I read about management ethics here:
Then I heard the et now interview which talks of sales of 2400-2500cr in Fy16.
Then I read the latest AR which says there is no slack in capacity.
My conclusion: Avanti can not do more than 2100cr (15% growth + will fall in realisatoins put pressure on margins? not sure). Did management come on tv to provide exit to someone? Are they really people of integrity?
@lustkills
The table showing correlation between Pay, Company Performance and Shareholder Position is highly ignorant at best. With no numbers/data for High and Low, we can justify any number according to that table.
I have no problem with 7% of PBT being paid out as commission if itâs normal practice across companies in general. I donât have much knowledge on this. Can you enlighten me?
As a couple of members have highlighted recently, the interview on ET didnât inspire much confidence (At least for me). It was almost a joke when asked
Can you confirm PAT guidance for FY 16 again? "200 crores"
Guidance PAT for FY 17? â300 croresâ
Thereâs no denying that the company has been doing a great job over the past few years and the P/E multiple still seems cheap wrt EPS. But Iâm interested in digging into the reasons for the recent run-up and I sincerely hope itâs not to do with the TV interview.
First thing first I also think that 2400cr Revenue /200cr PAT guidance is more of TV/bull market speak. I also think that managementâs remuneration is on higher side considering the ratio of compensation to median employee salary of 443:1
But why are some of us assuming that when company is saying it is operating at 100% utilization levels it is stating it as of today/July? Canât the stated capacity in annual report be based on March 15? Mr Indra clearly stated that company plans to add 1.1MT capacity this year so may be some portion of it has already been added.And if you see Sandeepâs post above there was a healthy growth of close to 30% in exports to U.S. and it would be a surprise that second biggest player in India grows only by 15% when industry itself is growing by 25-30%.
Lastly if you see the shareholding pattern in this years annual report more funds are entering into the company(e.g. Malabar fund) rather than exiting considering the fact that JV with TUF is lined up for next year which could mean company moving up the value chain.
The usual uncertainties like weather,disease,demand still remain with the business so do your own due diligence before investing
Yes, the management remuneration is on the higher side (I think I had raised this in earlier years also) but this is common with many of the mid/small cap companies and I personally donât take it as a deal-breaker.
Also, like @lustkills pointed out - the remuneration is high due to the commission being paid to the MD and Jt. MD (who doesnât has too much of shareholding and this would be the only way to reward him). And this policy has been consistent over the years.
@rajpanda - I think you have not considered or taken the other segment of the coâs business lightly 
Regards,
Ayush
@rajpanda The annual report is saying that the shrimp feed plants are operating at 100% capacity utilization. My interpretation is that 100% is current utilization. So this yearâs production should be around the capacity whiich is 300000 MT. Last yearâs production of 233489 MT may not have been at 100%.
Regarding the 200Cr PAT guidance by management, i also felt that management got carried away during the and mentioned a ballpark figure without proper thinking. On second thought, i not believe, it is some sort of internal target that was mentioned and not a guidance per say. So while the figures look too bullish, i wouldnt take it too negatively from management quality point of view.
I was just trying to estimate the numbers that they can do this year, and how exactly they can make 200Cr.
A combination of all this can land them somewhere close to 200 Cr in a most optimistic scenerio and thatâs is probably there internal taget, which came out in the interview.
Disclosure: Heavily invested from 300 levels.
Few extracts from FY14 AR
Notes from Augustâ14 AGM
Going by all of the above, i donât think company has 3 Lac MT capacity as of date.But more like 2.33 lac MT ?
But we donât know if the production can be more than quoted capacity by working in shifts etcâŚ
Letâs see where it lands up on PAT guidance. Am not so fixated on the 200 cr. PAT figure. Will take anything above 25% 
@rajpanda.Search for shrimp feed word in AR gives below lines from latest AR
Page 9 , under Summary of Operations & State of Companyâs affairs
For the fifth consecutive year there was overall increase in the shrimp culture both in terms of water spread
area and stocking density, mainly because of success of Vannamei shrimp culture. Your directors are glad to
inform that your Companyâs Shrimp Feed sales grew by 56% in quantitative terms. Your Companyâs high
quality of shrimp feed and technical support to the farmers by educating them with best culture practices has
made our feed one of the most preferred feed by the farmers. The year 2014-15 ended with shrimp feed sales at 2,33,489 MT, an increase of 83,598 MT as compared to previous financial year .
Page 18,PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY
S.No. Name and Descrption of main Products/Services NIC Code of the % of total turnover
Product/Service of the Company
Page 64, Plant locations:
Shrimp Feed Plant â I, III & Wheat Flour Plant
D. No.15-11-24, Kovvur â 534 350.
West Godavari District. Andhra Pradesh
Shrimp Feed Plant â II
Vemuluru, Kovvur â 534 350.
West Godavari District, Andhra Pradesh.
Shrimp Feed Plant
Block No.498/1 & 501, Pardi-Nashik Road, Balda Village
Pardi Taluk, Valsad Dist. Gujarat â 396 125. India
Page 76, Under Strengths
Presently companyâs shrimp feed plants are operating at 100% capacity utilization. In view of future increase
in growth of shrimp culture, it is planned to set up shrimp feed manufacturing plant with 1,10,000 MT per
annum capacity in Andhra Pradesh. Company is searching for suitable land for the purpose
When and how much new capacity gets added and utilized? will reveal the future unfolding of Avanti story atleast for there ~85% of core business currently.
Also, refer to earlier point put-up by Hitesh in June,2015 regarding 2,85,000 MT current capacity
I am still confused 
Am also saying the same thing and quoted almost same thing from AR in above post yesterday. Where does it indicate that the current capacity is 2.85 lac MT? I am aware of what Hitesh wrote in June. But I am still looking for more evidence. The addition of 30k & 50k in Gujarat and Andhra (Kovvur) actually took the capacity to 2.1 lac MT and this was completed by the time of last AGM notes (refer the AGM notes from Augâ14).
There was talk of adding a further 75,000 MT capacity in FY-15 on top of 2,10,000 MT existing to make it total of 2.85 lac MT. But I am not finding any document published between Augâ14 till now, which confirms that the expansion was actually done. Can you help me with this ?
We are very close to FY15 AGM, So if someone can clarify this point, will be greatly helpful.
Hi Raj,
I was there in the last AGM and the company had circulated its future plans print to all shareholders whereby it was clearly mentioned that the current capacity of shrimp feed to increase from 2.1lkh MT to 2.85 lkh MT in FY15.
Hi Darshit,
Thank you. That definitely helps.
So it effectively means, now company plans to increase from 2.85 lac MT to 3.95 lac MT with the new 1,10,000 MT addition.
Regards
RajPanda
The Company is operating a Vannamei hatchery on a leasehold hatchery producing Vannamei seed to supply good quality Vannamei seed to the farmers. As informed in the previous year discussion about your Companyâs plans to set up its own hatchery, Company has acquired land in Village Gudivada, near Visakhapatnam, Andhra Pradesh for setting up 400 million shrimp seed hatchery which will be implemented in two phases of 200 million each. The formalities for obtaining necessary statutory approvals is in progress.
The construction of project will commence from August 2015.
I have a counter argument on the guidance (aggressive) figures of 200 cr. PAT.
Unlike before, Avanti Frozen Foods is now a merged entity while previously it was not listed as a subsidiary. Unless, if i am not wrong the processed shrimp from this subsidiary should add to the processed shrimp sales. Besides, the new processed shrimp plant is being attached to the subsidiary.
SEAFOODNEWS.COM [SeafoodNews] July 6, 2015
Indian shrimp feed and fishmeal producer Avanti Feeds Limited has agreed to buy controlling interesting in Avanti Frozen Foodsâ shrimp processing operations located in the state of Andhra Pradesh.
According to the deal Avanti Foods will be a wholly owned subsidiary of Avanti Feeds. This will bring Avanti Frozen Foodsâ shrimp processing facility located in the Ravulapalem, East Godavari District of Andhra Pradesh, under Avanti Feeds management.
200 million shrimp would translate to how many MT?
The guidance is not far from the realms of possibilities, if we include the additional processed shrimp figures from the merged subsidiary, which being higher margin will contribute a greater PAT.
Feedback is welcome.
Disc: Invested.
Are you sure, you are not mixing up the news on 400 million shrimp hatchery (2 phases of 200 million each) with the news on Shrimp processing facility ? Because this 200 Million shrimp seeds should have no visible connection to MT for avanti.
From my understanding, hatchery is for shrimp seeds manufacturing , which will be sold as an input to farmers for further growing them up to mature shrimp. Shrimp processing is like cleaning (removing the shell, de-vein etcâŚ) up the grown up shrimp for preparing it for packaged sales.
Hatchery will be a new stream of income for the company. We need to collect more information on how revenue and profitability will look for each million of seeds sold. Shrimp processing is an existing business which provided 267 cr. of revenue & 25.24 cr. or PAT for FY15.
Or may be I misunderstood what you wanted to say ?
Hello Raj,
I agree the hatchery will sell the seeds to farmers, but i expect atleast half (being conservative) the farmers to sell back the shrimp to Avanti for processing.
Existing Processed shrimp capacity: 8000 tonnes
Additional capacity through JV : 15000 tonnes
With respect to Shrimp seed revenues, there was actually degrowth and it is an insignificant amt relative to Feeds/processed categories.
Besides, the intention of setting up the hatchery was for backward integration
If the seeds do not convert to processed shrimp eventually, then it dilutes the purpose, i think.
Hope, i was able to explain a bit better?
Trying to read the Management Q & A to refresh my memory, we seems to have lost the link access to it.
The link to the Q&A from this thread is not âclickableâ and from VP public forum, the link lands up âin page not foundâ.
Can some one help please. @pratyushmittal
Hi @crazymama,
Iâm not sure but I donât think there has to be a link between hatchery and shrimp processing. The idea seems to be more about having presence across the whole value chain.
Hatchery could be an interesting business as the biggest problem in the industry is of high quality seed.
On the processing side what we should try to understand and focus is - what will be the benefits of their relationship and agreement with TUF. I feel as they are going into value added products - ready to eat etc - they may get assured offtake and better margins. I donât think there would players in India doing value added products as of now.
Regards,
Ayush
Hello Ayush,
IFB looks like a significant player in the value-added space.
They even are listed in online grocery retailers such as ZopNow and BigBasket apart from their inhouse site.
Actually i came across it in the Heritage Fresh Supermarket near my house.
http://www.ifbfreshcatch.com/home/our-products/
It just made my hungry
I will come back to you on the hatchery part after trying some scuttlebutt.
My native is Nellore though i do not frequent it very often.
Regards,
Vishnu
Domestic market is a totally different ballgame and not very rewarding as of now - as we donât have the requisite infrastructure and big market.
TUF is a leader in ready to eat products - we should try to understand their size etc.
From AR 2014-15 of TUF
http://tuf.listedcompany.com/misc/investor_note/20150515-tuf-investorNote-1q2015-en-03.pdf
Interesting article stating shortage of FishMeal as early as 2016.
