KAUPOKONUI DAIRY CO.

Taranaki Daily News, 7 September 1921, Page 7

KAUPOKONUI DAIRY CO.

{TWENTY-FOURTH ANNUAL MEETING. A LENGTHY DISCUSSION. The annual meeting of the Kaupokonui Dairy Company was continued on Monday evening, commencing at 7.30 p.m., and continued till about midnight, when there was considerable discussion on the balance sheet. REPAYMENT OF DEBENTURES. Mr. C. Bourke opened the ball by asking a few questions. He said that he might say something that exception could be taken to, but he wanted it to be understood that criticism was in the interests of the company. He first asked what provision was being made for the repayment of the £44,000 that had been borrowed on debentures. The chairman said that the matter had been discussed, nothing definite hau been done.

Mr. Bourke said that everything had to come out of butter-fat. The chairman said that the debentures reduced the overdraft at the bank, and as they had to reduce their overdraft every year, by the time the debentures came due their overdraft would be reduced sufficiently to enable them to obtain the balance from the bank. It was proposed, he said, to place the reserves to the credit of the debenture account. BUILDING POLICY CRITICISED.

Mr. Bourke said that he had always opposed the issue of T. shares to shareholders, i.e., the profits from the store. He opposed this because he did not think there were profits made from the store. Any profit was from increased value, and should be placed to reserve. The company had gone in for a policy of building far out of proportion, to its increased supply. In this respect he showed that in 1911 their buildings were valued t £10,025, and their plant at £5418, and they handled 52,000,000 lbs of milk. In 1917, their buildings were valued at £27,960, their plant at £21,086, whilst they handled 54,764 000 lbs of milk. In 1918 their property account was £34,512, and their machinery £23,091, whilst 58,195,000 lbs of milk were handled. In 1919 properties totalled £48,655, and machinery £27,882, whilst they handled 59,652,555 lbs milk. In 1920 their property account had increased to £56,424, their machinery account to £31,236, and their milk supply had increased to 63,668,000 lbs. In 1921 their property had increased to £63,572, their machinery to £40,579, while their milk had decreased to 57,000,000 lbs. In other words, in ten years their property had increased by £53,348, and their machinery by £35.161. whilst their milk had increased by 11,300,000 lbs. In other words, the> property had increased six times over, and their machinery seven times, so that it was quite evident that the buildings end machinery had increased far too much in proportion to the amount of milk.

The chairman pointed out that during the frar period they had to go to a lot of expense in erecting buildings to store their cheese, etc.

THE PAY OUT. Mr. Bourke then asked how much the directors hoped to finally pay out beyond the 2s Old. The chairman stated that he could not te.".. Mr. Bourke did not think there would be any more, and it was as well for people to know rather than be depending on it. The chairman said there were 3000 or 4000 crates yet to sell, and it all depended on the value they obtained for that. THE WORKING ACCOUNT. Mr. Bourke agreed that the shares in the Egmont Box Company and Patea Freezing Company should also he written down. Every item in the working account showed very large. The item for cartage, £4200, appeared also large, and he wanted to know how that was made up. The chairman pointed out that there was a large quantity of Imperial Government cheese from last year, also extra firewood. He considered the directors did not know whether the lorries were paying or not, and separate accounts should be kept. The lorries charge the factory a certain amount for cartage. Personally he thought there were plenty of carters who would be glad to do their work for less than the £6OOO it now cost. He also considered the item of £5OOO extra interest very large.

The secretary stated that the first shipment was not until November 29, and had to he drawn against, whereas in the past-, the Imoerial Government had paid interest.

Mr. Bourke pointed out that they had only written off 21 per cent. on the machinery. The secretary pointed out that they could not write 3 per cent, off £40,000. Mr. Bourke considered the deprecation as written off very light. Regarding the reserve account he did not like this because he considered that they were not worth much, as they were mostly made up of profits on the store, and he considered there had been none. He had always advocated the store being run in departments, so as to see where the profit or the loss was. As far as things had gone noW, he was quite prepared to stick to the company, but if they spent more money and paid out less he would not guarantee to stay with them.

CONSIGNMENT POLICY. Mr. Bashford asked whether it was a fact that they had consigned through the same firm for the two years. The chairman said that if the opportunity arose they could still sell elsewhere. Last year they had consigned, but changed to butter. Mr. Bashford asked if they had guaranteed to consign through the same firm for two years, and he wished to know why they had done this for two years with new directors coming in. The chairman said that the outputs were, nearly all fixed upon before their annual meeting came on. A shareholder said: “Why make the consignment for two years? That’s killing my pig," he added. Was there any financial backing? LOAN CO.’S OPERATIONS. Mr. S J. Bennett touched at come length on the connection between the Manaia Loan Company and the Kauipokonui Dairy Company, which he conisidered not in the best interests of the I company. He held that the small .amount allowed those who borrowed for the Loan Company was the reason the hnnk debts at the store were so heavy.

Mr. A. G. Bennett said that the Manaia Loan Company had done a lot to assist small men on to the land with the object of obtaining milk for the Kaupokonui factory. It had been the greatest boon to the district that the district had ever had. Regarding the store, he thought the trouble was that people had, during the past year, been living too extravagantly. Mr. S. J. Bennett considered that the Manaia Loan Company had put up the value of the land. There should have been a proviso against speculation. Men who (hud stopped on their farms had done well, but the trouble was that men got on and sold out after a year or two.

Mr. E. Long, who represented the company on the Manaia, Loan Company, also explained the position. A shareholder considered the Loan Company’s terms were too stringent, and prevented a man from getting out of debt. Mr. Gamlin stated that aa soon as the Loan Company was in a position to do so, the store debts would be paid. The chairman said that in many cases, as soon as a man’s securities got down to a safe margin, the Loan Company took over the store debts. Since the State had decided to charge interest the only difference was that these men had to pay the store 10 per cent, interest instead of the 9 per cent, they paid the Loan Company. Loan Company clients were not compelled to get stores at Kaupokonui. In reply to Mr. Christie, the chairman stated that the company haa put an additional £5OO into the Loan Company during the year. The financial year did not end until August 20, and it had been decided to place any profits to debentures.

Mr. Christie took exception t 6 the Loan Company raising its interest one per cent, when its clients had agreed to supply their milk to the factory. The chairman said that it was optional for the clients to pay off the principal or pay the increased interest. He had heard no complaints. Interest had gone up everywhere. SOME ITEMS CRITICISED. Mr. Christie favored a larger sum being placed to repairs and renewals instead of depreciation. Interest on overdue store accounts was charged at the instigation of the directors. Legally they had no right to do this, but if shareholders did not want to pay interest it was up to them to take steps to pay their accounts, and not expect the company to pay interest on goods they received. In reply to Mr. Christie, the chairman said that the Patea grading notes showed that, including the 2£ per cent, shrinkage allowed, the shrinkage was about 6 per cent. When shipments were regular 2| per cent, would cover this. When the directors went in for debentures Mr. Christie asked whether they considered the question of taking over the Manara Loan Company. He thought the had been put into the store, where they had lost £8 on every £lOO turnover. If they had taken over the Manaia Loan Company, he thought they would have made more profit. The chairman said that they might be prepared to do so if the money were provided. Mr. Christie was now elected to the directorate, and might now be able to assist in this direction. Mr. S. J. Bennett asked whether it being a limited liability company made the Kaupokonui Dairy Company responsible for any loss made by the Loan Company.

Mr. A. G. Bennett assured sharehold - ers that their position was perfectly safe as regarded the Loan Company.

Mr. S. J. Bennett asked if £22 included all the legal expenses in the store. If so, <- A.G.” had been very lenient to them. The chairman: Yes. CARTING EXPENSES. Mr. Ruskin touched on the. point that in 1911 the whole of the carting was done for £llOO with horses, and though they had only increased about 300 tons of cheese, the cartage had cost about £3OOO more. It was a question whether it would not pay better to got their carting done by outside firms. He knew a firm that would be prepared to cart their 2500 tons for 10s per ton. The chairman said that the directors had gone into the matter, and were satisfied that they would get the cartage done cheaper by their own lorries, and get it carted when they wanted it. They would not have continual carting with their own lorries. Under normal conditions their own waggons could cope with all their cartage. YELLS AND OVER-RUN. Tn reply to a supplier, t.he chairman said that they had paid £609 for veils, which had been sent to the Rennet Co., from whom they liad received rennet, which had not been tried yet.

Mr. Burke also mentioned that the statistics only gave particulars regarding cheese, but there was no mention of butter. The yield of cheese, 2.73, was the best the company had ever had, but he would like to know the over-run for the butter.

The chairman said that while making butter the over-run was 15 per cent. Mr. Bourke said that over-run was what they wanted, and he hoped next year statistics would be entered in full detail. TESTING. A supplier said there was a good deal of squealing as to who was going to do the testing. The chairman said that the manager was going to do it. A change had been made last year because the manager was too busy. Mr. Voullaire favored an independent tester. The chairman said suppliers were always asking the directors to keep down expenses. Mr. Voullaire said they should start somewhere fclse. Mr. Ruskin also favored a neutral tester. He considered their manager was appointed to "do the best for the company and ziot to beat other companies. They were herding up for fat, and if their test was manipulated it was no use. He preferred Is fid on a correct test rather than 2s Gd on a “played” test. Have a neutral tester, and let the manager challenge, if he wished, and they would give confidence. He was prepared to move that the company again appoint a neutral tester.

This was seconded, but the Chairman stated that he could not accept it at the present stage. Another supplier explained that no sample had been taken for the last two days, as their bottles were full. More-

over, though they went every day last month to the factory, their tests were only taken twice instead of thrice.

The manager did not consider this made any difference. There had been a good deal of talk about him taking over the testing. In takine over the mauaee-

ment he considered there were responsibilities that he should not take. Testing was one of them. Any supplier could come into the room and see his testing done. Moreover, he could also have a sample and have it sent to Wellington for testing against the manager’s. Mr. Ruskin said that he had compared the manager’s tests with the herd tests, and they were the same, but he still favored a neutral tester.

Mr. Long said that if a separate tester were employed Mr. Macdonald had to verify that test, making additional work. If they trusted the manager, why not let him test the milk? If he was not trusted he should not be in the position he was. Messrs. H. Sandford and C. Burke also spoke on the subject.

THE COST OF RUNNING THE STORE. In reply to Mr. Hastie the chairman stated he had no idea as to the percentage it cost to run the store. Mr. Hastie said that it ran into a fraction under 10 per cent. Salaries ran into 16.15 per cent. Riverdale ran into £2 17s per £lOO. \ Mr. Long pointed to the fact that a renntet company had been formed with a manager at £lOOO per annum, and they had be\n told some of the rennet had not turned out satisfactory. They should either discontinue making rennet or help the company. Exhaustive enquiries should have been as to whether the rennet was satisfactory, and if it was not they should not continue making it. Mr. fe. J. Bennett thought they should discontinue buying veils.

1 A. shareholder said the establishment of ! their owij rennet company had reduced tlie price of Rennet by about £2O per cask, so it served its purpose. Mr. said that they had heard a lot of criticism about the overdraft, but were the shareholders prepared to take up additional papital in it ? He considered they looked at the matter in the wrong light. They had Djever put a penny into the company beyohd the cost of manufacturing their produce. They had depended on the bank too miich. He considered they should dispose of tfhe store, and form a separate company oil share capital. He moved that each man ikicrease his share capital pro rata on an average of 20 shares. Another supplier asked why the company ran a fiining room. Could not the men be allowed to look after themselves instead of the j company doing so, Mr. Pai’kinsdn did not think it was good business to do kway with the dining rooms. Mr. A. H. Cjiristie asked what profits, or losses the various stores had made. The chairman] explained that this was difficult to supply. Mr. Parkinson Explained that he had endeavored to charge the branches with their goods, so that tqpy could make, ordinary trading profits. Ithe main store, therefore, had to meet the sudden depreciation in the value of the stocks*. He still thought that branches were a qeally good proposition. He also expressed ifegret that some of the suppliers were not' more loyal to their own store. He outlined the position of the store at length. • After a little further discussion the report and we re adopted. A resolution was alsq passed authorising the payment of 6 pen cent, interest on fully-paid-up shares. ELECTION OF DIRECTORS.

Ihe elections resulted as follows: F. U S e n dge 622 (elected MH. Patton 118, T. McPhilhps 487, E. Long <33, A. H. Christie 420 (elected), F. Mouri '.333, S. J. Bennett 261, J. D. Bashford 4.0. i ari ? u ? canrtidate s returned thanks. Mr H. A. Lennon was relelectod auditor, the fee Being increased tij 100 guineas, bhareholders, however, made) it a condition that he must see the recomitaendations he nad made carried out. \ The directors were voted tie same fees as last year-viz., £1 l s per Meeting. lhe chairman’s honorarium\was also fixed at the same as last year—vizi, £l5O. GENERAL. It was resolved to again hold the) meeting at Kaupokonui, a motion in fafvor of holding it at Manaia being lost. • Mr. C. Burke moved that it be \ a recommendation to the directors to go i u to the matter of the Rennet Company, 1 and confer with other directors concerned, and taking what action they may deem necfe a . sary.—Carried. Mr. H. A. Lennon suggested that shareholders should recommend the directors t<-> consider the question of forming a federal tion of South Taranaki dairy factories. \ Mr. R. Dunn considered that the di- ' rectors had taken the right course in recom- ' mending that Mr, Lennon’s suggestions should be carried out, as there was no doubt the whole business required reconstructing.

Votes of thanks to the chair concluded a lengthy meeting.