The Hindu Business Line : SKM Egg to invest in poultry farm

The board of directors of company, in its meeting on Monday, gave the formal approval for the new investment which would facilitate in-house sourcing of shell eggs, prime raw material for its egg powder plant, thus scaling down the cost of production.

At present, the company procures the entire shell eggs from the market to feed its 10-lakh eggs-a-day plant that produces whole-egg, yolk and albumen powder range for exports.

It has recently enhanced its capacity to process 12 lakh eggs a day through re-engineering its Solingapalayam plant by adding balancing equipment that has lifted its installed processing capacity from 3,500 tonnes to 4,300 tonnes per annum.

"The proposal to have a own layer farming has been thought off largely to insulate against price fluctuation seen in shell egg prices in the market, besides ensuring homogeneity in quality of the shell eggs used for our production, the factors having a bearing on the bottomline of the company," said Mr Shree Shivkumar, Executive Director of the egg products arm.

"The new project is scheduled to start by January 2006 and will be completed by mid-2007 when its full complement of 10 lakh birds will be in place and once the entire project is on, we are hopeful of seeing sales turnover touching Rs 100-crore mark during 2007-08 fiscal," Mr Shivkumar said.

The company will meet the investment through internal accruals and debt funding route.

A volatile shell egg market pushes up the cost of operation for the company, especially when fluctuations are wide in certain seasons of a year.

Last year, for example, SKM Egg Products spent an average price of Rs 1.37 an egg procured from the market and it believes, in the event of the company restricting its egg rate in the Rs1.10/Rs.1.15 price band, its profitability would go up by Rs 4 crore in a year.

Further, the company is also eyeing the growing export market for the shell eggs from the Tamil Nadu farms.

During 2004-05, the company had exported a record 3,117 tonnes of egg powder compared with 2,253 tonnes achieved in previous year and export sale as a percentage of its production that year (3,236 tonnes) works out to 96 per cent.

Its export realisation went up to Rs 66 crore (51.17 crore) and net profit rose 31 per cent to Rs 5.65 crore (Rs 3.83 crore). The company has decided to pay 7 per cent dividend to its shareholders for 2004-05, same as the previous year.

The board took on record the financial results for the first quarter of 2005-06.

The company has posted a Rs 18.31 crore (Rs 16 crore) turnover in the quarter on a sale of 952 tonnes of egg powder.But its net profit for the quarter came down to Rs 1.14 crore from Rs 1.53 crore. The company expects export sale margin to improve after September when the shell egg prices to sober down in the domestic market.

It is also investing Rs 2 crore on the residual laboratory to strengthen its product analysis and surveillance/monitoring on the pesticides, heavy metal residuals in its egg products to international standards. The new lab would be in place by October.

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