Himalya International Limited

Himalya International Limited is a profit making entity which has established itself in the North American
markets already. However, the bulging opportunities back home has made the company to foray into the
Indian markets along with some major investment plans. Per the company's own estimates, it is looking at
more than 17 times the FY 09 revenues in another 4 years.

"10in3" - Small Cap Multibagger for the month of Sep 2009

HBJ Capital, India
Web: www.hbjcapital.com
Mail: Info@hbjcapital.com
Call: +91 98867 36791
Best Buying Price…

2 Phase Systematic buying suggested [Always buy in SIP ways]

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>>>Expect at least 10 times returns in next 3 years time frame!!!

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Table of Contents
 From the desk of CEO, HBJ Capital.
 Food processing sector in India – Page#7
 Himalya International Limited – Page#13
 Indirect growth drivers – Page#19
 Direct growth drivers – Page#27
 Financial analysis – Page#32
 Share holdings pattern – Page#37
 Best buying price – Page#41
 Challenges / Risks involved – Page#44
 Know more about Your - HBJ Capital.
 From the desk of CEO, HBJ Capital
Food processing sector has
been one of the most talked
about sectors for almost 10
years now, with no visible
improvement. However,
with the changing ground
realities the time may have
come for the sector to really
perform and to realize its
potential.
Dear Investors,
For more than 50 years, we have been teaching our school going
children that Agriculture is the backbone of the country. Of course
it is true that it support more than 50% of the country’ population.
But, what has the sector achieved, other than supporting millions
of rural families?
On a global scale, the achievements are nothing to speak about.
India lags behind by a large distance in terms of yield per hectare.
The contribution from the country in the global arena of food
trade is just 1.5% ?
So, where is the problem lying? Broadly speaking, there are two
reasons which results the country with a dismal performance. One
– the product does not really match what the demand needs. The
market is currently supply driven and not demand driven. If huge
processing units can come up which can tell the farmers to
produce something since that is where the demand is, this issue
can be scaled down to an extent.
The other main problem has been the lack of infrastructure
facilities or to be precise, the lack of processing facilities / post
harvest facilities. However, there are many food parks being setup
are being backed by MOFPI. There are many private players who
are investing in this category to have their own processing units.
Contd…
With the background being set at the food processing space, we started looking for mainly established player and
we ended up in a company that has established itself and has a strong recognition overseas – mainly North
American markets. However, the bulging opportunities back home has attracted this company to foray into the
domestic markets and with some big investment plans.

The company that has been selected as the 10in3 stock for the month of Sep 2009 is Himalya International Ltd.

HIL is a profit making company which has been reporting positive operational cash flows for the last 3 years. For
the financial year FY 09, the company reported revenues of around 57 crore and profits of around 13 crore. The
company has been a slow mover both in revenue growth and stock price for the last 4 to 5 years.

However, the company has lined up some major investment plans in India coupled with a foray into the domestic
food market. Per the company’s estimates, HIL is looking at revenues of around 1000 crore from in another 4
years. That’s some 17.5 times from the revenues recorded last year.

We would like to stress here that the company’s projections are long shots and we are actually looking at the
company just doing half its estimates – 500 crore of revenues in another 4 years.

Kumar Harendra, CEO, HBJ Capital,

www.hbjcapital.com
5th Main, Girinagar, BSK 3rd Stage, Bangalore 85;
Contact : 098867 36791 or Mail : Info@hbjcapital.com
 The food processing sector is poised
for a strong growth rate in the next
decade. The fundamentals of the
industry as a whole is clear witnessing
radical changes.

Food processing sector in India

Food production in India
India produces annually 105 million tonnes of milk (highest in the
world), 150 million tonnes of fruits and vegetables (second largest), 485
million livestock (largest in the world), 230 million tonnes of food grains
(third largest), 7 million tonnes of fish (third largest), 489 million tonnes
of poultry and 45,200 million eggs.

India produces 41% of World’s mangoes, 30% of cauliflowers, 28% of

tea, 23% of bananas, 24% of cashew nuts, 36% of green peas and 10% of
onions. This strong base in agriculture provides a large and varied raw
material base for food processing.

Moreover, India has natural comparative advantage in Agriculture with

161 million hectares of arable land and diverse agro climatic zones.
Agriculture, can thus be easily diversified to meet the demands of
domestic and overseas consumers.

Indian farm produce has unique aroma, flavor and taste and if
processed, packaged and marketed properly could even capture the
world market.

Even at the present level of productivity, which is less that half of US

level, India is the third largest producer of food in the world, covering
a wide range of agro produce.

In spite of the above numbers which seem to be huge and impressive,

the ground reality, as usual is different, on a global scale.
Food wastage and failure to meet consumer’s need
India’s agricultural production base is strong but at the same time, the
wastage of agricultural produce is massive. Processing level is very
low – India processes only 2.2% of fruits and vegetables compares to
countries like USA (65%), Philippines (78%) and China (23%); 26% for
marine, 6% for poultry and 20% for buffalo meat as against 70% in the
developed countries.

The share of India’s export of processed food in global trade is only

1.5% at present. Even, within the country, share of fruits and
vegetables processed is much less when compared to other
agricultural products such as Milk (35%) and Marine products (26%).

In a country where more than half of the population still live under
the poverty line and start their day only to fight with poverty, around
58,000 crore value of food items are wasted annually.

This can mainly be attributed to lack of processing and storage of

fruits and vegetables and to other reasons such as lack of
transportation and post harvest facilities.

Also, there is a gap between what the customer wants and what the
farmers produce. If this gap can be filled where the farmers are clearly
given what is required from them, the wastage can be reduced
drastically and the farmers will have more price realizations.
Rise of food processing sector in India is inevitable
Rise of Food processing industry will be inevitable due to the
following –

•A developed food processing industry would not only reduce

wastages, but would also fetch increasingly remuneration income to
farmers.

•Food processing enhances shelf life and adds value if the produce
is cleaned, sorted and packaged.

•Food processing is labor intensive and creates 1.8 jobs directly and
6.4 jobs indirectly across the supply chain for every 10 lacs invested.

•It makes farm produce more exportable

•Rising income levels, favorable demographic transitions, changing

consumption pattern and urbanization will compel the industry to
grow.

•Increasing demand for ready to eat food and convenience food

due to the change in households spending levels.

•The retail revolution in India and the setting up of organized retail

stores are acting as catalysts to the growing needs of processed
food.
 Food processing sector in India

The Indian food processing industry is estimated at US$ 70 billion. According to the Ministry of Food processing,
this industry contributed 9% to India’s GDP and had a share of 6% in the total industrial production.

The food processing sector is a highly fragmented industry, it widely comprises of the following sub-segments:
fruits and vegetables, milk and milk products, beer and alcoholic beverages, meat and poultry, marine products,
grain processing, packaged or convenience food and packaged drinks.

A huge number of entrepreneurs in this industry are small in terms of their production and operations, and are
largely concentrated in the unorganized segment. This segment accounts for more than 70% of the output in
terms of volume and 50% in terms of value. The food processing sector employs 13 million people directly and
around 35 million people indirectly.

Though the organized sector seems comparatively small, it is growing at a much faster pace.
 Government extending support

The Indian government has the identity of speaking a lot for long without any actual ground improvements.
However, a time comes, when there is no other way left but to pitch in and make significant contribution. The
time has come for the Food processing sector.

In terms of policy support, the ministry of food processing has taken the following initiatives:
Formulation of the National Food Processing Policy
Complete de-licensing, excluding for alcoholic beverages
Declared as priority sector for lending in 1999
100% FDI on automatic route
Excise duty waived on fruits and vegetables processing from 2000 – 01
Income tax holiday for fruits and vegetables processing from 2004 – 05
Customs duty reduced on freezer van from 20% to 10% from 2005 – 06
Implementation of Fruit Products Order
Implementation of Meat Food Products Order
Enactment of FSS Bill 2005
Food Safety and Standards Bill, 2005
5 year tax holidays for 100% export oriented food processing units
 This company is not a newbie to the
food processing sector. It has
established itself in the North
American markets and is now entering
into India with huge growth plans.

Himalya International Limited

Himalya International Limited
Himalya international is the first frozen food company in India that
has been into processing of mushrooms, baby potatoes and buffalo
cheese.

It has been concentrating mostly on the American markets and has

been acting as an export oriented food processing company and it
enjoys a strong brand recognition overseas.

It employs more than 500 people in the foothills of the Himalayas

which provides the luxury of the cleanest air, water and the purest of
natural resources. This has the most critical differential factor of the
company.

Its ideal location, which is the foothills of the mighty Himalayas with
freshest of Air, amidst pristine glacier blue underground water sources
and the richest of soils, make this aspect quite simple really; here
anything flourishes. Nature itself lends a hand to the already
unpolluted, green acres.

At Himalya, strategic planning based on predictive customers needs

has always set the momentum for constant diversification within the
Specialty Foods.

Himalya is ISO 9001:2000 certified Company with all it’s plants

complying with International GMP & HACCP.
Himalya International Ltd – Snapshot (Sep 25 2009)
CMP – Rs. 30.75 (The stock has not really been part of the Face Value – Rs. 10
previous bull run. Though it initially gave us a negative
input, it was offset by the current stock price which is the Promoter’s holding –15.90% (The promoters have
same as the Jan 2008 highs. increased by 5% in FY 09, the max allowed per SEBI
guidelines.)
Though initial positions can be taken at the CMP, a strong
BUY is recommended only when the stock crossed 34 level. Pledged shares – NIL
Before it crossing 34, there is every chance that the stock
price will fall to 22 to 24 levels.) Total # of shares – 2.7 crore shares

MCap – 88.78 crore (Per the company’s future plans, our Liquidity – High
conservative estimates projects a Mcap of around 800 to
1000 crore in another 3 to 4 years.) Debt to Equity Ratio - 0.23

PE – 6.27 (The company is currently available at an Authorized Capital – Rs. 40 crore

attractive valuation and when the company’s processing
plants are operational, it should be able to command more Issued Capital – Rs. 27.43 crore
than twice the current valuation.)
Website: http://www.himalyainternational.com/
EPS – Rs. 4.90 (based on the TTM basis)

52 Week High / Low – 10.25 / 34.40 (The company has

been more than a 3 bagger from its yearly lows. Also, the
stock price has had a strong rebound and is now quoting at
levels when the Sensex was quoting at 21K)
Production Units
The company currently operates four production units, all located at the foothills
of the Himalayas which provides the company with the freshest of Air, blue
underground water from the glaciers and the richest of soils.

Mushrooms - The company offers three varieties of Mushrooms; White

(Agaricus), Crimini (Italian Brown) and Portobello as frozen Buttons, Slices, Dices
& de-stemmed Caps. Mushrooms are grown in-house right from Composting agro
waste and developing spawn to quick processing within hours of picking.

Contract farming - The company has created partnerships with local farmers
to produce all it’s raw material requirements from Vegetables to pure Buffalo milk.

Specialty Vegetables - The company process Vegetables & Baby potatoes

grown especially in Sub-Himalayan terrain. Baby Potatoes are delicious & full of
nutrition with tender skin. We also create Baby Potato skins for specialty, gourmet
food service segment.

Buffalo milk Italian Cheeses – This unit covers the pure Buffalo milk from
India ‘the original home’ of water buffaloes with traditional Italian knowledge of
making the real, authentic Mozzarella & Ricotta Cheeses under an Italian expert
Raffaele Cioffi. Raffaele is the fifth generation cheese producer from the coast of
Sorrento in Compania region of Italy.

It guarantees the authenticity and true tradition by supervising the entire process
from milking to finish product at our plant
Contract Farming Practice
The company works with hundreds of small farmers in the Himalayan valley with
cleanest of Air & Water Sources. The Agriculture wing assists the farmers from
planning the crops to providing quality seeds and Manure rich in organic
Nitrogen.

Field selection: -Due care is taken in selection of fields. Fields should be little bit
away from main roads and it should be leveled one. There should be a approach
road to the fields to enable transport of the produce through tractor.
Crop inspection: -regular inspection of crops is done during the growth &
harvesting period of crops.
Hygiene: - Due care is taken to keep hygiene at every level during crop
production period.
Water for irrigation: - Assured clean water irrigation facilities should be
available.
Use of manure: - a maximum emphasis is given for the use of organic manure &
Use
chemical fertilizers to a limited extend.
Workers are trained to maintain: - good hygiene at the time of harvesting.
Workers dip their hands in chlorinated water before starting their work & during
the day after any break.
Harvesting is done :- manually & produced directly put in a tractor/trolly of
tractor-which has a clean plastic sheet on the floors & walls.

The company recycles all the spent compost from mushrooms, Vegetable and
Cheese plant waste & all other organic bye-products by Biodynamic method to
produce manure rich in organic nitrogen and that is also an excellent soil
conditioner.
Quality Control / Audits / Certificates
QA Team - The Company has established strict HACCP procedures for its products. The
company places maximum emphasis on quality, from the choice of spawns, through each step to the
finished product. Himalya has a modern quality control laboratory manned by qualified and
experienced food technologies and microbiologists. The Company has USFDA approval and the
FCE registration for its canned mushrooms and a Kosher certificate for all its products.

Audits –
SGS HACCP & GMP Audit
AIB International Audit
NSF Cooks & Thurber Audit
Certifications –
HACCP & GMP certified

Himalya International Limited is HACCP& FOOD SAFTEY, GMP & ISO 9000 certified company.
The company is audited by AIB International (US based), NSF Cook & Thurber (US based) &
also by SGS.

Laboratory Capabilities:-
a) Microbiological laboratory: Microbiological testing is carried out of all finished products.
This testing includes Total Plate Count, E.Coli, Coliform, Staphylococcus, Yeast & Mold, Listeria &
Salmonella. & In addition environmental sampling, Personal & Equipments Swabs, water testing
are carried out.

b) Chemical Analysis: Milk & milk products testing, which includes Fat, Protein, SNF,
Moisture, pH & all types of adulterations tests in milk. HPLC system (Perkins Elmer) for cow milk
adulteration in buffalo milk & also glycoalkaloids testing in Potato. Water testing includes Water
hardness, Chlorination & Residual chlorine content & also testing of Packing material.
 These are factors that will impact the
sector directly and the company in
more of an indirect manner.
Of course, on a positive note.

Factors shaping the food

processing sector
 MOFPI has come out with a vision for 2015

MOFPI (Ministry of Food Processing India) has come out with a vision for 2015 for the food processing industry
backed by a strategy and policy measured to achieve them.

The vision defines the following –

Increase the level of processing in perishables from the current 8% to 20%.
Increase the value addition from the current 20% to 35%
Increase the share in global food trade from the current 1.5% to 3%.
Investments required and the strategy
The source for the required funds will be a
combination of investments from financial
institutions, FDI and government funding through
financial schemes. The contribution from financial
institutions, FDI and the government is expected to
be 45%, 45% and 10%.

The government policy initiatives like the 5 year tax

holidays for 100% Export oriented processing facility
is expected to sweeten the deal for the private
investments.

Strategy –
Shift from Supply driven to Demand driven
Shift
approach
Increase affordability of food products by reducing
costs mainly through lesser taxation
Enhance financing to Agriculture and Food
processing sectors in a more inter connected manner
Replicate successful Indian and International
business models
Strengthen institutional framework to develop
manpower and R and D capabilities.
Increased food standards and safety systems.
 Shift in food that the country demands

Though Cereal products top the demand chart in the last 50 years, the growth in demand has been decreasing.
Off late, Vegetables, fruits, beverages and snack foods are increasing their contribution to the demand and at a
scorching pace.

There is a shift from carbohydrate staples like cereals to calories from animal sources and sugar. The trend is
clearly visible in many of the developing countries and in particular, India.

In the next development cycle, it is highly likely that there will be huge demand for prepared meals, convenience
foods, snack foods and further on there will be demand for functional, organic and diet foods.
 Urbanization is pushing consumption levels

Urban India with 30% of the population contributed for more than 40% of the food consumption in the country.
Its share is growing rapidly with rapid Urbanization in the country. This implies higher per capital expenditure in
urban areas. One of the reasons for this is that a part of the consumption in rural areas is met by own farm
production.

Urban food consumption was estimated at INR 1540 billion in the year 2000 – 2001. In the last 7 years alone, the
urban areas have recorded annual growth of around 10% in consumption. Rural India on the other hand has
recorded only around 6.5% growth in the same period.
 Changing age profile

The changing age profile with increasing share of population in the age bracket of 15 – 59 years, a large portion of
which constitutes the active work force augers well for the growth of food consumption.

Along with the increase in food consumption, they bring new patterns and these patterns support increased need
of processed foods.

This group has the willingness and the ability to spend on processed foods. In contrast, in many developed
countries, the population is aging with an active growth in the 60+ segment.
 Increasing income and hence spending levels

Upward mobility of income levels is likely to increase the demand for processed foods as has already been
demonstrated in USA, Europe and more recently in countries from South East Asia.

The middle and the upper middle income groups in India are growing at a much faster pace than the lower
income groups. On the other hand, the growth of lower income groups is gradually reducing.

The growth in food consumption in developed countries is in line with population growth and has not been
affected by rise in income levels.

On a contrary note, the impact of rising income in developing countries is two fold –
Significant share of additional income is spent on food due to higher income elasticity
Substitution of staples with animal protein and processed foods.
 Growth in organized retail space

The fragmented retail structure results in inefficient storage and transportation of food products, hence resulting
in higher wastages, value loss and higher distribution costs.

Organized food retailing can play an important role in the growth of consumption of food items. The stages of
retail development has a strong impact on the consumption patterns of the consumer. The consumption of
processed food items has a strong correlation with the development of organized food retailing.

Organized retail reduces the number of intermediaries and transaction costs.

Though sales of food items through organized retailing contributes just above 1% of the total food items sold, it is
growing at more than 50%.
 We just had a look at the indirect
growth drivers. Now, let’s have a look
at the drivers which will directly
impact the company and its fortunes.

Growth drivers
Increased business from US markets
The US operations of the company is expected to get a boost from the proposed
cheese manufacturing units and increasing export opportunities.

Cheese manufacturing – The company has set up a 100% subsidiary – Himalya

international inc in USA, which has made two joint ventures with US based
companies – one covering east coast and the other the west.

The east coast operations Bufflabella inc is located in Pennsylvania and the west
coast operations are set up in California. The JV partners are of Italian Lineage
and are already processing and marketing mozzarella cheese.

The parent company will export semi finished Mozzarella cheese which will be
converted into final product and marketed by the JV in US.

Increased penetration of its products – The company has planned to setup

own cash and carry stores for distribution of ethnic foods manufactured from its
plants in India. The company has also proposed to set up a logistics and
distribution chain for this purpose.

The company has also signed agreements with grocery stores in US like ALDI to
sell its products under Himalya fresh brand name. Under the agreements, the
company will sell Himalya fresh products like frozen vegetables, baby potatoes
and breaded appetizers.

The company is planning to raise 10 million USD as equity and debt for the above
activities. The company is expecting its US exports to clock a 60% growth in the
current fiscal.
Foray into the domestic market
The company has predominantly been an export oriented player so
far.

However, the growing opportunities at home has made the company

foray into the domestic markets with its already existing products
plus new products for the domestic taste.

The company has already launched some of its products in the metros
and is targeting a pan India presence by this year end.

The focus products will be Fresh Mushrooms, Vitamin D fortified,

zero fat and full fat yogurts, Paneer, breaded appetizers, All natural
ethnic sweets, frozen vegetables, packed soups, Olive oil, fruits,
Italian cheese and nutraceuticals.

The products will be available broadly under 4 brands – Himalya

Fresh, Bufalabella, American Harvest and Uno Italiano.

The company has made tie ups with almost all major retail chains in
India including Bharti Wal-Mart, Reliance Fresh, More, Metro, Home
stores, Subka Bazaar.

The company is expecting sales of around 25 crore from the domestic

markets in the current fiscal year and around 100 crore in another 2
years.
130 crore processing plant in Gujarat
The company will setup Mega food processing plant in Mehsana district of
Gujarat with an initial investments of around 130 crore. This plant will aid the
company to expand and diversify its value added products line.

The project will process “All Natural” Mushrooms, frozen vegetables, breaded
appetizers, Yogurt and Mozzarella cheese. The company will target both the
domestic and the export markets with more thrust on opportunities overseas.

The installed capacity of the mushroom division will be 9000 tones, 5940 MT
per annum of Mozzarella cheese, 9000 MT per annum Yogurt and 15000 tons of
appetizers.

The project would be 100% income tax free for the first 5 years from the year of
production. The project will also have the major advantage of proximity to raw
materials and the presence of some major sea ports. The proximity to the Gulf
is an added advantage.

Financial closure and land acquisitions are the major barriers for any of these
projects and the company has successfully crossed both of them. The company
had recently in Aug took possession of the land from the Gujarat state
government. Also, the company has arranged for term loans worth 90 crore
from its existing bankers. The remaining would come from warrants and
internal cash accruals.

The project is expected to start production by September 2010. Per the

company’s estimates, the plant at 100% capacity will result in revenues of
around 400 crore and earnings of around 80 crore.
120 crore processing plant near Delhi
The company is setting up a processing plant near Delhi at an investment of
around 120 crore. The project will be set up on a 32 acre plot, 120 kms from Delhi
in Rajasthan.

The plant will process Almonds, Berries, Cereal bars and high end confectionary
and functional foods. The plant is expected to manufacture Vitamin and protein
fortified “All” Natural” real fruits loaded Cereals, Diet energy bars and “Food on
the GO” items which will be positioned as meal replacements or energy add-ons
and will be targeted at the working population mainly youngsters.

The company has entered into a formal agreement with a US company for
technology transfer and product development suitable for Indian palette and
climate. The state of the plant will import almonds and dried berries from US.
The company has also plans to set up contract farming for Oats in Rajasthan and
Gujarat which will serve as the basic ingredient for healthy, high fiber cereals and
Bars.

This project marks the foray of the company into the Fancy food business and
will aim at the domestic markets along with Gulf and South Asian countries.

The Export Import bank of US had already issued an LOI for providing long term
funding support to the tune of around 8 million USD at a concessional rate of
4.37%.

At full capacity, the plant shall be producing around 100 million snack bars and
processing 7000 tons of almonds and berry fruits valued at around 100 million
USD.
 The growth drivers are sturdy. But,
what is the financial health of the
company?

Financial analysis
 Financial ratios

The company has increased both its operating and net margins over the years. These are the companies which
get better and better with its operations over a period of time.

ROCE has recorded a gradual rise over the years and this is part of the learning process in any business. The
fact that the rise is supported by margin expansion shows that the growth could be long standing.

The company is fairly liquid with a current ratio of around 1.6 and a quick ratio of around 8.0

Debt to Equity ratio is comfortable at this point of time at around .35. This gives the company the leeway to
leverage itself and add further debts for future growth. One can witness the debt to equity ratio to move up
significantly.

Interest cover at around 5.5 is a fair value. The company should be able to maintain this level since the
investment out of debt should result in strong earnings with higher margins.
Income Statement
The company has managed to grow the topline by
around 2.1 times in the last 4 years. The company being
an Export oriented Unit focusing on North American
markets has pulled off a decent growth rate of 25%
amidst the turmoil in FY 09.

SG and A expenses have seen a sharp rise in FY 09 -

around 40%. We believe that the trend will and should
continue. The company needs to involve itself actively
in brand building exercise especially in the wake of
domestic foray. Already, their ads for Himalya Fresh are
being aired on FM stations and can be seen in print
media too.

Interest expenses though are comfortable is set to

expand further. The huge growth plans lined up could
push the interest expense to even 5 or 6 times from here
in the next 3 years.

The company has reported operating and net margins

of around 23% and this is one of the best anyone could
ask for from a Export oriented Food processing
company. The contract farming method that the
company employs is a reason behind the high margins.
We believe that the OPM will move downwards going
forward, however on a manifold jump in income and
earnings.

The equity base has been rising over the recent years
and we expect this trend to continue strongly.
Balance Sheet
The company has increased its share
capital over the period in gradual manner
and we believe that the trend will
continue.

The total debt of the company primarily

contains Secured loans and even this has
been on a decline in the recent years.

However, the debt part will continue to

rise and could grow manifold times.

The net worth and the reserves have

shown impressive growth in the recent
years.

The cash, bank balances and short term

investments are at a low for the company.

The company has been able to control its

liabilities and debt part in the last few
years.
 Cash Flow Statement

The company has been able to report positive operational cash flow for the last 4 years. It has also recorded
growth in operational cash flow in the same period. However, as a result of the growth plans that the company
has come out with, it could get into negative operational cash flow zone starting from this fiscal year itself.

The company has been investing into capital expenditure plans in a moderate way. This will become more
aggressive going forward.

The company has been financing its growth mainly on issuance of equity. The debt part has almost been the same
for the last 5 years. However, going forward, the company will turn to debt option, since it is at a comfortable
level currently.
 Knowledge about the promoters is a
must for any equity related
investment. Also, Share holding
pattern throws some important
information on the promoters.

Promoters and Share holding

Meet the Drivers
Man Mohan Malik, the Founder, Chairman and CEO of Himalaya
International was thrust into business at the age of twenty on sudden demise of
his Father. Six years of multiple debacles in diverse businesses, Textiles to
Bullion, Commodities to trading at stock exchange did not decimate his will to
succeed.

Man believes in Power of Innovation and has always been itching to dare in
uncharted territory. Not only is he committed to the entity he created 28 years
ago, as he insists on living no more that 2 km away from the plant. He has
consistently innovated programs to help surrounding farmers, to further the
lives of employees, and to maintain the serenity and balance of the
environment.

Sanjiv Kakkar, Co-Founder, President & COO is the man with incessant
obsession to succeed. He is an Engineering grad from prestigious DMET,
Calcutta India and Royal College UK. After 6 Years with multi-national
shipping companies in Top responsible positions he joined hands with Man in
1986 and they jointly charted the future course of Himalya.

Diversifying from Chemicals to food business in 1995, they set up a new

composite project to grow Mushrooms & to process frozen vegetables and went
on to contract farming baby potatoes and recently ventured in ‘Bufala
Mozzarella Cheese’.

Going through various Roller Coaster rides without blinking they have put
Himalya as the India’s largest Premium frozen food Company today.
Shareholding Pattern
The recent share holding patterns are not
available for some reason. Hence we have used
the Dec filing, since there has been no major
bulk deals or SAST disclosures or PIT
disclosures.

Though the promoters' holding is low at 15.90%,

we believe there can be indirect holdings and
holdings of strategic interest in the company.

The corporate bodies owning around 5.65%,

NRI's holding around 1.76% and individuals
holding in excess of Rs 1 lac at 16.57% is an
indicator.

It should be noted that the promoters have

increased their stake by 5% in FY 09, the upper
limit as per the SEBI guidelines.

There is a significant Institutional holding with

the FII's holding around 30% in the company.

Also, recently in March 2009 BCCL was allotted

50 lac share warrants at a price of Rs. 18.30. In
June, the company had announced that BCCL
has subscribed to the warrants offered.
 Moats
Track record – The company has proved itself with a very strong track
record. The company which tapped the North American markets 11
years ago is now an established player and its products are sold in
thousands of stores in North America.

However, it is only now that the company is foraying into the domestic
market. It should be able to leverage its experience from its 11 years of
operation for a successful foray.

Product profile – The company has a well established profile of

products ranging from processed food items to ethnic sweets. The
company will initially start selling its existing products profile in the
Indian markets which will be followed by newer product versions.

The assurance of Quality and being “All Natural” – The company has
so far been operating out of the Himalayan foot hills and hence has
earned a reputation of delivering quality products. All of its products
are closely connected to the idea of “All Natural”.

The company clearly knows that this is one of the strongest

differentiating factor and is trying to leverage it in the domestic
markets. Almost all of their advertisements focus on the “All Natural”
quality of the products.
 Always buy in 2 phases in order to
keep the average buying price low.
Don’t put all your money in one go,
no one knows the bottom or top
hence play safe, invest in SIP ways.

Best buying price?

 Last 5 years chart

Ascending triangle formation can be seen. There is strong long term support around 12-15 levels. Higher top
formation can be seen above Rs34, which means a breakout from it's long term range bound move.

Since, this stock did not participated in last bull run, there is high probability that it can surprise you with its
sharp upside move. We can see a new era starting for this company from year 2009.
 Last 6 months chart

HIL has made high of 34.40(25th Aug'09) & low of 10.25 (Nov'08). During last 1 month it is under consolidation
in the range of Rs28-32, which can act as strong support in short term.

Fall in the price during June-July'09 was with low volume hence not sustainable, one can see accumulation
happening in relatively higher volume during Aug-Sept'09. Taking 50% exposure at CMP range Rs28-32 and
further average down it in case if it falls down to Rs16-22 levels.
 Any investment for capital
appreciation carries an associated risk
with it. What are the risks that could
derail the growth prospects for this
company?

Challenges / Risks involved

Challenges / Risks involved
The following are the probable risks involved with the investment in this
company.

Failure in installation of the proposed processing plants – The proposed

processing plants in Rajasthan and Gujarat will act as the twin engine which will
catapult the revenues and the earnings many times from here. Any failure /
delay in installing the plants will severely affect our recommendation.

However, it should be noted that the company is already done with

procurement of Land. Also, the company has almost tied up finances for both
the projects and hence any failure of implementation has very less chances. But,
the chances of delay cannot be ruled out.

Failure of the brand building exercise – Though the company has proved itself
with its products in the overseas market, this is the first time that it is making
any major foray into the domestic markets. The company has been actively
involved in brand building exercise and a strong brand image is a MUST for any
company making products and selling it directly to the consumer.

Handling working capital needs and interest expenses – The company will be
taking up more debt and with the launch of mega projects, it will result in
tightening of working capital and increase in interest expenses. The borrowed
investments will not yield results immediately and will take time to contribute
to the bottom line. The company may have tough time during this period in
securing working capital and to address the interest expense needs.
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