Q4FY17 Concall notes:
Our feed is of very good quality + technical support to farmer has been the reason for consistent increase in market share. We should be able to achieve 85-90% capacity utilization.
Historically margins were 10-11%. Should this quarter be aberration? What is long term?
Sustainable margins have been seen around 10-12%
- We retain the client base and keep increasing the base due to quality and support
- Profitability is due to feed prices being stable. RM has come down.
There is some economies of scale. But increased margins mostly due to fall in raw material prices.
Roadmap for 60:40:
3 pillar approach:
- Increasing feed market share. 42-45% current to over 50%.
- Processing unit added 15,000 TPA. Value added products with better margins.
Will should be able to achieve full utilization in 2-3 years
- Entering fish feed business.
GOI supporting it. Has good future.
Studying the total demand supply. Nothing done as of now.
300 Crore cash in book:
Using it for working capital. High profitability due to no debt.
Keeping short term deposits with MF for capex in fish feed and other expansion. Some good planning over next 1 year.
RM Prices in Q1FY18:
Raw material prices haven’t seen any big change. Remaining stable. So can expect good EBIDTA in coming quarter as no much difference currently.
Dip in processing unit:
Because shrimp harvesting starts in April-May and then processing.
Margins in processing:
5-7.5% sustainable margin. 10% if good value added product. Still working on that, doing trial runs. Yet to stabilise.
Feed capacity utilisation:
We are using 85% capacity. Will utilise fully.
Feed market in India:
10-15% growth in industry. Due to quality and support, we are getting new area as well as conversion of farmer.
Stable for last 8-10 months. Depends on world wide situation.
Disease risk is there but the Indian farmers have learned the lesson and they take effective measures to safe-gaurd and follow best aquaculture practices. If good practices are followed, EMS shouldn't happen. We haven't seen EMS in India.
Market share has increased. WC is negative. Is there more competition?
20 feed companies are there with capacity of 20lac tonnes. Yet we have taken market share.
We are keeping our prices stable. We are not reducing prices or offering discounts.
Our quality is good and we are confident that our clients will stay.
Those who are not able to sell offer discounts and credit days. But we have loyalty of customers.
50k capacity added is already implemented. Seeing 85-90% utilisation on increased capacity.
Advance from dealer network: Only around 4-5 crore.
Processing: commissioning was to happen in march, but due to approvals and trial production we should start around June.
350-400 crore revenue
Opportunity for shrimp:
- West bengal and Orissa have grown in last 1 year. Gujarat is attractive.
- We may look into exports to Bangladesh next year.
- As long as demand for sea food across world, we don’t see saturation.
- Govt is encouraging more fisheries and aquaculture.
170 Cr in 2017. 70 was feed (includes 50,000 capacity) and 100 for new processing line.
2018: 25 Crore. In next 1 month or so for Hatchery.
Feed sales volume: 3,40,000 tones in 2017. 93,000 for Q4FY17.
80% is cash sales. 20% is 1month credit.
Fish meal cost:
100-110 during the year.
Currently around 80.
On Processing business - we usually go for spot business - usually for 2-3 months. We do have about 15 customers like Red Lobster etc