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Umang Dairies Ltd.

BSE: 500231 Sector: Agri and agri inputs
BSE 00:00 | 23 Jun 76.90 -1.15






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OPEN 78.05
52-Week high 93.80
52-Week low 37.90
P/E 41.34
Mkt Cap.(Rs cr) 169
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 78.05
CLOSE 78.05
52-Week high 93.80
52-Week low 37.90
P/E 41.34
Mkt Cap.(Rs cr) 169
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Umang Dairies Ltd. (UMANGDAIRY) - Director Report

Company director report

To the Members

The Directors have pleasure in presenting the 27th Annual Report and Audited FinancialStatements of Umang Dairies Limited (UDL) for the year ended 31st March 2020.


(Rs. in Crores)

2019-20 2018-19
Revenue from Operations 245.76 225.77
Profit before Finance Cost and Depreciation (PBIDT) 12.02 14.16
Profit before Tax (PBT) 4.07 6.54
Profit after Tax (PAT) 2.83 5.05
Surplus brought forward 36.73 32.84
Total amount available for appropriation 39.56 37.89
General Reserve 0.50 0.50
Dividend (Incl. Tax) 1.33 0.66
Surplus carried forward 37.73 36.73


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


The Revenue from Operations was Rs.245.76 crores during the year as compared to Rs225.77 crores in the previous year. Milk price remained at an unprecedented high levelthrough out the year at an average of Rs. 44.90 per Kg. This spurt in prices was due todelayed monsoon and extended summer. High milk prices and short supply of milk led tohigher SMP price in H2 of 2019. Ghee prices did not increase in-line with milk prices.

The Company has been reducing its dependence on bulk sales of Ghee and in line withthis it reduced bulk Ghee sales by 70% and focussed on converting bulk sales into retailpacks to gain better margins. This has led to volume growth in retail and institutionalsales.

UDL has been able to retain its volumes in the consumer segment with its brands likeJK Dairy White Magik JK Dairy Top Umang Ghee and JK Dairy Milk Star. It has been able togrow its institutional business of products like Ghee and Dairy Whiteners to OrganizedRetail chains like Walmart Grofers Spar Spencer's Aditya Birla More Amazon Relianceetc. and to large corporates like Coca Cola and GSK Consumer Healthcare as an input totheir final products.

The Company launched 3 new products in the year based on consumer research and demandpattern. All the 3 products have been well accepted by the market. UDL is continuing toinvest in retail distribution expansion and up-gradation of distribution infrastructure.This will help in driving sales and distribution of consumer products.

UDL opened Nepal market with Dairy Creamers in the month of June 2019. Though thecompetition is tough we were able to create a space in the market.

In the coming year UDL will continue its efforts to build consumer and institutionalmodern trade and e-commerce segments for its products. The Company has renewed its effortson new product development and is actively engaging with consumers to develop productsbased on their feedback.

Despite National lockdown due to COVID-19 the Company continued its operation being anessential supply item after ensuring all precaution for safety health and hygiene of itsemployees.

Milk Procurement / Raw Material Security

Liquid milk prices remained very high during the year. This has led to good realisationof prices at farmer level. While commodity prices of SMP and Ghee also increased Gheeprices did not move in-line with milk prices leading to pressure in margins.

With farmers realising higher value for Milk in 2019-20 it is expected that they wouldbe able to invest in new cattle and better feed for their Cattle. In 2020-21 theproduction of milk is expected to be high compared to last year which can result in lowermilk prices. The selling prices of Ghee/SMP are expected to be lower this year.

Most dairies are procuring the milk through Village Level Collection (VLC) which isleading to high competition at the village level. Share of milk procured through VLC hasincreased for UDL during the year which has also led to better quality milk beingprocured to manufacture its products.

Liquid Milk Plant

UDL operates and manages a facility owned by another Company to process and pack LiquidMilk in poly pouches under a longterm agreement. Capacity utilization for the year was at96%. The capacity utilization for the Curd & Chhach plant was 73% which is highesttill date.

Growth and Modernization

Company wishes to become a significant player in Dairy and food space. New productslike Consumer Butter TOP Premium High yield SMP Milk Star and Top Dairy Creamer wereintroduced in the market. UDL continues to modernize its plant for better efficiency. UDLinstalled high speed powder packing machine with secondary packing automation in 2019-20which will result in better productivity reduction in packing material loss and betterpacking quality.

Food Safety

Food Safety and Quality remained a Focus Area for UDL during FY 2019 -20.

We complied the requirements of Food Safety Management System as per FSSC 22000 Version4.1 and Quality Management System as per ISO: 9001 - 2015. We also developed a dedicatedTeam of 20 Certified Internal Auditors to support the compliances across functions inPlant Site as well as front end. This enabled us to maintain Food Safety & Qualitystandards at par with leading Food & Dairy brands.

Good Manufacturing Practices (GMP) and structured trainings imparted by internal andexternal faculties played a pivotal role in this journey towards excellence. Prevention ofFood Fraud Food Threats and Integrated Pest Management System remained most importantaspects of these training sessions.

Due to knowledge gained through training and concerted effort by the team UDL hassuccessfully cleared GMP & Food Safety Audits by renowned Indian and Internationalcompanies like Nestle Amazon & Mother Dairy. We sustained the Number 1 Position inPlant Grading Index (PGI) Audit by Mother Dairy for 6th year in a row for 3P operations.This covers Infrastructure and systems in dairy processing plant for food safetycompliance.



After farm crops milk is the 2nd biggest source of earning for rural farmers. In 2019India's milk production reached 195 Million tons. Being the leading producer and consumerof dairy products India has attracted attention of many international players. Lactalisacquired three dairy plants at strategic locations in India Fonterra has recently tied upwith Big Bazaar to launch Dairy products in their stores and in key markets in India.Other players like BEL group leading Cheese marketer from France have started operationsin India.

The end of FY 2019-20 brought lots of challenges due to the COVID-19 spread in India.The preventive steps to contain the spread of Virus has led to significant drop in themilk prices. The out-of-home consumption which is 15% of total dairy consumption hascome to a complete halt during this period. The Institution powder (Includes SMP forIce-cream) sale and Bulk ghee business has also suffered a major blow in sales andconsumption.

The value-added segment has seen a lot of innovation. New variety of Cheese andflavoured Ghee and Ghee spreads and Greek Yogurt have been launched in the market and areslowly gaining traction with consumers.



i. The growth of alternate channel like E-commerce & App based Hyperlocal deliveryplatforms give an opportunity for companies to try new Innovations.

ii. Focus on Retail servicing would be helpful to get better pricing for Ghee.

iii. Innovation in healthy and immunity boosting products in dairy have an opportunityin the coming future.

iv. The milk prices are expected to be range bound and can pose an opportunity forDairy companies.


i. The slowdown in out-of-home consumption and Food Services channel would bringchallenges for dairy companies and competition in consumer segment would intensify.

ii. Adulterated Ghee continues to plague the market which is a serious health risk forthe consumers.


The Indian economy has slowed down in last two years and FY20-21 is expected to grow atlow single digits. The Dairy industry which has been growing at CAGR of 15% would alsoface challenges in the growth outlook.

Rapid digitization due to lockdown has brought sudden focus on online purchase and homedelivery of packed/processed consumer products. The demand of healthy nutritiousimmunity boosting and convenient products would see a rise due to restriction on out ofhome consumption.

Competition to retain and gain the consumer mind space would intensify and it willbring more focus on product quality and continuous product enhancement and development.

UDL is also exploring the new distribution channels and opportunities in productsegments to gain better connect with the market.


The COVID-19 situation would be tough for many companies. Overall consumption anddemand could be impacted in consumer products segment.

The lower milk prices might shift the farmers' investment in cattle and it may lead tohigher milk prices again in next FY.


Employees are considered as key stakeholders in the progress of organisation andvarious initiatives are being taken to upgrade their skills through internal and externaltraining. Job rotation opportunities are encouraging people to take on new roles andmaximize their learning and work experience. “Reward and Recognition” schemeshave been 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 workmenUDL has established cross Functional Team projects. UDL provides various Communicationplatforms with Senior Leadership to ensure open and transparent feedback from employees.

Industrial Relations remained cordial throughout the year under review.


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.


An extract of the Annual Return as on financial year 31st March 2020 in the prescribedform MGT-9 is attached as Annexure-1 to this Report and forms part of it.


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.


During the financial year ended 31st March 2020 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 any contract or arrangement or transaction withthe Related Parties which could be considered material in accordance with the Policy ofthe Company on materiality of Related Party Transactions. In view of the above disclosurein FORM AOC-2 is not applicable.

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


Smt. Sharda Devi Singhania retires by rotation and being eligible offers herself forre-appointment at the ensuing Annual General Meeting (AGM).

Shri Manish Bandlish was appointed as “Chief Executive Officer &Director” of the Company w.e.f. 24th July 2019 till 23rd July 2022 pursuant to theSpecial Resolution passed by the Members at the AGM held on 19th September 2019.

Shri A.S. Mehta was appointed as Non-Executive-Independent Director of the Companyw.e.f. 24.07.2019 for a period of five consecutive years and the requisite resolution inthis regard was passed by the Shareholders at the Annual General Meeting held on19.09.2019.

Shri Puneet Garg is the Chief Financial Officer of the Company w.e.f. 3rd February2020 post the resignation of Shri L.R. Nayak.

Shri R.C. Periwal was reappointed as Independent Director of the Company for a periodof three years by the Members at the AGM held on 19th September 2019.

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 and have also complied with Rule 6(1) and 6(2) of the Companies(Appointment and Qualification of Directors) Rules 2014.


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. 18.71 Lakhs under various CSR activities higher than the statutoryrequirement of Rs. 10.41 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 and forms part of it.


(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 in the year 2017 till the conclusion of the 29th AGM of the company to be held inyear 2022. The observation of the Auditors in their report on Accounts and the FinancialStatements read with the relevant notes are self-explanatory. The Audit Report does notcontain any qualification reservation adverse remark or disclaimer.

(b) Secretarial Auditor and Secretarial Audit Report

The Board of Directors appointed Shri Namo Narain Agarwal Company Secretary inPractice as Secretarial Auditor to carry out Secretarial Audit of the Company for thefinancial year 2019-2020. The Report given by him for the said financial year in theprescribed format pursuant to the provisions of Section 204 of the Act and Regulation 24Aof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (“ListingRegulations”) is annexed to this Report as Annexure-3 and forms part of it.The Secretarial Audit Report does not contain any qualification reservation adverseremark or disclaimer.

(c) cost Auditor and cost Audit Report

In accordance with the provisions of Section 148(1) of the Act the Company hasmaintained cost accounts and records. The Cost Audit for the financial year ended 31stMarch 2019 was conducted by M/s Sanjay Kumar Garg & Associates Cost AccountantsDelhi and as required Cost Audit Report was duly filed with the Ministry of CorporateAffairs Government of India. The Audit of the Cost Records for the financial year ended31st March 2020 is being conducted by the said firm and the Report will also be filedwith the Ministry of Corporate Affairs Government of India.


During the year under review there were no significant and material orders passed bythe Regulators or Courts or Tribunals which would impact the going concern status of theCompany and its future operations.


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


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 Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed to this Report as Annexure-5 and forms part ofit. Further Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rulesform part of this Report However in terms of provisions of Section 136 of the Act theAnnual Report for the financial year 2019-20 is being sent to all the members of theCompany and others entitled thereto excluding the said particulars of employees. Anymember interested in obtaining such particulars may write to the Company Secretary. Thesaid information is available for inspection at the Registered Office of the Companyduring working hours.


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 AnalysisCorporate Governance Report and Auditors Certificate regarding compliance of conditions ofCorporate 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 five 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) Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.


The Company has not taken any deposits from the public.


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


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 standards havebeen followed along with proper explanation relating to material departures; if any;

b) The accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of 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 maintenance of adequate accountingrecords in accordance with the provisions of the said Act for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities.

d) The annual accounts have been prepared on a going concern basis.

e) The proper internal financial controls to be followed by the Company have been laiddown and that such internal financial controls are adequate and were operatingeffectively; and

f) The proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


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 Manish Bandlish R. C. periwal
Date: 13th May 2020 (Chief Executive Officer & Directorr) (Director)