Yes there is a tail wind for Avanti which is going to benefit it for lowering the cost of its raw materials.
The 3 main sources of its raw materials are
Fish meal - 20% of total composition with value contribution of 36%. This is mainly made in India on the western coast karnataka, goa, maharashtra but I cant dig out from where does Avanti actually source them.
Wheat and wheat flour - 30% in total composition but only 10% in value contribution. Avanti itself is into wheat barn production but only worth 28L sales in 2016.
Soya Meals - This is almost 40% via input mix and costs 25% in value. The main area where this is picked up from is MP’s and Maharashtra’s Soya meal manufacturers. MP is the best place to grow Soya in the country.
The price of Soya has kept dropping over the months. If we check NCDEX the picture is evident even in the futures contracts up to Dec. Infact the price has dropped from 5000 18 months or so ago to 3000 and below now. July 2017 contract movement attached.
I do not have 2017 annual report.
Also have been speaking to a shrimp farmer in Andhra and he used to rely on Avanti feeds but he has recently switched to a Taiwan based company’s feed as he is not getting sufficient growth from Avanti. What could be the reason I wonder. Need to dig deeper.
Anyways ‘One man’s poison is another man’s…’ was my reaction after reading the above post. But perhaps capitalism works this way.
Disclosure: I hold Avanti ~3.3% of portfolio