S.H Kelkar Q3FY17 Concall Summary

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Performance Highlights

Consolidated P&L

SH Kelkar

Key Financial Ratios

SH Kelkar Q3FY17 Key Financial Ratios

Key Highlights

  • Revenue increased by 11% to Rs 733 crores
  • EBITDA improved by 21% to 136 crores and EBITDA margins were at 18.6%
  • PAT grew by 58% to 77 crore
  • Low capacity utilization of 45% in India, do not have enough capacity to absorb the entire Netherlands operation in one go
  • Acquisition of encapsulating technology gives the synergy in fragrant applications
  • 85% of our fragrance products are unique proprietary products & the company is the only one which makes it
  • Very few new customer acquisition as already a supplier to top FMCG companies
  • 13% of the revenue comes from new products developed in last 3 years
  • Move towards Ayurveda has made develop Ayurveda extraction unit within group. First company to make fully natural flavors & offer that on extensive range of natural flavors to our
  • customers for various applications
  • Global trend towards naturals in wellness & beauty products. 100% naturals is still unviable
  • Service income is around 11 crores
  • Sourcing of products from Singapore is a supply chain efficiency target measure. It is to combine buying in one location & keep excess inventory hedging stock in one location rather than multiple location. This allows to keep same amount of inventory & service more businesses
  • Market growing at about 10-12% & company is growing at rate of 21%
  • Deployed around 14 people & 4 offices in North India, south India, East india for sales
  • In southeast Asia the market is $15 million or more & continue growing business
  • Done 4 Acquisitions to the tune of 92 crores.

Demonetization Impact

  • Domestic business seen the impact
  • Post demonetization while the overall number for the year-to-date does not seem to be affected.
  • Effect is only for first 45 days of the quarter
  • Prior to demonetization there was 14-15% kind of revenue growth, now it is some where around 7-9%
  • Fourth quarter will be better as new products are coming into market
  • In December lot of stock which normally was to be moved were still lying in stock
  • Increase in working capital of 10-15 crores by the end of December

Fragrance business

  • Growth was 5% and saw a healthy traction in the domestic business where revenue was up 15%
  • Overseas revenue was down 13%
  • Division registered a notable 27% growth in profitability to Rs 102 crores.
  • Improvement in margin by 270 bps to 15.7% in 9 M for FY17
  • Approval of Acquisition of Intellectual property in Fragrance Encapsulation Technology held by Tanishka products. The technology is around for 15 to 18 years old. It will help drive synergy & cost structure of this technology to where it can be sold at the price points in India & Asia.
  • The acquisition is 51% of the technology & company.
  • Domestic growth was 7% & international is -22% in Q3 FY17
  • There has been decline in global demand

Flavor business

  • Registered a robust growth of 110% to 85 crore with both domestic & export business growing by 164% & 70% respectively.
  • The tuck-in acquisition of HTT along with significant off take in the domestic and overseas markets enabled us to report such strong performance.
  • The business also registered healthy growth of 196% in profitability
  • Operating profit stood at Rs 22 crores
  • Margin improved to 25% compared to 18% in 9 months FY16
  • Organic revenue growth for flavors was 30% combined, 22% domestic & 33% for the international business
  • For this quarter it was 26% for the domestic & 70% international
  • For Q3 domestic flavor sales was 6.5 crores which is 21% over last year
  • For Q3 exports flavor is 15.8 crore which is 33% last year.
  • HTT revenue was 6 crore for this quarter