HERITAGE FOODS (INDIA) Ltd - A Star in Making

Heritage Foods(India) Ltd - may be called as a unique listed company .This is because of the nature of its integrated operations in agri related sector. This company is promoted by Mr Chandra Babu Naidu - former chief minister of Andhra Pradesh.Company having four divisions- Dairy Business,Retail Business,Agri Business and Bakery Business.

DAIRY DIVISION

Heritages Dairy business having one of the largest network in India for collecting,processing  and supplying milk. It span Across Andhra Pradesh, Tamilnadu, Karnataka, Kerala and Maharastra and consists of a number of collection points 12 packing stations, 75 chilling centers/bulk coolers,4 ice plants ..etc.Company sells Milk and Milk Products including Ghee, Paneer, Ice Cream, Cooking butter, Lassi, Doodhpeda, Fresh Cream, Curd etc.It is very difficult for any company to set up such a large supply chain which is crucial for the success of any company in Dairy business.Company also exporting Heritage Pure Ghee and Heritage Butter in Bulk and Consumer Packs from two of its units located at Tirupati and Chittoor. Company also established about 1000 'Heritage Parlor's to sell its value added dairy products across south India.

RETAIL DIVISION

Under the retail division company is selling Groceries ,fresh fruits and vegetables. Under the brand "Farmers Pride”, company offers a full range of staples like rice, pulses, spices , dry fruits..etc Company operating retail stores in two formats - Flagship store (2500 Sqft) where it sells Fresh fruits and vegetables, grocery, processed food, cleaning aids, General merchandise, bakery, dairy, beverages, and frozen food and 'Daily'format stores(1000 sqft) where it sells foods and vegetable items.In total ,company owns about 80 retail stores.

AGRI BUSINESS DIVISION

Through Agri business division ,Company having strong presence in contract farming of vegetables and fruits. These items are selling through its own retail stores. Vegetables and seasonal fruits are produced through contract farmers and then it reaches at pack houses via collection centers strategically located in villages for washing, sorting, grading and packing and dispatch to the retail stores .This backward integration ensures the  freshness of vegetables and fruits sold through retail stores.Agri division activities are based at Chitoor (Andhra Pradesh), Kolar (Karnataka), Krishnagiri (Tamil Nadu) Medak and Nalgonda in Andhra Pradesh .Company having two pack houses one at Mattam and other at Mulugu. Heritage also having a Poly Green House facility for Production of Vegetable Seeds for supplying to farmers engaged in contract farming.

BAKERY DIVISION

Bakery Division  is relatively a new initiative of the company ,Currently this division operates at 14 company-owned stores in Andhra Paradesh and it is planning to expand it. This division also running Hyderabad’s first Premium Bistro as “ Heritage Bon Sante Bistro” in Jubilee Hills.

What is special with Heritage food ?

This company is growing as a one stop shop for daily needs through its various verticals. This integrated business model which includes farming,processing ,retailing ,baking and diary - Heritage is a company with no comparable listed players.It is very difficult to replicate a supply chain created by Heritage which connects the farmers from remote villages with the consumers of Metros.Only negative side of its operations is the poor performance of its Retail division which is eating a major portion of the profit generated by the dairy division .After the dismal performance of retail division last year ,now company took many cost cutting efforts and even closed down some shops which are unviable. As a result ,in the December quarter loss of this division has come down by 50%.For the nine month ended December ,Heritage posted a turnover of Rs.788 Cr and a net loss of Rs.46 lakhs.It is expected to back to black on a full year basis and post good performance going forward.Any chance of a turnaround in Retail division or a separation of this division from the main company will surely changes its fortune.Chances of such a move is very high in future. Stock price of Heritage foods moved up in recent times and it is trading around Rs.234/- .Any correction below Rs.200 should be consider as a buying opportunity with a four digit price target in five years.

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VESUVIUS INDIA

I have recommended a BUY on this company @ Rs.251/- on April 8 ,2010 .Currently it is quoting around Rs.371/- .Company is continuing its steady performance in its top line and bottom line and it is expected to show the same trend in the future.Recommending a HOLD at CMP

Old Report is re produced below
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VESUVIUS INDIA - A WORLD CLASS COMPANY

Vesuvius India is a part of U K based COOKSON group and one of the largest manufacturer of Refractories in India .In 2008 Cookson aquires foseco hence
two companies (Vesuvius India and Foseco India) are operating in India under the same parent. But the product line of these two companies are different and
are not competing each other. Vesuvius India makes high-end refractory products,flow control systems and services.These products are used by steel manufacturers using the continuous casting process for manufacturing steel.
Since most of the steel producers have switched to this technology company’s products are in good demand and the increase in steel production due to the revival in core sector will help the company a lot in future.Cement,glass,foundry and
petrochemical industries are also using company’s products. Company’s main plants are located in Kolkatta and visakapatanam. Strength of parent and its leadership position in refractory products with strong R&;D is expected to help the company
to add more products to its portfolio.Company has posted a turnover of Rs.364 crore and a net profit of 37 crore last year.company’s year ending is in December .Next financial year Vesuvius is expected to perform even better mainly because
of the improvement in steel production where its products are used.Vesuvius is an excellent MNC company available at a P/E of just 13 which is at the lower end for a
company like this.CMP is Rs.251/-

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NEULAND LABORATORIES LTD - REPEAT

Earlier this scrip was recommended as a BUY @ Rs.119 and also requested for book profit @ Rs.156/- .Currently it is quoting around Rs.127 /- .I feels it is the time to re-look at this stock for buying for decent return in medium to long term

Old Report HERE

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NILE LTD - RESULT UPDATE

I have covered NILE Ltd in one of my old posting when it was @ Rs.115/- .( Read it  HERE) .Currently NILE is quoting around Rs.165/- .Company declared its full year numbers on Saturday.Backed by the surging prices of lead and lead alloys which is two of its major products,.company posted robust numbers this time .For the full year ended March 31.2011,NILE posted a turnover of Rs.300 Cr v/s 145 Cr and a net profit of Rs.7.17 Cr v/s Rs.3.24 Cr .Full year EPS is Rs.24/- .Company also declared a dividend of 20%

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EASTER WISHES TO ALL

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SAH PETROLEUMS LTD -BUY

SAH Petroleums is relatively a new comer in the business of blending and marketing of automotive engine oils .Company already having presence in industrial lubricants,Transformer oil,White oil  and rubber process oils.
Company having two units ,one at Vasai and other at Daman.SAH marketing its products under the brand name 'IPOL'. Even if this industry is lead by multinational companies like Castrol and other PSU oil  companies  ,Sah could survive and grow steadily in past few years.Considering the potential of the industry and the prospects of the company ,in 2008 Sah Petro was taken over by NAVIS CAPITAL ,a private equity player based in Malaysia. Navis is one of the largest Private equity firm in South East Asia and it is currently  holding about 62% stake in this company .Out of the total equity of Rs.22 Cr only  10  % is held by general public.Now company is establishing a pan India marketing network to expend its operation where there was no presence earlier. Last year company posted a turnover of Rs.288 Cr and a net loss of Rs.6 Cr.With the effective initiatives including cost reduction  company back to black in the lasted nine months.For the nine month period ended December 2010 ,SAH posted a top line of Rs.250 Cr and a bottom line of Rs.11.5 Cr  and an EPS of Rs.2.9 on FV Rs.5 shares.Even if the cost of raw material is on a rise ,due to good demand company can pass on a portion of it to the end users. The most attractive part of this company is that it is owned by a P/E player with good track record.There is every possibility that  in future this company  may sold to some large national /international players from oil/lubricants industry at a premium to the current market price.Even we exclude this possibility , turnaround performance of SAH deserves a close look at CMP of Rs.27/-

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EPC INDUSTRIE - EVENT UPDATE

EPC Industrie announced the date for the declaration of  its fourth quarter result as 29th April 2011.Most probably ,this will the last working result under the old management .Open offer by M &M will be completed shortly and a change in management control is expected on completion of the open offer formalities. Fruits of fresh fund infusion ( at least the effect of debt repayment) is expected to positively affect its bottom line from the June quarter result onwards .Keep Holding.

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