apex frozen foods ltd share price Management discussions


This section contains a discussion on the opinions and perceptions of the Management on the trends that impact the Company, it has been collated from information available publicly and reports by various nodal and governmental agencies that the management believes to be accurate at the time of publishing this report. The Company does not undertake to update or revise any of the opinions or statements expressed in this report, consequent to, inter alia, revisions to the reports mentioned herein, new information, future events, or otherwise.


The Global Economy has been facing a series of economic shocks in the form of the Covid-19 related disruptions, followed by a brief period of recovery, and then being subjected to geopolitical tensions impacting the global availability of energy as well as again disrupting economic recovery due to inflationary and recessionary forces. The World Bank estimates that after growing 3.1% last year, the global economy is set to slow substantially in year 2023 to 2.1%, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in the year 2024, to 2.4%. Unexpected resilience in private consumption and investment, and robust growth in the services sector in India, underlie an upward revision to growth in 2023. India is estimated to remain the fastest- growing economy (in terms of both aggregate and per capita GDP) of the largest EMDEs. (Source: Global Economic Prospects, World Bank).


India shipped an all-time high exports of 17,35,286 MT of seafood accounting for 27% YoY growth and worth Rs 640 bn (US$ 8.1 bn) during Fiscal 2023, despite heavy odds as USA, one of the largest markets for India, witnessed sluggish demand. Strong growth came in from South East Asia, China, EU and Japan. During Fiscal 2023, USA continuing to be the top destination for exports, however growth was driven primarily by South East Asian, China and the European Union markets. With the global demand for animal protein turning more towards seafood, the past year saw a strong resurgence in demand from all quarters. While overall marine export volumes increased 27% from 1.37 million tonnes to 1.74 million tonnes, Frozen Shrimp remained flat with the key USA market seeing an almost 20% reduction. This can primarily be attributed to the reduced discretionary spends on account of increasing inflationary pressures in the USA. The slump in demand, coupled with a supply glut caused by Ecuador, resulted in large inventories across the distribution chain, resulting in lower demand for Indian Shrimp. The bright spot, however, continues to be Indias value proposition - disease free high quality product, optimised cost structures and competencies in value added products.

Indian Marine Exports - Annual Trend (Rs Billion)

Outlook Fiscal 2023

With Indian players working alongside their distribution partners, we expect that Fiscal 2024 should put the Shrimp Industry back on the path of growth, albeit at a slower pace. On the supply side, Indian farmers are also keenly watching the demand - supply dynamics and should bolster the production of to cater to the demand of mid and large sizes. We are hopeful that the alignment of the gradual increase in demand from the USA and the European Union will help improve the overall Outlook for the Industry.

C. BUSINESS OVERVIEW Company overview:

The Company is one of the leading exporters of variants of processed L. Vannamei (White leg) and Black Tiger shrimp with strong presence across key areas of the value chain. Our clientele consists of food companies, retail chains, restaurants, club stores and distributors spread across the markets of the USA, European Union and China. The Companys well-integrated operations include three Hatcheries with a combined breeding capacity of about 1.2 to 1.4 billion SPF seeds, Shrimp Pre-processing, and Processing capacity of 34,240 MTPA and Cold storage capacity of 3,500 MT. Of the total processing capacity, 10,000 MT is towards higher value-added ‘Ready-To-Eat category of products while the balance ~24,240 MT is for ‘Ready-To-Cook products.

The Companys total employee strength as of March 2023 stood at 2688.

Fiscal 2023 and Outlook

Despite the various challenges faced by companies across sectors and specifically the Indian Shrimp Aquaculture sector, your Company clocked an 8% volume growth and a 16% revenue growth in Fiscal 2023 over Fiscal 2022. The product mix continued to improve with the RTE share increased to 22% in Fiscal 2023 as against 20% in Fiscal 2022. However, profitability impacted due to higher raw material prices mainly on account of shortage of raw shrimp supply domestically. Another key development has been the improvement of working capital cycle and overall debt reduction in Fiscal 2023.

In terms of expansion projects, the major capex cycle was completed about two years ago, and we have been seeing strong momentum in demand for our RTE and value-added products ever since. To cater to this demand, the Company had planned to increase capacity for RTE products from 5,000 MTPA to 10,000 MTPA at the new state-of-the-art facility located at Ragampeta, Andhra Pradesh, which was designed to handle this expansion. In the Fiscal 2023, this expansion was undertaken, and the expanded capacity is available for production in the current Fiscal 2024.

While the global macro headwinds posed inflationary and recessionary challenges in some of our key markets in Fiscal 2023, we are hopeful of witnessing those easing off in the current Fiscal 2024. The inventories in the key consuming markets are also likely to deplete as demand picks up, thereby enhancing our exports potential. At Apex, we are also looking at newer markets and continue to be focussed on increasing the share of value-added and RTE products to enhance profitability. With our expanded capacities and well entrenched operations, we look forward to capitalising on the headroom for growth.



With a long coastline and other geographical advantages, India has a competitive edge and is well suited for developing the Aquaculture industry. The success story of L. Vannamei could be replicated for other species of fish and thereby strengthening Indias position in the seafood export markets, globally. Further, given its small presence currently, India could increase its market share in value added products going forward.


One of the key threats for the Aquaculture Industry is the risk of disease, and in the present situation, any outbreak could threaten the long-term prospects of the Industry. Further, being situated near the coastline and water bodies, several parts of the supply chains are susceptible to the vagaries of nature such as cyclones. While natural calamities are difficult to prepare for, measures such as traceability and scientific pond management help reduce the impact of diseases.


The Companys revenues are largely realised in foreign currency. Further, the nature of the business requires investment in working capital and therefore management of liquidity positions carefully.

Foreign Exchange Risk

The Company is exposed to foreign exchange rate risk as a significant portion of the revenues are denominated in foreign currencies, while a large part of the expenses is incurred in the Indian currency. Any appreciation in the value of the Indian Rupee (INR) against the U.S. Dollar (USD) or other foreign currencies would decrease the realisation of the Companys products in INR terms. The exchange rate between INR and USD has changed substantially in recent years and may continue to fluctuate significantly in the future. While the Company does partially hedge its positions, the recent movements in currencies could mean that a certain portion of the risk could still impact profitability.

Liquidity Risk

The Companys approach to managing liquidity is to ensure, as far as possible, to have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. The Company has thus far managed to ensure that relationships with customers and suppliers are cordial and will continue working on that ethos.


The Companys independent and robust Internal Audit processes provide assurance on the adequacy and effectiveness of internal controls, compliance with operating systems, internal policies, and regulatory requirements.

The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorised use or disposition and that all transactions are authorised, recorded, and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company.

The Audit committee and the management have at periodic intervals, reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

G. Discussion on Financial perfomance and key Financial ratios

The Financial Statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The total volumes sold grew by 8% YoY to 13,044 MT in Fiscal 2023, of which, RTE sales grew by 19% YoY to 2,823 MT and formed almost 22% of overall sales volumes from almost 20% share in Fiscal 2022. Due to this improved product mix led better realisations, the total income increased by 15% YoY to Rs 10,720 Million in Fiscal 2023 from Rs 9,319 Million in Fiscal 2022. The overall profitability was lower largely due to higher raw material (raw shrimp) prices during Fiscal 2023. The Balance Sheet has become leaner than previous fiscal with Gross debt lowered by Rs 762 Million to Rs 906 Million in Fiscal 2023, mainly on account of improving working capital cycle.

Key Financial Ratios

Pursuant to Schedule V(B) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Financial Ratio Fiscal 2023 Fiscal 2022
Operating Profit Margin(%) 7.9% 9.9%
Net Profit Margin(%) 3.3% 4.4%
Debtors Turnover (times) 8.8 6.3
Inventory Turnover (times) 5.6 5.0
Current Ratio (times) 13 11
Interest Coverage Ratio (times) 4.4 4.2
Debt-Equity Ratio (times) 0.2 0.35
Return on Net-worth (%) 7.5% 9.0%


1. Profit margins impacted mainly due to higher raw material (raw shrimp) prices

2. Debtor and Inventory Turnover ratio have been calculated based on Net Revenue. Both these ratios saw improvement to nearing normal levels as Covid-19 led disruptions like delayed shipments eased out during Fiscal 2023

3. Consequently, Current ratio improved favourably too

4. Debt-Equity ratio improved as there was a substantial reduction in Total Debt from Rs 1,668 Mn in Fiscal 2022 to Rs 906 Mn in Fiscal 2023, mainly on the back of improved working capital cycle

5. Lower profitability affected Return on Equity