Hindustan Foods Ltd- Analysis

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Incorporated in 1984, Hindustan Foods Ltd(HFL) started manufacturing in the year 1988 with the launch of Joint Venture between the Dempo Group and Glaxo (now GlaxoSmithKline) India with the objective of manufacturing nutritional food product(Farex).  But as the sales of the brand Farex declined, the company went into losses and continued the losses for many years.  Between 1988 and 2013, Hindustan Foods Limited was dependent on one factory and a single baby food brand(Farex) with very limited product skus. The brand Farex changed hands five times during this period.

In order to leverage the manufacturing capacity, in 2013, Dempo Foods Pvt. Ltd., the Holding Company of Hindustan Foods Ltd got acquired by Vanity Case India Pvt. Ltd. and the later bought 74.45% of the paid-up share capital. We can say that the history of the company should start be from 2013 as there was complete change in management and business model.

In order to turnaround the loss making operations of HFL, the new management first increased the capacity utilization of the plant by diversifying the customer base, adding new products from existing clients. And later they started acquiring & adding more capacities to fuel the growth as well as maintain the first movers advantage in India. 

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Company is now the largest organized Player in the FMCG contract manufacturing space.

 

Dempo group: Link

Vanity Case India Pvt Ltd: It is important to understand the background of The Vanity Case group who now operate ‘Hindustan Foods Ltd’. I have provided below the timeline for the group. It basically implies that the group has a long history of manufacturing in FMCG space.

The management had set a goal to reach ₹1000 cr of sales by FY20. Although they could achieve only ₹771cr in FY20, the MD was honest to admit it and cited the delay in ramping of Hyderabad facility, acquisition of Vasal shoe going wrong and the 10 days lost to lockdown leading to them not achieving 1000cr sales. But still is quite remarkable achievement from the revenue of 37cr in 2017. This growth has been achieved in such a short period mainly by the acquisition of existing capacities under OEM Model.

The company has 9 manufacturing plants across India as of March 31st 2020.



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Shekhar Yadav

Shekhar Yadav

It was only during the third semester in Engineering that Shekhar overheard a Gujarati guy in his class discussing stocks. After a few discussions with him, he realized that this was what he wanted to do in his life.
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