SKM AGM MEET 2017
- Started Supplying to contract company of Britannia industries in last financial year to the tune of 5000 liters/Per day of Liquid egg. Due to clarity on Input Tax Credit.
Since GST has given the clarity we can expect more orders from other domestic FMCG players.
- Global Egg powder prices have risen to 6 Dollars Per kg. ( Avg 8 Dollars to 10 Dollars)
- New Feed mill is considered near Plant at the cost of 3.5 Crores to enhance operating margins.
- Revenue contribution to top 3 customers ~ 25% CAGR growth in 5 years.
- Targeting 25 % Turnover from Domestic front by the year 2022. ( Around 125 Crores)\
- They don’t growth at the cost of leveraged balanced sheet.
- Capacity Expansion ruled out as company is operating at 72 %. Management maintained same Sales in MT’s unless Global egg powder prices improves.
- No fund raising, for the new B2C business. All expenses are done via internal accruals.
- SKM has introduced EGG WHITE CUBE and it is under test run in Erode town since
June 8,2017. They are improving the product based on customer feedback.
Price Points 500 gms - 230/-
Price Points 200 gms - 100/-
- Marketing to done by SKM universal (Sister concern). This is considered as positive as long as they don’t eat up margins. Because SKM universal Pvt limited and as 1000 dealers/Shop owners across 4 Southern states.
- EGG WHITE CUBE is made up of EGG ALBUMEN LIQUID, earlier they launches it as egg panner so it created confusion. It taste similar to " BOILED EGG WHITE".
- EGG WHITE CUBE is " 100 % NATURAL,PROTEIN RICH, ZERO FAT, ZERO CHOLESTEROL,and FREE FROM PESTICIDE RESIDUE". It will be successful Among health conscious consumers.
- Expecting launch by November or December in cities like Chennai, Bangalore and planning to cover all 4 States in one year time.
- They have 24 Products in Pipe line and Under R&D. ( Flavored Drinks, Pro Sprinklers).
- No plan for Invest Heavily on Branding ( No high profile ambassador )
- Marketing Margins for SKM universal not revealed. Since business is nascent stage it won’t affect much. After 2 to 3 years it is surely a concern. Now management is leveraging the dealer network established by sister concern.
- SKM is planning for major up-gradation ( Amount not revealed ) along with additional equipment for new business. For this they are planning to apply under central govt
scheme of capital subsidy to get 30 % interest subvention. They will go ahead with expansion only if govt approves the scheme, other wise they will go ahead with
required maintenance and replacement only.
- Management has not revealed margins on domestic B2C business.
- Management is not aggressive very cautious. ( Not hungry for growth )
Calculation of Margins for EGG WHITE CUBE ( Sample )
Egg weight : 60gms
Yolk Weight : 20 gms
So we can consider 40gms for white egg.
To make 500 gms of the product we need 12.5 Egg approximately.
Cost of One egg is taken @ retail rate of BEST EGGS so 12.5*8=100
Production Cost + Marketing + Packing Cost should work around 50 Rupees. ( Just a guess )
Their final product price is 230 with Taxes (If any)
I tried my best to represent the facts and figures with my little knowledge. Comments are welcome, this is not recommendation for buy or sell. I am invested in this with a long term view.