SKM Egg Products - thinking out of the shell

(spiderman) #145

Suzuki and ISE Japan to enter Indian Egg and Egg Processing market.

(tgokulprasad) #146

Whether this is going to be a negative news for SKM Egg?

(Hitesh Patel) #147

SKM q2 fy 18 results out.

Good topline growth from 41 cr to 67 cr y-0-y.

Margin pressures seem to be continuing with net profit negative due to tax impact.skm q2 fy 18.pdf (1.2 MB)

(spiderman) #148

Purchase of stock in trade for the 6 months ending stands at 35.94 crores compared to Zero in last year. Experienced management will take full advantage of this.

(Hitesh Patel) #149

spiderman, Can You please elaborate on the purchase of stock in trade comment? I didnt get the point? Does it mean they have built up big inventory to be utilised later on?

(spiderman) #150

Yes sir.

in Sep 2016 it is zero and now is nearly 36 Crores. Management has consciously built up inventory ahead of Festival season in USA.

(abhi2525) #151

This looks like a deliberate decision and should reflect in next half of the year. Will add more if it comes down below 70.

(Mridul) #152

Purchase of stock in trade by definition means anything that has been purchased (that cannot come under cost of material consumed) used for trading purposes i.e. steel being bought by a utensil manufacturing company will come under cost of material consumed, but steel bought by this company for trading directly (selling steel) will come under purchase of stock in trade. In the later case, i am not sure how any unsold steel bought for trading is reflected in P&L. Though, it should come under inventory in any case (trade or non trade).

You mean they have bought eggs in advance (so how is this different from inventory and should have come under changes in inventory heading), which has actually reduced from 52 cr to 47 cr (check Balance sheet). Anything that has been bought but not sold in a particular qtr should be deducted from the expenses under ‚Äúchanges in inventory, stock in trade‚ÄĚ row.

(manojkol) #153

cant make any sense of this stock in trade but such entries were there in 2012-2013 also ,stock in trade

(tgokulprasad) #154

I would like to confirm as my understanding on Purchase of stock in trade is correct. If they spent 18.73Cr on purchase of any goods in the previous quarter and if they are selling in next quarter, then whether they will show this under Income in next quarter apart from their revenue from operations?

(Raj) #155

The correct PE stands 90+. Can we still expect the company to grow? I am not sure if I am missing something here…

(spiderman) #156

Purchase of stock in trade as per the annual report in Egg powder only ( Russian Branch)

(Marathondreams) #157

I don’t think this is correct interpretation. If the management has purchased something to be used in next quarter, it would have reflected in increased inventory levels, which is not the case here.

It seems they have purchased goods worth 18.73 crores in Q2 and sold it during the quarter. This sale value is included in ‚ÄúRevenue from Operations‚ÄĚ. I think similar thing happened in Q1 also. So if you see sales have gone up in Q1 and Q2 as compared to Q2 2017 due to additional ‚Äúrevenue stream‚ÄĚ. So as @Mridul pointed out, they have started out buying stuff for reselling thereby showing higher revenue but higher cost too.

If we assume they are adding around 10% margin of ‚Äútraded‚ÄĚ goods, then sales for ‚Äútraded goods‚ÄĚ would come to 20.60 Cr (18.73 x 1.1). This means sales of SKM‚Äôs base business for the quarter is 47.09 Cr, which can be compared with Q2 17-18. So for 6 Crores sales increase, there is 6 Crores increase in material cost. So not very good operating performance I guess!

(tgokulprasad) #158


Egg prices jumped 20% in last 15 days

(spiderman) #160

Standalone Numbers

Year 2012 Egg Powder Purchase Nil
Year 2013 Egg Powder Purchase 4,60,24,670
Year 2014 Egg Powder Purchase 74,28,000
Year 2015 Egg Powder Purchase Nil
Year 2016 Egg Powder Purchase Nil
Customs Duty, Clearing & Forwarding expenses (Russia Branch)-6,52,878
Year 2017 Egg Powder Purchase Nil
Customs Duty, Clearing & Forwarding expenses (Russia Branch)-3,91,94,857

they started reporting separately from the year 2016 in Annual report. Please give your views.

there is no trading involved as per this data.

(tgokulprasad) #161

The egg price is at its life time high (4.47/Egg) as per Namakkal price and hope this will hurt the operation and financials of SKM. As per record they are purchasing approximately 15lakh eggs per day from outside and with the increase of approximate 50paise per egg will incur them a cost of 7.5lakh per day.

Aa per their record, their capacity utilization of their plant is keep on reducing.

(Rahul2015) #162

Egg prices are soaring.What could be the impact of high prices on the company‚Äôs margin in the coming quarters,considering the large ‚ÄúPurchase in Stock trade‚ÄĚ ?

(Rits) #163

Another article on rising egg prices… Will it adversely impact skm…

([email protected]) #164

On first look, it looks negative, but there could be opportunities in this adverse situation.
a.If they can use the high egg prices to negotiate and justify higher rate contracts. If they are successful with that and when the prices come down, it would help their margins.
b. Due to high egg prices, customer (specially hotels) could be inclined to try their egg while cubes, so this could help product promotion as well as penetration.

Only time can reveal the real impact and its size, till then the hope in the minds of deep pocket investors would drive the prices. My 2 cents.