Just thought to share a snippet of a conversation had with the ED of one of the largest Shrimp Exporters (not listed) from India.
Q: Sir, how's been the going this year?
Oh!, as you are aware it has been a fantastic year, and its looking good for India. There has been a marked preference for Shrimp from India in our biggest market US. It's a remarkable strengthening of "perception" about sustainability of Indian shrimp industry and the quality it offers large global importers/consumers
Q: I remember we asked you this question last year 2016 Sep, why is everybody (processors, farmers) so confident that Indian exports will continue to grow 20-25% for a few years - when the demand supply gap (in earlier years) had closed, Global demand was growing only at 4-5% and supply from indonesia, Equador, Mexico, India, Vietnam were at similar levels ~ 3-4Lakh Tons? To grow, India would have to snatch market share from other countries??
And you remember that we had mentioned (among other supporting factors) the growing "feeling" that there was a perceptible shift in the way Indian shrimp industry was looked at post the EMS breakout in some countries; there was appreciation for the robust regulatory framework/quarantine and traceabilty policies; large buyers who look for developing long-term sourcing were looking at India with increasing interest.
Q: So how do you assess this playing out in the medium term for Indian Shrimp Exports?
Its all looking very promising. Buyers are now specifically ASKING for INDIAN SHRIMP - like they once used to ask about Vietnamese shrimp. This is India's time, there is huge opportunity to harness, and we in the Industry must make sure that we don't mess up.
Q: This is huge. You had told us in 2015 when we first met - if the farmer gets his price and his happy - the whole industry viability, rests on that. So If Global demand for Indian Shrimp Exports keeps increasing, and global Shrimp supply remains stable as it has, then the Indian Farmer has good things to look forward to ??
We know most of us (still) invested in Avanti are wondering if at 35x trailing - everything is not factored into the price, and wondering about how to think through the way forward, and are a little uncomfortable holding through rich-valuation stages. It's a good problem to have
Well - from our active experience over last 6 years (in rich valuation cases) there is one clear lesson. We need to focus and work hard at establishing only 2 things:
a) that the Industry is stable and growing
b) that the competitive position of this business is getting stronger or weaker
The AGM is at Vizag on 12 Aug. Most of my friends are dropping out this year. To my mind this is a very important year to attend and take the opportunity to hear/question firsthand the Management, Thai Union folks and other leading players in the Sea Food Industry - based on hard facts - why this is likely to sustain, and/or demolish that premise.
For those not familiar, here's a back-peek into our 2015 Field Insights - that systematically collated data-points for a System2/Level2 (a la Daniel Kahneman/Howard Marks) analysis of the Indian Shrimp Industry sustainable viability.
AVANTI_FIELD_INSIGHTS.pdf (2.9 MB)
It's a solemn responsibility we have to UPDATE this Avanti Field Insights presentation - in 2017, with relevant field work, followed by conversations around the AGM. Who wants to join in??