SKM Egg Products Expands Poultry Farm Capacity by 20 Lakh Birds with ₹400 Cr Investment
SKM Egg Products is investing ₹400 crores to expand its poultry farm by 20 lakh birds, increasing total capacity to 24 lakh birds. The project includes new EC sheds and a feed mill, expected to save ₹60 crores in construction costs and reduce feed costs by 15-20%. Funding will be a mix of internal accruals and ₹300 crores in bank borrowings.
The expansion involves a substantial investment of ₹400 crores and is projected to significantly increase production capacity and profitability, which will have a material impact on the company's financial performance and market position.
The company is undertaking a significant expansion with clear cost-saving strategies and projected increases in production and profitability. The proactive approach to manage construction costs and the strategic financing plan indicate a positive outlook.
SKM Egg Products Export (India) Limited has provided an update on its expansion initiative at its poultry farm, involving an investment of approximately ₹400 crores. The company is establishing an additional layer bird capacity of 20 lakh birds, increasing the total capacity in its own poultry farm to 24 lakhs layer birds.
Construction costs, particularly steel prices and other core infrastructure expenses, have escalated by nearly 40% to 50% over the past 2-1/2 years. To mitigate future cost increases, the company has strategically negotiated and locked construction contracts at prevailing rates for the entire project, expecting to realize savings of nearly ₹60 crores.
The expansion includes replacing existing open sheds with new Environment Controlled (EC) sheds. Upon completion, the current egg production of 13.50 crore eggs is expected to increase to around 62 crore eggs, a nearly five-fold increase, significantly reducing the cost of eggs compared to procurement from contract farms and strengthening profitability.
Furthermore, a new Feed Mill is being established to cater to the nutritional requirements of the additional birds, aiming to reduce dependency on external feed procurement and generate cost efficiencies of approximately 15% to 20% in feed costs. The expansion of the Bio-Gas division with two additional digestors is also expected to lead to savings in coal costs and generate revenue from Compressed Bio-Gas (CBG).
Out of the total project expenditure of approximately ₹400 crores, about ₹100 crores will be funded through internal accruals and bank deposits, while the remaining ₹300 crores will be financed through bank borrowings. The company is eligible for an interest subvention of 3% from the Ministry of Animal Husbandry, bringing the net effective interest rate to around 4.5% to 4.7%. This strategy aims to preserve the company's high-yielding capital base and create long-term financial efficiencies.
The company anticipates substantial long-term benefits from this expansion, including economies of scale that will significantly reduce overall egg production costs, thereby strengthening profitability, operational resilience, and the financial position.
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SKM Egg Products Export (India) Limited filed this with the NSE as a statutory disclosure, categorised under capex. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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See the model portfoliosA plain-language summary of a public exchange filing by SKM Egg Products Export (India) Limited. Read the original for the full detail.