tax

Hatsun FY16 FY17 FY18 FY19
PBT 134 172 119 161
Tax 32.67 37.18 31.32 34.58
% of Tax 24.4% 21.6% 26.3% 21.5%
Heritage FY16 FY17 FY18 FY19
PBT 86 59 90 126
Tax 29.62 29.08 28.84 44
% of Tax 34.4% 49.3% 32.0% 34.9%

Why Hatsun is paying lower tax at around 20 to 25% while Heritage is paying above 30% taxes?
Is there any Tax benefits to Hatsun?

C. Other important points

1.Heritage haven’t diluted equity in last 10 years, there was a bonus issue in the year 2014. Hatsun has been diluting the equity often. In last 10 year they diluted equity 5 times include the recent rights issue of 527cr.
2. Heritage has been maintaining less debt or we can say reasonable debt. This debt is mostly due to retails business which was loss making. However they have sold the retail business to Future retail so they didn’t lose any money on this venture in fact they made money on this venture. Capital employed in retail business in FY16 was 86.3Cr and they sold business to Future at some 3%+ stock exchange which is now worth at 835cr (At the end of FY19)
Hatsun debt has been increasing continuously since last 12 years. Only last year they have reduced debt with cash not from free cash flow but from rights issue.


Excellent talk by Mr. Chandramogan. Regardless of whether you’re a shareholder in Hatsun or not, you should listen to this. Important lessons is brand building and business strategy.


I am starting to look at this company after having looked early in 2016/17. Noticed that the company has stopped sharing sales mix in the annual report from FY19. Does anyone have any idea about the mix or the growth rates across various categories (milk, milk products, ice-cream, cattle feed etc). Thanks

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One key aspect while looking the Company from a long term prospect is about the Succession plan…I think Mr Chandramohan is already more than 75 years and have not heard much about his Son. In this old age it is very difficult to handle a business growing at this pace.

Disclosure : Not invested but tracking

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According to me this will defenetly be the takeover target by MNCs.
What NESTLE and HUL can not make mr.chandramohan made so now they have everything ready in form of HATSUN.

Disc. Not invested

  • Today
  • Hatsun AgroProd. insider trade: Pledge of 725,000 equity shares worth Rs 4218.77 lacs by promoter & director

Why the promoter needs money by way of pledging of Shares???
The Company has anounced around Rs 8 as dividend in 2019, Mr Chandramohan holds around 9.15 Cr shares i.e he has received dividend of around Rs 36.60 Cr .


Instead of paying dividend out of the debt, the management could use the money to reduce the debt. Any debt to equity above 0.5 is adding to the risk. Debt to equity above 3 is ridiculous. The management seems very desperate to grow, putting the owners including the minority shareholders at risk of losing their money.

A good business should be able to grow using operating leverage and also command high operating margin which is lacking in this business and industry in which it operates.

Though we regularly buy their products, I could never convince myself to buy due to high valuation and debt levels.

@mmvravindra Thanks for share your insights regarding differences in Depreciation and Tax for Heritage and Hatsun.

I remember that in one concall management highlighted that assets in there factories are around 15 years old and will need to be renovated. That may be the reason of less depreciation compared to Hatsun. But this requires further investigation.

For Tax differences too, I have no clue.

Can any member help to understand the reasons of differences in Depreciation and Tax for Heritage and Hatsun?

Unable to understand why there are so much pledge transactions.


||DEVIGA SURESH|Promoter|7127938 (4.41)|Equity Shares|122000|61610000.00|Pledge|7127938 (4.41)|30/03/2020

30/03/2020 Pledge Released 30/03/2020
R G CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 2900000 1464500000.00
30/03/2020 Pledge Released 30/03/2020
R G CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 602400 304212000.00
30/03/2020 Pledge Released 30/03/2020
R G CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 5640000 2848200000.00
30/03/2020 Creation Of Pledge 30/03/2020
C SATHYAN Promoter & Director 15196774 (9.40) Equity Shares 137500 56677500.00
23/03/2020 Creation Of Pledge 24/03/2020
R G CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 40000 22994000.00
17/12/2019 Creation Of Pledge 19/12/2019
C SATHYAN Promoter & Director 15196774 (9.40) Equity Shares 25000 13773750.00
13/12/2019 Creation Of Pledge 17/12/2019
R G CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 7400 4205790.00
10/12/2019 Creation Of Pledge 10/12/2019
R.G.CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 640000 365504000.00
07/12/2019 Pledge Released 09/12/2019
C SATHYAN Promoter & Director 15196774 (9.40) Equity Shares 351724 203296472.00
05/12/2019 Creation Of Pledge 07/12/2019
R G CHANDRAMOGAN Promoter & Director 91549563 (56.62) Equity Shares 2815000 1633122250.00
02/12/2019 Creation Of Pledge 03/12/2019
DEVIGA SURESH Promoter 7127938 (4.41) Equity Shares 122000 70778300.00
02/12/2019 Creation Of Pledge 03/12/2019
R G CHANDRAMOGAN Promoter & Director 91486578 (56.59) Equity Shares 62985 38042940.00
31/10/2019 Market Purchase 01/11/2019
R G CHANDRAMOGAN Promoter & Director 91486467 (56.59) Equity Shares 111 66044.00
30/10/2019 Market Purchase 31/10/2019
R G CHANDRAMOGAN Promoter & Director 91486462 (56.59) Equity Shares 5 2895.00
27/10/2019 Market Purchase 29/10/2019
R G CHANDRAMOGAN Promoter & Director 91482867 (56.58) Equity Shares 725000 421877500.00
25/10/2019 Creation Of Pledge 28/10/2019
R G CHANDRAMOGAN Promoter & Director 91482867 (56.58) Equity Shares 3595 2083303.00
25/10/2019 Market Purchase 28/10/2019
R.G.CHANDRAMOGAN (Revised) Promoter & Director 91482867 (56.58) Equity Shares 2179030 1307418000.00
04/09/2019 Pledge Released 07/09/2019
R.G.CHANDRAMOGAN Promoter & Director 91482867 (56.58) Equity Shares 2179030 1307418000.00
04/09/2019 Pledge Released 05/09/2019
R.G.CHANDRAMOGAN Promoter & Director 91482867 (0.57) Equity Shares 125000 73100000.00
23/10/2018 Creation Of Pledge 24/10/2018
R.G.CHANDRAMOGAN Promoter and Director 91482867 (56.58) Equity Shares 30000 18600000.00
10/10/2018 Creation Of Pledge 11/10/2018
R.G.Chandramogan Promoter & Director 90482867 (55.96) Equity Shares 1398852 874300000.00
16/08/2018 Creation Of Pledge 20/08/2018
R.G.Chandramogan Promoter & Director 90482867 (55.96) Equity Shares 1000000 721069980.00
17/08/2018 Market Purchase 20/08/2018
R.G.CHANDRAMOGAN Director 84720470 (55.68) Equity Shares 5762397 2558504268.00
12/07/2018 Allotment 14/07/2018
C.SATHYAN Director 14199130 (9.33) Equity Shares 997644 442953936.00
12/07/2018 Allotment 14/07/2018


  • Regulation 7(2)- Disclosure to the Exchange by Listed company in terms of Regulation 7(2) (b) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
  • -(Promoter/KMP/Director /Immediate Relatives / Employee / etc )
    ** - (Share/Warrants /Convertible Debenture etc)

-market purchase / public rights/preferential offer / off market / inter-se transfer etc.

- Period of Allotment advice / acquisition of shares / sale of shares

~ - Number of Units = (Contracts * lot size)

Mr Chandra Mohan seems to be very generous in distributing dividends as he holds 74% of the share. He has depledged shares from Kotak and Bajaj Finance and pledged it with some Srinidhi Credit Pvt Ltd. Reasons quoted is Personal finance.

Borrowing from lesser know entity gives a sense of discomfort as to why Bajaj and Kotak are not lending…???HATSUN DIVIDEND.pdf (221.2 KB)

4F0B3D64_92D7_4673_AD00_3146F7300FE4_080321.pdf (237.6 KB)

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The pledged shares are only 5600000 i.e. 3.5%, imho it is insignificant as his holding 74% is worth appx.6000cr.
Dividend yield is around 0.80% i.e his 74% holding gets him 60cr.of dividend per annum & his interest liability is appx.30cr. only.


The ice cream industry in trouble due to lockdown.
They are facing Twin challenges
First the demand slowdown during the peak season and, second, the financial burden over the lockdown
Second As sales have come to a halt, stock inventories are piled up in cold storages. Having no sales, there is currently only financial outgo for the companies, which have obligations to pay wages, electricity bills, interest payments and other fixed expenses.


Hatsun today declared results for Q1.
Revenue down by 144 cr to 1279.3cr (-10% YoY)
Net profit jump to 56.1cr (+9.6%)

Icecream segment is one of the major component of profits especially for Q1 as it is Seasonally best quarter. It is one of the major hit segments in Q1 due to Lockdown and early mansoon. Then how come company profits increased ? Am I missing something

Further, there is a news that farmers are agitating on Hatsun pouring their milk on roads. There is no news coverage or exchange announcement . Any idea on present situation?

Why this company not conducting any conference calls or at least releasing Investor Presentations. As it is enjoying superior valuations compared to its peers I would at least expect yearly conference call if not quarterly.

Disclosure: No Investment

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Very good article in Forbes India magazine (issue has Zerodha founders on cover) on Mr Chandramogans journey documenting his humble beginnings from starting with Rs 13000 capital raised by father from selling ancestral property which was used to set up first ice cream factory of Arun Ice Creams. In the 80s, knowing they were unable to match with larger players like HUL, they targeted college mess canteens and ships and gained sizeable market share in that segment. Next they forayed into rural TN by adopting franchisee model where most of the capex such as freezers was incurred by franchisee.

Article also gives interesting insight into use of debt by Mr Chandramogan right from early days, in fact he even calls himself glorified employee of bank once having debt to equity of 5:1.

Those having Jio sim can read the Magazine free on Jio Mags


more pledging

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