You are here » Home » Companies » Company Overview » Umang Dairies Ltd

Umang Dairies Ltd.

BSE: 500231 Sector: Agri and agri inputs
BSE 00:00 | 05 Jun 40.45 2.45






NSE 00:00 | 05 Jun 40.25 2.25






OPEN 39.05
52-Week high 54.05
52-Week low 27.40
P/E 31.36
Mkt Cap.(Rs cr) 89
Buy Price 37.00
Buy Qty 120.00
Sell Price 41.35
Sell Qty 19.00
OPEN 39.05
CLOSE 38.00
52-Week high 54.05
52-Week low 27.40
P/E 31.36
Mkt Cap.(Rs cr) 89
Buy Price 37.00
Buy Qty 120.00
Sell Price 41.35
Sell Qty 19.00

Umang Dairies Ltd. (UMANGDAIRY) - Director Report

Company director report

to the members

The Directors have pleasure in presenting the 26th Annual Report and Audited FinancialStatements of Umang Dairies Limited (UDL) for the year ended 31st March 2019.

(र in Lakhs)
2018-19 2017-18
Revenue from Operations 22577 24576
Profit before Finance Cost and Depreciation (PBIDT) 1416 1343
Profit before Tax (PBT) 654 610
Profit after Tax (PAT) 505 527
Surplus brought forward 3284 2958
Total amount available for appropriation 3789 3485
Capital Redemption Reserve - 151
General Reserve 50 50
Dividend (Incl. Tax) 66 -
Surplus carried forward 3673 3284


The Directors are pleased to recommend a dividend of 10% on equity shares.


The Revenue from Operations was Rs 22577 Lakhs during the year as compared to Rs24576 Lakhs in the previous year. As anticipated last year the price of Milk SMP andGhee remained soft during the year. There was also a slump in International prices of SMP.Due to these factors your Company took strategic decision to reduce bulk sales (SMP/Ghee)by 44%. UDL is also focusing on converting bulk sales into retail packs to gain bettermargins. This has led to volume growth in retail and Institutional sales. The sales ofconsumer pack Ghee and Private label ghee increased by 52% for the year over previousyear. UDL is continuing to invest behind retail distribution expansion and up-gradation ofdistribution infrastructure. This will help in driving sales and distribution for theconsumer products.

UDL focused on decreasing interest costs through reduction of working capital which hasresulted in better cash flow

The capacity utilization for the plant stood at 47% for the year.

2018-19 was a challenging year as several small players entered the industry due tosurplus availability and low price of SMP. This led to these smaller players launching lowprice milk powders in the market. Despite these challenges UDL has been able to retainits volumes in the consumer segment with its brands like JK Dairy White Magik JK DairyTop & Umang Ghee. UDL has been able to grow its institutional business of its dairyproducts like Ghee and Dairy Whiteners to Organised Retail chains like Walmart GrofersSpar Spencers and to large corporates like Coca Cola and GSK Consumer Healthcare as aninput to their final products.

In the coming year UDL will continue its efforts to build both its consumer andinstitutional segments for its products including SMP and Ghee. The company has renewedits efforts on New Product Development. UDL is actively engaging with consumers to developNew Products based on their feedback.

Milk Procurement / Raw Material Security

Milk prices remained soft during the year. Many companies had excess inventory of Fat& SMP on account of which the commodity prices (SMP & Ghee) remained underpressure. The realization of Milk prices for the farmers also declined significantlyleaving less money in their hands to invest in new cattle. In 2019-20 the production ofmilk is expected to be low which can result in significant increase in Milk prices over2018-19. The selling prices of Ghee/SMP also expected to improve significantly for nextyear. Most dairies are procuring the milk through VLC pattern which is also leading tohigh competition at the village level. Share of milk procured through VLC has increasedfor UDL during the year which has also led to better quality milk being procured tomanufacture the products.

Liquid Milk Plant

UDL operates and manages a facility owned by another Company to process and pack LiquidMilk in poly pouches under a long term agreement. Capacity utilization for the year wasat 96% which is highest till date. The capacity utilisation for the Curd Chhach plant wasbetter than 2017-18.

Expansion And Modernization Plan

UDL continues to modernise its plant for better efficiency. The company hascommissioned CBMM (Continuous Butter Making Machine) leading to better productivity. UDLis working on continuous improvement in productivity initiatives including reduction instack losses. UDL is installing High Speed Powder Packing machine in 2019-20 that willresult in better productivity reduction in packing material loss and better packingquality.

Food Safety

Food Safety and Quality remained a Focus Area for UDL during FY 2018 -19.

We upgraded the Food Safety Management System as per requirement of FSSC 22000 Version4.1 and Quality Management System as per ISO : 9001 – 2015. This enabled us tomaintain the same standards that leading food & dairy brands follow as far as FoodSafety and Quality Management systems are concerned.

Good Manufacturing Practices (GMP) played a pivotal role for this transition phase.In– House Trainings were conducted by Renowned external experts. Staff Members fromdifferent functions were trained in FOSTAC & GMP respectively.

As result of the above efforts UDL has successfully cleared GMP & Food SafetyAudits by renowned Indian and International companies. We sustained Number 1 Position inPlant Grading Index (PGI) Audit by Mother Dairy for 5th year in a row for 3P operations.This covers Infrastructure and Systems in Dairy Processing Plant for Food SafetyCompliance.

Industry Scenario Indian Dairy Industry

India has been the leading producer and consumer of dairy products worldwide since 1998with a sustained growth in milk and milk products. Dairy activities form an essential partof the rural Indian economy serving as an important source of employment and income.However the milk production per animal is significantly low as compared to the othermajor dairy producers.

Moreover most of the dairy produce in India is consumed domestically with themajority of it being sold as liquid milk. On account of this the Indian dairy industryholds tremendous potential for value-addition and overall development. According to thelatest report by IMARC Group titled "dairy industry in india 2019 edition: marketsize growth prices segments cooperatives private dairies procurement anddistribution" the dairy market in India reached a value of INR 916800 Croresin 2018.

There are many Opportunities and Challenges in The Indian Dairy Industry. Dairyproducts are a major source of cheap and nutritious food to millions of people in Indiaand the only acceptable source of animal protein for a large vegetarian segment of theIndian population. Dairying has been considered as one of the activities aimed atalleviating the poverty and unemployment especially in the rural areas in the rain-fedand drought-prone regions. In India about three-fourth of the population live in ruralareas and about 1/3 of them are poor.

Utilizing the benefits of an integrated sales and distribution system and employingdiversified sourcing is the way forward in the sector. The value added dairy industrysegment is expected to attract investments and lot of players are entering into the dairyindustry. Players are emphasizing on offering the consumer better quality differentiatedproducts. Consumers are looking for more and more healthy and tasty dairy options. Thistrend is expected to continue in the coming years. As per research agencies dairy sectorto grow at 15% CAGR till 2020. Interestingly the per capita milk consumption in India isincreasing at 3% CAGR as compared to 1% globally.

Opportunities & Threats Opportunities

i. There is significant growth happening in Value added products in new channelssuch as Food Service & HORECA. ii. Dairy companies have introduced Innovative longershelf life products like UHT Milk Cream Paneer etc. iii. Focus on Retail and FoodService distribution of SMP & Ghee for better pricing iv. Innovation on healthyproducts at an affordable prices v. Indian consumer continues to upgrade to better qualityand packaged products which is leading to more than 15% growth in the Dairy industry.


i Milk prices are expected to increase during the year 2019-20 due to lower supplyof Milk resulting into higher cost. ii. Only 20% of the Milk produced goes to theorganized market resulting to huge quality risk for the end consumer. iii. The trend ofadulterated Ghee continues to plague the market which is a serious health risk for theconsumers.

Growth Outlook

The Indian economy is the fastest growing major economy and is projected to grow fasterin the coming years. However the economy appears to have slowed down slightly in 2018-19.The proximate factors responsible for this slowdown include declining growth of privateconsumption tepid increase in fixed investment and muted exports. There is slowdown ofgrowth in agriculture and sustained growth in industry as well as some challenges.

Headline inflation - measured using the consumer and wholesale price indices - declinedin 2018-19 though inflationhas up slightly in recent months.

Rapid urbanization has led to a major increase in the demand for packaged/processedfoods favorably impacting the dairy industry in the country. In the era of digitizationand increased access to actionable information the Indian populace is becoming health andproduct quality conscious which has led to the improved variety of food productsavailable in the country. The increase in working population is leading to increaseddemand for convenient healthy and tasty products by the consumers. The key to success inthe dairy industry in India has been largely based on the capacity of a company to gain ashare of a consumers' monthly basket. Hence industry trend has been to focus on providinga gamut of products across price ranges. While pasteurized milk is a volume driven marketvalue-added products such as Paneer Cheese Probiotics and Flavored milk-based drinksalong with flavored yogurts have picked up sales.

Value-added products require high-end infrastructure for manufacture storage andlogistics and are being eyed by several investors. In the quest for gaining visibilitystakeholders in the dairy industry have been investing in packaging to create brandloyalty and awareness. Innovative technologies of packaging are coming into the picturefor milk and especially value-added products because of an overall tropical condition ofthe subcontinent.

UDL is actively exploring entering some of these segments to gain better connect withthe consumers.

The expected growth rate for the dairy sector between the periods of 2018 to 2020 is tobe 15% will result into many players entering into the India Market.

Risks & Concerns

With the decline in milk prices last year farmers could not get the remunerativeprices leading to reduction in fresh investment for cattle. This will result into lowersupply of Milk for 2019-20 and may result into higher prices. The increasing fuel pricesmay lead to inflationary trend in 2019-20.

Human resourCe management/ industrial relations

Employees are considered as key stakeholders in the progress of organisation andvarious initiatives are being taken to upgrade their skills through internal and externaltrainings. Job rotation opportunities are encouraging people to take on new roles andmaximize their learning and work experience. "Reward and Recognition" schemesare being introduced to develop a competitive and performance oriented work culture.Automation of HR functions helps in building speed accuracy and improve employeeexperience. In order to encourage leadership and problem solving qualities among workmenCompany has established cross Functional Team projects. Company provides variousCommunication platforms with Senior Leadership to ensure open and transparent feedbackfrom employees.

Industrial Relations remained cordial throughout the year under review.

Internal Control System

Internal audit by corporate audit team consisting of Chartered Accountants as well asan external firm of Chartered Accountants is in place and carries out their job atpredetermined frequency. Their task is to audit internal control systems financialtransactions and statutory compliances. Findings/ audit reports along with the actiontaken reports are reviewed by the Audit Committee. The Audit Committee also reviews theeffectiveness of Company's internal controls and regularly monitors implementation ofaudit recommendations.

The Company has in place adequate internal controls commensurate with the size andnature of its operations.

Extract Of Annual Return

An extract of the Annual Return as on 31st March 2019 in the prescribed form MGT -9 isattached as Annexure-1 to this Report and forms part of it.

Particulars Of Loans Guarantees Or Investments

The particulars of loans guarantees or securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the financialstatements.

Related Party Transactions

During the financial year ended 31st March 2019 all the contracts or arrangements ortransactions entered into by the Company with the Related Parties were in the ordinarycourse of business and on arm's length basis and were in compliance with the applicableprovisions of the Companies Act 2013 and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. Further the Company has not entered into any contract orarrangement or transaction with the Related Parties which could be considered material inaccordance with the Policy of the Company on materiality of Related Party Transactions. Inview of the above disclosure in FORM AOC-2 is not applicable.

The Related Party Transaction Policy approved by the Board is available on the websiteof the Company.

Directors And Key Managerial Personnel

Shri D.B. Doda retires by rotation and being eligible offers himself forre-appointment at the ensuing AGM.

All the Independent Directors of the Company have given requisite declarations thatthey meet the criteria of independence as provided in Section 149(6) of the Companies Act2013 and also Regulation 16(1)(b) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and that they are not aware of any circumstances orsituation which exist or may be reasonably anticipated that could impair or impact theirability to discharge their duties with an objective independent judgment and without anyexternal influence.

Shri Manish Bandlish appointed as a Chief Executive Officer of the company w.e.f. 11thJune 2018. Shri C. Venugopal ceased to be Chief Executive Officer of the Company w.e.f.31st August 2018.

Shri L. R. Nayak is the Chief Financial Officer of the Company w.e.f. 1st October2018 post the resignation of Shri Diwan Singh.

Corporate Social Responsibility

The Company has framed Corporate Social Responsibility (CSR) Policy in accordance withthe provisions of the Companies Act 2013 and rules made thereunder. During the yearCompany has spent Rs. 19.07 Lakhs under various CSR activities higher than the statutoryrequirement of Rs. 13.90 Lakhs.

A detailed report on Company's CSR activities along with the annual report on the CSRactivities undertaken by the Company during the financial year under review in theprescribed format is annexed to this Report as Annexure-2.


(a) statutory auditors and their report

M/s Singhi & Co. Chartered Accountants have been appointed as Auditors of theCompany to hold the office from the conclusion of the 24th Annual General Meeting (AGM)held on 27th September 2017 until the conclusion of the 29th AGM to be held in year 2022subject to ratification of the appointment by the members at the respective AGMs. Howeverthe provision relating to ratification of such appointment by Members at every AGM standsdeleted w.e.f. 7th May 2018 by the Companies (Amendment) Act 2018 and accordingly the saidratification is henceforth not required. The observation of the

Auditors in their report on Accounts and the Financial Statements read with therelevant notes are self-explanatory.

(b) secretarial auditor and secretarial audit report

Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2018-19. TheReport given by him for the said financial year in the Annexure-3. The Secretarial AuditReport does not contain any qualification reservation or adverse remark.

(C) Cost Auditor And Cost Audit Report

The Cost Audit for the financial year ended 31st March 2018 was conducted byAccountants Delhi and as required Cost Audit Report was duly filed with the Ministry ofCorporate Affairs Government of India. The Cost audit for thefinancial year ended 31stMarch 2019 is being conducted by the said firm and the report will be submitted to theMinistry of Corporate Affairs Government of India.

Significant And Material Orders Passed By The Regulators Or Courts Or Tribunals

During the financial year under review there were no significant and material orderspassed by the Regulators or Courts or Tribunals which would impact the going concernstatus of the Company and its future operations.

Conservation of energy etc.

The details as required under Section 134(3)(m) read with the Companies (Accounts)Rules 2014 is annexed to this Report as Annexure-4 and forms part of it.

Particulars Of Remuneration

Disclosure of the ratio of the remuneration of each director to the median employee'sremuneration and other requisite details pursuant to Section 197 (12) of the CompaniesAct 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to this Report as Annexure-5. FurtherParticulars of Employees pursuant to Rule 5(2) & (3) of the above Rules form part ofthis Report However in terms of provisions of Section 136 of the said Act the Reportand Accounts are being sent to all the members of the Company and others entitled theretoexcluding the said particulars of employees. Any member interested in obtaining suchparticulars may write to the Company Secretary. The said information is available forinspection at the Registered Office of the Company during working hours.

Corporate Governance

Corporate Governance - including details pertaining to Board Meetings Nomination andRemuneration Policy Performance Evaluation Risk Management Audit Committee and VigilMechanism:

Your Company reaffirms its commitment to the highest standards of corporate governancepractices. Pursuant to Regulation 34 read with Schedule V of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a Management

Discussion and Analysis Corporate Governance Report and Auditors Certificate regardingcompliance of conditions of Corporate Governance are made part of this Annual Report.

The Corporate Governance Report which forms part of this Annual Report also covers thefollowing:

a) Particulars of the Four Board Meetings held during the financial year under review.

b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofDirectors.

c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.

d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.

e) Details regarding Risk Management.

f) Details relating to the constitution of Internal Complaints Committee under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.


The Company has not taken any deposits from the public.

Compliance With Secretarial Standards

The applicable Secretarial Standards issued under Section 118 of the Companies Act 2013have been complied with.

Directors' Responsibility Statement

As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:-a) In the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures; if any;b) The accounting policies have been selected and applied consistently and judgments andestimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit of theCompany for that period; c) proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the said Act forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; d) The annual accounts have been prepared on a going concern basis; e) Theinternal financial controls to be followed by the Company have been laid down and thatsuch internal financial controls are adequate and were operating effectively; and f) Theproper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Cautionary Statement

Management Discussion and Analysis Report contains forward looking statements which maybe identified by the use of words in that direction or connoting the same. All statementsthat address expectations or projections about the future including but not limited tostatements about the Company's strategy for growth product development market positionexpenditures and financial results are forward looking statements. These are based oncertain assumptions and expectations of future events. The Company cannot guarantee thatthese assumptions and expectations are accurate or will be realized. The Company's actualresults performance or achievement could thus differ materially from those projected inany such forward looking statements. The Company assumes no responsibility to publiclyamend modify or revise such forward looking statements on the basis of any subsequentdevelopment information or events.


The Directors wish to thank its Customers Shareholders Banks Dealers Suppliers andGovernment Authorities for their continued support.

The Board also places on record its sincere appreciation of the hard work put in bythe employees at all levels during the period under report.

On behalf of the board of directors
Place : new delhi R.c. Periwal
Date : 13thm ay 2019 ( director)