Topline of 58.55 Cr in Q4 shows third consecutive quarter of growth. However, profits remain a challenge mainly due to depressed global prices of Egg Powder. The company seem to have managed to hold on to the business from leading customers but with no profit. Net Working Capital Cycle has gone up from 56 days last year to 66 Days this year. The company is funding the working capital cycle through extended credits from creditors and through increase in Working Capital Loans. Even in this crunch situation, the company continues to maintain Cash & Equivalent of 17.52 Cr indicating that though the deal of acquiring Ovobel has not gone through, the process has not been aborted. Whether this is due to some legal compulsion or by choice of Management will be known only when the Annual Report provides an explanation on this.
It is tough to maintain faith when numbers are so disappointing but what I look at is that no other competitor from Europe or the US can have a cost structure more efficient then SKM and so they will be hurting much more than SKM. If SKM is able to retain customers, the profits will come once the glut in the market is reduced. As they say, in the forests of Africa, you only need to run faster than the slowest guy to save your life. However, It is tough to see our investment not doing well.