KOTHARI PRODUCTS Share price

Pan Masala was launched by the promoters through apartnership firm on 18th August 1973. To capitalise uponthe growing market of Pan Masala the promoters had decidedto run all the activities of manufacturing and marketingPan Masala in a new company. The Company was incorporatedon 17th September 1983 as Private Limited Company under thename of Kothari Products Private Limited by Shri M.M.Kothari and his family members. The Company became deemedPublic Limited Company under section 43A(2) on 1st October1988. Subsequently the Articles of Association of theCompany were altered to make the company a Public LimitedCompany with effect from 17th November 1994.Kothari Products Ltd (KPL) is engaged in manufacture andmarketing of Pan Masala and Gutka under brand name "PANPARAG" flavoured Chewing tobacco under brand name "PARAG"and in the packaging and marketing of Coconut Oil under thebrand name "7-UP". KPL pioneered the revolutionary conceptof low priced pouch packaging of Pan masala in 1985. Thecompany has fully mechanised manufacturing facilities atKanpur for the same. The pouch and zipper pouch packingchanged the perception of Pan Masala in the market and ledto an expansion of the market. This pouch packing of PanMasala is very convenient to carry and is an anytimeanywhere substitute of "PAN". It is also used as mouthfreshner because of its long lasting fragrance. Witheffective advertising and marketing efforts ''Pan Parag'' hasbecome one of the most popular brand in India."PAN PARAG" is an established brand in India as well as inother countries. KPL is one of the largest manufacturersand exporters of Pan Masala. The company''s exports haverisen from Rs 81.96 Lacs in 1988-89 to 416.43 Lacs in1993-94 (18 months). The total sales has also increasedfrom Rs 68.26 crores in 1989-90 to Rs 237.35 crores in1993-94 (18 months period). The company has a strongdistribution network of over 1600 distributors in India andinnumerable sale points in India and overseas markets.With an objective of capturing better market share regularsupply at all time and having fixed and regular income thecompany has entered into a franchise agreement with KothariPouches Limited with effect from 22.07.88 to manufactureand market Pan Masala under the brand name "PAN PARAG". Theagreement has been renewed and revised from time to time.According to terms and conditions of latest agreement dated01/10/94 and effective from 1/10/94 for a period of 5 yearsKothari Pouches Ltd shall pay a sum of Rs 10/- per Kg ofpan masala manufactured packed and cleared as per ExciseRecords of the company. Kothari Products Limited receivesroyalty @ Rs 1/- per Kg of pan masala manufactured and Rs 9/- per Kg is towards Advertisement and Publicity charges.As per agreement Kothari Pouches Ltd can sell pan masala inthe brand name Pan Parag in India only and not entitledfor export. Kothari Pouches Limited manufactures theseproducts as per strict quality standards of Kothari ProductsLimited and markets them under the brand name "PAN PARAG".Kothari Pouches has also agreed to discontinue any andevery use whatsoever of the trade mark ''Pan Parag'' upontermination of this agreement. KPL also reserves theabsolute right to terminate the agreement earlier. Theagreement would stand automatically terminated in the eventof breach of any or all of the terms and conditions of theagreement. All the terms and conditions of this agreement arebeneficial to KPL. As per the audited accounts of KPL forfinancial year ended 30th September 1994 the cost ofproduction of pan masala is Rs.327.66 per kg. The companyearns approx. Rs 14/-per Kg of pan masala produced whilewithout carrying any activity KPL earns Rs 10/- per Kg ofpan masala produced by Kothari Pouches Ltd.KPL also packages and markets coconut oil under the brandname "7 up" The brand "7 up "is well known brand in easternUttar Pradesh. 7up oil constitutes a very small part inthe total sales of the company as major thrust of thecompany is on Pan Masala and Zarda.