S H Kelkar and Company Limited - Q3FY2020-21 Business Update

S H Kelkar and Company Ltd (SHK), the largest Indian origin Fragrance and Flavours Company in India, would like to share the following business update for Q3 FY 2020-21.

The Company witnessed normalization in demand and enquiries in domestic and international markets during Q3 FY 2020-21 with steady engagements across the mid & large sized FMCG customers. Creative Flavors and Fragrances (CFF), the Company's 100% wholly-owned subsidiary, also delivered an encouraging performance during the quarter supported by robust demand and volume off-take in the European markets. This is the first full quarter of consolidation of CFF in SHK's performance. On a consolidated basis, sales in Q3 FY 2020-21 stood at approx.. Rs. 376 crore (Note: 1. Provisional and unaudited figures; 2. Including consolidation of CFF financial performance)

The global Fragrance and Flavours (F&F) industry has been witnessing notable increases in key raw material prices. In order to mitigate the near-term uncertainties in raw material prices, the Company proactively built-up its inventories to ensure continued supplies across all its customers. However, the Company believes that the surge in raw material prices is transitory in nature and the situation should normalize in the near to medium-term. Prudent inventory management combined with cost-optimization measures undertaken in the past has enabled the Company to register healthy operating performance during the period under review.

On the balance sheet front, the Company's total net debt position stood at approx. Rs. 487 crore as on December 31, 2020 (Note: 1. provisional and unaudited figure). The total net debt also includes consolidation of CFF balance-sheet debt and debt availed for the payment of the second and final tranche of the CFF acquisition. Excluding CFF debt and the debt for payment made for the acquisition, the Net Debt position stood at Rs. 263 crore (Note: 1. provisional and unaudited figure). Higher inventory levels on account of uncertainty in the raw material environment may result in a short-term increase in working capital requirements in the near-term. This would result in a higher-than-indicated debt position by Mar-2021. However, in the near-term, the Company has no major capex plans on hand and the focus remains on generating healthy free cash flows that will significantly strengthen its Balance Sheet position from Q4 FY 2020-21 onwards.

Shares of S H Kelkar and Company Ltd was last trading in BSE at Rs.129.45 as compared to the previous close of Rs. 121.4. The total number of shares traded during the day was 187718 in over 3935 trades.

The stock hit an intraday high of Rs. 133.9 and intraday low of 121.65. The net turnover during the day was Rs. 24135257.

Source : Equity Bulls

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