Additional Equity Investment in Keva Europe BV
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**privi specality results were announced
Why is the employee cost of Shk is more than double of Privi for the same amount of turnover and as per annual report employee are around 840 for both the companies.
can some seniors tracking throw some light please
Regards
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Very interesting observation. I have not tracked Privi but based on a review of their investor presentation some possible explanations
a. The nature of the business is different - Privi is in a different part of the value chain - so they provide bulk chemicals / formulations as an input into blenders like SH Kelkar (Keva) - see page 11 of Privi’s latest investor presentation. SHK has a more specialised business of blending multiple inputs to match exact requirements of FMCG customers (who are their direct customers)
b. Part of this difference can be explained by the factors of production - though the employee cost is lower, the depreciation cost for Privi is approx 50% higher (and perhaps therefore the cost of finance? - just a guess). So it seems that part of the value chain is more equipment heavy whereas the SHK part of the value chain is more employee expertise heavy (I have seen a similar trend in tea - where tea blenders are a very highly paid and expertise based service).
Though they have similar profitability, the market seems to reward Privi with a much higher multiple (the JV with Givaudan probably helps -as they will likely be a captive buyer).
I think SHK has been trying to backward integrate a bit as well (into what they call Global Ingredients) - but that is a small part and to derisk sources rather than as a line of business.
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