Sharing my notes of Avanti's Q3Fy17 Concall.
@Sandeepg Hope this helps!
Notes from Q3Fy17 Concall:
-Aim to be 1Bn$ Co by 2022.
-Shrimp exports and Shrimp Feed is currently at 15:85, efforts on to improve the ratio to 40:60.
-Increase in sales volume of feed & shrimp.
-Stocking have started in some region.
-Prices of shrimp are expected to remain at the same level.
-Overall year look promising with a growth expectation of 15-20%
80-90% of culture area will be of Vannamei this season.
-3 ways in front of Avanti to increase revenue:
1)India has huge coast line and the potential to have more area under cultivation.
2)Shifting of more farmers from tiger to vannamei.
3)Upcoming 15,000 TPA capacity for shrimp processing.
-We expect to have 30% capacity utilization in the 1st yr of commencement of new processing plant,
Which will go up to 70-75% in the 2nd year.
-Overhead exp will not be high, even at low utilization in processing business as the cost is variable in nature. (labour intensive work).
-Co. is looking to enter Fish feed manufacturing as well.
Plan is on the board.
No CAPEX numbers to share as of now.
Pre mature to make any comments on this front at this moment.
-Cash & Cash equivalent: 200 Cr.
-Hatchery Plan, phase 1 will be implemented in FY17 and expecting commencement in Mid 2018.
-Avanti needs fund in the month of Apr, May, June as it is the peak season.
-In Shrimp processing business we are not selling to TUF rather we are leveraging them in marketing our products in US market.
-Processing has 2 ways of sales:
1)Short-term contracts of 2-3 months. (It forms small portion of our sale) (High risk of price volatility)
2)Spot market transactions. (Major portion of sale) (Low Risk in terms of volatility)
-In Feed sector pricing is a sensitive area for farmers.
-Avanti has 45-50% market share in feed business.
Our feed is at a premium in the market.
It is preferred by the farmers. Due to superior quality.
Quality of feed and technical assistance to farmers is our secret of success.
We don’t export feed.
-US market offers better margins in Shrimp processing segment.
-Expected Revenue and margin at peak utilizations:
Feed: 2800 Cr & 8-9% margin. (700Cr. For 1Lac tonne capacity.)
Shrimp Processing: 1000 Cr & 6% Margin. (investment: 100Cr)
Hatchery: 15 Cr and 6.6% margin (investment: 25Cr)
-Management works day and night to run the business and So the managerial remuneration is justified.
It is in line with the regulation.
Geographical Presence: AP, Karntaka, WB, Orrisa, TN i.e all major aquaculture states.
Disclosure: Invested (I have tried to cover major points and it is possible that I might have missed some detail. Please consider the same and do your own due-diligence).