Agro Tech Foods have two business segments, which follow a profit center approach.

In the branded foods segment, company has branded oils and foods. The branded oils have two very successful brands namely Sundrop and Rath and Food segment has ACT II (the No 1 Popcorn brand in the world belonging to ConAgra) for popcorns.

Bulk and processed commodities segment includes oils and grains procured, processed and distributed by the commodity sourcing & exports and the seed buying operation.

Net sales of the company for quarter ended June 2007 increased by just 3% to Rs 252.9 crore compare to the corresponding quarter of the previous year. Sales from export has come down by 81% to Rs 0.07 crore. The company’s strategy of de-risking its business has resulted in low growth in sales. The turnover of the defocused sourcing and institutional business (excluding inter segment revenue) has declined by 15% while turnover of the branded business has shown growth of 23% for the June 2007 ended quarter.

Operating profit margin (OPM) has fallen by 20 basis points to 1.7%. This fall in OPM is due to increase in other expenditure and staff cost by 100 basis points to 8% and 40 basis points to 2%. The increase in other expenditure is due to significant increase in brand investment by the company. As per company, the recurring element in the increase in Staff Cost is lower than the overall increase reported in the quarter. However, raw material cost decreased by 120 basis points to 88%. This has resulted in fall in operating profit by 7% to Rs 4.20 crore.

Other income of the company saw a huge jump of 300% to Rs 0.40 crore compare to Rs 0.10 crore in the corresponding period of the last year. There has been no change in interest paid and depreciation of the company compare to the corresponding quarter of previous year. The interest paid stood at Rs 1.10 crore and depreciation at Rs 0.60 crore. As a result, profit before tax is same as the corresponding quarter of previous year, which stood at Rs 2.90 crore. Total tax outgo has decreased by 50% to Rs 0.40 crore, has lifted the company’s net profit by 19% to Rs 2.50 crore.

Year ended performance for March 07

Net sale of the company grew by 11% to Rs 1038.10 crore compare to last year. OPM of the company increased by 90 bps to 2.1%. This is due to reduction in other expenditure by 130 basis points to 7%. Raw material cost increased by 30 basis points to 89%. Staff cost increased by mere 3 basis points to 2%. This has resulted in increase in operating profit by 100% to Rs 21.40 crore.

Other income inclined by 71% to Rs 2.90 crore. Interest decreased by 33% to Rs 2.60 crore. This has caused profit before depreciation and tax to increase by 155% to Rs 21.70 crore. Deprecation reduced by 4% to Rs 2.20 crore, resulting in 215% increase in profit before tax to Rs 19.50 crore. There was no extra ordinary item for FY07 against Rs 5.06 crore in FY06. Total tax outgo increased by 100% to Rs 3.40 crore. The company registered a net profit of Rs 16.10 crore, an increase of 68% compare to previous year.

Segmented Results

Quarter ended June 07

The company continues to focus its branded food business, which is evident from the quarterly results. The branded food business grew by 23% to Rs 141.5 crore in the quarter ended June 2007. This category contributes 48% of the total revenue to the company. PBIT margin of the branded food business has increased by just 50 basis points to 3.5% leading to rise in PBIT by 44% to Rs 4.90 crore. This category contributes about 69% to total PBIT of the company.

The sourcing and institutional business declined by 6% to Rs 151.90 crore in the quarter ended June 2007. This category contributes 52% of the total revenue to the company. PBIT margin of the sourcing and institutional business has decreased by 20 basis points to 1.4% leading to decrease in PBIT by 19% to Rs 2.20 crore. This category contributes about 31% to total PBIT of the company.

Year ended March 07

The branded food business of the company grew by 11% to Rs 542.6 crore. Sundrop as a brand has grown about 4%; of that, the more profitable parts of Sundrop like Sundrop Heart grew by 8%. ACT II, which is popcorn brand, grew by about 66%.  It has market share of about 5% in the western snacks market, while for the month of March, Sundrop had 8.6% market share. The company aims to grow its ACT II popcorn brand by 100% every year.

The margins increased by 30 bps to 3.5%. In the case of Sundrop, company has gross margin about 17-18%, which for an edible oil brand is quite decent. In the case of ACT II, gross margins are at about 30%. PBIT increased by 22% to Rs 19.10 crore. The category contributed around 46% to the company’s revenues while the contribution to PBIT stood at 65%.

The sourcing and institutional business of the company grew 5% to Rs 628.80 crore. The margins increased by 20 bps at 1.6%. PBIT increased by 16% to Rs 10.10 crore. The category contributed around 54% to the company’s revenues while the contribution to PBIT stood at 35%.

Other developments

During the quarter ended June 2007, the Income Tax Appellate Tribunal ("ITAT"), Hyderabad has allowed the appeal filed by the company against the demand of Rs. 12.87 crore raised by the income tax authorities relating to income tax on sale of Mantralyam undertaking for the asessment year 1997-98. Pending the consequential orders by the assessing officer giving effect to the ITAT order, the quarter ended June 2007 results do not consider the impact arising on account interest on amounts paid in advance against the demand.

Valuation

The scrip closed at Rs 158.45 at BSE on 26^th July 2007.