SKM Egg Products – thinking out of the shell

Thanks to all boarders for contributing to this thread. Only VP can have so much information about a sub 500Cr MCap nano-cap company that doesn’t do concalls

A few open questions for me based on my reading of the thread.

1. Are there any updates about the IT raid in Nov ’21 where news reports claimed unaccounted income of 300Cr was detected by the IT Dept? I could find nothing online, but maybe somebody from this forum was able to get in touch with the company for an update?

2. It does seem like SKM Universal (The associate company where the listed entity now owns 26% equity) is the company responsible for sales of the FMCG egg products. The products aren’t even listed on the listed entity’s website, but are listed on SKM Best eggs website (https://skmbesteggs.com/). The contact us section on the website lists the SKM Universal address, so safe to assume the unlisted entity sells the products.

Does anybody have any information on how well these products are doing in the domestic market? The domestic sale of egg powder and egg liquid has increased from 10Cr in FY20 to 17Cr in FY21 to 42Cr in FY22. Could this be due to value added FMCG products? (I don’t see a separate head for revenues for FMCG products, so assuming it would be reported under this bucket?)

Domestic sales increasing for the company would be good news because domestic demand would most likely be less cyclical than export demand and at more consistent realizations.

3. In order to determine whether the Management has this arrangement (Mfg of FMCG products in listed entity and sales via unlisted entity) due to the listed entity being an EOU or in order to park profits in the unlisted entity, we have to access the financials of the unlisted entity. AR FY22 does mention AKM Universal’s net profit although it fails to mention its topline (These figures are for FY21). The entity made a loss of 1.2Cr in FY21. So prima facie does not look like a case of parking profits.

Company 360 has this to say about SKM Universal

Does anybody have the financials for SKM Universal? If not, I will purchase them from Company 260 and share them here (Don’t want to duplicate if somebody already has this)

4. The unit has been established in an area of 137835.93 sqm (34.06 acres) in Erode Tamil Nadu for modernization/expansion of the existing facilities for manufacturing of egg products with a total project cost of Rs. 19.99 crore including grants-in-aid of Rs. 5.00 core and private investment of Rs. 14.99 crore. The processing capacity created by this unit is approximately 7500 MT per Annum. This unit will generate employment generation 250 direct &740 indirect and will benefit 20 farmers

This was posted a couple of posts above mine. While this excerpt suggests company invested 15Cr and got 5Cr in grants, the FY22 cash flow statement suggests that investments towards PPE was only 9Cr? What would explain the difference? Also, as a result of this investment what is the % increase in production capacity for the company?