SKM Egg Products Plans Major Poultry Farm Expansion with 400 Crore Investment, Targeting 24 Lakh Layer Bird Capacity

SKM Egg Products Plans Major Poultry Farm Expansion with 400 Crore Investment, Targeting 24 Lakh Layer Bird Capacity​

SKM Egg Products Export (India) Limited announced a significant expansion initiative at its poultry farm, committing an investment outlay of approximately ~400 crores. The company is building additional layer bird capacity, increasing its total capacity to 24 lakh layer birds.

The expansion follows the release of the audited financial statements for the fourth quarter cum full financial year 25-26 on May 22, 2026. The company recently engaged with shareholders and analysts to discuss its financial performance and future growth trajectory.

Mitigating Inflation and Strengthening Operations​

The expansion involves setting up an additional layer bird capacity of 20 lakh birds. Recognizing the substantial escalation in construction costs, particularly steel prices and core infrastructure expenses, which witnessed an overall increase of nearly 40% to 50% over the last two-and-a-half years, the company proactively locked construction contracts at prevailing rates. This strategic negotiation is expected to generate savings of nearly ~60 crores in construction costs alone, insulating the project from future inflation.

Operationally, the modernization effort involves replacing existing open sheds, which are over 16 years old, with new Environment Controlled (EC) sheds. On completion, the current egg production in open sheds, standing at 13.50 Cr eggs, is projected to increase to approximately 62 Cr eggs, representing an almost five-fold increase. This operational improvement significantly strengthens profitability by reducing reliance on the procurement of eggs from contract farms.

Synergy through Captive Production and Resource Management​

Furthermore, the expansion includes the establishment of a New Feed Mill to meet the nutritional requirements of the additional 20 lakh layer birds. This in-house production capability is projected to generate cost efficiencies of 15% to 20% in feed costs, substantially reducing external dependency on poultry feed procurement.

The infrastructure build-out is highly resource-efficient, as both the new layer sheds and the new feed mill will be constructed entirely within the company's existing premises, eliminating the need for new land acquisitions, which would otherwise cost an estimated ~70 crores to ~80 crores.

The company is also expanding its Bio-Gas division by adding two more Digestors. This move is expected to yield savings in coal costs for the egg powder division, in addition to generating new sales revenue from Compressed Bio-Gas (CBG), thereby contributing further to overall profitability.

Financial Structure and Funding Strategy​

For the total project expenditure of approximately ~400 crores, the company has devised a strategic funding plan. Of this total, ~100 crores will be funded using internal accruals and bank deposits, while the remaining ~300 crores is proposed to be financed through bank borrowings.

A key aspect of the financing is the company's eligibility to receive a 3% interest subvention from the Ministry of Animal Husbandry on the borrowings. After accounting for this subsidy, the net effective rate of interest payable is projected to be only around 4.5% to 4.7%. This structure strategically leverages low-cost bank financing, preserving the company's high-yielding capital base, which currently generates investment returns of approximately 7.5% to 8%.

Collectively, these strategic measures are expected to generate cumulative savings of nearly ~150 crores, combining savings from construction cost inflation, utilization of existing land resources, reduction in feed expenses through captive production, and new revenue from CBG sales. The resultant economies of scale are expected to significantly reduce the overall egg production cost, bolstering the company's long-term financial position.

SKMEGGPROD Stock Price Movement​

Shares of SKM Egg Products Export (India) Limited are edging higher to ₹186.71 as of 9:39 AM, rallying 2.66% in live trading. The stock is seeing strong buying interest, trading today on a volume of 102,576 shares.