S H Kelkar says biz largely unaffected from COVID-19

S H Kelkar and Company (SHK) said it holds adequate inventories to support uninterrupted production till April 2020.

S H Kelkar and Company (SHK), the largest Indian origin fragrance and flavours company in India, on Wednesday (11 March 2020) shared a business updates with regards to the COVID-19 situation in China and Italy.

SHK said its business will be largely unaffected by any supply chain disruptions on account of COVID-19. The company directly sources about 20% of its raw material requirements from China and another about 10% is indirectly dependent on China. The company is actively in discussion with all its suppliers to continuously assess and be prepared for any change in the supply situation.

Currently, the company holds adequate inventories to support uninterrupted production till April 2020. However, given the evolving nature of the situation, the company will remain vigilant to prioritize delivery to long-term contracts over ad-hoc sales with a possibility of deferring certain sales to early next fiscal year.

In mid-January 2020, following the Chinese New Year celebrations, SHK had carried out a maintenance shutdown of its manufacturing facility in China which was extended until February end 2020 in-line with the Chinese government's directives over COVID-19. The manufacturing facility has become operational from 1% week of March 2020. In addition, the company is also geared to increase production at its manufacturing facility in Mahad, to meet a possible surge in demand for key special ingredients once market conditions normalize.

The government of Italy has recently adopted emergency measures in response to the outbreak of COVID-19. Amidst this situation, the operations of creative flavors and fragrances in Italy currently remain unaffected. The company is hopeful that the situation stabilizes in the medium-term.

On a consolidated basis, S H Kelkar and Company reported net loss of Rs 10.88 crore in Q3 December 2019 compared with net profit of Rs 21.39 crore in Q3 December 2018. Net sales rose 13% to Rs 287.59 crore in Q3 December 2019 over Q3 December 2018.

S H Kelkar and Company is a fragrance and flavors manufacturing company based in India. The firm is engaged in offering fragrances in various categories, such as personal care, hair care, skincare and cosmetics, fabric care, household products and fine fragrances.

Shares of S H Kelkar and Company slumped 8.40% to Rs 83.45. It hit a record low at Rs 82.75 during intraday trade.

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