Aquaculture feed business has been less profitable for the firm this year.
Avanti Feeds records drop in feed sales in Q2
Thursday, December 06, 2018, 23:50 (GMT + 9)
Avanti Feeds Ltd. experienced a decrease in feed sales turnover in the second quarter of fiscal year 2019 (April 1, 2018-March 31, 2019) compared to the same period a year ago, a result that the company attributes to the continued reduction in shrimp farming by about 15-20 per cent in the analysed period.
Part of the report prepared by Avanti Feeds Ltd.
From the company it was informed that in the secodn quarter its sales reached INR 5,529 million (USD 78.3 million) from INR 6,537 million (USD 92.6 million) in the previous fiscal year.
The firm’s feed business resulted in a profit of INR 485 million during the July-September period of fiscal year 2019 as compared to a profit of INR 1571 million (USD 22.2 million) in the corresponding period in fiscal year 2018. The decrease in profitability is on account of significant increase in prices of main raw materials, such as fishmeal, soya DOC and wheat flour and also other raw materials like vitamin premixes without increase in feed price.
Increases in raw material costs impacted the company's results as the price of the feed did not experience the same increases proportionally.
Avanti Feeds highlighted that shrimp exports to the US from India during the first half of the fiscal year 2019 recorded 10 per cent growth from the same period in the previous year.
The average realization per metric tonne from exports reduced by about 18 per cent during the first half of the year 2019 compared to the corresponding period in 2018. The farm gate prices of shrimp have also declined steeply by 20-25 per cent up to September and thereafter increased significantly.
A comparison of actual feed sales from April- September in 2016, 2017 and 2018 indicates a total shrimp feed sales in India is about 504,000 tonnes, 624,000 tonnes and 498,000 tonnes, respectively, which means the feed sales in the current six months has dropped by about 20 per cent compared to the corresponding period of the fiscal year 2018.
Avanti Feeds Ltd. is a subsidiary of Thai Union group ►
Avanti Feeds outlines that feed sales during the fiscal year 2019 is expected to remain at more or less same level as in fiscal year 2018 due to the reduction in shrimp farming. However, the company is expected to increase its market share from 43 per cent in fiscal year 2018 to 45 per cent - 47 per cent in fiscal year 2019.
Due to the developments that took place during the first three quarters of 2018, resulting in lower production of shrimp during fiscal year 2019, the resource processing and export is now projected at around 10,000 tonnes, representing a capacity utilisation of about 45 per cent.
“Our endeavour is to focus on value added products and achieve a minimum of 50 - 60 per cent export of these products and the balance on other regular products. As you know, the export prices and raw material prices are highly dynamic and volatile, the precise pricing of them cannot be estimated at this juncture. However, considering the past trends and composition of future exports, a PBT of 12 -15 per cent appears achievable,” pointed out the firm’s management representative C. Ramachandra Rao.