The success of Avanti Feeds can be credited to Kumar because of his ability to keep his ear to the ground, and chart a course of action for the company: He likes to plan ahead for the next three years, take feedback from employees irrespective of their ranks, and prepare a deadline schedule that has to be adhered to. He, in fact, lives on the campuses of the company’s plant so that he can work closely with his team.
A chemical engineer by education, Kumar joined Avanti Feeds as a director, when the company was incorporated in 1992, and is the kind of businessman who visits his end-customers to understand their requirements. It is this characteristic that has helped his marketing team, which doubles as a technical support unit. They visit around four farmers every day, and apart from resolving their queries related to shrimp feeds and breeding, gather information on their requirements that can then be implemented by the company.
The marketing team is also sent for regular training sessions—it includes techniques and innovations in farming—with Thai Union. “Since technology changes all the time, we need to help update the farmers about these changes because there will be new problems in terms of diseases and breeding every year. Our team is now well trained to handle this,” says S Mohanty, deputy general manager, marketing and retailing. This focus on customers was adopted by the company in 2009. “Once the farmer is successful, we are successful,” says Kumar.
Farmers also benefited when Avanti Feeds changed its payment methods, by moving away from a credit-based system to a cash-based one. Before 2008-09, the company sold its feed to dealers on credit, who, in turn, would sell it to farmers on credit and charge an interest. In 2008, when export demand fell, a large amount of money was stuck with farmers who could not pay the dealers, thus increasing the pressure on the company’s working capital. “That was when we decided on only-cash sales. It was one of our best decisions, which is reaping rewards even today,” says PV Rajsekhar, deputy manager, finance. When the company moved to a cash-based payment system, not only did it discipline the market and reduce the pressure on its working capital, it also meant that farmers didn’t have to pay any interest to the dealers.
Today the company’s sales to working capital ratio is 15, showing that the company does not have any credit stuck in the market. Other companies in the same business have very high working capital, and their money is stuck in the market for more than 50 days, say industry analysts. In 2010, Avanti Feeds implemented enterprise resource planning solutions, which connected all the departments, with constant checks and balances in the system. “We have got our finances right. What is now important is to expand the business into newer products. We are looking at processed food in this regard,” says Kumar.
Today, Avanti Feeds has a market share of 50% from 25% in 2008. Over the last five years, the company has grown by 45% annually
In 2015, Avanti Foods set up Avanti Frozen Foods, with a 40 percent equity from Thai Union, and is working on a new shrimp processing plant in the village of Yerravaram in East Godavari district of Andhra Pradesh, focussed on exports. Kumar is also looking to cultivate sea bass, a protein-rich fish that has a strong demand in the export market. “One of the best things to do is to get into newer species of fish. That is the way we can expand the market,” he says.
The growth of his company has not gone unnoticed in the stock market. The stock is traded at a P/E multiple of 24 times, and has a market capitalisation of Rs 3,400 crore. “Avanti Feeds has doubled its capacity every few years and still the demand for its product is very high. The company is efficiently managed and has grown at a very fast rate,” says Ayush Mittal, who invested in the company seven years ago, when the stock price was around Rs 35. It was a 100-bagger pick for Mittal, and he is still holding on to the stock.
****There is little doubt that others like Mittal would be reaping rich dividends through their association with Avanti Feeds**.******