Latest interview of Mr. Indra Kumar
Couple of news update
US, Japan buying shrimp early amid high global demand
The Japanese buyers told Minh Phu they were buying early because they were concerned about growing global demand. Current price stability or decreases – according to our prices portal in Thailand farmgate prices are dropping – won’t last, said Quang. “In my opinion prices will start to rise from late July,” he said.
He said how much they increase “depends on China”. “If it is the same as previous years, we can expect an increase in price,” he said.
In recent years China has become a major player in global shrimp markets – some say the biggest. This is largely due to fast-growing Chinese consumer demand and problems with its own production.
“Usually they [North American customers] wait until July to place big orders for the holiday season. But this year they have already started placing big orders.
US votes to end antidumping order on Brazilian shrimp, extends duties on Asia
The US International Trade Commission voted unanimously to remove the antidumping order on shrimp from Brazil on May 2.
However, it supported the domestic shrimp industry’s request to extend the antidumping orders on shrimp from China, India, Thailand and Vietnam for an additional five years.
Seafood exporters hit hard with rupee rising against dollar
The hardening of the rupee against the dollar has badly hit the seafood exporters in the country as the exports are now fetching lesser realisations than before.
At the present exchange rate, Indian exporters, who send out $4.7-billion worth of seafood annually, are reportedly incurring losses on each consignment they ship.
“The net realisation has come down. It will proportionately impact the raw material prices. We are incurring losses,” said Tara Patnaik, chairman of Falcon Marine Exports Ltd, India’s largest exporter of seafood.
However, the off season has come as a respite for the exporters. “Now, it is off-season. We expect the raw material prices to go down which may absorb the losses”.
The loss out of existing orders will be absorbed only when the raw material prices plunge. Exporters are pinning hopes on the arrival of new crops around the mid-May to ease the prices. Normally, June to October is the peak period for exports of seafood products from India
Would be interesting to see the latest US monthly numbers that will be released sometime late evening
Disclosure - Invested
Marine Products Exports (which is largely shrimps) from India grew 42% in March as per Commerce Ministry data This is in addition to almost 30% growth in two previous months.
Shrimp export from India to the U.S. has grown at an aggressive pace of 33% in Q1CY17 over the same period last year. Go Avanti…
It was heartening to see Ayush’s name there.
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.****
Dividend of Rs 9 for Rs 2 shares. Results awaited. http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/066dfc9d-72c9-4ad5-8e3d-20de9ba66db1.pdf
Very good results on quick assessment http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/e594fe99-c9ba-4894-a893-d5739e624042.pdf
Excellent results with little to fault. Strong revenue growth, margin improvement and good dividend growth. I think stock should close in four digits on Monday.
Congratulations @ayushmit, happy to see your name in articles!
Great results! Expansion in feed plant kicking in nicely.
Growth in shrimp exports for Avanti seems to match with the overall growth in exports from India. So the effect of new shrimp processing capacity with value addition should start reflecting in the next few quarters.
Hatcheries - Not a big deal apparently.
Fish feed - With aquaculture in focus, it could become significant. But unlike in shrimp business where Avanti was mainly a supplier for farmers, was wondering if it was better for Avanti to directly focus on land or coastal (nearshore) fisheries.
And lastly, highly optimistic, but Avanti becoming a brand name in shrimps like say that Kroger shrimp that @sushildarveshi posted in Waterbase thread.
Religare Q4 Result Update - Target upgraded to 1390
cant open or play it. What was Avanti MD saying?
Anchor: We have seen good gains coming up for you this morning, in fact yesterday it was locked in UC. Lot of delivery based buying has been seen- is there any development at the company front?
Indrakumar: Yes we have completed our expansions and our new projects have been commissioned. Increased capacities are in operation, all our expansions are complete and we have been doing pretty well.
Anchor: What kind of financial impact will these new capacities have on your financials? Could you give us a sense in terms of FY18 where the nos. could look like on the topline as well as margins front?
Indrakumar: There will be 20-25% increase in topline revenues and since our processing plant has also started we expect good turnover, revenues for FY18.
Anchor: Are we expecting a good FY18? If we look at quarter gone by the nos. have been very strong with revenues up 55% and in fact profits jumped 178% at 89 Cr. Tell us in FY18 we can expect the same growth, also because the new capacity has come on board, we can expect better growth nos.
Anchor: You have exposure to international markets like US as well as couple of European markets. Just want to understand the currency fluctuation impact there because Rupee has been appreciating, in fact this year we have seen good gains for Rupee. Could you tell us the impact on nos.?
Indrakumar: Yes. There is an impact on the rupee appreciation on our export front. Definitely Rupee becoming stronger there will be impact on Indian exports.
Anchor: Can you quantify the impact? Give us a ball-park figure there.
Indrakumar: An impact around 15% could be there.
Anchor: Any hedging strategy in anticipation of further appreciation of Rupee?
Indrakumar: Yes. We have a company policy, which covers for all our exports we commit. We have a good policy in place so that we don’t get affected with ups and downs of currency fluctuations.
Anchor: Any you experiencing any input cost inflations, because in the March quarter we did see your raw material price going up?
Indrakumar: Raw material prices are steady
Equirus gives a tgt of 1560. The report is publicly accessible at http://app.investmentguruindia.com/mobile/Researcharticles/2017/May/Avanti_Feeds.pdf
Apex Frozen Foods IPO
Can this be a opportunity for avanti feeds in long run…? is it good or bad for the company ?
Non-requirement of feed, resistance to disease and 70 per cent survival rate of the fingerlings keep cost of production down. And unlike other several other species that are bred, tilapia can be grown in tanks, ponds or cages, which add to its advantages.
Can some one explain on this ? it says Non-requirement of feed, so does that mean it can be a negative for Avanti’s business ? since farmers may move from vannamei to Tilapia.
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I agree. This is reminiscent of the rise of page industries stock. Ultimately good management in a good industry (with strong structural trends favoring it) in a company with an increasing moat are very rare and valuations need to be analysed accordingly imo
Tilapia is a fish and not a shrimp / prawn. They are not directly interchangeable.