The board of directors of Western Hatcheries, the flagship of the city-based Venkateshwara Hatcheries group, has decided to go in for buy-back of up to 30 per cent of its paid-up capital as and when the government permits the buy-back of shares.
The promoters of Western Hatcheries are of the view that its shares listed on the BSE and NSE, besides other regional stock exchanges are highly undervalued and therefore have decided to go in for the buy-back. The company will seek shareholder approval for the buy-back at its forthcoming annual general meeting. "Considering the book-value of our share at Rs 92 as against the market quote of Rs 28 to Rs 30 in the last one week, we feel the scrip is highly undervalued," a company official said. The scrip has a very low PE ratio of two.
Although the company has not decided on any allocation of funds for the buy-back, it is confident of improving the shareholders value as the company's paid-up capital is only Rs 7.70 crore.
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In fiscal 1997-98 Western Hatcheries posted a 16.46 per cent growth in net sales and services and 43.03 per cent rise in net profit as against the corresponding period of the previous year.
The company has been able to put up a better show due to improved realisation of broiler chicken prices. "The broiler prices which were depressed till September 1997 recovered from October onwards as a result of the various measures initiated by the group," Anuradha Desai, chairperson of Western Hatcheries said. Net sales increased from Rs 164.92 crore to Rs 192.07 crore in 1997-98. Other income remained almost stagnant at Rs 2.20 crore from Rs 2.22 crore. Total expenditure was up by 12.96 per cent to Rs 163.08 crore from Rs 144.36 crore.
Interest cost was marginally lower at Rs 10.94 crore from Rs 11.03 crore. The company has made a provision for contingency of Rs 1.50 crore against nil the previous year.
Gross profit (after interest but before depreciation and taxation) rose by 59.57 per cent to Rs 18.75 crore (Rs 11.75 crore). Depreciation stood at Rs 3.95 crore (Rs 3.67 crore). Taxation at Rs 3.50 crore was higher than the previous year's Rs 18 lakh.
Net profit jumped up to Rs 11.30 crore from Rs 7.90 crore. The earnings per share for fiscal 1997-98 works out to Rs 14.67 (Rs 10.26). Cash earnings per share was Rs 19.81 (Rs 15.03).
The board of directors have recommended a higher dividend of 35 per cent against 30 per cent declared the previous year.
The company is undertaking several expansion programmes including the expansion of specific pathogen-free eggs production capacity at Pasure, near here. The company's project to manufacture nutritional health supplements for infants and invalids is at an advanced stage of completion.