Avanti Feeds

(Peabody) #1334

There is news that US has imposed anti dumping duty on Indian shrimps -3X to 2.84%-source Business Standard. What will happen now?

Invested in Avanti

(nil_71) #1335

The United States of America, the largest market for Indian seafood, has enhanced the anti-dumping duty on the shrimps to 2.34 per cent from 0.84 per cent putting exporters in a tizzy. The Department of Commerce (DoC) has preliminarily determined that certain frozen warmwater shrimp from India is being sold in the United States at less than normal value during the period of review (POR) February 1, 2016 to January 31, 2017.

While the rate for Devi Fisheries, one of the largest seafood exporters in the country, has been set at 2.34 per cent, for Liberty Group it is zero per cent. Both Devi Fisheries and Liberty Group were mandatory respondents to the review.
Except Liberty Group, the enhanced duty will be applicable to all the exporters exporting shrimp to US.

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“We preliminarily determine that sales to the United States have been made below normal value and, therefore, are subject to antidumping duties. If these preliminary results are adopted in the final results of this review, we will instruct US Customs and Border Protection (CBP) to assess antidumpingduties on all appropriate entries. We invite all interested parties to comment on these preliminary results”, the DoC said.
“When the final duty will be declared we will know the impact. This is preliminary determination of duty declared by the United States”, said Tara Patnaik chairman of Falcon Marine Exports Ltd.
The surge in duty has come at a time when senators are blaming Indian exporters for shipping heavily subsidized shrimps.

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Recently, eleven US senators – Republicans and Democrats – came out in support for inclusion of shrimp under the Seafood Import Monitoring Program (SIMP). After implementation of the prgramme, shrimp importers will be forced to adhere to similar standards that the US shrimp industry has been required to meet for years. The USA’s primary sources of shrimp import include India, Indonesia, Thailand, and Vietnam.
“US President Donald Trump is leaving no stones unturned to protect its domestic producers cutting across sectors by increasing duties. The increased anti dumping may be a step towards that to discourage imports in USA”, said a trade source.

(nil_71) #1336

Is 2.34% high enough ? Vietnam also has been subjected to significant ADD this time. Also, Rupee Depreciation will give some cushion definitely

(Vivek Gautam) #1337

One of the earliest stock investor in Avanti who had bought Avanti pre split very cheap few years back had sold out too soon exactly due to this anti dumping reason.

Avanti stock needs more ability & stomach to with stand all such negative news which keeps on coming .

American consumers would have to bear more cost . There is dearth of natural sea borne shrimps in west & they are quite expensive vs farmed shrimps in India and other places IMHO.

(nil_71) #1338

Also recently I saw from Mr.Indra Kumar interview and also from Under Current news, China has become a decent buyer at lower value for Indian Shrimps.

Patience of value investors will be tested

Can anyone tell what was ADD rate before the reduction ???

(nil_71) #1340

This is back to 2012 rate and you need to check Avanti Performance in 2012/13/14 before panic selling.

(Tolaha) #1341

It was 0.84% earlier.

A couple days back, ADD on Vietnamese shrimps was in news, they have been charged with 25.39%!


(Deepak Venkatesh) #1342

I am a little surprised by this. But anyways.
Earlier last year we had looked at historical ADDs. Its not that we have not seen such rates before.


(nil_71) #1343

What will be the worse, margin will get but margin will be hit higher in case Soya Meal price going up. In the last concal, Mgmt was telling Soya mean reaching 42-43 Rs per kg but I was checking in for last 1.5 Month


and found it is always below 35-36

Can anyone throw some light ?

(phreak) #1344

Just a random radical thought. US Soybean meal prices seem to be around $400/MT. Indian prices are around 32k/MT or about $500/MT or higher. US is the largest producer of soybean if I am not mistaken and we are the largest producer/exporter of shrimp and US is our biggest shrimp market. That’s a perfect trade relationship there for converting vegetable protein into a more desirable animal protein.

Am certain its not as easy as it sounds, as domestic soybean producers would be up in arms but its just a random thought. Maybe they can work something out so that soybean imported is only used in shrimp feed. There is talk that China might impose tariffs on US soybean imports as retaliatory measure for Steel and Aluminium tariffs - Wouldn’t this plan work out perfectly for shrimp producers if that US soybean ended up here?

(sarmams) #1345

I tried to quantify the impact of rise in Anti Dumping Duty (ADD) on Avanti’s performance in FY 18/ 19 . As per FY 17 annual report, Avanti paid ADD of INR 58.2 mln. Over Shrimp exports of INR 3380 mln, this comes to an average rate of 1.72%. Now, if I am correct, US reduced ADD in Sep 2017 for Indian shrimp exports to 0.84%. So this lower rate was applicable for Q3 FY 18. Based on these rates for first 9M in FY 18 and new ADD in Q4, I am expecting ADD of ~ INR 100-120 mln in FY 18. I assumed shrimp exports of INR 2000 mln in Q4 by Avanti (Q3 sales were at ~ INR 1560 mln). For full year FY 19, if we assume total sales of INR 40 Bn for Avanti (assuming 20% growth over FY 18 sales), shrimp exports contribution should be in the range of INR 8 -10 Bn. With an ADD of 2.34% in FY 19, incremental ADD expenses in FY 19 over FY 18 would be ~ INR 120 mln. Over an expected net profit of INR 5000 -5600 mln in FY 19 (assumed lower profit margins compared to current levels due to rise in raw material expenses) , these incremental ADD expenses appear to be small. Important point to watch would be shrimp export figures to US from India in coming months compared to 2017. This would allow us to see, if new ADD caused any dent in sales volumes. In the past (2012), when US increased ADD on Indian Shrimp, there has been no change in MoM/YoY growth. Would like to hear views from other senior members.

Disc: invested in Avanti. Not a buy/sell reco. Views are biased. Please do your own due diligence.

(ajay81) #1346

Arent these duties part of preliminary findings and will be actually applicable only post final findings which should take another 3-6 months. So there may not be any impact at all immediately. Secondly assumption is this that none of this can be passed on. If they are planning to put duties on every importer, then by default it will become pass through to end user. Plus if the vietnam duty at 25% comes true and india at 2.34%, we are in much more advantageous position as all vietnam exports will be up for grabs.

"When the final duty will be declared we will know the impact. This is preliminary determination of duty declared by the United States”, said Tara Patnaik chairman of Falcon Marine Exports Ltd. "

(nil_71) #1348

That means at 2.96% rate of ADD, Avanti paid on 2016-17 and 2015-16 also, since ADD reduction happened only in Sept 2017

(Gaurav Agarwal) #1349

(Ayush Mittal) #1351

I’m kind of surprised to see so much of worry and apprehension since this development. There have been multiple forwards on different platforms.

I feel 1.8% increase overall doesn’t materially changes the equation. At the farmer level 10-15% volatility (drop in prices) keeps happening due to demand supply mismatch from time to time and the farmer still makes good returns. So there is enough profitability in the whole value chain as of now. The problem/slowdown will be there if the international shrimp prices correct.
May be the processors may face some margin pressure as they are the ones at the last end of the trade.

I think @ajay81 has highlighted a very important point…if the duty on other Countries is more than India then infact India may end up benefiting. Vietnam has been a major producer of shrimp and their Govt keeps pushing and rolling lot of incentives to increase trade…so if this news of higher duty on Vietnam is true…that may be a more relevant thing to look at.

Of course, the reaction on stock prices may be a bit different given higher valuations and probable fear on mind of people.

(Raj A A) #1352

Equirus report on Impact of US-ADD in Indian Aquaculture should allay any doubt on AFL investments

(Sourav Banerjee ) #1353

(aerofire) #1354

(Gaurav Agarwal) #1355

Grain and soyabean prices drop on US tariff concerns.

(phreak) #1357