Heritage Foods Plans Buy Back

Heritage Foods (India), the Hyderabad-based dairy products company owned by the Andhra chief minister's family, has announced a share buy-back to provide an exit route to the small shareholders.

The board of directors of the company at its board meeting today decided for buying back company shares from the open market at a price not more than Rs 30 a share. The company's shares are presently quoted at Rs 20 on the stock exchanges.

Heritage Foods proposes to spend a maximum of Rs 3 crore on buy-back over the next one year. Since the amount being spent is less than 10 per cent of the paid-up capital and free reserves of the company, the proposal does not require shareholders' approval.

"We have taken the buy-back decision to provide an exit route to the small shareholders at a better rate," V Nagaraja Naidu, the wholetime director of the company said.

"Out of the total number of 1.08 crore equity shares (paid-up capital Rs 10.80 crore), 45 lakh shares are still in the physical form. Of these, 13.29 lakh shares are held by 9,200 small shareholders with a holding of less than 500 shares each. Since it is difficult for them to sell their shares in the current rolling settlement mechanism, we are coming out with the buy-back offer," Naidu explained.

"Now, we are almost a debt-free company. So we also thought of reducing the paid-up capital through the buy-back to improve the financial performance indicators," he added. Heritage Foods posted a net profit of Rs 4.61 crore on sales of Rs 79 crore for the first-half of the current fiscal.

Heritage Foods proposes to enter into agro food products and milk-based nutritional products business during the next fiscal. "We want to build Heritage brand in the growing food retailing sector by making the entire kitchen as an ultimate target. To start with, we will be introducing non-perishable agro-processed food products," Nagaraja Naidu said.

The company, at present, is marketing about 3.6 lakh litre of milk per day in the cities of Hyderabad, Bangalore, Chennai and Visakhapatnam.

The company has about 12 milk procurement & processing centres and five packing stations apart from its main dairy plant at Chandragiri, near Tirupati.

The company hopes to record a turnover of Rs 160 crore for the current fiscal. It posted a net profit of Rs 8.10 crore on a turnover of Rs 142 crore during last fiscal.