S.H.Kelkar Q4FY17 Concall Summary

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Financial Highlights

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  • Total Revenues for FY17 has gone up by 6% to Rs. 992 Crore whereas EBITDA has improved by 11% to Rs. 107 Crore from last financial year.
  • Q4FY17 revenues have been subdued by 6% to Rs. 249 Crore – Operating Profit has also been down by 7% to Rs. 35 Crore from the last quarter
  • PAT has grown by 44% to Rs. 105 Crore from FY16.

Fragrance Business

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  • Demonetization has hit the domestic business due to pause in the launch of new products and liquidity crunch for products
  • Domestic business has declined by 12% this quarter whereas it has grown only 7% Y-o-Y.
  • Market share on dungeon front has been kept intact by the company
  • Company expects to launch the products in the pipeline to cater to their growth the following quarters.
  • Company is also hoping for a revival in the market demand after the demonetization and GST effects have normalized
  • SH Kelkar has also executed the acquisition of Fragrance Encapsulation Program from Tanishka Products
  • Company is also looking forward to heavily invest in the R&D and also increase manpower and ongoing projects to deliver growth


  • Depreciating Forex and Sluggish demand has led to 21% decline in the quarter results for the business and also a 15% decline for the whole year
  • Devaluation of currencies in Africa and Middle East has affected a lot. But the company is looking at stabilized prices for the future

Service Income

  • GST has led to less other service income for the company due to destocking of customers before the April cycle of GST kicked in
  • Company is expecting a GST rate of 18% bracket for the following year.

Flavours Business

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  • Acquisition of HTT and integration of Gujarat Flavors products have given this business a substantial growth of 113% in revenues to Rs. 124 Crore
  • The business saw strong growth in profitability with operatingprofits at Rs. 34 crores translating into margins of 28% as against 19% in FY16
  • There has been commercialization of new US patented product which is the first of its kind in India and will contribute to sales in the following quarters
  • Long term Expected Growth rate seems in the range of 25% CAGR for domestic and 20% for Internationalwhich is inline with the current market share of the company
  • Due to integration with Gujarat Flavors, SH Kelkar has got some key customers in the dairy and savory industry

 Capex Plan

  • Company is excited about a high capex for the following year with 2-3 chunks of 25-30 Crore projects and some 10-15 Crore maintenance capex
  • Company is also going to highly invest in R&D capitalization and manpower in R&D to boost growth and research
  • Company has also undertaken Rs 6.5 Crore worth of Solar panels which is expected reduce 35% of the current electricity consumption

Future Outlook

  • Company expects to grow at 12%-15% topline growth for the overall fragrance business
  • SH Kelkar hopes to maintain their domestic fragrance business by launching new products and commercialize new patented products into the market to boost growth
  • SH Kelkar gives an expectation of 20% EBITDA margins across the business with Inventory days coming lower as the following quarter works on